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Demystifying the Zestimate®
Knowing the value of your home is helpful in many ways. It can help determine one’s net worth, help decide if a home sale or purchase is a financially feasible move, determine the ability to get a loan – and it’s just nice to know where your largest investment stands. Consumers have the option to access websites such as Zillow® to search the Zestimate® or other Automated Valuation Model (AVM) on their property.
A Zestimate is an AVM. The product of an automated valuation technology comes from analysis of public record data and computer decision logic combined to provide a calculated estimate of a probable selling price of a residential property. An AVM generally uses a combination of two types of evaluation, a hedonic model and a repeat sales index. The results of each are weighted, analyzed and then reported as a final estimate of value based on a requested date.
Often times when we talk with potential sellers, their Zestimate (or other AVMs) come up in the overall conversation, which is understandable. This information is relatively easy to access and gives the seller a starting point on the value of their home. Where an AVM can become dangerous is when a consumer thinks it’s accurate. Even worse, when a consumer makes a major financial decision solely based on this information. According to Zillow, less than half of all Zestimates in the Seattle metro area are even within 5.4% of the actual value, and they only give themselves a 2-star (fair) rating on their accuracy. In fact, they publish an accuracy report that you can view here.
In August, the average home price in the Seattle Metro area was $824,000. With less than half of all Zestimates within 5% of the actual value, that is a beginning margin of error of $41,200! Further, they claim that 72.3% of their Zestimates are within 10% of the actual value, which is a marked difference – up to $82,400. Where AVMs are incomplete is that the basis of their formula is tax records, which in our experience are often inaccurate. Also, and most importantly, an AVM does not take into consideration the condition of the home, the neighborhood and other environmental impacts such as school district, road noise and unsightly neighboring homes, to name a few.
At the end of the day, to give an accurate accounting of the value of a home in today’s market requires actually physically touring the home and the surrounding homes that compare. As well as considering current market conditions such as supply and demand and seasonality. An algorithm cannot accomplish this, but a real estate broker can.
So why does the Zestimate exist? Zillow is a publicly traded company (ZG) and their website is their vehicle to create profit. The Zestimate drives consumers to the website who are often dipping their toe in the pool to see what their home might be worth, or searching available homes for sale. When a consumer is searching on the website they are surrounded by real estate broker and mortgage broker ads on every page. These real estate brokers and mortgage brokers are paying for that advertising space, which is how Zillow makes its money and why there is a Zestimate. The Zestimate is not a public service, it is a widget to bring eyes to their advertising space which in turn, sells more ads.
Another important item to note is that Zillow does NOT have all available inventory in the Greater Seattle area on their website. In May, they cut off access to manually input listings, leaving some real estate firms unable to get their listings on the site any longer. Some firms just plainly chose not to syndicate to them. It is estimated that Zillow has between 70%-80% of the total available inventory on their site. In an inventory-tight market like the one we are in now, it is important for consumers to understand that if Zillow is the only source they are searching with, they may be missing out. Brokerage firm websites such as ours have a direct IDX feed from the Northwest Multiple Listing Service which refreshes every 15 minutes, insuring the accuracy and completeness of all listing data.
The moral of the story is this: use Zillow as one of the many tools in your real estate evaluation and search toolbox. Zillow provides a great starting point and contains a ton of information to whet your palate when embarking on a real estate endeavor. However, we live in a time of information overload and we are overstimulated at best. Nothing beats the evaluation and discernment of a knowledgeable and experienced real estate broker to help you determine accuracy, which will lead to the empowerment of clarity.
If you are curious about the value of your home in today’s market, please contact us. Any one of our experienced agents can provide an annual real estate review of all of your real estate holdings, or even dive deep into a complete comparative market analysis if you would find that helpful. It is our goal to help keep our clients informed and empower strong decisions.
Zillow® and Zestimate® are trademarks of Zillow, Inc.
Buyers: Keep Your Head Down, This May be Your Time
The first five months of 2017 have been a grind for buyers in our area. Inventory has been quite limited and demand has been off the charts. However, in the month of May we started to see things loosen up, with the highest rate of new listings coming to market in some time. Below are two market samplings from the Greater Seattle area: north King County and south Snohomish County which are reflective of our entire market.
South Snohomish County:
In May we saw just over 1,000 new listings come to market in south Snohomish County; the highest inventory push in one given month in over five years! In fact, it was a 46% increase over the previous month, and a 17% increase from the same month a year ago. This is good news for buyers, finally! One should note, however, that pending sales nearly mirrored the number of new listings, illustrating that demand is still very strong.
