Market News February 17, 2020

LOCAL MARKET UPDATE – FEBRUARY 2020

New jobs and low interest rates continue to fuel the housing market boom. While January is traditionally a slower month for activity, the new year saw steady buyer demand. With the number of sales exceeding new listings, all indicators point to a strong spring market.

The tech industry on the Eastside continues to grow rapidly. Microsoft and Alibaba both have significant expansions underway. Amazon expects to increase its workforce in Bellevue to 15,000 in the next few years, a sevenfold increase from today. As the economy continues to grow, inventory keeps being squeezed. There were 47% fewer single-family homes on the market in January than the year prior. Home prices have been stabilizing for some time, fluctuating slightly from month to month. In January the median home price slipped 2% over a year ago to $892,000.

VIEW FULL EASTSIDE REPORT

Gardner ReportMarket News February 1, 2020

THE GARDNER REPORT – Q4 2019


ECONOMIC OVERVIEW

Employment in Washington State continues to soften; it is currently at an annual growth rate of 1.7%. I believe that is a temporary slowdown and we will see the pace of employment growth improve as we move further into the new year. It’s clear that businesses are continuing to feel the effects of the trade war with China and this is impacting hiring practices. This is, of course, in addition to the issues that Boeing currently faces regarding the 737 MAX.

In the fourth quarter of 2019 the state unemployment rate was 4.4%, marginally lower than the 4.5% level of a year ago. My most recent economic forecast suggests that statewide job growth in 2020 will rise 2.2%, with a total of 76,300 new jobs created.

HOME SALES

  • There were 18,322 home sales registered during the final quarter of 2019, representing an impressive increase of 4.7% from the same period in 2018.
  • Readers may remember that listing activity spiked in the summer of 2018 but could not be sustained, with the average number of listings continuing to fall. Year-over-year, the number of homes for sale in Western Washington dropped 31.7%.
  • Compared to the fourth quarter of 2018, sales rose in nine counties and dropped in six. The greatest growth was in Whatcom County. San Juan County had significant declines, but this is a very small market which makes it prone to extreme swings.
  • Pending home sales — a barometer for future closings — dropped 31% between the third and fourth quarters of 2019, suggesting that we may well see a dip in the number of closed sales in the first quarter of 2020.

HOME PRICES

  • Home price growth in Western Washington spiked during fourth quarter, with average prices 8.3% higher than a year ago. The average sale price in Western Washington was $526,564, 0.7% higher than in the third quarter of 2019.
  • It’s worth noting that above-average price growth is happening in markets some distance from the primary job centers. I strongly feel this is due to affordability issues, which are forcing buyers farther out.
  • Compared to the same period a year ago, price growth was strongest in San Juan County, where home prices were up 41.7%. Six additional counties also saw double-digit price increases.
  • Home prices were higher in every county contained in this report. I expect this trend to continue in 2020, but we may see a softening in the pace of growth in some of the more expensive urban areas.

DAYS ON MARKET

  • The average number of days it took to sell a home dropped four days compared to the third quarter of 2019.
  • For the second quarter in a row, Thurston County was the tightest market in Western Washington, with homes taking an average of 29 days to sell. In nine counties, the length of time it took to sell a home dropped compared to the same period a year ago. Market time rose in four counties and two were unchanged.
  • Across the entire region, it took an average of 47 days to sell a home in the fourth quarter. This was up nine days over the third quarter of this year.
  • Market time remains below the long-term average across the region, a trend that will likely continue until we see more inventory come to market — possibly as we move through the spring.

CONCLUSIONS

This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.

The housing market ended the year on a high note, with transactions and prices picking up steam. I believe the uncertainty of 2018 (when we saw significant inventory enter the market) has passed and home buyers are back in the market. Unfortunately, buyers’ desire for more inventory is not being met and I do not see any significant increase in listing activity on the horizon. As such, I have moved the needle more in favor of home sellers.

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

Living January 19, 2020

AS BIG TECH’S EASTSIDE PRESENCE EXPANDS, BELLEVUE PREPS FOR MORE COMMUTERS

Incorporated in 1953, during the heyday for cars, Bellevue was originally built for the automobile.

