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QUARTERLY UPDATE: Western Washington Real Estate Market
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.
ECONOMIC OVERVIEW
Washington State continues to see strong employment growth, outpacing national numbers with an annual rate of more than 3%. Interestingly enough, despite these substantial job gains, the unemployment rate remains stubbornly high at 5.8%. However, I’m not overly concerned about this because it’s largely due to a growing labor force rather than a declining job market. This means that those who are unemployed who had previously stopped looking for work are now resurrecting their job searches because they have confidence in the economy.
I expect to see a modest drop in the unemployment rate through the balance of the year, and believe we will continue to outperform the nation as a whole with above-average job gains.
HOME SALES ACTIVITY
- There were 22,721 home sales during the second quarter of 2016, up by 4.4% from the same period in 2015. We finally saw a much-needed increase in listings, which rose by 30.1% between first and second quarter. This increase in the number of homes for sale led to an increase in sales, which rose by 4.4% when compared to the same period in 2015.
- Island County saw sales grow at the fastest rate over the past 12 months, with sales up by 22.1%. This is a small county which is subject to wild swings, so I take the data at face value. That said, the larger Thurston County saw sales up by an equally impressive 19.7%. Most interesting is that King County saw sales fall modestly compared to the same time period in 2015. Price—and supply—are clearly an issue in the most populous county in our state.
- Overall listing activity was down by 21.8% compared to the second quarter of 2015, but the good news is that the supply side deficit is actually getting a little less than we have seen over the past few years. The total number of homes for sale was 30.1% higher than seen at the end of the first quarter. While much of this can be attributed to seasonality, it is still nice to see!
- The region is experiencing positive job growth, and with it, migration to Washington State is running at a very brisk pace. Given these factors—in addition to our lack of new home construction—it is not surprising to see demand substantially usurping supply. As I look forward, I believe inventory levels will continue to rise modestly, but it will remain a solidly seller’s market for the rest of the year.
HOME PRICES
- With demand still exceeding supply, we should not be surprised to see average sale prices continuing to rise, as is certainly the case in our region. Home prices rose by 8.1% between the second quarter of 2015 and the second quarter of this year. This is down from the annual rate of 10.1% that we showed in our last report, but the rate is still far higher than the historic average of 4%.
- Regular readers of this report will remember that there were several counties where average sale prices in the first quarter were actually lower than seen a year before. I suggested that seasonality was to blame and that was indeed the case, with all counties in this report now showing annualized price gains.
- When compared to the second quarter of 2015, price growth was most pronounced in San Juan County and, in total, there were nine counties where annual price growth exceeded 10%.
- The prevailing supply/demand imbalance continues to push prices higher, and persistently low interest rates are just adding fuel to the flames. If rates stay at current levels, it is unlikely that we will see much in the way of slowing appreciation for the rest of the year.
DAYS ON MARKET
- The average number of days it took to sell a home dropped by 17 days when compared to the second quarter of 2015.
- It took an average of 67 days to sell a home in the second quarter of this year—down from both the 86 days it took to sell a home in the first quarter of this year, and from the 84 days that it took to sell a home in the second quarter of 2015.
- The only market where the length of time it took to sell a home rose was in the notoriously fickle San Juan County, where it rose by 30 days to 196 days. In the rest of the region, the average decrease in the time it took to sell a home between the second quarter of 2015 and the second quarter of 2016 was 20 days.
- Snohomish County has joined King County as a market that takes less than a month to sell a home. At 18 days, King County is unarguably the hottest market in the region, but sales are slowing due to the lack of inventory. This imbalance is unsustainable over the long term.
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 second quarter of 2016, I am leaving the needle in the same position as last quarter. Inventory levels have improved, albeit modestly, and price growth has slowed very slightly. However, this is offset by a jump in pending sales, a slightly higher number of closed sales, and a drop in interest rates. As such, the region remains staunchly a seller’s market.
ABOUT MATTHEW GARDNER
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.
NEW ADVICE COLUMN: Dear Serena…
Welcome to my new Real Estate advice column, “Dear Serena,” where I strive to answer your burning Real Estate questions. Email yours to me at serena@windermere.com and I’ll try to answer them in future columns.
Dear Serena,
I’ve been renting in South Seattle for several years. My landlord recently raised my rent $225/month and expressed his desire to sell next spring when my lease is up. I may be in a position to buy a house at that point but don’t I can afford the current prices in Seattle. That said, it seems like there’s more inventory lately. What do you expect the market to look like in spring 2017? And where can one buy a house for less than $500,000?
Thank you!
Sincerely,
“South Seattle Renter”
Windermere Realtor Serena Heslop has been serving South Seattle for 20 years.
