Community Info • April 16, 2023

South Snohomish County Market Report – Q1 2023

by Travis DeFries

We are seeing signs of price stabilization and some growth after the market correction of 2022! Illustrated on the front is the up-down-up trajectory that home prices have experienced over the last year. While we are in the midst of measuring the negative difference from the peak prices of the first half of 2022 to now, we are still up 12 months over 12 months, and most recently prices are up from last month.

The correction in prices was a result of a 3-point increase in interest rates over the second half of 2022. Data shows the market has recalibrated in 2023 which has increased buyer demand as consumers have become more comfortable with the “new normal”. This has caused prices to stabilize and start to grow month-over-month since January. Days on market are shrinking and sale prices are averaging closer to the list prices, and in some cases are escalating over the list price. It has been an eventful past year highlighting the importance of real-time, accurate information to help empower strong decisions. Moves are motivated by life changes, lifestyle goals, and strategic financial planning. If you or someone you know is curious about how the market relates to these needs, please reach out.

Community Info • April 16, 2023

North King County Market Report – Q1 2023

by Travis DeFries

Community Info • April 16, 2023

Eastside Market Report – Q1 2023

by Travis DeFries

Community Info • April 16, 2023

Seattle Metro Market Report – Q1 2023

by Travis DeFries

Community Info • April 16, 2023

North Snohomish County Market Report – Q1 2023

by Travis DeFries

Community Info • April 16, 2023

South King County Market Report – Q1 2023

by Travis DeFries

Uncategorized • April 2, 2023

Real Estate Newsletter – 03/30/2023

by Travis DeFries

As we round out the first quarter of 2023, three real-time trends to pay close attention to in order to truly understand what is happening in the real estate market are absorption data, interest rates, and inventory levels. Right now, we are in the midst of the market heating up due to seasonality, pent-up buyer demand, and rates finding their new normal. The media will often lag in reporting the latest information (pending sale data) and will latch onto closed sale data, which is outdated. I am here to keep you on the frontline of market activity so you are connected to the most current data to keep you well informed.

Let’s start with absorption data. Month-to-date (3/1/23-3/27/23), days on market are shrinking and sale price to original list price ratios are climbing. This means that houses are selling faster and negotiations are becoming more competitive for buyers. I was able to determine that these trends are fluid from Snohomish County to King County by analyzing four zip codes: 98296 (City of Snohomish), 98020 (Edmonds), 98155 (East Shoreline), 98117 (Ballard).Available inventory is constricting

due to an increase in absorption and new listings lagging. As we head into spring, we will see a seasonal uptick in new listings which will be welcomed by a healthy buyer audience. Month-to-date, inventory levels based on pending sales show a seller’s market (0-2 months). You calculate months of inventory by taking the number of available homes and dividing it by the number of pending sales. If no new homes came to market the trend suggests we would sell out of homes in this amount of time. Month-to-date the actual number of homes available in each zip code is quite limited and a welcome sign for more new listings as we head into Spring. Again, I pulled the data for the four zip codes to represent a sampling of both Snohomish and King Counties.Both of the trends above have been determined by buyers becoming more comfortable with the new normal of interest rates. The correction in the market that we experienced in 2022 was a result of a 3-point increase in interest rates. After prices adjusted to levels that would work with the higher rates, buyers started to return to the market. 2-3% and maybe even 4% interest rates will be folklore we tell our grandchildren about. People that want to make a move have come to terms with adapting to the higher rates and making these important life transitions. Today’s rates are much more in line with the average over the last 30 years.At the start of 2023, the 30-year fixed

mortgage was at 6.48%, then dropped to 5.99% in early February, peaked at 7.1% in early March, and is now back down to 6.54% at press time. Rates have been volatile as the Fed tries to manage inflation. You can access a video below from Matthew Gardner explaining the effect of the Fed and the recent bank failures on interest rates and the real estate market overall.One item to note is that mortgage rates are long-term interest rates, and when you hear about the Fed raising rates they are referring to short-term rates such as car loans, credit cards, and home equity loans. The media does not make that distinction, often confusing the public. In fact, in some cases when the short-term rate has been increased, we have seen mortgage rates drop. Here is a great website to follow to get a real-time read on rates.Interest rates finding their way, the

psychological acceptance of the new normal, and people needing to make moves to adapt to their life changes have led to prices starting to stabilize and even grow in some markets. I pulled the month-to-date median price data for the four zip codes and it appears prices are leveling and growth is happening or will be in the near future. Bear in mind, that the bottom often comes in the form of a bounce before there is a consistent straight shot up. All signs are pointing to recovery from the correction in these areas noted. This growth will be added to the immense long-term price gains we have seen. Currently, 93% of all homeowners in the U.S. have positive home equity and 48% of homeowners have more than 50% equity.During this time of change, it is important that each neighborhood and price point is researched individually. From the four zip code breakdowns above, it is clear that the trends vary. When I am asked the question, “How’s the Market?”, I am always curious to know what you have heard and what you want to learn about. Sweeping statements are dangerous and I am committed to diving into the data to educate my clients on how the trends affect their investments and their lifestyle.With the market correction of 2022 in the rearview mirror and the recovering market of 2023 upon us it is important to understand that opportunity abounds. That opportunity is rooted in research. Solid research and discerning the data gathered help empower strong decisions and build trust. This is my process and my passion and it is all about helping people! If you are curious about how the latest trends match up with your investment and lifestyle goals, please reach out and we can dive in.

