Homeowner • February 13, 2020

SEATTLE HOME SELLERS SEE SOME OF THE HIGHEST ROI IN THE NATION

by Julia and Mark Krill

As the housing boom continued to roar across the country and home prices soared in 2019, median home sales profits and returns-on-investment (ROI) achieved record highs, according to an annual year-end report from ATTOM Data Solutions.

Western states and metropolitan areas, especially those on the coast, continue to reap the highest returns on home sales. (In the report, returns are expressed both as a dollar amount and as a percentage and are factored by analyzing the difference between the median sales price of homes and the median sales price of the previous sale of those same homes.) Seattle is comfortably situated in the top five of 220 metro areas surveyed nationwide with an average of 65.6% return on investment. Seattle sellers’ ROI is nearly double the new nationwide average.

The other metros with the highest home seller ROIs are: San Jose, CA (82.8%), San Francisco, CA (72.8%), Merced, CA (63.2%) and Salem, OR (62.1%).

Nationally, raw profits and ROI have improved for eight straight years. In 2019, the average home price gain and percent return on investment also reached a 13-year high. The average seller saw a home price gain of $65,500 on a typical sale, which represents a 34% return in investment compared to the original purchase price.

This rise in ROI may remain a trend locally as home prices continue to rise and the Puget Sound region is squeezed for inventory and the Seattle area remains a sellers’ market.

Read more from ATTOM on 2019 market trends here.

A version of this article was first published on realtor.com

The Gardner Report • January 21, 2020

THE GARDNER REPORT – FOURTH QUARTER 2019

by Julia and Mark Krill

The following analysis 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 me.

ECONOMIC OVERVIEW

Employment in Washington State continues to soften; it is currently at an annual growth rate of 1.7%. I believe that is a temporary slowdown and we will see the pace of employment growth improve as we move further into the new year. It’s clear that businesses are continuing to feel the effects of the trade war with China and this is impacting hiring practices. This is, of course, in addition to the issues that Boeing currently faces regarding the 737 MAX.

In the fourth quarter of 2019 the state unemployment rate was 4.4%, marginally lower than the 4.5% level of a year ago. My most recent economic forecast suggests that statewide job growth in 2020 will rise 2.2%, with a total of 76,300 new jobs created.

HOME SALES

There were 18,322 home sales registered during the final quarter of 2019, representing an impressive increase of 4.7% from the same period in 2018.
Readers may remember that listing activity spiked in the summer of 2018 but could not be sustained, with the average number of listings continuing to fall. Year-over-year, the number of homes for sale in Western Washington dropped 31.7%.
Compared to the fourth quarter of 2018, sales rose in nine counties and dropped in six. The greatest growth was in Whatcom County. San Juan County had significant declines, but this is a very small market which makes it prone to extreme swings.
Pending home sales — a barometer for future closings — dropped 31% between the third and fourth quarters of 2019, suggesting that we may well see a dip in the number of closed sales in the first quarter of 2020.

HOME PRICES

Home price growth in Western Washington spiked during fourth quarter, with average prices 8.3% higher than a year ago. The average sale price in Western Washington was $526,564, 0.7% higher than in the third quarter of 2019.
It’s worth noting that above-average price growth is happening in markets some distance from the primary job centers. I strongly feel this is due to affordability issues, which are forcing buyers farther out.
Compared to the same period a year ago, price growth was strongest in San Juan County, where home prices were up 41.7%. Six additional counties also saw double-digit price increases.
Home prices were higher in every county contained in this report. I expect this trend to continue in 2020, but we may see a softening in the pace of growth in some of the more expensive urban areas.

DAYS ON MARKET

The average number of days it took to sell a home dropped four days compared to the third quarter of 2019.
For the second quarter in a row, Thurston County was the tightest market in Western Washington, with homes taking an average of 29 days to sell. In nine counties, the length of time it took to sell a home dropped compared to the same period a year ago. Market time rose in four counties and two were unchanged.
Across the entire region, it took an average of 47 days to sell a home in the fourth quarter. This was up nine days over the third quarter of this year.
Market time remains below the long-term average across the region, a trend that will likely continue until we see more inventory come to market — possibly as we move through the spring.

