Monthly Newletter • June 28, 2022

2022

by Travis DeFries

Every year since 1984, Windermere has designated one day to help make a positive difference in the communities where we work and live.2022 is the 7th year that my office has spent this day working to put fresh produce on the tables of local families who need a little help.On June 10th, my office spent our annual Windermere Community Service Day with the Snohomish Garden Club constructing trellises, weeding and staking beds, and planting and labeling a half-acre of produce! The Snohomish Garden Club will harvest this half-acre, which will yield close to 10,000 pounds of fresh produce to be donated to local food banks in Snohomish County. In tandem with this project, we are also holding a Food Drive through the month of July, with a goal to donate $5,000 to the Volunteers of America Food Banks across Snohomish County. You can donate here, or bring non-perishable donations to my office through the month of July.

Monthly Newletter • June 4, 2022

Real Estate Newsletter – 06/03/2022

by Travis DeFries

“How’s the market?” is a question I am asked all the time. It is a common segue in casual conversation over the neighbor’s fence, at a party or family gathering. Now more than ever, the answer to this question is critical and detailed. You see, our market is experiencing a shift, a slowing down of price growth, if you will. Believe it or not, this is providing great opportunities for both buyers and sellers. Let’s talk about what the slow down in price appreciation means first. What this means is when we get to the end of the year and average the last 12 months of median price and compare it to the previous 12 months of median price, we will still have a positive growth percentage, but that percentage will be lower than it was earlier in the year. You see, we had a very significant bump in prices in Q1 of 2022 that will level off as we complete 2022. Bear in mind that the long-term annual price appreciation rate is closer to 3-6% when comparing the growth that we’ve had recently. Let me break this concept down for you with some numbers. In Snohomish County, in April of 2020, the median price was $520,000 and in April of 2022 the median price was $830,000 – this is a 60% increase in 2 years! In King County, in April of 2020, the median price was $720,000 and in April of 2022 the median price was $995,000 – this is a 38% increase in 2 years! That pace is unprecedented and unsustainable. Let’s dig a little deeper! In Snohomish County, in December 2021 (the end of last year) the median price was $700,000 which was an above-average 35% increase from April 2020 (20 months). That means there was a 35% gain from April 2020 to December 2021 (20 months: $520,000 to $700,000 = 35%) but then a whopping 19% gain in 4 months, from December 2021 to April 2022 (4 months: $700,000 to $830,000 = 19%). This 4-month stretch of price growth is the root of the unsustainability and one that we will be leveling off of during this shift. It is very unlikely that we will return to prices below the December 2021 level, which was at an above-average growth rate of 35% from April 2020. The (unofficial) median price in May sits at $810,000 indicating the shift to settle somewhere between the April peak and where we landed at the end of last year. We must remember that we were celebrating price growth at the end of 2021!

In King County the numbers are not as extreme, but still well above average growth rates. In August 2021, the median price was $875,000 which was an above-average 22% increase from April 2020 (15 months). That means there was a 22% gain from April 2020 to August 2021 (15 months: $720,000 to $875,000 = 22%) and then a 14% gain in 9 months, from August 2021 to April 2022 (9 months: $875,000 to $995,000 = 14%). This 9-month stretch of price growth is one that will be leveling off during this shift. It is very unlikely we will return to prices below the August 2021 level, which was still an above-average growth rate of 22% from April 2020.