Back then, planners designed wide six-lane arterials meant to move vehicles fast. The road grid creates 600-foot-wide superblocks on former farmland.

Now, tremendous growth is straining transportation. Traffic stacks up during afternoon commutes, and Interstate 405 slows to a crawl.

As Amazon, Microsoft, Google, and others grow their Eastside workforces, City staff anticipate a net gain of roughly 18,000 downtown jobs by 2025, joining the more than 52,000 people who currently work in the city core.

Roughly translated, this would boost employment higher than the current numbers in Seattle’s busy South Lake Union.

But local leaders acknowledge remaking a car-dominated landscape doesn’t happen overnight. The City aims to cut the share of downtown commuters who drive alone to work to about one-third by 2035, a reversal of today’s pattern where more than two-thirds drive alone.

To do this, they’re planning for trains, buses, bicycles, walking, vanpools — and maybe even autonomous vehicles — to keep people moving.

In past years, the Bellevue City Council voted to create a safer walking network by converting Sixth Street to a 60-foot-wide, tree-lined walking corridor and shortening a street to complete its circular Downtown Park.

Instead of narrowing six- and seven-lane streets with so-called road diets, Bellevue’s approach to reducing car-pedestrian conflicts relies on skybridges around Bellevue Square, and altering some traffic signals to give walkers a head start at intersections. Smaller streets include walker-activated amber flashers.

Large employers and city officials are also counting on the $3.7 billion Sound Transit East Link light-rail line — projected to serve 50,000 daily passengers when it opens in 2023 — to handle many of the new commutes.

New bike lanes on 108th Avenue Northeast serve a trickle of riders for now. More bike lanes are planned on Main Street. Just east of I-405, the 42 miles of abandoned BNSF railroad tracks are being redeveloped for bicycle riders and pedestrians as Eastrail, spanning from Snohomish to Renton.

Bellevue’s growth spurt won’t necessarily translate into massive public-transit ridership, however, at least in the short term. Private transit is adapting faster.

With aid from a $100 million federal loan, the city has created or widened 11 streets between Wilburton and the Spring District east of I-405 where REI’s headquarters, Facebook and other companies are locating.

That follows citywide spending of $5.5 million to equip 197 intersections with adaptive signals that continually re-time to move clusters of approaching vehicles.

And the permit paperwork for the planned 43-story Amazon tower shows 1,175 underground parking stalls (nearly double the 632 spaces in the current parking garage that this new tower will replace).

On I-405, the Washington State Department of Transportation (WSDOT) will build an express toll lane each direction between Renton and Bellevue, to open in 2024, along with exit-only lanes to clear departing drivers off the mainline.

The existing carpool lanes will be converted to a second toll lane each way. Sound Transit will follow with new bus-rapid transit and park-and-ride lots.

Finally, in perhaps its most lofty vision yet, The Grand Connection is a sprawling pedestrian and cyclist pathway that would stretch between Meydenbauer Bay Park on the west, through Main Street and downtown, and across the freeway to Eastrail. With a bridge or park lid above I-405, just south of the nearly completed Sound Transit rail bridge, design concepts show amphitheater steps, sculptures and a row of ginkgo trees.

Unlike the longer Burke-Gilman Trail in Seattle, the Grand Connection would encourage people to linger at cafes and parks. As a traffic-free shortcut, it would reduce the need to drive and park at downtown spots.

There’s no funding yet. Costs vary based on whether Bellevue builds a full park like Mercer Island has over I-90, or a thin bridge, for around $130 million.

A version of this article was originally posted on U.S. News by Michelle Baruchman

Investing January 19, 2020

Matthew Gardner – Will There Be A Recession in 2020?

Windermere Chief Economist, Matthew Gardner, answers the most pressing question on everyone’s minds: Will there be a recession in 2020? Here’s what he expects to see.

 

Gardner ReportMarket News December 20, 2019

MATTHEW GARDNER’S 2020 MORTGAGE RATE FORECAST

Homeowner August 8, 2019

Extend the Life of your Roof

Your roof is one of the most important and expensive assets of your home, but no other element is quite as valuable. While the average lifespan of a roof is about 15 years, careful homeowners can extend the life of their homes without enduring too many hardships. Take a look at these three quick maintenance tips to help your roof last.

