Local Market Update – May 2016

The supply of homes for sale in April was up over March, indicating that more sellers are deciding to list their homes. But with less than a month of inventory available in the area, it’s still a seller’s market. While prices were up over last year, the increases aren’t as lofty as they were in the first quarter of this year. Buyers looking for affordable housing continue to push their search outside the more expensive urban cores.

King County

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Click image to view full report.

After breaking records for home prices in February and March, King County reached a new record-high in April. The median price of a single-family home was $540,000, a 12 percent increase over the same time last year. The more affordable areas in the south and north ends of the county saw the greatest increases, with home prices climbing almost 20 percent in these outlying areas.

Seattle

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Click image to view full report.

Seattle continues to have the tightest inventory of homes in King County. An influx of young, well-paid technology workers has fueled demand for homes close to the city. The median price of a single-family home increased 15 percent over a year ago to $637,250. But like the Eastside, that number was down slightly from February and March.

Eastside

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Click image to view full report.

At $730,000, the median price of a home on the Eastside was up 11 percent over last year. That figure was down slightly from February and March, suggesting that prices may be moderating. Competition for homes has not moderated. Brokers continue to report homes on the Eastside selling very quickly and often for over asking price.

Western Washington Gardner Report Q1 2016

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ECONOMIC OVERVIEW

Washington State has seen very robust growth over the past 12 months with the addition of 102,600 new jobs, which is 224,000 more jobs than seen at the previous peak in 2008. With this robust growth, it is unsurprising to see the unemployment rate trend down to 5.8%—well below the long-term average of 6.4%. As pleasing as it is to see the unemployment rate drop, it is equally pleasing to see that the decrease comes in concert with growth in the civilian labor force, which continues to grow at a very solid pace. I continue to believe that there is no risk that we will see a statewide decline in the employment picture in 2016.

HOME SALES ACTIVITY

  • There were 13,841 home sales during the first quarter of 2016, up by 3.8% from the same period in 2015. Sales activity continues to slow as a function of inventory constraints. Any spring “bounce” in listings has, thus far, failed to materialize.
  • The growth in sales was most pronounced in Grays Harbor County, which increased by 35% (but represented a real increase of just 63 units). Robust increases were also seen in Kittitas, Mason, Pierce, Snohomish and Island Counties. Sales declines were seen in San Juan, Jefferson, Cowlitz and King Counties.
  • Overall listing activity was down by 30.1% compared to the first quarter of 2015, and this continues to put upward pressure on home prices (discussed below).
  • Economic vitality in the region, combined with interest rates that continue to retest historic lows, is driving buyer demand that simply cannot be met. I hope that we will see more inventory come online as we move through the year, but believe that any reasonable growth in inventory will still be insufficient for the demand in the market.

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HOME PRICES

  • Given the demand factors mentioned above, I am not surprised that prices are up by an average of 10.1% year-over-year. This is up from the 9.3% average growth in prices that was reported in the fourth quarter 2015 report.
  • When compared to the first quarter of 2015, price growth was most pronounced in Jefferson County, and all but three counties saw prices increase by double digits from the previous year.
  • Interestingly, there were eight counties that actually saw a drop in average sale prices between the last quarter of 2015 and the first quarter of 2016. I believe this was caused by seasonal factors, but will keep an eye on it.
  • Very straightforward supply and demand factors are pushing prices higher. While this certainly favors sellers, I believe that there are some buyers who are starting to suffer from “buyers’ fatigue”. Rampant growth in inventory would sort this out but it is unlikely to occur this year.

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DAYS ON MARKET

  • The average number of days it took to sell a home dropped by sixteen days when compared to the first quarter of 2015.
  • As was seen in the Q4 2015 report, there were just two markets where the length of time it took to sell a home did rise, but again the increases were minimal. Skagit County saw an increase of three days while San Juan County rose by nine days.
  • It took an average of 86 days to sell a home in the first quarter of this year—up from the 78 days it took to sell a home in the last quarter but this is simply due to seasonality.
  • Sales activity remains most brisk in the Central Puget Sound counties. Given their proximity to the major job centers, this is not a surprise.

