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The Gardner Report – Q4 2021

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WINDERMERE INSIGHTS·4 min read 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 your Windermere agent. REGIONAL ECONOMIC OVERVIEW Just when we thought COVID was starting to pull back, the Omicron variant made its presence known. It is still too early to suggest that this has affected the region’s economic recovery—we won’t likely know for certain until we get more job data. I remain hopeful that this latest spike in infections will not have too much of an impact, but only time will tell. To date, the region has recovered all but 51,000 of the 297,000 jobs that were lost due to the pandemic. Some of the region’s smaller counties, including Grays Harbor, Cowlitz, Thurston, San Juan, and Clallam, have seen a full job recovery. The most recent data (November) shows the regional unemployment rate at a very respectable 3.3%, which is below the pre-pandemic low of 3.7%. The lowest unemployment rates were in King and San Juan Counties, where 2.9% of the labor force was out of work. The highest rate was in Grays Harbor County, which registered 5.1%. I still expect to see a full job recovery by this summer. However, there is a growing labor shortage holding the area back. Hopefully, this will change, but some industry sectors—especially hospitality—continue to find it hard to attract workers. HOME SALES In the final quarter of the year, 22,161 homes sold, representing a drop of 5.2% compared to the same period in 2020 and down 18.8% from the third quarter. The reason there were lower year-over-year sales is simply because the number of homes for sale was down more than 30%. The drop between third and fourth quarters is likely due to seasonality changes in the market. Although home sales were lower in most markets, there was a significant uptick in Grays Harbor and Thurston counties. The number of homes sold dropped across the board compared to the third quarter. The ratio of pending sales (demand) to active listings (supply) showed sales outpacing listings by a factor of 5.2. The market is supply starved and unfortunately, it’s unlikely enough homes will be listed this spring to satisfy demand. HOME PRICES […]

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Local Market Update – January 2022

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LOCAL MARKET UPDATE·2 min read Record-low temperatures combined with record-low inventory put a chill on housing activity in December. With very few homes available to buy, sales were down. Lack of supply and high demand continued to push prices up. Since the winter months historically bring the smallest number of new listings, buyers should not expect relief anytime soon. While up from a year ago, home prices in general were relatively flat from November to December. In King County, the median single-family home price rose 9% from last December to $810,000. Despite high demand and low inventory, prices in Seattle continue to level off. While down slightly from November, the median price increased a modest 5% over a year ago to $839,000. The Eastside was again the outlier. After breaking price records in October and November, home prices soared 37% year-over-year to set yet another all-time high of $1,529,500 in December. That represents a 7% increase from November. In further evidence of just how hot the Eastside market is, 75% of the properties there sold for over list price. Prices in Snohomish County continued to inch closer to King County. The median home price there jumped 22% to $700,000.       The driving force affecting affordability is lack of inventory. In both Snohomish and King counties it would take less than a week to sell the homes that are currently on the market. At the end of December, Snohomish County has just 210 single-family homes for sale in the entire county. Seattle had only 167 homes for sale; the Eastside just 55. That represented 70% less inventory for both Seattle and the Eastside as compared to a year ago. To give some historical perspective, the ten-year average inventory for the end of December is 545 homes in Seattle and 743 homes on the Eastside. Matthew Gardner, Chief Economist at Windermere, registered his concern. “The Puget Sound region is in dire need of more housing units which would function to slow price growth of the area’s existing housing,” he said. “However, costs continue to limit building activity, and that is unlikely to change significantly this year.” The demand side of the equation isn’t expected to wane any time soon either. With millions of square feet of new office space and new light rail developments in the works, the area continues to be a draw for employers – and more potential homebuyers.      What’s ahead for 2022? […]

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2022 Housing Market Forecast

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[THE STATE OF] REAL ESTATE·4 min read Each year, Windermere’s Chief Economist, Matthew Gardner, helps us plan for the year to come with his annual forecast about the state of the economy and upcoming housing market trends. According to Gardner, the U.S. housing market has been a beacon of hope during the pandemic period. Given the massive spike in demand that started last June, he’s expecting more than 6 million existing homes will have changed hands in 2021. However, he doesn’t see this level increasing in 2022 – mainly due to ongoing supply limitations as well as rising affordability issues. Therefore, Gardner is forecasting sales to modestly pull back in 2022. That said, the country has never seen more than 6 million homes sold in a single year since records were first kept, so the number is still very impressive. With the market as tight as it has been so far in 2021, it shouldn’t be any surprise to see median sale prices skyrocketing. Even though there are 3 more months of sales data yet to be released for this year, Gardner anticipates prices will have risen by almost 16.5 % in 2021 — a remarkable number. This pace of appreciation has never been seen before. The closest was in 2005, when the housing bubble was inflating rapidly, but even then prices only rose by 12.2%. However, as Gardner mentioned in his sales forecast, this pace of growth is unsustainable. He is expecting to see some of the heat to come off the market next year, but a growth rate of 7.3% should still be noted. There are three major reasons why the market will see the pace of growth slow. Gardner has concerns regarding housing affordability, but mortgage rates and new supply will also influence the slowdown in sales and price growth for resale homes. Although Gardner does not prepare a forecast for housing affordability, this is where he expects to see mortgage rates through the end of next year; he is predicting they will continue “stair-stepping” higher, but still ending 2022 below 4%. This is very low by historic standards given that the long-term average for a conventional 30-year mortgage is somewhere around 7.5%. As rates notch higher, this will start to compress price growth as it puts a lower ceiling on how much a buyer can afford to pay for a home. Slowing growth in existing home […]

