Mondays-with-Matthew

This video is the latest in our Monday with Matthew series with Windermere Chief Economist Matthew Gardner. Each month, he analyzes the most up-to-date U.S. housing data to keep you well-informed about what’s going on in the real estate market.

 

Hello there, I’m Windermere’s Chief Economist Matthew Gardner and welcome to this month’s episode of Monday with Matthew. A little while ago, a housing analyst was being interviewed about the current state of the residential market and they suggested that the country is in a “housing recession.” Well, needless to say, this got a lot of attention from the media and the public at large—for obvious reasons.

Any time the word “recession” is mentioned we almost subliminally cast our minds back to 2007. And when the word “recession” is combined with the word “housing,” then panic starts to set in with flashbacks of headlines about burgeoning housing supply, plummeting home prices, and surging foreclosures.

As this is a topic being discussed by many across the country right now, I wanted to share with you my opinion as to whether the phrase “housing recession” is an appropriate one when describing today’s market.

So, what is a recession? To answer this, I will turn to my trusted Oxford English Dictionary, and this is how they describe that word.

Definition of a Recession

A slide showing two definitions of the word "recession" from the Oxford English Dictionary. The first definition is for both countable and uncountable contexts, which defines a recession as quote a difficult time for the economy of a country, when there is less trade and industrial activity than usual and more people are unemployed end quote. The second definition is the more formal of the two, applicable in uncountable contexts. The definition reads quote the movement backward of something from a previous position end quote.

Image Source: Matthew Gardner

Recession:

  • a difficult time for the economy of a country, when there is less trade and industrial activity than usual, and more people are unemployed
  • the movement backward of something from a previous position

Well, how do we use these definitions when it comes to the ownership housing market?

I guess that “less trade” could mean lower sales and we have certainly seen sales pull back. “Movement backward” could be how someone might describe the fact that sale prices have been pulling back in many markets across the country.

But although some may say that we really are in a housing recession given the definition of the word, is it really accurate? Are we are inextricably headed down a road that leads to the bursting of some sort of bubble as we all remember from 2007? I don’t believe we are. To explain my thinking let’s start out by looking at housing supply.

Inventory of Homes for Sale

A line graph titled "Inventory of Homes for Sale," showing the months January 2021 through July 2022 on the x-axis and numbers in millions on the y-axis ranging from 0.8 to 1.3. The graph shows that listing activity has risen from an all-time low of 900,000 during February 2022 to over 1.2 million units in July 2022—a 35.6% increase. Between January 2021 and October 2021, inventory ranged between 1.1 and 1.2 million before plummeting steadily toward the all-time low of 900,000 in February. Since then, inventory has rebounded to over 1.2 million again almost as quickly as it dropped.

Image Source: Matthew Gardner

 

Yes, listing activity is up—can’t argue with that—with the number of resale homes for sale jumping by more than a third from the start of this year. But there’s more to it than that. You see, we have to look a little further back to better understand what’s really going on.

And to do this, let’s check out the number of homes for sale during the first seven months of this year and compare those numbers to the same periods in 2018 through 2021.

Active Listings By Month

A multi-line graph titled "Active Listings by Month" showing the number of active listings for the years 2018, 2019, 2020, 2021, and 2022. The x-axis contains the months January through July, and the y-axis shows the number of listings ranging from 600,000 to two million. Overall, the graph indicates that listings remain well below the long-term average, and that the number of homes for sale in July 2022 exactly matches that of July 2021. 2022's January value is the lowest of the selected years, followed in order by 2021, 2020, 2018, and 2019. 2019 began the year with around 1.6 million active listings. In short, the July numbers show that there were hundreds of thousands more active listings in 2018 and 2019 than 2020 through 2022.

Image Source: Matthew Gardner

 

I don’t know about you, but this doesn’t look like a chart showing a massively oversupplied market! The number of homes for sale in July of this year was almost exactly the same as we saw last July and is still well below the levels seen in 2018, 2019, or 2020.

Sure, listings are up. But are we at levels that will cause prices to tumble? Remember that it was a massive increase in the number of homes for sale that led to the housing bubble bursting back in 2007. Listings peaked at almost 3.9 million units in 2006; but today there are 2.6 million fewer units on the market than we saw back then. Now that we’ve seen that supply isn’t at concerning levels, let’s look at demand.

Existing Home Sales

A line graph titled "Existing Home Sales." The x-axis shows every other month from January 2020 to July 2022, and the y-axis shows numbers in millions ranging from 0 to 7.0. Overall, the graph shows that, although they remain higher than the levels we saw at the beginning of the COVID-19 pandemic, home sales have been falling since January 2022. Home sales dipped sharply in March 2020 due to the onset of the pandemic, going from above 5 million to 4 million. By September 2020, existing home sales rose above 6 million, and hovered around that mark until January 2022. In July 2022, existing home sales dipped below 5 million again.

Image Source: Matthew Gardner

 

This chart doesn’t look too good. On an annualized basis, sales have been pulling back since the start of the year but that’s not the full story. Let’s look at this in a slightly different way.

Year-to-Date Sales

A multi-bar chart titled "Year-to-Date Sales" showing non-seasonally adjusted and seasonally adjusted sales for the past five years. The years 2018 through 2022 are represented on the x-axis, while the y-axis shows numbers in millions ranging from 0 to 4.0. 2022 year-to-date sales are lower than they were last year, but unadjusted for seasonality, year-to-date sales are higher than 2019 or 2020. And when adjusted for seasonal shifts, 2022's year-to-date sales are higher than 2018, 2019, and 2020. 2021 has the highest year-to-date sales totals, with both non- and seasonally adjusted sales figures right around 3.5 million.

Image Source: Matthew Gardner

 

The bars here show year-to-date sales through July—both adjusted and unadjusted for seasonality—and although unadjusted sales so far this year are lower than we saw during the first seven months of 2021, they are at about the same level as we saw in 2018 and are higher than in 2019 or 2020.

But when we adjust the monthly sales data for seasonality, year-to-date sales in 2022 were higher than all years shown here other than 2021.

So, although sales have fallen, it appears to me that we are heading back to a more realistic market rather than one that is hemorrhaging. Yet another indicator we need to consider when examining the market for evidence of some sort of recession are months of inventory , which shows how long it would take to sell every home for sale using the current monthly sales pace.

