Effective January 1, 2024, the statute in Washington that governs real estate brokerage relationships (RCW 18.86) otherwise known as the “Agency Law” – was significantly revised. The revisions modernize the 25-year-old law, provide additional transparency and consumer protections, and acknowledge the importance of buyer representation.

KEY REVISIONS
For decades, real estate brokerage firms were only required to enter into written agency agreements with sellers, not buyers. The Agency Law now requires firms to enter into a written “brokerage services agreement” (agency agreements) with any party the firm represents, both sellers and buyers.

This change is to ensure that buyers (in addition to sellers) clearly understand the terms of the firm’s representation and compensation, much like a listing agreement. The new agreements are called Buyer Brokerage Service Agreements (BBSA) and they are to be initiated in writing prior to or upon rendering real estate brokerage services, such as showing homes.

The services agreement with buyers must include:

• The term of the agreement (with a default term of 60 days and an option for a longer term);
• The name of the broker appointed to be the buyer’s agent;
• Whether the agency relationship is exclusive or non-exclusive;
• Whether the buyer consents to the individual broker representing both the buyer and the seller in the same transaction (referred to as “limited dual agency”);
• Whether the buyer consents to the broker’s designated broker/managing broker’s limited dual agency;
• The amount the firm will be compensated and who will pay the compensation; and
• Any other agreements between the parties.

Last week, my office hosted our 16th Annual Economic Forecast Event featuring Matthew Gardner. Matthew is a sought-after economist focused on the national and local economies and has a deep understanding of the housing market across the country and right in our own backyard. He is an economic advisor for the State of Washington, Governors Council, lectures on real estate economics at the University of Washington, and is found quoted in various media outlets throughout the year as a respected expert. He is certainly a trusted real estate advisor that I look to to stay informed to help educate my clients.

The event was virtual and I have the recording and his PowerPoint in a PDF that I am happy to share with you, please reach out if you would like me to email it to you. So much was shared in his 60-minute presentation that was focused on the national economy and a deep dive into both King and Snohomish Counties, followed by Q & A. I can’t quite cover it all here, but here are some highlights!
 
1. Inflation levels have dropped from their peak and are now tracking with more normalized levels. This has caused interest rates to start to drop, which is a trend he sees continuing in 2024.

2. The U.S. unemployment rate measured at 3.8% at the end of 2023 and is forecasted to rise ever so slightly and remain under the long-term average of 4.5%. In King and Snohomish Counties the unemployment rate averaged 4% at the end of 2023.

3. There is a major labor gap in both King and Snohomish Counties, with job postings heavily outweighing labor supply. Biotech is the darling of the moment which will balance out the IT side in the overall jobs picture.

4. Interest rates are predicted to gradually decrease throughout 2024 as inflation softens. The Fed will slow-play these reductions to get them right, so they do not have to raise them again.

5. The Tri-County area of Snohomish-King-Pierce Counties had massive organic population growth from 2020-2022, much of which was international vs. domestic.

6. Homeowner equity averages 60% in King County and 57.5% in Snohomish County. According to the median price in King County in December 2023 that is $511,200 and $391,000 in Snohomish County. Homeownership proves to have the strongest impact on household wealth.

7. There will NOT be a bubble in the housing market! Given that prices remained stable in 2023 amongst the highest interest rates we’ve seen in two decades along with inflation at a high, the housing market has proven to be a fortuitous economic marker. Rates and inflation are both improving, which will bode well for home values. Our biggest challenge is the lack of inventory and affordability.
 
8. Price growth in King and Snohomish Counties was flat year-over-year (2022 to 2023) after massive growth from 2020-2022, which was positive given the correction in prices and rise in interest rates. Prices are forecasted to modestly increase in 2024. Tight inventory and continued buyer demand will drive this growth while interest rates temper.

Please reach out if you would like to learn more and receive the documents and recording. Also, you can count on me to follow the trends, statistics, and rhythm of the market throughout the year. It is my goal to gain knowledge and understanding so I can help keep you informed. This level of service helps empower my clients to make thoughtful, sound decisions when navigating their investments and big life choices.

The holiday season came and went in a flash with so much going on.  As I reflect on the joys that the holiday season brings, one thing that I love is that our office makes it a priority to come together as a team to lift up our neighbors in need.  Our collective gratitude runs deep and spreading some love and support within our community is the best way we can celebrate everything we are thankful for.
 
This year our holiday food drive brought in $3,115 and 1,787 pounds of food for Volunteers of America Western Washington food banks, just in time for the holidays. The current need in our area is high, and our local food banks need all the help they can get. These numbers are all thanks to friends and clients like you. Thank you for your generosity!
 
Next, we had the absolute joy of helping bring some Christmas magic to homeless/housing-insecure youth in our area. We partnered again this year with WA Kids in Transition, who work with social workers in the Edmonds School District to collect wish lists from students living in shelters, tents, cars, transitional housing, or other temporary housing. Together, the brokers in our office provided gifts and hygiene items for 28 kids.
 