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Five New Year’s Resolutions For Your Home

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The new year traditionally brings with it resolutions: we make intentions to lose weight, drink less, exercise more, be kinder or more patient or just generally be better people.  What if you were to make some resolutions for your house? Here are five ways to approach your home with increased respect and sensitivity. Houses, like people, can be mistreated, neglected, misunderstood and abused and, like people, will show the ill effects sooner or later. Here are some guidelines to avoid that.    Have nothing in your home that is not beautiful or useful. De-cluttering is all the rage, but is still more consistently done on TV than in our own homes. Most of us have closets we don’t want to think about, cabinets crammed with mysterious stuff, furniture we don’t really like or use, knick-knacks gathering dust but not love. Making big changes is hard, and enormous industries have sprung up to help us do that. Marie Kondo says an object should ‘spark joy’ if you want to keep it. Others espouse the notion that, if you have not used it in – three months, a year, a season – it should go.  But the simplest, and most personal way to have a home furnished with things that work for you is to ask these two questions: Is it useful? Is it beautiful? You won’t ever throw out your favorite spatula because you reach for it whenever you are cooking. Whenever the afternoon sun illuminates your tribal rug, the colors make you smile. You love to put flowers into your grandmother’s vase because it makes the flowers look even prettier and brings fond memories. These are the things we want to surround ourselves with: things we use and things that we find beautiful. Everything else is clutter. Before launching a costly and disruptive renovation, ask yourself some tough questions. Begin with: do I WANT this or do I NEED this? How will the process affect my family? Our finances? Is this really the best thing for our house? Am I being swayed by peer pressure or by overly enthusiastic home décor experts?  Renovating can, of course, solve problems and make your home work better for you. But, before you undertake a project that will most certainly be more expensive, take longer and be more disruptive than anticipated, make sure you are doing the right thing for the right reasons. Bring a […]

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Local Market Update – December 2021

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LOCAL MARKET UPDATE·2 min read While the housing market typically slows down in the winter, fewer buyers are taking a break this year. High demand and scant inventory still favor sellers, who continue to see multiple offers. In one bright spot for buyers, home prices – while up from over a year ago – appear to be evening out in most of the region. Potential home sellers who’ve been sitting on the fence may want to consider taking a leap into the market now.       With the exception of the Eastside, Puget Sound median home prices were essentially flat in November compared to the previous month. However, prices increased by double-digits in most areas from last year. In King County, the median single-family home price rose 12% from last November to $820,000. Home prices in Seattle continue to level off, with the median price of $850,000 up just 4% from a year earlier. The Eastside maintained its strong appreciation, with prices soaring 35% from a year ago to a new record. The median home price there of $1,428,000 topped the previous all-time high price of $1,365,000 set in October. Prices in Snohomish County jumped as well, rising 23% to $695,000. Despite the traditional winter slowdown, the supply of homes for sale just isn’t budging. Snohomish County has just three weeks of inventory. In King County it would take just over a week to sell through all the homes for sale. Inventory is at an all-time low on the Eastside, where there are only 100 single-family homes for sale in the entire area, which stretches from Issaquah to Woodinville. Homes there are snapped up quickly, with 85% of properties selling within two weeks. With demand at a peak, the inventory crunch is expected to continue. Developers are particularly bullish on the Eastside, where plans are in the works for numerous projects, including a new condo tower in Bellevue, a $500 million transit-oriented development, and over 7,500 new apartment units that are being built in Redmond.    What’s ahead for 2022? Matthew Gardner, Chief Economist at Windermere, expects the market to continue to be strong, but believes the pace of appreciation will slow significantly from this year. “I predict single family prices will increase by around 8% in King and Snohomish counties. Affordability issues and modestly rising interest rates will take some of the steam out of the market in 2022.”  EASTSIDE KING COUNTY SEATTLE SNOHOMISH COUNTY