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CONCLUSIONS

This speedometer reflects the state of the region’s housing market using housing inventory, price gains, sales velocities, interest rates, and larger economics factors. For the first quarter of 2016, I have moved the needle slightly more in favor of sellers. content_16088_WWA_GardnerReportQ1_SpeedometerInventory constraints persist and this is now starting to affect sales activity, with growth in pending as well as closed sales starting to trend down. However, price growth remains well above average and interest rates are still close to historic lows.

ABOUT MATTHEW

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 over 25 years of professional experience both in the U.S. and U.K.

 

This blog was originally posted on the Windermere.com.

What’s the Deal with Condos?

A question that I am being asked regularly these days is, “Why isn’t anyone building condominiums anymore?

Given the egregious lack of homes for sale – and considering that single family home builders have not done their part to satisfy substantial pent-up demand – one would expect to see developers raising condominium towers at a frenetic pace, but that is simply not happening.

Firstly, a bit of background on this: the Seattle real estate market saw a rapid rise in the development of condominiums starting in the late 1990’s and continuing through to the housing bubble burst of 2008. When the post-recession dust finally settled, what condominiums were left were either converted into apartments or returned to the lenders, who subsequently disposed of them via auction or at very favorable prices.

As the housing market recovered, shell-shocked developers remained wary of condominiums. However, even if there were any developers who had an appetite to build more towers, they were essentially blocked by banks who still perceived condo developments as an extremely risky land use.

Given this situation, it wasn’t surprising to see developers rapidly turn their attention to the apartment market. They were aware that demand had taken off and that banks were willing to lend on that product type. Paralleling the substantial demand from the rental market, the institutional investment community had started to snap up a large number of projects, but their appetite was not being satisfied.

So, with this veritable alignment of planets, many traditional condominium developers turned their attention to the development of rental projects. There was financing available, substantial demand, limited risk, and the potential for an earlier payout (if the developer sold to an institution).

This then became the path that many developers chose.

But these are not the only reasons why many developers stopped building condominiums; there were, and still are, additional hurdles that continue to hold them back.

Firstly, costs across the board continue to increase. Land values in downtown Seattle re-broke the $1,000 per-square-foot mark – a number not seen since well before the recession started. Additionally, almost all of the area’s contractors are busy building apartments (or Amazon.com office space), which has put additional upward pressure on labor costs. On top of this, material costs continue to escalate due to high demand from other development types.

Because of these factors, the prices for new condominiums have to be at a substantial premium, and developers were/are uncertain if the market can support these high price points.

There is also one last hurdle that is stopping developers in their tracks – the remarkably onerous construction defect laws that exist in our state. Current laws allow homeowners’ associations to file large group lawsuits for construction problems associated with new condominiums. Because of this factor alone, a vast majority of developers are not building condominiums for fear of exposure to litigation.

Several states, including Washington, are looking to make changes to the current construction defect laws, but until that happens, the insurance premiums that developers must pay, combined with the almost certainty that they will be sued regardless of the quality of their construction, is further stifling the development community.

Our region continues to grow its population base but not its land base. As such, density needs to be embraced. Condominiums play an important part of the equation, but until this segment of the market regains its footing, there will be further pressure on housing of all types to accommodate our region’s growth, and this will continue to put upward pressure on prices.

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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 over 25 years of professional experience both in the U.S. and U.K. 

 

 

4 Reasons to Sell Your House Now

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Blank Real Estate Sign & New Home

1) Sale prices are at all-time highs.

Home prices in King County hit new highs last month. The median price of a single family home sold in King County in February was $514,975, a whopping 20% increase over a year ago. The median price in Seattle was up 24% to $644,950. The Eastside’s median price was up 20% to $739,975. You may be surprised at how much your home is worth today.

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2) Competition among buyers is driving prices even higher.

Despite increasing prices, there is intense competition among buyers because inventory is at all-time lows. That means multiple offer and bidding wars, increasing the likelihood that your home will sell above your asking price.

3) Homes are selling fast.

With such limited inventory, homes in King County are selling rapidly – sometimes in days. If you list your house now, chances are you’ll get a buyer quickly.

4) You can make the sale work to your needs.

With competition for homes so fierce, you have the freedom to make the deal that works best for you. Many buyers are paying cash. They’ll also make concessions. Do you want stay in the home a few months after the sale? Want a large earnest money payment? You’re in the driver’s seat, and many buyers are willing to do what it takes to get the home they want.

It’s a seller’s market.
Are you ready to take advantage of it?

 

This blog was originally posted on the Windermere Eastside.

