THE GARDNER REPORT – FIRST QUARTER 2020

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 reach out.

A MESSAGE FROM MATTHEW GARDNER

Needless to say, any discussion about the U.S. economy, state economy, or housing markets in the first quarter of this year is almost meaningless given events surrounding the COVID-19 virus.

Although you will see below data regarding housing activity in the region, many markets came close to halting transactions in March and many remain in some level of paralysis. As such, drawing conclusions from the data is almost a futile effort. I would say, though, it is my belief that the national and state housing markets were in good shape before the virus hit and will be in good shape again, once we come out on the other side. In a similar fashion, I anticipate the national and regional economies will start to thaw, and that many of the jobs lost will return with relative speed. Of course, all of these statements are wholly dependent on the country seeing a peak in new infections in the relatively near future. I stand by my contention that the housing market will survive the current economic crisis and it is likely we will resume a more normalized pattern of home sales in the second half of the year.

HOME SALES

  • There were 13,378 home sales during the first quarter of 2020, a drop of only 0.2% from the same period in 2019, but 27% lower than in the final quarter of 2019.
  • The number of homes for sale was 32% lower than a year ago and was also 32% lower than in the fourth quarter of 2019.
  • When compared to the first quarter of 2019 sales rose in eight counties and dropped in seven. The greatest growth was in Cowlitz and Lewis counties. The largest declines were in Island and Snohomish counties.
  • Pending sales — a good gauge of future closings — rose 0.7% compared to the final quarter of 2019. We can be assured that closed sales in the second quarter of this year will be lower due to COVID-19.

HOME PRICES

  • Home-price growth in Western Washington rose compared to a year ago, with average prices up 8.7%. The average sale price in Western Washington was $524,392, and prices were 0.4% higher than in the fourth quarter of 2019.
  • Home prices were higher in every county except San Juan, which is prone to significant swings in average sale prices because of its size.
  • When compared to the same period a year ago, price growth was strongest in Clallam County, where home prices were up 21.7%. Double-digit price increases were also seen in Kitsap, Skagit, Mason, Thurston, and Snohomish counties.
  • Affordability issues remain and, even given the current uncertain environment, I believe it is highly unlikely we will see any form of downward price pressures once the region reopens.

DAYS ON MARKET

  • The average number of days it took to sell a home in the first quarter of this year dropped seven days compared to the first quarter of 2019.
  • Pierce County was the tightest market in Western Washington, with homes taking an average of only 29 days to sell. All but two counties — San Juan and Clallam — saw the length of time it took to sell a home drop compared to the same period a year ago.
  • Across the entire region, it took an average of 54 days to sell a home in the first quarter of the year — up 8 days compared to the fourth quarter of 2019.
  • Market time remains below the long-term average across the region. This is likely to change, albeit temporarily, in the second quarter due to COVID-19.

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.

Given the current economic environment, I have decided to freeze the needle in place until we see a restart in the economy. Once we have resumed “normal” economic activity, there will be a period of adjustment with regard to housing. Therefore, it is appropriate to wait until later in the year to offer my opinions about any quantitative impact the pandemic will have on the housing market.


Posted on April 19, 2020 at 7:29 pm
Stephen Hicks | Posted in Market News, Matthew Gardner Report | Tagged , , , , ,

Your Queen Anne Market Report for April 2020

Strange times. As I stated in last month’s newsletter, the real estate market was showing earlier than normal signs of a coming spring market that was going to be gangbusters. That was true until March 25 when non-essential services were ordered to stay at home. As a small personal example, I sold a home in Magnolia on March 12 that was listed for $975K. There were nine offers on it with nine pre-inspections. My clients and I were very fortunate to have been the winner at a sold price of $1.205M. We were also very lucky that we were able to fast track the closing to March 27th because since then, several lenders, led by Wells Fargo, have temporarily suspended granting “jumbo” loans(loans over $741K that are not government secured). These larger loans, if available, face tightening qualifications for buyers. Until that restriction is lifted, it is going to have a negative effect on Queen Anne listings since nearly all of the homes on the Hill are well over $1M. Out of curiosity, I just searched SFD on QA that have sold since being listed after March 24.There were two. Normally by now, we would be in a very active spring market with homes up to $1.5M flying off the shelves and being driven up in price. As an  example, of the 15 homes that have sold in the last 30 days since my last report, 8 have sold for more than list, but these all went into contract before March 25th. Incidentally, the winner in that group for this month was 3603 13thWest, listed for $1.295M and sold for $1.615M! Until the restrictions, the average sold price/square foot was steadily rising and reached $575.00.

