COVID-19 & the Real Estate Market – where we are now

I hope this newsletter finds you and yours feeling well and making the best of the Stay Home, Stay Healthy order. It has been my goal as we navigate the COVID-19 pandemic to help keep my clients informed on how this is affecting real estate. I have received many inquiries asking about how the real estate market in our area is faring during this time. Fortunately, I have access to Matthew Gardner, Windermere’s Chief Economist on a weekly basis. Matthew’s one of the most respected economists in the nation, specifically in relation to housing. Last week, I had the opportunity to sit in on a Zoom meeting with him and my colleagues to learn more about COVID-19 and the Western Washington real estate market, and I found his outlook reassuring. Below is the latest edition of a weekly video series that he is recording each Monday to help keep everyone informed and connected to meaningful data. Matthew Gardner and Steve Harney, another economist on the East Coast, are who I am looking to for answers in contrast to just turning on the news or reading the latest headlines. Please click on the image below to listen to Matthew. If you have any questions or want to discuss how this might affect your real estate position specifically, please reach out! It has always been my goal to help keep my clients informed and empower strong decisions, now more than ever.
The effects of the COVID-19 pandemic have surely been felt economically. A common question that I have been asked is, “Is this 2008 all over again?” The answer is “No!” As Matthew touched on above, this is a health crisis, not a housing crisis. Yes, we are headed toward a recession, but not one that is based in housing like The Great Recession of 2008. That recession was primarily based on predatory lending practices that put people into homes they could not afford with little to no down payments and horribly vetted credit. In fact, of the last five recessions, three did not see price depreciation in housing.

Take a look at the graph to the right, which shows the homeowner households in King County with more than 50% equity in their home. In Q4 of 2019, 43% of homeowners in King County were in a very healthy equity position, owing less than 50% of what their home was worth. I have been tracking sales weekly since March 1st, and prices remain strong. We have a very limited amount of inventory, rates remain low, and buyer demand is being fueled by these positive components. Our economy was formidable prior to this, indicating solid bedrock for recovery once we weather this storm that needs to be waited out. The Greater Seattle Area is particularly fortunate as many of our large businesses are centered in information technology and Amazon, which have both stayed active during this time.

Another aspect that is different from the 2008 Great Recession is that some banks and mortgage investors (servicers) are working with homeowners to provide mortgage relief. With the shutdown of so many businesses and services, job losses have been abundant. If you or someone you know would benefit from setting up a mortgage forbearance program or loan modification in order to alleviate the pressure of monthly payments right now, click on this link and have them contact their mortgage servicer today. The available programs that are offered will vary from one loan servicer to another, and are primarily available for loans that are owned by Fannie Mae or Freddie Mac (click on the appropriate link to help research who owns your loan). Make sure you consider the details and payback terms for your long-term financial health. The ability to protect this asset while waiting this out will protect one’s equity. This is a milestone opportunity and will ensure a strong housing market moving forward.

On Saturday, March 28th, Governor Inslee adjusted the Stay Home, Stay Healthy order in relation to how real estate services can be provided. The point of this was to get the 17,000 pending transactions in our state headed towards a successful close. This also opened up the option for real estate to transact in order to help homeowners who need to sell to become unstuck, and buyers who need housing to be placed. The adjustments were focused on creating safe housing and addressing economic needs. This is not business as usual and now more than ever, entering into a real estate purchase or sale takes a well-thought-out strategy. Public health and safety have become a part of that strategic plan and are of the highest priority to consider along with housing and financial needs. In fact, waiting it out will be the best choice for some. If you or someone you know needs some guidance or is in a position to buy or sell during the Stay Home, Stay Healthy orders, please reach out. Also, see below the restrictions that are in place to help ensure all of our safety.
The uncertainty of COVID-19 and all of its repercussions may leave you feeling helpless or anxious. Sometimes it might feel like the only thing we can do is stay home and wait. The good news is that there are some practical ways we can all help.

1. Give blood, if you can. Blood banks nationwide are in a state of crisis, with severe shortages due to an unprecedented number of blood drive cancellations. Even if your area has ordered residents to stay at home, going out to give blood is allowed as a volunteer activity to help meet essential needs. Go to Bloodworks Northwest or The American Red Cross to schedule an appointment.
*Blood banks are operating by appointment only to meet social distancing orders. Important note: Coronavirus has not been shown to be transmitted through blood transfusion.