I think we will see that opportunities have loosened up for buyers in the list-to-sale price ratios that will post in June closings (May pendings). My prediction is that they will have tempered a bit from the 103% posting in May, purely based on buyers having more selection.
Demand surely met the new surge of inventory, but from what I am observing in the market, not all homes are getting multiple offers. When there are multiple offers, smaller groups of buyers may be vying for one house. We have even seen more price reductions in May with overzealous sellers not paying close attention these slight shifts in the market.
Don’t get me wrong, the good houses that are well-priced and looking good are seeing great price escalation and competition, but some are simply selling with a one-buyer audience. There are just more opportunities when there is more inventory, and this is good news for all of us as tempered price growth is needed after a 51% increase in median price over the last four years.
North King County:
In May, we saw just over 800 new listings come to market in north King County; the highest inventory push in one given month in over three years! In fact, it was a 33% increase over the previous month and a 9% increase from the same month a year ago. Pending sales also met demand here, but more buyers were able to land a home, which is good news. List-to-sale price ratios recorded at an average of 107% in this area, so definitely a needed tempering as we head into June.
When you are closer to jobs centers demand is higher, so the in-city market will continue to present a hustle for buyers, but more listings will equal a better chance of landing a house close to work. Prices in this area have increased 60% over the last four years.
Interest Rates:
Currently, interest rates are a buyer’s dream come true! We started the year at 4.25%, bumped up to 4.375% in early spring, and we have inched down to 4% most recently. This reduction in rate is saving buyers thousands of dollars over the course of their mortgage on their monthly payments, somewhat offsetting the increase in prices since the first of the year. This is something to pay attention to, and could not come at a better time as it is coupled with more inventory. Inventory in June and July should continue to be strong as the long winter delayed folks getting to market, and many sellers are taking advantage of the prices.
If you have thought about making a move or even your first purchase, now may be the time to not just dip your toe in the pool, but to jump in. It is summer and who doesn’t like a nice swim? Especially if that pool has more homes than we’ve seen in some time and cheap money. If you or anyone you know is interested in learning more about our market please contact one of our agents, as it is our goal to keep our clients informed and empower strong decisions.
Does it Make More Sense to Rent… or Own?
*The amount of time you need to own your home in order for owning to be a superior financial decision.
With Seattle’s robust job market and high housing costs, there has been a lot of talk lately about the cost of living in the Greater Seattle area. In fact, Seattle is now the 5th most expensive city to rent in the country according to a new study from Nested.com. The average monthly rental price for a one bedroom apartment in the city of Seattle is $1,790 according to Zumper.com, up 8.5% year-over-year; and a two bedroom is $2,470, up 6% year-over-year! With rising rental rates, still historically low interest rates, and home prices on the rise, the advantage of buying versus renting has become clear for folks who have a down payment saved, good debt-to-income ratios and strong credit. Currently, the breakeven horizon (the amount of time you need to own your home in order for owning to be a superior financial decision vs. renting) in the Greater Seattle area is 2.4 years according to Zillow research.
An additional study by Nested.com outlines the monthly rental costs for a single person or a family of four, as well as the yearly income required. In Seattle, it costs the average single person $1,288.76 a month to rent, which requires an annual income of $53,328.00. The average family of four costs $2,665.34 for monthly rent, and an annual income of $101,186.48. That is a lot of money one would be paying towards someone else’s investment.
There are several factors to consider that will lead you to make the best decision for your lifestyle and your financial bottom line. One of the biggest factors is interest rates! Currently, the rate for a 30-year fixed, conventional, conforming loan is hovering around 4.25%. That is amazingly and historically low, making the advantage of securing a mortgage huge. What is nice about having a mortgage is that the payment stays the same over the term of the loan. With renting, rates can be increased at any time, and you are paying down someone else’s asset, not your own. Owning gives the homeowner control over their overhead while getting to make their house their home. What is also so great about owning, is that once you have hit the breakeven horizon, every month that ticks away thereafter is building your nest egg in value. The long-term benefits of owning are abundant, including the stability of not being asked to move. These are important factors to consider for everyone, but especially the younger folks who are enjoying the benefits of Seattle’s attractive job market.
Where folks are having to compromise most due to affordability is commute times, and settling in less urban neighborhoods. Worth pointing out, is the average home price in South Snohomish County is 46% less than Seattle Metro – that is a huge savings! Some people, mainly millennials, have not been willing to give up living in the more core urban neighborhoods that have high walk scores and shorter commute times. That should be apt to change as rents are rising fastest in those areas. The advantages of moving out a little further and securing a home will start people on the track of building long term wealth.
