Does it make more sense to rent or own?

The current break-even horizon* in the Seattle metro area is 1.6 years!

*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.

I am happy to help you or someone you know assess your options; please contact me 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.

Posted on April 30, 2018 at 4:34 pm
Cori Whitaker | Category: Market Trends and Statistics | Tagged , , , ,

Western Washington Real Estate Market Update – First Quarter 2018

 

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 don’t hesitate to contact me.

ECONOMIC OVERVIEW

The Washington State economy added 96,900 new jobs over the past 12 months, representing an annual growth rate of 2.9%—still solidly above the national rate of 1.5%. Most of the employment gains were in the private sector, which rose by 3.4%. The public sector saw a more modest increase of 1.6%.

The strongest growth was in the Education & Health Services and Retail sectors, which added 17,300 and 16,700 jobs, respectively. The Construction sector added 10,900 new positions over the past 12 months.

Even with solid increases in jobs, the state unemployment rate held steady at 4.7%—a figure that has not moved since September of last year.

I expect the Washington State economy to continue adding jobs in 2018, but not at the same rate as last year given that we are nearing full employment. That said, we will still outperform the nation as a whole when it comes to job creation.

HOME SALES ACTIVITY

  • There were 14,961 home sales during the first quarter of 2018. This is a drop of 5.4% over the same period in 2017.
  • Clallam County saw sales rise the fastest relative to the first quarter of 2017, with an increase of 16.5%. In most of the other markets, the lack of available homes for sale slowed the number of closings during this period.
  • Listing inventory in the quarter was down by 17.6% when compared to the first quarter of 2017, but pending home sales rose by 2.6% over the same period, suggesting that closings in the second quarter should be fairly robust.
  • The takeaway from this data is that the lack of supply continues to put a damper on sales. I also believe that the rise in interest rates in the finalquarter of 2017 likely pulled sales forward, leading to a drop in sales in the first quarter of 2018.

 

HOME PRICES

  • With ongoing limited inventory, it’s not surprising that the growth in home prices continues to trend well above the long-term average. Year-over-year, average prices rose 14.4% to $468,312.
  • Economic vitality in the region is leading to robust housing demand that far exceeds supply. Given the relative lack of new construction homes— something that is unlikely to change any time soon—there will continue to be pressure on the resale market. As a result, home prices will continue to rise at above-average rates in the coming year.
  • When compared to the same period a year ago, price growth was strongest in Grays Harbor County at 27.5%. Ten additional counties experienced double-digit price growth.
  • Mortgage rates continued to rise during first quarter, and are expected to increase modestly in the coming months. By the end of the year, interest rates will likely land around 4.9%, which should take some of the steam out of price growth. This is actually a good thing and should help address the challenges we face with housing affordability—especially in markets near the major job centers.

 

 

DAYS ON MARKET

  • The average number of days it took to sell a home dropped by seven days when compared to the same quarter of 2017.
  • King County continues to be the tightest market in Western Washington, with homes taking an average of 24 days to sell. Every county in the region saw the length of time it took to sell a home either drop or remain essentially static relative to the same period a year ago.
  • In looking at the entire region, it took an average of 61 days to sell a home in the first quarter of this year. This is down from 68 days in the firstquarter of 2017 but up by eleven days when compared to the fourth quarter of 2017.
  • Anyone expecting to see a rapid rise in the number of homes for sale in 2018 will likely be disappointed. New construction permit activity—a leading indicator—remains well below historic levels and this will continue to put increasing pressure on the resale home market.

 

 

CONCLUSIONS

This speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors. For the first quarter of 2018, I have left the needle at the same point as fourth quarter of last year. Price growth remains strong even as sales activity slowed. All things being equal, 2018 is setting itself up to be another very good year for sellers but, unfortunately, not for buyers who will still see stiff competition for the limited number of available homes for sale.

 

 

Mr. Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has more than 30 years of professional experience both in the U.S. and U.K.

Posted on April 25, 2018 at 1:22 pm
Cori Whitaker | Category: Matthew Gardner Economic Reports | Tagged , , , , , , , ,

Lake Forest Park

Welcome to Lake Forest Park!

