Monthly Newletter • January 28, 2022

2022

by Travis DeFries

Last week, my office hosted our 14th annual Economic Forecast Event with Matthew Gardner, Windermere’s Chief Economist. It was an hour-long presentation followed by lively Q & A that was packed with useful information to help guide us as we start the new year. Matthew journeyed the audience through a macro to micro approach, reflecting on all of the activity in 2021 and also analyzing future trends.He started with a national overview of the economy overall and ended with a detailed accounting for King and Snohomish County housing markets, including some predictions. Below are some highlighted bullet points. Please reach out if you would like a digital copy of his PowerPoint and/or the link to the recording of his presentation.National Economy:The GDP (Gross Domestic Product) growth in 2021 was 3.9%, well above the long-term average of 2%. This indicates we are not in a recession and have recovered from the brief recession we experienced in the spring of 2020. A recession is defined by two consecutive quarters with declining GDP.Matthew anticipates the U.S. to be back to full employment by the end 2022 after the fall-out of 2020 due to the pandemic shut-down.Inflation:Inflation peaked in Q4 of 2021 and is projected to start to slow as supply chain issues improve. Certain industries such as used cars which are costing 25% more since February 2020 are having a huge influence on overall numbers. Food and energy prices are also volatile and affecting overall numbers.U.S. Housing Market:Improved supply chain and labor forces will increase the number of new builds, increasing inventory to help quench buyer demand. This will slow national year-over-year price growth to 6.5% in 2022.Regional Economy:Jobs are increasing and will recover from the spring 2020 fall-out twice as fast as the job losses we saw during the Great Recession of 2008. In fact, he expects local jobs to fully return by the end of 2022!Our diverse economy which includes tech, aerospace, biotech, and manufacturing will help our overall economy thrive as we are not dependent on just one industry for a full recovery.Mortgage Rates:Mortgage rates are predicted to slowly rise in 2022. Matthew along with the National Mortgage Brokers Association, Fannie Mae, and the National Association of Realtors expect rates to end the year just under 4%. This is well below the long-term average of 7.5%!Prices:In 2021, prices were up 14% year-over-year in King County and 24% in Snohomish County. He predicts housing prices to rise 13% in King County and 14% in Snohomish County in 2022. This is well above the long-term average of 5.5% year-over-year!The Work from Home phenomenon has had a huge influence on price growth in the suburbs. Many buyers have eliminated long commutes or are only having to drive into work a handful of days a month. This has driven many buyers to consider the suburban markets which is why the price growth in Snohomish County was much higher than King. Seattle saw a bit of a correction as this new lifestyle shift came to be. He anticipates 2022 to be kind to urban markets and a continued attraction to the suburbs.In 2021, net in-migration in both King and Snohomish Counties was up, which is continuing to have a strong influence on buyer demand. In fact, new listings were up in 2021 over 2020; it was increased buyer demand that whittled down inventory levels and drove prices up.Homeowner Equity:Prices have been growing since 2012 and have had historic growth over the last two years. In King County, 59% of homeowners have 50% or more equity in their homes and in Snohomish County, 55% of homeowners have 50% or more home equity.This uptick in home equity and the Work from Home shift has reduced the average tenure a homeowner spends living in their home to just shy of 7 years in 2021 from 10 years just two years ago. This is another indicator of buyer demand.Are we Headed Towards a Housing Bubble?Simply put, no! Even with forbearance being a viable option to weather the fall-out from the pandemic, there will not be a wave of foreclosures on the horizon. Homeowners have too much equity to walk away, they will sell and take their profits in order to recover if need be.Prices have made a big run, but if you take interest rates and inflation into consideration, monthly payments are only up 26% since 2000 in King County and 34% in Snohomish County. That is parallel to raw home prices being up 249% since 2000 in King County and 272% in Snohomish County.Financial indicators such as recovering jobs, deep homeowner equity, stringent lending practices, strong buyer demand, and low interest rates combat any inkling of a housing bubble. There are 600k Millennials in King County and 171k in Snohomish County that are coming of age and will want to buy a house.Condominiums:Condo sales stalled when the pandemic hit as people decided if they wanted to live in such density, and the downtown core suffered due to the shutdown. Since then, the stall started to move forward and condo prices are up 7% year-over-year in King County and 23% in Snohomish County. Condos provide a more affordable option, especially for first-time buyers, and single-level, maintenance-free living for retirees. Condos are predicted to appreciate 4% in King County in 2022 and 7% in Snohomish County.Luxury Market:2021 was the year that the $1M home sale price became more common. In 2021 there we 11k sales over $1M in King County compared to 7k in 2020. In Snohomish County, there were just shy of 2k sales over $1M in compared to 590 in 2020. The $1M price point may not be synonymous with the definition of luxury any longer. It is more so a depiction of affordability in our region. With that said, homes in the very high-end have had brisk movement and marked appreciation.Overview:The Work from Home lifestyle is real and has created lots of movement in the marketplace, especially towards the suburbs. This has caused an upward trajectory on price appreciation along with continued low interest rates. New listings outpaced 2020, but buyer demand gobbled up the inventory leaving us at the lowest levels we have ever seen as we start 2022. Price appreciation will continue but is predicted to decelerate after record-breaking levels in 2021. Interest rates will creep up by the end of 2022 and inflation will improve as the supply chain recovers. Homeowner equity is at an all-time high and jobs are recovering, offsetting any big crash to the housing market. Affordability is our biggest roadblock as the landscape of the PNW has changed with tech jobs the heart of our renewed economy.

