If you’re considering whether it’s the right time to buy a property, the answer is definitely yes! There is a lot of inventory on the market right now, so that means that there is less competition among buyers. And interest rates have dropped substantially and are the lowest they’ve been in around a year, meaning your money will go further.
Whether it’s a condo, townhome, or house you’re considering, let’s talk about your buying needs. You can reach me at (206) 790-0081 or Jamie@JamieFlaxman.com.
There were three themes that drove the real estate market in 2018—Supply, Demand, and Affordability. Although these are always at play, the increased pressure from all three were intense in 2018 and will continue throughout 2019. Let’s look at what makes up each of these areas and how they will impact the market in 2019. Our market did cool down in 2018, but not to the extreme that you may have heard in the media. In fact, as we look at year over year statistics from 2017 to 2018, prices were up 8.1% in King County and 10.1% in Snohomish County.
The big change we saw was an increase in inventory, yet we are still solidly in a sellers’ market with inventory at 1.7 months in King County and 1.5 months in Snohomish. A sellers’ market has less than 4-6 month in inventory.
As we look at Supply, Demand, and Affordability with these statistics in mind, we see that affordability is the most significant factor at play.
Supply – There are only three ways we get new inventory – existing resale homes, new homes, and foreclosures. The number of years we are staying in our homes has reached an all-time high of 10 years which is one of the main contributors to the inventory shortage (plugging up the resale pipeline). However, another contributor – and this is a big one – is the continued lack of new construction. We also don’t have many foreclosures to add to our inventory levels. Therefore, all three inventory supply sources are drying up instead of flowing.
Demand – Our economy is humming along. Unemployment is at almost historic lows, GDP is up, Consumer Confidence is up and Millennials are ready to buy. Therefore, demand has been high and will continue to be so. If it wasn’t for the affordability issues we are experiencing, Millennials would be buying up a storm.
Affordability – High demand for housing is causing prices to soar out of a comfortable price range for buyers. The cost for builders to build (land, labor, materials, and regulatory demands) are all rising at a pace that makes new construction less affordable. Interest rates are on the rise. All of these factors affect affordability and home sales.
These three factors are in a push-pull relationship which was very evident this past year when home prices peaked in May. The market then quickly reacted with an adjustment in inventory. There was an initial surge of new listings concurrent with a moment in which buyers had had enough and affordability reached a tipping point. That surge caused buyers to step back and assess the situation instead of moving forward, which caused another moment in which sellers were ready to sell but buyers were no longer willing to pay the inflated prices. Buyers figured out quickly that the market had hit its peak and they did not want to buy at the peak of the market. This led to even more inventory coming on the market with demand pausing as supply surged. Now that surge is receding – sellers who couldn’t get the price they wanted are taking their properties off the market and savvy buyers are working with sellers, allowing both parties to make their next move.
What can we expect in 2019?:
Housing Inventory – I believe the inventory surge that we will begin the year with will be absorbed as sellers get realistic about their prices or take their homes off the market. We will then see the spring and summer return to a more reduced inventory market. I expect buyers to also hop back into the market, trying to capitalize on interest rates that are expected to rise throughout 2019.
Housing Starts/New Construction – Our builders have not been able to keep up with the demand for new construction. Historically, we have needed 1.5 million units each year. That has recently increased to 1.62 million units. However, we are only on target to build 1.25 million units this year and next which means we are continuing to add to our deficit. Local issues in many areas such as zoning and water rights are also capping new construction opportunity. The cost of building supplies, labor, land, and regulation are causing problems for our builders and I expect these problems to worsen in 2019.
Home Price Growth – In Western Washington, we saw year-over-year median sales price grow 9.1% to $409,752, according to the Northwest Multiple Listing Service (NWMLS), and you can see from the charts on page 1 and this page how prices changed in King and Snohomish Counties as well as Seattle and Edmonds. Since I expect the pace of our market to downshift after the spring (with more balanced inventory than last year), I predict that median sales prices will continue to grow but at a smaller pace.
Interest Rates – The Federal Reserve has been trying to return the country to neutral for interest rates. The Fed raised interest rates in December but said they are not sure what they will do in 2019. I do expect that rates may rise as high as 5.75% by year-end. Rates had been as high as 4.94% last November for a 30-year fixed rate mortgage, but the rate slid back and as of December it was at 4.63%.
There are several “wild card” issues in 2019 which could affect the real estate market in a way that cannot be foreseen. Issues such as immigration reform, political uncertainty, the national debt, global issues such as Brexit, possible trade wars, and even the true impact of the tax reform changes may cause shifts in the real estate market that are unpredictable. That being said, I am excited for what 2019 has in store!
For additional information and how these issues may affect you, please call or text: (206) 790-0081 or send an email to Jamie@JamieFlaxman.com.
