Local Market Update – November 2017

Prices in our area have now been rising faster than anywhere in the country for twelve months. Sellers seem to be getting the message that now is a good time to put their home on the market. There was an increase in new inventory in October, but with homes selling rapidly, there still aren’t enough properties to meet demand. As a result, counties throughout the Puget Sound area saw year-over-year price increases in the double digits.

Seattle

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Seattle remains the hottest real estate market in the country, with prices rising here at more than double the national rate. Rents in Seattle are also rising faster than almost anywhere else in the country, pushing more people into the home buying market. High demand and slim supply helped boost the median price of a single-family home nearly 18 percent to $735,000.

Eastside

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The median price for a single-family home on the Eastside rose 10 percent from a year ago to $845,000. Homes in West Bellevue hit a new record median price of $2.6 million. Despite soaring prices, demand has remained strong in this desirable area. And the continued robust economy makes it unlikely that home prices here will cool any time soon.

King County

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The number of new listings in King County increased at the highest rate in more than a year. But, they were grabbed up quickly, with most homes selling in well under 30 days. The shortage of homes for sale propelled prices up, with the median home price in King County jumping 15 percent over the same time last year to $630,000.

Snohomish County

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The median price of a single-family home in Snohomish County in October was $440,000, an increase of 14 percent over the prior year. The market here may be moderating slightly. Brokers note that while multiple offers are continuing, listings are experiencing longer market times and fewer above-list price offers.

Posted on 11/16/2017 at 9:32 AM
Grace Currier | Category: Local Market News

The Gardner Report – Third Quarter 2017

Economic Overview

The Washington State economy added 79,600 new jobs over the past 12 months—an impressive growth rate of 2.4%, and well above the national growth rate of 1.2%. However, as we anticipated in last quarter’s report, we continue to see a modest slowdown in the growth rate as the state grows closer to full employment. Growth has been broad-based, with expansion in all major job sectors other than Aerospace (a function of a slowdown at Boeing). Given the current rate of expansion, I am raising my employment forecast and now predict that Washington will add 81,000 new jobs in 2017.

Given the robust job market, it is unsurprising that the state unemployment rate continues to fall. The current unemployment rate in Washington State is 4.6% and we are essentially at full employment. Additionally, all counties contained within this report reported either a drop or stability in their unemployment rate from a year ago. I maintain my belief that the Washington State economy will continue to outperform the U.S. as a whole. Given such a strong expansion, we should also expect solid income growth across Western Washington.

Home Sales Activity

  • There were 25,312 home sales during the third quarter of 2017. This is an increase of 3.6% over the same period in 2016.
  • Clallam County maintains its number one position for sales growth over the past 12 months. Only four other counties saw double-digit gains in sales. This demonstrates continuing issues with the low supply of listings. There were modest declines in sales activity in six counties.
  • The market remains remarkably tight with listing inventory down by 14.2% when compared to the third quarter of 2016. But inventory is up a significant 32% compared to the second quarter of this year. Pending sales rose by 5.2% over the same quarter a year ago, which suggests that closings in Q4 will still be robust.
  • The key takeaway from this data is that inventory is still very low, and the situation is unlikely to improve through the balance of the year.

Home Prices

  • Given tight supply levels, it is unsurprising to see very solid price growth across the Western Washington counties. Year-over-year, average prices rose 12.3% to $474,184. This is 0.9% higher than seen in the second quarter of this year.
  • With demand far exceeding supply, price growth in Western Washington continues to trend well above the longterm average. As I do not expect to see the new home market expand at any significant pace, there will be continued pressure on the resale market, which will cause home prices to continue to rise at above-average rates.
  • When compared to the same period a year ago, price growth was most pronounced in Grays Harbor County where sale prices were 20.1% higher than the third quarter of 2016. Nine additional counties experienced double-digit price growth.
  • Mortgage rates in the quarter continue to test the lows of 2017, and this is unlikely to change in the near-term. This will allow home prices to escalate further but I expect we will see rates start to rise fairly modestly in 2018, which could slow price growth.

Days on Market

  • The average number of days it took to sell a home in the quarter dropped by eight days when compared to the same quarter of 2016.
  • King County continues to be the tightest market, with homes taking an average of 17 days to sell. Every county except San Juan saw the days on market drop from the same period a year ago.
  • This quarter, it took an average of 43 days to sell a home. This is down from the 51 days it took in the second quarter of 2016 and down by 8 days from the second quarter of this year.
  • At some point, inventory will start to grow and this will lead to an increase in the average time it takes to sell a house. However, I do not expect that to happen at any time soon. So we remain in a seller’s market.

