Market Advice October 12, 2021

Eastside Market Update – October 2021

Despite a boost in new listings, inventory remained as tight as ever in September. The shortage of homes for sale combined with pent-up buyer demand and low interest rates kept prices high as compared to the same time last year. However, home prices over the past few months appear to be leveling out. The market traditionally slows down as we move into the holiday season, so price appreciation should continue to cool through the rest of the year.

Home prices in most of the region continued their pattern from the past few months – up from a year ago but falling slightly from the prior month.  The median price of a single-family home in King County in September was $825,600, an increase of 10% from last year, down from the $850,000 median in August. Seattle’s median price rose 4% year-over-year to $850,000, a slight drop from $875,000 last month. The Eastside was the exception to the trend of cooling prices. How hot is the market? 70% of homes sold there over the list price, and 86% sold in under two weeks. The median home price on the Eastside soared 26% from a year ago to $1,310,000, basically flat from $1,300,000 in August. Snohomish County’s median price jumped 18% from a year ago to $675,000, down from $694,900 the prior month.

Some of the greatest price increases occurred in areas that have traditionally been more affordable. According to Matthew Gardner, chief economist at Windermere Real Estate, “We continue to see a migration of buyers to suburban markets which has resulted in significant year-over-year price growth in areas such as Shoreline, Auburn, Skyway, Woodinville, and Burien. It’s likely that buyers are drawn to these areas because housing is more affordable than in the urban neighborhoods closer to Seattle and Bellevue.”

More homes were available at the end of September than in August, but low inventory continues to pose challenges for buyers. In King County there were 40% fewer homes on the market than the same time last year. The condo market, which was negatively impacted by COVID-19, has come roaring back as buyers look for more affordable alternatives to single-family homes. Condo sales were up 20% over last year, and inventory is being rapidly depleted. There were 50% fewer condo listings at the end of September than the year prior. In Snohomish County, the tight supply of homes continues. At the end of September there were just 672 single-family homes for sale in the entire county, a supply of just two weeks.

Real estate markets can vary significantly from area to area. Whether you’re looking to buy or sell, your broker can provide you with the most current data for your specific area so you can make the best informed decision. Let us know how we can help.

Market AdviceReal Estate Forecast September 30, 2021

Early October is the Sweet Spot for Buyers

Are you looking to buy a home? If so, we’ve got good news for you.

While there’s no denying the housing market is having a great year, many of the headlines are focused on the perks for sellers. But what about buyers today? As a buyer, you’re likely braving bidding wars and weighing low mortgage rates versus price appreciation as you search for your dream home. If you find yourself a bit discouraged, hear this: there are clear signs buyers may have more opportunities this fall.

According to realtor.comthe sweet spot for buyers is just around the corner. In a recent study, experts analyzed housing market trends by looking at data from the past several years. When applied to the current market, experts determined the ideal week to buy a home this year. The research says:

Nationally, the best time to buy in 2021 is the week of October 3-9. This week historically has shown the best balance of market conditions that favor buyers.”

So, what’s that mean for you? If you’re looking to buy a home, there’s a golden window of opportunity coming. Here’s what you can expect from that week.

Increased Housing Supply

The number of homes available for sale should increase. According to realtor.com, you can expect to see more new listings come to market the week of October 3. The findings estimate we’ll see roughly 17.6% more homes available than we saw at the start of the year.

This means you’ll have more options to choose from which should be a welcome relief in a market with tight housing supply.

Fewer Bidding Wars

With more homes available, you should also see a slight decline in the number of bidding wars. Having more options means buyers may not be competing as intensely for the homes on the market because there are more choices to go around.

This means when you write an offer, you may have less competition and a better chance of being the top bid. Just remember, it’s still important to come in with a strong offer.

Adjusted Homes Prices

As we move into the end of the year, the findings from realtor.com note this week may also be one of the peak weeks for price reductions in 2021. Historically the data shows an average of 7.0% of homes have a price reduction that week. Why? When housing supply ticks up, sellers need to look for other ways to make their house stand out.

This means, while home prices are still appreciating overall, you may see some homes with price adjustments from eager sellers. The process of closing a house takes time. To close before end of year, sellers may be more motivated this October.

Market Advice September 28, 2021

Is a 20% Down Payment Really Necessary To Purchase a Home?

There’s a common misconception that, as a homebuyer, you need to come up with 20% of the total sale price for your down payment. In fact, a recent survey by Lending Tree asks what is keeping consumers from purchasing a home. For over half of those surveyed, the ability to afford a down payment is the biggest hurdle.