Months of Inventory

A line graph titled "Months of Inventory," which reflects how long it would take every home on the market to sell given the current housing market conditions. The x-axis displays the months January 2021 through July 2022, and the y-axis shows the number of months ranging from 0 to 3.5. The chart shows a figure of 3.3 months of inventory for July, indicating a seller's market. A balanced market is 4 to 6 months of inventory. From January 2021 to August 2021, months of inventory rose from below 2.0 to above 2.5, then dipped to just above 1.5 in January 2022. Since then, months of inventory has steadily risen to the 3.3-month figure in July 2022.

Image Source: Matthew Gardner

 

This graph shows that it would take three months to sell every home on the market given the sales we saw in July. That is quite a jump from the January pace but, again, perspective is everything.

Months of Inventory: Seller’s Market

A line graph titled "Months of Inventory," which presents an expanded view of inventory dating back to the year 2000. The x-axis shows the years 2000 through 2022, and the y-axis shows the months of inventory ranging from 0 to 13. The graph shows that as of 2022, we are still in a seller's market, even though listings have risen and sales have slowed. A balanced market—marked by 4-6 months inventory—is still not present. From 2000 to early 2006, the housing market stayed below 6, then leapt up to roughly 10 months by 2008. The highest months of inventory displayed is 13 between 2010 and 2011. Since then, the overall direction of the chart has trended downwards, with the lowest figure—below 2 months of inventory—appearing in late 2021/early 2022.

Image Source: Matthew Gardner

 

At three months, it is still a seller’s market. It’s generally accepted that the definition of a seller’s market is any number below four months; a balanced market is four to six months of inventory, and a buyer’s market is when the month of inventory is above six.

And a simple bit of math shows us that, for the market to shift from favoring sellers to favoring buyers, the number of homes for sale must break above two million—which we haven’t seen since 2015—and monthly sales would have to drop to below 300,000. We’ve only seen that happen three times in history: November 2008, and again in July and August of 2010.

Yes, listings are up, and sales are down. There’s no denying it. But, again, does the data justify the term recession? My answer would be no. But, if you’re still not convinced, let’s turn our attention to sale prices. I think that might help make things even clearer.

Median U.S. Existing Home Price

A line graph titled "Median U.S. Existing Home Price." It shows home sale price figures (displayed on the y-axis from $100,000 to $450,000) for the months January and July from 2012 through 2022 (displayed on the x-axis). a solid line tracks the median home price, showing a gradual increase over time from roughly $150,000 in January 2012 to over $400,000 in July 2022. A dotted line runs through the middle of the undulations in the solid line, following the same upward trend from 2012 through the end of 2020. But during early 2021, the solid line breaks away from the trend line, which reflects the historically low levels of mortgage rates at that time. Sale prices are starting to pull back, given the affordability constraints and high financing costs in the housing market status quo. Windermere Chief Economist Matthew Gardner expects this pull-back of prices to continue.

Image Source: Matthew Gardner

 

The solid line represents the median sale prices of homes over time and the dotted line shows the trend. You can clearly see that we started breaking away from the trend line in early 2021 and that’s not at all surprising as it started the month after mortgage rates hit their historic all-time low.

But today’s financing costs are significantly higher, and prices have started to slide. Although I certainly expect that we will see sale prices fall further, it appears to me as if they are simply moving back to the long-term trend, and not collapsing.

Mortgage Rate Forecasts

A multi-bar chart titled "Mortgage Rate Forecasts" showing how several institutions foresee mortgage rates in 2023. The chart shows Fannie Mae's 2023 prediction of 4.5%, followed by Freddie Mac's 5.1%, Mortgage Bankers Association's (MBA) 4.9%, 6.0% for the National Association of REALTORS® (NAR), 5.3% for Wells Fargo, and Matthew's forecast of 5.3%. Overall, rates remain higher than buyers are used to, but will not get close to the long-term average of 7.5%. It is generally accepted that mortgage rates are likely to start pulling back modestly in 2023.

Image Source: Matthew Gardner

 

With mortgage rates doubling from their 2021 lows, downward pressure on sale price was to be expected. But will they—as some think—rise to a level that will cause home prices to plummet? To answer that, here are the forecasts of several associations. You’ll see that all, bar the National Association of Realtors and Freddie Mac, see rates pulling back—albeit modestly—in 2023.

Of course, all these are annual averages and today’s rates are higher with the latest Freddie Mac data showing the average 30-year fixed rate above 6%—a level we haven’t seen since 2008.

However, economists including myself find it unlikely that rates will continue rising significantly from where they are today. The mortgage market is certainly in a bit of disarray right now with the yield curve inverting, but that should correct itself by early next year and that’s why we generally expect rates to start pulling back from their current levels by the start of 2023.

But if rising rates are triggering memories of 2008, you wouldn’t be alone. There are some expecting that the spike in rates will trigger a surge in foreclosures and that will doom the market. But as you see here, although foreclosure filings have certainly risen, they are still remarkably low compared to historic standards.

U.S. Foreclosure Filings

A bar graph titled "U.S. Foreclosure Filings" showing the number of home foreclosures (displayed on the y-axis from 0 to 250,000) in the U.S. from Q1 2017 to Q2 2022 (displayed on the y-axis). From Q1 2017 to Q2 2019, U.S. foreclosures remained above 150,000. Between Q1 and Q2 2020, foreclosures dropped from just below 150,000 to well below 50,000. This figure dropped further in Q3 2020 but has increased every quarter since. Windermere Chief Economist Matthew Gardner opines that this increasing trend of foreclosures is not concerning, since it does not yet represent a level of foreclosures sufficient to create an oversupply in the market.

Image Source: Matthew Gardner

 

In the second quarter, newly delinquent mortgages represented just 1.9% of all mortgages outstanding1 and that’s the lowest share the market has seen since 2006. Although I do expect the number of homes being foreclosed on will rise as we move into 2023, I just don’t see it getting to the levels necessary to materially impact the market. And a big part of the reasoning behind my thinking is this:

Equity Rich Households (Q2 2022)

A slide titled "Equity Rich Households (Q2 2022)" showing a map of the United States where each state's equity rich household percentage is displayed. "Equity rich" in this context signifies people with a mortgage that are sitting on more than 50% equity. The highest equity-rich state in the country is Vermont at 71.4%, followed by Idaho at 69.5%, and Arizona at 64.8%. The least equity rich state in the country is Louisiana at 23.4%, followed by Illinois at 25.4%, and Alaska at 26.7%.