2. Give to your local food bank. Cash or food donations are imperative right now, with so many of our neighbors out of work and facing economic uncertainty. You can do an online search for the closest food bank to you, or check out one of these local pantries.
Concern for Neighbors (Mountlake Terrace)
Lynnwood Food Bank
Edmonds Food Bank
Mukilteo Food Bank
Volunteers of America (Everett)
Snohomish Food Bank
Woodinville Storehouse
Canyon Hills Food Bank (Bothell)
Hopelink (Shoreline)

3.Donate to health care workers. Now more than ever before, we need to support our front-line healthcare workers, who are so bravely fighting COVID-19 and taking care of our sick loved ones. Most hospitals have a donation page, outlining what they are currently in need of. Not only are they desperate for personal protection equipment such as gloves and masks, but many facilities are also accepting food (snacks for health care workers), notes of encouragement, or monetary donations. Do a quick search for the hospital nearest you to see what they are lacking and how you can help. Here are a few to get you started.
UW Medicine
Swedish Hospital
Evergreen Hospital

4. Support local businesses. It is often said that small businesses are the backbone of America. Well, now is the time for us to rally and support the bedrock of our communities. Many restaurants are still open for take-out or delivery (have you tried Uber Eats, or Grubhub? These are great options, as you are not only supporting the corner pizza place, but the delivery driver as well), and many local shops are still selling online or offering curb-side pickup.
Some cities are rallying around their restaurants and shops by putting together a one-stop resource for who is open and what services are still available. I have linked a couple of local city’s lists below, including a very cool interactive map for the city of Seattle. For information on your city, try searching Facebook or looking up the city’s Chamber of Commerce website.
Seattle
Edmonds
Bothell / Kenmore
Everett

Take the challenge: the next time you think about ordering something on Amazon, stop and take a minute see if a local small business can fill that need for you instead.


Posted on April 1, 2020 at 3:06 pm
Cori Whitaker | Posted in Market Trends and Statistics, Matthew Gardner Economic Reports, Monthly Newsletter |

Monthly Newsletter – April 2019

I am pleased to present the first-quarter 2019 edition of the Gardner Report, which provides insights into select counties of the Western Washington housing market. This analysis is provided by Windermere Real Estate Chief Economist Matthew Gardner. I hope that this information will 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.

Click to view the full report

 

 

 

 

 

When you shop at a local Farmers Market, you’re buying outstanding freshness, quality and flavor. Knowing exactly where your food comes from and how it was grown provides peace of mind for your family. Plus, you’re supporting a sustainable regional food system that helps small family farms stay in business; protects land from development, and provides the community with fresh, healthy food. Find one near you!

 

We are collecting vegetable seeds and starts for the Martha Perry Garden, where volunteers grow thousands of pounds of fresh produce every year for local food banks.

My office will be spending a volunteer day in the garden for our annual Community Service Day in June. In addition to our labor, we will gift them all of the vegetable seeds and starts collected between now and then.

All seeds should be no more than a year old, although fresh seeds are preferred.
Wish List:

Basil, Beets, Cabbage, Carrots*, Cauliflower, Chard, Cucumbers, Green Beans, Herbs, Marigolds, Peppers, Radishes, Summer Squash, Snow Peas, Tomatoes, Winter Squash, Zucchini

*High Demand!

Starts of cucumbers, winter & summer squash, cole crops (cabbage, cauliflower, broccoli, kale, etc) are especially welcome

Thank you!!

 

Thank you for another successful Shred Day!

Two full truckloads of paper were safely shredded and recycled.

We love providing this service for our clients, friends and neighbors, but what we’re really excited about is how you all gave back to the community. Your donations provided 534 pounds of food and $1,129 to benefit Concern for Neighbors food bank. Thank you!


Posted on May 2, 2019 at 1:38 pm
Cori Whitaker | Posted in Matthew Gardner Economic Reports, Monthly Newsletter |

Monthly Newsletter – February 2019

Most recently, we have experienced an uptick in market activity. In fact, in King and Snohomish counties we saw a 53% increase in pending sales from December to January. While it is seasonally normal to see activity increase at the first of the year, it was 16% higher than the previous January. This increase is being driven by multiple factors, such as our thriving economy and job market, price acceleration softening, and the recent decrease in interest rates.

Currently, rates are as low as 4.5% for a 30-year fixed conventional mortgage – 0.75 points down from the fourth quarter of 2018. In fact, the interest rate in November was the highest we’ve seen in five years!  The current rate level is the lowest we have seen in a year. This is meaningful because the rule of thumb is that for every one-point increase in interest rate, a buyer loses ten percent in purchase 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 link above, you can see that the folks who choose to jump into the market this year will enjoy an interest cost savings when securing their mortgage. This lasts the entire life of the loan and can have a huge impact on the monthly cash flow of a household. This cost savings is also coupled with a slow-down in home-price appreciation. Complete year-over-year, prices are up around 8% in both King and Snohomish counties, but note that from 2017 to 2018 we saw a 14% increase. Price appreciation is adjusting to more normal levels and is predicted to increase 4-6% in 2019 over 2018.

