2018 Housing Forecast

I feel fortunate to have Chief Economist Matthew Gardner on staff to provide valuable analysis of the economy and housing market. Matthew recently completed his national forecast which details his predictions for the 2018 housing market.

 


Posted on January 18, 2018 at 11:21 pm
Andrew Jackson | Posted in Home Seller, Matthew Gardner Report, Real Estate, Seattle Real Estate |

Perspectives: 2017 Forecast

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Originally published on Windermere Blog; authors Jill Jacobi Wood, OB Jacobi & Geoff Wood

Well, it’s December; the time of year when we look to our crystal ball and offer our housing market predictions for the coming year. And by crystal ball we mean Windermere’s Chief Economist, Matthew Gardner, who has been travelling up and down the West Coast giving his annual forecast to a variety of real estate and financial organizations. Last month’s surprising election results have created some unknowns, but based on what we do know today, here are some thoughts on the current market and what you can expect to see in 2017.

HOUSING SUPPLY: In 2016 the laws of supply and demand were turned upside down in a majority of markets along the West Coast. Home sales and prices rose while listings remained anemic. In the coming year, there should be a modest increase in the number of homes for sale in most major West Coast markets, which should relieve some of the pressure.

FIRST-TIME BUYERS: We’re calling 2017 the year of the return of the first-time buyer. These buyers are crucial to achieving a more balanced housing market. While rising home prices and competition will act as a headwind to some first timers, the aforementioned modest uptick in housing inventory should help alleviate some of those challenges.

INTEREST RATES: Although interest rates remain remarkably low, they will likely rise as we move through 2017. Matthew Gardner tells us that he expects the 30-year fixed rate to increase to about 4.5 percent by year’s end. Yes, this is well above where interest rates are currently, but it’s still very low.

HOUSING AFFORDABILITY: This remains one of the biggest concerns for many West Coast cities. Some markets continue to see home prices escalating well above income growth. This is unsustainable over the long term, so we’re happy to report that the rate of home price appreciation will soften in some areas. This doesn’t mean prices will drop, but rather, the rate of growth will begin to slow.

Last but not least, we continue to hear concerns about an impending housing bubble. We sincerely believe these fears to be unfounded. While we expect price growth to slow in certain areas, anyone waiting for the floor to fall on housing prices is in for a long wait. Everything we’re seeing points towards a modest shift towards a more balanced market in the year ahead.

Photo credit: Andrew O’Neil


Posted on December 14, 2016 at 5:53 pm
Andrew Jackson | Posted in Matthew Gardner Report, Real Estate | Tagged , , , , ,

The Trump effect. How will it impact the US economy and housing?

Originally published on Windermere Blog by author Matthew Gardner, chief economist of Windermere Real Estate.

american-flag-1208660_960_720The American people have spoken and they have elected Donald J. Trump as the 45thpresident of the United States. Change was clearly demanded, and change is what we will have.

The election was a shock for many, especially on the West Coast where we have not been overly affected by the long-term loss in US manufacturing or stagnant wage growth of the past decade. But the votes are in and a new era is ahead of us. So, what does this mean for the housing market?

First and foremost I would say that we should all take a deep breath. In a similar fashion to the UK’s “Brexit”, there will be a “whiplash” effect, as was seen in overnight trading across the globe. However, at least in the US, equity markets have calmed as they start to take a closer look at what a Trump presidency will mean.

On a macro level, I would start by stating that political rhetoric and hyperbole do not necessarily translate into policy. That is the most important message that I want to get across. I consider it highly unlikely that many of the statements regarding trade protectionism will actually go into effect. It will be very important for President Trump to tone down his platform on renegotiating trade agreements and imposing tariffs on China. I also deem it highly unlikely that a 1,000-mile wall will actually get built.

It is crucial that some of the more inflammatory statements that President-Elect Trump has made be toned down or markets will react negatively. However, what is of greater concern to me is that neither candidate really approached questions regarding housing with any granularity. There was little-to-no-discussion regarding housing finance reform, so I will be watching this topic very closely over the coming months.

