What Amazon in Bellevue Means for Our Housing Market

En este blog se pueden enterar de noticias importantes sobre todo lo relacionado con el mercado de bienes raíces en los condados de King, Snohomish y Pierce. Si tienen alguna pregunta (o solo buscan información al respecto), estamos aquí para lo que ocupen y para ayudarlos a comprar o vender su casa.

In case you missed it, Amazon is officially expanding to the Eastside! Back in August there were rumors that Apple and Amazon were looking to add offices across Lake Washington. A recent article from The Seattle Times confirmed Amazon will be returning to its Bellevue roots to lease a space much larger than the garage where it started 22 years ago. The online retail mogul will be the new (and only) tenants of Centre 425, a 16-story building in downtown Bellevue that is due to be completed this fall.

Amazon has already invested billions of dollars in its Seattle campus that occupies 8.5 million square feet in and around South Lake Union. This desirable location has attracted many young creatives in the area, as evidenced by the fact that the company currently employs more than 25,000 people in Seattle. The Bellevue office is expected to accommodate over 2,200 people. Considering the success of other Eastside-based companies such as Microsoft and Valve, Amazon will not have a problem recruiting that amount of local tech talent for Centre 425.

Right now it is unclear why Amazon is deviating from its original plan to develop in more urban areas like Seattle. GeekWire speculates it could be a way to cater to employees who already live on the Eastside or an attempt to lure in talent from Expedia once it relocates from Bellevue to Seattle in 2019.

What does this mean for our local housing market?

Whatever the reason for Amazon’s expansion, it will certainly make the Eastside even more attractive for tech employees and have an impact on our housing market. Although the median home price is lower in Seattle, inventory remains higher on the Eastside. Amazon’s location in Bellevue will allow prospective employees to focus their search on the Eastside and give employees currently living here an incentive to stay.

Read the full article from The Seattle Times.

Posted on October 26, 2016 at 10:20 am
Oscar J. Diaz | Category: Housing Market News

More Choices Create More Competition in the Puget Sound

En este blog se pueden enterar de noticias importantes sobre todo lo relacionado con el mercado de bienes raíces en los condados de King, Snohomish y Pierce. Si tienen alguna pregunta (o solo buscan información al respecto), estamos aquí para lo que ocupen y para ayudarlos a comprar o vender su casa.

Our intuition tells us that when home inventory is up, prices decrease. However, according to a recent article from the Puget Sound Business Journal (PSBJ) that is not currently the case in the Seattle area. What is causing prices to continue to climb even with an influx of inventory? As with everything else in the housing market, we can look at the bigger picture to make sense of this situation.

Although local buyers have more homes to choose from, they are competing against more buyers who are also taking advantage of the large selection. The article reports, “There’s demand among buyers for houses of all prices, though it’s highest for entry-level homes.” This is not surprising considering tech salaries go farther in the Seattle area than other tech hubs, which attracts more employees searching for homes. Additionally, even though the number of new listings in August increased 14.5 percent, that still reflects a decrease from August 2015. The PSBJ also cautions that experts don’t expect price hikes to keep moderating because they believe the number of new listings will drop significantly between November and February.

What can home buyers take away from this news?

If you are in the market to purchase a new home, your best opportunity will be within 60 days. Let me know how I can help make the search easier to help you find your dream home.

Find the full article on the Puget Sound Business Journal.

Posted on September 28, 2016 at 8:46 am
Oscar J. Diaz | Category: Housing Market News

Help for Buying a Home Now

Buying Help  header

Think you can’t afford to buy a house? There are a number of programs that can help make the dream of buying a home a reality.

Are you ready to start looking for a home? A Windermere Real Estate broker can help you find programs that make buying a house more affordable.

  • You don’t need to put 20% down. Fannie Mae and Freddie Mac have down payment requirements as low as 3%. If you’re a vet or active military, a VA loan requires no down payment.
  • Your family can help with your down payment. Fannie Mae’s HomeReady Mortgage allows a down payment of just 3%, and income from grandparents, parents, relatives, and working children can be used to help qualify for the loan.
  • You don’t need perfect credit. To qualify for an FHA loan, your credit score needs to be just 500 or higher. FHA loans allow a down payment as low as 3.5%, and that payment can come entirely from “gift funds.”
  • BIG PLUS: There are a number of down payment assistance programs in Washington State to help you finance a home and arrange a payment you can afford.
Posted on August 31, 2016 at 11:22 am
Oscar J. Diaz | Category: Housing Market News

The Gardner Report – Second Quarter 2016

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.  

