Tag Archives: Seattle real estate market

Continuing Discussion: Our Local Housing Market and Low Inventory

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The housing market recovery, locally and nationally, and the low inventory in our region are both hot topics of interest. Windermere Blog featured posts on both subjects this week.

Windermere’s president, OB Jacobi, discusses the low inventory in our region in his post Time to Reality Check the Real Estate Market. From the post:

Here are the current inventory levels in key markets along the West Coast, all of which fall below six months of supply and report strong competition among buyers.

· Seattle: 1.4 months

· Portland: 4.2 months

· San Francisco: 1.8 months

· Las Vegas: 3.8 months

· Palm Springs: 2.5 months

Mr. Jacobi discusses what this means to buyer and sellers, along with discussing the impact of current interest rates and its effect on affordability.

Matthew Gardner, principal at Gardner Economics, compiled a report on how our region fared during the 4th Quarter of 2012. He provides analysis of Western Washington’s job market along with the housing market. He, too, touched on our region’s low inventory:

As stated previously, I do worry about the lack of homes for sale. If we do not see a fairly dramatic increase in inventory, I fear that the market will be forced to give some of its recent gains back— albeit temporarily. Because of this fact, and regardless of the solid price growth that we are witnessing, I am still unable to raise my grade above the “C” that I gave it last quarter.

With that being said, Gardner goes on to state in his conclusions:

From a real estate standpoint, it is clear that we are now well removed from the days when home prices were hemorrhaging. Home values have stabilized and a recovery in values is underway. The credit markets have thawed and getting a mortgage is easier now than it has been since the housing “bubble” exploded. Interest rates remain at historic lows, and although I believe that they will rise in 2013, the increase should be modest.

Please take time to read both blog posts. They are full of pertinent data for those interested in our current housing market. To quote OB Jacobi, “It goes without saying that nobody wants to sell at the bottom of the market, yet at the same time, everybody wants to buy at the bottom. Obviously these two scenarios can’t exist at the same time, but I hope the information in this blog shows there are definitely opportunities to be had by both buyers and sellers that are worth considering.”

Before You Waive the Inspection Contingency, Consider the Risks

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In marketplaces where multiple offers are more common place, there may be a temptation to forgo an inspection to woo the sellers. However, it would behoove a buyer to take some time to learn the risks that can accompany forgoing the inspection contingency when purchasing a home.

The American Society of Home Inspectors (ASHI) website has an informative FAQ section which addresses commonly asked questions about inspections. Their Facebook Page contains photo examples of what ASHI inspectors find out in the field. While many are humorous looking, the reality is dealing with unexpected problems after purchasing a home is no laughing matter.

Check out this Huffington Post article about a woman who paid $1,000,000 for a home, waived the inspection contingency, and after the transaction closed discovered an enormous mouse infestation. According to the article and accompanying video, the home needs to be torn down to the studs. While this is an extreme example, it illustrates clearly why conducting an inspection prior to purchasing a home is usually in a buyer’s best interest.

If the local real estate market you want to buy in suffers from low inventory, like it is here in the greater Seattle area and Eastside, multiple offers are a reality buyers grapple with. For buyers who are finding that an unwillingness to waive the inspection contingency can be a deterrent to sellers receiving multiple offers, a pre-inspection may be a good option to consider.

What exactly is a pre-inspection? This is an inspection service available to buyers that is conducted before making an offer on a house. It’s not as long, or as detailed, as a regular inspection. During a pre-inspection, which generally lasts an hour to 90 minutes, the inspector examines all the main structural elements and systems. Roof, attic, crawl spaces, foundation, heating and cooling systems, electrical, plumbing… the large components of a home, like these, will be inspected for damage, moisture problems, breakdown and infestations.

In neighborhoods that have more buyers than available inventory, it’s become increasingly popular to invest in a pre-inspection first. While it’s not as thorough, conducting one may give a buyer more confidence to move forward without a full inspection if that waiver would make their offer stronger. “Certainly no one wants the added expense of paying for an inspection on a house where your offer may not be accepted,” Raj Hayden, of Cardinal Home Inspection, shared. However when you consider the risks of forgoing any type of inspection, Hayden said for her it’s always preferable to have as much information going in to the decision making process as is readily available, to minimizing the shock and/or regret later.

Furthermore, during a pre-inspection, while their agent is present, buyers can do the detail leg-work a home inspector usually completes during a full-length inspection. Check out doors and windows. How do they fit into their frames? Do they open and close easily? Check out the appliances that will be staying. How do they work? How noisy are they? Do closet doors ride easily on their rails? Have walls been patched? What is the condition of the cabinetry? Does the carpet in any of the rooms have spots pulling away from under the molding? These details can be easily checked by the buyer while the inspector examines the core of the home.