If you or anyone you know is currently renting and is considering a change, please let us know as we would be happy to get their questions answered to help them make an informed decision.
Affordability: Commute Times & Interest Rates
These graphs illustrate the brass tacks of affordability between King and Snohomish Counties, measured by the average monthly payment. Most recently in September, the average monthly payment was 35% higher in King County compared to Snohomish County. What is fascinating, though, is comparing today’s average monthly payment to peak monthly payments back in 2007! In King County, monthly payments are currently 21% less than during the peak, and in Snohomish County, 36% less. That is a lot of saved monthly overhead. Note that this has everything to do with today’s historical interest rates, as average prices are higher now than in 2007. When one buys or refinances a house, they are not only securing the property, but securing the rate for the life of the loan.
Close proximity to the work place and affordability is often near the top of a buyer’s list of preferred features. 2016 has continued to be a year when commute times to major job centers widened the price divide between key market areas in the greater Seattle area. Over the last 12 months, the average sales price for a single-family residential home in the Seattle Metro area was $696,000! In south Snohomish County (Everett to the King County line), the average sales price for a single-family residential home was $471,000 – 48% less than Seattle Metro. Further, if you jump across Lake Washington to the Eastside, the average sales price for a single-family residential home was $881,000 – 27% more than Seattle Metro!
The “drive to qualify” mentality has been proven by the pending sales rate in south Snohomish County over the last 12 months. Pending sales are up 7% complete year-over-year, whereas in Seattle Metro pending sales are down 1%, and down 2% on the Eastside. We believe this is a result of affordability, more inventory choices in south Snohomish County, new construction options, lower taxes, strong school district choices, and manageable commute times. Newer transit centers and telecommuting have also opened up doors to King County’s little brother to the north as well. If you are curious about possible commute times, you can search for properties on our website based on commutes times, which is a feature provided by INRIX Drive Time. Also, we track the market in several ways, so if the graphs here are interesting to you, any of our agents would be happy to provide additional information relative to your specific neighborhood. Please contact us anytime, as it is our goal to help keep you informed and empower you to make strong real estate decisions.
Market Update – Q3
Inventory levels providing more choices for buyers; is the market starting to stabilize?
As we head into the fall and winter months after an incredibly eventful spring and summer, available inventory levels are starting to ease. It is still a seller’s market (3 months of inventory or less) in most areas, but one that is providing buyers increased options. The increase in available inventory is due to pent-up seller demand starting to come to market. The return of strong equity levels have brought sellers to market that have been waiting to jump in for some time. Continued buyer demand due to our flourishing job market and historically low interest rates have steadily absorbed new inventory, but we are finally starting to see a trend toward some more balance. This is good news! Additionally, lending requirements remain stringent and down payments are bigger, unlike the dreaded bubble market we experienced in 2007/2008. Educated pricing and sound condition is what will drive a buyer’s interest in a home. As the market stabilizes, it will be important for consumers to partner with a broker who closely follows the market to help them make informed decisions and develop winning strategies.
Read below for market details from Snohomish County down through south King County.
Snohomish County
This graph shows that we currently sit at 1.6 months of inventory based on pending sales, which is the highest level we have seen in all of 2016! It is still a seller’s market (3 months or less), but one that is providing buyers increased options. The average cumulative days on market reached 28 days in September, which was up 8% over August. Median price peaked in August at $401,000 and settled at $397,000 in September after hovering between $380,000 and $400,000 since April. For the first time since February, the average list to sale price ratio was 99% after sitting at 100-101% over the last six months.
The return of strong equity levels have brought sellers to market that have been waiting to jump in for some time. In fact, average prices have grown just over 20% over the last two years, freeing up sellers to make the moves they have been waiting for. Continued buyer demand due to our flourishing job market and historically low interest rates have steadily absorbed new inventory, but we are finally starting to see a trend toward some more balance. This is good news! We are still seeing multiple offers and quick market times, but not quite the frenzy that we experienced earlier this year.
All of these factors indicate that we may finally be headed towards a more stabilized market with positive attributes for both buyers and sellers.
South Snohomish County 
This graph shows that we currently sit at 1.4 months of inventory based on pending sales, which is the highest level we have seen in all of 2016! It is still a seller’s market (three months or less), but one that is providing buyers increased options. The average cumulative days on market reached 24 days in September, which was up 14% over August. Median price peaked in August at $453,000 and settled at $440,000 in September after hovering between $440,000 and $450,000 since March. For the first time since February, the average list to sale price ratio was 99% after sitting at 100-101% over the last six months.
