Q3: July 1 – September 30, 2018
NORTH SNOHOMISH COUNTY: In September, the average days on market landed at 29 days and the original list-to-sale price ratio at 98%. Since May, inventory growth has been noticeable, and has given buyers more options. This has led to more negotiations and fewer bidding wars, which is tempering month-over-month price growth to a more sustainable level.
Back in May, the average days on market was 22 days and the original list-to-sale price ratio 101%; but months of inventory based on pending sales was 1 month compared to 2.3 months currently. Year-over-year, prices are up 11%, still well above the historical norm of 3%-5% year-over-year gains—but note that the majority of this growth happened during the spring, due to constricted inventory levels.
Supply has increased, creating more options for buyers and helping to buffer affordability issues. Many sellers are deciding to make moves and cash in on the equity gained over the last six years. An average original list-to-sale price ratio of 98% is a positive return, yet illustrates a softening in the market after some very extreme times. With 11% price growth over the last 12-months in a seller’s favor, the increase in selection has led to more nimble moves from one house to another. Where sellers need to be careful is anticipating the month-over-month price growth we saw prior to the shift in inventory. Prospective buyers would be smart to take advantage of today’s historically low interest rates and the added inventory selection.
This is only a snapshot of the trends in north Snohomish County; please contact me if you would like further explanation of how the latest trends relate to you.
Q3: July 1 – September 30, 2018
SOUTH KING COUNTY: In September, the average days on market landed at 26 days and the original list-to-sale price ratio 98%. Since May, inventory growth has been noticeable, and has given buyers more options. This has led to more negotiations and fewer bidding wars, which is tempering month-over-month price growth to a more sustainable level.
Back in April, the average days on market was 21 days and the original list-to-sale price ratio 103%; but months of inventory based on pending sales was 0.9 months, compared to 2.6 months currently. Year-over-year, prices are up 10%, still well above the historical norm of 3%-5% year-over-year gains—but note that the majority of this growth happened during the spring, due to constricted inventory levels.
Supply has increased, creating more options for buyers and helping to buffer affordability issues. Many sellers are deciding to make moves and cash in on the equity gained over the last six years. An average original list-to-sale price ratio of 98% is a positive return, yet illustrates a softening in the market after some very extreme times. With 10% price growth over the last 12-months in a seller’s favor, the increase in selection has led to more nimble moves from one house to another. Where sellers need to be careful is anticipating the month-over-month price growth we saw prior to the shift in inventory. Prospective buyers would be smart to take advantage of today’s historically low interest rates and the added inventory selection.
This is only a snapshot of the trends in south King County; please contact us if you would like further explanation of how the latest trends relate to you.
August 8th-10th will be an exciting time in Seattle. Pearl Jam, Seattle’s own original grunge band will be hosting two shows at Safeco Field on August 8th and 10th, and the Seattle Seahawks kick off their preseason schedule at Century Link on August 9th. Besides providing great entertainment for music and football fans, both of these events will give back to the community.
The two Pearl Jam shows have been coined The Home Shows as Seattle is Pearl Jam’s home town; but more importantly, proceeds from both shows will be donated to organizations such as Mary’s Place, the YMCA and The Mockingbird Society to help fight homelessness. These organizations have programs in place that are helping to improve the homeless crisis in our city. The Windermere Foundation has partnered with Pearl Jam and their Vitalogy Foundation and joined other organizations such as Alaska Airlines, Nordstrom, Tom Douglas, and The Bill and Melinda Gates Foundation to help sponsor these two benefit shows.
The Windermere Foundation has always been rooted in working towards overcoming homelessness and helping families and children get back on their feet. The Home Shows aligned with the Windermere Foundation’s mission, making it a natural fit for this partnership. Check out this video of Mike McCready, Pearl Jam’s guitarist serenading Windermere for our partnership.
On August 9th, the Seattle Seahawks kick off their pre-season schedule which also kicks off the Windermere Foundation’s third year of partnering with the Seattle Seahawks to Tackle Homelessness. For every defensive tackle that takes place at a regular season home game, the Windermere Foundation will donate $100 towards Youth Care, an organization that helps youth struggling with homelessness or transitional living.
Thanks to the generosity of Windermere agents, staff, franchise owners, and the community, the Windermere Foundation has proudly donated a total of $920,351 so far this year to non-profit organizations that provide services to low-income and homeless families. This brings the total amount of money that the Windermere Foundation has raised since 1989 to over $36 million.