 

 

 

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 post originally appeared on the Windermere.com blog.

Posted on August 3, 2016 at 1:17 pm
Oscar J. Diaz | Category: Housing Market News

California-to-Seattle Home Searches Decrease

The local housing market has so many elements that it can be difficult to identify a single cause of overcrowding, soaring housing prices, fluctuating mortgage rates, etc. However, for years Seattleites have relied on one constant scapegoat – Californians. According to The Seattle Times, Seattle residents may need to start looking at other factors, as a recent study found that the number of Bay Area residents searching for homes in the Seattle area has dropped 45 percent compared to a year ago.

The Seattle Times suggests that the fear surrounding the influx of wealthy, home-hunting Californians in Seattle may be exaggerated, but not unfounded. Census data shows that in a typical year about 3,650 people move from the Bay Area to King County. In 2015 the percentage of Bay Area home searchers looking at homes in Seattle skyrocketed to 5.1 percent. This year that share is down to 2.8 percent. That raises the question, what’s preventing people from even considering relocating to Seattle?

The article discusses some possibilities for why Seattle has fallen off Californians’ radars. People working in the tech industry have more options now that other desirable cities including Austin, Denver, Boston, and Washington, D.C. are turning into tech hubs. Although these cities also have various housing challenges, the article claims Seattle is the only one that has a “brutal trifecta” of problems: soaring prices, lack of inventory, and homes that sell too quickly for transplants to tour.

Looking at the future, if this decrease in home searches is any indication of things to come, homebuyers could soon experience some much-needed relief.

Find more information and read the full article at The Seattle Times.

Posted on July 6, 2016 at 3:07 pm
Oscar J. Diaz | Category: Housing Market News

Mortgage Rates Drop This Week

If you’ve been looking to buy a home in Seattle or the Eastside recently, you’ve probably been overwhelmed with news of bidding wars, rising costs, and inventory shortages. We’re here to share good news that will keep you optimistic about jumping into the housing market.

According to The Seattle Times, long-term U.S. mortgage rates fell this week after three straight weeks of increases. The average 30-year fixed-rate mortgage slipped to 3.6 percent from 3.66 percent last week, which is well below its level a year ago. As for short-term mortgages, the report states that it is unlikely that the Federal Reserve will increase short-term interest rates at its upcoming meetings this summer.

What does this mean for you?

It means now is a great time for you to invest in your new home. You know as well as we do that mortgage rates fluctuate often, so securing a home is all about seizing the day (and house) when conditions are right – like they are now.

What does this mean for us?

It means we are ready to work with you to help you find your new home, and soon. Contact us today so we can help put the power of Windermere to work for you.

Read the full article on The Seattle Times.

Posted on June 9, 2016 at 11:52 am
Oscar J. Diaz | Category: Housing Market News

Why Buying Beats Renting Today

Buy Rent header hires

Buying a home in the Puget Sound area beats renting in less than two years, according to anew study. The “breakeven horizon” – the number of years after which buying is more financially advantageous than renting – is 1.9 years.

Why the short timeframe?

Interest rates are at historic lows. (But experts expect them to rise soon.)

Interest rates

Rents are at record highs.

Zillow Rent Index

If you paid the average cost of monthly rent towards a mortgage payment instead, here’s what you could buy:
Based on principal & interest on a 30 year mortgage at 4% interest with 0% down.

Bellevue
Monthly mortgage: $2,666
Home value: $558,400

Seattle   Monthly mortgage: $2,401 Home value: $502,900

Snohomish County 
Monthly mortgage: $1,884
Home value: $294,600

Are you ready to invest the money you spend on rent to buy a home?

Get in touch with Oscar and Nancy so we can help you take advantage of the “breakeven horizon” and turn your monthly rent into a mortgage payment!

