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What You Need to Know about the US Luxury Housing Market….

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Photo courtesy of West Bellevue Partners | MLS # 1324889 Luxury homes sales across the U.S. continue to perform strongly, but I’m noticing some headwinds starting to appear that are worthy of a closer look. It’s often thought that luxury real estate runs totally independent of the overall market, and while this is true in some respects, there are definitely correlations between high-end housing and the rest of the market. The first similarity is that the luxury market has suffered from some the same inventory constraints that are almost endemic across all price points in the U.S. But, similar to the overall market, we are starting to see a rise in inventory, which should be good news for real estate agents and luxury home buyers alike. Impact of rising inventory  This increase in the number of luxury homes for sale has started to have a tapering effect on price growth, which again, is similar to what we’re seeing in the rest of the market. But as real estate professionals, we know full well that all housing is local and some markets are performing far better than others. For example, luxury markets in Maui, Northern California, Colorado, and Sarasota, Florida, are all experiencing substantial price growth, while there are noticeable slowdowns in many parts of New York and New Jersey. Even Queens and Jersey City, which have continued to benefit from high demand, have seen price growth stall recently, indicating that those markets could be losing some steam. Why the slowdown?  The slowing of luxury sales in certain areas around the country piqued my interest, so I decided to explore why this is happening. The first thing I noticed is that cities with high property taxes are fairly prevalent on the list of slowing markets; this includes cities like Boston, Austin, New York City, and Chicago. It is likely that the federal tax changes limiting the deductibility of property taxes are the culprit for such slowdowns in these areas. Something else that has undoubtedly impacted luxury home sales in markets, such as New York City and Seattle, is the significant decline in foreign buyers from countries like China and Canada. According to the National Association of Realtors, the number of purchases by international buyers fell by 21 percent between 2017 and 2018, amounting to a drop of $32 billion – the largest decline on record.  Foreign buyers spent $121 billion on 266,754 properties, making up […]

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What’s Really Happening in the Housing Market?

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Our housing market is finally cooling a bit, from scorching hot to slightly-less-sweltering. While some alarmists are talking bubble or impending crisis, the statistics tell a different story. The market does appear to be shifting, and that’s good news! The steep price increases of the past few years are not sustainable, and also risk pricing buyers out of the market altogether. Where The Market Is Today Inventory is up, but still far short of demand. Despite a considerable increase in inventory, King County has just six weeks of supply. Four to six months of inventory is what is considered a balanced market, and we’re far short of that. Homes are staying on the market a bit longer. New listings have increased in the past few months, but the increase in inventory is primarily due to homes staying on the market longer. With buyers accustomed to homes being snapped up in days, “longer” is a relative term. Homes in King County are taking an average of 15 days to sell. Prices appear to be moderating. While home prices are up compared to a year ago, the rate of increase is in the single digits rather than the double-digit surges of past months. Prices are down 4 percent from the record high reached this spring. What This Means For The Housing Market The shift towards slower, consistent appreciation will result in a healthier market.     Buyers have more choices and more time to make an informed decision. It’s still a seller’s market, but sellers need to have realistic expectations about pricing their homes as the market softens. More inventory is still needed to meet demand.  Whether you’re thinking about buying or selling, it’s important to have the most current information about the market. Our Windermere brokers can provide you with statistics about today’s market and answer any questions you may have.

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Generational Trends in Home-Buying

