Stop Purchasing Homes! | Seattle Housing Market 2022

“Stop purchasing a home in Seattle! Don’t do it.” That’s what some people are currently saying. Why?

In today’s video we are going to explore this. Let’s get right into it.  

Rates are at a 20-year high and prices are still relatively high, making affordability really tough for many buyers. But, the biggest reason why some are saying NOT to make a home purchase in Seattle, Bellevue or across our region is because prices COULD go even lower.

Just look at this housing survey by Fannie Mae (http://bit.ly/3O0s3gf). It says Consumer Confidence in Housing Hits New All-Time Low! Only 16% of Consumers report that now is a good time to buy a home.

Another warning sign of the softening market is from this recent Seattle Times article (http://bit.ly/3E4izfq) saying that Seattle’s Redfin to cut workforce by at least 13%, stop flipping homes.

These are just 2 examples of reports that communicate doom and gloom. And because of this, at first glance, it might sound like good advice not to purchase a home now. I mean, why not wait until the market corrects more before making a home purchase?

Well, While Headlines are somewhat sensationalized and paint a picture of the market cool down, it’s time to zoom out and look at the big picture. Despite the rising costs of buying a home, and the potential further downturn, the benefits of homeownership tend to outweigh the drawbacks over the long term. 
 
There are a lot of perks to homeownership.

For instance, you are in control of your environment. You are in charge and the master of your domain. Owning your home means you have Autonomy and can adjust your home to your liking.  

It also means more financial stability for most people. When you pay rent, you are lining your landlord’s pocket. Ownership means you are putting money back in your pocket and building equity with every monthly mortgage payment.

On top of the principle buydown, you also have the benefit of home appreciation. Over time, homes tend to go up in value and this increases your net worth. The past 2 years, homes experienced record appreciation. Now we are experiencing those growing pains and necessary correction.

There are other financial benefits like tax advantages and the ability to borrow against the home. Homes are also a fantastic asset to hedge against inflation.

In addition to all this, you can have a sense of community where you live. Perhaps the best thing about home ownership is that peace of mind, sense of security, and ability to create amazing memories when you own.

Also, because of where we live, I am confident that greater Seattle will continue to outperform the national average when it comes to home price appreciation. We have so much going for us here.

Please do not take what I am saying out of context. I am not saying you or anyone else needs to buy a home right now. Purchasing, may never be in your best interest. But I always get concerned when the messaging throws the baby out with the bathwater. Because it doesn’t convey the full picture as to why homeownership is worth it. And whether you buy or wait to buy should depend on YOUR needs and specific situation.

Sure, there are a lot of headwinds to making a home purchase, and you should always be cautious. But, if you find a home that checks all the boxes, is in a location you like, you can afford it, and you feel it’s a good deal, buying that home could be one of the best decisions you ever make.

If you want to stay in the know, please hit the like and subscribe button. And if you are thinking about buying or selling a home, we’d love to have hear from you and discuss your goals.  

November Market Update 2022 | Seattle Real Estate News

What’s happening in the Greater Seattle Real Estate Market?

This recent article from Redfin says, “Seattle’s Housing Market is Cooling Faster Than any Other in the US” (https://bit.ly/3T0vzs9)…I think it is about time we PANIC!!!

Kidding aside, before we panic, let’s take a look at the numbers and then decide. Welcome to November’s Market update where we go over the latest data so you can stay informed.  

And, more importantly, we’ll interpret the numbers, so it makes sense to you. There is so much misinformation out there it can be confusing.

Be sure to stick around until the end so you don’t miss our helpful tips. Whether you are a buyer or a seller you can be empowered in today’s market when you have the right information.

Let’s dive right into the data because the numbers don’t lie. It’s important to look at both month over month numbers and, the year over year to get a full picture.

It may surprise you, but both month-over-month and year-over-year numbers show a decrease in inventory coming on the market across our region. Snohomish County saw a 16.9% decrease in inventory, King County saw a 17.4% decrease, and the City of Seattle saw a 19.2% decrease of new listings come on the market vs this same time 1 year ago.

Now, lets’ mention the speed at which homes are selling. When looking at all 3 areas, the month-over-month days on market is holding steady with minimal change. In fact, in the city of Seattle, the average days on market went down by 2 days, meaning homes sold faster in the month of October than September this year.

When looking at the year-over-year numbers all 3 areas have increased their days on market. In both counties, it’s about double the amount of time from last year, which is what we would expect given the current market conditions. 

For instance, In Snohomish County, the average time it took to sell a home in October 2021 was 13 days. In October 2022, it took 31 days. For King County, the average was 14 days last year and 26 days this October.

For Seattle, the average days on the market was 14 last year, vs this October was 19 days. Now, while these numbers show a significant increase in days on market, the current numbers reflect a more balanced or what we call a “normal market.”

Let’s talk about the sales price to list price ratio which tells us how much above or below the list price homes are selling for on average. In Snohomish County, homes went from selling for 3.1% above the asking price, to selling for 1.4% below the asking price, year over year.

For King County, homes went from selling for 4.8% above the list price to 1.4% below the list price year over year. And in Seattle, homes went from selling for 4% above the list price to .6% below the list price.

Translation? Most are selling close to the asking price.

Exactly.

Ok, what about the median home values? In Snohomish County, the median sales price went up from $680,000 to $724,900 year-over year. That’s an increase of just over 6.6%.

For King County, the median sales price went up from $825,000 to $910,000 year-over year, which is in increase of 10.3%. And in Seattle, the median sales price went up from $835,000 to $910,500 year-over year, which is in increase of 9%.

When looking at the year-over-year comparison, values are still well above what they were a year ago. And what is interesting is when you look at the month-over-month trend, Snohomish County shows a slight decrease of .7%, whereas King County and the city of Seattle show an increase of 3.4% and 2.2%.

What do all these numbers mean? Bottom line, while the market hysteria or frothiness has gone away, we currently have a relatively normal market where prices are still higher than 1 year ago. Also, most homes are selling for close to the asking price, and in some cases, even above the asking price.

That’s right! Not convinced? Check out our previous video on bidding wars. Yes, even in this market.

Now, what are the takeaways for buyers?

·         First, talk with your lender. Rates have been very volatile and trending up. Do yourself a favor and briefly touch base with your lender on a weekly basis to make sure nothing has changed regarding your qualifications or affordability.

·         If possible, negotiate with the seller to help pay for a rate reduction on your loan. The amount of money the seller spends on your rate reduction is usually WAY more beneficial to you than taking that same amount of money and reducing the purchase price.

·         Even though rates have gone up dramatically since the beginning of this year, it could still be a good time for you to purchase. Buyers now have more negotiating power and options with far less competition.

How about you sellers?

·         We still don’t have a lot of good inventory on the market. So, make sure your home looks fantastic. Not ok, not good, but fantastic. You can do this, even with a limited budget. Reach out if you need tips!

·         Price your home competitively based on the most current data, and by that we mean look at the current pending homes that are under contract not the sold homes that are months old as they won’t provide you with the best data. When you price it competitively you retain power and leverage in the sale. That way you are not hoping and praying for some unicorn buyer.

·         We still recommend our sellers to have their home inspected prior to going on the market, order preliminary title, and have top notch marketing so you stand out.

How do YOU interpret these numbers? Do you think it’s still time to panic? We’d love to hear from you in the comments below.