Posted on March 24, 2016 at 12:51 pm
Oscar J. Diaz | Category: Housing Market News

Homeowner’s Net Worth is 45x Greater Than a Renter’s

Every three years the Federal Reserve conducts a Survey of Consumer Finances in which they collect data across all economic and social groups. The latest survey, which includes data from 2010-2013, reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400).

In a Forbes article the National Association of Realtors’ (NAR) Chief Economist Lawrence Yun predicts that in 2016 the net worth gap will widen even further to 45 times greater.

Read the full post on Keeping Current Matters.

Posted on February 18, 2016 at 2:39 pm
Oscar J. Diaz | Category: Housing Market News | Tagged , ,

The Gardner Report – Fourth Quarter 2015

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Economic Overview

The Washington State economy has added almost 370,000 jobs since the lowest point of the recession at the start of 2010. Additionally, total employment is 176,000 jobs higher than seen at the 2008 peak. With a vast majority of our metropolitan areas having fully recovered from the job losses seen during the recession, I expect to see somewhat more modest job growth in the coming year. That being said, our economy will continue to expand, which will be a benefit to our region’s housing market.

Home Sales Activity

  • There were 16,895 home sales during the fourth quarter of 2015, up by 4.6% from the same period in 2014. Sales activity is starting to slow somewhat but this is due to inventory constraints.
  • The growth in sales was most pronounced in Cowlitz and Lewis Counties and double-digit growth was also seen in Thurston County. Sales declines were seen in Grays Harbor County and Skagit County, but only minimally.
  • The number of home sales grew in all but two counties, with the average number of sales up by almost 6% from the same period in 2014.
  • I am not surprised to see some decline in sales start to appear. Listing activity was down by 28% compared to the fourth quarter of 2014, and there were no counties where there were more homes for sale in Q4-2015 versus Q4-2014.

Home Prices

  • Prices in the region rose by an average of 9.3% on a year-over-year basis but were 0.4% lower than seen in the third quarter of 2015.
  • Unsurprisingly, no counties saw a drop in average home prices compared to fourth quarter last year.
  • When compared to the fourth quarter of 2014, San Juan County again saw the fastest price growth with an increase of 37.6%. However, this county is notorious for extreme swings given the huge variations in prices in the San Juan Islands. Double-digit percentage gains were also seen in five other counties.
  • As long as inventory constraints persist, it is likely that price growth will continue. That said, modest increases in interest rates, in combination with declining affordability conditions in several markets, will likely slow price appreciation.

Days on Market

  • The average number of days it took to sell a home dropped by nine days when compared to the third quarter of 2014.
  • It took an average of 78 days to sell a home in the fourth quarter of this year—down from the 91 days it took to sell a home in fourth quarter of last year.
  • There were just two markets where the length of time it took to sell a home did rise, but the increases were minimal. Jefferson County saw an increase of eight days while Mason County rose by two days. King County remains the only market where it takes less than a month to sell a home.

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 fourth quarter of 2015, I have left the needle at the same position as the previous quarter. In as much as the market is still very heavily in favor of sellers, I fear that some markets are reaching price points that will test affordability. Furthermore, while inventory levels are likely to see some growth in 2016, it will not be enough to satisfy demand, adding further upward pressure to prices. Overall, 2015 was a stellar year with sales volumes and home prices moving higher across the board. In 2016, I believe we’ll see some growth in sales activity, as well as continued price growth – just at more modest levels than last year. Interest rates are going to rise moderately through the year, but still remain very competitive when compared to historic averages. In other words, any increase in interest rates should not be a major obstacle for home buyers. Looking forward, I believe 2016 will be a year of few surprises. Because it is an election year, I do not expect to see any significant governmental moves that would have a major impact on the U.S. economy or the housing market.

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.

Posted on February 4, 2016 at 2:36 pm
Oscar J. Diaz | Category: Housing Market News | Tagged , , , ,

2016 Economic & Housing Forecast

The National Economic Forecast

1. The U.S. will continue to expand with real GDP growth of 2.3% in 2016.

Although a positive number, the forecasted rate of growth suggests that we will be modestly underperforming in 2016.  On a positive note, oil prices are likely to remain well below long-term averages, which puts more money into consumers’ pockets in terms of disposable incomes.  However, I believe that consumers are likely to continue to save rather than spend which will constrain growth.  That said, there is certainly no recession on the horizon – at least not yet – and a strong dollar will act as a bit of an anchor.