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 housing market ended the year on a high note, with transactions and prices picking up steam. I believe the uncertainty of 2018 (when we saw significant inventory enter the market) has passed and home buyers are back in the market. Unfortunately, buyers’ desire for more inventory is not being met and I do not see any significant increase in listing activity on the horizon. As such, I have moved the needle more in favor of home sellers.

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.

This post originally appeared on the Windermere.com Blog.

Local Market Update • January 9, 2020

Local Market Update January 2020

by Julia and Mark Krill

2019 ended with too many buyers chasing too few homes. December marked the sixth straight month of declining supply. The severe shortage of homes, historically low interest rates, and strong job growth are predicted to keep the local housing market strong in 2020. In a region starved for inventory, sellers can expect significant interest in new listings.

Homes sold briskly on the Eastside in December in all categories, including the luxury market. The number of listings were down nearly 50% from a year ago and the area had under a month of available inventory. That lack of inventory helped bump the median price of a single-family home up 4% from a year ago to $949,000, which is a $49,000 increase from November. New large scale developments and a strong economic forecast indicate that the housing market will remain healthy.

VIEW FULL EASTSIDE REPORT

Windermere Foundation • January 6, 2020

WINDERMERE FOUNDATION DONATES $100,000 TO SEATTLE CHILDREN’S HOSPITAL

by Julia and Mark Krill

The Windermere Foundation’s recent contribution to Seattle Children’s Hospital‘s Homelessness Prevention Fund and Children’s Emergency Patient Fund will help 40 families secure stable housing and retain ownership of their homes this holiday season.

“No parent should have to choose between having a place to live and having a healthy child,” said Christine Wood, Executive Director of the Windermere Foundation. “Our goal is to help take on some of the financial burden of housing and
living expenses so they can focus on their child’s health.”

The Homelessness Prevention Fund provides low-income families with financial support to help cover imminent expenses, repairs, and other needed services. The one-time payment can spare a family from eviction or other hardships triggered by shelter insecurity.

“There are 104 children and 74 parents and guardians who will be able to stay in their homes during the holidays thanks to the Windermere Foundation’s generous donation,” said Roosevelt Travis, Director of the Department of Social Work at Seattle Children’s. “It is truly life changing.”

Additionally, a portion of the donation was directed to the Children’s Emergency Patient Fund which provides modest sums to cover food, utilities, transportation and other essentials to more than 2,000 families each year.

Over the years, Windermere donations to this fund have been used to pay for hotel vouchers, gas cards, and, in the saddest cases, funeral expenses.

“When I am contacted by Children’s seeking funding, I know not every situation is going to have a happy ending,” said Christine Wood. “We’re just grateful that we have the opportunity to relieve some of the burden for these families during what is a very difficult time in their lives.”

Since its establishment 30 years ago, the Windermere Foundation has raised over $40 million to support local low-income and homeless families, and Windermere has donated a total of $318,000 directly to Seattle Children’s Hospital since 2006. The Foundation is currently the 17th largest corporate philanthropist in the Puget Sound, as ranged by the Puget Sound Business Journal.

To learn more about the Windermere Foundation, please visit www.windermerefoundation.com.

Read the full Windermere Foundation press release here.

Real Estate News • December 19, 2019

Eastside 2020 Growth Forecast

by Julia and Mark Krill

Another banner year for the region has brought tremendous prosperity across a breadth of industries, a wealth of new jobs, flourishing tourism, and the welcoming of several large businesses into our cities.

So, how is the Eastside poised to begin a new decade? Will this growth continue? To find out, 425 Business ditched the crystal ball and talked to Eastside movers and shakers across myriad industries to find out what they believe the year ahead holds.

Residential Real Estate

The Eastside residential real estate market is going to experience significant growth in the next few years. Amazon, Google, Facebook, and other tech giants are rapidly expanding their footprint to the Eastside. Thousands of tech workers relocating to this area, along with new hires for supporting businesses (such as retail and restaurants), will greatly increase the demand for housing. This year, almost half of the buyers who walked through my open houses were relatively new in town.