This is where perspective comes in and where pricing can get a little tricky. Coaching potential sellers as to why it would be unrealistic to expect the peak prices of Q1 2022 requires explaining the market factors that have played into this shift. The combination of the lowest inventory levels and lowest interest rates in history that took place in Q1 2022 was the perfect storm that created intense price growth over a short period of time. Now we must navigate the new environment as we chart our real estate goals. Three main factors have led to this much-needed tempering in price growth: inventory, interest rates/inflation, and affordability. Inventory has finally started to grow although it is still a seller’s market. In Snohomish County, 2021 was an extreme seller’s market that never crested over 0.6 months of inventory; that’s just over two weeks! A seller’s market is defined as 0-3 months of inventory, a balanced market as 3-6 months, and a buyer’s market as 6-months plus. In May 2022, we sit at 0.9 months of inventory (unofficially). We have started to see more homes come to market, providing buyers with more selection. For example, in April 2020 there were 996 new listings; in December 2021 there were 525 new listings; in April 2022 there were 1,503 new listings (almost 3x as much over December), and (unofficially) in May there were 1,654 new listings. This additional selection is providing buyers the long-awaited option to find housing and has started to reduce the number of multiple offers which have put downward pressure on prices. When there is more selection, prices do not escalate as quickly.In King County, for May 2022, we sit at 0.9 months of inventory (unofficially). In April 2020 there were 2,138 new listings; in December 2021 there were 1,103 new listings; in April 2022 there were 3,353 new listings (just over 3x as much over December), and (unofficially) in May 2022 there were 3,698 new listings. Interest rates have also grown over the last two years and even more specifically since the first of the year. We are currently hovering around 5%. At the start of 2022 we were hovering around 3%. The Fed finally gave way to the promise that rates would rise, which was a necessary tool to combat inflation. While 3%-4% rates were a dream, they were not a long-term reality. The 30-year average for interest rates is 7% which highlights that 5% is a great rate!It is understandable that 5% pales in comparison to the historic lows we had, but those are most likely only going to be found in the history books in the foreseeable future. Rates being as low as 3% in Q1 2022 played into the rapid acceleration in price because it made the buyer audience larger when we had the least amount of inventory available. The good news is that while they had a quick 2-point increase from March 2022 to May 2022, they have seemed to stabilize. They have even come down a bit, making this our new normal for now, as future increases into 2023 are predicted. The good news for buyers who secured a home in Q1 is they also secured the lowest debt service in history, so they should be very happy.Affordability has been a challenge for many, especially first-time home buyers. Affordability challenges at December 2021 prices were real, but the rise to April 2022 levels just plain removed buyers from the market. As price appreciation slows and prices level off due to the shift in market conditions, some buyers will be able to reenter the market and start to secure their wealth-building asset that also augments their lifestyle. So, what does all of this mean? The word that keeps coming to my mind is perspective. We have walked through one of the most extreme seller’s markets of our time, which resulted in rapid price growth for sellers and limited choices for buyers. That is starting to ease up and we need to celebrate this! We are heading towards historical norms and while that is happening, we will need to keep the crazy Q1 price growth in a box alongside the unicorns and rainbows for the lucky sellers that found the pot of gold and buyers who secured the lowest rates ever. Good for them, but still good for anyone who has owned their home for longer than two years, as the amount of seller equity is abundant. Real estate has always been a long-hold investment and we have lost sight of that with the abnormality of the last two years. Most importantly, real estate is a lifestyle decision. Our homes provide us shelter, community, features, and benefits. We make memories, find comfort, and if we are lucky, we are able to match our home to our lifestyle needs and build wealth at the same time.With more selection, still-low interest rates, and coming off the crazy prices of Q1, more buyers will be able to make these lifestyle pivots more comfortably, all while sellers will still make phenomenal returns. Perspective is key to help see the forest through the trees, and if not taken into consideration could stall one from reaching their goals.If you are curious about the value of your home in today’s market or are considering a purchase, please reach out. Even if you just want to talk these changes through and understand how they might affect your long-term goals. It is always my goal to help keep my clients well informed and empower strong decisions.

Every year, my office comes together to provide summer camp scholarships for local kids who may not otherwise have the opportunity to experience the adventures of overnight camp. This year we donated $16,300 to YMCA Camp Orkila and Camp Colman! Overall, since 1994, we are responsible for $230,000 in summer camp scholarships for local kids in need. I am so proud to be part of an office that cares so deeply for the community!

Community Info • May 30, 2022

Local Farmers Markets: 2022

by Travis DeFries

When you shop at a local Farmers Market, you’re buying outstanding freshness, quality and flavor. Knowing exactly where your food comes from and how it was grown provides peace of mind for your family. Plus, you’re supporting a sustainable regional food system that helps small family farms stay in business; protects land from over-development, and provides the community with fresh, healthy food. Find one near you on the list below!

South Snohomish County

Arlington Farmers Market
Legion Park: 114 N. Olympic Ave
Saturdays. 10am-2pm
May 8 — September 25

Bothell Park Ridge Community Market
Park Ridge Church: 3805 Maltby Road, Bothell
Wednesdays 4pm-8pm
June —September

Edmonds Museum Summer Market
Historical Museum: 5th St from the fountain
Saturdays 9am-2pm
May 7—October 8

Everett Farmers Market
2930 Wetmore Ave
Sundays 11am-3pm
May 8—October 30

Lake Stevens Farmers Market
1806 Main Street
Wednesdays 3pm-7pm
June—August

Monroe Farmer’s Market
Galaxy Theater: 1 Galaxy Way
Wednesdays 3pm-7pm
May 25-September 7