The Puget Sound area real estate market has shown a shift over the past few months, and we’re moving toward what is considered a balanced market. A balanced market is one that does not favor the buyer or the seller and is the healthiest possible situation. Typically, a balanced market is considered one with 4 to 6 months of inventory; less than that favors the seller, more than that favors the buyer. Here are some selected inventory levels for September:
Inventory in Months
Single Family Homes
Moving toward a balanced market is a good trend. It puts both buyers and sellers on equal footing. Mike Grady, COO of Coldwell Banker Bain, states “buyers are at long last now seeing properties that stay on the market longer. Listings that are priced appropriately, and not based on the feverish market we saw just a few months ago are still selling quickly, and home prices are still showing 8 percent appreciation year-over-year, more than double the rate of inflation.”
What does this mean to you if you’re considering selling your home? Homes are selling if they are priced properly. More than ever it means you need an experienced REALTOR who will provide you with a detailed pricing analysis based on what is happening in today’s market, not on sales from even 3 or 6 months ago. And automated values are even less reliable than they have been because they may not reflect what is happening today. When I work with a seller, I give you a detailed report and recommendation and update this report frequently to adjust for market change.
If you’re a buyer, this is a fabulous time to get in the market. With prices stabilizing and interest rates increasing, waiting might be not be a good idea. What you can afford today might be less than what you can afford next year. I can provide you with recommendations of lenders who can help you determine what your buying power is. Additionally, with the market becoming more balanced, the need for pre-inspections and waiving of contingencies is passing.
I’d love to talk with you about the market in your neighborhood and why now might be the time for you to buy or sell. Give me a call/text at (206) 790-0081 or email Jamie@JamieFlaxman.com to set up a time to chat.
We are seeing a shift in the market, but it’s not a cause for alarm. This shift is a balancing. We have reached the point where prices have hit the top and now they’re settling down. A recent article from CityLab.com explains it well:
“Housing prices are cooking. Across the nation, the price of homes is rising faster than the rate of inflation—in some places by a factor of three. That’s true of high-cost cities such as Seattle and San Francisco and lower-cost cities such as Charlotte and Tampa alike. And the overheated market for homes is costing the middle class the American dream.
Nationwide, the price for homes is approaching the zenith seen in 2006, just before the market fell into a foreclosure crisis and the economy sank into the Great Recession. . .
But there are key differences between the housing peak in 2006 and the housing peak today. This surge in housing prices is not necessarily evidence for a bubble—much less any indication that a bubble is about to burst.
Late in July, the S&P CoreLogic Case–Shiller U.S. National Home Price NSA Index tracked a 6.4 percent annual gain in home prices for May 2018. This index has recorded year-over-year increases of at least 5 percent every month since August 2016—a sign of the strength of the recovery. . . . in Seattle, which saw a year-over-year price increase of 13.6 percent for May, home prices are already well above the 2006 high-water mark.But since most workers aren’t earning 6 percent raises year after year, eventually this party has to come to an end. (Indeed, for four-fifths of privately employed workers, wages are actually falling.) Housing prices will stabilize or soften because they have nowhere else to go. The prevailing trend is unsustainable. “If something can’t go on forever, sooner or later it will end,” says David Blitzer, managing director for S&P Dow Jones Indices. With mortgage rates and prices rising, sales in both new homes and existing homes are starting to slow. ‘Either buyers have gone for the summer, because it’s too hot to look at housing, or they’re pausing to see what’s going on,’ Blitzer says. ‘If the pause continues, you’ll see sales go down.'”
And this is what we’re now seeing in Seattle. Most homes are not selling in 7 days and significantly above list price right now. I’m seeing a significant increase in price reductions and less multiple offer situations as well.
What does this mean for you? If you’re a buyer, this is all good news. It means you may be able to get into the market without a bidding war and having to look at homes significantly below your price point.
If you’re a seller, it’s not a time to panic. This shift is actually creating a healthier market. You probably will get less for your home than if you listed 6 months ago. But you probably will still have significant profits if you sell as prices are at record highs. We still have a significant shortage of housing so even with the increased inventory, demand still outweighs supply. Inventory levels are still under 2 months which means it’s a seller’s market – a balanced market would be 4-6 months, and a buyer’s market would be greater than 6 months.
As I’ve said often, there’s no crystal ball in real estate. In my predictions for 2018, I said price increases would slow down. In fact, year over year prices are still up about 11%. I also predicted interest rates would hit 5% before year-end; we have already hit this number which is reducing buying power for buyers.
If you’re thinking of buying, this is the time to get pre-approved and start your buying process. If you’re a seller, I’d be moving quickly to get your home on the market while prices are still at the peak. Please call me at 206-790-0081 or email me at Jamie@JamieFlaxman.com for a complimentary market analysis for your home.