Condos under $750,000 and single-family homes under $1.5 million will sell very quickly if they are in good condition and priced right. Also, homes with easy access to public transit and future light rail stations will become more and more desirable. Areas in and near downtown Bellevue and downtown Kirkland will still be the hottest submarkets because they are job centers with superb amenities.

– Mei Yang, global real estate adviser and broker at Realogics Sotheby’s International Reality

Commercial Real Estate

(The current) cycle exhibits some significantly different conditions from those that precipitated the “thrift crisis” of the ’80s; the dot-com bust of the ’90s; or, certainly, the “Great Recession” of the last decade. Interest rates are lower, equity is plentiful, and expectations for return on equity across all asset classes are significantly less expensive.

Federal taxes and punitive regulations are generally lower (unfortunately, we can’t say that about state and local), and corporate earnings are remarkably strong (yes, with a few notable exceptions) despite tariffs and turmoil. Perhaps most important is the fact that employers across all sectors are scrambling to attract workers and have tens of thousands more openings to be filled.

My belief is that real estate economics is pretty simple — it’s all about employment. If you have healthy job creation, everything works. It attracts more residents who need housing, businesses that need more lawyers and accountants, kiddos who need teachers, demand for groceries, and so on. Conversely, if employment flattens or falls, the economy constricts.

Bottom line: If you can tell me when Eastside employers are going to quit hiring or start laying off, I’ll tell you when commercial real estate on the Eastside is going to suffer. Until then, land prices and rents on existing buildings will continue to rise, and developers will race to provide the office, apartment, and retail space to support the growth.

– Robert Wallace, CEO of Wallace Properties

Transportation

Bellevue has a ton of local transportation improvements on tap for 2020 that will make travel safer and easier for thousands of residents. But we’re also excited about the work we’re doing with our regional partners. It has the potential to benefit hundreds of thousands of people in the coming years and will be a big boon for transportation options on the Eastside.

Bellevue and Kirkland are working with King County Metro on a new RapidRide K Line that will connect the Eastgate Park & Ride in Bellevue to the Totem Lake Transit Center in Kirkland starting in 2025. And King County Parks is working with several Eastside cities on Eastrail, a regional pedestrian and bicycle path.

On the roads side, the state Department of Transportation will break ground in 2020 on the I-405 Renton to Bellevue Widening and Express Toll Lanes project. It will add capacity, boost transit options, and improve safety on one of the most congested stretches of highway in the state.

– Andrew Singelakis, transportation director for the City of Bellevue

Healthcare

Next year, I see healthcare in general (and EvergreenHealth) placing an increased emphasis on access — both in the traditional sense and through innovative alternatives. The ever-permeating digital age provides care for patients through new approaches with even greater creativity and efficiency. We also will have the increased benefit of effective solutions, possible through new sources of data analysis and other breakthroughs.

As always, we’ll collectively prepare for the needs of an expanding senior population, offering valuable services to help them sustain their well-being and healthy, active lifestyles.

Finally, we are committed to collaborating with our schools and others, supporting care for students with behavioral health issues.

– Jeffrey J. Tomlin, CEO of EvergreenHealth

Tourism

Bellevue and the Eastside’s tourism and hospitality industry is positioned for continued growth. Demand is projected to increase due to the growing corporate presence on the Eastside, a strong consumer economy, healthy airline capacity, and popularity in the Pacific Northwest as a destination. In recent years, the Puget Sound region has seen significant hotel supply increases, which have caused property rates and occupancy to level out, but we are hopeful that this additional demand will offset the recent inventory surge.

As a whole, travel growth in large technology markets like San Francisco, San Jose, Seattle, and Vancouver have recently slowed, compared with previous years. With that said, many business travelers now book rooms and visitor experiences outside of the large city centers — which positions areas like Bellevue and the Eastside well for 2020 and beyond.

– Brad Jones, executive director of Visit Bellevue Washington

Technology

(Next year) is the year that cybersecurity will turn inside-out. Malware, ransomware, and phishing attacks are all significantly on the rise, and (historically) 61 percent of data breach victims have been small businesses. These businesses can no longer rely on legacy tools like antivirus and networks that only protect them at the office.