As we head into spring market, the time of year we see the most inventory become available, the interest rates will have a positive influence on both buyers and sellers. Naturally, buyers will enjoy the cost savings, but sellers will enjoy a larger buyer pool looking at their homes due to the demand the lower rates are creating. Further, would-be sellers who are also buyers that secured a rate as low as 3.75% via a purchase or re-finance in 2015-2017, will consider giving up that lower rate for the right move-up house now that rates are not as big of a jump up as they were during the second half of 2018.

This recent decrease in rate is making the move-up market come alive. What is great about this, is that it opens up inventory for the first-time buyer and helps complete the market cycle. First-time buyers are abundant right now as the Millennial generation is gaining in age and making big life transitions such as buying real estate. According to Nerd Wallet, 49% of all Millennials have a home purchase in their 5-year plan.

Will these rates last forever? Simply put, no! According to Matthew Gardner, Windermere’s Chief Economist, rates should increase into the 5’s in 2019. While still staying well below the 30-year average of 6.85%, increases are increases, and securing today’s rate could be hugely beneficial from a cost-saving perspective. 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. Note the 30-year average – it is reasonable to 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 interest rates pertain to your housing goals, please contact me. I 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 my goal to help empower you to make sound decisions for you and your family.

Celebrate Earth Day with us! Bring all your sensitive documents to be professionally destroyed on-site by Confidential Data Disposal. Limit 20 file boxes per customer.

We will also be collecting non-perishable food and cash donations to benefit Concern for Neighbors Food Bank. Donations are not required, but are appreciated.

Saturday, April 20th, 10am – 2pm.
4211 Alderwood Mall Blvd, Lynnwood 98036

*This is a shredding-only event. Only paper will be accepted – no electronics or recyclables.

I am pleased to present the fourth-quarter 2018 edition of the Gardner Report, which provides insights into select counties of the Western Washington housing market. This analysis is provided by Windermere Real Estate Chief Economist Matthew Gardner. I hope that this information will 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.

Click to view the full report


Posted on March 3, 2019 at 7:41 pm
Cori Whitaker | Posted in Matthew Gardner Economic Reports, Monthly Newsletter |

Q4 2018 – South King County Quarterly Market Trends

2018 was a year of change and growth. The market shifted from an extreme seller’s market, but still had strong gains. Year-over-year, median price is up 9% and since 2012 has increased 89%! Over the last 19 years, the average year-over-year price increase has been 6%. This puts into perspective the growth we have experienced, resulting in well-established equity levels. In 2018, inventory averaged 1.7 months, 30% more than 2017. This caused the month-over-month price gains to slow, and we experienced a price correction over the second half of the year. We expect to see more average levels of price appreciation in 2019 as the market continues to balance out.

After six years of expansion resulting in an extreme seller’s market, in 2018 we encountered a market shift in the late spring. Inventory increased, interest rates took a jump, and demand took a step back to re-evaluate the new playing field. This resulted in a tempering of month-over-month price appreciation, and has established some long-awaited balance. This balance has brought opportunities for both buyers and sellers. Buyers have more selection and are negotiating terms like inspection items and concessions. Sellers are sitting on 6+ years of equity growth, and are now able to sell their home and make a move without fearing where they will land next. Interest rates are still well below the 30-year average, currently hovering just under 5%. We are seeing demand start to re-engage now that the new normal has settled in.

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.


Posted on January 16, 2019 at 4:07 pm
Cori Whitaker | Posted in Matthew Gardner Economic Reports |

Q4 2018 – Eastside Quarterly Market Trends

2018 was a year of change and growth. The market shifted from an extreme seller’s market, but still had strong gains. Year-over-year, median price is up 8% and since 2012 has increased 87%! Over the last 19 years, the average year-over-year price increase has been 6%. This puts into perspective the growth we have experienced, resulting in well-established equity levels. In 2018, inventory averaged 2 months, double that of 2017. This caused the month-over-month price gains to slow, and we experienced a price correction over the second half of the year. We expect to see more average levels of price appreciation in 2019 as the market continues to balance out.