Keep Your Gutters Clear

Debris that accumulates and clogs your gutters adds extra weight and pulls at your roof’s fascia, which can be a costly fix. Look down the length of your roof for any signs of sagging or bending – that’s a sure sign your gutters are carrying too much weight and pulling at your roof.

Don’t forget the downspouts either, and don’t be fooled by easy-flowing water. Moss and algae buildup on and around your roof can slowly eat away at your roofing material and severely compromise its integrity.

 

Focus On The Attic

The exterior of your roof isn’t the only area you should focus on as your attic is your roof’s first line of defense against damage with a two-pronged approach: insulation and ventilation.

Insulating your attic has the double benefit of keeping your home’s internal temperature consistent while also preventing vapor and moisture buildup on the underside of your roof. When combined with proper ventilation your attic can stay dry and keep your roof’s rafters safe from moisture damage.

A great way to keep properly ventilate is to add a fan or dehumidifier to the attic.

Catch Problems Early

Check on your roof regularly, an easy time to remember to check is with every change of the season, or after a significant storm. Catching small issues early on will save you money in the long run, so utilizing the services of a reliable, professional roofer is an invaluable asset. As with any working professional, it’s a good idea to establish a working relationship with a roofer and even consider scheduling a yearly checkup for your roof just to make sure there aren’t any problems sneaking up on you. After all, spending a little each year to maintain your roof is a lot better than dropping $15,000-$50,000 on a new one, right?

Gardner ReportMarket News July 25, 2019

Q2 Western Washington Real Estate Market Update

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 contact me!

 

ECONOMIC OVERVIEW

Washington State employment jumped back up to an annual growth rate of 2.4% following a disappointing slowdown earlier in the spring. As stated in the first quarter Gardner Report, the dismal numbers earlier this year were a function of the state re-benchmarking its data (which they do annually).

The state unemployment rate was 4.7%, marginally up from 4.5% a year ago. My current economic forecast suggests that statewide job growth in 2019 will rise by 2.6%, with a total of 87,500 new jobs created.

 

HOME SALES

  • There were 22,281 home sales during the second quarter of 2019, representing a drop of 4.8% from the same period in 2018. On a more positive note, sales jumped 67.6% compared to the first quarter of this year.
  • Since the middle of last year, there has been a rapid rise in the number of homes for sale, which is likely the reason sales have slowed. More choice means buyers can be more selective and take their time when choosing a home to buy.
  • Compared to the second quarter of 2018, there were fewer sales in all counties except Whatcom and Lewis. The greatest declines were in Clallam, San Juan, and Jefferson counties.
  • Listings rose 19% compared to the second quarter of 2018, but there are still a number of very tight markets where inventory levels are lower than a year ago. Generally, these are the smaller — and more affordable — markets, which suggests that affordability remains an issue.

 

HOME PRICES

  • Year-over-year price growth in Western Washington continues to taper. The average home price during second quarter was $540,781, which is 2.8% higher than a year ago. When compared to first quarter of this year, prices were up 12%.
  • Home prices were higher in every county except King, which is unsurprising given the cost of homes in that area. Even though King County is home to the majority of jobs in the region, housing is out of reach for many and I anticipate that this will continue to act as a drag on price growth.
  • When compared to the same period a year ago, price growth was strongest in Lewis County, where home prices were up 15.9%. Double-digit price increases were also seen in Mason, Cowlitz, Grays Harbor, and Skagit counties.
  • The region’s economy remains robust, which should be a positive influence on price growth. That said, affordability issues are pervasive and will act as a headwind through the balance of the year, especially in those markets that are close to job centers. This will likely force some buyers to look further afield when searching for a new home.