As far as the housing market is concerned, it is really too early to make any definitive comment. That said, Trump ran on a platform of deregulation and this could actually bode well for real estate. It might allow banks the freedom to lend more, which in turn, could further energize the market as more buyers may qualify for home loans.

Concerns over rising interest rates may also be overstated. As history tells us, during times of uncertainty we tend to put more money into bonds. If this holds true, then we may see a longer-than-expected period of below-average rates. Today’s uptick in bond yields is likely just temporary.

Proposed infrastructure spending could boost employment and wages, which again, would be a positive for housing markets. Furthermore, easing land use regulations has the potential to begin addressing the problem of housing affordability across many of our nation’s housing markets – specifically on the West Coast.

Economies do not like uncertainty. In the near-term we may see a temporary lull in the US economy, as well as the housing market, as we analyze what a Trump presidency really means. But at the present time, I do not see any substantive cause for panic in the housing sector.

We are a resilient nation, and as long as we continue to have checks-and balances, I have confidence that we will endure any period of uncertainty and come out stronger.

Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has over 25 years of professional experience both in the U.S. and U.K.

Photo Credit: Aktim Ι Pixabay


Posted on November 12, 2016 at 12:22 am
Andrew Jackson | Posted in Real Estate | Tagged , , , ,

Western Washington Real Estate Market Update

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This blog post originally appeared on Windermere Blog, author Matthew Gardner.

ECONOMIC OVERVIEW

Annual employment growth in Washington State slowed somewhat in the third quarter of this year, but still remains well above the long-term average. Additionally, the jobs that are being created are primarily quality, high-paying positions, which is important for the health of our economy.

Unemployment in the state remains at levels that are somewhat higher than I would like to see, but this continues to be impacted by a growing labor force and modestly slowing job growth. I still expect to see the rate drop a little further as we move through the final quarter of the year.

 

HOME SALES ACTIVITY

  • There were 24,277 home sales during the third quarter of 2016—up by an impressive 7.9% from the same period in 2015, and 6.8% above the total number of sales seen in the second quarter of this year.
  • Skagit County saw sales grow at the fastest rate over the past 12 months, with transactions up by 25.6%. There were also impressive increases in home sales in Thurston, San Juan, Pierce, and Grays Harbor Counties. Sales fell slightly in Jefferson and Kittitas Counties.
  • Overall listing activity remains low with the total number of homes for sale at the end of the quarter 11.2% below that seen a year ago. That said, I’m happy to report that listings have been slowly trending higher in 2016.
  • I’ve been thinking about how sales can continue to rise while inventory remains so low. I believe this is due to an uptick in first-time buyers. These buyers have no home to sell, so they don’t add to the number of listings; however, they do cause sales to increase when they buy. This is a good trend to see!

 

HOME PRICES

  • As demand continues to exceed supply, we are continuing to see upward pressure on home prices. In the third content_16229_WWA_GardnerReportQ3_Mapquarter, average prices rose by a substantial 10.2% and are 3.2% higher than seen in the second quarter of this year.
  • The current rate at which homes are appreciating cannot continue, and I anticipate that we will see a “cooling” start to take place in 2017.
  • When compared to the third quarter of 2015, price growth was most pronounced in Lewis County. In total, there were nine counties where annual price growth exceeded 10% and prices were higher across the entire region when compared to a year ago.
  • Although supply levels are slowly starting to creep higher, we are still solidly in a seller’s market. Rising inventory levels should start to do a better job of meeting demand next year, which when combined with modestly higher mortgage interest rates, will see the region move closer toward becoming a balanced market.

 

 

DAYS ON MARKET

  • The average number of days it took to sell a home dropped by twenty-two days when compared to the third quarter of 2015.
  • All the counties that comprise this report saw the length of time it took to sell a home drop.
  • In the third quarter of 2016, it took an average of 52 days to sell a home. This is down from the 74 days it took in the third quarter of 2015, and down from the 67 days it took in the second quarter of this year.
  • King and Snohomish Counties remain the only two markets where it took less than a month to sell a home. Even though King County saw days on market rise slightly from 18 to 20, it remains the hottest market in the region.