Dear South Seattle Renter,
If only I had a crystal ball and could look into the future! All I can do it look at future projections and also look at the hard facts of past appreciation.
First, for something less than $500,000, I would suggest looking in the South Seattle neighborhoods of Upper Rainier Beach, Rainier Beach, Lakeridge or Brynmawr.
Second, the costs of waiting to buy is defined by the additional funds it would take to buy a home, if prices and interest rates were to increase over a period of time.
Freddie Mac predicts that interest rates may rise to 4.6% next year. And Core Logic predicts home prices will appreciate by 5.3% nationally. Seattle has tends to have higher appreciation rates, city wide it has been 11% this year.
If we take this projection let’s compare what you could get now versus a year down the road. Seattle is not cheap as we all know, so say you can buy a house for $425,000 putting 10% down with a current interest rate of 3.65% ( I am guestimating homeowners insurance and taxes) You would also have to pay private mortgage insurance (PMI) unless you have 20% to put down (a tall order for a lot of first time buyers).
So your monthly rate would be $2,253.93. PMI is $160.42.
If you waited a year and rates have increased to 4.6% as projected your mortgage would be $2,466.39, plus you would be buying less house if the price projection is correct so the house would be $403.750.
So waiting does not make a lot of sense if you can buy now.
Also If we look back to last year the median list price of pending sales in South Seattle was $416,238 and this year it is $485,462, so that is actually an over 15% price increase! So again it seems wise to look sooner rather than later, unless Donald Trump gets in and then I think a lot of folks will be leaving the country and Canada will have to build a wall to keep us out!
Sincerely,
Serena Heslop, Realtor
FROM SERENA: A Realtor’s Work is Never Done!
Dear Friends,
I’m so excited to announce that my two new listings that were launched a week ago are both PENDING!
The first – a mid-century modern in Columbia City – would make you smile. Fastidiously maintained and updated by arty owners, with soaring vaulted ceilings and a wide open floor plan, this 3 BR/1+ BATH is listed at $649,888.
The second is a bright Mount Baker Craftsman, with rentable studio apartment. Listed at $465,000, this lovely home is great for entertaining with a real fireplace, hardwoods and French doors leading to a dining room and eat-in kitchen, including a glass sliding door to a big covered back deck.
In other news, I’m looking forward to launching my new Real Estate advice column next week, where I’ll be answering your most pressing questions about everything from predictions and interest rates to the best time to buy or sell. Feel free to send your questions to me at serena@windermere.com, and I’ll try to answer in future columns.
If you get a chance to look at GO: South Seattle, take a peek at their People In Your Neighborhood column where I recently answered all sorts of prying questions – much like being called into the principal’s office! Just kidding, it was great fun and I’m both honored and humbled to have been invited to participate.
Finally, if you haven’t already, please check out my new and improved Facebook page where you’ll find all sorts of fun and even useful tidbits of information to impress your friends.
As always, thank you for your support, referrals are the mainstay of my business, and I am truly grateful for your trust in me.
Sincerely,
Serena
NEW LISTING: Mount Baker Bungalow with Extra Income Potential
4125 38th Avenue South
Listed at $465,000
OWC & income too! The best of both worlds, in this bright Mount Baker Craftsman, with rentable studio apartment. The living room has original built-ins, a ‘real’ fireplace, hardwoods & French doors leading to a dining room and eat-in kitchen, with glass sliding door to a big covered back deck. Great spot for entertaining! There are two bedrooms & one full bath on the main. Upstairs there’s a self-contained studio apartment with separate access. Could also be a guest space or third bedroom. The back yard is very private and has a sweet insulated cabana with electricity. Parking can be off-street.
Specs:
- 2,000 Square Feet
- 5,610 Square Foot Lot
- 2 Bedrooms
- 1 Full Bathroom
- Separate Studio Apartment with Full Bath
- Heat: Gas Forced Air/Wood Fireplace
- Taxes: $4,662
- MLS #: 1002758
Information provided as a courtesy only, buyer to verify. For more, go here.
NEW LISTING: This Columbia City Mid-Century Modern Will Make You Smile
4821 44th Ave. S., Seattle, WA 98118
Listed at $649,888
Mid-Century Modern fans, you’re gonna love this place! Fastidiously maintained and updated by artsy owners, with soaring vaulted ceilings and a wide open floor plan. The living space is all on one level, with 3 bedrooms, 1 3/4 baths, a big living room & kitchen, as well as a family room with a wood burning stove, and you can’t beat the location, dead-end country quiet street, tons of parking, yet you can walk everywhere! City skyline and sunset views, low maintenance gardens with private patio. Big basement with workspace & storage room plus two-car garage.