2. Employment will continue to expand but the rate of growth will slow. Look for an increase of 1.6% in 2016.

We are rapidly approaching full employment (generally considered to be when the unemployment rate drops below 5 percent).  As such, growth in employment has to be driven more by population growth rather than a return to employment. 2015 saw an average of around 210,000 jobs created per month and I believe that this is likely to slow to an average monthly gain of 190,000 new jobs.

3. The U.S. unemployment rate will continue to drop and end 2016 at 4.8%.

As mentioned above, we are heading toward full employment and, as such, the national unemployment rate cannot trend much lower.  That said, the less acknowledged U-6 rate (which includes those working part-time and those marginally attached to the workforce) will remain elevated at around 8%, signifying that there is still some slack in the economy and room for the rate to drop a little further.

4. Inflation will remain in check with the Consumer Price Index at 1.9%.

The Federal Reserve has begun the long-awaited tightening of monetary policy and we will likely see the Fed Funds Rate continue to move higher over the next two years. Inflation has yet to respond to the low unemployment rate, but it will.

The core rate of inflation should remain in check and the overall rate could stay below long-term averages as a function of stubbornly low energy costs. Should we see a shift in OPEC’s position relative to oil supply, the overall rate of inflation could rise more rapidly.  Oil prices, therefore, will remain in focus during 2016.

The National Housing Market Forecast

5. Mortgage rates will rise, but we will still end 2016 with the average 30-year fixed rate below 5%.

I am taking the Fed at its word when it says that monetary tightening in 2016 will be gradual and heavily data dependent. Accordingly, I expect only a modest uptick in long-term rates in 2016. Furthermore, as long as the Federal Reserve continues to reinvest the dividends that it is receiving from their bond holdings – which is highly likely – the yield on the key 10-year treasury will remain low and hold mortgage rates in check. This is only likely to change after the general election, therefore suggesting that rates will remain very attractive relative to their long-term averages.

6. Credit Quality – which had been remarkably stringent – will relax a little.

Access to credit, specifically mortgage instruments, has not been easy for many would-be homebuyers but that is set to change. I believe that we will see some improvement, specifically for borrowers with “near-prime” credit. This will be of some assistance to first-time buyers; however, credit quality will still be higher than it needs to be.

7. Existing home sales will rise modestly to an annual rate of 5.53 million units with existing home prices up by 4.7%.

I anticipate that we will see some improvement in overall transactional velocities in 2016, but unfortunately, demand will still exceed supply. Prices will continue to rise, but at a more constrained pace than seen over the past few years. This will be a function of modestly rising interest rates as well as slightly improving levels of inventory. I anticipate that we will see more listings come online as more households return to positions of positive equity in their homes.

8. New home sales will jump and be one of the biggest stories for 2016.  Look for a 23% increase in sales and prices rising by 3.4%.

I believe that builders will start to build to the entry-level buyer, filling a huge void.  Additionally, I see the total number of new home starts increase quite dramatically in 2016 as banks start to ease lending and builders start to believe that the downward trend in homeownership has come to an end.  This will help to absorb some of the pent-up demand currently in the market.

9. Foreclosures will continue to trend down to “pre-bubble” averages.

Any story regarding foreclosures will be a non-story as the rate will continue to trend down toward historic averages. However, we will see the occasional uptick as banks work their way through their existing inventory of foreclosed homes. Move along.  There’s nothing to see here.

10. The Millennials will start to enter the market.

There are several substantial reasons to expect an increase in Millennial buyers. Firstly, early Millennials are getting older and starting to settle down, and even with modestly higher mortgage rates, rents are likely to continue to trend upward, and this will pull many into homeownership.

Secondly, more favorable mortgage insurance premiums, additional supply from downsizing boomers, and growing confidence in the housing market will lead to palpable growth in demand from this important – and substantial – demographic.

To conclude, it appears to me that 2016 will be a year of few surprises – at least until the general election! Because it is an election year, I do not expect to see any significant governmental moves that would have major impacts on the U.S. economy or the housing market.

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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. 

Posted on January 21, 2016 at 2:01 pm
Oscar J. Diaz | Category: Housing Market News