With competition for homes growing and inventory shrinking, the real estate market in January was as hot as ever. Home prices were up by double digits as buyers chased severely limited inventory. The number of homes for sale hit a record low for the month of January, which should strongly favor sellers as we move into the prime spring selling season. The average home seller in our area now makes a 64 percent profit, the fourth-highest rate of any region in the country, according to ATTOM Data Solutions.
Home prices on the Eastside continue to climb. The median price of a single-family home was up 18 percent over last January to $938,000 — virtually unchanged from the record high set a month ago. West Bellevue, King County’s most expensive area, saw the median home price surge to a record high of $2.72 million. With less than a month of available inventory, prices aren’t expected to cool any time soon.
Single-family home prices in King County soared 20 percent over a year ago to $628,388, with double-digit increases recorded in every area of the county. Lack of inventory continues to fuel the market. There were 21 percent fewer homes for sale here as compared to a year ago, with inventory hitting a record low for the month of January. The region has now been the hottest housing market in the country for 15 months in a row.
An ongoing shortage of inventory combined with an economy that continues to add jobs has kept the Seattle housing market very competitive and increasingly expensive. Seattle’s median price hit a new record in January jumping 19 percent to $757,000. Despite the increase in prices, brokers are reporting open house traffic that can number in the hundreds of interested buyers.
Home price increases in Snohomish County were more moderate than those in King County. The median price of a single-family home grew 10 percent over a year ago to $450,000. That number is down from the high of last year, and reflects a more common seasonal slowdown.
The Washington State economy added 104,600 new jobs over the past 12 months. This impressive growth rate of 3.1% is well above the national rate of 1.4%. Interestingly, the slowdown we saw through most of the second half of the year reversed in the fall, and we actually saw more robust employment growth.
Growth continues to be broad-based, with expansion in all major job sectors other than aerospace due to a slowdown at Boeing.
With job creation, the state unemployment rate stands at 4.5%, essentially indicating that the state is close to full employment. Additionally, all counties contained within this report show unemployment rates below where they were a year ago.
I expect continued economic expansion in Washington State in 2018; however, we are likely to see a modest slowdown, which is to be expected at this stage in the business cycle.
Home Sales Activity
- There were 22,325 home sales during the final quarter of 2017. This is an increase of 3.7% over the same period in 2016.
- Jefferson County saw sales rise the fastest relative to fourth quarter of 2016, with an impressive increase of 22.8%. Six other counties saw double-digit gains in sales. A lack of listings impacted King and Skagit Counties, where sales fell.
- Housing inventory was down by 16.2% when compared to the fourth quarter of 2016, and down by 17.3% from last quarter. This isn’t terribly surprising since we typically see a slowdown as we enter the winter months. Pending home sales rose by 4.1% over the third quarter of 2017, suggesting that closings in the first quarter of 2018 should be robust.
- The takeaway from this data is that listings remain at very low levels and, unfortunately, I don’t expect to see substantial increases in 2018. The region is likely to remain somewhat starved for inventory for the foreseeable future.
- Because of low inventory in the fall of 2017, price growth was well above long-term averages across Western Washington. Year-over-year, average prices rose 12% to $466,726.
- Economic vitality in the region is leading to a demand for housing that far exceeds supply. Given the relative lack of newly constructed homes—something that is unlikely to change any time soon—there will continue to be pressure on the resale market. This means home prices will rise at above-average rates in 2018.
- Compared to the same period a year ago, price growth was most pronounced in Lewis County, where home prices were 18.8% higher than a year ago. Eleven additional counties experienced double-digit price growth as well.
- Mortgage rates in the fourth quarter rose very modestly, but remained below the four percent barrier. Although I anticipate rates will rise in 2018, the pace will be modest. My current forecast predicts an average 30-year rate of 4.4% in 2018—still remarkably low when compared to historic averages.
Days on Market
- The average number of days it took to sell a home in the fourth quarter dropped by eight days, compared to the same quarter of 2016.
- King County continues to be the tightest market in Western Washington, with homes taking an average of 21 days to sell. Every county in the region saw the length of time it took to sell a home either drop or remain static relative to the same period a year ago.
- Last quarter, it took an average of 50 days to sell a home. This is down from 58 days in the fourth quarter of 2016, but up by 7 days from the third quarter of 2017.
- As mentioned earlier in this report, I expect inventory levels to rise modestly, which should lead to an increase in the average time it takes to sell a house. That said, with homes selling in less than two months on average, the market is nowhere near balanced.
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 fourth quarter of 2017, I have left the needle at the same point as third quarter. Price growth remains robust even as sales activity slowed. 2018 is setting itself up to be another very good year for housing.
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.