Now it’s your turn. What has your experience been in a multiple offer situation? Have you invested in a pre-inspection before making an offer on a home?

Interest Rates Climb For Third Consecutive Week– Compare Mortgage Payments

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The Thursday, August 16th, press release from Freddie Mac revealed the 3rd straight week of rate increases for both 15 and 30 year mortgages. The 15 year, fixed rate mortgage ended the week at 2.88%; the 30 year, fixed rate mortgage finished the week at 3.62%.

If you are contemplating a home purchase, taking advantage of today’s lower interest rates can save you quite a bit of money over the life of the loan. Also, the monthly mortgage payment is so much more affordable.

Jennifer Burton, of Windermere Mortgage Services, put together payment comparison charts to compare the monthly payments for homes between $200,000 and $900,000 at 3.5%, 4.5% and 5.5% interest rates. It’s pretty amazing to take a look at the jump in the monthly mortgage payment as the interest rate climbs! If you would like to print the payment comparison charts to look at them closer, click here for homes priced between $200,000 and $600,000; for homes priced between $600,000 and $900,000, click here.

The economy is showing signs of modest growth, which in turn has caused the interest rates for fixed-rate mortgages to rise a little. The following quote is attributed to Frank Nothaft, vice president and chief economist, Freddie Mac,

“The latest economic indicators point toward low inflation but gradually stronger economic activity which placed further upward pressure on long-term Treasury yields and, in turn, fixed mortgage rates. For example, inflation remains in check with 12-month growth in the core consumer price index falling for a second month to 2.1 percent in July. At the same time, industrial production rose 0.6 percent in July compared to a 0.1 percent increase in June and retail sales jumped 0.8 percent in July from a 0.7 percent decline in June.”

According to local economist, Matthew Gardner, the housing market in Western Washington is seeing some home price stability, however the inventory of homes available is still very low. It’s noteworthy, however, to read how the greater Seattle area has been witnessing continued job growth, and how Gardner also notes that increased consumer confidence is evident with the modest economic growth in the retail sector. If listing your home for sale has been on your mind, maybe now is the time to speak with a real estate broker, to discuss how the small inventory has effected the selling process in King County. Request from real estate broker your broker a market analysis of your home. This document will help the two of you discuss what options you have as a seller, and if it makes sense to list your home now.

Now it’s your turn. What are your thoughts about the recent increases in fixed mortgage rates? Has it changed any plans you had to buy or sell a home?

Open Houses: Sunday, June 17th, 2012

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Hello and Happy Saturday! Lots of exciting fun things to do this weekend. Seattle Flight Museum is having all Dad’s free Sunday June 17th from 10-5pm lots of fun activities going on. Or if you like horses and races try Emerald Downs, its Free Cap Day and they have free family activities in the park, pony rides, face painting and more 12-5pm.

This weekend there will be open houses to visit, as well!

Two Windermere R.E. / Mercer Island listings will be held open on Sunday, June 17th. One is brand new to the market this is the first open, its a NW beauty-extensive remodel -traditional sensibility.  The other one is a peaceful, private rambler located in Shoreline’s Innis Arden neighborhood.

Details about each open house are below, by city.

Mercer Island

$950,000 l 6215 86th Ave NE l 368876 l Cynthia Schoonmaker l Sunday, 6/17, 1-4PM

Shoreline
$493,000 l 17061 10th Ave NW l 350859 l Ina Bahner l Sunday, 6/17, 11-2PM

“The Mercer Island Open House List is ready to conveniently print from this blog post!  5 home are available to preview Saturday, June 16th, and 10 will be open Sunday, June 17th. The list prices range from $650,000 to $2,799,000. The prominent features of the homes being held open over the weekend new to the market, outdoor entertaining spaces and walk-in pantries.”

The Gardner Report for Western Washington’s 1st Quarter 2012– Both Positive and Realistic

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Windermere Real Estate is proud to partner with Gardner Economics to create an analysis of the Western Washington real estate market for the first quarter of 2012.

Matthew Gardner, principal at Gardner Economics, stated that “location” is the most appropriate theme for this first quarter analysis. Depending on the location in Western Washington, the signs of recovery for both the job market and real estate market varied. However, to quote Gardner, “…we have come out of the free fall and are starting up the long road to recovery on both the job front as well as in our real estate markets.” Between March 2011 and March 2012, 54,230 jobs were added in the counties examined for the report. That is a 2.58% growth rate, exceeding the growth rate of Washington State as a whole and the United States average.

