The headlines are swirling about the real estate market. The environment is shifting from a seller’s market to a balanced market, creating opportunities for buyers and holding sellers to exacting standards. The primary factors affecting this shift are inventory levels, interest rates, and consumer confidence. These are the same factors that commonly influence the market conditions, and for the first time since 2018, months of inventory have reached their highest peak. Interest rates have remained stubborn, hovering around 7% for the last six months, and the stock market drama in April took a toll on consumer sentiment.

The good news is that the stock market has fully recovered from the April decline; however, the residual effects are likely to have some lasting impact on consumer confidence as they plan their financial decisions. Other good news for buyers is the increase in selection, which allows for more negotiations and can provide the option of a buyer credit. In King County, there were 62% more homes for sale in May compared to the same month last year, and 33% more than in April.  In Snohomish County, there were 48% more homes for sale in May compared to the same month last year, and 32% more than in April.  It is also important to note that each sub-market, established by price point, location, and property type, can vary.  We are currently seeing a mix of sellers’, balanced, and buyers’ markets across the region as inventory increases.

We surveyed our office’s pending sales over the last two months, and one in three transactions had a buyer credit, with an average credit of $14,000. This is where a credit to the buyer from the seller is baked into the contract. Often, this accompanies a full-price offer (from the list price), and sometimes the offer is below the list price. These credits are used to offset the buyer’s closing costs, which leaves more money in the buyer’s pocket post-closing for improvements, a larger down payment, or savings. We are also seeing savvy buyers use these credits to buy down their interest rate, thereby saving on their monthly payment.

A permanent rate buydown requires approximately 3% of the purchase price to lower the rate by one point for the 30-year term of the loan. A good rule of thumb to remember is that every 1-point decrease in rate equals a 10% increase in buying power. For example, if the rate is 7% and you are qualified for a home at $800,000, and the rate were to decrease by 1 point to 6%, you could now afford $880,000 with a very similar payment. Another way to look at this is simply the monthly payment itself. An $800,000 purchase with 20% down and a 6% interest rate would save a buyer $420.82 a month compared to the payment at 7%.

A permanent buydown is a valuable tool, as is a temporary buydown. It is one of the most powerful tools in today’s market. It costs far less than a permanent buy-down. Here is an example: let’s say you are shopping for a house and have an $800,000 budget, along with a 20% down payment (btw, this works for any down payment amount), given today’s interest rate of 7%. The monthly principal and interest payment would be $4,257.94. You could do a 2-1 buydown (2 points lower in year one and 1 point lower in year 2), which would have your payment in year one be based on an interest rate of 5% with a monthly principal and interest payment of $3,435.66 – a savings of $822.28 a month. For year two, the monthly principal and interest would be based on 6%, resulting in a monthly payment of $3,837.12, a $420.82 savings. The total savings in monthly payments with the 2-1 buy-down over the two years would be $14,917.18.

The roughly $15,000 in monthly payment savings is paid upfront at closing and can be provided as a buyer credit by the seller. The buyer still needs to qualify based on the 7% interest rate, as the payments will be converted to those based on the 7% rate in year three and moving forward. The buyer may never have to pay the 7% amount if rates decrease and they can refinance within the two years, permanently locking in a rate below 7%. A bonus is that if the entire $15,000 credit has not been used yet, in some cases, those unused funds can be applied towards the refinance.  The latest expert rate predictions are below.  While we don’t have a crystal ball to predict when this will happen, I do know that when it does, there will be more buyer competition in the market, which will affect negotiations.

A peculiar aspect of consumer sentiment is that when there is more inventory and the market becomes more balanced, as opposed to a tight market where buyers are competing for limited choices, it confuses buyers. They tend to slow down and think something may be wrong. Savvy buyers will zero in on a house they want and use this time to negotiate better terms for due diligence and possible credits, rather than escalating prices and accepting no contingencies that often occur in a seller’s market. Another benefit to a balanced market is the return of home sale contingencies. This balance of inventory is necessary to introduce this option, and it has been quite a while since we’ve seen this happen. Although they are not commonplace, they are on the rise. This enables the buyer to purchase contingent on the successful sale and closing of their current home. It was how real estate used to be done, and a great option if all lines up.