Each Windermere office has its own Windermere Foundation fund account that they use to make donations to organizations in their local communities. Our office recently sent 24 low-income children to YMCA’s Camp Orkila and Camp Colman with funds that we raised. These kids will enjoy a life changing week of summer camp, meeting new friends and experiencing the outdoors. These experiences would not be possible without the support of our clients. For each transaction that Windermere closes, the Windermere agent involved donates a portion of their commission to the Windermere Foundation. Thank you for your support of our business; it helps make the Windermere Foundation possible!
The late spring market brought about some welcomed change to our local real estate markets. In May, we experienced the largest increase in inventory in a decade! North King County and South Snohomish County are two examples of what is happening in all the markets across the Puget Sound as we head into the second half of 2018. Below is a breakdown of the current environment; further is an explanation of what it all means.
North King County (Ship Canal to Snohomish County Line):
- 38% increase in new listings from April to May 2018
- 16% more new listings in May 2018 vs. May 2017
- Overall 5% more new listings over the last 12 months vs. the previous 12 months
- Average list-to-sale price ratios reduce to 104% from 105% in May 2018
- Median Price up 15% complete year over year, but down 1% vs. the previous month, landing at $815K.
South Snohomish County (Snohomish County Line to Everett):
- 27% increase in new listings from April to May 2018
- 10% more new listings in May 2018 vs. May 2017
- Overall 2% more new listings over the last 12 months vs. the previous 12 months
- Average list-to-sale price ratios reduce to 102% from 103% in May 2018
- Median price up 12% complete year over year, but equal with the previous month, landing at $500K.
This increase in inventory is awesome! It is providing more selection for buyers and is helping temper price growth, which was increasing at an unsustainable level. It is still a Seller’s market by all means, which is defined by having three or less months of available inventory. Both market areas are still just under one month of inventory based on pending sales, but not as low as the two-week mark they were experiencing in March.
The increase in inventory is the result of pent up seller demand. From 1985-2008 the average amount of time a homeowner stayed in their home was 6 years. From 2008-2017 it grew to 9 years. With a resounding amount of equity under their belts, many homeowners are now deciding to make moves. Some are moving up to the next best thing and others are cashing out and leaving the area for a new beginning or retirement. This is providing buyers with the selection they have been waiting for after a very tenuous, inventory-starved start to 2018. The buyers that have stayed on the forefront of the market are now being rewarded with choices. These choices are best accompanied with keen discernment in order to craft the best negotiations – the broker they choose to align with is key.
The price analysis above indicates strong equity positions for sellers, but also a leveling off in price growth. Over the first quarter we saw prices increase month-over-month quite handily; now that more inventory is appearing and demand is being absorbed, price growth is not as extreme. This has highlighted the importance of having a strategic pricing and marketing plan for sellers wanting the highest price and shortest market time. The broker they choose to align with is key.
The importance of both buyers and sellers aligning with a knowledgeable, well-researched and responsive broker is paramount. One might think that it is “easy” to sell a house in this market, but the pricing research, home preparation, market exposure, varied marketing mediums, close management of all the communication, and how negotiations are handled can make or break a seller’s net return on the sale. With market times increasing, having a broker with a tight grasp on the changing environment will help create an efficient market time, resulting in the best price and terms for a successful closing. It is important that sellers do not overshoot this market, and it takes a broker with a keen gut sense rooted in in-depth research to help get them their desired results.
If you’re a buyer, it is overwhelmingly important that you are aligned with a broker that knows how to win in this market. The increase in selection has left some room for contemplation in some cases. Considering possible terms and price based on thorough market research as you head into negotiations are what set a highly capable selling broker apart and are required to prevail. With more selection coming to market, buyers have more to consider, and having a broker alongside them to help craft a strategy of negotiations will ensure they don’t overpay.
If you have any curiosities or questions regarding the value of your current home or purchase opportunities in today’s market, please contact us. It is our goal to help keep you informed and empower strong decisions.
Have you had dreams of owning a home or know someone that does? Jumping into the market as a first-time home buyer can be intimidating, especially within the wild ride of the Greater Seattle market; but there is hope! In an effort to illustrate the reality for first-time buyers in today’s market, our office got together and identified several sets of buyers who recently found success in today’s market and asked them to share their stories. We think this is timely because it is the time of year that we see a surge in inventory, which gives buyers more selection and opportunity. We have two stories to share below, but before we dive into those let’s defy some first-time home buyer myths.