If you attended our Virtual Economic Forecast Event last week with Matthew Gardner, did you see the mountain of socks?! Matthew is a bit of a sock aficionado, and we usually give him a gift of some fun or funny socks at our yearly event. This year, we decided to collect socks and donate them in Matthew’s name to Beautiful Soles for local kids in need. I am happy to report we collected 523 pairs of socks and $125 amongst our brokers.

Thank you to everyone who gave to our Healthcare Worker Meal Drive in December! We raised $4,360 which enabled us to deliver meals and snacks to frontline workers at Providence in Everett, Swedish Edmonds, and UW Medicine Northwest Hospital. We partnered with We Got This Seattle, who helped us coordinate the restaurants we ordered from and set up our contacts at the hospitals. I am so grateful for ALL of our local frontline workers who have been working so long and hard under the most difficult circumstances.

Community Info • January 16, 2022

South King County Market Report – Q4 2021

by Travis DeFries

2021 was a year that will go down in infamy in regards to the real estate market. Tight inventory levels, historically low interest rates and increased buyer demand influenced by pandemic lifestyle shifts made for an eventful year! 2021 price appreciation is on top of the strong price growth we also saw in 2020. Seller equity is undeniable as homeowners are sitting on top of a wave of appreciation that has been mounting since 2012! Wherever you sit in this decade of price growth, if you are considering selling, you will enjoy phenomenal returns. As for buyers, they are securing homes with low debt service which has helped offset the affordability of housing prices.

We anticipate 2022 being another fruitful year for the real estate market, but expect price appreciation to temper as interest rates slowly creep up. Look to me to continue to help keep you updated as the year progresses. It is always my goal to help keep my clients well informed and empower strong decisions.

Community Info • January 16, 2022

North Snohomish County Market Report – Q4 2021

by Travis DeFries

Community Info • January 16, 2022

Seattle Metro Market Report – Q4 2021

by Travis DeFries

Community Info • January 16, 2022

Eastside Market Report – Q4 2021

by Travis DeFries

Community Info • January 16, 2022

North King County Market Report – Q4 2021

by Travis DeFries

Community Info • January 16, 2022

South Snohomish County Market Report – Q4 2021

by Travis DeFries

Monthly Newletter • January 6, 2022

Real Estate Newsletter – 01/05/2022

by Travis DeFries

2021 was a wildly eventful year in the real estate market! Price appreciation was the highest we have ever seen, interest rates remained historically low, and demand for housing was elevated by the ever-changing shifts in our lifestyles due to the pandemic. Further, our overall economy in Washington State and the Greater Seattle area had many bright spots, but also some challenges.Matthew Gardner, Windermere’s trusted and reputable Chief Economist will join us for a virtual economic forecast event (details below) and will touch on the economy, both nationally and locally in addition to our local real estate market. He will recap 2021 and look at what to expect moving forward in 2022 and beyond. He is both informative and entertaining! His quick wit, English accent, and simple breakdown of complicated figures make this a fun event, some laughs are promised!Real estate is most often someone’s largest single investment, so we see this opportunity to hear what Matthew has to share as a valuable element to help our clients nurture their investment(s). Even if you don’t own a home yet, this will help equip you with the knowledge to make a formidable plan. It is always my goal to help empower my clients with knowledge and information to help guide strong decision-making for both their long-term investments and to enhance their lifestyles. I sure hope you can make it!Please join me for a very special virtual live event: AN ECONOMIC FORECAST FOR 2022 & BEYONDwith Matthew Gardner, Chief Economist for Windermere Real Estate Wednesday, January 19, 20226:30pm – 8pm Presentation from 6:30-7:30 pm, Q&A to follow Please RSVP by phone/text or email by January 14th, 2022to receive an emailed event link prior to the event.

