The Gardner Report – 2nd Quarter 2017

The Gardner Report | Western Washington Q2 2017

 

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


The Washington State economy has been expanding at a rapid pace but we are seeing a slowdown as the state grows closer to full employment. Given the solid growth, I would expect to see income growth move markedly higher, though this has yet to materialize. I anticipate that we will see faster income growth in the second half of the year. I still believe that the state will add around 70,000 jobs in 2017.

Washington State, as well as the markets that make up Western Washington, continue to see unemployment fall. The latest state-wide report now shows a rate of 4.5%—the lowest rate since data started to be collected in 1976.

I believe that growth in the state will continue to outperform the U.S. as a whole and, with such robust expansion, I would not be surprised to see more people relocate here as they see Washington as a market that offers substantial opportunity.

HOME SALES ACTIVITY


  • There were 23,349 home sales during the second quarter of 2017. This is an increase of 1.1% from the same period in 2016.
  • Clallam County maintains its position as number one for sales growth over the past 12 months. Double-digit gains in sales were seen in just three other counties, which is a sharp drop from prior reports. I attribute this to inventory constraints rather than any tangible drop in demand. The only modest decline in sales last quarter was seen in Grays Harbor County.
  • The number of homes for sale, unfortunately, showed no improvement, with an average of just 9,279 listings in the quarter, a decline of 20.4% from the second quarter of 2016. Pending sales rose by 3.6% relative to the same quarter a year ago.
  • The key takeaway from this data is that it is unlikely we will see a significant increase in the number of homes for sale for the rest of 2017.
Annual Change in Home Sales

HOME PRICES


  • Along with the expanding economy, home prices continue to rise at very robust rates. Year-over-year, average prices rose 14.9%. The region’s average sales price is now $470,187.
  • Price growth in Western Washington continues to impress as competition for the limited number of homes for sale remains very strong. With little easing in supply, we anticipate that prices will continue to rise at above long-term averages.
  • When compared to the same period a year ago, price growth was most pronounced in San Juan County where sale prices were 29.2% higher than second quarter of 2016. Eight additional counties experienced double-digit price growth.
  • The specter of rising interest rates failed to materialize last quarter, but this actually functioned to get more would-be buyers off the fence and into the market. This led to even more demand which translated into rising home prices.
Western Washington Heat Map
Annual Change in Home Sale Prices

DAYS ON MARKET


  • The average number of days it took to sell a home in the quarter dropped by 18 days when compared to the same quarter of 2016.
  • King County remains the tightest market; homes, on average, sold in a remarkable 15 days. Every county in this report saw the length of time it took to sell a home drop from the same period a year ago.
  • Last quarter, it took an average of 48 days to sell a home. This is down from the 66 days it took in the second quarter of 2016.
  • Given the marked lack of inventory, I would not be surprised to see the length of time it takes to sell a home drop further before the end of the year.
Average Days on Market

CONCLUSIONS


Market Speedometer
This speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors. For the second quarter of 2017, I moved the needle a little more in favor of sellers. To define the Western Washington market as “tight” is somewhat of an understatement. Inventory is short and buyers are plentiful. Something must give, but unless we see builders delivering substantially more units than they have been, it will remain staunchly a sellers’ market for the balance of the year. Furthermore, increasing mortgage rates have failed to materialize and, with employment and income growth on the rise, the regional housing market will continue to be very robust.

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 more than 30 years of professional experience both in the U.S. and U.K.
Posted on July 26, 2017 at 12:45 pm
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King & Snohomish County Market Stats – May 2017

What’s Happening in the Market

Eastside (based on Residential and Condominium report):

  • Closed median price at an all-time high of $748,944, up 20% from a year ago

 

  • Price appreciation is being driven by low supply and high demand.  Eastside months’ supply of inventory is less than three weeks, the lowest ever!

 

  • 748 active listings as of 4/30/17.  Down 33% from the year before and 48% from two years before.

 

  • Scarcity has buyers paying above list price on 65% of the sales that closed in April.

 

  • What was the cost of waiting on year (April 2016 vs April 2017) to buy?  $123,944 in median price.  $9,026 per year in payment.