First, many people think it is necessary to have a 20% down payment saved in order to make their first purchase. That is simply not true. While a 20% down payment can help make you more competitive and naturally lowers your monthly payment, it is not the only option. There are loan programs with down payments as low as 3%. Nationally, in March the average down payment for all loans was 10%. For first-timers it was 6% and repeat buyers it was 14%.
Second, expectations around credit scores can use some clarification as well. In March, the average credit score for all loans was 722. For Conventional loans it was 742 and for FHA it was 677. If your credit needs some work, contact me and I can put you in touch with one of my preferred lenders that can help with credit repair. There is hope, as these numbers are just the average. You’d be surprised that you don’t have to have perfect credit to get the process started.
Lastly, the cost to be a renter is high, and the return on your investment is nothing. Recently, Rent.com did a survey of landlords and 88% said they planned to raise their rents in the next 12 months. In the same survey, 53% said they’d rather place a new tenant with a higher rent versus renegotiate and renew with a current tenant. This sounds expensive and unstable. Owning leads to building wealth and putting down permanent roots.
Now that we’ve gained some clarity on what it takes to qualify in today’s market, let’s jump into these two honest, yet heartwarming local first-time home buyer stories.
Three Teenagers, One Bathroom, No More
A happy family of five just moved in to this house in mid-May. Two hard working parents, Brandy and Juan, with three teenagers were renting a 3-bedroom, 1-bath rambler in Edmonds and needed more space. It was time to make a move, and they had saved up a 3% down payment for a new home. Their budget was $400,000.
The first step in the home buying process was sitting down with their agent for the initial buyer consultation. This is where they discussed market conditions, desired features such as bedrooms, bathrooms and garage, and their budget. This lead them to explore which locations had the inventory that met their needs in order to stay within their budget. They had to marry these three key points – we like to call this the Triangle of Buyer Clarity. They then identified a few workable locations that had inventory which supported their desired features and their budget and went for it. This upfront research and partnership with their agent lead to Brandy and Juan finding success rather quickly, saving them money in an appreciating market, and a whole lot of strife.
They did this and ultimately bought a great house in Marysville which fit their budget, afforded them the features they desired, and still provided a manageable commute into Lynnwood. Their mortgage payment is higher than their rental rate, but is relative to the size of their new home and their investment. Not to mention, they are now on the equity-building train and don’t have to worry about a landlord displacing them. Their monthly mortgage payment is fixed with an awesome low interest rate, and they are super happy to have more than one bathroom for their teenagers.
From North Seattle to West Seattle
First, how cool is this house? Super cool! That’s just how Paul and Ange feel about their newly purchased home in the Highland Park neighborhood of West Seattle. They just closed in early April and have already attended two neighborhood BBQ’s, received gifts from their new neighbors, discovered new parks and restaurants and, wait for it…shortened their commute.
Paul described his new neighborhood, Highland Park, as “magical.” Previously, Paul and Ange were renting in Wedgwood for six years and loved it there. So much that they could not imagine living anywhere else. When they started their home search in late 2017, they kept to strict search criteria of North Seattle because that is what they knew and it was comfortable. After making two offers and not prevailing because they were getting beat out on price, their agent suggested West Seattle as a more affordable option. The ‘price’ corner of the Triangle of Buyer Clarity was making itself known as a challenge in North Seattle, so it was time to reconvene. They sat down with their agent and evaluated the market conditions in West Seattle compared to North Seattle and applied them to their feature list and budget, and : West Seattle was calling their names. You see, they wanted a more turn-key home, and the homes they were encountering in their price range in North Seattle needed a lot of work.
They went out on a limb and traveled over the bridge to start looking at homes. They quickly saw the difference – the homes they were interested in were not, as Paul said, “scary”! The anticipated repairs they would have to make to the homes they were able to afford in North Seattle were daunting and unexciting. They felt much more at ease with the features that the West Seattle homes provided within their price range. They just needed to get comfortable with the idea of moving to a different community.
When they found the house featured above, the leap of faith to West Seattle started to take shape. They prepped a strong offer, did their due diligence, and believe it or not, secured the home in a multiple-offer situation at $805,000 – which was not the highest price offered! They listened to their agent and wrote an offer with very strong terms as well as a very well-researched price. Their agent kept in close contact with the listing agent and the Sellers chose their offer due to all of these factors.
Since moving in almost two months ago, they find themselves in a state of excitement and discovery every day. The community has been welcoming and conversations with neighbors and the random stranger at the grocery store come easily. Paul has observed a strong sense of curiosity within his new community as people are new to the area and are encouraged to build relationships and make discoveries.