My prediction for where the market will be, once we have people going back to work, is that the pent up demand for QA homes will be very strong and when we get listings coming on the market(that I suspect are currently being held off the market) we will have a gangbusters market once again. My best guess is that will start to happen in mid-June. I don’t see our economy getting back to strength until October or so. Because of low interest rates continuing as well as low inventory, I do not see prices coming down. I do see only vacant homes come onto the market until the all-clear is issued since most sellers will not want strangers in their home if they are still  living there. Actually , for the past year, about 65% of the homes coming on market have been vacant anyway(my observation looking at the data over the last year).

 

QA Pendings and Solds for April 2020 Report the active and sold data for the preceding 30 days as usual and have added a link to Bill Gates discussing the pandemic and what he sees needs to happen before we are in the clear.

 

And that’s the way Steve sees it…

Stay safe


Posted on April 16, 2020 at 12:14 am
Stephen Hicks | Posted in Market News | Tagged , , , , , ,

A Senior’s Guide to Aging in Place Safely

For many seniors, finding a way to safely age in place — or stay at home for as long as possible — can be difficult. There may be health or mobility issues involved, or the home may not be a viable living space anymore due to the presence of stairs or because it’s too large. For those who don’t have long-term care planned, it can be a scary and stressful thing to consider not living at home anymore, so it’s important to find ways to modify your home that will make it safe and accessible.

Fortunately, there are some simple ways you can do this, especially if your home is one level. In some cases, you may need the help of a contractor who can come in and do an assessment of your home. While this is a pricier option, you may be eligible for assistance with funding. Look online for information specific to your state, or start here.

Go room to room

Assessing your home for safety issues is important, so take a look around with a discerning eye. Think about not only your present needs, but your future ones as well. If you have health issues at the moment, consider how they will affect you four or five years from now. Will you have trouble using the stairs? Will you be able to use the bathroom safely? Walk through your home and look for potential issues so that you can get a feeling for what needs to be done and how to create a budget.

Eliminate the potential for injuries

Eliminating the potential for injury is imperative. According to the National Council on Aging, roughly one in every four Americans over the age of 65 falls each year, and many of those falls occur in the home. The bathroom is one of the rooms with the most potential for injuries because slick surfaces and stepping in and out of the bathtub can lead to a serious fall. Fortunately, there are several things you can do to make the bathroom safer, from adding grab bars and a shower seat to refinishing the tub with non-slip flooring. You could even remove the bathtub altogether and install a zero-entry shower.

Look for an accessible home

If staying in your house isn’t an option, it’s important to look in your area for accessible homes that you can afford. These are homes that already have a senior’s specific needs in mind, from open floor plans that allow a wheelchair to move about unrestricted, to wider doorways and lower countertops. Remember that in many cases, location is just as important as the home itself.

Use color and light to your advantage

Color and lighting can make a huge impact in your home, especially if you or your spouse have vision issues. You might paint the wall behind the toilet and sink a contrasting color than the rest of your bathroom, for instance, or add new lighting to pantries, closets, and hallways to help prevent stumbles and allow you to find things more easily.

Finding ways to make your home safer will not only benefit you now, but also for years to come. Aging in place is important to many seniors who don’t have a plan for long-term care or who want to spend their post-retirement years at home, but it’s imperative to make sure your house is up to par. Consider all your options and talk to your loved ones about your plans so you can garner their support. With a good plan and the right help, you can make sure that your golden years are everything you hoped they would be.