While the Greater Seattle area real estate market has cooled, we have not entered “crash” territory.  But we have officially entered into a more “normal” market.

If you like this type of content, be sure to like and subscribe so you can stay in the know! And be sure to reach out with your real estate needs. Over and out.

Bidding Wars in THIS Market? | Seattle Housing Market 2022

Bidding wars in this market? Absolutely! In today’s video, we are going to talk about 2 recent examples of bidding wars. In both cases, this provided our sellers a lot more money than the list price and the sales ended up being much easier despite the declining real estate market.

Whether you are a potential buyer or seller in the greater Seattle real estate market, you’re going to want to stick around till the end, so you can apply this to your situation and stay in the know! Let’s dive right in.

We all know the market went way up in the beginning of 2022. Then, as interest rates rose dramatically, the market began to cool. We are still in this declining market.

So how did 2 recent sellers of ours get more than their asking price?

Let’s start with the story of our Kirkland, WA condo listing. Our sellers purchased this wonderful, water view condo in Kirkland in 2017. After 5 years of ownership they decided they were tired of condo living and wanted to upgrade to actual waterfront. After selling them a waterfront home in nearby Redmond, WA we worked with the sellers to get their Kirkland, WA condo ready for market. Walls were painted, all personal belongings were moved out and everything had a deep clean. Then our expert stager went in and made it look like a model home. Our professional photographer took beautiful photos and created a home tour video to showcase the best features. Here is a short clip from that marketing video. We put their condo on the market, at a competitive price of $1,475,000 and soon received 2 offers. With effective negotiating, we ended up selling it for $45,000 ABOVE the asking price. Not only that, but the winning offer was all cash, waved all contingencies and closed in only 12 days after listing the property. So not only were our sellers ecstatic about the price. They were also really grateful that it was a quick closing with very little risk to them. Needless to say, this was a major win for our clients.

Our next seller, Donna, wanted to downsize after 45 years in her Lake Forest Park home. As the original owner having lived in the home for 4 and a half decades, you could say it needed a bit of freshening up to bring it to today’s selling standards. Family and friends pitched in and helped Donna sort through all her stuff. One pile to keep, one pile for charity and the other pile to throw out. New paint, new carpet and a deep cleaning made everything look fresh. And again, our expert stager did her magic to make the home look it’s best. So did our professional photographer. We went on the market at a competitive price of $830,000. We received 3 offers in total, and negotiated a nice sales price that was $61,000 above list with the buyer waiving contingencies. This home is set to close in just a few weeks and is another example of a terrific sale, despite the declining market.  

What’s the takeaway from these 2 examples? We’ll get to that in just a second. First, I’m curious, about your thoughts and what experience you have had in today’s market. Please leave a quick comment below. Here is the interesting thing regarding these successful outcomes for our sellers (and let’s not forget the winning buyers either). This did not happen just by chance, and they have a few things in common. One, the sellers prepared their homes to look really clean and fresh. Two, effective marketing, including quality staging and expert photography grabbed buyers’ attention and got them interested. Three, the homes were priced competitively so buyers recognized the value. And four, we had an effective way to negotiate the price up because of the multiple offers, without scaring buyers off or having it backfire.

Now, let’s go back to point number 3, when I mentioned the homes were priced competitively. This does not mean the homes were priced way below market value. If that were the case, there would have been a lot more offers to choose from and investors would have gotten involved. To price a home competitively, especially in a declining market, simply means to use the latest data, numbers and market sentiment, to price the home effectively. Also, this does not mean relying on comparable home sales 3 or more months ago. Rates are much higher, and prices are lower. The market is fluid and always changing. The most meaningful data to compare home values are the pending sales (those homes that just recently went under contract).

The moral of the story is know your data, know your data, know your data and use that to your advantage.

Are there still bidding wars? Yes. Bidding wars exist in every market, including declining markets like this one. Does that mean it’s the norm like we experienced earlier this year and all last year? Absolutely not. Today, bidding wars are the exception. And while there is no guarantee, Sellers, by doing the right things, you increase your chances of a clean, quick and easy sale, that could get you above the asking price.

Also, for you buyers, when you have your ducks in a row and can quickly identify a good deal, you can act quickly in a multiple offer situation and use that to your advantage as well.  

Be sure to watch next week’s video as we go over the latest market data and provide tips for buyers and sellers so you can navigate our ever-changing market. If you haven’t already, please click the like and subscribe button. And for your specific real estate needs, please reach out as we’d be happy to help.

DON'T Buy a Home in Seattle! | Seattle Housing Market 2022

“Don’t Buy a house in Greater Seattle!”

This is the advice I hear some people say. These same people say, “The market is crashing so buyers should wait.” Just look at this article from the Seattle times (https://www.seattletimes.com/business/real-estate/seattle-is-americas-fastest-cooling-housing-market-redfin-says/)….”Seattle is America’s fastest-cooling housing market…” Does this mean buyers should not buy now? Would it be more prudent to wait? That’s what we’re answering today.

I got a call yesterday from a lovely person named Kate who is looking to make a home purchase. Like any prudent buyer, she has concerns regarding the Seattle market and market timing.

Kate’s been following the news and market and knows we are in the midst of a market correction. Let me repeat, if you didn’t know it, we are in the midst of a market correction. This can cause some people to panic. We often hear sensationalism from news outlets (because that sells), social media, and even YouTubers. The fact is, prices have dropped, they will probably continue to soften. Obviously, Kate and the rest of you buyer should wait to purchase a home. Or should you?

Not to be vague or wishy washy, but it depends.  

You should absolutely, without question, not purchase a home if you can’t afford it. I cannot stress this enough. It all starts with your financial wellbeing. You can’t be a truly happy homeowner when you are financially strapped.

You also shouldn’t purchase a home if you aren’t ready. In other words, just because your friends own homes or some dude on YouTube says investing in real estate is a smart move, doesn’t mean this lines up with your personal timing and goals.

Another reason not to purchase is when you don’t love the home. Please don’t take this out of context. I’m not saying you’ll find your luxury dream mansion with all the bells and whistles when you can barely qualify for an entry-level studio. But when considering your budget, if you still love the property and look forward to calling it home for years to come, that’s a good sign.

That brings me to the next point, which is not buying if you don’t think you’ll own the property for at least 5 years. Longer is better. Real estate doesn’t always go up in value. That’s why you want to have staying power, especially when the market isn’t in your favor. The longer you can own a property, the higher the chances that it will appreciate over time.

I can hear some of you say “But Sterling, as buyers we should wait for the market to drop more before buying.” Fine, you can do that. Maybe that’s the right decision for you. But consider these 3 thoughts.

1)    It’s not timing the market, it’s time IN the market that matters. You’ll hear financial advisors and seasoned real estate investors say this. And I agree.  

2)    You aren’t buying the entire market. You are buying a specific property, and your home. When you find a home you love, and it checks the important boxes, fulfilling your needs, AND you feel you are getting a great deal (heck, maybe even a bit under market value), that’s a good strategy to make a purchase vs. trying to time the market bottom.

3)    As mentioned, prices will probably go down more in the near future. But that doesn’t mean things will necessarily get more affordable because of the rising interest rates. Here’s a question… what has a lower monthly mortgage payment? A $1 million dollar home loan at a 6% rate or a $900,000 home loan at a 7.5% interest rate? The answer is, (even it’s a $100,000 more expensive) the $1 million dollar property, actually costs less per month because it has the lower rate. So again, unless you are buying with all cash, consider the affordability regarding your monthly mortgage payment and interest rate vs. just looking at the price alone. And, when rates do go down again, and they will, it’s just a matter of when, you can always refinance.