The return of strong equity levels have brought sellers to market that have been waiting to jump in for some time. In fact, average prices have grown just over 20% over the last two years, freeing up sellers to make the moves they have been waiting for. Continued buyer demand due to our flourishing job market and historically low interest rates have steadily absorbed new inventory, but we are finally starting to see a trend toward some more balance. This is good news! We are still seeing multiple offers and quick market times, but not quite the frenzy that we experienced earlier this year.
All of these factors indicate that we may finally be headed towards a more stabilized market with positive attributes for both buyers and sellers.
North King County 
This graph shows that we currently sit at 1.1 months of inventory based on pending sales, which is the highest level we have seen since January! It is certainly still a seller’s market (3 months or less), but one that is starting to provide buyers increased options. In fact, we saw a 13% jump in new listings month-over-month. The average cumulative days on market reached 20 days in September, which was up 18% over August. Median price peaked in June at $650,000 and settled at $600,000 in September after hovering between $605,000 and $650,000 since March. In June, there were 95% more home sales above $1M over September. For the first time since February, the average list to sale price ratio was 101% after sitting at 102-104% over the last seven months.
The return of strong equity levels have brought sellers to market that have been waiting to jump in for some time. In fact, average prices have grown 21% over the last two years, freeing up sellers to make the moves they have been waiting for. Continued buyer demand due to our flourishing job market and historically low interest rates have steadily absorbed new inventory, but we are finally starting to see a trend toward some more balance. This is good news! We are still seeing multiple offers and quick market times, but not quite the frenzy that we experienced earlier this year.
All of these factors indicate that we may finally be headed towards a more stabilized market with positive attributes for both buyers and sellers.
Eastside 
This graph shows that we currently sit at 1.5 months of inventory based on pending sales, which is the highest level we have seen in all of 2016! It is still a seller’s market (3 months or less), but one that is starting to provide buyers increased options. The average cumulative days on market reached 31 days in September which was up 24% over August. Median price peaked in August at $770,000 and settled at $750,000 in September after hovering between $737,000 and $770,000 since March. In June, there were 18% more home sales above $1M over September. Over the last two months, the average list to sale price ratio was 99% after sitting at 101-102% over the five months prior.
The return of strong equity levels have brought sellers to market that have been waiting to jump in for some time. In fact, average prices have grown 25% over the last two years, freeing up sellers to make the moves they have been waiting for. Continued buyer demand due to our flourishing job market and historically low interest rates have steadily absorbed new inventory, but we are finally starting to see a trend toward some more balance. This is good news! We are still seeing multiple offers and quick market times, but not quite the frenzy that we experienced earlier this year.
All of these factors indicate that we may finally be headed towards a more stabilized market with positive attributes for both buyers and sellers.
Seattle Metro 
This graph shows that we currently sit at 1.1 months of inventory based on pending sales, which is the highest level we have seen since January! It is certainly still a seller’s market (3 months or less), but one that is starting to provide buyers increased options. In fact, we saw a 16% jump in new listings month-over-month. The average cumulative days on market reached 21 days in September, which was up 31% over August. Median price peaked in June at $650,000 and settled at $605,000 in September after hovering between $608,000 and $650,000 since March. In June, there were 23% more home sales above $1M over September. For the first time since February, the average list to sale price ratio was 101% after sitting at 102-104% over the last seven months.
The return of strong equity levels have brought sellers to market that have been waiting to jump in for some time. In fact, average prices have grown 22% over the last two years, freeing up sellers to make the moves they have been waiting for. Continued buyer demand due to our flourishing job market and historically low interest rates have steadily absorbed new inventory, but we are finally starting to see a trend toward some more balance. This is good news! We are still seeing multiple offers and quick market times, but not quite the frenzy that we experienced earlier this year.
All of these factors indicate that we may finally be headed towards a more stabilized market with positive attributes for both buyers and sellers.
South King County 
This graph shows that we currently sit at 1.7 months of inventory based on pending sales, which is the highest level we have seen in all of 2016! It is still a seller’s market (3 months or less), but one that is providing buyers increased options. The average cumulative days on market reached 27 days in both August and September, which was up 23% over July. Median price peaked in June at $371,000 and settled at $360,000 in September after hovering between $350,000 and $371,000 since March. For the first time since March, the average list to sale price ratio was 99% in August and September after sitting at 100-101% the prior four months.