Image Source: Matthew Gardner

 

In the second quarter of 2022, over 48% of homeowners with a mortgage were sitting on more than 50% equity.

Simply put, for enough homeowners to be put in a negative equity situation that would lead them to enter foreclosure and materially damage the market, home prices across the country would have to fall by a percentage greater than we saw during the market crash. And I just don’t see this happening.

The word “recession” has many connotations, and when it’s used to describe the housing market, it can engender a significant level of panic. So, I will ask you all. Given the data I have showed you today, do you think that we are in a housing recession?

Yes, supply levels have risen. But they are still relatively low when compared to historic averages and with builders slowing construction activity to a crawl, it’s unlikely that housing supply will grow much organically. Over the longer term, I believe that the supply of resale homes for sale will remain below historic averages. I say this for one simple reason: mortgage rates.

In 2020, a record number of households refinanced their homes to take advantage of the mortgage rates that had been plummeting. And in 2021, over six million home buyers got mortgages with rates averaging below 3%.

I would suggest to you that we will not see the number of homes for sale even get back to normalized levels in the mid-term, as many potential sellers will decide not to sell, because if they did, they would lose the never seen before and likely never to be seen again mortgage rate that they currently have.

Of course, there will be sellers who have to move because of factors such as job relocation, death, or divorce, but I would contend that listing activity may well be tight for a long time. And if supply remains below the level of demand, the market is further protected.

And as far as demand goes, let’s not forget that the age makeup of the country suggests that we will see a lot more potential buyers as Millennials and Generation Z mature, with current numbers suggesting significant buyer demand for the next two decades.

As for sale prices, I still believe (as do almost all economists) that the median home price next year will be higher than we will see this year, but a very significant drop in the pace of sales growth is likely as we trend down to historic averages.

Of course, all real estate is local and there are markets across the country that will see prices drop in absolute terms. But even in the most highly susceptible markets, it will be a temporary phenomenon. By 2024, homeowners in these markets will see the value of their homes start to rise again.

I’m going to leave you with my quote to describe today’s market today and it’s that we are in a “housing reversion,” NOT a housing recession.

As always, I’d love to hear your comments on my thoughts so feel free to reach out. In the meantime, stay safe out there and I’ll see you all again next month.

1: New York Fed Quarterly Report on Household Debt and Credit

About Matthew Gardner

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

This post originally published by Matthew Gardner

staging-tips_featImg

Nowadays, home staging is an integral part of the home selling process. The impact of home staging is crystal clear, but how you go about it deserves some consideration. Many homeowners will hire a home staging professional, trusting their expertise to make their home as appealing as possible to buyers. However, if hiring a professional isn’t in your budget, taking a DIY approach to home staging can deliver its own benefits.

7 Tips for Staging Your Home Yourself

1. Declutter

The first rule of home staging: make it tidy! A well-staged home should make potential buyers feel comfortable and at ease. To make that happen, it’s important that the spaces in your home are free of clutter. Consider investing in storage bins or a separate storage space temporarily to pare down the items in your home as much as possible.

2. Deep Clean

To really make your home sparkle, it will need more than a cursory cleaning. On top of your usual cleaning routine, get those hard-to-reach and uncommon spots throughout your home that will make it feel spotless. Putting some elbow grease into your bathroom surfaces, underneath and behind furniture, baseboards, and all switches and handles will make a difference when guests enter your home.

3. Fresh Paint

Not only does adding a coat of fresh paint do wonders for the look of your home, it’s a low-cost, high-ROI investment for a DIY project as important as home staging. Going for neutral colors will help to create balance in your interior while appealing to a wide spectrum of buyers’ tastes. It’s the splashes of color on top of a neutral foundation that will help guide visitors’ eyes from room to room.

Image Source: Getty Images – Image Credit: irina88w
Image Source: Getty Images – Image Credit: irina88w

4. Curb Appeal

You only get once chance to make a first impression on potential buyers visiting your home and upping your curb appeal will give you the best chance of wowing them. Take a trip to your local hardware store and prepare to spend some time working in the front yard. Projects that improve the look and quality of your lawn, flower beds, walkways, outdoor lighting, windows, and trim will impress buyers and can increase the value of your home.

5. De-Personalize

Once a buyer pulls up to your property, you want to give them every opportunity to imagine themselves in the home. That’s why it’s important to de-personalize your interior and let them fill it with their own imagination. Remove all family photos, notes, personal gifts, and the like from your home. Aim for a décor style that’s not too ornate and not too bland—think calm, simple, and clean.

6. Focus on Accents

Once you’ve applied fresh paint, boosted your curb appeal, and de-personalized your home, you’re ready to add décor accents. Again, the most important thing is that buyers feel comfortable in your home, so your accents should reflect that notion. Add area rugs that are inviting but not too loud, keep freshly folded towels in the bathroom, and consider adding house plants throughout your spaces to make them feel natural.

7. Design Hacks

A few key design hacks will help you round out your DIY home staging project. If you’re struggling with making the smaller spaces in your home feel comfortable, try adding a mirror. Mirrors help to reflect light and can help narrow or cramped spaces feel bigger. Arrange your living room furniture in a way that emphasizes the room’s dimensions. Since you’re designing your home with open houses in mind, the TV no longer needs to be the focal point of the living room.

For more information on preparing to sell your home, helpful tips on working with an agent, moving checklists, and more, visit our Seller Essentials Home Selling Guide.

 

­­­­­­Featured Image Source: Getty Images – Image Credit: PC Photography

This post originally published by Sandy Dodge

ARM_blogFeatImg

An integral part of the formula to successfully buying a home is securing the correct amount of financing. Once you’ve found the home you’d like to pursue, one of your primary tasks is exploring different loan products to see which best fits your situation. Eventually, you’ll come to a fork in the road where you’ll need to decide between a fixed-rate mortgage and an adjustable-rate mortgage (ARM). The following information will help you gain a better understanding of ARMs to help you decide whether they’re right for you.

What Is an Adjustable-Rate Mortgage (ARM)?

After your down payment, your mortgage will finance the remainder of your home purchase. Whereas fixed-rate mortgages allow you to lock in a specific interest rate and payment for the life of your loan, adjustable-rate mortgages’ interest rates will fluctuate over time, thus changing your loan payment. It’s typical for ARMs to begin with a low introductory interest rate, but once that first stage of the loan has passed, they will begin to shift up and down. ARMs generally have a cap that specifies the maximum rate that can occur for that loan.

