The Gardner Report – Fourth Quarter 2016

Economic Overview

Washington State finished the year on a high with jobs continuing to be added across the market. Additionally, we are seeing decent growth in the area’s smaller markets, which have not benefitted from the same robust growth as the larger metropolitan markets.

Unemployment rates throughout the region continue to drop and the levels in the central Puget Sound region suggest that we are at full employment. In the coming year, I anticipate that we will see substantial income growth as companies look to recruit new talent and keep existing employees happy.

 

Home Sales Activity

  • There were 19,745 home sales during the fourth quarter of 2016—up by a very impressive 13.4% from the same period in 2015, but 18.7% below the total number of sales seen in the third quarter of the year. (This is a function of seasonality and no cause for concern.)
  • Sales in Clallam County grew at the fastest rate over the past 12 months, with home sales up by 47%. There were also impressive sales increases in Grays Harbor and Thurston Counties. Jefferson County had a fairly modest decrease in sales.
  • The number of available listings continues to remain well below historic averages. The total number of homes for sale in the fourth quarter was down by 13.7% compared to the same period a year ago.
  • The key takeaway from this data is that 2017 will continue to be a seller’s market. We should see some improvement in listing activity, but it is highly likely that demand will exceed supply for another year.

 

Home Prices

  • Demand continued to exceed supply in the final three months of 2016 and this caused home prices to continue to rise. In the fourth quarter, average prices rose by 7.1% but were 0.4% higher than the third quarter of the year. The region’s average sales price is now $414,110.
  • In most parts of the region, home prices are well above historic highs and continue to trend upward.
  • When compared to the fourth quarter of 2015, price growth was most pronounced in Kittitas County. In total, there were eight counties where annual price growth exceeded 10%. We saw a drop in sales prices in the notoriously volatile San Juan County.
  • The aggressive home price growth that we’ve experienced in recent years should start to taper in 2017, but prices will continue to increase at rates that are higher than historic averages.

 

Days on Market

  • The average number of days it took to sell a home in the fourth quarter dropped by 15 days when compared to the fourth quarter of 2015.
  • King County was the only area where it took less than a month to sell a home, but all markets saw decent improvement in the time it took to sell a home when compared to a year ago.
  • In the final quarter of the year, it took an average of 64 days to sell a home. This is down from the 78 days it took in the third quarter of 2015, but up from the 52 days it took in the third quarter of 2016. (This is due to seasonality and not a cause for concern.)
  • We may experience a modest increase in the time it takes to sell a home in 2017, but only if there is a rapid increase in listings, which is certainly not a given.

 

Conclusions

This speedometer reflects the state of the region’s housing market using housing inventory, price gains, sales velocities, interest rates, and larger economic factors. For the fourth quarter of 2016, I actually moved the needle a little more in favor of buyers, but this is purely a function of the increase in interest rates that was seen after the election. Higher borrowing costs mean that buyers can afford less, which could ultimately put some modest downward pressure on home prices in 2017. That said, the region will still strongly favor sellers in the coming year.

This article originally appeared on the Windermere.com blog.

First Time Buyers, Millennials, and What to Expect in 2017



By Matthew Gardner, Chief Economist at Windermere Real Estate

I believe that the big story for the coming year will be first-time home buyers. Since they don’t need to sell before purchasing, their reemergence into the market ensures that sales will continue to increase, even while inventory is limited. Thirty-one percent of buyers currently in the real estate market are first-time buyers, but it would be more ideal if that figure was closer to 40 percent.

Why don’t we have enough first-time buyers in the market? With Baby Boomers working and living longer, we aren’t making much room for Millennials to start their careers. Plus, the major debt that the younger generation owes on student loans ($1.3 trillion today) hugely impacts the housing market. But the bigger issue is lack of down payments. Before the recession, many Millennials could look to their parents for help with down payments; however, these days that is not as much the case.

I would also contend that the notion of Millennials being a “renter generation” is nonsense. In a National Association of Realtors survey, 75 percent of them said that buying a home would be the most astute financial decision they’d ever make; however, 80 percent said they don’t think they could qualify for a mortgage. I do believe that Millennials will eventually buy, but they’re delaying their purchasing decisions by about three years when compared to previous generations, which is about the same amount of time they’re waiting to start families as well.

Mortgage rates have risen rapidly since the election, and unfortunately, I do not see a turnaround in this trend. That said, they will remain cheap when compared to historic averages.  Expect to see the yield on 30-year mortgages rise to around 4.7% by the end of 2017. For those who have grown accustomed to interest rates being at historic lows, this might seem high, but it’s all relative.

If I were to gaze all the way into 2018, my crystal ball takes me to the dreaded “R” word. Like taxes and death, recessions are another one of those unwanted realities that inevitably comes to visit every so often. Irrespective of who was voted into the White House, my view remains the same: prepare to see a business cycle recession by the end of 2018, but, rest assured, it will not be driven by real estate, nor will it resemble the Great Recession in any way.