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Local Market Update – November 2021

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LOCAL MARKET UPDATE·2 min read As we head towards the end of the year, the housing market traditionally slows down. This year activity was even slower than normal, with record-low inventory and correspondingly fewer sales. Prices aren’t appreciating at the pace they were in the spring, but they continue to be up as compared to a year ago.  While potential home sellers usually wait until after the holiday season to list their homes, those who opt to put their home on the market now can count on strong buyer interest. With the number of buyers far outstripping supply, inventory is at historic lows. King County as a whole has less than two weeks of inventory. The supply of homes is especially strained on the Eastside where there was just one week of inventory at the end of October – 61% fewer homes were on the market than the same time last year. Snohomish County is starved for supply as well, with just over one week of inventory. The entire county had just 492 single-family homes for sale at the end of October. Strong buyer demand has kept prices steady. Most areas saw home prices increase from a year ago but remain fairly flat over the past few months. The median price of a single-family home in King County rose 11% from twelve months ago, increasing from $745,000 to $824,270. Within the county, the Eastside experienced the greatest gain. Home prices soared 30% to $1,365,000, inching above the previous all-time high of $1,364,000 set in June of this year.  Prices in Seattle registered the smallest gain at 6%, up from $800,000 a year ago to $850,000. Homes that sold in the North, Southeast and Southwest parts of the county saw price gains ranging from 16% to 20%. Buyers may find some relief with condominiums. The median price of a condo in King County was $459,970, an increase of 3% from the prior year.  Tight inventory kept prices strong in Snohomish County. The median price of a single-family home jumped 20% in October to $695,000.  Like most of King County, home prices In Snohomish County have been fairly flat over the past few months. Have home prices plateaued? Will strong buyer demand continue? The real estate market can change quickly. Whether you’re looking to buy or sell, your broker can provide you with the most current data so you can make the […]

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Local Market Update – October 2021

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LOCAL MARKET UPDATE·2 min read Despite a boost in new listings, inventory remained as tight as ever in September. The shortage of homes for sale combined with pent-up buyer demand and low interest rates kept prices high as compared to the same time last year. However, home prices over the past few months appear to be leveling out. The market traditionally slows down as we move into the holiday season, so price appreciation should continue to cool through the rest of the year. Home prices in most of the region continued their pattern from the past few months – up from a year ago but falling slightly from the prior month.  The median price of a single-family home in King County in September was $825,600, an increase of 10% from last year, down from the $850,000 median in August. Seattle’s median price rose 4% year-over-year to $850,000, a slight drop from $875,000 last month. The Eastside was the exception to the trend of cooling prices. How hot is the market? 70% of homes sold there over the list price, and 86% sold in under two weeks. The median home price on the Eastside soared 26% from a year ago to $1,310,000, basically flat from $1,300,000 in August. Snohomish County’s median price jumped 18% from a year ago to $675,000, down from $694,900 the prior month. Some of the greatest price increases occurred in areas that have traditionally been more affordable. According to Matthew Gardner, chief economist at Windermere Real Estate, “We continue to see a migration of buyers to suburban markets which has resulted in significant year-over-year price growth in areas such as Shoreline, Auburn, Skyway, Woodinville, and Burien. It’s likely that buyers are drawn to these areas because housing is more affordable than in the urban neighborhoods closer to Seattle and Bellevue.” More homes were available at the end of September than in August, but low inventory continues to pose challenges for buyers. In King County there were 40% fewer homes on the market than the same time last year. The condo market, which was negatively impacted by COVID-19, has come roaring back as buyers look for more affordable alternatives to single-family homes. Condo sales were up 20% over last year, and inventory is being rapidly depleted. There were 50% fewer condo listings at the end of September than the year prior. In Snohomish County, the tight supply of […]

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Local Market Update – September 2021