Security must go mobile and leave traditional technologies behind. It’s also time to eliminate SMS-based authentication in favor of hardware keys that support Universal Two Factor authentication.

– Riley Eller, chief technology officer at Rubica

Legal

We expect the rapid growth of technology companies of all sizes based on the Eastside or expanding their operations to the Eastside to continue, many of which will be focused on intelligent connectivity, including 5G, AI, IoT, and Quantum computing. With that, we expect to see more regulatory attention on consumer privacy and data usage.

This regulatory attention will increase the demand for legal service providers, especially those who have a stake in the Eastside community and a desire for more personal interaction with their clients.

– Barry Stulberg, counsel, and Carly Chan, associate, Davis Wright Tremaine’s Bellevue Office

Finance

Eastside residents and business owners should have a plan in place for when times are good and when times are bad, regardless of the Federal Reserve’s actions. The Fed cut rates by 25 basis points, to 1.5 percent (from) 1.75 percent. This means that the Fed is helping prolong the economic expansion. The Fed is not expected to reduce rates further in the coming year, barring a recession. However, consumer confidence fell for a third straight month (as of Nov. 1), and consumers have not shown signs of slowing down.

Fed rate cuts to prop up an otherwise-slowing global economy generally mean that they are prolonging the inevitable — a recession. However, the bigger effect is to Americans saving for later. Because of low interest rates, American consumers are forced to take on more risk than necessary to make their money work for them. It would be prudent to include in one’s portfolio insurance and real estate to complement their investment portfolio.

Because of the technology industry and the various Silicon Valley companies coming into the Seattle-Eastside area, our economy will not be as affected as other economies when we experience a recession.

Clients at local technology companies have indicated that hiring has slowed down, and jobs that were eliminated aren’t being replaced with new workers. This can mean they are bracing for a possible recession or slowdown in the economy.

Consumer confidence is still not at a level where they are pulling back from spending; this explains why housing is still strong in the area and consumers are stretching their budget to buy into a hot real estate market.

Restaurants in the area are feeling the effects of a low interest rate environment, which generally follows inflation of raw materials and commodities. It is evident in the exorbitant prices we are experiencing when we go out to eat.

– Tony Sablan, wealth manager at Eagle Strategies LLC

This article was originally posted on 425 Business.

Local Market Update • December 19, 2019

Local Market Update – December 2019

by Julia and Mark Krill

Favorable interest rates and soaring rents boosted activity in the housing market in November. More buyers competing for less inventory kept home prices strong. With the supply of homes far short of demand, sellers can expect well-priced properties to sell quickly this winter.

With just over a month of available inventory, demand on Eastside remains very strong. Sales are brisk, with 45% of single-family homes selling in 15 days or less and 20% of homes selling for over list price. The median single-family home price in November rose 2% from a year ago to $900,000 and was unchanged from October.

VIEW FULL EASTSIDE REPORT

Buying a Home • October 21, 2019

Your Beginner’s Guide to Home Appraisals

by Julia and Mark Krill

Appraisals are used as a reliable, independent valuation of a tract of land and the structure on it, whether it’s a house or a skyscraper. Designed to protect buyers, sellers, and lending institutions, appraisals are an important part of the buying/selling process.

Below, you will find information about the appraisal process, what goes into them, their benefits and some tips on how to help make an appraisal go smoothly and efficiently.

Appraisal value vs. market value

The appraiser’s value is determined by using a combination of factors such as comparative market analyses and their inspection of the property to determine if the listing price is typical for the area.

Market value, on the other hand, is what a buyer is willing to pay for a home or what homes of comparable value are selling for.

If you are in the process of setting the price of your home, you can gain some peace-of-mind by consulting an independent appraiser. Show them comparative values for your neighborhood, relevant documents, and give them a tour of your home, just as you would show it to a prospective buyer.

What information goes into an appraisal?

Professional appraisers consult a range of information sources, including multiple listing services, county tax assessor records, county courthouse records, and appraisal data records, in addition to talking to local real estate professionals.