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When making an important decision like buying a new home, personal circumstances are often a driving force. Whether you are a first-time homebuyer, need more space for your growing family, downsizing to fit an empty nest, or looking for a retirement property, finding the right information, the right real estate agent, and the right properties that fit your needs are all important parts of that process. Based on recent studies by the National Association of REALTORS®on generational trends, we can identify the best resources to help you in any phase of your life. Among all generations, the first step most buyers take when searching for a home is online. Younger generations tend to find the home they eventually purchase online, while older generations generally find the home they purchase through their real estate agent. Across generations, home ownership still represents a significant step in achieving the American Dream. According to a study by LearnVest, an online financial resource, 77 percent of those surveyed believed that buying a home of their own was, “first and foremost in achieving the American Dream”. How that dream manifests is different for those who have grown up in different eras.   Millennials: 1980-2000 Also known as Generation Y or the Echo Boomers because this generation almost equals the baby boomers in population. This age group is the second largest group of recent homebuyers, representing 28 percent according to the National Association of REALTORS. 79 percent of homebuyers in this age are purchasing their first home. According to the 2012 Trulia American Dream Study, 93 percent of renters in this generation plan on purchasing a home someday. When considering a home purchase, Millennials (and some Generation X buyers) place a high value on convenience to work, affordability, and the quality of school district. This generation is the most likely to choose an urban center as the location of their first home. According to market research by Gfk Roper, this group is most interested in their home as a social hub, with a focus on entertainment and amenities. When looking for a real estate agent, Millennials are most likely to looks to friends and family for a referral. They generally place a high value on an agent’s honesty and trustworthiness because they are often relying on their agent to walk them through the home purchase process for the first time.   Generation X:  1965-1979 As the largest group of recent homebuyers, the LearnVest […]

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Local Market Update – August 2018

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For the first time in years, the real estate market is finally starting to deliver good news for buyers. The region experienced its third straight month of significant growth in inventory.  Homes are sitting on the market longer, prices are moderating, and multiple offers are becoming more rare. Despite the surge in homes for sale, it is still a seller’s market.  Inventory would need to triple to reach what is considered a balanced market. Eastside >>>Click image to view full report. Inventory on the Eastside soared 47 percent over the same time last year. There was a slight increase in new listings, but the jump was mostly due to homes staying on the market longer. Price drops have become more common.  With buyers having more choices, sellers need to work with their broker to make sure they price their home correctly the first time. After setting a new high of $977,759 in June, the median price of a single-family home dropped to $947,500 in July.  While offering some hope that prices may have started to moderate, the median is still 10 percent higher than it was the same time a year ago. King County >>>Click image to view full report. King County saw the biggest increase in inventory in a decade, with the number of homes for sale jumping 48 percent over a year ago.  However, at 1.5 months of supply that’s still well below the 4-6 months of inventory that is considered balanced.  The median price of a single-family sold in July was $699,000. That represents an increase of 6 percent from a year ago, but is down 4 percent from the record high of $725,000 set in April. Perceptions that the market is cooling needs to be kept in perspective. Homes here took an average of 15 days to sell. Seattle >>>Click image to view full report. Seattle saw inventory shoot up 60 percent over a year ago, bringing the supply to its highest level in over three years.  Even with the sharp increase, much more inventory is needed to meet the demand for homes in the city and sellers may well decide to jump into the market. According to a Zillow study, more than 97 percent of homes in Seattle are worth more now than the peak level before the housing market crashed. Median home prices are 29 percent above the bubble peak level with the median price in July […]

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The Gardner Report – Second Quarter 2018

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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. Economic Overview The Washington State economy added 83,900 new jobs over the past 12 months, representing an annual growth rate of 2.5%. This is a slowdown from the last quarter, but employment growth remains well above the national rate of 1.6%. Employment gains continue to be robust in the private sector, which was up by 2.8%. The public sector (government) grew by a more modest 1.1%. The strongest growth sectors were Retail Trade and Construction, which both rose by 4.8%. Significant growth was also seen in the Education & Health Services and Information sectors, which rose by 3.9% and 3.4%, respectively. The State’s unemployment rate was 4.7%, down from 4.8% a year ago. Washington State will continue adding jobs for the balance of the year and I anticipate total job growth for 2018 will be around 80,000, representing a total employment growth rate of 2.4%. Home Sales Activity There were 23,209 home sales during the second quarter of 2018. This is a drop of 2.3% compared to the same period a year ago. Clallam County saw sales rise the fastest relative to the same period a year ago, with an increase of 12.6%. Jefferson County also saw significant gains in sales at 11.1%. The number of homes for sale last quarter was down by a nominal 0.3% when compared to the second quarter of 2017, but up by 66% when compared to the first quarter of this year. Much has been mentioned regarding the growth in listings, but it was not region-wide. King County saw a massive 31.7% increase in inventory, though all but three of the other counties covered in this report saw the number of listings drop compared to a year ago. The takeaway from this data is that while some counties are seeing growth in listings — which will translate into sales down the road — the market is still out of balance. Home Prices As inventory is still fairly scarce, growth in home prices continues to trend well above the long-term average. Prices in Western Washington rose 12.2% over last year to $526,398. Home prices continue to trend higher across Western Washington, but the pace of growth has started to slow. This […]