You’re invited to our annual Paper Shredding Event & Food Drive. We partner with Confidential Data Disposal to provide a safe, eco-friendly way to reduce your paper trail and help prevent identity theft. Saturday, April 15th, 10AM to 2PM*4211 Alderwood Mall Blvd, LynnwoodBring your sensitive documents to be professionally destroyed on-site. Limit 10 file boxes per visitor. This is a paper-only event. No x-rays, electronics, recyclables, or any other materials. We will also be collecting non-perishable food and cash donations to benefit Volunteers of America Western Washington food banks. Donations are not required, but are appreciated. Hope to see you there! *Or until the trucks are full

Monthly Newletter • March 11, 2023

Real Estate Newsletter – 03/08/2023

by Travis DeFries

The financial benefits of owning real

estate significantly outweigh the option of renting. Renting is certainly a must for some, and is what one may have to do while they build up to becoming a homeowner. Becoming a homeowner requires solid employment, good credit, and some type of down payment. Savings can all be built over time and if achieved can provide incredible long-term financial growth by becoming a down payment on a home. In fact, many people think you need a 20% down payment in order to purchase a home and that is just not the case. There are various loan programs available requiring much less than 20% down.The savings of your nest egg that

you would put into a home purchase is the single most powerful investment vehicle to build household wealth and financial security. Did you know that the average net worth of a homeowner is 40 times higher than one of a renter? There are many factors that play into this statistic. Take in my outline below as well as the video link below from Matthew Gardner, Windermere’s Chief Economist who also weighs in on this subject.Over time, your mortgage payment becomes easier to afford. Fixed mortgage payments do not go up, but rent inevitably does. While your mortgage stays fixed your income often increases, making the monthly payment easier to handle.Real estate is a solid long-term investment. Historical home price appreciation is on your side. The historical average is 3-5%, and in some cases, that figure has been much higher. Only once, during the Great Recession, did we see multiple-year price declines. However, the people that held onto those homes since that time have been handsomely rewarded with phenomenal equity. Real estate is a long-term hold investment that provides shelter and financial opportunity. You cannot live in your stock certificate. Real estate is an investment that you can touch, feel, smell, live in, and improve! You have to live somewhere and allocate a portion of your income to shelter. Why not pay your shelter budget towards an asset that is growing for your financial future? You can also make improvements to your property that you can enjoy which will also increase the value of the asset. Diversifying your investments is important, stocks are a natural option, but real estate should be in the mix as well. I have even seen first-time buyers keep their starter home as a rental, move on to their next home and start to build their own real estate portfolio.Every mortgage payment goes towards paying down your loan principle. Right now, mortgage rates are up a bit, leading to conversations about the impact of rates. One thing I know for sure is that the interest rate on rent is 100%! None of that money ever comes back to you. Your mortgage payment goes back into your asset and becomes a forced savings account. This piles your money safely away all while your asset is appreciating year-over-year which builds long-term wealth.Owning real estate provides tax benefits. Depending on the state you live in, you can write off your real estate taxes and mortgage interest. This can offset your tax burden and save you significant money every year. There are also capital gains tax exemptions on your primary residence that you have lived in for at least two years of the last 5 years (make sure to consult your tax expert on the details). You can have tax-free gains of up to $250,000 for a single person and up to $500,000 for a married couple. This is a wonderful opportunity to move your wealth towards your future when planning for big lifestyle improvements such as retirement.I will leave you with this: it can seem overwhelming to take on the task of buying your first home or to prepare to own again after renting. Start by understanding that shopping in the price range you can afford matters. Often times people want to get their forever home right off the bat and that makes the accomplishment of becoming a homeowner much harder. Figure out how much you can afford now and put your nest egg to work sooner rather than later to start building wealth. Maybe it is a small condo that fits your budget now, but over time the money saved and the equity built can turn into the down payment needed to purchase your forever home.Owning real estate is a step-by-step journey that takes time and sacrifice. Your patience and commitment will be rewarded with compounded savings which will lead to building long-term wealth. It also creates a fond memory lane of that first condo or small house that you loved making a home, which then became the vehicle to afford the next home that better suited your lifestyle. If you are curious about the prospect of owning real estate or have a special person in your life who is poised to become a homeowner, please reach out. It is my goal to help people understand the process, align them with a trusted lender, help them make strong financial decisions, and match their living situation to their lifestyle.