Just because the Christmas decor is put away and the festive mood of the holidays is over doesn’t mean we have to stop creating a snug and cozy home. It’s a good time to embrace winter Hygge! If you aren’t familiar with Hygge, it’s a Danish word for feeling content and cozy.
Here are seven ways to bring Hygge style comfort to your home, even during the dreariest winter month of the year!
Even if you feel like you’re lacking in the cozy department, simply addressing your lighting will make a huge difference. Layers of lighting make every room feel more welcoming. In the daytime, natural light is ideal. But for evenings, it’s nice to add a cozy glow. A good rule of thumb is to try to have a least three light sources in every room. Use a mix of table lamps, floor lamps, task lamps, and overhead lighting. Consider using warmer lightbulbs for the coziest ambience.
Your home will offer a sense of comfort when you incorporate some favorite photos of loved ones, treasured hand-me-downs, antiques or flea-market finds, eye-catching conversation starters, art that inspires you, special mementos, or simply things that make you smile.
AN INVITING AROMA
What aroma feels ‘cozy’ to you? Set the tone for your home by filling it up with winter scents that inspire you.
The coziest homes contain a variety different textures that delight the eye. Incorporate different touch-worthy materials through pillows, drapery, throw blankets, rugs, lamps, and furniture. The fabric possibilities are endless: velvet, woven, knit, embroidered, grain sack, faux fur, tweed, etc. You can also consider creating contrast with varying materials like metal, wood, glass, rattan, mirrored, painted, and more.
A PLACE TO CURL UP
Make yourself a special cozy place to relax. A reading chair will be extra cozy with some good books nearby in a basket, a lamp, a footstool, a side table to set a cup of tea, and a soft blanket you can curl up in.
A BIT OF WARMTH
Every home can benefit from warmth. No matter what your color scheme, you can add warmth through natural tones like wood, leather, jute, warm metals, etc.
A room comes to life when an organic element is incorporated into the decor. Every room can benefit from having at least one plant, bouquet of flowers, or even a sprig of greenery like eucalyptus to remind us that spring is on its way.
This post originally appeared on the Windermere Blog.
2017 closed out the year with historically low inventory and record-breaking price gains. A strong local economy and brisk population growth has helped fuel a steep discrepancy between supply and demand. As long as this imbalance remains, 2018 is on track to remain a very strong seller’s market.
Defying the usual winter slow-down in home prices, December broke new records on the Eastside. The median price of a single-family home soared 17 percent over a year ago to $938,240 – an all-time high for the region. Appreciation in higher-end areas, like West Bellevue and Mercer Island, topped 20 percent. Homeowners, especially those considering downsizing, may want to take advantage of the sharp increase in equity.
King County recorded the lowest inventory since records began in 2000, and demand just keeps rising. As a result, the price of a single-family home jumped 15.5 percent over the same time last year to $635,000. Those looking buy a condo as a more affordable option were out of luck. The median price tag of $402,000 is a relative bargain when compared to a single-family home, but there are only about 200 condos on the market, another record low.
While below the high point last summer, the median price of a home in Seattle jumped 14 percent year over year to $725,000. Supply and demand is again the culprit. There are just two weeks of available inventory on the market. Not only are homes here selling quickly, but fewer people are putting their homes up for sale. Most economists are predicting a moderate slowdown in cost increases here in 2018, with prices still rising but not as sharply as they did in 2017.
Prices in Snohomish County continue to rise at a rapid pace. The median price of a single-family home here grew 12.5 percent from a year ago to $449,950. With less than a month of available inventory, prices are projected to remain high.
It looks like we’re skipping the normal holiday slowdown this season with brokers reporting crowded open houses and competitive bidding in many areas. However, since sellers who list their homes at this time of the year are usually motivated to move soon, the holidays are still a good time to buy. Some of the best pricing is historically found between December and February.
The rate of appreciation for homes on the Eastside continues to be as robust – or more so – as in Seattle. Both local and international buyers attribute the appeal of the area to larger lot sizes, newer construction, and highly-rated school districts. Inventory here is extremely low, and homes are selling quickly. The median price for a single-family home on the Eastside reached $851,000 in November, a 12 percent increase over the same time last year.
The number of new listings in King County is down 19 percent as compared to a year ago. With demand still strong, the median home price in King County rose 15 percent over last year to $630,750. Condo inventory, long an option for more affordable housing, is at a record low as developers opt for building apartments to avoid the legal and financial risks that come with building condos.
Seattle is one of the fastest growing American cities, and demand doesn’t look to be slowing any time soon. Combine that with a very limited supply and it’s no surprise that for over a year home prices here have been rising faster than anywhere in the country. Last month, the median price for a single-family home in Seattle was $741,000, soaring 21 percent from the previous year.