Specs:
- 2,360 Square Feet
- 5,160 Square Foot Lot
- Built in 1967
- 3 bedrooms
- 1.75 Bathrooms
- Gas Forced Air Heat
- 2016 Taxes $3,751
- MLS # 975157
Information provided as a courtesy only, buyer to verify. For more, go here.
Real Estate Market Update: Prices Up 11% From Same Time Last Year
Windermere’s Metro Seattle Real Estate Market Update tracks key performance indicators to determine the current state of the market and to anticipate trends. This report looks at Metro Seattle from West Seattle to Lake Washington and north to Shoreline and Kenmore, and is designed to help you make sound decisions in today’s residential market.
PRICE TRENDS
Prices on a per-square-foot basis are up 11% from the same time last year, with an average sold price of $737K, compared to $673K. First time buyers, relocation buyers and investors are competing to capitalize on continued favorable interest rates. Windermere brokers indicate clients’ frustration with lack of inventory. Absorption rates increased 3% compared to last month, and increased 4% compared to last year, both of these indicate the market will continue to be tight going forward.
MARKET ACTIVITY
The number of homes in pending status increased month-on-month to 1025 for June, up from 931 a year earlier. There was .7 months of housing inventory on the market, down slightly from .8 months last year based on pending sales. Average cumulative days on market for new listings was 18 days, up from 1 days for the same time period last year. The continued strong local employment market and new hiring by firms in the Seattle Metro area may be responsible for the high level of demand for housing.
FINANCIAL MARKET TRENDS
From Matthew Gardner: Mortgage rates took a tumble following the UK’s decision to leave the European Union (i.e. Brexit). As the air starts to clear following that historic announcement, I think that it is quite possible for the market to retest historic lows before stabilizing and possibly moving modestly higher as we move through the coming month.
Serena Featured in GO: South Seattle Interview
Well, I am downright embarrassed to be in the spotlight but they tell me I’m contractually obligated to share it so here you are:
English Transplant Devoted to Dogs, South Seattle Community
Longtime South Seattle neighbor and realtor Serena Heslop has witnessed first-hand the area’s growth and change over the last 20 years.
Originally from the south of England and the daughter of a single mum who cooked for the British aristocracy, Serena first found her way to Columbia City and now calls Mount Baker home. She’s been involved in all sorts of community building events in her adopted community, including the very first Columbia City BeatWalk back in 1995.
“Over the years, I’ve witnessed first-hand an incredible transformation of the area,” she says, “thanks to a community of caring, engaged and enthusiastic neighbors, a growing business district and fun cultural events like the Rainier Valley Heritage Parade, Columbia City Farmers Market, Beatwalk music festival and much more.”
Serena is also well regarded in her field — voted Best Realtor in South Seattle not once but twice, won Best in Client Satisfaction by Seattle Magazine 10 years running and was awarded the Five Star Professional Realtor designation.
She’s also participated in neighborhood clean-ups, supported many local organizations, volunteered with Project Cool to give homeless kids new backpacks with school supplies, collected food for the Rainier Valley Food Bank and recently volunteered with Wellspring Family Services where her company — Windermere Mount Baker — spent the day giving back to one of South Seattle’s most vital organizations.
When asked what motivates her to do this work, Serena responds simply, “I love this neighborhood.”
She is also a devoted animal lover who supports both the Feral Cat Spay & Neuter Clinic, the Prison Pet Partnership Program, Pigs Peace, Pasado’s Safe Haven and many more organizations. And while she spends most of her time contributing here at home, she also works with transnational organizations like Baja Dogs La Paz in Mexico, helping to rescue street dogs who might otherwise starve to death. Within the past six years she and her partner Jacki have brought 12 abandoned street dogs back to the states and nursed them back to health before finding homes for the recovering pups.
“It’s so easy to do,” she says. “And it’s so hard to see animals starving. We can’t ignore it. Just saw a need and felt like we could make a difference.”
This week, she was kind enough to take the time to answer a few questions for our People in Your Neighborhood column — a series of interviews with some of South Seattle’s most interesting and engaging people. More.
Find the full interview here.
FROM SERENA: Windermere Teams with Wellspring to Help Neighbors In Need
Dear friends,
My Windermere Real Estate Mount Baker office colleagues and I recently had the opportunity to volunteer with an amazing South Seattle organization dedicated to helping homeless children and families in our community.
We spent the day organizing clothes and donations at the Wellspring Family Services Baby Boutique, where families in crisis can get free children’s items (new and gently-used) such as seasonal-appropriate clothing and shoes, diapers, formula, and other essentials for infants, multicultural learning toys and books and baby gear and equipment.
For me personally, it was an eye-opening day learning about how Wellspring helps support and empower neighbors in need. From a victim of domestic abuse with three children who was able to get back on her feet, open her own hair salon and buy her own house. To a struggling realtor who had been living with her son in an empty house that she had listed. I always think that this could happen to any of us.