My advice is this. Emotions run high when buying a home. Don’t panic. Definitely, don’t rush into a home purchase. Also, don’t wait too long if buying a home would improve your quality of life and financial goals. Ultimately, the right time to buy a house depends on your specific situation. Are you financially ready and able? What are your specific goals and your personal timeline? Do you want to purchase now, or would you rather wait? Only you can answer that. 

If you’ve made it this far and you are new here, my name is Sterling and I’m a Managing Real Estate Broker in Seattle. If you want to stay in the know regarding the Greater Seattle real estate market, then do us both a favor and click that like and subscribe button. And Kate, thanks for inspiring today’s topic. See you all soon!

Seattle Housing Market, What's Going to Happen?

What is likely to happen to the greater Seattle real estate market for the remainder of this year? What's going to happen in 2023? Well, this is exactly what today's blog is about.

Bring up the topic of real estate, and most people have an opinion. Now when it comes to predicting the future of the housing market, it's tricky and downright speculative. But, to make any sense of it, it's best to take a good look at current data, examine history, then make an educated interpretation of what is likely to happen next.

And as a broad stroke statement, there are only 3 things that could happen. 1) Home values will remain strong, maybe even going up. 2) Home values stay relatively flat. Or, 3) home values go down.

Let's talk about each one of these. There is a good case for those who believe that Seattle area real estate values are going to go down in the near future. In fact, values have already slid about 7-10% off their high earlier this year. When real estate values go up 50% (and in some cases more) in just 3 years, that's unsustainable. Another reason why some experts believe housing prices are headed downward is because we are either in or headed toward a recession. When we are in a recession, this is a time of uncertainty and fear in the market. It's no secret, the Greater Seattle area housing has become really unaffordable for many buyers. On top of this, higher interest rates and Inflation have become a major budgetary constraint. In plain English, it sucks for a lot of people. 

Now, let's look at why some experts believe housing prices will remain strong. First, it's because we still have low inventory. Sure, we had much lower inventory just 6 months ago and last year. That being said, even though we have had a bump up in inventory, we still don't have enough housing. When I say we don't have enough housing, I'm talking about both rentals and owned property. Also, while home prices and rates are much higher, there are still a lot of people who make a ton of money and can still afford a home. Keep in mind where we live and our strong local economy. We have some of the highest income earners in America. Another reason why people say values won't dip is because of inflation. Yes, inflation can be good for homeowners. As the prices of goods and services go up across the board, home values tend to do the same during times of inflation. 

As mentioned before, there is also the viewpoint that housing could stay relatively flat...not making any significant move up or down. This opinion takes the two opposing forces (meaning, the pressures that move home values up, and the pressures to suppress prices) and they kind of equal themselves to a flat market. 

I'll tell you my humble opinion, but first, I'd love to hear from you. In the comments below, do you think the Greater Seattle area real estate is going down, up, or staying the same for the rest of 2022 and into 2023? Here's my take. I think our market is going to soften more. I think a soft housing correction will continue. Let me repeat, a soft housing correction, not a crash. In other words, my crystal ball, and take it with a grain of salt, we'll see prices slide another 5-7% in the next 3-6 months. But for all the reasons mentioned earlier, the market could level off, or even start going back up again next year. For instance, if in an effort to combat the recession and stimulate the economy the Feds decide to lower interest rates next year to below 4.5%, and the job market is decent, real estate values could go back up again. 

Bottom line? In this rapidly changing and uncertain world, there are many variables. Seattle, Bellevue, and surrounding areas have a fluid, and constantly changing housing market. Nobody can pinpoint what home values will do in the future -- except for me. In case you couldn't tell. I'm kidding. But, what I'm not kidding about is that you really should watch our videos, click that like and subscribe button if you want to stay in the know. Please reach out for your specific real estate needs. Contact information in the description below. Thanks. Over and out!

September Market Update 2022 | Seattle Real Estate News

What on earth is happening to the Greater Seattle Area real estate market? Is it time to panic?

In this brief video we are going to go over the latest data. So if you want to stay in the know please be sure to watch the entire video because there are a couple of things that will probably surprise you.

Without further ado…let’s talk numbers.

We always like to look at the year over year comparison as well as the month over month to get a full perspective.

(Watch video to see the charts)

So what does this all mean?  I’ll give you my thoughts, but I’d love to hear what YOU think. Please leave a comment below. Is there anything you find surprising with this information?

Here is what I find interesting regarding the data. Whether looking at the year-over-year or month-over-month numbers, the number of new listings that have come on the market is down. In other words, fewer homeowners are putting their homes on the market. That being said, there are fewer buyers competing in the market vs this time last year.

The other interesting thing to point out is that currently, neither buyer or seller have much of an upper hand or a clear advantage. Sure, we have more inventory than 6 months, or a year ago. But it’s still relatively low inventory, which is keeping prices propped up. Because we have higher interest rates than we’ve had in a long time, not as many buyers are competing against one another. So while many sellers are having to lower their price in order to sell, it’s not so dramatic as to call this a buyers’ market.  Folks, we have a normal market, at the moment anyway.

Also, interest rates have fluctuated a lot. Not long ago, they were close to 6%, then they slid to around 5.2% earlier in August. Now, they are in the high 5%’s again. Obviously, this has a huge impact on affordability and purchasing power.

This is what is happening in the market now. What does the rest of the year look like, or next year for Seattle area real estate? That’s what we are going to talk about in our next video. If you like this type of content, please tap that like and hit subscribe buttons. Thanks for watching.

Goodbye Seller's Market? | Seattle Housing Market 2022

How can the Greater Seattle Real Estate Market be summed up? In one word: recalibrated. Today, I am giving a quick synopsis of how the market looks right now. Let’s dive in!

Ok, I said the real estate market is recalibrated. What does that mean? It means that market is very different compared what we experienced over the past 2 years. Just 5 months ago we were in a sizzling, white hot market. Now, home buyers and sellers are in a totally different climate, and we need a new point of reference.

It’s no secret buyers finally have more homes to choose from. And sellers are not receiving a dozen or more offers. You could say, we are practically in a “balanced market.” Now, each month on our YouTube channel we provide in-depth market update videos that go into detail regarding all the numbers, so be sure to subscribe to our channel so you remain informed. In the meantime, let’s look at something interesting, and this is the famous MONTHS OF INVENTORY that we as real estate professionals constantly reference.  

When brokers and agents use the term “months of inventory,” we are referencing the absorption rate. It’s a way to measure supply and demand. “Months of inventory” tells us the number of months it would take to sell ALL properties actively for sale at the current pace they are selling. A normal or balanced market is 3 – 5 months of inventory. When you have less than 3 months of inventory, this favors sellers. When you have more than 5 months of inventory, this favors buyers. Just 1 year ago, we had only half a month of inventory. To put this in perspective, this is the lowest supply our Northwest Multiple Listing Service has ever recorded.

Fast forward to Spring 2022 and we know the Feds raised interest rates. This made it much harder for buyers to afford homes. As a result, buyers have been forced out of the market, or to purchase a home with a lower price tag. Because of the lower demand amongst buyers inventory levels started rising.