In the end, Paul and Ange remained within their price range, bought a home with all the features they wanted, but made what seemed to be at the time, a compromise on location. That compromise ended up being, as they put it, magical! They have never looked back to Wegdwood with regret, only excitement over what their new neighborhood might bring.
The point of these two stories is to debunk the sentiment we hear from time to time, that first-time home buyers cannot find success in our market. With a well-laid-out plan strategically constructed by the agent and client, we are seeing many happy stories for first-timers. The end result is putting these new homeowners on the path to building wealth, growing thriving communities, and making their house their home.
If you or someone you know has dreamed about buying their first home, please reach out. It is our goal to help identify the opportunities that are available, the strategies that find success, and to educate along the way.
*The amount of time you need to own your home in order for owning to be a superior financial decision.
With rising rental rates, historically low interest rates, and home prices on the rise, the advantage of buying vs. renting is becoming clearer each month.
In fact, Seattle has seen some of the sharpest rent hikes in the country over the last year! Snohomish County has seen a huge increase in apartment growth and rising rental rates as well. There are several factors to consider that will lead you to make the best decision for your lifestyle and your financial bottom line. Zillow Research has determined the break-even point for renting vs. buying in our metro area. In other words, the amount of time you need to own your home in order for owning to be a superior financial decision. Currently in Seattle the break-even point is 1.6 years – that is quick! What is so great about every month that ticks away thereafter is that your nest egg is building in value.
We are happy to help you or someone you know assess your options; please contact us anytime.
These assumptions are based on a home buyer purchasing a home with a 30-year, fixed-rate mortgage and a 20 percent down payment; and a renter earning five percent annually on investments in the stock market.
We are commonly asked which improvements sellers should make to get the greatest return on their home sale. Every year The Remodeling 2018 Cost vs. Value Report (www.costvsvalue.com) compiles all the information and analyzes the estimated percentage return on home improvements in each region. Getting a home prepared for market requires a keen eye and great resources. To access the entire Cost vs. Value report please visit www.costvsvalue.com and follow the steps to locate the Seattle area report.
Complete data from the Remodeling 2018 Cost vs. Value Report can be downloaded free at www.costvsvalue.com
© Hanley Wood Media Inc.
We often share the advantages of this market for home sellers, which is unbelievably positive. However we thought it was time to give the potential buyers in our marketplace some love, hope, and of course data!
Dear Greater Seattle Home Buyer,
Let’s just be up front: buying a home in today’s market is not easy. Quite frankly, it can be a wild roller coaster ride with twists and turns; but remember, folks pay a lot of money and stand in long lines for roller coaster rides. Imagine the excited pit in your stomach as the cart clicks up to the highest point before you plunge down a steep drop, and the thrill of raising your hands up because you trust that you are going to be okay. These emotions also accurately reflect the feelings of today’s home buyer – it can be a wild ride! Let’s also note that many roller coaster riders return to the back of the line right after getting off. Home ownership is also a good exercise to repeat and is often the investment that leads to the most built wealth in one’s life.
So how does one ensure that they are not the Nervous Nelly who stands in line for over an hour, finally makes it to the front to be strapped in to the cart, but who then chooses to bow out? The one that sits on the sidelines watching others throw up their hands with a thrill in their eye; the one with that tinge of regret as their friends rejoin them back on hallowed ground to recount their adventure. Wow, this is getting dramatic! Here are a few tips to follow that will ensure that one can find success securing a home in today’s market and get on the equity building train.
Waiting is Even More Expensive
In 2017, the year-over-year median price gains across our region were strong. In fact, here is a little break down.
The appreciation is for real and as each month ticks by, prices are going up. That is why it is incredibly important to have a plan and realistic expectations. In referring to the chart above, it is plain to see the affordability of each area. Buyers have had to get creative and honest with themselves regarding the city or neighborhood in which they land. Commute times are one of the biggest indicators of home cost. It is paramount to line your budget up with a realistic commute time and then dig in. Too often we’ve seen buyers tightly grip to the idea of an in-city commute, only to have it end up being a more suburban choice in the end. The months wasted trying to perform in a market that didn’t match their budget ended up costing them at least 1% a month, based on last year’s appreciation. Getting real saves time, money, and heartache.