Posted on May 24, 2017 at 4:03 pm
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Meydenbauer Bay Park construction has begun

Meydenbauer Bay Park construction

The City of Bellevue has started the construction of Meydenbauer Bay Park. We’re excited to see how it would improve the connection between Bellevue’s bustling downtown and its scenic Lake Washington waterfront.

With a quarter mile of waterfront, the 10-acre park considerably expands the current Meydenbauer Bay Beach Park. A large public swimming beach, pedestrian pier, historic whaling building and new beach house will make the park a destination for residents and visitors.

Rendering of Meydenbauer Bay Park

“We are one step closer to fulfilling a 30-year council vision,” said Mayor John Stokes. “This project is a testament to the patience and tenacity of city leaders who wouldn’t give up on their dream of increasing waterfront access and connections to the heart of our city.”

Key elements of the project include:

  • Relocation and expansion of the public swimming beach
  • Construction of a new beach house with restrooms and showers
  • A curvilinear pedestrian pier and hand-carry boat launch
  • Pedestrian, pathways and picnic areas
  • Remodeling the historic Whaling Building to include accessible restrooms, a small meeting room and boat rentals
  • Shoreline restoration to improve ecological functions
  • Parking and overlooks

Meydenbauer Bay, the site of a small village in the early 1900s, has a rich history. From 1914 to 1952, the inlet was the off-season home to a whaling fleet that plied Puget Sound.

The new park responds to the community’s long-held interest in additional public water access. Despite Bellevue’s 14 miles of shoreline along Lake Washington and Lake Sammamish, total shoreline in public ownership is limited to approximately 1.6 miles, or 12 percent, with the majority along Lake Washington.

IMCO General Construction will work primarily west and northwest of 99th Avenue Northeast to connect with and expand the existing park between Lake Washington Boulevard and the Meydenbauer Bay shoreline. Meydenbauer Beach Park will be closed during the project, and the Bellevue Marina will remain open.

Construction is expected to be completed in late fall 2018.

This article was first released by City of Bellevue.

Posted on May 24, 2017 at 3:45 pm
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The Gardner Report – First Quarter 2017

The Gardner Report – First Quarter 2017

Economic Overview

I’m happy to report that Washington State continues to add jobs at a steady rate. While the rate of growth is tapering, this is because many markets are getting close to “full employment”, during which time growth naturally slows. That said, I believe that the state will add around 70,000 jobs in 2017. Washington State, as well as the markets that make up Western Washington, continues to see unemployment fall and I anticipate that we will see this rate drop further as we move through the year. In all, the economy continues to perform at or above average levels and 2017 will be another growth year.

Home Sales

  • There were 15,652 home sales during the first quarter of 2017. This is an increase of 9.5% from the same period in 2016, but 20.7% below the total number of sales in the final quarter of 2016.
  • With an increase of 45.5%, sales in Clallam County grew at the fastest rate over the past 12 months. There were double-digit gains seen in an additional 10 counties, suggesting that demand remains very robust. The only modest decline in sales was seen in Grays Harbor County.
  • The number of homes for sale showed no improvement at all, with an average of just 6,893 homes for sale in the quarter, a decline of 33% from the previous quarter and 25% from the first quarter of 2016. Pending sales rose by 2% relative to the same quarter a year ago.
  • The key takeaway from this data is that 2017 will offer little relief to would-be home buyers as the housing supply remains severely constrained.

Home Prices

  • With demand continuing to exceed supply, home prices continued to rise at above-average rates. Year-over-year, average prices rose by 9.5% but were 1.1% lower than in the final quarter of 2016. The region’s average sales price is now $409,351.
  • Price growth in Western Washington is unlikely to taper dramatically in 2017 and many counties will continue to see prices appreciate well above their long-term averages.
  • When compared to the same period a year ago, price growth was most pronounced in Kittitas County, which rose by 19.6%. Double-digit price growth was seen in an additional 10 counties. The only market where the average price fell was in the ever-volatile San Juan County.
  • It is clear that rising interest rates have not taken much of a sheen off the market.