And that’s where we are today. Does this mean we are in a buyer’s market? No. Right now, the current months of supply in Greater Seattle is hovering around 2 months of inventory. We haven’t had this much inventory since January 2019 when there was 2.3 months of supply. Technically, the market we are in still favors home sellers, but this is so slight. The number of homes for sale continues to increase and many sellers are dropping their prices in order to get their properties sold. Needless to say, sellers don’t have much of an advantage. If inventory levels or interest rates rise much more, then the pendulum could easily swing further to the buyer’s favor.

Yes, we do have more inventory. And yes, homes are taking a bit longer to sell. But I’ll repeat what I mentioned earlier – and this is a broad stroke statement. At the moment, we are more or less in a balanced market. Buyers, you have more options. Sellers, you can’t take anything for granted.

For your specific real estate questions, please reach out. Talk to you soon.

What Should a Seller Do Now? | Seattle Housing Market 2022

Since the Greater Seattle and Bellevue area home values have declined, and we have an uncertain economy and housing market, what should a home seller do?

In today’s video, we are going to go over 7 tips for sellers to be successful. Here we go!

When I first got into the business 18 years ago, my Broker told me that selling a home boils down to 2 things: it’s a pricing war, and a beauty contest. Of course, there are a lot of details and components that go into selling a home. But, in simple terms it does come down to the price and the attractiveness (or features) of each home.

1) Price your home correctly from the start. Ready for the truth? The most common reason why homes don’t sell is due to the price being too high. It’s only natural to want the absolute highest price possible. But the overwhelming data shows that overpricing a home, will usually cost the seller more money in the end. That’s because when a home sits on the market for too many weeks or months, it becomes old news, stale, and buyer’s wonder why it is not selling.

When you first hit the market, be sure to price your home competitively so buyers see the value.  Also, because the market is fluid and always changing, it is important to be open to any necessary price adjustments if that’s what the market data indicates. Don’t wait too long to respond to the data either. Otherwise, this could cost you more money, or you might be chasing the market down.

2) Listen to market feedback. When buyers and agents tour your home, it’s important to know their thoughts and impressions. Now, this does not mean you should care too much about every individual opinion. Because, let’s face it, there are people out there who might make strange comments. However, when you hear a pattern of remarks, it’s important to take note. If the feedback you hear is consistent and something easily remedied, consider taking care of it.

3) Keep emotions in check. This is a tough one since it is usually hard to separate the business from the emotional side of selling a home. Maybe it’s not the right time for you to sell, and you should listen to that voice. But, if you want to or need to sell, then it’s important to start thinking about this place as your former home, and not yours anymore. Things may take longer, or you might sell lower than you’d like. When you can mentally strengthen your mindset and go into this with the right expectations you are much better off.  

4) Prepare your home as best as possible. We say best as possible because everyone’s situation is different. Some sellers don’t have the means or time to make the house look perfect. But do the best you can, within reason, to make your home look fantastic. The better it looks, the better your chances of standing out amongst the other homes for sale.  Also, try to maintain it in show ready condition. This can be a tough one if your home isn’t selling within a couple of weeks. Since you don’t know when that right buyer is going to tour your home, it’s important to keep it looking it’s best.

5) Offer buyers an incentive. For instance, if your home is not getting the activity or offers you were hoping for, consider sweetening the deal. This could be anything from including furniture or the home theater system, to providing a credit for new carpet or paint. Currently, the incentive that is making the most impact on buyers is to help them pay down their interest rate.

It’s no secret, buyers are now forced to pay much higher interest rates than in years past. Sellers, you can turn this into an opportunity. By helping pay down the interest rate on the buyer’s loan, you not only make the buyer’s monthly payment more affordable, but you can help yourself net more money than the alternative, which could be a more substantial price drop.

6) Market your home effectively. Are the listing photos top quality? Is there a self-guided virtual tour? Is there a professional video tour that highlights special features for buyers to really see the value? Marketing is what grabs people’s attention. In this day and age, we only have a few seconds to make an impact. Make it count!

7) Hire the right agent. Experienced, skilled, a sincere desire to help, aggressive in negotiating and representing your needs, trust, the list goes on. There are a lot of characteristics that make a quality agent. In this changing market, it is crucial you work with someone who has experience navigating more challenging markets. When selling a home, there is just too much at stake to settle.

If you want to stay informed on the market trends, be sure to check out our monthly market update videos!

Will the Market Dip or Crash? | Seattle Housing Market 2022

Will our Greater Seattle housing market crash?

This is a question we are hearing more often. So, buckle up and let’s get right into it.

There are 2 schools of thought about this subject. Let’s discuss both. On one hand, many housing experts and economists do not think we will have a major dump in home values anytime soon. And these experts’ main reason is hard to argue with. They point to the overwhelming shortage in the supply of homes (link to article; https://n.pr/3PtJEgj). This is a fact.

We’ve mentioned this in previous videos but here is the summary. We currently have around 142 million housing units in the US. This includes single family homes, condos, apartments, mobile homes -- Basically, any type of home.

But here is the clencher. We are around 3 - 5 million housing units short to meet demand. This is because over the past decade, home builders have not been able to keep up with the demand for new homes.  When looking at both the national and local supply, we just don’t have enough.

Another reason why experts are saying we will not have a big housing crash is due to inflation. When inflation occurs, the prices of goods and services increase. This often includes housing. Yes, your home can be a great hedge during times of inflation.

This is one key reason why so many people enjoy the financial benefits of owning real estate. And I personally feel better about owning real estate and rental property versus having money in the bank. Because money in the bank loses purchasing power and value over time. Whereas real estate values usually go up over time.

The last reason we’ll mention why many people think our housing market will not decline dramatically is because of a disincentive to move. Think about this, so many homeowners now have interest rates in the 4’s, 3’s and even in the 2% ranges. Financially, it will be a huge burden for people to sell their current home and then purchase another with a rate that is twice as high.

Because of this affordability conundrum, we have had clients decide to push off moving until it’s absolutely necessary. Ultimately, this continues to suppress the supply of homes for sale and keep home values propped up. Now let’s talk about the other side of the equation, because some experts are saying we will have a crash.

The first reason is because of the looming recession. There are significant signs of a recession either this year or next year. And of course, during a recession the economy struggles, layoffs occur, and when this happens, it could affect the housing market negatively. Obviously, our Seattle/Bellevue economy is largely affected by tech companies. And we’ve recently seen a lot of tech companies stock prices plummet.

While we have not had any significant layoffs, we have had some, and concerns are warranted. When companies don’t have revenue or sales, they lay off employees. And when people are laid off and don’t find a job soon, they may not be able to pay their mortgage, property taxes and home upkeep. So, under these circumstances they can be forced to sell their home in distress.    

Another reason why some are saying the housing market will fall is due to unaffordability. With rates double what they were just a few months ago, it is no surprise that many buyers can no longer afford the home they could have earlier this year.

When you have a seller, who is motivated to sell, but no buyers who are willing or able to pay the asking price, the seller often has to lower the price. When this happens across the board, this is what moves the market down.

The third explanation for a possible housing dip is because some believe homes are overvalued. It is not uncommon around the Seattle region to see homes that sold for $X price, say 10 years ago, sell for 3 times that just within the past 6 months. This is not normal growth or appreciation.