Snohomish Farmers Market
Union & Glen Ave
Thursdays 3pm-7pm
May —September

Stanwood Farmers Market
8727 271st St NW
Fridays 2pm-6pm
June 3 —October 7

Eastside

Bellevue Farmers Market
First Presbyterian: 1717 Bellevue Way NE
Thursdays 3pm-7pm
May 12—October 6

Bellevue Crossroads Farmers Market
East Parking Lot: 15600 NE 8th St
Tuesdays 12pm-6pm
June 7—September 27

Issaquah Farmers Market
Pickering Barn: 1730 10th Ave NW
Saturdays 9am-2pm
May 7—September 24

Juanita Friday Market
Juanita Beach: 9703 NE Juanita Dr
Fridays 3pm-7pm
June —September

Kenmore Farmers Market
Marina Park: 25 Lakeshore Plaza
Wednesdays 3pm-7pm
June 1—September 28

Kirkland Wednesday Market
Town Square: 6728 NE 181^st St
Wednesdays 3pm-7pm
June 1—August 31

Mercer Island Farmers Market
Mercerdale Park: 7700 SE 32nd St
Sundays 10am-3pm
June 5—September 25

Redmond Saturday Market
9900 Willows Rd NE
Saturdays 9am-2pm
May 7—October 29

Sammamish Farmers Market
City Hall Plaza: 801 228th Ave SE
Wednesdays 4pm-8pm
May—September

Woodinville Farmers Market
Schoolhouse District: 13205 NE 175^th St
Saturdays 10am-3pm
May—September

Seattle

Ballard Farmers Market
Ballard Ave NW
Sundays. 9am-2pm
YEAR ROUND

Capitol Hill Broadway Farmers Market
E Denny Way (btwn Broadway & 10th Ave)
Sundays 11am-3pm
YEAR ROUND

Columbia City Farmers Market
37^th Ave S & S Edmunds St
Wednesdays 3pm-7pm
May 4—October 12

Fremont Sunday Market
Corner of 3410 Evanston Ave N
Sundays 10am-4pm
YEAR ROUND

Lake City Farmers Market
125th St and 28th Ave NE
Thursdays 3pm-7pm
June 16—October 6

Lake Forest Park Farmers Market
Third Place Commons: 17171 Bothell Way NE
Sundays 10am-2pm
May 8—October 9

Madrona Farmers Market
1126 Martin Luther King Jr. Way
Fridays 3pm-7pm
May 13—October 21

Magnolia Farmers Market
Magnolia Village: 33rd Ave W & W McGraw
Saturdays. 10am-2pm
June 4—October 15

Phinney Farmers Market
Magnolia Village: 33rd Ave W & W McGraw
Fridays 3pm-7pm
June 3—September 30

Queen Anne Farmers Market
W Crockett Street & Queen Anne Ave N
Thursdays 3pm-7:30pm
June 2—October 13

Shoreline Farmers Market
192^nd St N & Aurora Ave N
Saturdays 10am-2pm
June 4—October 1

University District Farmers Market
University Way NE
Saturdays 9am-2pm
YEAR ROUND

Wallingford Farmers Market
Meridian Park: Meridian Ave N & N 50^th St
Wednesdays 3pm-7pm
May 25—September 28

West Seattle Farmers Market
California Ave SW & SW Alaska St
Sundays 10am-2pm
YEAR ROUND

Monthly Newletter • May 14, 2022

Real Estate Newsletter – 05/12/2022

by Travis DeFries

At Windermere, we are fortunate to have Matthew Gardner as our Chief Economist. In fact, we are one of the only real estate companies in the country to have such a well-respected expert sitting in this role. Not only is Matthew an asset to Windermere brokers and their clients, but he is a coveted resource within the industry. He is often called upon by major media outlets and industry think tanks for his insights and knowledge.Every quarter Matthew produces The Gardner Report which explains statistics and trends and provides predictions for all of the market areas Windermere serves, see the links below. What is so great about this is you can read about where you live and also get a glimpse into other markets that may pique your interest.Read the full Western Washington report here. Additionally, since Windermere spans the entire Western Region of the United States, he also provides this same report for Washington (Western, Central & Eastern), Oregon, Idaho, Montana, California (Southern & Northern), Utah, Colorado, and Nevada.There has been a lot of state-to-state moves over the last few years. Many of these moves have been prompted by retirement, second home purchases, affordability, and remote working opportunities. This is a great way to research other markets you may be interested in. These reports update every quarter; please let me know if you’d like me to send them to you when they update. Also, I am connected to the Windermere-wide network of brokers and can easily find you a reputable broker who would be a stellar match for your real estate needs outside of my normal market area.