Every holiday season, the brokers in my office come together to sponsor local teenage foster boys for Christmas gifts, and several families in need for grocery gift cards. It’s such a privilege to give back in a small way, and I always love seeing the gifts under our office Christmas tree before they are sent off to the group homes. This opportunity to give back at the end of every year is a reflection of the gratitude we all have for our clients and their support of our businesses. Here’s a little bit about what we did for Christmas 2021:

We gifted Christmas presents for 17 teenage foster boys living in 3 group homes managed by Pioneer Human Services.
- We purchased gifts totaling $3,296 for the boys, which also included outings for all the boys to Traxx racing, a movie theater, and bowling.

We divided a total of $4,210 in Safeway grocery gift cards amongst 13 families (comprised of 52 individuals); all referred by Pioneer Human Services.
- We collected $2,050 in money
- We received a match of $2,000 from The Windermere Foundation
- And Safeway included a bulk buy bonus of $160

Monthly Newletter • December 6, 2021

Monthly Real Estate Newsletter – December 2021

by Travis DeFries

At Windermere, we have the benefit of being expertly guided by our Chief Economist, Matthew Gardner. Every year he shares his predictions for the US Economy and Housing Market. I have included a list of highlights below along with a link to a video where he spells it all out.Matthew’s Forecast for the US Economy:

The US will still continue to feel the effects of the COVID-19 pandemic on the economy. He acknowledges that we are healing, but still experiencing drag due to supply chain delays and Covid-sensitive consumers. He expects this to improve as we head into spring and the second half of 2022.
He predicts a 4% increase in GDP in 2022.
Even though we are still experiencing supply chain delays and labor shortages he does not anticipate a recession.
He predicts more robust job growth in 2022 and returning to pre-Covid employment in the second half of 2022.
Inflation is still very much affected by supply chain issues and labor shortages, but he sees that settling out mid-2022.
Interest rates will help to counteract inflation and will start to increase in 2022, but not crest 4%.

Matthew’s Forecast for the US Housing Market:

There will be a modest reduction in home sales year-over-year, but realize this is coming off of a high volume of sales in 2021.
After a record-breaking 16% increase in median price in 2021, he predicts a 7% increase in median price year-over-year in 2022. This slow down in appreciation will be due to increased interest rates, affordability, and a slight increase in supply.
Housing starts will increase, but more importantly, construction completion will increase due to supply chain issues and labor shortages improving.
Interest rates will increase towards 4% as we travel through 2022, but will still be well below the 30 year average of 7.5%.
There will not be a housing bubble due to high demand for housing, job growth improving, and the overall recovery of the US economy.
He is not concerned about forbearance, but more so affordability for the aging millennial generation who would like to purchase their first home.
He sees the housing market moving towards more balance in 2022 after an incredible year of growth in 2021.

Look for Matthew’s local economy and housing market predictions from me in January. My office is also hosting a virtual Economic Forecast event with Matthew on January 19th. Stay tuned for more information.Overall, this is a positive outlook weighted with some real challenges that we still face as we recover from the global pandemic. It is always my goal to help keep my clients well-informed and empower strong decisions. Please reach out if you are curious about how the housing market relates to your goals or if you’d like to attend the virtual economic forecast event with Matthew in January.

Thank you to everyone who donated to our Thanksgiving food drive! Because of your generosity, we were able to give The Volunteers of America Food Banks a check for $3,075 and 2,169 pounds of food! That will provide a total of 3,498 meals for our community.

Food insecurity is one of the most prevalent social issues of our time. VOA food banks, food pantries, and distribution center all exist to tackle hunger in our community and also serve as touchpoints to connect our neighbors with other basic needs.Thank you!

This holiday season, I invite you to join me in this tangible way of showing gratitude and support to our healthcare workers, who have worked so long and hard under the most difficult circumstances.In tandem with The Windermere Foundation and local non-profit We Got This Seattle, my office is collecting donations that will be used to purchase meals from local restaurants. We will be personally delivering these meals over three weeks to a coordinated point person at Providence Hospital in Everett, Swedish Edmonds, and UW Medical Center-Northwest. Meals and treats will be distributed to frontline workers such as nurses, doctors, respiratory therapists, and cleaning staff.All funds collected through:12/6-13 will provide meals to Providence Everett12/14-20 will provide meals to Swedish Edmonds12/21-27 will provide meals to UW Medical Center – Northwest>> Click here to donate!Thank you for your generous gifts in support of our community.Happy Holidays!