A word you may have heard is “frothy”. And if not, you can now use this in conversation to sound cool. So instead of prices being in line with fundamentals, and based on actual value, a frothy housing market is based on inflated exuberance and speculation.

What do we think will happen with the housing market? Glad you asked! Based on the data, we do not think either school of thought is 100% right. Both have merit. Our current professional opinion is that the greater Seattle housing market will continue to cool and prices will decline some. That being said, we do not think there is a major crash currently on the horizon.  

Nobody knows what the future has in store. And predictions are like the weather forecasts. Sometimes they are right, sometimes slightly off, or even way off. The best thing to do is stay informed and evaluate your individual needs. One great way to stay informed is to subscribe to our channel. So, tell us, what do you think? Will our housing market stay strong, or are we headed for a Crash?

July Market Update 2022 | Seattle Real Estate News

What is happening in the Greater Seattle Real Estate Market now that we are halfway through the year?

Welcome to July’s Market update!

We will go over the most recent market stats and current market conditions. And, as always, we’ll mention key points so whether you are a buyer or seller, you are in the know.

Let’s first briefly summarize what’s happened thus far in 2022. What a year it has been for real estate across the Greater Seattle region! For the first 3 months of 2022, it felt like home prices were on a rocket ship heading straight up. Then, around mid-April it felt like someone hit the breaks, hard. That someone was the Federal Reserve, and they hit the breaks by raising interest rates rapidly. By mid-April, rates had gone up to 5%, which is a huge jump from the 3.1% at the start of the year.

In the second quarter of the year rates continued to rise but not as rapidly. In a nutshell, these extreme rate hikes coupled with the dramatic rise in home prices has led to where we are now, a more flat market. This means home values are not rising. But, because we still have relatively low inventory, prices are not dropping dramatically either. In other words, homes are selling close to their asking prices. Now, this is a broad stroke statement, because it depends on the specific home; the location, the price point, the condition, etc.

Yes, there are many sellers who have even had to lower their prices in order to get their homes sold. This is a very different market from a few months ago when homes were selling for 12% above their asking price on average. So, let’s dive right into the numbers. Also, it is important to note, we will sometimes share the year-over-year numbers (that’s June 2021 to June 2022) and sometimes mention the month-over-month numbers when important.

In May 2022, Snohomish and King County both saw an increase in the number of homes come on the market (in other words, more inventory). While the City of Seattle had a decrease in inventory. But in June, all 3 areas saw an increase in inventory. Snohomish County saw a 15.3% increase in inventory, King County saw a 7% increase, and the City of Seattle saw a minor increase of about 1% of new listings come on the market vs this same time 1 year ago.

Now, lets’ mention the speed at which homes are selling. Interestingly enough, even though we have had an increase in inventory, and a decrease in the number of buyers competing, homes across our region are still selling rather quickly. Keep in mind, some of these numbers do lag because most of the homes that closed in June 2022 were actually listed in April or May, which is when the market was more robust.

For instance, in Snohomish County, the average time it took to sell a home in June 2021 was 9 days. In June 2022, it took 12 days. For King County, the average was 10 days last year and 9 days this June. For Seattle, the average days on the market was 11 last year, vs this June was 8 days. When looking at these numbers you might think the market is just as hot as earlier this year or last year. However, we expect that in the coming months the numbers will show it now takes longer to sell a home on average.

Let’s talk about the sales price to list price ratio which tells us how much above or below the list price homes are selling for on average. In Snohomish County, homes went from selling for 8.5% above the asking price, to selling for 2.2% above the asking price, year over year, which is a decrease of 6.3%. For King County, homes went from selling for 8.4% above the list price to 3.5% ABOVE the list price year over year. This is a decrease of 4.9%. And in Seattle, homes went from selling for 6.6% above the list price to 5% above the list price, which is a decrease of 1.6%. What does this all mean? To put it simply, homes were selling for way above their asking prices earlier this year and this time last year. However, as mentioned earlier, we are seeing homes sell much closer to their asking prices.

What about the median home values? In Snohomish County, the median sales price went up from $705,000 to $790,000 year-over year. That’s an increase of just over 12%. For King County, the median sales price went up from $865,000 to $930,000 year-over year, which is in increase of 7.5%. And in Seattle, the median sales price went up from $885,000 to $971,000 year-over year, which is in increase of 9.7%. When looking at the year-over-year comparison, values are increasing across the board. However, if we look at the month-over-month trend, this paints a very different picture.

The following numbers are the most interesting we are going to share in today’s market update. Snohomish County’s Median Sales Price in May was $810,000, while June’s median Sales price was $790,000. This is a decrease of 2.5%, or $20,000 in home values. King County also saw a decrease in value because in May, the median sales price was $1,003,000, while in June, it was $930,000, which is a decrease of around 7% or $73,000. And in the City of Seattle the median sales price was $996,000 in May, while in June it was $971,000. That’s also a decrease of 2.5% or about $25,000.

Now, this is a big deal because the data shows us prices have come down from their all-time high. Not to beat the dead horse, but this was inevitable given the huge surge in prices coupled with the huge surge in interest rates. So, what are this month’s tips and takeaways?

Let’s start with buyers:

·         Should you wait to purchase if prices might come down more? Not necessarily. We are not fans of trying to time the market. More importantly, the answer depends on your affordability and personal needs. When you find a home that meets your desired criteria, timing and you can afford it, you should consider a purchase. At the same time, currently you may also be able to do some good negotiating to get a better deal.

·         Speaking of which, when you are negotiating with a seller, it is often more valuable to you as the buyer to get the seller to pay towards your closing costs or, pay down your rate vs. merely reduce the asking price. You can play with the numbers with online calculators, but you’ll soon see that you can easily come out ahead with certain strategies. Talk to your lender about the best option for you.

Now for you sellers.

·         When you are pricing your home, you shouldn’t just compare what your neighbor’s house sold for earlier this year. That’s because rates were lower, and the monthly mortgage was more affordable. Instead, try to compare to the active homes for sale in your neighborhood. Or, better yet, compare to the homes that just went under contract.

·         Because this is no longer an extreme seller’s market, try to make sure your home looks top notch. First impressions count more now since there are not as many buyers competing for homes. Also, be sure to set the right expectations upfront so you are not stressed if your home takes a bit longer to receive an offer. You may have to pivot or even lower your price to get it sold.

Why You Can't Afford a Home! | Seattle Housing Market 2022

This Seattle Times article headline reads “Seattle’s red-hot home market is cooling. Here are the 3 signs.” (Link to full article: https://bit.ly/3HBrjLE)

A big thanks to the Seattle Times, because it appears they are watching our YouTube channel. Yeah!

Sometimes the media is late to the game, or may not tell the whole story. But this article is timely in reporting that our greater Seattle real estate market is cooling.

In it, the Seattle Times reports the following 3 main points…

1.     “Homes aren’t flying off the market as quickly.” This is correct and echoes what we reported in our previous video, that homes are taking longer to sell.

2.     “Fewer buyers are taking the plunge.” True. With prices and rates higher, fewer buyers are making offers. The level of uncertainty has increased, which has also contributed to buyers taking a pause from the market.  

3.     “Prices are leveling off.” Also correct. Generally speaking, homes are currently selling closer to their list prices. No longer are the majority of homes selling for WAY above their asking price. Of course, this is a case-by-case basis as some still sell above the asking price, and others below.