Conclusions

This speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors. For the third quarter of 2017, I have left the needle at the same point as the second quarter. Though price growth remains robust, sales activity has slowed very slightly and listings jumped relative to the second quarter. That said, the market is very strong and buyers will continue to find significant competition for accurately priced and well-located homes.

 

Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has more than 30 years of professional experience both in the U.S. and U.K.

 

This article originally appeared on the Windermere.com blog.

Posted on 11/02/2017 at 11:34 AM
Grace Currier | Category: Local Market News

Tech Hubs Still Hot in National Housing Market

The Seattle area continues to be an outlier in the national housing market. In May the price of single-family homes in the area increased by 13.3 percent year-over-year, more than double the national average. That marked the ninth month in a row in which Seattle experienced the biggest year-over-year increase in home prices. According to Curbed, there is a definite link between our hot housing market and the other defining feature of our region – the tech industry.

Reports about significant price growth in other tech hubs such as Portland, Denver, and of course San Francisco help confirm the correlation. This is because the tech industry has brought people to these cities in massive numbers – in Seattle’s case 1,000+ people per week – and they are all looking for homes in competition with locals.

Finance expert David Blitzer sums it up saying, “A larger population combined with more people working leads to higher home prices.” He goes on to say that even though U.S. home prices continue to climb and are outpacing both inflation and wages, we are not headed towards a bubble.

Suffice it to say, the tech industry is probably here to stay and people will continue flocking to our area for jobs and housing. Your best option for success in our frenzied market is working with a real estate professional. Reach out to me to talk about how I can put my expertise and the power of Windermere to work for you.

Source: Curbed

Posted on 08/24/2017 at 9:41 AM
Grace Currier | Category: Local Market News

The Gardner Report – Second Quarter 2017

Economic Overview

The Washington State economy has been expanding at a rapid pace but we are seeing a slowdown as the state grows closer to full employment. Given the solid growth, I would expect to see income growth move markedly higher, though this has yet to materialize. I anticipate that we will see faster income growth in the second half of the year. I still believe that the state will add around 70,000 jobs in 2017.

Washington State, as well as the markets that make up Western Washington, continue to see unemployment fall. The latest state-wide report now shows a rate of 4.5%—the lowest rate since data started to be collected in 1976.

I believe that growth in the state will continue to outperform the U.S. as a whole and, with such robust expansion, I would not be surprised to see more people relocate here as they see Washington as a market that offers substantial opportunity.

Home Sales Activity

  • There were 23,349 home sales during the second quarter of 2017. This is an increase of 1.1% from the same period in 2016.
  • Clallam County maintains its position as number one for sales growth over the past 12 months. Double-digit gains in sales were seen in just three other counties, which is a sharp drop from prior reports. I attribute this to inventory constraints rather than any tangible drop in demand. The only modest decline in sales last quarter was seen in Grays Harbor County.
  • The number of homes for sale, unfortunately, showed no improvement, with an average of just 9,279 listings in the quarter, a decline of 20.4% from the second quarter of 2016. Pending sales rose by 3.6% relative to the same quarter a year ago.
  • The key takeaway from this data is that it is unlikely we will see a significant increase in the number of homes for sale for the rest of 2017.

Home Prices

  • Along with the expanding economy, home prices continue to rise at very robust rates. Year-over-year, average prices rose 14.9%. The region’s average sales price is now $470,187.
  • Price growth in Western Washington continues to impress as competition for the limited number of homes for sale remains very strong. With little easing in supply, we anticipate that prices will continue to rise at above long-term averages.
  • When compared to the same period a year ago, price growth was most pronounced in San Juan County where sale prices were 29.2% higher than second quarter of 2016. Eight additional counties experienced double-digit price growth.
  • The specter of rising interest rates failed to materialize last quarter, but this actually functioned to get more would-be buyers off the fence and into the market. This led to even more demand which translated into rising home prices.

Days on Market

  • The average number of days it took to sell a home in the quarter dropped by 18 days when compared to the same quarter of 2016.
  • King County remains the tightest market; homes, on average, sold in a remarkable 15 days. Every county in this report saw the length of time it took to sell a home drop from the same period a year ago.
  • Last quarter, it took an average of 48 days to sell a home. This is down from the 66 days it took in the second quarter of 2016.
  • Given the marked lack of inventory, I would not be surprised to see the length of time it takes to sell a home drop further before the end of the year.

Conclusions

This speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors. For the second quarter of 2017, I moved the needle a little more in favor of sellers. To define the Western Washington market as “tight” is somewhat of an understatement.