 

DAYS ON MARKET

  • The average number of days it took to sell a home matched the second quarter of 2018.
  • Snohomish County was the tightest market in Western Washington, with homes taking an average of only 21 days to sell. There were five counties where the length of time it took to sell a home dropped compared to the same period a year ago. Market time rose in eight counties and two were unchanged.
  • Across the entire region, it took an average of 41 days to sell a home in the second quarter of 2019. This was the same as a year ago but is down 20 days compared to the first quarter of 2019.
  • As stated above, days-on-market dropped as we moved through the spring, but all markets are not equal. I suggest that this is not too much of an issue and that well-priced homes will continue to attract attention and sell fairly rapidly.

CONCLUSIONS

This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors. I am leaving the needle in the same position as the first quarter as demand appears to still be strong.

The market has benefitted from a fairly significant drop in mortgage rates. With average 30-year fixed rates still below 4%, I expect buyers who have been sitting on the fence will become more active, especially given that they have more homes to choose from.

 

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

Market News July 13, 2019

Local Market Update – July 2019

The market in our region appears to be moderating. Inventory is up, prices are relatively stable and homes are taking a bit longer to sell. However, with less than two months of available inventory, supply is still far short of demand. Steady buyer activity, low interest rates and a thriving economy are making for a strong summer in the housing market.

Eastside

>>>Click image to view full report.

The median price of a single-family home on the Eastside was $950,000 in June, down 3% from the same time last year and up $21,000 from May. Many buyers are looking to take advantage of the Eastside jobs boom with Amazon announcing plans to build a 43-story tower in Bellevue and Google expecting to reach 1 million square feet of office space in Kirkland.

King County

>>>Click image to view full report.

There was good news for buyers in June as a growing supply of homes helped boost inventory close to 2012 listing levels. The median price of a single-family home in King County was $695,000. That figure is a 3% drop from a year ago and virtually unchanged from May. 33% of homes sold above list price; another sign prices are moderating when compared to 52% of homes sold over list price this time last year.

Seattle

>>>Click image to view full report.

Home inventory in Seattle inched slightly higher in June. However, with less than two months of supply, the city is still a solid seller’s market. Apple’s plan to turn Seattle into a key engineering hub can only add to demand. The median price of a single-family home in Seattle was $781,000, down 4% from a year ago and nearly unchanged from May.

Snohomish County

>>>Click image to view full report.

After hovering around $500,000 since March, home prices in Snohomish County crept up in June. The median price of a single-family home was $515,500, as compared to $511,500 last June. Snohomish County continues to attract buyers priced out of the King County market, putting an additional strain on supply which stands a just 1.5 months of inventory.

Living July 11, 2019

What to Consider Before You Build

If you’re short on space but don’t want to move, a home addition is an attractive way to solve your woes and turn your current home into your dream home.

Whether you’re adding a whole new room or a more modest addition, it can turn into a major construction project; with architects and contractors to manage, construction workers traipsing through your home, hammers pounding, and sawdust everywhere. Although new additions can be a great investment, the cost per-square-foot is typically more than building a new home, and much more than buying a larger existing home.

Before you make the leap, consider the following:

Define your needs

To determine if an addition makes sense for your situation, start by defining exactly what it is you want and need. By focusing on core needs, you won’t get carried away with a wish list that can push the project out of reach financially.

If it’s a matter of needing more space, be specific. For example, instead of just jotting down “more kitchen space,” figure out just how much more space is going to make the difference, e.g., “150 square feet of floor space and six additional feet of counter space.”

If the addition will be for aging parents, consult with their doctors or an age-in-place expert to define exactly what they’ll require for living conditions, both now and over the next five to ten years.

 

Types of Additions

Bump-out Addition

“Bumping out” one or more walls to make a first-floor room slightly larger is something most homeowners think about at one time or another. However, when you consider the work required, and the limited amount of space created, it often ends up to be one of your more expensive approaches.

First Floor Addition

Adding a whole new room (or rooms) to the first floor of your home is one of the most common ways to add space to a home. You can easily create a new family room, apartment or sunroom. But this approach can also take away yard space.

Dormer Addition

For homes with steep rooflines, adding an upper floor dormer may be all that’s needed to transform an awkward space with limited headroom. The cost is affordable and, when done well, a dormer can also improve the curb-appeal of your house.

Second-Story Addition

For homes without an upper floor, adding a second story can double the size of the house without reducing surrounding yard space. But be cautious not to ruin the value of homes next to you when you do this, the second story might not be worth the drama on your block.