Now we are not saying the Seattle Times hijacked the information from our June market update, but it makes me wonder?

Now the question is. “Where are we headed?” Well, tough to answer as we have opposing forces. On one hand, we have rising interest rates, which make it hard to afford a home. On the other hand, we still have low supply, which props up the prices.

To put the affordability issue into perspective, here are 3 graphs to compare. To keep it simple, the mortgage payments listed include principal and interest, not taxes and insurance. The first graph shows a home purchase in June of 2020. The purchase price is $1,000,000, with a 20% down payment and a 3% interest rate. This means the monthly payment, is around $3,373.

The second graph shows what happened in 2021, which is that home values went up, but rates stayed low. So, this same house now costs around $1,200,000, with a 20% down payment and a 3% interest rate. Now the monthly payment is around $4,047. This is a difference of $674 per month.

Ok, so here is where things get REALLY interesting. This third graph shows what happens when BOTH prices AND interest rates go up. The house that cost $1,000,000 just 2 years ago currently costs around $1.4 million. The 20% down payment is much larger, and the interest rate is much higher at 5.8%. Now the monthly payment is a staggering $6,572.

This is MIND-BLOWING as it showcases the affordability problem. Just 24 months ago, someone buying this house would have a payment of around $3,373. Now, that same house, with the same location and condition has a monthly mortgage payment of around $6,572. That’s an increase of around 95%, or $3,199 per month. This is almost double of what the mortgage payment was just 2 years ago!

Many people could afford the rising prices, OR the rising rates. BUT, to have both rapidly rising prices AND rapidly rising rates is a double whammy that forces buyers out of the market. Yes, salaries have gone up. But not nearly enough to keep pace with home affordability.

The relatively low supply of homes is keeping home values at currently high levels. However, now that we are seeing the supply inch up, this is starting to cause motivated sellers to be more careful in pricing their home. To stay competitive, this means sellers may need to reduce their asking price in order to sell.

There are so many forces at play…inflation, supply chain, stock market, the national and global economy, Russia’s invasion of Ukraine, the pandemic and the list goes on. There are always going to be predictions, but these are educated guesses at best. Whether you are a buyer or seller in our local Seattle Area Real Estate market, the key is to stay informed. Then you can determine how you want to navigate and respond accordingly.

June Market Update 2022 | Seattle Real Estate News

What is happening in the Greater Seattle Real Estate Market? In one word, shifting.

Welcome to June’s Market update where we dive into the numbers and the current market conditions. First, we’ll go over the latest market stats, then, just as important, we’ll tell you what this means for both buyers and sellers.

Let’s get into it. First, the inventory. Snohomish County saw an increase in inventory of 26.2%, and King County saw a 12.1% increase year-over-year. On the other hand, the city of Seattle saw a 10.9% decrease in new homes come on the market vs this time 1 year ago. Even though Seattle saw a drop in inventory, when looking at the region as a whole, more homes came on the market. Obviously, when we have an increase in inventory there is more competition for sellers, giving buyers more options.

Now, lets’ mention the speed at which homes have been selling. In the month of May, homes across our region sold faster than the same time last year. In Snohomish County, the average time it took to sell a home in May of 2021 was 8 days. May of 2022, it took 9 days. For King County, the average was 14 days last year AND only 9 days this May. For Seattle, the average days on market was 18 last year, vs only 12 days this May. That being said, these are the numbers of from homes that went under contract in March and April, when the market was hotter. Currently we are seeing increases in the time it takes for homes to sell.

Another revealing statistic is the Sales Price to List price ratio because it tells us how much above or below the list price homes are selling. In Snohomish County, homes went from selling for 9.3% ABOVE the asking price, to selling for 6.3% ABOVE the asking price, year over year, which is a decrease of 3%. For King County, homes went from selling 9.4% ABOVE the list price to 8.7% ABOVE the list price year over year, which is a 0.7% decrease. And in Seattle, homes went from selling for 7.8% ABOVE the list price to 10.2% ABOVE the list price, which is an increase of 2.4%. This makes sense as the City of Seattle did not have as many new homes come on the market as the other areas, so there was more buyer competition driving the prices up.

In Snohomish County, the median sales price went up from $695,000 to $810,000 year-over year. That’s just over 16%. For King County, the median sales price when up from $875,000 to $1,003,000 year-over year, which is in increase of 14.6%. And in Seattle, the median sales price went up from $893,500 to $996,000 year-over year, which is in increase of 11.5%. When looking at the year-over-year comparison values are increasing. HOWEVER, if we compare to last month’s values there is a different story. Snohomish County’s Median Sales Price in April was $841,000, which is $31,000 more than this month. King County saw an increase in value by only $3,000 and the City of Seattle by only $2,000. Here is the important message. We have seen a slowdown in the dramatic home appreciation that we’ve all witnessed the past 2 years.  And we expect next month’s market numbers to show even more significant decreases in median home values. 

Whether you are a buyer or a seller, everyone is asking, WHERE is the market headed? One thing is for certain, home values are NO LONGER appreciating like they did last year and earlier this year. Do NOT rely on Mainstream media, because they are behind the curve on reporting this. Most of the nation has seen a cool down. Here in greater Seattle, the market HAS also flattened. And we believe this more or less “flat market” (where home prices stay the same) will continue. Home values might even start softening.

Now here are our takeaways for both buyers and sellers. Let’s start with Sellers

1.        Temper expectations. Inventory is still low, but it is increasing. The length of time it takes to sell a home is also increasing. Bidding wars are not as common. If you do receive multiple offers, consider yourself fortunate. You may be thinking, “but my neighbor’s home sold 3 months ago and received 20 offers.” True, but that is not today’s market. If you receive multiple offers, even if they don’t increase drastically over the asking price, consider that a win.

2.        Do not overshoot your list price by going on the market too high. Your home will sit on the market without enough showings or offers. Currently, 1 out of every 5 home sellers is having to reduce their price. By overpricing, this ends up costing the seller even more money and frustration. The best pricing strategy is to price competitively, according to what market data is showing. Depending on how the market reacts, you may need to make a price adjustment.

3.        This is still a fantastic time to sell. Your home’s value is incredibly high. Depending on your neighborhood and the specifics of your home, you could still sell anywhere from 10 – 24% MORE than you could have last year. This is especially true if you have a nice home in a good location. Keep in mind, even though the market has flattened, historically we still have low supply, so buyers are excited to see good homes come on the market.

Now for you buyers:

1.        Finally, you are getting some relief. Because much higher prices and interest rates have left many buyers on the sidelines, you don’t have the feeding frenzy environment to compete with. Well priced homes in popular neighborhoods still sell quickly and can garner multiple offers. But as mentioned, it is a far cry from just a couple of months ago. Our advice is to be patient and really find a home you love, especially since you no longer have the overwhelming competition from other buyers. Even better, summer is often a great time to shop for a home in our region because many buyers take a break. While they are distracted with summer plans and travel, you can use this to your advantage.

2.        Interest rates have come down a little bit from their recent high of 5.65%. At the time of this recording, you can lock in a 30-year fixed rate mortgage at 5.25%. Now check this out, you can drastically save on your monthly mortgage payment and still get a 3.9% interest rate. What’s the catch? You have to be willing to take on a 5-year adjustable-rate mortgage. Now, we are NOT advocating for everyone to take on an adjustable-rate mortgage just to get a lower rate, because this could get you in to trouble. However, if you know with certainty that you don’t plan on owning the home very long, say you are planning to relocate and sell it within that 5-year timeframe, then an adjustable-rate mortgage could be a good way to go.