Local Market Update – March 2016

A severe lack of inventory has led home prices to reach an all-time high. With the supply of properties at its lowest level since 2003, the market is in dire need of more homes to meet buyer demand. That is excellent news for those thinking about selling their home. Sellers can expect a quick sale, favorable terms and a historically high sale price. Buyers will need patience and a strategy for competing with multiple offers.

King County

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Click image to view full report.

The median price of a single-family home sold in February hit an all-time high of $514,975, a whopping 20 percent increase over the same time last year. The number of homes sold exceeded the number that were listed, depleting inventory at a rate that is unsustainable. For the market to remain healthy, more people need to make the decision to list their homes.

Seattle

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Click image to view full report.

The continued boom in tech company hiring helped propel home prices to peak levels in Seattle. The median price of a single-family home jumped 24 percent over a year ago to $644,950, a new high. Inventory is at critical levels. In the hot Ballard neighborhood there are currently only 17 homes on the market.

Eastside

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Click image to view full report.

The Eastside, already the most expensive area in King County, saw home prices set a new record in February. The median price soared 20 percent over last year to $739,975. Inventory here is particularly tight, and the area remains a very strong market for sellers. Homes are selling quickly, even at the higher end. A $3.2 million home in Yarrow Point sold last month in just 14 days.

This blog was originally posted on the Windermere Eastside.

Welcome Leigh Canlis!

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We are excited to announce the addition of Leigh Canlis to the Windermere Services team!

Leigh has been a well-known business and community leader in the Seattle area for more than 18 years. Her background includes managing sales, events, and VIP client relations for Dale Chihuly, 13 years as President of Canlis Glass, and Vice President-Private Banker at JP Morgan, as well as Vice President-Wealth Strategist for Northern Trust. Leigh is also well known for her extensive charitable work with several Seattle-area non-profits.

“I want to help Windermere push the traditional boundaries of luxury real estate and define a new, refined category within the marketplace,” she said in a statement. “I want it to make a mark and grab people’s attention with its grace and sophistication, to feel out of the box for the real estate world, while complimenting everything that Windermere stands for.”

Windermere already leads in luxury sales in the greater Seattle area, but we are excited for the creativity and fresh ideas Leigh brings with her. We know all too well how quickly our market can change, and we want to make sure Windermere stays ahead of the evolving needs of our clients.

Welcome to the Windermere family, Leigh!

This blog was originally posted on the Windermere Eastside.

Local Market Update January 2016

2015 closed out the year with home prices hitting new highs, and inventory hitting new lows. The market is tough for buyers who are competing for a dwindling number of homes, but it’s also the greatest seller’s market in recent memory. What’s in store for 2016? Here is what Windermere Chief Economist Matthew Gardner forecasts.

King County

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Click image for full report.

King County achieved two milestones in December. The number of homes on the market hit a historic low – the smallest number of active listings since at least 1993. And the median price for a single-family home hit an all-time high of $508,000, surpassing the previous high of $481,000 set in 2007. Those wanting to buy in King County can find more affordable options by heading south. The median home price in Southwest King County was $305,000. The median price in Southeast King County was $349,950.

Seattle

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Click image for full report.

The hot market in Seattle just keeps getting hotter. High demand has sent prices soaring. The median home price in December hit a new peak of $600,000, an increase of 20 percent over a year ago. Homes here sell within days of coming on the market, often for substantially more than the list price. In December, a 1600 square foot bungalow in the popular Ballard neighborhood sold in eight days for $750,000 – $75,000 over the asking price. With just a few weeks of inventory available, home prices and competition are projected to stay strong.

Eastside

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Click image for full report.

Home prices on the Eastside continued to climb. The Eastside extended its lead as the most expensive market in King County, posting a median home price of $675,000 in December. A strong technology sector here has helped boost demand for a very limited supply of properties. Competition among buyers is fierce at every price point, including luxury homes. Multiple offers are the norm, and cash sales are common. For buyers, a savvy broker can make the difference between an accepted offer or another disappointment.

Local Market Update December 2015

The traditional seasonal slowdown is taking a break this year. Activity in November was brisk, and home prices continued to climb. Driving the surge in prices is the lowest inventory of homes in more than a decade. The result is a holiday gift for sellers – with limited choices, multiple offers are common. Now is the ideal time to get top dollar for your home.

Seattle

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Click image to view full report.