Further, I am also a part of a national and international network of real estate companies for referrals outside of the Windermere footprint. This is through Windermere’s affiliation with Leading Real Estate Companies of the World. Bottom line, I can help provide information and can help align you with a trusted real estate advisor anywhere in the world. Please reach out if I can help! Lastly, Matthew also releases a monthly video that speaks to real estate market hot topics. Here is his latest video that touches on the interest rates, inventory, inflation and more.

My office is working together with our entire Windermere family to hit $50 million raised for our 50th anniversary. Each dollar returns to our community through the Windermere Foundation, helping homeless and low-income families in the neighborhoods we serve.Being part of an office and a company that cares deeply for the community is so important to me, and I’m excited to watch these numbers grow! We are currently wrapping up a donation drive among our Windermere North brokers to help send kids to YMCA summer camps. Look for those final numbers in the coming weeks!

Community Info • April 27, 2022

Western Washington Gardner Report – Q1 2022

by Travis DeFries

Q1 2022 Western Washington Real Estate Market Update

by Matthew Gardner

Q1 2022 Western Washington Real Estate Market Trends

The following analysis of select counties of the Western Washington real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere Real Estate agent.

Regional Economic Overview

The post-COVID job recovery continues. Though data showed the number of jobs dropped in January, February saw gains that almost offset the jobs lost the prior month. As of February (March data is not yet available), the region had recovered all but 47,000 of the more than 300,000 jobs lost due to the pandemic. Of note is that employment levels in Grays Harbor, Thurston, San Juan, and Clallam counties are now above their pre-pandemic levels. In February, the regional unemployment rate rose to 4.1% from 3.7% in December. Although this may be disconcerting, an improving economy has led more unemployed persons to start looking for a job, which has pushed the jobless rate higher. I expect the regional economy to continue expanding as we move into the spring and summer, with a full job recovery not far away.

Western Washington Home Sales

❱ In the first quarter of 2022, 15,134 homes sold, representing a drop of 5.8% from the same period a year ago, and down 31.7% from the fourth quarter.

❱ Yet again, supply-side constraints limited sales. Every county except Snohomish showed lower inventory levels than a year ago.

❱ Sales grew in five counties across the region but were lower across the balance of the counties contained in this report. Compared to the fourth quarter, sales were lower across all market areas.

❱ The ratio of pending sales (demand) to active listings (supply) showed pending sales outpacing listings by a factor of 6.7. Clearly, the significant jump in mortgage rates in the first quarter has not yet impacted demand. Rather it appears to have stimulated buyers partly due to FOMO (Fear of Missing Out)!

A bar graph showing the annual change in home sales for various counties in Western Washington between Q1 2021 and Q1 2022.

Western Washington Home Prices

❱ Although financing costs have jumped, this has yet to prove to be an obstacle to buyers, as prices rose 16.4% year-over-year to an average of $738,152. Naturally, there is a lag between rates rising and any impact on market prices. It will be interesting to see what, if any, effect this has in the next quarter’s report.

❱ Compared to the same period a year ago, price growth was again strongest in San Juan County, but all markets saw prices rising more than 10% from a year ago.

❱ Relative to the final quarter of 2021, all but Kitsap (-2.7%), Mason (-1.5%), Skagit (-1.8%), Jefferson (-6.3%), and Clallam (-0.1%) counties saw home prices rise.

❱ The market remains supply starved. While increases in “new” listings suggest that more choice is coming to market, it remains insufficient to meet demand.

A map showing the year-over-year real estate market percentage changes in various counties in Western Washington for Q1 2022.

A bar graph showing the annual change in home sale prices for various counties in Western Washington from Q1 2021 to Q1 2022.

Mortgage Rates

Average rates for a 30-year conforming mortgage were 3.11% at the end of 2021, but since then have jumped over 1.5%—the largest increase since 1987. The surge in rates is because the market is anticipating a seven- to eight-point increase from the Federal Reserve later this year.

Because the mortgage market has priced this into the rates they are offering today, my forecast suggests that we are getting close to a ceiling in rates, and it is my belief that they will rise modestly in the second quarter before stabilizing for the balance of the year.

A map showing the real estate market percentage changes in various counties in Utah during the third quarter of 2021.

Western Washington Days on Market

❱ It took an average of 25 days for a home to go pending in the first quarter of 2022. This was 4 fewer days than in the same quarter of 2020, but 2 days more than in the fourth quarter of 2021.