Interest Rates are Rising
This aspect is actually one to pay very close attention to. We have been amazingly spoiled with historically low interest rates over the last five years. In fact, there is an entire generation of buyers who only know rates that have hovered from 3.5 – 4.5% – that is close to 3 points under the 30-year average! A good rule of thumb regarding interest rates, is that for each 1-point increase a buyer loses 10% of their buying power. That means that if you have a $500,000 budget and the rate goes up by a point, that you are now shopping for a $450,000 house if you want the same payment. Note, that shift does not take appreciation into consideration. Today’s rates have helped buyers bear the home prices in our area. It is predicted that rates will rise in 2018 by .5 to 1%.
Rents are High and Don’t Build Wealth
Seattle is now the 5th most expensive city to rent in the country according to the US Census Bureau. 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 1.6 years according to Zillow research.
Partner with a Broker Who Will Get the Job Done
A broker that has a process is key! It starts with an initial buyer consultation. I liken the buyer consultation to the seat belt you would wear on the roller coaster ride. The buyer consultation aims to unearth a buyer’s goals, research the areas they are interested in, address financing, and illustrate the challenges of the environment, so one can be successful. Time is money, and this consultation brings clarity, efficiency and trust. This upfront education coupled with a high level of communication and availability is paramount. The depth of the relationship will lead to success, and is the ingredient that enables a buyer to throw up their hands and take the thrilling plunge. It is hard to do that without a seat belt!
Get Your Finances in Order
Aligning with a trusted real estate professional is key, but so is aligning with a reputable and responsive mortgage lender. Getting pre-approved is the minimum, but getting pre-underwritten is a game changer. Finding a lender that is willing to put in the work up-front to vet credit, income, savings, debt, and all other financial indicators will lead to being pre-underwritten, which listing agents and sellers appreciate! Also, be aware that you do not always need to have a huge down payment to make a purchase work. Employment, assets, credit, and what you have saved all work into your ability to acquire a loan. I have seen plenty of people secure a home with 3-5% down. Education and awareness create clarity, and investing into understanding your financial footing equals empowered and more efficient decisions. Note that I mentioned “responsive”. This is a 24/7 market, and lenders who don’t work evenings and weekends can get in the way of a buyer securing a home. If you need a short list of lenders that fit this description, please contact me.
‘Tis the Season – Inventory is Coming
Have hope! This is the time of year where we see inventory climb month over month. There will be more selection, but bear in mind it is also the time of year that the appreciation push happens. If you are feeling 75-80% in love with a home, it is one to act on. You’re never going to “get it all”, so a willingness to focus on priorities will pay off, because waiting will have an expense.
If you or someone you know is considering a purchase in today’s market, please contact us. It is our pleasure to take the time to educate, devise a plan, and help buyers find success in a challenging, yet advantageous market.
Price growth was particularly strong in 2017! Median was up 13% and average price up 12% over 2016. Median price in 2017 landed at $405,000 and the average at $440,000. The average amount of days it took to sell a house in 2017 was 30 days which is 9% faster than 2016. The average list-to-sale price ratio over the last year was 100%, with the spring months as high as 102%! In 2017, inventory growth continued to be a challenge, with a 7% decrease in new listings compared to 2016. Even with inventory limitations there were 2% more sales! This phenomenon illustrates strong buyer demand and a need for more listings.
South King County real estate has seen a steady stream of buyers come our way due to affordability, reasonable commute times and quality of life. In fact, the median price in 2017 was 75% higher in Seattle Metro. Historically low interest rates continue to drive the market as well, they have helped offset the increase in prices. Sellers are enjoying great returns due to this phenomenon and buyers are securing mortgages with minor debt service.
This is only a snapshot of the trends in south King County; please contact me if you would like further explanation of how the latest trends relate to you.
Price growth was particularly strong in 2017! Median was up 15% and average price up 16% over 2016. Median price in 2017 landed at $865,000 and the average at $1,049,000. The average amount of days it took to sell a house in 2017 was 24 days, which is 17% faster than 2016. The average list-to-sale price ratio over the last year was 101%, with the spring months as high as 103%! In 2017, inventory growth continued to be a challenge, with a 4% decrease in new listings compared to 2016. Even with inventory limitations there were a near equal amount of sales! This phenomenon illustrates strong buyer demand and a need for more listings.
Demand for Eastside real estate has grown due to close proximity to job centers, great schools and quality of life. Over the last year, the Eastside was 70% more expensive than south Snohomish County and 22% over Seattle Metro. Historically low interest rates continue to drive the market as well, they have helped offset the increase in prices. Sellers are enjoying great returns due to this phenomenon and buyers are securing mortgages with minor debt service.
This is only a snapshot of the trends on the Eastside area; please contact us if you would like further explanation of how the latest trends relate to you.