That may be because those individuals assume a 20% down payment is necessary. While putting more money down if you’re able can benefit buyers, putting 20% down is not mandatory. As Freddie Mac puts it:

The most damaging down payment myth—since it stops the homebuying process before it can start—is the belief that 20% is necessary.”

If saving that much money sounds overwhelming, you might be ready to give up on the dream of homeownership before you even begin – but you don’t have to. According to the Profile of Home Buyers and Sellers from the National Association of Realtors (NAR), the median down payment hasn’t been over 20% since 2005. It may sound surprising, but today’s average down payment is only 12%. That number is even lower for first-time homebuyers, whose average down payment is only 7%.

Based on the Home Buyers and Sellers Generational Trends Report from NAR, the graph below shows an even closer look at the down payment percentage various age groups pay:

Is a 20% Down Payment Really Necessary To Purchase a Home? | MyKCM

As the graph shows, the only groups who put 20% or more down on average are older homebuyers who likely can use the sale of an existing home to fuel a larger down payment on their next home.

What does this mean for you?

If you’re a prospective homebuyer, it’s important to know you don’t have to put the full 20% down. And while saving for any down payment amount may feel like a challenge, keep in mind there are programs for qualified buyers that allow them to purchase a home with a down payment as low as 3.5%. There are also options like VA loans and USDA loans with no down payment requirements for qualified applicants.

To understand your options, you do need to do your homework. If you’re interested in learning more about down payment assistance programs, information is available through sites like downpaymentresource.com. Be sure to also work with a real estate advisor from the start to learn what you may qualify for in the homebuying process.

 

Video Blogs September 22, 2021

September 22nd Update

Market Advice September 21, 2021

Home Price Appreciation Is Skyrocketing in 2021. What About 2022?

One of the major story lines over the last year is how well the residential real estate market performed. One key metric in the spotlight is home price appreciation. According to the latest indices, home prices are skyrocketing this year.

Here are the latest percentages showing the year-over-year increase in home price appreciation:

The dramatic increases are seen at every price point and in all regions of the country.

Increases Are Across Every Price Point

According to the latest Home Price Index from CoreLogic, each price range is seeing at least a 19% increase year-over-year:

 

Increases Are Across Every Region in the Country

Every region in the country is experiencing at least a 14.9% increase in home price appreciation, according to the Federal Housing Finance Agency (FHFA):

Home Price Appreciation Is Skyrocketing in 2021. What About 2022? | MyKCM

Increases Are Across Each of the Top 20 Metros in the Country

According to the U.S. National Home Price Index from S&P Case-Shiller, every major metro is seeing at least a 13.3% growth in prices (see graph below):

Home Price Appreciation Is Skyrocketing in 2021. What About 2022? | MyKCM

What About Price Appreciation in 2022?

Prices are the result of the balance between supply and demand. The demand for single-family homes has been strong over the last 18 months. The supply of houses available for sale was near historic lows. However, there’s some good news on the supply side. Realtor.com reports:

“432,000 new listings hit the national housing market in August, an increase of 18,000 over last year.”

There will, however, still be a shortage of supply compared to demand in 2022. CoreLogic reveals:

“Given the widespread demand and considering the number of standalone homes built during the past decade, the single-family market is estimated to be undersupplied by 4.35 million units by 2022.”

Yet, most forecasts call for home price appreciation to moderate in 2022. The Home Price Expectation Survey, a survey of over 100 economists, investment strategists, and housing market analysts, calls for a 5.12% appreciation level next year. Here are the 2022 home appreciation forecasts from the four other major entities:

  1. The National Association of Realtors (NAR): 4.4%
  2. The Mortgage Bankers Association (MBA): 8.4%
  3. Fannie Mae: 5.1%
  4. Freddie Mac: 5.3%

Price appreciation is expected to slow in 2022 when compared to the record highs of 2021. However, it is still expected to be greater than the annual average of 4.1% over the last 25 years.

Bottom Line

If you owned a home over the past year, you’ve seen your household wealth grow substantially, and you’ll see another nice boost in 2022. If you’re thinking of buying, consider buying now as prices are forecast to continue increasing through at least next year.

Market Advice September 16, 2021

Local Market Update – September 2021

Prices appear to be cooling, according to Windermere Chief Economist Matthew Gardner. In King County, the median list price was lower in August than in July, and the median sales price also dipped slightly from the prior month. “I believe this is because we are hitting a price ceiling and that the rabid pace of home price appreciation will continue to cool as we move through the rest of the year,” said Gardner.