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LOCAL MARKET UPDATE·2 min read Price appear to be cooling, according to Windermere Chief Economist Matthew Gardner. In King County, the median list price was lower in August than in July, and the median sales price also dipped slightly from the prior month. “I believe this is because we are hitting a price ceiling and that the rabid pace of home price appreciation will continue to cool as we move through the rest of the year,” said Gardner. While up by double digits year-over-year, home prices in August did cool off slightly throughout the region as compared to July. The median single-family home in King County last month sold for $850,000, up 14% from a year ago, and a drop from the record-high $871,000 set in July. Seattle saw the median price rise 6% from a the same time last year to $875,000, down from $896,500 the prior month. Home prices on the Eastside were up 24% year-over-year to $1,300,000, a dip from the $1,330,563 median price in July. Snohomish County’s median price jumped 25% from a year ago to $694,900, just shy of July’s median of $700,000. While a slight softening of home prices may be welcome news for buyers, inventory is still a big problem. King County has under three weeks of available homes for sale. Lack of inventory is especially severe on the Eastside. At the end of August there were just 278 homes for sale in the entire area, 62% fewer than the same time a year ago. And 85% of homes sold in less than two weeks. As companies continue to invest in large office projects on the Eastside, demand for homes is expected to continue to rise. Snohomish County reported the smallest supply of homes of any county in Eastern Washington, about two weeks. The Puget Sound area as a whole remains well below the four-to-six weeks of inventory that is considered a balanced market, favoring neither buyer nor seller. An uptick in condo sales indicates that in-city living is on the rise again. In King County, the number of closed sales were up 20% in August compared to a year ago. The median condo price on the Eastside rose 14% to $544,000. The supply there remains tight, with just two weeks of inventory. Seattle offers much more choice, with six weeks of inventory available. Condo prices there dropped slightly year-over-year to $480,000. With Amazon looking to […]

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Local Market Update – August 2021

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LOCAL MARKET UPDATE·2 min read The typical summer slowdown brought some good news for those looking to buy a home. While prices are still on the rise, there are more homes to choose from and multiple offers are down as compared to earlier this year. This easing, however, is slight, and the market continues to be very competitive for buyers. While there was a small increase in homes for sale in July, inventory remains very tight. The region as a whole has just about a two week supply. And demand isn’t likely to ease up any time soon. The economy here is strong, and despite plenty of talk of an urban exodus due to the pandemic and the rise of remote work, our population grew steadily over the past year. The blistering competition may have cooled a bit, but home prices are still heading up. The median single-family home in King County last month sold for a record-high $871,000, up about 20% from last July. In Seattle, the median price jumped 11% from a year ago to $896,500, down from a $919,000 peak in May. Home prices on the Eastside shot up 32% year-over-year to $1,330,563, just shy of the record set in June. Lack of inventory has propelled the particularly steep price hikes, with 90% of homes there selling for over list price. At the end of July there were just 350 single-family homes for sale on the Eastside. Seattle had more than double that amount of inventory. The limited supply of homes in Snohomish County also sent prices soaring. The median home there sold for $700,000, a 22% jump from a year ago, but down slightly from the all-time high in June. Condos remain a more affordable option. And with employers saying that they’ll want employees working in the office at least part-time, an increase in condo sales indicate that buyers are looking at in-city living again. More plentiful inventory gives buyers more choices as well. The Eastside has about three weeks of available condo inventory; Seattle nearly two months. The median condo price on the Eastside was up 12% over a year ago to $558,000. Seattle’s median price was essentially unchanged from last year at $492,000. What’s happening in your neighborhood? Whether you are thinking of buying or selling — or just curious — your broker can provide you with the latest data about specific neighborhoods and answer any […]

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Local Market Update – July 2021

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LOCAL MARKET UPDATE·2 min read Is there finally hope for homebuyers? The number of listings rose slightly throughout the region in June, but it’s not clear if that trend will continue. Supply is still far short of demand, and the Puget Sound region remains one of the hottest housing markets in the country. Despite the uptick in inventory, many homes continue to sell within days and for over asking price. As tech companies like Amazon and Microsoft lease large office spaces and hire thousands of employees, demand for homes in our region isn’t expected to lag any time soon. With more buyers chasing a limited supply of homes, the market still heavily favors sellers. The median price of a single-family home in King County rose 19% from a year ago to $860,000, down slightly from the all-time high of $869,975 set in May. Seattle saw home prices increase 11% year-over-year to $890,444, also down from May’s record price of $919,000. Home prices on the Eastside, however, continued to trend up. The median home price in June soared 40% over last year to $1,364,000, surpassing the previous high set in March. With inventory the tightest of any area of King County — the Eastside had just 288 homes for sale at the end of June —  prices are expected to remain strong. Snohomish County also hit new records, with the median home price jumping 32% over a year ago to an all-time high of $716,000. The number of homes for sale in the county declined more than 44% from a year ago, leaving it with only about 10 days of inventory, the lowest of all the counties served by Northwest MLS. Much of the demand is being driven by buyers who can continue to work from home, and are opting to buy outside of King County where housing is more affordable. Condos are another more affordable option for buyers wanting to stay in King County. Condo inventory is relatively more plentiful, and prices aren’t escalating at the same pace as other homes. And the median price of $462,500 is nearly half that of a single-family home. As a result, condo sales here continued to boom, with closed sales up 79% over the same time last year (that compares with a 39% increase in the sale of single-family homes for the same period). Market shifts can happen quickly, and your best strategy is to be well […]

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