Consulting your trusted advisor vs following the media
Spring is in the air! The bulbs are starting to poke out of the ground and we recently hit 70 degrees in the Greater Seattle area. This is the time of year, due to weather and the end of the school year approaching, that the local real estate market starts to take off with activity. Not only is the sun thawing out gardens and backyard patios, helping to ready homes for market, but interest rates are continuing to fall, providing a heyday for buyers and sellers.
Spring is the time of year we see more homes come to market providing more selection for buyers. This is what we call our peak season. This spring, however, is especially meaningful due to the recent decrease in interest rates. Seasonality naturally brings more activity, but 2019 has started out with a downward trajectory in regards to interest rates, which has been a welcome shift after watching rates increase by almost an entire point over the course of 2018.
According to Ycharts.com, as of March 14th the US 30-year mortgage rate is at 4.31%, compared to 4.41% the week prior and 4.46% last year. This is quite a bit lower than the long term average of 8.07%. Additionally, rates are now over half a point lower than they were just four months ago, which gives buyers 5% more buying power. Meaning they can increase their price range by 5% and keep the same mortgage payment.
We are beginning to see a ton of activity at open houses, market times are starting to shrink, and multiple offers are popping up again. Demand is on the rise, with first-time home buyers out in full-force along with move-up and down-size buyers all going after the same inventory. Price appreciation will start to happen again month-over-month as the tulips start to open and veggie gardens start sprouting.
This assessment is not only factual and researched, it is anecdotal. You see, statistics are only reported monthly from the NWMLS, so the stories from the streets tell the real story of where we have been, what’s happening now, and where we are headed in the real estate market. My daily engagement with the market, either helping buyers or sellers, researching values, showing properties, negotiating contracts, and working on inspections and appraisals helps me to be informed of the trends before they are even reported.
Around the third of each month, the NWMLS distributes a press release to the media reporting the previous month’s statistics. The media grabs the numbers that are most exciting to them to craft a story around. They create headlines to entice readership, which in turn sells advertising. The problem is that these news stories often only tell part of the story.
A classic example of cherry picked statistics used to create a headline came earlier this month. The Seattle Times reported in a sub-headline that Snohomish County home prices were falling at their fastest rate in seven years. This is simply not the whole truth. This is a common tactic of the media often only using month-over-month numbers (comparing the current month to the same month a year ago) versus a complete year-over-year analysis. Real estate is a long-term investment, and month-over-month numbers tend to provide more of a snapshot rather than a longer-term analysis of data and what influenced it.
We need to look at the data from all angles. Where were we a year ago, what has happened over the course of the last year in comparison to the previous year, and what happened this month compared to last month? Real-time experiences matter too, as the market changes weekly and even daily. Interactions throughout the month help me understand what opportunities the current environment will provide before the ink even dries on the media release. All of this helps us understand where we have come from and where we are headed. Couple that with front-line, daily experiences, and your trusted advisor can help you determine how all of this relates to your bottom line much more effectively than an article in the newspaper.
Another important factor to consider is that the bulk of the statistics reported in that monthly NWMLS press release are based on closed sales. While closed sales are very important, we must also closely track pending sales activity (homes currently under contract). Closed sales show where we have been and pending sales indicate where we are headed. February was a misleading month because of Snowmageddon. It halted new inventory reaching the market and kept buyers at home. The second half of February once the roads were cleared, had buyers lined up. Many of those buyers are anxiously waiting for that seasonal surge in inventory as we head into spring. This is indicated by conversations being had at open houses and one-on-one encounters with clients. Buyers want to take advantage of these surprisingly low interest rates now and sellers are enjoying the audience they are providing.
Unfortunately, the media is the initial source of information, and sometimes the only source a consumer considers when making such big decisions. I can’t tell you how often I encounter people that are grossly misled by alarming headlines and bite-sized bits of media when it comes to their largest asset, or the consideration of entering into home ownership.
Supply and demand illustrates where we are at in the market, and factors such as interest rates, the local and global economy, and simple things like weather and consumer mindset drive the market. Consumer mindset is influenced by the media. Take it a step further and make sure you are aligned with a professional who is committed to tracking all of this and can help explain how it all relates to you. Everyone has their own goals and their own concerns; it is the analysis of a well-researched trusted advisor that can help you navigate these meaningful financial decisions. It is our goal to provide our clients with the most up-to-date information to help empower strong decisions. If you are curious how this all relates to you, please reach out. We would be happy to connect you with agent who can discuss and help educate.
Quarterly Reports: Q3 North Snohomish
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.
Quarterly Reports: Q3 South King County
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.
The Windermere Foundation Partners with Pearl Jam & Seahawks
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!