Monthly Newletter • February 15, 2023

Real Estate Newsletter – 02/15/2023

by Travis DeFries

Markets change fast! We experienced a substantial shift in 2022 with the first half of the year feeling like a completely different market than the second half of the year. A 3-point increase in interest rate was the main culprit along with inflation and affordability for the 2022 market correction we experienced. A market correction is defined by prices reverting by 10% or more. In January 2022 the median price in Snohomish County started at $700,000 then peaked at $830,000 in April, and ended the year at $689,000 (-17%). In King County, the median price started at $794,000 then peaked at $1,000,000 in May, and ended the year at $820,000 (-18%). Bear in mind that the December 2022 median price was also up 17% over the January 2021 median price in Snohomish County and up 12% in King County. This illustrates that the correction was only off the peak of spring 2022 not off of the strong equity that was built prior to that intense run-up.

As we find ourselves in mid-Q1 2023 all data points and anecdotal stories are pointing to the worst of the market correction being behind us and yet again, another shift. Interest rates peaked in November 2022 at just over 7% and have since come down. Experts are predicting rates to find themselves under 6% as we travel through the easing of inflation in 2023.

The well-defined price correction and interest rates lowering have brought many buyers back to the market. In fact, pending sales in Snohomish County in January 2023 were up 52% over December 2022 and were up 3% over January 2022. Even more so an indicator: pending sales are up 80% month-to-date (MTD) in February over January 2023! In King County, pending sales in January 2023 were up 63% over December 2022 and were up 2% over January 2022, and up 61% MTD over January 2023. This pent-up demand has come at a time when listing inventory is seasonally scarce and has tilted the market from a balanced market back to a seller’s market in many areas. Months of inventory is how we define market conditions. 0-2 months is a seller’s market, 2-4 months a balanced market, and 4 months plus a buyer’s market. In Snohomish County, we ended 2022 with 2.3 months of inventory based on pending sales, and in January 2023 had 1.2 months, and MTD is sitting at 0.9 months. In King County, we ended 2022 with 2.6 months of inventory based on pending sales, and in January 2023 had 1.3 months, and MTD is sitting at 1.1 months.After months of price reductions and searching for the bottom, we are now starting to come across some multiple offers and price increases. This is leaving clues that the bottom was reached and that we are now stabilizing and looking toward the predicted growth that 2023 has to offer. Buyers are eager for additional selection and will welcome the spring influx of new listings. If sellers are ready, they should not hesitate. Should rates lower as the new listings arrive, sellers will be well supported by a willing buyer audience ready to absorb any growth in inventory.Buyers need to understand that rates and prices are closely related and that waiting for rates to hit a certain point may be detrimental to securing a stabilized price. Many buyers are heading into today’s market with a refinance in mind down the road. They are aware that prices will rise as rates lower, so they are looking to obtain a lower price now with a higher rate and once the rate hits their desired level, they will refinance to lower their payment all while holding on to their lower basis point.For example, if a buyer bought now at $750,000 with 20% down and a rate of 6.5% their monthly principal and interest payment would be $3,792. If a year from now, rates are at 5.5% and prices are up 5% and that same buyer refinances, they will save $364 a month on their payment and $37,500 in principle. This would also be $192 lower than what the payment would be at the appreciated price with the lower rate!

Real estate moves are driven by life changes. It was completely understandable that many buyers took a pause as the market corrected. Now that the market is showing signs of stabilizing these life changes are pushing buyers to find the home that better fits their lifestyle. Sellers need to keep in mind that their homes need to be priced right and show up to the market well-appointed and properly prepared to get the best results.We’ve learned a lot over the last year. Once the historical 3-4% interest rate disappeared, consumers had to adapt to the new normal. Now that consumer sentiment is leaning towards a resurgence in demand, opportunity abounds for sellers who are ready to make a move. Please reach out if you are curious about the market trends and want to discuss your goals. It is always my goal to help keep my clients well-informed and empower strong decisions. 2023 is going to be a great year for real estate, I can feel it!

At Windermere we help people buy and sell homes, but we also help build community. I’m proud to support the Windermere Foundation which has raised over $50 million in the past 34 years for low-income and homeless families right here in our local community.

Community Info • January 27, 2023

Western Washington Gardner Report – Q4 2022

by Travis DeFries

Q4 2022 Western Washington Real Estate Market Update

by Matthew Gardner

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

Although the job market in Western Washington continues to grow, the pace has started to slow. The region added over 91,000 new jobs during the past year, but the 12-month growth rate is now below 100,000, a level we have not seen since the start of the post-COVID job recovery. That said, all but three counties have recovered completely from their pandemic job losses and total regional employment is up more than 52,000 jobs. The regional unemployment rate in November was 3.8%, which was marginally above the 3.7% level of a year ago. Many business owners across the country are pondering whether we are likely to enter a recession this year. As a result, it’s very possible that they will start to slow their expansion in anticipation of an economic contraction.