 

CONCLUSIONS

content_16229_WWA_GardnerReportQ3_SpeedometerThis speedometer reflects the state of the region’s housing market using housing inventory, price gains, sales velocities, interest rates, and larger economics factors. For the third quarter of 2016, I am moving the needle very slightly toward the buyers. This is entirely due to the recent increase in inventory levels that I believe will continue through the rest of the year. That said, the region remains steadfastly a seller’s market.

 

 

content_content_MatthewGardner_colorMatthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has over 25 years of professional experience both in the U.S. and U.K. 


Posted on October 29, 2016 at 7:09 am
Andrew Jackson | Posted in Matthew Gardner Report, Seattle Real Estate | Tagged , , , ,

Free One-Day Tickets For The 2016 Seattle Art Fair: August 5th, 6th, or 7th

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The 2nd annual Seattle Art Fair is a a fantastic event for all those who appreciate art, whether you are a collector or arts patron. It features the vibrant scene right here in Seattle, in addition to regional and international art.  Galleries from around the world will be presenting top-tier modern and contemporary art, and you can go explore for the day courtesy of Windermere Real Estate! 

Click here to reserve your free one day ticket for either Friday August 5th, Saturday August 6th, or Sunday August 7th.  The Seattle Art Fair is held at CenturyLink Field Event. Here's the scoop on parking for the Fair.  If you'd like to preview the projects and talk calendar before ordering your one-day ticket, click here

Have a fabulous time! Let me know what you enjoyed most at Seattle Art Fair.  


Posted on July 28, 2016 at 8:09 pm
Andrew Jackson | Posted in Seattle Art Fair, Windermere Real Estate Event | Tagged , , , ,

Free Recycle Event: Saturday June 11th, 10am to 2pm

Andrew-May-Recycle-FB-ImageDoes your garage need some TLC and decluttering? Do you have files you no longer need but don't have time to shred all the documents? I have good news for you! My office is hosting our annual FREE recycling event Saturday June 11th, from 10am – 2 pm. Bring your recyclable items (working or not) to this event. All recycling services are free!

Items to Bring

  • Bicycles and bicycle parts
  • Any electronics (working or not), whole or parts — Computers & Parts, Printers, Fax Machines, Phones, Record Players, Speakers, Radios, Game Systems, VCRs, Christmas Tree Lights, All Appliances, Car Batteries, Computer Batteries, Medical Equipment, Ink Toner & Cartridges.
  • Data and paperwork for confidential destruction

The recycle event will be in the Windermere Real Estate/Mercer Island parking lot at 2737 77th Ave SE, Mercer Island. There will be a station to drop off your old appliances and electronics, a station for the bikes and bike parts, plus a shredding truck on site to securely shred your paper documents. 

If you have any questions about the event and what you can bring to recycle, please email me at andrewj@windermere.com.  

Services Provided by :
1 Green PlanetBike Works & Windermere Mercer Island 

We will also be accepting voluntary donations for Mercer Island Youth and Family Services, our Windermere Foundation grant partner. 


Posted on May 25, 2016 at 11:53 pm
Andrew Jackson | Posted in Windermere Real Estate Event | Tagged , , , ,

43% of King County Real Estate Transactions Involve Multiple Offers

Multiple offers are no longer the exception in the King County housing market. My most recent listing garnered 29 offers from buyers- 29! I was able to efficiently guide my clients through this process due to my 18 years of real estate experience in the greater Seattle area.  

Having an experienced real estate broker representing you is imperative in a multiple offer situation, for both buyers and sellers. Windermere Real Estate brokers work diligently for their clients, and those representing buyers 19% more likely to win transactions involving multiple offers. Also, local brokers are more confident in completing a transaction with a broker from Windermere than they are with any other real estate company.

Do you have questions about navigating our fast paced real estate market? Email me at andrewj@windermere.com – or give me a call at 206-650-4939 – so we can set up a time to go out for coffee and discuss your questions. 

 2015 Multiple Offer Market Share Growth


Posted on March 11, 2016 at 5:59 am
Andrew Jackson | Posted in Home Seller, Seattle Real Estate | Tagged , , ,

Home Sellers – Professional Photography Is A MUST!

photographer-424623_960_720One of the most important tools I bring to the table as a listing agent is professional photography. I schedule a photo session with a real estate photographer for every home I list. Today’s curb appeal is digital, and if you don’t have quality photos of a home online then it will be difficult to get buyers through the door. Professional photography is key to creating the necessary curb appeal that will lead to a timely sale of your home.   