Inventory is short and buyers are plentiful.

Something must give, but unless we see builders delivering substantially more units than they have been, it will remain staunchly a sellers’ market for the balance of the year.

Furthermore, increasing mortgage rates have failed to materialize and, with employment and income growth on the rise, the regional housing market will continue to be very robust.

 

Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has over 25 years of professional experience both in the U.S. and U.K.

 

This article originally appeared on the Windermere.com blog.

Posted on 07/28/2017 at 10:08 AM
Grace Currier | Category: Local Market News

The Urbanization of Downtown Bellevue

When you hear of a city that is “something between an urban jungle and the classic picture of suburbia,” Bellevue may not be the first place that comes to mind. However, that’s exactly how one young couple describes downtown Bellevue in a recent article from The Seattle Times – and they aren’t the only ones.

When and how did downtown Bellevue transform into a dense, urban, mini-Seattle?

According to the article, downtown Bellevue is the fastest-growing neighborhood in the city, so much like the growth in Seattle it happened fairly quickly. Most of it has occurred over the past four years as developers have built more than a dozen new apartment projects in the neighborhood – and more are in the works. Permit data from the city shows that since the latest development cycle began in 2013, downtown has seen $800 million worth of new projects come up and $100 million more about to begin.

The current wave of projects is a little different than the last. This time the surge is mostly apartments, which are seen as a safer investment, but at least two companies are planning the city’s first new condos in a decade. Additionally, office construction in this current development cycle has added 1.5 million square feet of office space to downtown, most of which has already been leased.

Residents of downtown have been experiencing the effects of this growth and they are welcoming some changes more than others. Millennials are starting to think of downtown Bellevue as a lively, energetic, interesting neighborhood and residents and visitors have given the area high marks for safety and cleanliness. Less welcome changes include added gridlock on the roads and an increase in housing costs.

Luckily, our region is no stranger to adjusting to expansion so the future of Bellevue looks bright.

Read the full article from The Seattle Times.

Posted on 05/05/2017 at 1:54 PM
Grace Currier | Category: Local Market News

The Gardner Report – Fourth Quarter 2016

Economic Overview

Washington State finished the year on a high with jobs continuing to be added across the market. Additionally, we are seeing decent growth in the area’s smaller markets, which have not benefitted from the same robust growth as the larger metropolitan markets.

Unemployment rates throughout the region continue to drop and the levels in the central Puget Sound region suggest that we are at full employment. In the coming year, I anticipate that we will see substantial income growth as companies look to recruit new talent and keep existing employees happy.

 

Home Sales Activity

  • There were 19,745 home sales during the fourth quarter of 2016—up by a very impressive 13.4% from the same period in 2015, but 18.7% below the total number of sales seen in the third quarter of the year. (This is a function of seasonality and no cause for concern.)
  • Sales in Clallam County grew at the fastest rate over the past 12 months, with home sales up by 47%. There were also impressive sales increases in Grays Harbor and Thurston Counties. Jefferson County had a fairly modest decrease in sales.
  • The number of available listings continues to remain well below historic averages. The total number of homes for sale in the fourth quarter was down by 13.7% compared to the same period a year ago.
  • The key takeaway from this data is that 2017 will continue to be a seller’s market. We should see some improvement in listing activity, but it is highly likely that demand will exceed supply for another year.

 

Home Prices

  • Demand continued to exceed supply in the final three months of 2016 and this caused home prices to continue to rise. In the fourth quarter, average prices rose by 7.1% but were 0.4% higher than the third quarter of the year. The region’s average sales price is now $414,110.
  • In most parts of the region, home prices are well above historic highs and continue to trend upward.
  • When compared to the fourth quarter of 2015, price growth was most pronounced in Kittitas County. In total, there were eight counties where annual price growth exceeded 10%. We saw a drop in sales prices in the notoriously volatile San Juan County.
  • The aggressive home price growth that we’ve experienced in recent years should start to taper in 2017, but prices will continue to increase at rates that are higher than historic averages.

 

Days on Market

  • The average number of days it took to sell a home in the fourth quarter dropped by 15 days when compared to the fourth quarter of 2015.
  • King County was the only area where it took less than a month to sell a home, but all markets saw decent improvement in the time it took to sell a home when compared to a year ago.
  • In the final quarter of the year, it took an average of 64 days to sell a home. This is down from the 78 days it took in the third quarter of 2015, but up from the 52 days it took in the third quarter of 2016. (This is due to seasonality and not a cause for concern.)
  • We may experience a modest increase in the time it takes to sell a home in 2017, but only if there is a rapid increase in listings, which is certainly not a given.