Western Washington Home Sales

❱ In the final quarter of 2022, 12,711 homes sold, representing a drop of 42% from the same period in 2021. Sales were 34.7% lower than in the third quarter of 2022.

❱ Listing activity rose in every market year over year but fell more than 26% compared to the third quarter, which is expected given the time of year.

❱ Home sales fell across the board relative to the fourth quarter of 2021 and the third quarter of 2022.

❱ Pending sales (demand) outpaced listings (supply) by a factor of 1:2. This was down from 1:6 in the third quarter. That ratio has been trending lower for the past year, which suggests that buyers are being more cautious and may be waiting for mortgage rates to drop.

Western Washington Home Prices

❱ Sale prices fell an average of 2% compared to the same period the year prior and were 6.1% lower than in the third quarter of 2022. The average sale price was $702,653.

❱ The median listing price in the fourth quarter of 2022 was 5% lower than in the third quarter. Only Skagit County experienced higher asking prices. Clearly, sellers are starting to be more realistic about the shift in the market.

❱ Even though the region saw aggregate prices fall, prices rose in six counties year over year.

❱ Much will be said about the drop in prices, but I am not overly concerned. Like most of the country, the Western Washington market went through a period of artificially low borrowing costs, which caused home values to soar. But now prices are trending back to more normalized levels, which I believe is a good thing.

A map showing the real estate home prices percentage changes for various counties in Western Washington. Different colors correspond to different tiers of percentage change. Grays Harbor and Whatcom Counties have a percentage change in the -6.5% to -3.6%+ range, Clallam, Jefferson, King, and Skagit counties are in the -3.5% to -0.6% change range, Snohomish and Pierce are in the -0.5% to 2.4% change range, Mason, Thurston, Island, and Lewis counties are in the 2.5% to 5.4% change range, and San Juan County is in the 5.5%+ change range.

Mortgage Rates

Rates rose dramatically in 2022, but I believe that they have now peaked. Mortgage rates are primarily based on the prices and yields of bonds, and while bonds take cues from several places, they are always impacted by inflation and the economy at large. If inflation continues to fall, as I expect it will, rates will continue to drop.

My current forecast is that mortgage rates will trend lower as we move through the year. While this may be good news for home buyers, rates will still be higher than they have become accustomed to. Even as the cost of borrowing falls, home prices in expensive markets such as Western Washington will probably fall a bit more to compensate for rates that will likely hold above 6% until early summer.

A bar graph showing the mortgage rates from Q4 2020 to the present, as well as Matthew Gardner's forecasted mortgage rates through Q4 2023. After the 6.79% figure in Q4 2022, he forecasts mortgage rates dipping to 6.27% in Q1 2023, 6.09% in Q2 2023, 5.76% in Q3 2023, and 5.42% in Q4 2023.

Western Washington Days on Market

❱ It took an average of 41 days for homes to sell in the fourth quarter of 2022. This was 17 more days than in the same quarter of 2021, and 16 days more than in the third quarter of 2022.

❱ King County was again the tightest market in Western Washington, with homes taking an average of 31 days to find a buyer.

❱ All counties contained in this report saw the average time on market rise from the same period a year ago.

❱ Year over year, the greatest increase in market time was Snohomish County, where it took an average of 23 more days to find a buyer. Compared to the third quarter of 2022, San Juan County saw average market time rise the most (from 34 to 74 days).

A bar graph showing the average days on market for homes in various counties in Western Washington for Q4 2022. King County has the lowest DOM at 31, followed by Kitsap at 45, Island and Snohomish at 35, Whatcom, Thurston, and Skagit at 36, Pierce at 37, Clallam at 38, Jefferson at 40, Mason at 43, Grays Harbor at 46, Lewis at 49, and San Juan at 74.

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 regional economy is still growing, but it is showing signs of slowing. Although this is not an immediate concern, if employees start to worry about job security, they may decide to wait before making the decision to buy or sell a home. As we move through the spring I believe the market will be fairly soft, but I would caution buyers who think conditions are completely shifting in their direction. Due to the large number of homeowners who have a mortgage at 3% or lower, I simply don’t believe the market will become oversupplied with inventory, which will keep home values from dropping too significantly.

A speedometer graph indicating a balanced market, barely leaning toward a seller's market in Western Washington in Q4 2022.

Ultimately, however, the market will benefit buyers more than sellers, at least for the time being. As such, I have moved the needle as close to the balance line as we have seen in a very long time.

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.