3.        When you find homes that have sat on the market for more than a week or two, you have the potential for negotiating power. This could mean contingencies that are more in your favor and a lower purchase price. YES, you CAN now negotiate lower prices if the sellers haven’t received offers and they are motivated to sell.

Be sure stay in the know regarding the Seattle Area real estate market, make it your mission to click the like & subscribe button on our YouTube channel. See you in the next video!

Seattle Real Estate Market | 1 Secret EXPOSED!

Want to hear a secret about the Seattle housing market? It’s something shocking, and nobody is talking about it. According to the Northwest Multiple Listing Service, 1 out of 7 homes in the Seattle area is selling BELOW the original list price.

You don’t hear much about this do you? That’s because we are in this extreme sellers’ market. The 71% of homes that sell ABOVE the asking price get ALL the news and attention. Of the remaining 29% of homes NOT selling above the asking price, half sell at their original list price, AND the other half actually sell BELOW the asking price. So, what does this mean for you as a Buyer or Seller? Stay tuned to find out!

Buyers, listen up, if 14% of the total homes sold are selling below the asking price, you can use this to your advantage. And Sellers, it’s important for you to know how to navigate this if you are found in a situation where your home isn’t selling. When do you hold out vs adjust the price? Stick around to find out.

Generally speaking, when a home is properly marketed, but NOT selling, it comes down to the price. 

But what if it’s a dated home?

If the price is right, it will sell. 

But what if it’s a small home? 

If the price is right, it will sell. 

How about if it’s an unusual home with unique attributes? 

Again, if the price it right it WILL Sell. 

Regardless of the location, size and condition, ALL homes sell for the right price. There are SOME exceptions to this, and we’ll talk about that in just a moment. But first, here are a few signs and general rules indicating the list price is too high and a price adjustment is necessary for a sale to occur.

1.       The home receives very few or possibly no showings AND no offers within the first 2 weeks. With few exceptions, in order to sell a home, people need to preview it. If buyers are NOT previewing the property, it most likely won’t sell at the current list price.

2.       The home receives showings, possibly a LOT of showings, but no offers. This is an indication that the list price COULD be closer to the actual market value, BUT it’s likely to still be a little overpriced.

3.       The home receives showings BUT gets low-ball offers. Obviously, this indicates the market sees value in the property, because there are offers, but at a reduced price.

Now these are GENERAL rules and guidelines. However, occasionally, there are times when staying the course and NOT adjusting the price can benefit you.  

Here is an example of a home we recently listed. It’s a cool property in the heart of the city. The sellers did a great job preparing the home. And we did a great job marketing it with pictures, staging, and even an awesome promotional video.

Of course, before going on the market we did an in-depth comparative market analysis and presented the data to the sellers. After examining the information, they decided, and we supported, a list price of $1,285,000. Out of the gates we received a lot of showings. In fact, 38 showings.

PRO TIP, on average for every 7 showings, a seller should receive 1 offer. Again, this is just the average. This number will fluctuate a lot, depending on the property. But it does gives you a general idea.

So, we were getting a lot of showings on the house but no offers. 2 weeks into our listing we finally did get an offer. But it was at 1 million dollars. $285,000 less! Or about 22% less than the asking price. Our seller didn’t even bother with a counteroffer as it was too far off the list price.

Fast forward 2.5 weeks, there were several days when we didn’t have a SINGLE showing. In a market as HOT as this, you KNOW most homes are selling in less than a week and ABOVE the asking price, so this was discouraging to say the least, and an indication that the price might be too high. Why didn’t the sellers panic?

Because, we had done our homework upfront, and we knew this home had a couple of unique challenges which would not appeal to a large segment of buyers. The biggest challenge regarding the property is that it doesn’t have any garage or off-street parking. After finding parking on the street, you have to walk up a lot of stairs to get to the front door. Most buyers just aren’t ok with this inconvenience. I mean, how many of you want to park a block away and carry groceries up a bunch of stairs when it’s raining?

At the 3-week mark, we received another offer. This time, at $1.2 million. $85,000 less than the asking price. I quickly called the buyers agents who had shown the home to try and encourage a second offer. And that worked. The second offer we received came in at $1,250,000. Ultimately, after a couple rounds of negotiating between the 2 offers we got the home sold at the FULL list price of $1,285,000, no inspection contingency and a quick closing. SUCCESS! And our sellers are VERY HAPPY!

With so many showings and no decent offers, why didn’t the seller drop the price sooner? The short answer is, we had JUST enough supporting evidence – based on the buyer and agent feedback – to hold off a little longer before dropping the price.

So, the question becomes how do you know if and when to drop the price? Sellers, here are 3 key points for you.

1.       The first is, the market doesn’t lie. It doesn’t matter what you hear in the news, or even what the neighbor’s house sold for. What really matters is how buyers perceive value and respond to YOUR home. It isn’t until a home is ACTUALLY listed that you find out the truth about how the market will respond. Sometimes the market response is better than anticipated, and sometimes it’s not.

2.       It is so crucial to get DETAILED feedback from every agent and their buyers regarding the property. We regularly reach out to any agent after they preview the home to get their honest feedback. We need to hear it. The good, the bad and the ugly because it’s the market data in real time. With regard to our example, we got the feedback saying the lack of parking was the problem and a deal killer for most buyers. But we also got feedback saying that it’s a cool property with a lot of features and benefits, and the price wasn’t off by much for the right buyer. Ultimately, after speaking with the sellers we came to the conclusion that holding off a bit longer before considering a price adjustment could be prudent in order to find that unique buyer. And it paid off! Now, this can be a VERY slippery slope. And that leads to point number 3.

3.       After examining the data, don’t be afraid to adjust your price down, IF that’s the best course of action. Sellers can actually do themselves a disservice by not dropping the price soon enough if that is what the market indicates. The specifics and details of each scenario are different. So having experienced and skilled agents to navigate this gray area is crucial. There is a STRONG correlation, the longer a home sits on the market the weaker the offers become.  

Buyers, here is how YOU can capitalize. If you keep getting beat out on multiple offer situations, then try another approach. Try submitting your offer before the review date. OR, related to what we’ve been talking about, identify homes that haven’t sold after a week or more and are lingering on the market. You usually won’t have to worry about some big bidding war and this gives you a better position to negotiate price and terms. Heck, you may even get the possibility of buying the home for LESS than the asking price. Nobody else is reporting this.

If you find it interesting that 1 out of every 7 homes in the Seattle area is selling for LESS than the original asking price, then please be sure click that like button. Then Smash the subscribe button so you can stay in the KNOW regarding the greater Seattle real estate market.

Seattle Home Prices | Your Home Made MORE Than You!

Home prices are way up. Yeah, yeah, yeah…tell me something I don’t know. OK, how about this? Did you know many houses “earned” more money in appreciation than many people earned in their annual salaries?

WHAT? Yes, you heard that correctly. Home prices have gone up SO much in the Greater Seattle Area, that in many cases, homes actually earned more in appreciation last year, than homeowners made in their yearly salary. That’s CRAZY!