The return of strong equity levels have brought sellers to market that have been waiting to jump in for some time. In fact, average prices have grown 16% over the last two years, freeing up sellers to make the moves they have been waiting for. Continued buyer demand due to our flourishing job market and historically low interest rates have steadily absorbed new inventory, but we are finally starting to see a trend toward some more balance. This is good news! We are still seeing multiple offers and quick market times, but not quite the frenzy that we experienced earlier this year.
All of these factors indicate that we may finally be headed towards a more stabilized market with positive attributes for both buyers and sellers.
These are only snapshots of the trends in our area; please contact one of our agents if you would like further explanation of how the latest trends relate to you.
Interest Rates and Your Bottom Line
Wow, just wow! The interest rate levels that we have experienced in 2016 are seriously unbelievable. Currently we are hanging around 3.5% for a 30-year fixed conventional mortgage, almost a half a point down from a year ago. This is meaningful because the rule of thumb is that for every one-point increase in interest rate a buyer loses ten percent in buyer power. For example, if a buyer is shopping for a $500,000 home and the rate increases by a point during their search, in order to keep the same monthly payment the buyer would need to decrease their purchase price to $450,000. Conversely, for every decrease in interest rate, a buyer can increase their purchase price and keep the same monthly mortgage payment.
Why is this important to pay attention to? Affordability! If you take the scenario I just described and apply it to the graph on the right, you can see that the folks who jumped into the market this year enjoyed an interest cost savings when securing their mortgage. This cost savings is doubly important because we are in a price appreciating market. In fact, the median price in King County has increased by 13% complete year-over-year and 10% in Snohomish County. Interest rates are helping to keep payments more manageable in our appreciating market. Most recently we have started to see a slight increase in inventory compared to the spring/summer market, which is a plus for buyers and something to be taken advantage of.
Will these rates last forever? Simply put, no! The graph above provided by Freddie Mac shows a prediction for rates to start rising. While still staying well below the 30-year average of 7.65%, increases are increases, and securing these rates could be downright historical. Just like the 1980’s when folks were securing mortgages at 18%, the people that lock down on a rate from today will be telling these stories to their grandchildren. Another factor to consider is that it is an election year, and rates historically remain level during these times. What 2017 and beyond hold for rates will likely not mirror these historical lows under 4%. Note the 30-year average – one must think that rates closer to that must be in our future at some point.
So what does this mean for you? If you have considered making a move, or even your first purchase, today’s rates are a huge plus in helping make that transition more affordable. If you are a seller, bear in mind that today’s interest rate market is creating strong buyer demand, providing a healthy buyer pool for your home. As a homeowner who has no intention to make a move, now might be the time to consider a refinance. What is so exciting about these refinances, is that it is not only possible to reduce your monthly payment, but also your term, depending on which rate you would be coming down from.
If you would like additional information on how today’s historical interest rates pertain to your housing goals, please contact any of our agents. We would be happy to educate you on homes that are available, do a market analysis on your current home, and/or put you in touch with a reputable mortgage professional to help you crunch numbers. Real estate success is rooted in being accurately informed, and it is our goal to help empower you to make sound decisions for you and your family.
Many Factors to Consider When Choosing to Rent vs. Own
*The amount of time you need to own your home in order for owning to be a superior financial decision.
There has been a lot of talk lately about the cost of living in the Greater Seattle area. Whether it has to do with home prices or rental rates the story is the same: it is becoming more and more expensive by the month. With rising rental rates, historically low interest rates, and home prices on the rise, the advantage of buying vs. renting has become clear for folks that have a down payment saved, good debt to income ratios and strong credit. In fact, Seattle is now the 10th most expensive city to rent in the country according to a new study from Zumper.com. The average monthly rental price for a one-bedroom apartment in the city of Seattle is $1,740! Snohomish County has seen an increase in apartment growth and rising rental rates as well. Currently, the breakeven horizon in the Greater Seattle area (the amount of time you need to own your home in order for owning to be a superior financial decision versus renting) is 1.6 years according to Zillow research.
There are several factors to consider that will lead you to make the best decision for your lifestyle and your financial bottom line. One of the biggest factors is interest rates! Currently, the rate for a 30-year fixed, conventional, conforming loan is hovering around 3.5%. That is amazingly and historically low, making the advantage of securing a mortgage huge. What is nice about having a mortgage is that the payment stays the same over the term of the loan. With renting, rates can be increased at any time, and you are paying down someone else's asset, not your own. Owning gives the homeowner control over their overhead while getting to make their house their home. What is also so great about owning is that once you have hit the breakeven horizon, every month that ticks away thereafter is building your nest egg in value. Did you know that American homeowners’ net worth is 36 times the amount of renters? The long term benefits of owning are abundant. These are important factors to consider for everyone, but especially the younger folks that are enjoying the benefits of Seattle’s attractive job market and competitive wages.