Posted on April 6, 2020 at 8:13 pm
Stephen Hicks | Posted in Homeowner, Real Estate News | Tagged , , , , , ,

Stay Home, Stay Healthy – The Impact on Real Estate


Posted on March 26, 2020 at 9:07 pm
Stephen Hicks | Posted in Real Estate News | Tagged , , , , , , , ,

The Life Expectancy of Your Home

Image Source: Shutterstock

 

Every component of your home has a lifespan. Common questions asked by homeowners include when to replace the flooring or how long to expect their siding to last. This information can help when budgeting for improvements or deciding between repairing and replacing when the time comes. We’re all familiar with the cliché: They just don’t build things like they used to. And while this may be true when it comes to brick siding or slate roofing, lifespans of other household components have increased in recent years. Here are the life expectancies of the most common household items (courtesy of NAHB):

 

Appliances: Among major appliances, gas ranges have a longer life expectancy than things like dishwashers and microwaves.

Appliance

Life Expectancy

 Oil-burning Furnace  20 years
 Heat Pump  16 years
 Gas Range  15 years
 Electric range / Refrigerator / Dryer  13 years
 Electric / Gas Water Heater  10 years
 Garbage disposal  10 years
 Dishwasher / Microwave / Mini Fridge   9 years

 

Kitchen & Bath: When choosing your countertops, factor in the life expectancies of different materials.

Kitchen / Bath Item

Life Expectancy

 Wood / Tile / Natural Stone Countertops  Lifetime
 Toilets (parts will require maintenance)  50+ years
 Stainless steel sink  30+ years
 Bathroom faucet  20+ years
 Cultured marble countertops  20 years
 Kitchen faucet  15 years

 

Flooring: If you’re looking for longevity, wood floors are the way to go. Certain rooms in your home will be better suited for carpeting, but you can expect they’ll need replacing within a decade.

Flooring Material

Life Expectancy

 Wood / Bamboo  Lifetime
 Brick Pavers / Granite / Marble / Slate  100+ years
 Linoleum  25 years
 Carpet  8 – 10 years

 

Siding & Roofing: When choosing roofing and siding for your home, climate and maintenance level factor into the life expectancy of the material. However, brick siding and slate roofing are known to be dependable for decades.

Siding / Roofing Material 

Life Expectancy

 Brick Siding  100+ years
 Aluminum Siding  80 years
 Slate / Tile Roofing  50+ years
 Wood Shingles  30 years
 Wood Siding  10 – 100 years (depending on climate)

 

Are extended warranties warranted?

Extended warranties, also known as service contracts or service agreements, are sold for all types of household items from appliances to electronics. They cover service calls and repairs for a specified time beyond the manufacturer’s standard warranty.

You will have to consider whether the cost is worth it to you. For some, it brings a much-needed peace of mind when making such a large purchase. Also consider if the cost outweighs the value of the item. In some cases it may be less expensive to replace a broken appliance than to pay for insurance or a warranty.


Posted on March 12, 2020 at 10:35 pm
Stephen Hicks | Posted in Homeowner | Tagged , , , , , ,

Your Queen Anne Market Report for March 2020

“As the economic storm clouds on the horizon in early 2019 cleared up, we saw buyers return in droves, taking advantage of ultra-low mortgage rates,” said Zillow economist Jeff Tucker. “Our first look at 2020 data suggests that we could see the most competitive home shopping season in years, as buyers are already competing over near-record-low numbers of homes for sale. That is likely to mean more multiple-offer situations, and that buyers will have a harder time finding the perfect fit for their families. The good news for buyers is that low mortgage rates are helping to make home ownership more affordable, and home builders are responding to the hot housing market by starting construction on more homes than at any time since 2007.”-Zillow

I could not agree more and I liked the way the above was concisely written so I thought I would pass it along. So far this year, what I am seeing on the Hill is much more demand than last year at this time. While January and February are always low inventory months, this year the demand is much greater and as a result, I think this spring is going to be gangbusters again as I said in last month’s newsletter. Homes priced under $1M sell especially fast. As an example, 1916 11th West, a busy section of 11th going down to 15th West, listed for $900K, sold in less than a week. It had 2 bedrooms, 1 bath, unfinished basement, no yard and the back of the home was next to a new condominium project. It was so close that if you wanted to borrow some mustard from the neighbor, you wouldn’t even have to leave your home to do it.