Let’s say you secure an adjustable-rate mortgage with 30-year terms, the first five of which are at a fixed rate. When the variable interest portion of the loan kicks in, your mortgage’s fluctuations will be measured against an index. If the index is higher than when you secured the loan, your rate and loan payment will go up—and vice versa. How often your ARM rates change depends on your agreement with your lender. Talk to your mortgage broker to learn more about the characteristics of adjustable-rate mortgages.

 

 

ARM_bodyImg

Different Types of Adjustable-Rate Mortgages (ARMs)

Payment-Option ARM: You’ll have flexibility to choose your monthly payments with a payment-option ARM, including interest-only payments and minimum payments that don’t cover interest. These loan products can get home buyers into hot water quickly when rates increase.

Interest-Only ARM: With an interest-only ARM, you pay just the interest on the loan for a specified introductory period, then the principal payments kick in on top. The longer the introductory period, the higher your payments will be when the delayed principal payments enter the equation.

Hybrid ARM: As outlined above, a hybrid ARM begins with a fixed-rate introductory period followed by an adjustable-rate period. Typically, a hybrid ARM’s fixed-rate period lasts anywhere between three to 10 years, and its rates adjust at an agreed-upon frequency during the adjustable-rate period, such as once every six months or once a year.

Pros and Cons of an Adjustable-Rate Mortgage (ARM)

  • The low introductory rate allows you to save money and plan for when the adjustable-rate period kicks in.
  • If you plan to live in the home for a long time, a fixed-rate mortgage may be a better option.
  • If you plan on selling in a few years, you can use the proceeds to pay back your mortgage before the fixed-rate period ends.
  • Without knowing what will happen to interest rates, your monthly payments could become unaffordable.
  • The low introductory rate allows you to save money and plan for when the adjustable-rate period kicks in.
  • If you plan to live in the home for a long time, a fixed-rate mortgage may be a better option.
  • If you plan on selling in a few years, you can use the proceeds to pay back your mortgage before the fixed-rate period ends.
  • Without knowing what will happen to interest rates, your monthly payments could become unaffordable.
  • If the index decreases over time, you could end up with a lower interest rate and monthly payments.
  • Financial planning is more difficult with an ARM, since there’s no telling what your monthly payments will be one year to the next.

Home Monthly Payment Calculator

To get an idea of how your mortgage payment will fit into your budget, use our free Home Monthly Payment Calculator by clicking the button below. With current rates based on national averages and customizable mortgage terms, you can experiment with different values to get an estimate of your monthly payment for any listing price.

 

 

For more information on financing your next home purchase, connect with an experienced, local Windermere agent.

 

 

­­­­­­Featured Image Source: Getty Images – Image Credit: Pekic

This post originally published by Sandy Dodge

contempInteriorDesign

Although there are certain fundamental principles to contemporary design, it is constantly evolving. While other interior design styles are often rooted in a specific period, contemporary design is set in the present. What’s popular now is what’s popular in contemporary design. Its ability to remain timeless is what gives contemporary design its greatest quality—it never goes out of style. Learn a bit more about contemporary design to find ways to incorporate it into your home.

What is contemporary interior design?

Contemporary style is characterized by clean lines, state-of-the-art materials, and a preference for openness over ornamentation. These tenets go hand in hand with the philosophies of modernism and minimalism, but contemporary design simply dips its toes in these other design styles without relying on them too heavily.

The aesthetic of modern construction lends itself well to contemporary design. Industrial spaces and open rooms with high ceilings and large windows help to deliver a magazine-quality contemporary look. But even if your home isn’t tailor-made for contemporary design, you can still curate it.

 

An open living room and kitchen area characterized by a contemporary interior design style. In the forefront of the photo sits a beige couch with grey and brown pillows. The coffee table is wood with black metal legs over a white and beige couch. The living room is separated from the kitchen in the background by large square framed windows. On the other side you can see white cabinets and a dark grey cement tile back splash and wood table and chairs.

Image Source: Getty Images – Image Credit: vicnt

Contemporary Design in Your Home

The simplest way to incorporate contemporary design philosophy into your home is to let the natural architectural elements show. Let your exposed wooden beams and brick walls shine, decluttering the spaces around them to make them the focal point. This can make your spaces feel empty at first but remember; contemporary design is all about opening things up to effectively apply decorative details.

Choose modern furniture with clean lines and solid-colored fabrics. In the kitchen and bathroom, chrome and metallic surfaces will reinforce a contemporary aesthetic. When decorating, start with a neutral foundation (white, grey, and black) and add bold accent colors on top. The timeless appeal of a hardwood floor makes it a fitting choice for achieving contemporary style, while textured textiles in natural fabrics will help to liven up your spaces.

Stone, metal, and glass mix well in contemporary design, often combined in the selection of living room sets, decorative centerpieces, and kitchen/bathroom design. Large pieces of art, accent walls, and bold decorations help to broaden the color palette of contemporary spaces. You are free to choose bold, impactful hues from across the color spectrum in your decoration.

 

A living room area characterized by a neutral-colored contemporary interior design style. White walls host large neutral art in black frames. An off-white sectional couch with pewter heathered pillows and a grey blanket sit in the corner, with 2 wood and white marble round coffee tables. On the left is an angular seat with matching wood frame and cream-colored cushions. Above is a metal and dark glass light fixture. Open concept is implied with a black metal table in the back on the left against the wall, with metal lamps, glass reed infuser, and metal candle holders.

Image Source: Getty Images – Image Credit: AleksandraZlatkovic

The Differences Between Contemporary and Modern Design

Whereas contemporary design is centered on what is popular during the present, modern design is rooted in a specific time period. Modern design dates back to at least the early twentieth century, which evolved into mid-century modern during the 1950s.

Modern design typically has earthier colors and a general preference for wood, whereas saturated colors and metals/glass are more at home in contemporary design. Choosing modern design means you’re choosing to make decorative variations on a theme, whereas the theme of contemporary design is always changing, so you never know where it might lead.

Visit our Design Styles page to learn more about common interior design styles and how you can incorporate them into your home:

Windermere – Interior Design Styles

This post originally published by Sandy Dodge

Mondays-with-Matthew

This video is the latest in our Monday with Matthew series with Windermere Chief Economist Matthew Gardner. Each month, he analyzes the most up-to-date U.S. housing data to keep you well-informed about what’s going on in the real estate market.