Buyers priced out of the King County market are taking this advice: drive until you qualify. Many are ending up buying in Snohomish County. The number of homes for sale was down more than 24 percent here in November and there is currently less than one month of inventory available. The median price of a single-family home was $445,000, up 11 percent year-over-year.
It’s the time of the year when our Chief Economist Matthew Gardner looks deep into his crystal ball to see what’s on the horizon for the upcoming year. As we are all aware, 2017 has been a stellar year for housing across the country, but can we expect that to continue in 2018?
Here are his thoughts:
Millennial Home Buyers
Last year, I predicted that the big story for 2017 would be millennial home buyers and it appears I was a little too bullish. To date, first-time buyers have made up 34% of all home purchases this year – still below the 40% that is expected in a normalized market. Although they are buying, it is not across all regions of the country, but rather in less expensive markets such as North Dakota, Ohio, and Maryland.
For the coming year, I believe the number of millennial buyers will expand further and be one of the biggest influencers in the U.S. housing market. I also believe that they will begin buying in more expensive markets. That’s because millennials are getting older and further into their careers, enabling them to save more money and raise their credit profiles.
Existing Home Sales
As far as existing home sales are concerned, in 2018 we should expect a reasonable increase of 3.7% – or 5.62 million housing units. In many areas, demand will continue to exceed supply, but a slight increase in inventory will help take some heat off the market. Because of this, home prices are likely to rise but by a more modest 4.4%.
New Home Sales
New home sales in 2018 should rise by around 8% to 655,000 units, with prices increasing by 4.1%. While housing starts – and therefore sales – will rise next year, they will still remain well below the long-term average due to escalating land, labor, materials, and regulatory costs. I do hold out hope that home builders will be able to help meet the high demand we’re expecting from first-time buyers, but in many markets it’s very difficult for them to do so due to rising construction costs.
Interest rates continue to baffle forecasters. The anticipated rise that many of us have been predicting for several years has yet to materialize. As it stands right now, my forecast for 2018 is for interest rates to rise modestly to an average of 4.4% for a conventional 30-year fixed-rate mortgage – still remarkably low when compared to historic averages.
Something that has the potential to have a major impact on housing are the current proposals relative to tax reform. As I write this, we know that both the House and Senate propose doubling the standard deduction, and the House plans to lower the mortgage interest deduction from $1,000,000 to $500,000. If passed, the mortgage deduction would no longer have value for home owners who would likely opt to take the standard deduction.
If either of the current proposals is adopted into law, the potential reduction in mortgage-related tax savings means the after-tax cost of home ownership will increase for most home owners. Additionally, both the House and Senate bills also end tax benefits for interest on second homes, and this could have a devastating effect in areas with higher concentrations of second homes.
The capping of the deduction for state and local property taxes (SALT) at $10,000 will also negatively impact states with high property taxes, such as California, Connecticut, and New York. Furthermore, proposed changes to the capital gains exemption on profits from the sale of a home (requiring five years of continuous residence as compared to the current two) could impact approximately 750,000 home sellers a year and slow the growth of home ownership.
Something else to consider is that all of the aforementioned changes will only affect new home purchases, which I fear might become a deterrent for current home owners to sell. Given the severe shortage of homes for sale in a number of markets across the country, this could serve to exacerbate an already-persistent problem.
I continue to be concerned about housing affordability. Home prices have been rising across much of the country at unsustainable rates, and although I still contend that we are not in “bubble” territory, it does represent a substantial impediment to the long-term health of the housing market. But if home price growth begins to taper, as I predict it will in 2018, that should provide some relief in many markets where there are concerns about a housing bubble.
In summary, along with slowing home price growth, there should be a modest improvement in the number of homes for sale in 2018, and the total home sales will be higher than 2017. First-time buyers will continue to play a substantial role in the nation’s housing market, but their influence may be limited depending on where the government lands on tax reform.
This post originally appeared on the Windermere.com blog.
Last week Windermere hosted 16 members of the China Alliance of Real Estate Agencies (CAREA) during a daylong tour of Seattle and Bellevue, WA. CAREA is a coalition of the largest regional and national real estate companies in China, representing over 60 percent of all Chinese real estate sales. Their stop in Seattle was a part of a four-city tour that also included Chicago, New York, and Dallas. The cities were identified because of their popularity amongst Chinese investors/buyers, and the CAREA member’s desire to better understand the residential real estate markets in those areas.
The group’s interest in Seattle stems from the growing number of Chinese foreign national buyers in the area, especially in neighborhoods like West Bellevue where real estate brokers say buyers are drawn to the newer homes, top-performing schools, and proximity to high-end restaurants and shopping. This year, Seattle surpassed San Francisco as the second place in the world where Chinese millionaires want to purchase property (according to Shanghai-based Hurun Research).