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Economists Predict: Recession Coming

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The local economy is booming, and nationally we are experiencing the second-longest bull market in history. That’s great news, but it can’t last forever. The economy runs in cycles and we’re long overdue for our overheated market to cool down a bit. According to a survey of top economists by Zillow, almost half of experts said they expect the next recession to begin some time in 2020. Experts Say Recession Could Hit by Early 2020 A Recession Means a Slow-Down, Not a Crisis A recession means the economy has slowed down. It does not mean we are experiencing another housing crisis. The housing crash of 2008 caused the last recession. However, that crash was primarily due to faulty lending practices that encouraged people to purchase homes they could not afford. Current lending practices make that unlikely to occur today. Housing Won’t Be the Problem  According to economists, monetary and trade policy are the most likely triggers for the next recession, not housing. “If a recession is to occur, it is unlikely to be caused by housing-related activity, and therefore the housing sector should be one of the leading sources to come out of the recession.”  – Mark Fleming, chief economist for First American The last recession that was caused by the housing crash was an anomaly. During the previous five recessions home values actually appreciated. If the US experiences a recession you can expect a slow-down of home price increases, not a housing crisis.

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Local Market Update – July 2018

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The local real estate market looks like it might finally be showing signs of softening, with inventory up and sales down. More sellers have opted to put their homes on the market. Inventory was up 47 percent in King County and price increases were in the single digits. Despite the increase in inventory and slowdown in sales, it’s still a solid seller’s market. Over half the properties purchased in June sold for more than list price. Eastside >>>Click image to view full report. A booming economy offered little price relief for buyers looking on the Eastside. In a recent study of economic strength by state, Washington ranked number one in the country. An additional report targeting cities ranks the Seattle-Bellevue-Tacoma market as the nation’s fourth strongest economy.  The median price of a single-family home on the Eastside rose 10 percent over a year ago to $977,759 setting another record. There is some good news for buyers. Inventory rose to its highest level in three years, with the number of homes for sale increasing 46 percent from the same time last year. King County >>>Click image to view full report. The number of homes on the market in King County soared 47 percent from a year ago, the biggest increase since the housing bubble burst. Despite the increase, there is just over one month of available inventory, far short of the four to six months that is considered a balanced market.  The median price of a single-family home increased 9 percent over last June to $715,000. That’s down 2 percent from the $726,275 median in May. Home prices haven’t dropped from May to June in King County since the last recession. Seattle >>>Click image to view full report. Seattle trails only Bay Area cities when it comes to greatest profits for home sellers.  That may help explain the surge in inventory in June. For example, the number of homes for sale in the popular Ballard/Green Lake area doubled from a year ago. Even though buyers are finally getting more choices, demand still exceeds supply. Homes sell faster in Seattle than in any other U.S. real estate market.  That demand propelled the median price of a single-family home to $812,500; up 8 percent over last June and down from the record $830,000 set in May. Snohomish County >>>Click image to view full report. The largest jump in home prices in the region came in Snohomish County. While higher-priced […]

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Home Inventory Jumps; Demand Stays Strong

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NEW NEWS: Inventory is finally up. New listings and total home inventory took a big leap recently. In King County, more people put their homes on the market in May than any May in the past 10 years. And the total number of homes for sale increased by 40 percent from a year ago. Why the big leap? Home prices have risen so sharply that sellers are finally jumping into the market. That’s good news for buyers, who have more choices than they’ve had in years. OLD NEWS: There still aren’t enough homes to meet demand. While King County now has about a month of available inventory, four to six months of inventory is considered a balanced market. Despite the increase in listings, it’s still a seller’s market. Whether you’re thinking about buying or selling, it’s important to have the most current information about the market. Contact one of our amazing brokers for recent statistics about the market today and to answer any questions you may have.

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