Hello there, I’m Windermere’s Chief Economist Matthew Gardner and welcome to this month’s episode of Monday with Matthew. Today we are going to take a look at the new home market where headwinds are certainly growing. And the reason this particular subject piqued my interest was that the National Association of Home Builders just released their Housing Market Index for August, and the numbers were certainly eye-opening.

Now, for those of you who may not be particularly familiar with this index, it is based on a survey of home builders which asks them to give their opinions on the single-family home market and asks them to rate current market conditions for the sale of homes today as well as in six months’ time. It also asks their opinion regarding foot traffic of prospective buyers to their new home communities.

NAHB Housing Market Index

A line graph titled "NAHB Housing Market Index." It shows the falling confidence of U.S. home builder in the Housing Market Index, which measures their perspective of current market conditions for the sale of new homes. The x-axis spans from January 2020 to August 2022. August's figure of 49 represents the eight consecutive drop in the index, and is the first time we've seen a number below 50 since May of 2020.

 

And as you can see, the headline index level fell six points to 49. The drop in August marked the eighth consecutive monthly decline for the Housing Market Index. It was also notable because it was the first time since May of 2020 that the index has dropped below the key 50 breakeven level. This is significant, as it tells us that today more home builders currently rate sales conditions as poor than good.

Now, while the August number was certainly lower than some economists had forecast, I was actually not too surprised as builders have been reporting a spike in cancelled contracts recently. In fact, a report I just read that was put out by John Burns Consulting suggested that the cancellations have more than doubled since April with 17.6% of buyers pulling out of their purchases in July. That compares to 8% in April and 7 ½% a year ago.

Housing Market Index Components

A multi-line graph titled "HMI Components." This chart shows the components behind home builder's falling confidence in the current market, displayed in the Housing Market Index. The three components displayed here are present single-family home sales, expectations (future sales), and traffic. All three are at their lowest levels since May 2020. Of the chart, Matthew Gardner says, "the present sales index fell seven points to 57 but is still above the breakeven point. The future sales series fell two points to 47, while prospective buyer traffic fell five points to 32 which, if we exclude the pandemic, represents the lowest index level since April of 2014."

 

This chart shows a breakdown of three components of the Housing Market Index which are all at their lowest levels since May of 2020, which was just before housing activity rebounded following the lockdown due to COVID-19.

  • The present sales index fell seven points to 57 but is still above the breakeven point
  • The future sales series fell two points to 47
  • Prospective buyer traffic fell five points to 32 which, if we exclude the pandemic, represents the lowest index level since April of 2014

I find this index has a very strong correlation with new home sales, but I also use it as a pretty reliable leading indicator when it comes to single-family housing starts. I’ll get to that shortly. The survey also stated that one in five builders had reduced prices in August. That might help to explain the 10-point spread between builders’ perception of current versus future sales. But there are limits on home builders’ ability to keep cutting prices in order to support sales. This has become a significant issue because many of them are currently holding a large stock of inventory.

New Homes for Sale

A bar graph titled "New Homes for Sale." It shows inventory levels for the period January 2020 through June 2022. Listings have risen 32.1% year over year, and are up 16% since the start of the year. Of the homes currently for sale, 67% are under construction, 24% have yet to break ground, and 95 are ready to occupy. The y-axis displays the number of new homes for sale in the thousands. June 2022 has the highest value on the chart, with an inventory level just above 450,000.

 

Here is what current inventory levels look like. Although you might think that it’s not that bad given that only 9% of available homes are finished are ready to move into, I would tell you that builders incur costs every day that a home is not sold, even if that home has yet to be built. And with inventory at a level not seen since 2008, I’m sure there are a lot of builders not sleeping too well right now.

I would add that by the time the above video is released, the July new home sales report will have been published. I can almost guarantee that the number of homes for sale will have grown further.

New Homes Sales

A bar graph titled "New Home Sales." When taken in context of the "New Homes for Sale" chart mentioned earlier in this month's episode, Matthew Gardner is showing a decline in the pace of sales activity. Sales fell by over 8% month over month in June 2022, and are 17.4% lower than a year ago. On an adjusted basis, monthly sales were the lowest seen since before the pandemic.

 

Higher inventory levels are due to slower sales activity, which is continuing to decline. Sales are 17% lower than a year ago. With more homes for sale and lower transactions, it would now take more than nine months to absorb all available homes using the current sales pace. I would also tell you that the last time months of supply broke above nine was all the way back in 2010.

  • It’s my forecast that sales in July will have dropped from the annualized rate of 590,000 shown in the chart above to somewhere between 570,000 and 580,000.

U.S. Single-Family Housing Starts

A chart titled "U.S. Single Family Housing Starts." It shows the number of new home starts from January 2019 to July 2022. The most recent figures show starts have fallen 18.5% year over year. As Matthew Gardner explains, "With fewer buyers and rising inventory levels, builders have pulled back significantly. The number of building permits issues is 11.7% lower than a year ago."

 

With high supply levels and lower sales, it’s not at all surprising to see builders hitting the brakes, with new home starts falling by 10.1% between June and July of this year. Starts are down by 18 ½% from a year ago. Starts have dropped on a sequential basis for five consecutive months now, and I am afraid that they will drop further before finding a bottom.

So, what’s the bottom line here? Well, there are several issues I see, the first of which is affordability. Home prices have been spiraling upward since the start of the pandemic not only because mortgage rates dropped, but construction costs started jumping and builders had to charge more for a home.

Builders saw prices rise by almost 18% last year. This had already taken a significant toll on affordability even before the mortgage rates spike we saw earlier this year. The upshot, as I see it, is that tighter monetary policy from the Fed, in concert with construction costs that remain well above normal levels, has hit builders and hit them hard. Of course, they are doing their best to address the situation by slowing construction activity significantly, but I think that they are going to have a pretty rough time for the next several months.

Ultimately, I see little option for home builders other than lowering prices further, especially now that they are competing with rising inventories in the resale market. I also believe that there are buyers out there waiting patiently on the sidelines for prices to drop in the coming months as they know that builders at some point have to solve the current supply demand imbalance and lowering prices is the easiest way of doing this. Last month the average price drop was 5%, but this is very likely to increase as we move toward the fall.

Will builders get through the situation they find themselves in? I believe that they will. And there are some glimmers of light out there with inflation appearing to be peaking, interest rates are, if not dropping, then certainly stabilizing, and this will help.