Windermere took the group on a tour of three luxury homes in West Bellevue that are on the market for between $5 and $10 million. The tour started with a new construction home priced at $6.8 million in Clyde Hill, represented by Windermere broker Shawna Ader. The second stop was a more traditional home in Medina for $5.3 million, listed by Windermere broker Wendy Paisley. The last home was the show stopper, an incredible manse priced at just under $10 million on Yarrow Point, represented by Windermere broker Anna Riley.
Along for the ride were also several members of the media who were drawn to the story about Chinese interest in the Seattle-area housing market. KING 5 News, KOMO 4 News, Q13 News, and the Seattle Times all spent time touring the homes and interviewing representatives from CAREA and Windermere about the reasons why Seattle is an increasingly popular location for international buyers.
Following the luxury home tour, the Chinese guests and Windermere executives gathered for lunch and a presentation by Windermere Chief Economist, Matthew Gardner, who provided an overview of the greater Seattle area housing market and economy. The day was then capped off with a seaplane tour of Seattle by Kenmore Air. As CAREA vice president Yi Lui stated after the tour, “A float plane is the way to sell Seattle.”
This post originally appeared on the Windermere.com blog.
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.
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.
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.
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.
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.
The typical seasonal slowdown of new listings in September added to frustration for buyers who are competing for a very limited number of homes. Strong job growth continues to fuel demand. The state added 83,000 new jobs in the month of August, and September looked to be just as robust. The result? King, Pierce and Snohomish counties all reported double-digit price increases from a year earlier.
The median price of a single-family home on the Eastside jumped 14 percent from the same time last year to a $855,000. As the median on the Eastside approaches the $1 million mark, the price tag for a luxury home is increasing. Of all the single-family homes that sold on the Eastside in September nearly 40 percent sold for more than $1 million. In the city of Bellevue, two-thirds of the homes sold for more than $1 million.
The median price of a single-family home sold in King County in September increased 16 percent from a year ago to $625,000. While down from the record high of $658,000 in July, it represents the highest value for any September since records began in 2000. Among the largest metro areas in the U.S., our region has now led the nation in price increases for the last 11 months.
Seattle’s inventory remains as tight as ever, with homes being snapped up in days. A big hiring push by local employers just keeps adding to the pressure. With supply dwindling and demand soaring, prices had only one place to go – up. In September, the median single-family home price in Seattle soared 15 percent over a year ago to $725,000.
The median price of a single-family home in Snohomish County sold in September was $450,000, a 14 percent increase over the same time last year. With just slightly over one month’s inventory of homes available, it’s unlikely price growth here will slow any time soon.
If you’ve been looking to buy a house, it’s easy to get discouraged. With our local real estate market still the hottest in the country, a lot of buyers have become frustrated after losing out to multiple offers and all-cash sales. While some buyers are considering waiting out the market, here is why that’s not a wise move.
1. Historically, this time of the year is the best time to buy a home.
The fourth quarter of the year has always seen the lowest demand for home sales. Kids are back in school. The holiday season is gearing up. It’s just not the time of year when people want to uproot their lives and move into a new home. That all changes in a few months. The market traditionally experiences the highest demand and the lowest inventory of the year between January and May. Your best bet is to make an offer now.
2. Home prices are expected to increase next year.
A booming economy, rising population, and an influx of highly-paid workers are all expected to sustain the strong demand for housing through 2018. While the sharp home price increases of the past few years are expected to moderate, Windermere Chief Economist Matthew Gardner predicts that home prices will increase by 9 percent next year.
3. Interest rates are predicted to rise.
Waiting means you’ll get less house for your money. It’s all about the One in Ten Rule. As Matthew Gardner explains, for every 1 percent increase in mortgage rates your buying power decreases by 10 percent. Even if home prices are flat a year from now (which is not expected), an increase in interest rates means you’ll have to borrow more money to buy the same house.
With home valuations at high levels today, buyers should consider three things before they purchase a home: Can I afford the monthly payments, do I like the location, and am I planning to live in the home for at least five years?
If you decide to move forward, your real estate agent can make the difference between winning the deal or not.
Here’s what sets Windermere Real Estate brokers apart:
- We can position your offer to have the greatest appeal to the seller (and sometimes that’s not just a higher price).
- We receive extensive training on how to create the most competitive offer and negotiate successfully in a multiple-offer situation.
- Other agents are more confident in completing a transaction with an agent from Windermere than they are with any other real estate company.
Contact us today.
This post originally appeared on the Windermere Eastside blog.