Days on Market

  • The average number of days it took to sell a home in the first quarter dropped by 16 days when compared to the first quarter of 2016.
  • King County remained the tightest market, with the average time to sell a home at just 31 days. Island County was the only area where it took longer to sell a home than seen a year ago; however, the increase was just one day.
  • In the first quarter of the year, it took an average of 70 days to sell a home. This is down from the 86 days it took in the first quarter of 2016, but up from the 64 days it took in the final quarter of last year.
  • Given woefully low levels of inventory in all Western Washington markets, I do not expect to see the length of time that it takes to sell a home rising in 2017. In fact, it is likely that it will continue to drop.

Conclusions

This speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors. For the first quarter of 2017, I moved the needle a little more in favor of sellers. The rapid increase in mortgage rates during the fourth quarter of 2016 has slowed and buyers are clearly out in force.

This article originally appeared on the Windermere.com blog.

Posted on May 18, 2017 at 8:35 am
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3 Charts That Shout, ‘List Your Home Today!’

3 Charts That Shout, ‘List Your Home Today!’ | MyKCM

In school, we all learned the theory of supply and demand. When the demand for an item is greater than the supply of that item, the price will surely rise.

SUPPLY

The National Association of Realtors (NAR) recently reported that the inventory of homes for sale stands at a 3.8-month supply. This is considerably lower than the 6-month supply necessary for a normal market.

3 Charts That Shout, ‘List Your Home Today!’ | MyKCM

 

DEMAND

Every month NAR reports on the number of buyers out in the market looking for homes, which is also known as buyer traffic. As seen on the map below, buyer demand in March was strong or very strong in 45 out of 50 states nationwide, and Washington, DC.

3 Charts That Shout, ‘List Your Home Today!’ | MyKCM

Many buyers are being confronted with a very competitive market in which they must compete with other buyers for their dream homes (if they are even able to find a home they wish to purchase).

Listing your house for sale now will allow you to capitalize on the shortage of homes for sale in the market, which will translate into a better pricing situation.

HOME EQUITY

Many homeowners underestimate the amount of equity they currently have in their homes. According to a recent Fannie Mae study, 37% of homeowners believe that they have more than 20% equity in their homes. In reality, CoreLogic’s latest Equity Report tells us that 78.9% actually do!

3 Charts That Shout, ‘List Your Home Today!’ | MyKCM

Many homeowners who are undervaluing the equity they have in their homes may feel trapped, which may be contributing to the lack of inventory in the market.

Posted on April 26, 2017 at 10:04 am
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How Fast Can You Save for a Down Payment?

How Fast Can You Save for a Down Payment? | MyKCM

Saving for a down payment is often the biggest hurdle for a first-time homebuyer. Depending on where you live, median income, median rents, and home prices all vary. So, we set out to find out how long would it take you to save for a down payment in each state?

Using data from the United States Census Bureau and Zillow, we determined how long it would take, nationwide, for a first-time buyer to save enough money for a down payment on their dream home. There is a long-standing ‘rule’ that a household should not pay more than 28% of their income on their monthly housing expense.

By determining the percentage of income spent renting a 2-bedroom apartment in each state, and the amount needed for a 10% down payment, we were able to establish how long (in years) it would take for an average resident to save enough money to buy a home of their own.

According to the data, residents in Iowa can save for a down payment the quickest in just under 2 years (1.99). Below is a map created using the data for each state:

How Fast Can You Save for a Down Payment? | MyKCM

What if you only needed to save 3%?

What if you were able to take advantage of one of Freddie Mac’s or Fannie Mae’s 3% down programs? Suddenly, saving for a down payment no longer takes 5 or 10 years, but becomes attainable in a year or two in many states as shown in the map below.

How Fast Can You Save for a Down Payment? | MyKCM

Posted on April 26, 2017 at 9:25 am
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King & Snohomish County Market Stats – March 2017

What’s Happening in the Market

  • Closed median price at an all-time high of $736,500, up 20% from a year ago.

 

  • Price appreciation is being driven by low supply and high demand.  Eastside month’s supply of inventory is less than three weeks (0.7 months), the lowest ever.