Builders also understand that the country has a significant housing shortage. In fact, a recent report published by “Up For Growth” suggested that we have a housing shortage today of around 3.8 million homes. Although this includes rental and ownership housing, some basic math tells me that there is a need today for around 2.5 million new owner-occupied homes. So, light is definitely at the end of the tunnel, but there is a way to go before they get out of it.

And there you have it. I hope that you’ve found my thoughts on this topic of interest. As always, if you have any questions or comments about the current new home environment, please do reach out to me. In the meantime, stay safe out there and I look forward to visiting with you all again next month.

Bye now.

 

About Matthew Gardner

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

This post originally published by Matthew Gardner

movingChecklistHdr

Once you and your agent work through the process of selling your home, there comes a point when it’s time to switch gears and get ready to move. It can be difficult to juggle the various steps of the moving process, especially if you’re Buying and Selling a Home at the Same Time. Using a moving checklist will help you stay organized and on schedule throughout your moving timeline.

Moving Checklist: A Step-by-Step Guide to the Moving Process

We’ve included a comprehensive checklist below of all the steps you’ll need to complete to ensure a smooth, successful move. This list is also available as an interactive web page and downloadable PDF here: Moving Checklist

Twelve Weeks Before:

  • Get estimates from professional movers or truck rental companies if needed.
  • Once you’ve selected a mover, discuss insurance, packing, loading and delivery, and the claims procedure.

Six to Eight Weeks Before:

  • Use up things that may be difficult to move, such as frozen food.
  • Sort through your possessions. Decide what you want to keep, what you want to sell, and what you wish to donate to charity.
  • Record serial numbers on electronic equipment, take photos (or video) of all your belongings and create an inventory list.
  • If you are moving yourself, use your inventory list to determine how many boxes you will need. Stock up on the items you’ll need from our “Moving Essentials” list.
  • Obtain a change of address packet from the post office and send it to creditors, magazine subscription offices, and catalog vendors.
  • Discuss tax-deductible moving expenses with your accountant and begin keeping accurate records.
  • If you’re moving to a new community, contact the Chamber of Commerce and school district and request information about services.
  • Make reservations with airlines, hotels, and car rental agencies, if needed.
  • Begin packing nonessential items.

Two to Four Weeks Before:

  • Arrange for storage, if needed.
  • If you have items you don’t want to pack and move, hold a yard sale.
  • Update the address listed on your car registration, license, and insurance.
  • Transfer your bank accounts and safe-deposit box items to new branch locations if needed. Cancel or redirect any direct deposit or automatic payments from your accounts.
  • Make special arrangements to move your pets and consult your veterinarian about ways to make travel comfortable for them.
  • Have your car checked and serviced if you’ll need to drive it a long distance.
  • Change your utilities, including phone, power, and water, from your old address to your new address.

Week of Moving Day:

  • Defrost your refrigerator and freezer.
  • Have movers pack your belongings.
  • Label each box with the contents and the room where you want it to be delivered.
  • If you’re using a moving company, arrange to pay for their services in full, or the remainder of what you owe, upon delivery.
  • Set aside legal documents and valuables that you do not want packed.
  • Pack clothing and toiletries, along with extra clothes in case the moving company is delayed.
  • Give your travel itinerary to a close friend or relative so they can reach you as needed.
  • Pack a first-day box with items that you’ll want accessible before other boxes are unpacked. See our list of suggested items on the right and add any others you’ll want to include.

Moving Day:

Old Home

  • Pick up the truck as early as possible if you are moving yourself.
  • Make a list of every item and box loaded on the truck.
  • Let the mover know how to reach you.
  • Double-check your closets, cupboards, attic, basement, yard, and garage for any left-behind items.

New Home

  • Be on hand at the new home to answer questions and give instructions to the mover.
  • Check off boxes and items as they come off the truck.
  • Install new locks.
  • Confirm that the utilities have been turned on and are ready for use.
  • Unpack your first-day box.
  • Unpack your children’s toys and find a safe place for them to play.
  • Examine your goods for damage.

Our Moving Checklist page has all the information above, plus helpful lists for Moving Essentials and which items to pack in your First-Day Box available as a downloadable PDF.

For additional information on the selling process from start to finish, tips on working with an agent, and more, visit our Home Selling Guide:

 

 

­­­­­­Featured Image Source: Getty Images – Image Credit: JohnnyGreig

This post originally published by Sandy Dodge

HOAFeesHdr

Becoming a homeowner comes with many responsibilities, but if the home you’re purchasing requires you to be part of a Homeowners Association (HOA), you’ll have to follow additional guidelines and pay additional fees. As you’re looking for homes, talk to your agent about whether purchasing a home that’s part of an HOA is right for you.

What is a Homeowners Association (HOA)?

A Homeowners Association is an organization that governs a community of homes. Homeowners within the governed community must follow certain guidelines for property upkeep and maintenance and will face restrictions on their ability to make additions and/or changes to the property. These rules exist to maintain a standard level of quality amongst the community to maximize property value.

Different HOAs may have different stipulations based on the type of housing they govern. For example, an HOA may oversee a community of detached single-family homes, but they are commonly found in communities of condo or townhome housing styles where there is a shared, communal living style. Each HOA has a Board of Directors in charge of enforcing rules, collecting fees, and managing the funds, and certain associations may hire a third-party management company to help the Board of Directors carry out their operations. The members of an HOA are the residents who live in that community. Here are some examples of typical HOA property restrictions:

  • Exterior paint color choices must be submitted for approval
  • Grass must be mowed regularly
  • Flower beds must be kept weed-free
  • Noise regulations and/or noise curfew
  • Pet restrictions (type of animal and/or number of pets per household)

Homeowners Association (HOA) Pros and Cons

Living in an HOA community means your property will maintain its curb appeal and you can live with the knowledge that systems are in place to protect property values. However, the benefits come with additional restrictions on your freedoms as a homeowner while increasing your monthly payments.

Image Source: Getty Images - Image Credit: mphilips007
Image Source: Getty Images - Image Credit: mphilips007

How much are HOA fees?

If you buy in a development governed by a Homeowners Association, you will be required to pay HOA fees on top of your monthly mortgage payment. Typically paid monthly, HOA fees go toward the neighborhood’s shared spaces, property maintenance, and amenities. Homeowners Association fees vary greatly depending on the particulars of that community’s agreement. These fees often cover landscaping costs, parking, community security, garbage pickup, maintenance and repair, insurance, and other amenities, such as a shared pool or gym. If the home is your primary residence, your HOA fees are not tax-deductible.