Now, how does this increase in inventory affect sellers? As mentioned above, it raises the bar on property preparation, accurate price positioning, and overall appeal. When there are more choices, you need to stand out! That is why homes that meet these criteria continue to sell for more than their list price and receive multiple offers. Homes that are brought to market, neutralized, staged, free of deferred maintenance, and appropriately priced are selling quickly. If a home has modern improvements, that helps too, as many buyers prefer move-in condition as they are often using the bulk of their savings for a down payment to create the lowest possible monthly payment.

So, what is appropriate price positioning? I will start with the big picture first.  Sellers must maintain a long-term perspective and assess their equity growth during their ownership. Single-family residential prices in King County have increased by 91% over the past decade and by 44% over the past five years. Single-family residential prices in Snohomish County have increased by 113% over the past decade and by 52% over the past five years. Sellers have made remarkable gains, and success should not be measured by the froth of a seller’s market, but by the gains of a sale in any market. The big-picture approach often leads to a smooth and profitable transition from one house to the next.

Now, back to the tactics of price positioning.  Annual prices typically peak in the spring, and after reviewing the latest May 2025 figures, it appears we have hit the peak for the year. This is about 30-45 days earlier than in 2024 and previous years. Additionally, year-over-year prices are flat and slightly down from 2024, so sellers should consider this when choosing their price with their broker. This, along with the increase in selection, means that sellers need to determine the value point at which a buyer is willing to make an offer when they have more choices. They cannot price based on last year’s market, which had different environmental factors.

One thing we can always count on in life is change. The real estate market is no different. In the case of our local real estate market, this change sits on the shoulders of monumental growth.  There is always an opportunity within the change, and staying close to the data helps unearth this. I’m encouraged by the balance in the market and look forward to helping my clients navigate their life transitions in the most effective way possible. Research, data, and listening to my client’s goals are the backbone of my approach. If you or someone you know is experiencing significant life changes that a move could help with, please reach out. We can discuss the big picture, apply the data, and chart a custom plan together. It is always my goal to help keep my clients well-informed and empower them to make strong decisions.

Last week, my office hosted a panel discussion on the hot topic of homeowners insurance. In the wake of several natural disasters, supply chain issues, and inflation on building materials, homeowners insurance is currently experiencing a “hard market”. Non-renewal and cancellation rates are rising, some carriers are leaving certain states, and specific aspects of a home, like wood-shake roofs, are being more scrutinized. This has caused coverage to increase in cost and, in some cases, not be available. We assembled this panel to get this critical real-time information in front of our clients, so they can adequately care for their home(s).

As your trusted real estate advisor who helps you transact when it is time for a move, I also see it as my role to help you protect your asset through education. While I am not an insurance expert, the esteemed panel of insurance professionals we invited to discuss the state of the homeowners insurance market is an example of a trusted advisor in the homeowners insurance field. Below are my top takeaways from the hour-long guided discussion. You can also access the event recording below, which also includes 30 minutes of Q&A from the audience.

What is RCV (Replacement Cost Value), and why is it important?
RCV is the dollar amount established to determine the cost of rebuilding your home to its pre-damage condition. This is different from market value, which includes the land and location premiums. RCV estimates the cost of materials and labor to restore or rebuild your home at today’s prices. This number is critical, and that is why it is important to always let your carrier know when you have made changes or improvements to your home. NOTE: Some carriers use ACV (Actual Cost Value), but this is not preferred as it takes into account depreciation.

Request an annual review of your policy with your carrier.
Most carriers have some built-in annual coverage adjustments, but they are often insufficient. The homeowner is responsible for reporting upgrades, additions, and improvements to their carrier so the increase in investment translates to coverage. Record-keeping of invoices and receipts helps establish accurate replacement value. Notifying your carrier of these changes will capture the appropriate coverage.

Request and review the Declaration Page in your policy.
The declaration page in your policy provides a detailed overview of your coverage. It lists what is covered, the RCV, notes additional riders, and outlines your premiums and deductibles. This is a valuable tool for helping you understand your policy and ensure that everything you have done to your home is included. You can easily request this from your carrier, and it should lead the discussion at your annual review.

Coverage vs. cost matters!
Carriers often advertise and try to appeal to customers based on the affordability of their rates. While no one wants to overpay for insurance, you must analyze the cost-benefit of adequate and complete coverage over the cheapest policy. Oftentimes, the cheapest premiums will lead to your home being underinsured.

Consider adding specific riders for additional coverage.
Unfortunately, earthquake and water backup riders are not included in your basic policy. However, you can purchase these specific riders to add them to your policy and be covered should damage be caused by an earthquake or your sewer line backing up into your home and causing a flood. Adding riders for personal property, such as fine jewelry, is common. These will be listed on your declaration page for an easy accounting of your coverage.  Make sure you ask your insurance professional what other rider options are available, so you don’t miss something you would like covered.