They also conduct an inspection. Typically, an appraiser’s inspection focuses on:

The condition of the property and home, inside and out.
The home’s layout and features.
Home updates.
Overall quality of construction.
Estimate of the home’s square footage (the gross living area “GLA”; garages and unfinished basements are estimated separately).
Permanent fixtures (for example, in-ground pools, as opposed to above-ground pools).

After the inspection, the appraiser of a typical single-family home will create their report including their professional opinion on what the price of the home should be.

You might hear the lender ask for two reports, the “Sales Comparison Approach” and the “Cost Approach.” These two approaches use different methodologies to find the appropriate value of the home, and help the lender confirm the home’s price.

Who pays and how long does it take?

The buyer usually pays for the appraisal unless they have negotiated otherwise. Depending on the lender, the appraisal may be paid in advance or incorporated into the application fee; some are due on delivery and some are billed at closing. Typical costs range from $275-$600, but this can vary from region to region.

An inspection usually takes anywhere from 15 minutes to several hours, depending on the size and complexity of your property. In addition, the appraiser spends time pulling up county records for the values of the houses around you. A full report is sent to your loan officer, real estate agent, and/or lender in about a week.

If you are the seller, you won’t get a copy of an appraisal ordered by a buyer. Under the Equal Credit Opportunity Act, however, the buyer has the right to get a copy of the appraisal if they request it. Typically, the requested appraisal is provided at closing.

What if the appraisal is too low?

A low appraisal can present a problem when there’s a large difference between what you’ve agreed to pay and the appraisal price.

Usually, the seller’s agents and the buyer’s agent will respond by looking for recent sold and pending listings of comparable homes. Sometimes this can influence the appraisal. If the final appraisal is well below what you have agreed to pay, you can re-negotiate the contract or cancel it.

Where do you find a qualified appraiser?

Your bank or lending institution will find and hire an appraiser; Federal regulatory guidelines do not allow borrowers to order and provide an appraisal to a bank for lending purposes. If you want an appraisal for your own personal reasons and not to secure a mortgage or buy a homeowner’s insurance policy, you can do the hiring yourself. You can contact your lending institution and they can recommend qualified appraisers and you can choose one yourself or you can call your local Windermere Real Estate agent and they can make a recommendation for you. Once you have the name of some appraisers you can verify their status on the Federal Appraisal Subcommittee website.

Tips for hassle-free appraisals:

To ensure the appraisal process is smooth and efficient, provide your appraiser with the information and documents he or she needs to get the job done. The documents you will need include:

A brief explanation of why you’re getting an appraisal
The date you’d like your appraisal to be completed
A copy of your deed, survey, purchase agreement, or other papers that pertain to the property
A sketch of the property with the property’s dimensions. These are usually available online from the county assessors.
If you have a mortgage, provide the information about your lender, the year you got your mortgage, the amount, the type of mortgage (FHA, VA, etc.), your interest rate, and any additional financing you have.
A copy of your current real estate tax bill, statement of special assessments, balance owing and on what (for example, sewer, water)
Tell your appraiser if your property is listed for sale and if so, your asking price and listing agency.
If it’s a multiple offer situation, provide the appraiser with the other offers to prove the demand for the home.
Any personal property that is included in the sale, like appliances and other fixtures.
If you’re selling an income-producing property, a breakdown of income and expenses for the last year or two and a copy of leases.
A copy of the original house plans and specifications.
A list of recent improvements and their costs.
Any other information you feel may be relevant.

By doing your homework, compiling the information your appraiser needs, and providing it at the beginning of the process, you can minimize unnecessary delays.

Windermere Foundation • September 5, 2019

Windermere Teams Up with the Seahawks to #TackleHomelessness

by Julia and Mark Krill

Windermere is proud to partner with the Seattle Seahawks for the fourth season to help #TackleHomelessness. For every Seahawks home game defensive tackle, Windermere will donate $100 to Mary’s Place, whose mission is to help families on their journey out of homelessness. To date we’ve raised nearly $100,000 through our #TackleHomelessness campaign and we’re looking forward to raising even more for our friends at Mary’s Place!