Insanely low interest rates are a major part of this demand as they are at their lowest in 50 years. This is mainly due to the stock market suffering from corona virus fears and investment money flowing into 10-year Treasuries for safety. I see these low interest rates staying around probably through the rest of the year. Mortgage brokers are swamped with requests for re-financing which is what happens when rates go this low. Also, first time buyers are getting into the market now with larger numbers because rents are not going down and at a certain point, they can buy a home for not much more per month than the rent they are currently paying (if they have the down payment). In short, I am predicting that this spring will be crazier than last spring, so great for sellers (and buyers if they can get into contract on a home).

I have posted a video below that shows you a short video on the current Seattle market from our Windermere economist, Matthew Gardener. He addresses the virus outbreak and his prediction on how it will affect our market. 

The winner of last month’s home that went most over list price is 2900 1st North, a beautiful Craftsman, listed for $1.395M and selling for $1.685M! The demand is back in force!

Read the full report by clicking here.

And that’s the way Steve sees it…

Make it a great month and stay healthy!


Posted on March 11, 2020 at 10:35 pm
Stephen Hicks | Posted in Market News | Tagged , , , , , ,

Your Queen Anne Market Report for February 2020

Well we have gone from only 5 active listings last month to 15 currently. Looking at the last 30 days of sales on the Hill, it looks like we are going to have another great spring market due to how quickly new listings coming on the market have gone into escrow. We have had 10 sales in the last 30 days with an average market time of only 8 days. This certainly demonstrates that demand is alive and well for Queen Anne homes. The low inventory is the only factor that is keeping the sales from going even higher. The most popular price ranges for these sales is under $1.5M and especially active is anything listed under $1M. This makes sense of course because there are more buyers in this range than in price ranges over $1.5M. You can look at the data in the attachment if you like.

The national and local economy is very strong which is also underpinning this activity. Interest rates have been declining for the last six weeks or so due to all the money going into safe haven 10 year Treasury bonds. The more money that flows into those bonds, the lower their yields and consequently mortgage rates which stand around 3.5% (for a conforming loan amount for buyers with at least a 760 credit score and sufficient income). As long as tariffs are an issue and the corona virus, I see rates staying at this level. With rents skyrocketing and with mortgage rates this low, more younger buyers are moving into the market place instead of renting. The problem is usually lack of down payment, so I have started to see some banks offering zero down loans again. I do hope we have learned from our mistakes in 2007! Frankly, looking at the big picture, as long as unemployment stays low(3.6%), inflation remains under control(1.6%) and interest rates stay low, business and employment will continue to be profitable and consumers will continue to spend money which accounts for about 67% of our national GDP. As a small example of how optimistic I am about this spring, the home that sold for the most over list price in the last 30 days was 112 West McGraw, listed for $1.15M and selling for $1.345M! This is very positive considering it was in the dead of winter and on a very busy street!

As an side, I want you to know that this year, I will be offering a $2,000 credit towards staging, plus a custom movie and colorized floor plans in addition to professional high resolution photos for any new listings. I am trying to give you as much value as possible to help you sell your home for maximum dollar.

And that’s the way Steve sees it…
Make it a great month!

Click here to view the full report


Posted on February 17, 2020 at 11:40 pm
Stephen Hicks | Posted in Market News | Tagged , , , , , ,

Working with a Local Real Estate Professional Makes All the Difference

Some Highlights:

  • Choosing the right real estate professional is one of the most impactful decisions you can make in your home buying or selling process.
  • A real estate professional can explain current market conditions and break down what they will mean to you and your family.
  • If you’re considering buying or selling a home in 2020, make sure to work with someone like me who has the experience to answer all of your questions about pricing, contracts, and negotiations.

Source: Keeping Current Matters


Posted on February 11, 2020 at 7:24 pm
Stephen Hicks | Posted in Homebuyer, Selling | Tagged , , , , ,

THE GARDNER REPORT – FOURTH QUARTER 2019



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.

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.


Posted on January 22, 2020 at 7:32 pm
Stephen Hicks | Posted in Market News, Matthew Gardner Report | Tagged

MATTHEW GARDNER – WILL THERE BE A RECESSION IN 2020?

Windermere Chief Economist, Matthew Gardner, answers the most pressing question on everyone’s minds: Will there be a recession in 2020? Here’s what he expects to see.


Posted on January 19, 2020 at 2:35 am
Stephen Hicks | Posted in Market News, Matthew Gardner Report | Tagged , , , , ,