Are you being besieged by offers to purchase your home? I must get 4-6 postcards and letters a month to do just that. It makes me wonder if a national seminar rolled through the NW teaching people how-to low-ball owners on the value of their homes and then try to re-sell them for a profit. Speaking of that, I was on the Zillow site yesterday looking at a Zestimate of a home and noticed that Zillow is now buying homes and re-selling them! Though not in Washington yet, they are in 26 US markets. As a test, I called them on a rental home I have in Palm Springs to get an offer to purchase. That is in progress and I will let you know how that turns out in my next newsletter. I suspect their model is to purchase homes below market, add a fee due from the seller and then attempt to re-sell them in a very short time frame. One of the appeals, of course, is that there are no realtor commissions and no bank loans. The huge downside in all of this for the owner is that the home is not presented to the market at large and therefore, the owner runs the risk of selling it for less, or far less, than its real market value. I think we all agree that “Zestimates” are not exactly reliable estimates of your home’s value so why should rely on Zillow to give you a reasonable offer? I have always maintained that an experienced real estate agent is well worth the commissions paid in getting you the highest, feasible price on your home through the extensive exposure the agent can garner. Time after time, I have seen that even after commissions are paid, the seller still has a higher net than selling without testing the market place.
As far as the Queen Anne market goes now, 80% of the homes listed since my last report have gone into escrow or have closed. That is very respectable number. 36% of those sold homes had to reduce their original list price to get into escrow, so list prices generally have been declining. BTW, the home that sold for most over list price was 506 Galer, listed for $989,000 and sold for $1,030,000, not much of a difference and reflects the fact that on the Hill, prices are not being run up over list like they once were. Of course, one reason for that is that most of the homes on the Hill are listed for over $1M. Homes priced for less in other neighborhoods are still seeing more activity. Please see the attachment for the data for the last 30 days on the Hill.
Finally, for the last 20 years, I have spent the winter months from November until March in Palm Springs where I have a home. I have had a California real estate license for over 12 years, but have not affiliated with a brokerage until now. I am happy to tell you that I will be selling homes there this winter and if you, or someone you know, would like to purchase a home there and get out of the grey, wet winter weather, please let me know. Prices are much lower than Seattle BTW. Same phone number and email address as always. In March, I will return to Seattle to once again be listing and selling homes on the Hill. I am always available during the winter months to assist you and have a realtor partner in Seattle, so don’t hesitate to call. And that’s the way Steve sees it.
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 contact me!
Washington State employment jumped back up to an annual growth rate of 2.4% following a disappointing slowdown earlier in the spring. As stated in the first quarter Gardner Report, the dismal numbers earlier this year were a function of the state re-benchmarking its data (which they do annually).
The state unemployment rate was 4.7%, marginally up from 4.5% a year ago. My current economic forecast suggests that statewide job growth in 2019 will rise by 2.6%, with a total of 87,500 new jobs created.
- There were 22,281 home sales during the second quarter of 2019, representing a drop of 4.8% from the same period in 2018. On a more positive note, sales jumped 67.6% compared to the first quarter of this year.
- Since the middle of last year, there has been a rapid rise in the number of homes for sale, which is likely the reason sales have slowed. More choice means buyers can be more selective and take their time when choosing a home to buy.
- Compared to the second quarter of 2018, there were fewer sales in all counties except Whatcom and Lewis. The greatest declines were in Clallam, San Juan, and Jefferson counties.
- Listings rose 19% compared to the second quarter of 2018, but there are still a number of very tight markets where inventory levels are lower than a year ago. Generally, these are the smaller — and more affordable — markets, which suggests that affordability remains an issue.
- Year-over-year price growth in Western Washington continues to taper. The average home price during second quarter was $540,781, which is 2.8% higher than a year ago. When compared to first quarter of this year, prices were up 12%.
- Home prices were higher in every county except King, which is unsurprising given the cost of homes in that area. Even though King County is home to the majority of jobs in the region, housing is out of reach for many and I anticipate that this will continue to act as a drag on price growth.