❱ Snohomish, King, and Pierce counties were the tightest markets in Western Washington, with homes taking an average of 11 to 15 days to sell. The greatest drop in market time compared to a year ago was in San Juan County, where it took 23 fewer days for homes to sell.

❱ All but five counties saw average time on market drop from the same period a year ago, but the markets where it took longer to sell a home saw the length of time increase only marginally.

❱ Quarter over quarter, market time dropped in Snohomish, King, and Pierce counties. Jefferson and Clallam counties also saw modest improvement. In the balance of the region the length of time a home was on the market rose, but seasonality undoubtedly played a part.

A bar graph showing the average days on market for homes in various counties in Utah during the third quarter of 2021.

Conclusions

This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.

The numbers have yet to indicate that demand is waning amid rising interest rates, but this is sure to become a greater factor as we move into the spring. A leading indicator I pay attention to is changes to list prices and, in most counties, these continue to increase. This suggests that sellers remain confident they will be able to find a buyer even in the face of higher borrowing costs. If this pace of increase starts to soften, it may be an indication of an inflection point, but it does not appear to be that way yet.

A speedometer graph indicating a seller's market in Western Washington during Q1 2022.

Given all the factors discussed above, I have decided to leave the needle in the same position as the last quarter. The market still heavily favors sellers, but if rates rise much further, headwinds will likely increase.

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

Monthly Newletter • April 19, 2022

Real Estate Newsletter – 4/21/2022

by Travis DeFries

Did you know that over 50% of homeowners in Washington State have over 50% home equity? We have had 10 years of price appreciation, and the last 3 years have been record-breaking. The chart below shows complete year-over-year (the last 12 months over the previous 12 months) price appreciation for the six main market areas in the Greater Seattle area. Home equity gains have been plentiful!

What does this mean when you go to sell? You need to consider capital gains taxes when estimating your total profit. This is important as we typically move our profit into our next home, making this a critical element in planning our future. You can qualify for a tax exclusion: $250,000 for a single person and $500,000 for a couple as long as you meet certain requirements.

You must have owned the house for at least two years. Check out this IRS link for more details.
And you must have lived in the house as your primary residence for two out of the last five years, ending on the date of the sale.

The two years do not need to be consecutive as long as you’ve lived in your home for a total of 24 months out of the five years prior to the sale. You can also only claim the exclusion every two years. This is important for folks who own multiple homes and are looking to liquidate. This would need to be strategically spaced and would require living in each home for the designated amount of time.Another important element for calculating the tax implication is understanding your cost basis. The cost basis is a combination of the purchase price, certain legal fees, improvement costs, and more. It is important to have good record-keeping on all capital improvements you’ve made to your home to increase your cost basis which will in turn decrease your taxable profit. Capital improvements increase the value of your property versus a repair which only restores the property to its original condition. This informative Charles Schwab article provides a sample tax bill that outlines how capital improvement can help offset your tax burden.Of course, consulting your trusted CPA on your tax implications is a valuable resource. It is my hope that this overview of the requirements and how you would go about a calculation helps you understand how to prepare for your next move if you are in an equity position that would incur capital gains. It is always my goal to help keep my clients informed and empower strong decisions.

On April 9th, our office had our annual Shred Event and Food Drive. In 4 hours, we filled two shredding trucks and helped hundreds of clients carefully destroy documents and do some spring cleaning. We bill this event as one of our annual food drives and we are happy to report that our clients were beyond generous! We raised $2,650 and collected 1,993 pounds of food! We partner with the Volunteers of America of Snohomish County who manages the county food bank coalition and gets the food and money spread throughout the region.

Uncategorized • April 16, 2022

South King County Market Report – Q1 2022

by Travis DeFries

The 2022 real estate market started with a bang! We started the year with the lowest amount of available inventory we’ve ever seen coupled with interest rates a point lower than they are now, along with a plentiful buyer pool due to a strong job market and work-from-home influenced moves. The combination of supply and demand and low debt service created an intense seller-centric environment which resulted in huge home price increases from January to March. This is on top of ten years of solid price growth; over 50% of homeowners in WA state have at least 50% home equity.

As we head into the spring and summer months, we anticipate seasonal increases in inventory, which will provide much-needed selection for buyers. Interest rates have increased as a tool to combat inflation, which was predicted by experts across the nation and announced by the Fed. Rates still remain historically low and have only departed from the “tell-your-grandkids” levels between 3.5% to 4.5%. Price growth should start to temper after a feverish Q1 and buyers will enjoy more selection. If you are curious about how your real estate goals match up with the market, please reach out. It is my goal to help keep my clients informed and empower strong decisions.