While not all the counties experienced job growth — 9 of the counties examined did, while 7 experienced a decline to their employment base — compared to this time last year the statistics show definite improvement. The 3 counties which saw the most employment growth were Snohomish, King and Whatcom. The growth rate we’re seeing in our regional employment base right now is not a rate that Gardner sees as sustainable, so he chose to give the current employment situation in Western Washington a “B-” grade. This is up some from his last assessment, and is at a grade level Gardner sees as maintainable with our current economic trends.

The sales of existing homes in Western Washington saw a growth of 13.7 percent when compared to the first quarter of 2011. The counties which experienced the biggest gain were Mason, San Juan, Snohomish , Pierce, and King. When examining sale price numbers for the region, it appears that there was a 4.5% decline in price over the 1st quarter of 2011. However, the mercurial stats from San Juan County greatly skewed the data. Remove those numbers from the aggregate and home prices in Western Washington actually rose by 2.9% year-over-year.

Short sales and foreclosures are still a formidable force in the market, and their presence has been keeping home prices lower. While it’s difficult to continue to deal with these distressed properties, Gardner discusses how it’s part and parcel of the process of recovery.

“Getting through this inventory is a process, and it can be a painful one. That said, it is an important part of any recovery. We know that the percentage of “all cash” sales are far higher than we have ever seen, which indicates to me that investors are now buying, and this will likely help in depleting this inventory.” ~Matthew Gardner

Gardner again stresses location when discussing recovery. Depending on how close the county is to economic centers, and how much growth home sales saw in yesteryear, will impact how quickly counties will see more of an increase in home prices. And while recovery signs are positive in so many local markets, Gardner rates Western Washington’s real estate market at a “C” grade this quarter. The low inventory, in his opinion, greatly affects the health of the market and he does not see an improvement of his assessment until there is a larger inventory of homes available for sale.

The take away from Gardner’s 1st quarter report of Western Washington is we have come a long way to climb out of the hole the recession left in our job and real estate markets, however we still have work to be done. Gardner states “We are not out of the woods yet, but the forecast is a positive one.” Please take some time to read the full report on Neighborly News. It’s well worth your time– his analysis is insightful and he shares several graphs to illustrate his points.

“Overall, I am still looking to 2012 as the year that we emerge from the recession and, in our own inimitable Washingtonian manner, stride forward in the belief that the way ahead is a good one. (After all, who else wears shorts when it’s 50 degrees outside?)” ~Matthew Gardner

December 2011 Stats Are Out

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The most notable aspect of the December 2011 stats is the continued trend toward high pending sales volume despite the softening of sales prices. Listing inventory is down markedly compared to inventory levels for the past three years in the month of December. With interest rates below 4% buyer interest has remained very strong and multiple offers are not unheard of–albeit at much more modest prices than in years past. Having been burned once, buyers are cautious of overpaying and are negotiating for a fail-safe price.

2011-12 Summary

2011-12 Mercer Island

2011-12 Eastside

2011-12 Seattle Metro

2011-12 King County

October is Mixed Bag for the Island

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October’s stats contain the good, the bad and the ugly!

The good: inventory is down 58% from the same time last year, the Average Sale Price is higher, $/sq ft is higher, and the absorption rate is holding steady.

The bad: Pending sales are down 20% from a year ago, the gap between original list price and sale price is larger (83% as compared to 88%) and the # of months inventory on the market has grown to 10.3 months.

The ugly; Closed sales totaled out at a meager 11 as compared to 26 in October 2010.

September Real Estate Statistics

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September turned out to be another solid month for real estate on Mercer Island and in the surrounding communities–continuing the trend for 2011.

Summer Bodes Well for Residential Real Estate

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Mercer Island, Seattle, the Eastside and King County all posted strong gains in number of units sold over those of the prior year. In fact, residential sales met, or in most cases, far exceeded the volume of any July over the last four years.

While unit sales have risen dramatically, sales prices continue to be badgered by local short sales, foreclosures and bank-owned properties, many of which are coming to market in reasonably good condition. We continue to see signs that our market is in the early stages of recovery and are reminded that we are faring much better than most markets across the country. We expect to enjoy a robust Fall market across the Northwest this year.

March Sales Activity is Strong!

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The attached report should brighten your day just a little!  I did a four year history this time to show just how much our market has changed. Nice to see that all market areas are on par with or better than 1 year ago on almost every level. That is quite a feat considering the percentage of sales spurred by the housing stimulus tax credit a year ago.

The Absorption Rate based on pending sales, one of the leading indicators of the overall health of our market, is up across all markets. This is real, non-stimulus created growth!!!