The Seattle Times published an article (which was originally published in the Washington Post) titled “Did your house earn more than you did in 2021?” (https://wapo.st/38eu5bO). The article states the following, “Soaring home values are thrilling for homeowners who can watch their wealth increase without lifting a finger. A new study by Zillow found that home price appreciation in 25 metro areas last year exceeded the median salary in those locations.”

The article goes on to say “The amount of price appreciation was highest in high-cost housing markets like the Seattle-Tacoma region, where the median home price grew $131,129 between December 2020 and December 2021. The median salary was $65,000, meaning, according to Zillow’s analysis, the median home made $66,129 MORE than the median resident in 2021.”

If you think this is normal, think again. This is historic price appreciation. Seattle is used to higher-than-average price appreciation, but this is next level. And it wasn’t just Seattle. The article says, “Nationally, the median house appreciation was $52,667 in 2021, which is $2,667 more than the median salary of $50,000.”

Along with this, the article goes on to say that “Rents rose 16% across the United States in 2021, so ALL you renters are feeling the financial pressure as well. And Since down payments are typically a percentage of the purchase price, the amount needed for a down payment has increased along with home values, putting homeownership further out of reach for some renters.”

For many of us, one obvious question is, “how can people afford a home?” The answer is 2-fold. One simple, cold-hard fact is that many people can no longer afford the type of home they were hoping and planning to purchase in 2022. Prices are up, interest rates are up, and the supply of homes is still way down. The 2nd important thing to point out is that we have some really high wage earners. This graph shows that roughly 1/3rd of Seattle households earn more than $150,000 annually (https://bit.ly/36E3ioZ). Keep in mind, this is household income, so often this means 2 income earners.

Thanks mostly to our robust tech sector, a lot of households will earn significantly more than $150,000. When a household earns $250,000, $300,000, $400,000 or more in annual income, the insanity in the real estate market actually starts to make sense. Some Seattle Area home buyers can bid a home up so much that this has resulted in the enormous and unusual appreciation we’ve seen over the past 2 years. Let’s talk about what this means for both buyers and sellers.

Let’s start with the buyers:

·         On behalf of all of you discouraged and wounded buyers, we know it has been brutal. If you have been shopping for a home over the past few months or year, we understand you may have scars and war-wounds. If home values are far outpacing your income, then it could be time for you to adjust your expectations and search criteria. BUT, don’t throw the baby out with the bathwater. There are SO many benefits to homeownership, and as the article clearly points out, owning real estate is a BIG part of building wealth. If you are thinking about whether or not now is the right time to buy, then you need to check out this video (https://youtu.be/zT0ZRnIP76M).

·         On a slightly positive note for buyers, we are currently seeing fewer offers being submitted on listings. From our own experience and from talking with other full-time brokers, last year we saw many homes receive 15 – 20, or possibly more, offers. In comparison, these same types of homes might receive only 3 – 6 offers now. That’s a big difference. But keep in mind that the homes are much higher in price and the interest rates have increased significantly. There are still more buyers than sellers, and most homes are selling above the asking price. But the fact that we are seeing fewer offers submitted, could very well be an early indication of the market beginning to soften. The verdict is still out on this.

·         Here is an example to make the comparison. We listed and sold a home in November of 2020. The list price was $879,000. We received 11 offers and after negotiations it sold for $1,047,500. The buyer put 20% down, which is around $210,000. The buyer secured an interest rate at 2.75% with total monthly payments of $4,167. This includes principal, interest, taxes and insurance. Now, let’s look at what a buyer would be paying today, just 18 months later on the same house. After running a comparable market analysis, the home is valued at around $1.4 million today. If a buyer put down 20% that would be $280,000. Today’s interest rates are around 5%, so a buyer’s monthly payment would be about $6,762. This is a difference of $2,595 per month!, on the same house, just 18 months later! 

Now for the sellers:

·         We often get the question from sellers, “how long will this steroid market last?” Well, nobody knows for certain. The consensus amongst market experts at the beginning of this year was that we would see a continuation of the frenzied 2021 market, still heavily favoring sellers, just a little bit tamer. So far, these predictions have been correct. The fundamentals of low supply and high demand continue to be the case across our region. However, some experts are calling for a shift in the market later this year or in 2023. With interest rates now hovering around 5% and prices having gone up anywhere between 25 – 50% over the past 2 years, this dramatic price appreciation isn’t sustainable.

·         We don’t foresee any major shifts happening over the next 3 to 6 months. But at some point, this market will change. It is not going to last forever. If rates go up to 6% in the near future, we believe this will make a big impact on the housing market. According to a recent article from CNBC, “Surging interest rates push mortgage demand down more than 40% from a year ago.” (https://bit.ly/3klIBSd) For those of you trying to time the market and sell at the high point, there are never any guarantees where and when that is. Often, we only recognize the height of the market after it has peaked as we look back. Yet, many experts believe that we could be peaking in the near future.

·         If you are considering a move, you will want to meet with a skilled real estate professional sooner vs later. That way you can come up with a plan that is going to benefit you based on your needs and timeline. What preparations will profit you the most? How can you best navigate selling and buying simultaneously? With all the moving parts and amount of money at stake, it’s important to create a plan that is going to serve you. We’ve created a whole series on the home selling process linked here (https://youtube.com/playlist?list=PLBN8dBcNd-XQud6it7OUs-3ctM3nScph-).

The market is dynamic and constantly changing. We post monthly market updates with the latest numbers and information (https://youtube.com/playlist?list=PLBN8dBcNd-XRgl-hiepyWieEGJp8rRb5T).

Seattle Real Estate Trends | Should I Buy a House Now or Wait?

With the Seattle housing market soaring, should you wait to buy a house? If you can answer YES to the next 5 questions, then you should strongly consider buying. And if you can’t say yes, you should probably wait. Let's dive in!

Seattle Real Estate Trends | Increase in Crime, What Can YOU Do About It?

Violent Crime up by 20%, shootings and shots fired up by 40%, and property crime up by 9% in Seattle, as well as surrounding areas? According to the 2021 Year-End Crime report from the Seattle PD, this growing trend of crime tragically affects many victims. And you don’t need to be a direct victim for this to impact you. Why? Because the crime level can dramatically affect PROPERTY values! In this video we are tackling the serious subject of crime, how it impacts our housing market, and most importantly what YOU can do about it.

Seattle Real Estate News | April Market Update 2022

What is happening in the Greater Seattle Real Estate Market? Welcome to April's Market Update. We will be going over the most recent numbers and mention key points. So, whether you are a Buyer or a Seller, you will be in the know! We will look at King and Snohomish County numbers, as well as the City of Seattle numbers, and compare the numbers from March 2021 to March 2022. Let's dive in!

Home Selling Process | Home Inspection Tips for Sellers

As a Seller, should you do an inspection on your own Seattle Area home before listing it for sale? In today's video we are going to go over the PROS & CONS of a "Seller Procured" home inspection. We'll also tell you what we personally do when selling a property we own. There is a lot at stake when selling a home. So, as a Seller, you want to make sure you are making smart, informed decisions. *Disclaimer: in no way is this legal advice, we are but humble real estate agents and our aim is to educate.

Will Seattle Housing Market Crash During Crisis?

What would happen to the Seattle Area real estate market if America enters another war? What would happen if we fall into a recession? How do major CRISIS effect the real estate market? If you are curious about how housing performs in uncertain times, stay tuned because THAT is what we are going to be talking about in this video!