This article originally appeared on the Windermere.com blog.

2017 Windermere Eastside Kick-off

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Last week, over 500 brokers from offices across the Eastside (and even Chelan!) gathered at the Hyatt Regency Bellevue for the annual Windermere Eastside Kick-off event to prepare and get motivated for the 2017 housing market. Speakers shared their insights and predictions for the year ahead so our brokers can be better prepared to serve their clients.

Opportunity – Synergy – Endurance

eastsidekickoff-144Kicking off the event was Matt Deasy, owner of Windermere Real Estate/East, Inc., to share three takeaway values and reminders as we prepare to take on the red-hot Seattle real estate market.

Windermere brokers provide value to our clients in three different ways: opportunity, synergy, and endurance. In the greater Seattle area, we are uniquely poised to take advantage of the strong economy and educate our customers on our housing market.

Top Producer Broker Panel

eastsidekickoff-158Next up was a broker panel with some of the Eastside’s top producing brokers moderated by Mike Connolly, owner of Windermere Real Estate/Central, Inc. The broker panel included Nicole Mangina (Bellevue Commons), Jay Agoado (Mercer Island), Ruth Harle (East, Inc.), Clive Egdes (Kirkland – Central), and Tony Butz (East, Inc.). These brokers shared tips, ideas, and personal anecdotes about what has improved and made a positive impact on their businesses.

Technology Update

eastsidekickoff-227Shawn Prutsman, Vice President of Technology with Windermere Services, also spoke on some of the technological updates we can expect this year.

Windermere’s leading tech services help our brokers and customers. Through our innovative tools, we are able to provide outstanding marketing and technological support to help our clients sell their homes quicker, and to help buyers with the selling process.

Economic Forecast

eastsidekickoff-240Matthew Gardner, Windermere Real Estate’s Chief Economist, attended to share his forecast for the 2017 housing market. While he has shared some general reports with predictions, Gardner provided our brokers with an in depth analysis of the economy and the local real estate market. We always appreciate his insight and statistics as we educate our clients on the financial choices they make in the purchase or sale of their homes.

Home Design Trends for 2017

eastsidekickoff-277In a special panel moderated by Peter Hickey, owner of Windermere Real Estate/Northeast, Inc., architecture and design specialists described Northwest home design trends we might be seeing more of this year. This panel featured Sheri Olson of Sheri Olson Architecture, Susan Marinello of Susan Marinello Interiors, Inc., and Brenda Gage with JayMarc Homes.

With a large influx of newcomers to the area, home buyer design interests and trends are shifting. Outgoing trends like microwaves over ranges, and incoming trends like designed mudrooms were hot topics. The three discussed how we will probably see a resurgence in architecture to reflect the environment.

The Right Mindset for 2017

eastsidekickoff-292Then it was time to wrap up the event and get everyone in the right mindset for the new year. Dan Givens with Windermere Professional Development shared his three main ways to help positively approach the new year. The bonus with these steps is they can be used every day and will benefit everyone regardless of where they work in the real estate industry. If you tell yourself you will have fun, meet nice people, and set a goal to help someone solve a problem each day, you will have no choice but to have a positive and successful year.

The Windermere Eastside Kick-off was an inspiring event with useful information to help our brokers prepare for and embrace for the year ahead. We are excited to put this knowledge to good use as we help you navigate the listing or sale of your home in 2017!

Local Market Update – January 2017

A record low number of houses for sale in December indicates that 2017 will continue to be a very competitive market for buyers. The good news: those who decide to take the plunge and list their home can count on getting a premium price for their property. Brokers reported that about three-fourths of the homes sold in December involved bidding wars.

Eastside

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Click image to view full report.

Strong demand driven by a booming tech economy and great schools continue to strain the already low inventory on the Eastside. It’s not unusual for a well-priced new listing to receive dozens of offers and to sell for well over asking price. With supply failing to meet demand, the median price for homes sold in December soared 19 percent to a new record high of $803,500.

King County

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Click image to view full report.

King County had only about 1,600 single-family homes on the market in December, an all-time low. With the healthy regional economy, demand remains very strong. Prices, however, appear to be moderating somewhat. The median price for a single-family home sold in December was $550,000, up 8 percent over a year ago, but unchanged from October and November. A traditional uptick in inventory this spring may help keep price increases more modest this year compared to the double-digit increases seen in 2015.

Seattle

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According to the Case-Shiller home price index, home prices are rising faster in the Seattle metro area than in any other major region in the country. One issue is space. The city’s existing density means that virtually no new single-family homes are being built in Seattle. As new residents flood in, more people are competing for the already tight inventory. As a result, home prices are up. The median cost of a single-family home rose 6 percent from a year ago to $635,000.

Snohomish County

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While home prices in Snohomish County are well below those of King County, the gap is closing as prices here are increasing at a faster pace than neighboring counties. The median price of a single-family home in Snohomish County rose 12 percent as compared to a year ago to $400,000. Like King County, inventory is very slim, indicating a market heavily favoring sellers.