Garage Addition

Building above the garage is ideal for a space that requires more privacy, such as a rentable apartment, a teen’s bedroom, guest bedroom, guest quarters, or a family bonus room.

 

 

Permits required

You’ll need a building permit to construct an addition—which will require professional blueprints. Your local building department will not only want to make sure that the addition adheres to the latest building codes, but also ensure it isn’t too tall for the neighborhood or positioned too close to the property line. Some building departments will also want to ask your neighbors for their input before giving you the go-ahead.

 

Requirements for a legal apartment

While the idea of having a renter that provides an additional stream of revenue may be enticing, the realities of building and renting a legal add-on apartment can be sobering. Among the things you’ll need to consider:

  • Special permitting—Some communities don’t like the idea of “mother-in-law” units and therefore have regulations against it, or zone-approval requirements.
  • Separate utilities—In many cities, you can’t charge a tenant for heat, electricity, and water unless utilities are separated from the rest of the house (and separately controlled by the tenant).
  • ADU Requirements—When building an “accessory dwelling unit” (the formal name for a second dwelling located on a property where a primary residence already exists), building codes often contain special requirements regarding emergency exists, windows, ceiling height, off-street parking spaces, the location of main entrances, the number of bedrooms, and more.

In addition, renters have special rights while landlords have added responsibilities. You’ll need to learn those rights and responsibilities and be prepared to adhere to them. Be sure to talk to with me about municipal, state, and federal laws.

 

Average costs

The cost to construct an addition depends on a wide variety of factors, such as the quality of materials used, the laborers doing the work, the type of addition and its size, the age of your house and its current condition. For ballpark purposes, however, you can figure on spending about $200 per square foot if your home is in a more expensive real estate area, or about $100 per food in a lower-priced market.

You might be wondering how much of that money might the project return if you were to sell the home a couple years later? The answer to that question depends on the above details; but the average “recoup” rate for a family-room addition is typically more than 80 percent.

 

The Bottom Line

While you should certainly research the existing-home marketplace before hiring an architect to map out the plans, building an addition onto your current home can be a great way to expand your living quarters, customize your home, and remain in the same neighborhood.

Market News June 27, 2019

Regional Market Update June 2019

The pace of the housing market gained momentum in May, bringing an uptick in open house traffic and offers. A drop in interest rates and increased inventory were great incentives for buyers. Despite the increase in supply there is less than two months of inventory available – half the national average and far short of what is considered balanced. Industry experts are predicting a strong market as we segue into summer.

Eastside

>>>Click image to view full report.

The median price of a single-family home on the Eastside was $928,800 in May, down 3% from the same time last year and virtually unchanged from April. With a booming economy that continues to grow, news of Amazon’s expansion in Bellevue, the latest Microsoft acquisition and plans for a $1.2 billion office park in Redmond, demand for housing on the Eastside is unlikely to decrease any time soon.

King County

>>>Click image to view full report.

Home sale activity in King County was brisk in May. According to a Windermere analysis, 7 out of 10 properties sold last month had 15 or fewer days on the market. More than half of the homes sold at or above list price. The median price of a single-family home was $700,000. While down 4% from the same time last year, that price was up about $22,000 from the previous month. Home to the fastest growing economy in the country,  King County is expected to draw even more buyers to the area this year.

Seattle

>>>Click image to view full report.

Seattle employment continues to grow faster than in most of the country.  This has made the city a top location for workers, particularly millennials.  Demand has put a strain on available homes, reducing the supply to just seven weeks of inventory available. May home prices in Seattle were lower than they were a year ago, but showed a healthy increase from the previous month. The median price of a single-family home was $784,925 in May, down 5% from a year ago and up $30,000 from April.

Snohomish County

>>>Click image to view full report.

In May, the median price of a single-family home in Snohomish County was $499,950. That number remains unchanged from a year ago, and also unchanged from March and April. Despite a 44% increase in inventory, the supply of homes for sale in this area is even tighter than in King County.  Brokers report that buyers are being drawn from King County and willing to trade a longer work commute for more affordable housing.