Monthly Newletter • November 13, 2021

Monthly Real Estate Newsletter – November 2021

by Travis DeFries

The recent news of Zillow’s plan to shut down their iBuyer program due to a $328 million loss in the third quarter has heads spinning in the real estate world and on Wall Street. Sadly, Zillow plans to eliminate 25% of its workforce because of its decision to move away from the practice of purchasing and re-selling homes due to their mismanagement of property price evaluations. “Fundamentally, we have been unable to predict the future pricing of homes to a level of accuracy that makes this a safe business to be in,” Zillow CEO Rich Barton. This is a bold statement from a CEO who built their company on a computer algorithm that spits out a home value called, the Zestimate. A Zestimate is an AVM (Automated Valuation Model). The product of an automated valuation technology comes from analysis of public record data and computer decision logic combined to provide a calculated estimate of a probable selling price of a residential property. An AVM generally uses a combination of two types of evaluation, a hedonic model and a repeat sales index. The results of each are weighted, analyzed, and then reported as a final estimate of value based on a requested date. Zillow’s iBuyer program sought to find eager home sellers who wanted a quick, no-nonsense sale. They would present a cash offer based on their algorithm and close on a mutually agreed-upon date. After closing, Zillow would turn these properties around with some improvements and bring them back to the market. This is often labeled a “flip”. The problem was Zillow overpaid for the majority of their purchases which proved that their computer-generated evaluation (AVM) lacks market accuracy. On average, they re-sold these homes for $80,800 less than what they purchased them for. Thorough market research that includes touring the subject and neighboring properties, seeking info from other brokers about the terms of recent sales and overall experience helps to determine accurate market conditions in comparison to the swirl of data used to establish the Zestimate. Computers can’t do this type of in-depth research, nor do they have the instinct to predict shifts in the market, but humans (real estate brokers) can! Often times when I am talking with potential sellers, their Zestimate (or other AVMs) come up in the overall conversation. I understand why, too. This is information that is relatively easy to access and gives the seller a starting point on the value of their home. Where an AVM can become dangerous is when a consumer thinks it’s the be-all, end-all. Even worse, when a consumer makes a major financial decision solely based on this information. According to Zillow, 39% of all Zestimates in the Seattle metro area are not within 5% of the actual value. In fact, they publish an accuracy report that you can access here.In October, the median home price in the Seattle Metro area was $850,000. With 39% of all Zestimates not within 5% of the actual value, that is a beginning margin of error of $42,500! Further, they claim that 82% of their Zestimates are within 10% of the actual value, which is a marked difference – up to $85,000. Where AVMs are incomplete is that the basis of their formula is tax records, which in my experience are often inaccurate. Also, and most importantly, an AVM does not take into consideration the condition of the home, the neighborhood, and other environmental impacts such as school district, road noise, and unsightly neighboring homes, to name a few.So why does the Zestimate exist? Zillow is a publicly-traded company (ZG) and their website is the vehicle to create profit. The Zestimate drives consumers to the website who are often dipping their toes in the pool to see what their home might be worth or searching available homes for sale. When a consumer is searching on Zillow’s website they are surrounded by real estate broker and mortgage broker ads on every page. These real estate brokers and mortgage brokers are paying for that advertising space, which is how Zillow makes its money and why there is a Zestimate. The Zestimate is not a public service, it is a widget to bring eyes to their advertising space which in turn, sells more ads to brokers looking for leads.The moral of the story is this: use Zillow as one of the many tools in your real estate evaluation and search toolbox. Zillow provides a great starting point and contains a ton of information to whet your palate when embarking on a real estate endeavor. However, we live in a time of information overload and we are overstimulated at best. Nothing beats the evaluation and discernment of a knowledgeable and experienced real estate broker to help you determine accuracy, which will lead to the empowerment of clarity. At Windermere, we like to call this, The Human Algorithm.If you are curious about the value of your home in today’s market, please contact me. I can provide an annual real estate review of all of your real estate holdings, and can even dive deep into a complete comparative market analysis if you would find that helpful. It is my goal to help keep my clients informed and empower strong decisions.

Zillow® and Zestimate® are trademarks of Zillow, Inc.

Matthew Gardner is the Chief Economist at Windermere and a sought-after expert on real estate, both locally and across the country. Every quarter, Matthew breaks down the real estate market by region and provides the Gardner Report; you can read this quarter’s full report here. If you have any questions or curiosity about the current real estate market that you would like to discuss, please reach out. Are you curious about the value of your home, are you contemplating a move, or considering a new purchase? I can help! It is always my goal to help empower my clients to make strong financial decisions and to help them understand how real estate can positively affect their lifestyle.