Seattle is being supplied with a steady influx of well-paid technology workers who can afford the premium price of homes here. Their pressure on an ever-dwindling supply of homes continues to drive prices upward. With inventory at its lowest in over 15 years, prices have soared. The median price of a home in Seattle jumped 20 percent to $598,000, the highest so far in 2015.

Eastside

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Click image to view full report.

The Eastside continues to lead the market in home prices. The median price for homes sold in November jumped 10 percent to $674,000. Even as prices continue to increase, until supply improves, the Eastside remains a very strong housing market. Buyers can expect fierce competition for existing homes, and need to work strategically on presenting their offer. Sellers can expect multiple offers, and the ability to tailor terms to their advantage.

King County

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Click image to view full report.

New residents are flocking to King County – an average of about 6,000 people a month so far this year. The increased demand for housing has gobbled up inventory as soon as it hits the market. As a result, home prices continue to climb. The median price for single family homes sold in November was $499,950, a 13.6 percent increase over a year ago. Southwest King County had the lowest median price in the county at $305,970. However, that was 20 percent higher than last November.

 

Understanding the Chinese Home Buyer in the U.S. Housing Market

IMG_7178Earlier this week, Bill Russell, head of International Development for Chinese real estate website, Juwai, spoke to a large group of Windermere agents about how to connect to Chinese buyers. Since China is a country with very different marketing tactics and a culture drastically different than our own, we were able to learn a great deal. To put things in perspective, Juwai.com currently has 2.6 million unique views per month from Chinese consumers who are searching purely for western properties; 20 percent of whom live outside of China. The United States is the number one searched country by far, followed by Australia and Canada.

So why are so many Chinese investing in land abroad? According to Juwai, 36 percent are buying for investment, 34 percent for immigration, and 16 percent for education (i.e. buying a house for their kids to live in while they’re studying in the U.S.). What many people may not know is that there is a minuscule amount of inheritance wealth in China, the majority is “new money” made in the last 10-15 years. With an average budget of $2.6 million, the Chinese typically take a year to search for the right home in which to invest, patiently taking time to research everything thoroughly. On average, they end up spending about $933,723 per property.

There are 297 different Chinese dialects, making it nearly impossible for local agents to market their properties effectively. It can also be time consuming and stressful trying to market to China since they don’t use any social media from the Western world; China has their own Google, Facebook, Twitter, etc. which all have different names. Juwai.com is their version of Zillow.com, which is bridging the gap between East and West by translating all property and marketing comments. It may come at a price, but real estate companies, like Windermere, don’t mind paying the cost of marketing on Juwai since the Chinese buyer is such an important part of the housing market (especially in Seattle’s Eastside neighborhoods).

Cities like Seattle, San Francisco, and LA are popular destinations for Chinese immigrants and investors, and they’re representing larger and larger pieces of the real estate pie. Experts don’t see this changing for the foreseeable future, so it’s in a real estate professional’s best interest to get to know the Chinese consumer. A big thank you to Bill Russell for coming out and helping us do just that.

Local Market Update October 2015

Strong sales continue to whittle down a dwindling supply of homes. The lack of supply to meet demand kept driving home prices upward in September. While the Puget Sound area saw steady appreciation over a year ago, there are signs that the frenzied level of growth may be starting to moderate – good news for a market that was starting to look unsustainable.

Seattle

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Click image to view full report.

The Seattle market continues to be very hot. Homes are snapped up as soon as they come on the market. As a result, the city has under a month of available inventory, the lowest in the region. Home prices climbed 10 percent over last year to a median of $571,000. That increase hasn’t seemed to decrease demand from buyers, who have become accustomed to facing multiple offers on newly listed homes.

Eastside

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Click image to view full report.

The Eastside continues to lead the region in home values. The median price for homes sold in September was $680,000, an increase of 12 percent over a year ago. Sales were up as well, with many homes selling within days of being listed. As a result, inventory is at historic lows, with only a six week supply available. That is far below the three to six months of supply that is considered to be balanced.

King County

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Click image to view full report.

Home prices rose a moderate seven percent in King County as compared to last year. The median price for a single family home in September was $490,250. Areas farther from the urban core are relative bargains, with the median price in Southeast King County coming in at $344,975, and at $304,000 in Southwest King County. Inventory remained tight throughout the region, with just five weeks of available supply.