HOA fees are an additional expense you’ll have to budget for when buying a home. To get an idea of what you can afford, use our free Home Monthly Payment Calculator by clicking the button below. With current rates based on national averages and customizable mortgage terms, you can experiment with different values to get an estimate of your monthly payment for any listing price, accounting for any HOA fees you may incur.

 

­­­­­­Featured Image Source: Getty Images – Image Credit: RichVintage

This post originally published by Sandy Dodge

q22022-GardnerReport

The following analysis of select counties 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 your Windermere Real Estate agent.

Regional Economic Overview

The most recent employment data (from May) showed that all but 2,800 of the jobs lost during the pandemic have been recovered. More than eight of the counties contained in this report show employment levels higher than they were before COVID-19 hit. The regional unemployment rate fell to 4.5% from 5.2% in March, with total unemployment back to pre-pandemic levels. For the time being, the local economy appears to be in pretty good shape. Though some are suggesting we are about to enter a recession, I am not seeing it in the numbers given rising employment and solid income growth.

Western Washington Home Sales

❱ In the second quarter of 2022, 23,005 homes sold, representing a drop of 11% from the same period a year ago, but up by a significant 52% from the first quarter of this year.

❱ Sales rose in Grays Harbor County compared to a year ago but fell across the balance of the region. The spring market, however, was very robust, likely due to growing inventory levels and buyers trying to get ahead of rising mortgage rates.

❱ Second quarter growth in listing activity was palpable: 175% more homes were listed than during the first quarter and 61.98% more than a year ago.

❱ Pending sales outpaced listings by a factor of 3:1. This is down from the prior year but only because of the additional supply that came to market.

A bar graph showing the annual change in home sales for various counties in Western Washington from Q2 2021 to Q2 2022. The only county with a positive percentage year-over-year change is Gray Harbor County at 4.9%. All other counties show a negative year-over-year change Here are the totals: Skagit -0.6%, Lewis -1.1%, Kitsap -1.3%, Cowlitz -5.4%, Clallam -5.8%, Jefferson -6.6%, Whatcom -6.7%, Thurston -7.3%, Snohomish -8.4%, Pierce -10.2%, Island -11.3%, Mason -11.7%, King -15.8%, and San Juan -38.2%.

Western Washington Home Prices

❱ Even in the face of rising mortgage rates, home prices continue to rise at a well-above-average pace, with average prices up 13.3% year over year to $830,941.

❱ I have been watching list prices as they are a leading indicator of the health of the housing market. Thus far, despite rising mortgage rates and inventory levels, sellers remain confident. This is reflected in rising median list prices in all but three counties compared to the previous quarter. They were lower in San Juan, Island, and Jefferson counties.

❱ Prices rose by double digits in all but four counties. Snohomish, Grays Harbor, Mason, and Thurston counties saw significant growth.

❱ List prices and supply are both trending higher, but this has yet to slow price growth significantly. I believe we will see the pace of appreciation start to slow, but not yet.

A map showing the real estate home prices percentage changes for various counties in Western Washington. Different colors correspond to different tiers of percentage change. San Juan County is the only county with a percentage change in the 5% to 7.9% range, Skagit, Lewis, and Cowlitz counties are in the 8% to 10.9% change range, Clallam, Jefferson, Kitsap, and Pierce are in the 11% to 13.9 % change range, King and Whatcom counties are in the 14% to 16.9% change range, and Grays Harbor, Mason, Thurston, and Snohomish counties are in the 17% + range.

A bar graph showing the annual change in home sale prices for various counties in Western Washington from Q2 2021 to Q2 2022. Snohomish county tops the list at 20.6%, followed by Grays Harbor at 18.9%, Mason at 18.4%, Thurston at 17.4%, Whatcom at 16.3%, King at 14.3%, Kitsap at 13.8%, Jefferson at 13.6%, Pierce at 13%, Clallam at 12.7%, Skagit at 10.8%, Lewis at 9.1%, Cowlitz at 8.9%, Island at 8.6%, and finally San Juan at 5.6%.

Mortgage Rates

Although mortgage rates did drop in June, the quarterly trend was still moving higher. Inflation—the bane of bonds and, therefore, mortgage rates—has yet to slow, which is putting upward pressure on financing costs.

That said, there are some signs that inflation is starting to soften and if this starts to show in upcoming Consumer Price Index numbers then rates will likely find a ceiling. I am hopeful this will be the case at some point in the third quarter, which is reflected in my forecast.

A bar graph showing the mortgage rates from 2020 to the present, as well as Matthew Gardner's forecasted mortgage rates through Q2 2023. He forecasts mortgage rates continuing to climb to 5.9% in Q4 2022, then tapering off to 5.58% in Q1 2023 and 5.53% in Q2 2023.

Western Washington Days on Market

❱ It took an average of 16 days for a home to go pending in the second quarter of the year. This was 2 fewer days than in the same quarter of 2021, and 9 fewer days than in the first quarter.

❱ Snohomish, King, and Pierce counties were, again, the tightest markets in Western Washington, with homes taking an average of between 8 and 10 days to sell. Compared to a year ago, average market time dropped the most in San Juan County, where it took 26 fewer days for a seller to find a buyer.

❱ All but six counties saw average time on market drop from the same period a year ago. The markets where it took longer to sell a home saw the length of time increase only marginally.

❱ Compared to the first quarter of this year, average market time fell across the board. Demand remains very strong.

A bar graph showing the average days on market for homes in various counties in Western Washington for Q2 2022. Snohomish and King counties have the lowest DOM at 8, followed by Thurston and Kitsap at 9, Pierce at 10, Island and Skagit at 12, Whatcom at 14, Mason at 16, Cowlitz at 17, Lewis at 20, Jefferson at 21, Clallam at 24, Grays Harbor at 25, and San Juan at 35.

Conclusions

This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.

The economy remains buoyant, which is an important factor when it comes to the regional housing market, particularly as it affects buyers. Even though the number of homes that came to market has jumped significantly, which should favor those looking for a new home, demand is still robust, and the market remains competitive.

A speedometer graph indicating a strong seller's market in Western Washington for Q2 2022.

Much to the disappointment of buyers, rising listing prices suggest that sellers are clearly still confident even as financing costs continue to increase. While the pace of price growth is slowing, sellers are still generally in control. As such, I have moved the needle a little more in the direction of sellers. Until we see list-price growth and home sales slow significantly, we will not reach a balanced market.