 

Conclusions

This speedometer reflects the state of the region’s housing market using housing inventory, price gains, sales velocities, interest rates, and larger economic factors. For the fourth quarter of 2016, I actually moved the needle a little more in favor of buyers, but this is purely a function of the increase in interest rates that was seen after the election. Higher borrowing costs mean that buyers can afford less, which could ultimately put some modest downward pressure on home prices in 2017. That said, the region will still strongly favor sellers in the coming year.

This article originally appeared on the Windermere.com blog.

Posted on 02/03/2017 at 8:56 AM
Grace Currier | Category: Local Market News

Perspectives: 2017 Forecast

Well, it’s December; the time of year when we look to our crystal ball and offer our housing market predictions for the coming year. And by crystal ball we mean Windermere’s Chief Economist, Matthew Gardner, who has been travelling up and down the West Coast giving his annual forecast to a variety of real estate and financial organizations. Last month’s surprising election results have created some unknowns, but based on what we do know today, here are some thoughts on the current market and what you can expect to see in 2017.

HOUSING SUPPLY: In 2016 the laws of supply and demand were turned upside down in a majority of markets along the West Coast. Home sales and prices rose while listings remained anemic. In the coming year, there should be a modest increase in the number of homes for sale in most major West Coast markets, which should relieve some of the pressure.

FIRST-TIME BUYERS: We’re calling 2017 the year of the return of the first-time buyer. These buyers are crucial to achieving a more balanced housing market. While rising home prices and competition will act as a headwind to some first timers, the aforementioned modest uptick in housing inventory should help alleviate some of those challenges.

INTEREST RATES: Although interest rates remain remarkably low, they will likely rise as we move through 2017. Matthew Gardner tells us that he expects the 30-year fixed rate to increase to about 4.5 percent by year’s end. Yes, this is well above where interest rates are currently, but it’s still very low.

HOUSING AFFORDABILITY: This remains one of the biggest concerns for many West Coast cities. Some markets continue to see home prices escalating well above income growth. This is unsustainable over the long term, so we’re happy to report that the rate of home price appreciation will soften in some areas. This doesn’t mean prices will drop, but rather, the rate of growth will begin to slow.

Last but not least, we continue to hear concerns about an impending housing bubble. We sincerely believe these fears to be unfounded. While we expect price growth to slow in certain areas, anyone waiting for the floor to fall on housing prices is in for a long wait. Everything we’re seeing points towards a modest shift towards a more balanced market in the year ahead.

This article originally appeared on the Windermere.com blog.

Posted on 12/13/2016 at 11:31 AM
Grace Currier | Category: Local Market News

Seattle’s Red Hot Housing Market and Its First-Time Homebuyers

According to an analysis by The Seattle Times, Seattle-area home prices are now rising at their swiftest pace in 2.5 years. While we missed out on taking over Portland for the top spot on the Case-Shiller index, Seattle did increase its lead over third-place Denver where prices only rose 8.8 percent over last year.

Portland, having led the Case-Shiller index all year, had the fastest-rising home prices up 11.7 percent over a year ago. In Seattle, home prices were up 11.4 percent over 2015. Both Pacific Northwest cities saw home costs increase at more than twice the national rate of 5.3 percent. By this point, the “record-high home price” headlines are trite. So what makes this time so important?

Well, for starters, this is the eighth straight month of double-digit growth. That in itself is something fairly noteworthy. Additionally, as The Seattle Times states, homes across all price levels are getting more expensive, but “the biggest increase was in the cheapest set of homes” which were up 12.4 percent. The smallest jump was for luxury homes, up 10.9 percent.

Home prices have been soaring consistently for more than four years having jumped 59 percent since 2012. Starter homes have seen prices jump 75 percent in that time frame. Our local millennials are ready to take advantageof the low mortgage rates, but the starter home just is not what it used to be.

What does this mean for the Eastside?

We want to take a look at Windermere Real Estate’s latest housing market updatewhere we reported the median home sale price at $750,000. That is a solid 10 percent increase over the home prices we saw last year. By comparison, the median sale price of a single-family home was $630,000 last month.

First-time buyers are faced with these skyrocketing home prices, and even though other housing market factors are playing in their favor, it can be an intimidating time to jump into the real estate world. Make sure you team up with a Windermere broker who can help you navigate the real estate market and can turn your homeownership dreams into a reality.

Read more from our source, The Seattle Times.

This post originally appeared on the Windermere Eastside blog.

Posted on 11/08/2016 at 8:33 AM
Grace Currier | Category: Local Market News