In other news, I’m thrilled to announce that we’ve chosen the first winner of our random monthly drawing! The lucky winner will receive a gift certificate to their favorite South Seattle restaurant. There will be another chance to win next quarter, so if you haven’t already, take a moment to subscribe to this fabulous blog and you too will be entered to win our next drawing!
Finally, if you haven’t already, please check out my new and improved Facebook page where you’ll find all sorts of fun and even useful tidbits of information to impress your friends.
As always, thank you for your support, referrals are the mainstay of my business, and I am truly grateful for your trust in me.
Sincerely,
Serena
CASE STUDY: A Contingent Sale in this Market? No Way!
Well miracles do happen, even in the crazy world of real estate! It just takes experienced brokers, excellent communication and faith that it will all work out in the end.
My buyer Anita Austin really needed to buy a house before she sold her old one, so she would not have to move twice with two big dogs in tow, however she was not moving to Kansas, she was looking in hot neighborhoods in Seattle, so the chances of that happening were very slim!
She did have a great house to sell on Queen Anne but it was not on the market when we first started looking. We found the perfect house in a great neighborhood in West Seattle that she really loved, but it had been on the market for just under a week, so the chances of her getting it contingent on the sale of her house were slim.
However, a pleading letter and photo compiled by me were sent, and it worked! Anita had been a nurse for 30 years and that really swayed the sellers, as one of them had been a nurse. Who says letters don’t work?!
Anita’s Queen Anne house went on the market the next day with a Windermere Queen Anne agent, with the expectation that her house would sell quickly, given the amazing location and the Seattle Housing market.
Anita received two offers and one was over the asking price so we seemed all set. Two days later the buyer backed out. Of course it was disappointing and stressful for my buyer, but we still had a week to get the house sold. Three days later Anita got another full price offer, so once again we were all set. A week later, the second buyer backed out.
Now, this was getting stressful as Anita’s contingency was running out, but I had been in good communication with the listing agent on the West Seattle house, so I called her and explained the situation.
Luckily her sellers were not in a hurry to move — a miracle! So we extended the contingency for three more weeks, and a few days later Anita got three offers. One was all cash and over the list price with no inspection contingency and a short close date, even shorter than the original sale! So it was bit of a mad scramble and some short rent back negotiations, but in the end, everyone was happy.
“When I decided to downsize,” said Anita, “I wanted someone who was familiar with the areas I was interested in moving to. I was referred to Serena who was a perfect match; she knew just what I was looking for and I found the perfect house. She even wrote a fabulous letter to the sellers about me and my family and they waited until I sold my Queen Anne house. She arranged home and sewer inspections and kept me informed and updated; she was very reachable. Buying and selling a house is never easy, but Serena made the whole process smooth and I learned a lot from her.”
15 Budget-Conscious Tips for Sprucing Up Your Yard & Boosting Your Home’s Value
If you’re trying to impress potential buyers — or even guests — nothing is worse than having unkempt grounds. An unruly yard is an immediate turnoff, as buyers might assume you’re not maintaining the home well. Boost your home’s value by sprucing up your yard with these 15 budget-conscious tips.
1. Create a welcoming entrance with one or two big pots filled with colorful plants.
2. Make a significant impact on your landscape with a few 5-gallon trees for about $35 each, if you plan to stay in your home for at least five years, says landscape architect David Keith, owner of Arbor Studio, in Blanco, Tex. Smaller trees also tend to acclimate better.
3. Invest in a couple of great architectural pots that make a statement at your entrance, Vincenta says. Add rounded boxwoods for a classic look, or try a seasonal planting of ornamental grasses, and colorful annuals and trailing plants for an eye-catching display.
4. Add a bench or garden ornament, such as a trellis or birdbath to a key spot, or add a nice mailbox with some plantings at the base.
5. Hire someone to professionally prune or selectively remove (and replace) overgrown bushes.
6. Spruce up your foundation plantings with a border of long-blooming perennials.
7. Redo an area of your garden or even a small backyard.
8. Hire a landscape designer or architect to create a plan that you can install or to develop a solution to a nagging problem in your yard.
9. Add several evergreen plants, both trees and shrubs, to punctuate an entrance, create year-round color in your yard or block a bad view.
10. Go green by creating a rain garden that will capture and filter runoff from your roof.
11. Install landscape lighting to illuminate the path to your front door.
12. Buy a small, freestanding water feature, and add rocks, boulders and plantings to make it look natural.
13. Clean up existing plant beds by removing weeds and overgrown plants.
14. Prune shrubs — but not into an unnatural ball or square shape.
15. Trim tree branches that hang too low and create hazards.