After six years of expansion resulting in an extreme seller’s market, in 2018 we encountered a market shift in the late spring. Inventory increased, interest rates took a jump, and demand took a step back to re-evaluate the new playing field. This resulted in a tempering of month-over-month price appreciation, and has established some long-awaited balance. This balance has brought opportunities for both buyers and sellers. Buyers have more selection and are negotiating terms like inspection items and concessions. Sellers are sitting on 6+ years of equity growth, and are now able to sell their home and make a move without fearing where they will land next. Interest rates are still well below the 30-year average, currently hovering just under 5%. We are seeing demand start to re-engage now that the new normal has settled in.

This is only a snapshot of the trends on the Eastside; please contact me if you would like further explanation of how the latest trends relate to you.


Posted on January 16, 2019 at 4:06 pm
Cori Whitaker | Posted in Matthew Gardner Economic Reports |

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 | Posted in Matthew Gardner Economic Reports | Tagged , , , , , , , ,

The Gardner Report – Windermere Real Estate

ECONOMIC OVERVIEW

The Washington State economy added 104,600 new jobs over the past 12 months. This impressive growth rate of 3.1% is well above the national rate of 1.4%. Interestingly, the slowdown we saw through most of the second half of the year reversed in the fall, and we actually saw more robust employment growth.

Growth continues to be broad-based, with expansion in all major job sectors other than aerospace due to a slowdown at Boeing.

With job creation, the state unemployment rate stands at 4.5%, essentially indicating that the state is close to full employment. Additionally, all counties contained within this report show unemployment rates below where they were a year ago.

I expect continued economic expansion in Washington State in 2018; however, we are likely to see a modest slowdown, which is to be expected at this stage in the business cycle.

 

HOME SALES ACTIVITY

  • There were 22,325 home sales during the final quarter of 2017. This is an increase of 3.7% over the same period in 2016.
  • Jefferson County saw sales rise the fastest relative to fourth quarter of 2016, with an impressive increase of 22.8%. Six other counties saw double-digit gains in sales. A lack of listings impacted King and Skagit Counties, where sales fell.
  • Housing inventory was down by 16.2% when compared to the fourth quarter of 2016, and down by 17.3% from last quarter. This isn’t terribly surprising since we typically see a slowdown as we enter the winter months. Pending home sales rose by 4.1% over the third quarter of 2017, suggesting that closings in the first quarter of 2018 should be robust.
  • The takeaway from this data is that listings remain at very low levels and, unfortunately, I don’t expect to see substantial increases in 2018. The region is likely to remain somewhat starved for inventory for the foreseeable future.

 

 

HOME PRICES

  • Because of low inventory in the fall of 2017, price growth was well above long-term averages across Western Washington. Year-over-year, average prices rose 12% to $466,726.
  • Economic vitality in the region is leading to a demand for housing that far exceeds supply. Given the relative lack of newly constructed homes—something that is unlikely to change any time soon—there will continue to be pressure on the resale market. This means home prices will rise at above-average rates in 2018.
  • Compared to the same period a year ago, price growth was most pronounced in Lewis County, where home prices were 18.8% higher than a year ago. Eleven additional counties experienced double-digit price growth as well.
  • Mortgage rates in the fourth quarter rose very modestly, but remained below the four percent barrier. Although I anticipate rates will rise in 2018, the pace will be modest. My current forecast predicts an average 30-year rate of 4.4% in 2018—still remarkably low when compared to historic averages.

 

 

DAYS ON MARKET

  • The average number of days it took to sell a home in the fourth quarter dropped by eight days, compared to the same quarter of 2016.
  • King County continues to be the tightest market in Western Washington, with homes taking an average of 21 days to sell. Every county in the region saw the length of time it took to sell a home either drop or remain static relative to the same period a year ago.
  •  Last quarter, it took an average of 50 days to sell a home. This is down from 58 days in the fourth quarter of 2016, but up by 7 days from the third quarter of 2017.
  • As mentioned earlier in this report, I expect inventory levels to rise modestly, which should lead to an increase in the average time it takes to sell a house. That said, with homes selling in less than two months on average, the market is nowhere near balanced.

 

 

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 fourth quarter of 2017, I have left the needle at the same point as third quarter. Price growth remains robust even as sales activity slowed. 2018 is setting itself up to be another very good year for housing.

 

 

Matthew 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 January 29, 2018 at 11:52 am
Cori Whitaker | Posted in Matthew Gardner Economic Reports | Tagged , , , , ,

Matthew Gardner’s 2018 Housing Forecast

In a nutshell, here is Matthew Gardner’s 2018 Housing Forecast. If you want to read his forecast in more detail, click here: http://bit.ly/2Cx1oSG


Posted on January 10, 2018 at 12:36 pm
Cori Whitaker | Posted in Matthew Gardner Economic Reports, Monthly Newsletter | 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 | Posted in Matthew Gardner Economic Reports | Tagged , , , , , ,