Hot off the press, here are some highlights of the May housing market:
The median sales price for a single family home in Seattle in May was $802,000. For condos it was $529,500. Combined, we saw a 17.3% increase in the median sales price from May 2017.
Inventory improved in May and for the first time in a long time, we have more than 1 months supply of housing (1.1 at the end of May). There’s still a long way to go to get this to the 4-6 months necessary for a balanced market.
The most impressive statistic for May is this one – 84% of properties sold at or above list price! (26% sold at list, 58% above.) That tells us that it is likely that 6 out of 10 listings received multiple offers.
If you’re a seller, it’s the time to sell. If inventory continues to increase, we may start seeing smaller increases in sales prices and less competition. If you’re a buyer, let’s get you into a home.
Give me a call/text at 206-790-0081 or email Jamie@JamieFlaxman.com and let’s talk about your real estate needs.
It’s a tough market out there for buyers. With demand for housing seriously outweighing supply, buyers are competing on most listings, and losing out on many.
The most offers I’ve had to write for a client was 2 years ago, when it took 8. I’ve heard of buyers who have submitted in the double digits.
Right now I have 2 sets of buyers who are on the offer roller coaster. One set has submitted 4. The other 2 (and we’re waiting to hear on the 2nd). It’s frustrating. You find a house you love and want to buy, but end up competing with 26 other offers (yes, last week buyer set 1 was one of 27 offers). You move on, but then you go through it again. What to do? Here are some tips I offer to buyers:
Know the numbers. You know what your maximum you can spend is. But also know the market numbers. If homes are selling 10-20% above list price, you should be looking at properties listed 10-20% below your maximum.
Have your financing lined up, and make sure your lender has taken you all the way through underwriting (except for a property address). Have a local lender who is available on the weekends.
Look at homes that have been on the market for more than 10 days. These are less likely to receive multiple offers. In this case, you might be able to look at homes at or slightly above your maximum as you might be able to get an offer accepted below list price.
Think about what you can compromise on. Could you go a few miles farther out? Is having a garage more important than getting a house? Don’t restrict yourself to fenced yards, you could put a fence in yourself.
For more ideas on how to compete or to talk about the real estate market, please call/text me at 206-790-0081 or email me.
Spring is here and there are more homes coming on the market!!! While we did see an increase in listings in April over April 2017, we still have a severe shortage of properties for sale. If you’re considering selling, now is the time to talk. Give me a call/text at 206-790-0081 or email and find out what your home is worth today.
Inventory (or lack of) is still the story of the greater Seattle real estate market. We did see increases in some areas but not nearly enough to address the demand. In King County the number of single family homes coming on the market increased 6.6% over February 2017 but is still down 7% from 2016; condo inventory increased 13.2% from 2017 but is down 16.9% from 2016.Seattle continued to see a decrease in inventory for single family homes compared to the two past years – down 4.7% from 2017 and 6.9% from 2016. Condos on the other hand increased significantly, a 34.2% increase from 2017 although from 2016 the number was down 15.1%. The increase in condos may be from pre-sales of a few new buildings that are in the development stages.
Moving on to Snohomish County, the number of single family homes showed an increase of 1.3% from 2017 but that is still a 16.8% decrease from February 2016. New condo listings also increased 12.7% from 2017 and also showed a 12.1% increase from 2016.
Are you thinking of selling your home this year? We’re moving into the spring real estate frenzy so let’s talk now about your plans. Give me a call/text at 206-790-0081 or email at Jamie@JamieFlaxman.com.
If you’re a buyer in our crazy, hot market, you may be wondering, how do I compete? While most properties are receiving multiple offers and bidding wars, it is very possible to be successful in our market.
I have an 8-step process for helping my buyers be successful. These steps begin with being pre-approved for a mortgage and knowing the maximum amount you can afford. I have a list of wonderful lenders who can help you with your pre-approval.
My 8-steps include recommendations on pricing and how to make your offer stronger. If you’d like to learn more about the 8-steps, please contact me.
Another option in our market is to look for homes that have been on the market for more than 2 weeks. It’s very possible these homes have been overpriced, so even if the list price is higher than your max budget, you may be able to negotiate to a price in your range.
Let’s talk about your home buying needs. Phone/text 206-790-0081 or email me.
In both Snohomish and King Counties we saw an increase in inventory in January, but not nearly enough to meet the demand. I know of a home in Everett that received 27 offers and one in Seattle (Fremont) that had 18. Looking at January 2018 inventory you can see that the numbers are continuing to decrease, year over year. In King County the number of active listings at month end is down 50% since 2016, 21% from 2017; in Snohomish County it is down 81% since 2016, 30% from last year.
This is the time to sell – let’s talk about your needs. Give me a call/text at 206-790-0081 or email Jamie@JamieFlaxman.com.