- When compared to the same period a year ago, price growth was strongest in Lewis County, where home prices were up 15.9%. Double-digit price increases were also seen in Mason, Cowlitz, Grays Harbor, and Skagit counties.
- The region’s economy remains robust, which should be a positive influence on price growth. That said, affordability issues are pervasive and will act as a headwind through the balance of the year, especially in those markets that are close to job centers. This will likely force some buyers to look further afield when searching for a new home.
DAYS ON MARKET
- The average number of days it took to sell a home matched the second quarter of 2018.
- Snohomish County was the tightest market in Western Washington, with homes taking an average of only 21 days to sell. There were five counties where the length of time it took to sell a home dropped compared to the same period a year ago. Market time rose in eight counties and two were unchanged.
- Across the entire region, it took an average of 41 days to sell a home in the second quarter of 2019. This was the same as a year ago but is down 20 days compared to the first quarter of 2019.
- As stated above, days-on-market dropped as we moved through the spring, but all markets are not equal. I suggest that this is not too much of an issue and that well-priced homes will continue to attract attention and sell fairly rapidly.
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. I am leaving the needle in the same position as the first quarter as demand appears to still be strong.
The market has benefitted from a fairly significant drop in mortgage rates. With average 30-year fixed rates still below 4%, I expect buyers who have been sitting on the fence will become more active, especially given that they have more homes to choose from.
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.
The market in our region appears to be moderating. Inventory is up, prices are relatively stable and homes are taking a bit longer to sell. However, with less than two months of available inventory, supply is still far short of demand. Steady buyer activity, low interest rates and a thriving economy are making for a strong summer in the housing market.
What I suggested might happen to our market in last month’s report, namely that increased inventory would probably lead to a slow down to the market, has come to pass. In addition, we are now in the summer market which is usually slightly slower.
Having said that, homes are still appreciating quite well as demand for Queen Anne remains high due to its location and continuing low interest rates. The Fed is expected to cut the rate they charge banks next month and that usually leads to slightly lower mortgage rates so I see rates as continuing to be positive.
To recap the last 30 days, there have been 43 homes sell or close since my last report on June 10th. Seven of those have sold for more than full price. Of those 43 sold or pending homes, 10 were listed since June 10th. We currently have 44 active listings for sale which is about the same number as last month. Incidentally, I am seeing a less frantic pace of homes coming onto the market since the last report. This spring was truly something of a record breaker in terms of homes coming on the market. In the last 30 days, we have only had 18 homes listed for sale which is far less than the number listed in March, April and especially May. I expect this slower pace of homes being listed to continue through summer.
Many of you probably know that the WS Legislature has increased the excise rates you pay when your home sells. Please review this document which will let you know how much more it will cost you to sell your home beginning in January. FYI, the rate more than doubles for homes sold for $1.5M or more. Yikes!
The winner of last month’s home that sold for the most over its list price was 3338 9th West, listed for $1.195M and selling for $1.321M. After I previewed this home, I thought it was too low on the price, but the market gave us the current value. Please review this document for details of those homes that sold in the last 30 days.
And that’s the way Steve sees it…
Have fun outside if it ever stops raining! (At least it’s warmer).
Geopolitical uncertainty is causing mortgage rates to drop. Windermere Chief Economist, Matthew Gardner, explains why this is and what you can expect to see mortgage rates do in the coming year.
Over the past few months we’ve seen a fairly significant drop in mortgage rates that has been essentially driven by geopolitical uncertainty – mainly caused by the trade war with China and ongoing discussions over tariffs with Mexico.
Now, mortgage rates are based on yields on 10-Year treasuries, and the interest rate on bonds tends to drop during times of economic uncertainty. When this occurs, mortgage rates also drop.
My current forecast model predicts that average 30-year mortgage rates will end 2019 at around 4.4%, and by the end of 2020 I expect to see the average 30-year rate just modestly higher at 4.6%.
The last time we saw a balanced market was late 1990s, meaning many sellers and buyers have never seen a normal housing market. Windermere Real Estate’s Chief Economist Matthew Gardner looks at more longer-term averages, what does he see for the future of the housing market?