For those who love the great outdoors without being too far from premium city amenities, Lake Forest Park  is a dream come true! Nestled along the shores of picturesque Lake Washington and north of Seattle and Bellevue, Lake Forest Park offers the opportunity to truly have it all. Whether you need to commute into the city for work or want to spend a day on the beach, it’s all wonderfully within reach.

As Jill L points out, living in Lake Forest Park is “like being in an enchanted forest.” She adds that large lots cater to gardeners, and there’s even an amazing Garden Club you can join. Claudette M shares that “Most homes are on large lots, many along streams or creeks. The many trees that are the city’s namesake provide an immense amount of privacy between neighbors.” Keep exploring our guide to Lake Forest Park to see why people love this city! 


Getting Out & About

One of the coveted perks of owning in certain Lake Forest Park neighborhoods (there are quite a few that qualify) is eligibility for membership in the Lake Forest Park Civic Club. Members play on the shores of Lake Washington, enjoying access to the private beach/swim area and boat launch.

The Civic Club is well known with plenty of surrounding homes being deeded in, but lesser known is the adjacent Sheridan Beach Club which provides excellent amenities, shore access, a pool and most importantly, a heightened sense of community. If you’re looking for it all in LFP, the Beach Club is where you should start.

Go for a run, walk or bicycle ride on the Burke-Gilman Trail, along the shore of Lake Washington.

The Lake Forest Park Farmer’s market on Sundays is awesome.


Commuting From Lake Forest Park

Lake Forest Park residents predominantly rely on car & bus for their commutes to Seattle or the Eastside. However, with convenient access to a 2-mile stretch of the Burke-Gilman Trail that passes through the city, there is a robust population of residents that commute into Seattle by bicycle, and particularly work centers such as the University of Washington & Children’s Hospital.


Homes in Lake Forest Park

Lake Forest Park was designed as a bedroom community for Seattle, so much of the housing consists of single family homes built between the 1950s and early 1980s. The city is very hilly, so multi-level, split-entry and one-story with basement homes that accommodate the topography are common. The hilly topography also translates into many homes enjoying Cascade Mountain or verdant territorial views, and some with Lake Washington views too.

Posted on November 2, 2017 at 3:59 pm
Cori Whitaker | Category: Lake Forest Park, Neighborhood Profiles | Tagged , , , , , , , , , , , ,

The Gardner Report – Third Quarter 2017

As a member of Windermere Real Estate, the leading real estate company in the Western U.S., I have access to a vast array of resources and services that are designed to help you make well-informed decisions regarding your real estate needs. This includes access to the most relevant housing and economic data from Windermere’s Chief Economist, Matthew Gardner.

Matthew has been a real estate economist for more than 25 years in both the U.S. and U.K. He specializes in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. His study and interpretation of this economic data and its impact on the real estate market, gives us unique insights into short-term and long-term housing trends that are important to consider when buying or selling a home.

Every quarter Matthew compiles a detailed report that analyzes the Western Washington real estate market.  Read the full Third Quarter Gardner Report here.  If this is something you’d like to personally receive every quarter, please contact me and I will add you to my distribution list. It is my goal to help keep my clients informed, empower strong decisions and create exceptional results.

 

Posted on November 1, 2017 at 9:00 am
Cori Whitaker | Category: Matthew Gardner Economic Reports | Tagged , , , , , ,

3 Reasons Why We Are Not Headed Towards Another Real Estate Bubble

I get asked this question often, and I can understand why. With the 2008 Great Recession not too far back in our rear-view mirror it is understandable that folks don’t want history to repeat itself, as that was a very painful time for many. Also, price appreciation has been rapid across the country, but especially in our region. The large price gains might seem familiar to the gains of the previous up market of 2004-2007, but the environment is much different, and that is why we are not headed toward a housing collapse.

Lending Requirements
As the graph shows, lending requirements are much more stringent now than what they were prior to the fall of the housing market.

Previous lending practices allowed people to get into homes with risky debt-to-income ratios, low credit scores and undocumented incomes. They called this sub-prime lending. A large part of why the housing bubble burst 10 years ago was due to people getting into mortgages they were not equipped to handle, which lend to the eventual fall of sub-prime lending. Currently, the average credit score over the last 12 months according to Ellie Mae was 724. During the days of sub-prime lending people were funding loans with scores as low as 560! This, coupled with many zero-down loan programs and the risky terms mentioned above left many new homeowners with little to no equity. When you have little or no equity it very easy to just walk away.