While up by double digits year-over-year, home prices in August did cool off slightly throughout the region as compared to July. The median single-family home in King County last month sold for $850,000, up 14% from a year ago, and a drop from the record-high $871,000 set in July. Seattle saw the median price rise 6% from a the same time last year to $875,000, down from $896,500 the prior month. Home prices on the Eastside were up 24% year-over-year to $1,300,000, a dip from the $1,330,563 median price in July. Snohomish County’s median price jumped 25% from a year ago to $694,900, just shy of July’s median of $700,000.

While a slight softening of home prices may be welcome news for buyers, inventory is still a big problem. King County has under three weeks of available homes for sale. Lack of inventory is especially severe on the Eastside. At the end of August there were just 278 homes for sale in the entire area, 62% fewer than the same time a year ago. And 85% of homes sold in less than two weeks. As companies continue to invest in large office projects on the Eastside, demand for homes is expected to continue to rise. Snohomish County reported the smallest supply of homes of any county in Eastern Washington, about two weeks. The Puget Sound area as a whole remains well below the four-to-six weeks of inventory that is considered a balanced market, favoring neither buyer nor seller.

An uptick in condo sales indicates that in-city living is on the rise again. In King County, the number of closed sales were up 20% in August compared to a year ago. The median condo price on the Eastside rose 14% to $544,000. The supply there remains tight, with just two weeks of inventory. Seattle offers much more choice, with six weeks of inventory available. Condo prices there dropped slightly year-over-year to $480,000. With Amazon looking to hire 12,500 corporate and tech employees in Seattle, demand for in-city living there is predicted to remain strong. As single-family home prices have soared, condo living remains an affordable option for those wanting to live close to urban centers. At $460,000, the King County median condo price is 46% less than that of a single-family home.

The real estate market can change quickly. Whether you’re looking to buy or sell, your broker can provide you with the most current data, and help you create a strategy to meet your specific goals. Just reach out and let us know how we can help.

Video Blogs September 8, 2021

Weekly Update – September 8th

Market Advice September 7, 2021

5 Reasons Today’s Housing Market Is Anything but Normal

There are many headlines out there that claim we’re reverting to a more normal real estate market. That would indicate the housing market is returning to the pre-pandemic numbers we saw from 2015-2019. But that’s not happening. The market is still extremely vibrant as demand is still strong even while housing supply is slowly returning.

Here’s the definition of normal from the Merriam-Webster Dictionary:

“conforming to a type, standard, or regular pattern: characterized by that which is considered usual, typical, or routine.

Using this definition, here are five housing industry metrics that prove we’re nowhere near normal.

1. Mortgage Rates

If we look at the 30-year mortgage rate chronicled by Freddie Mac, we can see the average rates by decade:

  • 1970s: 8.86%
  • 1980s: 12.7%
  • 1990s: 8.12%
  • 2000s: 6.29%
  • 2010s: 4.09%

Today, the average mortgage rate stands at 2.87%, which is very close to the historic low.

Currently, mortgage rates are anything but usual, typical, or routine.

2. Home Price Appreciation

According to Black Knight, a housing data and analytics company, the average annual appreciation on residential real estate prices since 1995 has been 4.14%.

According to the latest forecast from the National Association of Realtors (NAR), home price appreciation will hit 14.1% this year, which will be greater than any year since Black Knight began collecting this data.

Currently, home price appreciation is anything but usual, typical, or routine.

3. Months’ Supply of Inventory (Homes for Sale)

According to NAR:

“Months’ supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Historically, six months of supply is associated with moderate price appreciation, and a lower level of months’ supply tends to push prices up more rapidly.”

As of the latest Existing Homes Sales Report from NAR, the current months’ supply of inventory stands at 2.6. That’s less than half of a normal supply.

Currently, the supply of homes for sale is anything but usual, typical, or routine.

4. Days It Takes To Sell a Home

The days-on-market metric gives an indication of how hot a market is and how quickly homes are selling. In 2019, prior to the pandemic, the average days on market stood at 35, according to NAR. Today, that number is cut in half and is now at 17 days.

Currently, the days-on-market metric is anything but usual, typical, or routine.

5. Number of Offers per Listing

According to NAR, the number of offers per listing stood at 2.2 in 2019. Today, that number is double at 4.5.

Currently, the number of offers per listing is anything but usual, typical, or routine.

Bottom Line

When…

  1. Mortgage rates are near historic lows
  2. Price appreciation is at historic highs
  3. Housing inventory is less than half of the normal amount
  4. The time it takes to sell a home is cut in half, and
  5. There are twice as many offers on each house

…it’s hard to say we’re in a normal market.

Home Knowledge August 31, 2021

Your Checklist To Get Ready To Sell

Video Blogs August 4, 2021

Weekly Update – August 4th