Align your deductible with your claim tolerance.
You want to analyze at what point you would make a claim if something happened to your home.  The theory of only making a claim if the repair or replacement amount is catastrophic is a good rule of thumb to ensure your policy is not dropped, non-renewed, or wildly increased in premium. What is catastrophic for one person may not be for another, so it is a personal preference around your financial comfort. What you don’t want to have happen is to make a claim on something you could handle on your own, and then have something big happen and no longer be covered. Always consult your insurance professional off-the-record before contacting the carrier directly, so your decision-making is not misconstrued as a claims risk.

Maintain your home to protect your premium.
Due to the industry’s tight margins, many carriers are visiting properties and performing drive-by and/or drone inspections to help determine their risk exposure. They are also accessing Google Earth to make these determinations. Homes that do not appear well-maintained are penalized with premium increases and sometimes dropped by their carriers. This is also why opening and reading all mail from your insurance carrier is essential.

The home and the human are considered in the coverage.
The home’s condition will play into the coverage and premiums, as will the human who is purchasing the policy. Carriers will examine a person’s claims history to help determine their risk exposure. It is common to look back 36 months, and if a person has multiple claims in that timeframe, they will have higher premiums and, in some cases, not be able to purchase coverage.

Have a good relationship with your insurance professional.
Whether working with an insurance broker or a captive company, having a consistent relationship with your provider is valuable. They should be available to answer questions, help you decide whether to make a claim, and review your policy and riders annually. You should never call the carrier directly without first contacting your insurance professional. They can help you navigate important decisions that will keep your coverage intact and your premiums manageable.

I hope you found this information useful—I know I did! It drove home my responsibility of managing my policy and ensuring I am adequately insured through communication with my insurance professional. Much like real estate, having a trusted advisor regarding homeowners insurance is crucial. After all, our home is often our largest asset and most prized possession. Protecting it is critical!  Click HERE to access the recording (Passcode: E+gmk9V*) to watch the panel discussion.

As always, please don’t hesitate to reach out if you have any questions or concerns about your property, and I can help guide you to the right answers. I have reputable referrals to multiple insurance professionals that can help you should you need additional contacts. My goal is always to help keep my clients informed and empower them to make strong decisions.

As your trusted real estate advisor, my service to you is beyond the transaction of buying and selling real estate. Your home is your nest egg and often your most significant financial investment, requiring care and attention to maintain and protect it. An important aspect of protecting your home is your Homeowners Insurance Policy. In the wake of several natural disasters over the past five years, insurance carriers have depleted their reserves and had to recalibrate their risk management plans. Carriers have mitigated their risk by analyzing which areas of the country have the highest likelihood of claims, as well as which consumers have the highest claim rates.

The heat map below illustrates the rate of cancelled policies nationwide based on risk, weather patterns, and claims history. Beyond available coverage, it’s essential to understand the scope of your policy and the riders that accompany it. That is why it is essential to have an annual review with your insurance provider, ensuring you are adequately covered and updating your Replacement Cost Value (RCV) as needed.

Furthermore, some carriers are revising their policies, including the states in which they will operate and the products and materials they will insure. For example, in 2025 Safeco/Liberty Mutual will stop writing new policies for condominium, renters, and watercraft insurance in the state of California. This month, they are also capping umbrella limits to $1 million in some states, forcing renewals to lower that level if they had a higher coverage amount. No company is immune to these effects, so it is important to explore your options for the most complete coverage. It is also essential to review all mail from your insurance providers as renewals approach, so you don’t miss any significant changes.

Although I am not an insurance professional, I have connections to some credible insurance professionals who can help you better understand the changing climate. Join me on May 7th for a live webinar featuring a panel of experienced insurance professionals who will share their insights and expertise on today’s rapidly evolving homeowners insurance market.

Windermere North is proud to host this educational webinar, featuring Peter Hong of Allstate Insurance, Alex Busilacchi of Moreland Insurance, and Douglas Olsen of USI Insurance Services.

The first hour will be a guided conversation covering key points and will provide information to shed light on how the volatile environment affects you and the protection of your home. Then we will open up for a live Q&A so you can get your questions answered.

Click the link below to register and receive the Zoom link, or reach out and I can send the registration link to your email. Registration closes May 4th.