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

This post originally published by Matthew Gardner

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!

 

REGIONAL ECONOMIC OVERVIEW

In the summer and fall of 2020, Western Washington regained some of the jobs lost due to COVID-19, but employment levels in the region have been in a holding pattern ever since. As of February, the region had recovered 132,000 of the 297,000 jobs that were lost, but that still leaves the area down by 165,000 positions. Given the announcement that several counties may have to roll back to phase 2 of reopening, I would not be surprised to see businesses hold off on plans to add to their payrolls until the picture becomes clearer. Even with this “pause” in the job recovery, the region’s unemployment rate ticked down to 6.1% from the December rate of 6.4% (re-benchmarking in 2020 showed the December rate was higher than the originally reported 5.5%). The lowest rate was in King County (5.3%) and the highest rate was in Grays Harbor County, which registered at 9.2%. Despite the adjustment to the 2020 numbers, my forecast still calls for employment levels to increase as we move through the year, though the recovery will be slower in areas where COVID-19 infection rates remain elevated.

WESTERN WASHINGTON HOME SALES

❱ Sales in the first quarter were impressive, with 15,893 home sales. This is an increase of 17.5% from the same period in 2020, but 32% lower than in the final quarter of last year—a function of low levels of inventory.

❱ Listing activity continues to be well below normal levels, with total available inventory 40.7% lower than a year ago, and 35.5% lower than in the fourth quarter of 2020.

❱ Sales rose in all counties other than Jefferson, though the drop there was only one unit. There were significant increases in almost every other county, but sales growth was more muted in Cowlitz and Thurston counties. San Juan County again led the way, likely due to ongoing interest from second-home buyers.

❱ The ratio of pending sales (demand) to active listings (supply) shows how competitive the market is. Western Washington is showing pendings outpacing new listings by a factor of almost six to one. The housing market is as tight now as I have ever seen it.

A bar graph showing the annual change in home sales for various counties in Western Washington

WESTERN WASHINGTON HOME PRICES

A map showing the real estate market percentage changes in various Western Washington counties

❱ Home price growth in Western Washington continues to trend well above the long-term average, with prices 21.3% higher than a year ago. The average home sale price was $635,079.

❱ Compared to the same period a year ago, price growth was strongest in Grays Harbor and Mason counties, but all markets saw double-digit price growth compared to a year ago.

❱ Home prices were also 2.9% higher than in the final quarter of 2020, which was good to see given that 30-year mortgage rates rose .4% in the quarter.

❱ I expect to see mortgage rates continue to trend higher as we move through the year, but they will remain significantly lower than the long-term average. Any increase in rates can act as a headwind to home-price growth, but excessive demand will likely cause prices to continue to rise.

A bar graph showing the annual change in home sale prices for various counties in Western Washington

DAYS ON MARKET

❱ The market in early 2021 continued to show far more demand than supply, which pushed the average time it took to sell a home down 25 days compared to a year ago. It took 2 fewer days to sell a home than it did in the final quarter of 2020.

❱ Snohomish and Thurston counties were the tightest markets in Western Washington, with homes taking an average of only 15 days to sell. The greatest drop in market time was in San Juan County, where it took 52 fewer days to sell a home than it did a year ago.

❱ Across the region, it took an average of only 29 days to sell a home in the quarter. All counties saw market time decrease from the first quarter of 2020.

❱ Very significant demand, in concert with woefully low levels of supply, continues to make the region’s housing market very competitive. This will continue to be a frustration for buyers.

A bar graph showing the average days on market for homes in various counties in Western Washington

CONCLUSIONS

A speedometer graph indicating a seller's market in Western Washington

This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.

Demand is very strong and, even in the face of rising mortgage rates, buyers are still out in force. With supply still lagging significantly, it staunchly remains a seller’s market. As such, I am moving the needle even further in their favor.

As I mentioned in last quarter’s Gardner Report, 2021 will likely see more homeowners make the choice to sell and move if they’re allowed to continue working remotely. On the one hand, this is good for buyers because it means more listings to choose from. However, if those sellers move away from the more expensive core markets into areas where housing is cheaper, it could lead to increased competition and affordability issues for the local buyers in those markets.

 

ABOUT MATTHEW GARDNER

Matthew Gardner - Chief Economist for Windermere Real Estate

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

 

This post originally appeared on the Windermere.com blog

Neither the snowstorm nor the increase in mortgage rates dampened buyer demand in February. Lack of inventory continues to be a frustration as there are way more prospective buyers than there are homes for them to buy. As a result, prices continued their upward climb.

While the number of homes for sale edged up, it was still far shy of demand. This is especially true of single-family homes. There were 41% fewer homes on the market in King County in February than the same time last year. In an indication of just how competitive the current market is, the entire Eastside ended the month with just 224 homes for sale. Inventory was even more scarce in Snohomish County where the entire county had just 283 homes for sale, a drop of 58% from a year ago. Condo shoppers have more options as the number of units on the market in King County increased 56% from last February.

With inventory so slim, competition is fierce. 57% of King County properties that sold in February sold over the list price. The median sale price paid was 9% over list price. Both are record highs. Competition doesn’t show signs of easing any time soon. A hike in interest rates is expected to only increase buyer urgency. An average rate of 3.02% for a 30-year fixed-rate mortgage for the week ending March 4 is the first time since July that the benchmark mortgage rate climbed above 3%.

The enormous imbalance between supply and demand sent single-family homes prices soaring throughout the region. In King County, the median home sold for $750,000, 11% higher than a year ago. Most areas in the county saw double-digit increases. Home prices on the Eastside jumped a whopping 28%. Seattle home prices were up 9%. In Snohomish County, the February $624,075 median price was up 21% from a year earlier and far surpassed the previous all-time high of $599,990 set in January.

With seller review dates, escalation clauses and multiple offers now the norm it’s more important than ever for buyers to work with their broker to create a strategy that balances their wants and needs with their budget.

The charts below provide a brief overview of market activity. If you are interested in more information, every Monday Windermere Chief Economist Matthew Gardner provides an update on the US economy and housing market. You can get Matthew’s latest update here.

EASTSIDE

VIEW FULL EASTSIDE REPORT

KING COUNTY

VIEW FULL KING COUNTY REPORT

SEATTLE

VIEW FULL SEATTLE REPORT

SNOHOMISH COUNTY

VIEW FULL SNOHOMISH COUNTY REPORT

This post originally appeared on GetTheWReport.com

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