Where folks are having to compromise most due to affordability is commute times and settling in less urban neighborhoods. Some people, mainly millennials, have not been willing to give up living in the more core urban neighborhoods that have high walk scores and shorter commute times. That should be apt to change as rents are rising fastest in those areas. The advantages of moving out a little further and securing a home will start people on the track of building long term wealth. If you or anyone you know is currently renting and is considering a change, please let us know, as we would be happy to get your questions answered to help you make an informed decision.
Looking Towards the 2016 Real Estate Market
As we round out a very strong 2015 in the real estate market, it is time to look towards 2016 and what it may bring. After two straight years of inventory challenges, multiple offer madness and steep price appreciation, will things start to temper? Below is a list of my predictions for what 2016 might hold for the real estate market. These are fun, educated guesses based on studying the market and paying attention to important indicators. I hope you enjoy and I welcome your questions or discussions.
1. Interest Rates: They have been saying for a few years now that interest rates are going to go up, and they really haven't. Since 2012 they have ebbed as low as 3.375% and as high as 4.25%, and are currently leveled out at 4% on a 30-year fixed conventional loan. By the end of 2016, I predict that they will be just under 5%. As the economy continues to improve and consumer confidence grows, an increase in rates will be important for the health of our overall economy and the public should be able to handle this rise. Plus, we must not lose sight that the average interest rate over the last 30 years has been 6.959% and we are still WAY below that.
2. Listing Inventory: Inventory has been the biggest challenge this year, with King County hovering between one and two months of inventory and Snohomish Country hovering between two and three months of inventory in 2015. That is LOW!! There are two reasons it has been that way; we have had 21% less homes come to market in King County year-over-year, and 15% less in Snohomish County. There have also been more buyers in the market, causing demand to heavily outweigh supply. In 2016 I think we will see more homes come to market, due to the fact that as prices have appreciated, homeowners have gained much more favorable equity positions, giving them options to make the moves they've been dreaming of and waiting for. Folks are ready to upgrade their lifestyle, whether that means buying a bigger home or transitioning to a "right" size home due to retirement. Pent up seller demand due to these equity and lifestyle factors will lead to an increase in homes coming to market.
3. Buyer Demand: Buyer demand will remain strong! This is largely related to our booming job market and the expanding tech sector. Our unemployment rate is 4%, meaning jobs are more abundant than they have been in years, and wages are growing in every county. Couple this with low interest rates, and it equals a more-than-plentiful pool of buyers. One factor to look out for as we head into 2016, is if the strong buyer demand we have will quickly absorb any increase in inventory, keeping months of inventory basically the same as 2015. This will be a fun one to watch.
4. Prices: We will indeed continue to see price appreciation due to the factors above. Year-to-date, median price appreciation in King County is up 8% complete year-over-year and up 9% in Snohomish County. A year from now I anticipate price appreciation to slow to 6% in King and 5% in Snohomish, due to a bit more inventory, and meet peak levels. This is still higher than the normal 3-4% year-over-year appreciation, but it is below the double-digit appreciation we saw in 2013 and 2014, thank goodness! As we have dug out of the Great Recession's hole and regained equity levels after the fall of the sub-prime mortgage fiasco it is important to retreat back to more sustainable appreciation levels.
5. First-Time Home Buyers: The big talk of 2015 was the Millennial generation, and when they would jump into the housing market. They have started to make their play as they are getting some of those great tech sector jobs, but many are limited in purchasing due to high student loan debt. We are starting to see FICO scores loosen up a bit for this reason. Interestingly enough, the average FICO score for a denied borrower for a conventional loan was 700, and 754 for an approved borrower. Average FICO score for a FHA borrower who was denied was 635, and 687 for an approved borrower. These are important factors to pay attention to along with debt-to-income ratios. Also important to note is that rents are extremely high in the Greater Seattle area, so the cost of owning over the long term is more favorable. Once the Millennials decide that they are ready to settle down, what they are willing to have their commute look like and pay down some of that debt they will be ready to start building household wealth by buying vs. renting.
If you or anyone you know has any questions about real estate, please don't hesitate to contact any one of our agents. We are here to help!