The graph above shows the percentage of homes in our state with significant equity (20% or more) according to CoreLogic. Today many homeowners, especially in our region are making large down payments to begin with. Believe me, when reviewing multiple offers on a house, the size of down payment matters – hence many buyers landing homes are making large down payments. Unlike the market prior to the crash, when people have high equity levels they are not likely to abandon their home or miss payments.

Inventory Levels & Our Job Market
The biggest challenge in our market has been low inventory levels and high housing demand. It’s simply the concept of supply and demand. Our thriving job market has afforded folks already in our area the ability to make moves, and it is bringing people into our area from other parts of the country. Washington State’s net in-migration is 43% higher than it was 10 years ago. This has created increased demand, especially for homes closer to job centers resulting is shorter commutes. When you have increased demand and not enough homes to absorb the buyers, prices go up. Over the last three years we have easily seen a 10% increase in prices year-over-year. That is above the norm and should slow down as inventory increases. As inventory increases we anticipate a leveling out of appreciation rates to historical norms of 3-4% annually, but not decreasing home values like the 2008-2010 crash.

I understand that the recent increase in home prices has been big and that it might remind you of the previous up market before the crash. I hope that digging into the topics above has shed some light on how it is different. According to Matthew Gardner, Windermere’s Chief Economist and nationally sought after expert on all things real estate, buyers should not wait this market out, due to future price appreciation and today’s historically low interest rates. Check out his latest vlog (video blog) that addresses this topic.

As always, it is my goal to help keep my clients informed and empower strong decisions. Please let me know if I can answer any questions or help you or anyone you know with their real estate needs.

 

Posted on September 1, 2017 at 9:29 am
Cori Whitaker | Category: Monthly Newsletter | Tagged , , , , ,

Mill Creek

Welcome to Mill Creek! 

Located in Snohomish County and just about 20 miles northeast of Seattle, Mill Creek is a smaller community brimming with excellent amenities to take advantage of. Originally built around a country club and golf course that you can still enjoy today, Mill Creek offers a long list of city conveniences whether you’re looking for gorgeous outdoor opportunities or plenty of restaurants, shops, and activities close by.

In addition to the pristine Mill Creek Country Club and Golf Course, Mill Creek is brimming with ways to stay active. A long list of parks and an incredible trail system offers picturesque settings to enjoy, and parks and the incredible sports center will keep the whole family busy! Additionally, the Mill Creek Town Center is another top destination whether you want to have a delicious dinner out or spend the day shopping!

“Mill Creek officially incorporated on August 30th, 1983 and was built around the Mill Creek Country Club and its golf course. It currently has a population of just under 20,000 people. It is full of hiking/jogging trails throughout the wooded areas. The Country Club is a private club that has a gem of a golf course that people love to play!” –Travis D


Getting Out & About

“There are some nice walking trails near the downtown area and around village green drive, many parks including a skateboard park. The towncenter is a fun place to walk around, go for coffee, dessert or dinner.” -Tonya T

“Central Market grocery store has the best selection of fresh fruit, wine, seafood, meats, made to order sandwiches, fresh sliced deli meats and cheeses, large selection of organic foods, sushi and more. Grab a bite to eat and enjoy the outdoor courtyard or stop to shop for a special dinner. This store has has it all.” -Heather P

“There is such a broad array of restaurants to choose from when meeting up with friends & clients. Something for everyone!” -Tonya T

“I love the convenience and the downtown feel of the Mill Creek Town Center! I can grab my coffee, get a manicure, grocery shop, and run other errands all in the same great spot!” -Ginna D

“One thing I also love about Mill Creek is all the doctors, walk in clinics and dentists that are in town. Super convenient to have so many health providers in close proximity.” -Jen B

“Miles and miles of walking trails linking parks all over Mill Creek is one of my favorite features.” -Jen B


Commuting from Mill Creek

Located just minutes from Interstate-5, Mill Creek is nestled in between Seattle and Everett. Mill Creek to Downtown Seattle is approximately 24 miles, while Mill Creek to Everett is just about 10 miles.