 

  • 737 active listings as of 3/31/17.  Down 21% from last year and 42% from the year before.

 

  • Scarcity has buyers paying above list price on 61% of the sales that closed in March.

 

  • What was the cost of waiting on year (March 2016 vs March 2017) to buy?  $120,400 more in median price. Interest rates up .51%.  $769 a month more for the same home.

Posted on April 12, 2017 at 9:18 am
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Buying a Home this Spring? Be Prepared for Bidding Wars

Buying this Spring? Be Prepared for Bidding Wars | MyKCM

Traditionally, spring is the busiest season for real estate. Buyers come out in force and homeowners list their houses for sale hoping to capitalize on buyer activity. This year will be no different!

Buyers have already been out in force looking for their dream homes and more are on their way, but the challenge is that the inventory of homes for sale has not kept up with demand, which has lead to A LOT of competition for the homes that are available.

A recent Bloomberg article touched on the current market conditions:

“It’s the 2017 U.S. spring home-selling season, and listings are scarcer than they’ve ever been. Bidding wars common in perennially hot markets like the San Francisco Bay area, Denver and Boston are now also prevalent in the once slow-and-steady heartland, sending prices higher and sparking desperation among buyers across the country.”

Sam Khater, Deputy Chief Economist at CoreLogic went on to explain why buyers are flocking to the market in big numbers:

“In today’s market, many buyers think the trough in [interest] rates is over. If you don’t get in now, it’s just going to be worse later. Rates will be higher, prices will be higher, and maybe inventory selection will be lower.”

In some markets, “thirty-five percent of properties are selling within the first week or two of hitting the market.” Homes are selling at a rapid clip in places like:

  • Denver, CO
  • Seattle, WA
  • Oakland, CA
  • Grand Rapids, MI
  • Boise, ID
  • Madison, WI
  • Omaha, NE
Source: keepingcurrentmatters.com

Posted on April 5, 2017 at 8:38 am
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King & Snohomish County Market Stats – February 2017

What’s Happening in the Market

Home sales continue to be slightly above last year’s totals in the areas tracked in this report.  We are continuing to see double digit price increases spread out from the core of Bellevue and Seattle due to the somewhat exorbitant prices now demanded from the metro area Sellers.

Low Inventory

Inventory hit an all-time low in February which at last count was 3 weeks of inventory if nothing new came on the market.  (That’s weeks, not months!) We do expect to see an increase in listings in March and April, but Sellers are still wary of putting their home on the market with nowhere to go. Buyers and Buyers agents are having to be creative with their offers as we are seeing at least 50% of the sales occurring are done in multiple offer situations. We don’t expect this to change anytime soon!

Posted on March 9, 2017 at 10:39 am
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How Much Did Residential Home Prices Rise in 2016?

King County Residential Home Price-Increase in 2016

King County Residential home prices increased an average of 12.7%. Here is the list of median home price-increase in different areas.

Shoreline/Richmond Beach $439,725–> $503,393
Lake Forest Park $432,250–> $505,350
Ballard $587,000–> $655,000
North Seattle $575,000–> $679,950
Queen Anne/Magnolia $780,500–> $882,500
Central Seattle $689,999–> $774,995
SODO/Beacon Hill $420,000–> $501,975
West Seattle $450,000–> $511,500
Southeast Seattle $441,500–> $500,000
Kirkland/Rosehill $801,000–> $899,500
Redmond $650,000–> $709,793
West Bellevue $1,751,000–> $1,948,000
East Bellevue $638,950–> $730,000
East Lake Sammamish $645,000–> $736,001
South Bellevue/Newcastle $713,000–> $788,888
Mercer Island $1,195,000–> $1,315,000
Juanita/Woodinville/Bothell/Duvall $525,000–> $610,000

 

All data compiled from information supplied by Northwest Multiple Listing Association on 1/01/2017 Accuracy of information herein is not guaranteed.
This information was only taken of single-family homes, and does not include condominiums or vacant land.

Posted on February 1, 2017 at 9:21 am
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