Then we provided $3,700 in grocery gift cards for 13 families, comprised of 60 individuals. Some of these families are unemployed or living in transitional housing, some are walking through grief and loss, and some are coming out of domestic violence. It is our privilege to partner with Pioneer Human Services, to help relieve some of the burdens for these families.
 
Next, we always put together a volunteer group at Christmas House in Everett. Christmas House is a 100% volunteer, non-profit organization that provides an opportunity for qualifying, low-income, Snohomish County parents to select free holiday gifts for their children age infant-18. This is an amazing day helping families in need have a joyful Christmas.
 
You can access any of the links above to learn more about these organizations or to donate yourself.  As we head into 2024, our commitment to giving back to the community that we serve will remain a cornerstone of our business.  Here’s to a happy, healthy, and heartwarming 2024 and beyond.

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data. With over 30 years of professional experience, he provides valuable insights into the real estate industry and housing market, including quarterly regional reports, monthly videos, and timely analysis of the latest trends. Below the Top 10, you will find information inviting you to the live, virtual Economic Forecast Event I am hosting in January. Please reach out if you would like to attend.

1. Still no housing bubble
This was number one on my list last year and, so far, my forecast was spot on. The reason why I’m calling it out again is because the market performed better in 2023 than I expected. Continued price growth, combined with significantly higher mortgage rates, might suggest to some that the market will implode in 2024, but I find this implausible.

2. Mortgage rates will drop, but not quickly
The U.S. economy has been remarkably resilient, which has led the Federal Reserve to indicate that they will keep mortgage rates higher for longer to tame inflation. But data shows inflation and the broader economy are starting to slow, which should allow mortgage rates to ease in 2024. That said, I think rates will only fall to around 6% by the end of the year.

3. Listing activity will rise modestly
Although I expect a modest increase in listing activity in 2024, many homeowners will be hesitant to sell and lose their current mortgage rate. The latest data shows 80% of mortgaged homeowners in the U.S. have rates at or below 5%. Although they may not be inclined to sell right now, when rates fall to within 1.5% of their current rate, some will be motivated to move.

4. Home prices will rise, but not much
While many forecasters said home prices would fall in 2023, that was not the case, as the lack of inventory propped up home values. Given that it’s unlikely that there will be a significant increase in the number of homes for sale, I don’t expect prices to drop in 2024. However, growth will be a very modest 1%, which is the lowest pace seen for many years, but growth all the same.

5. Home values in markets that crashed will recover
During the pandemic, there were a number of more affordable markets across the country that experienced significant price increases, followed by price declines post-pandemic. I expected home prices in those areas to take longer to recover than the rest of the nation, but I’m surprised by how quickly they have started to grow, with most markets having either matched their historic highs or getting close to it – even in the face of very high borrowing costs. In 2024, I expect prices to match or exceed their 2022 highs in the vast majority of metro areas across the country.

6. New construction will gain market share
Although new construction remains tepid, builders are benefiting from the lack of supply in the resale market and are taking a greater share of listings. While this might sound like a positive for builders, it’s coming at a cost through lower list prices and increased incentives such as mortgage rate buy-downs. Although material costs have softened, it will remain very hard for builders to deliver enough housing to meet the demand.

7. Housing affordability will get worse
With home prices continuing to rise and the pace of borrowing costs far exceeding income growth, affordability will likely erode further in 2024. For affordability to improve, it would require either a significant drop in home values, a significant drop in mortgage rates, a significant increase in household incomes, or some combination of the three. But I’m afraid this is very unlikely. First-time home buyers will be the hardest hit by this continued lack of affordable housing.

8. Government needs to continue taking housing seriously
The government has started to take housing and affordability more seriously, with several states already having adopted new land use policies aimed at releasing developable land. In 2024, I hope cities and counties will continue to ease their restrictive land use policies. I also hope they’ll continue to streamline the permitting process and reduce the fees that are charged to builders, as these costs are passed directly onto the home buyer, which further impacts affordability.

9. Foreclosure activity won’t impact the market
Many expected that the end of forbearance would bring a veritable tsunami of homes to market, but that didn’t happen. At its peak, almost 1-in-10 homes in America were in the program, but that has fallen to below 1%. That said, foreclosure starts have picked up, but still remain well below pre-pandemic levels. Look for delinquency levels to continue rising in 2024, but they will only be returning to the long-term average and are not a cause for concern.

10. Sales will rise but remain the lowest in 15 years
2023 will likely be remembered as the year when home sales were the lowest since the housing bubble burst in 2008. I expect the number of homes for sale to improve modestly in 2024 which, combined with mortgage rates trending lower, should result in about 4.4 million home sales. Ultimately though, demand exceeding supply will mean that sellers will still have the upper hand.