Homes in Mill Creek

“[Mill Creek is home to] nice planned single family and condo communities ranging from $500s and up in varying styles and ages.” -Tonya T

Posted on August 17, 2017 at 4:14 pm
Cori Whitaker | Category: Mill Creek, Neighborhood Profiles | Tagged , , , , , , , , , , ,

You’d Like to Sell Your Home, but Where to Next, and How?

How to sell and then buyHomeowners across our region are enjoying very healthy equity levels due to an upswing in the real estate market over the last five years. In fact, the median price in King County is up 50% over the last five years and up 47% in Snohomish County. This growth in equity has given homeowners the exciting option to sell their home for a high price and move on to their next chapter, such as a move-up, down-size or second home. This price growth is great news and provides many opportunities, however we have also faced some challenges in how to make these transitions.

Our biggest challenge in the marketplace right now is inventory levels; sometimes requiring a buyer to compete in multiple offers for their next home. Currently King County sits at 0.7 months of inventory and 0.8 in Snohomish. Historically, buyers that are also sellers would commonly secure a new home contingent on the sale of their current home. This means the seller of the new home they are buying would give them a month or so to get their current house sold in order to buy theirs. Well in this market, that is only rarely an option. So, the million-dollar question is this: how does one who has gained so much equity, now itching to get that bigger house, different location, or perfect rambler for settling into retirement, make this transition without having to move twice? We need to get creative and have a strategy. Two options that I have recently found to be successful, are negotiating a rent-back for my sellers or using the Windermere Bridge Loan program.

First, negotiating a rent-back has become a great option for someone who needs to first sell their current home in order to buy. The way it works is we put their home on the market, price it competitively to create demand, and ask for a rent-back as one of the preferred terms. If this rent-back is successfully negotiated, then the seller closes on their home and collects their funds, but gets to stay in the house anywhere from 30-60 days. This enables the seller, who is now a buyer, to have their cash in-hand, time to find a new house, get it under contract and close the sale when their rent-back is ending. This eliminates the need to move twice. There is a bit of calculated risk in this plan, but I’ve seen it work multiple times, always with a plan B ready just in case. Rarely has plan B needed to be executed, and often times we’ve even been able to pay little to no rent during this time.

The second option is the Windermere Bridge Loan program. This is an amazing tool for homeowners that own their homes free and clear, or who have paid down their debt quite a bit. This is a low-cost alternative to pull the equity out of one’s house prior to selling it in order to make a non-contingent offer. The way it works is we take the market value of the house the homeowner current lives in, established by a comparative market analysis that I complete and is signed off by my broker. We then take 65% of that value and subtract any debt owed, and that is the maximum amount the homeowner can borrow for their next down payment. They can then make a non-contingent offer on a new home. What is really great about this, is that it doesn’t require an appraisal (like a HELOC does), and these can easily be turned around in 3-5 business days. This tool provides the opportunity to quickly and inexpensively pull your equity out, be competitive, and eliminates the double move.

The fees associated with this program are a 1% loan fee on the equity that is pulled, a title report, and interest that is incurred between the loan funding and being paid off once the subject home is sold. That interest is conveniently wrapped up in the closing costs when they close the sale of their home, eliminating the need to make monthly interest payments. In a strategy that is somewhat mind blowing, we can sometimes use these bridge loans and never have to actually fund them. For example, if we secure a property non-contingent with the bridge loan and immediately get the subject home on the market, we can often secure a sale with a simultaneous closing, and never have to fund the loan. This eliminates the loan fee, interest, and the need to carry two mortgages.

If you are excited about equity levels and today’s low interest rates and have thought about making that move you’ve been waiting for, but have been fearful of how to do it all – I can help. These two options, along with great attention to detail, hand-holding, and careful planning have helped many people make these exciting transitions. It is my goal to help keep my clients informed and empower strong decisions. Please contact me if you would like further information on how this might work for you or someone you know.

 

Posted on June 12, 2017 at 3:28 pm
Cori Whitaker | Category: Monthly Newsletter | Tagged , , ,