There’s work to be done before I can schedule the photo shoot, so I can present your home in its best light. Another tool I’ve gained from my 18 years in real estate is the ability to help sellers get their home ready to be professionally photographed.  Realtor Magazine published a helpful article that outlines 5 things that need to be done to achieve the best quality photos of a home you can, and these 5 items are so important. They are all part of what I do to help your home be ready to say “Cheese!”

  1. To get the best photos you need quality equipment and editing software, aka hire a pro photographer!
  2. Your knickknacks are not photogenic. In real estate photography, less is more.
  3. Dirt really shows in photos. Really, it does.
  4. The weather a few days before the photo session is just as important as the day of.
  5. Those little details do count – do a final sweep through the house before the photo session.

Click here to read the whole Realtor Magazine article. 


Posted on March 2, 2016 at 6:38 am
Andrew Jackson | Posted in Home Seller | Tagged , ,

2016 Remodel Cost Versus Value Report

2016 Remodel Cost Versus Value Report

Did you know that some home improvement projects can pay for themselves, or even earn you a profit when it’s time to sell? According to the Remodeling 2016 Cost vs. Value Report for Seattle (www.costvsvalue.com) certain upgrades may increase your home’s resale value by more than what they cost. 

As home prices rise across the nation, average payback on remodeling projects is up too. “We’ve seen a steady ramping up on both the sales and construction side,” said Jonathan Diehart, director of custom services and published research at Metrostudy. “I think over time that really starts to loosen up prices a bit and allows some of these [remodeling] factors to become more significant as part of the price.”  The biggest year-over-year gains in return were seen for more expensive and complicated "upscale" remodeling projects.

While this information provides a fun insight into which projects might be worth your while, it's important to note that these are just overall estimates–your return on investment will vary substantially depending on your unique home and neighborhood.

Seattle's 10 Best Projects

Seattle's 10 Worst Projects

 

Return on Investment in Seattle


In Seattle, the top 10 most profitable remodeling projects were:

  • Attic Insulation (Fiberglass)
    Cost: $1,249
    Resale Value: $1,877
    Cost Recouped: 150.3% 
     
  • Manufactured Stone Veneer
    Cost: $7,631
    Resale Value: $10,897
    Cost Recouped: 142.8% 
     
  • Garage Door Replacement (Upscale)
    Cost: $3,175
    Resale Value: $4,503
    Cost Recouped: 141.8%
     
  • Garage Door Replacement (Mid-Range)
    Cost: $1,783
    Resale Value: $2,440
    Cost Recouped: 136.9% 
     
  • Entry Door Replacement (Steel)
    Cost: $1,400
    Resale Value: $1,790
    Cost Recouped: 127.9%
     
  • Siding Replacement (Fiber Cement)
    Cost: $16,196
    Resale Value: $18,826
    Cost Recouped: 116.2% 
     
  • Window Replacement (Vinyl)
    Cost: $15,308
    Resale Value: $17,417
    Cost Recouped: 113.8%
     
  • Siding Replacement (Engineered)
    Cost: $15,396
    Resale Value: $17,237
    Cost Recouped: 112.0%
     
  • Deck Addition (Wood, Mid-Range)
    Cost: $12,145
    Resale Value: $12,985
    Cost Recouped: 106.9
     
  • Minor Kitchen Remodel
    Cost: $21,889
    Resale Value: $22,833
    Cost Recouped: 104.3%
     


While all still higher than the national average recoup of 64.4%, these were Seattle's 10 least profitable remodeling projects:

  • Bathroom Addition (Upscale)
    Cost: $86,087
    Resale Value: $60,206
    Cost Recouped: 69.9% 
     
  • Bathroom Addition (Mid-Range)
    Cost: $47,572
    Resale Value: $34,457
    Cost Recouped: 72.4%
     
  • Deck Addition (Composite, Upscale)
    Cost: $41,140
    Resale Value: $29,972
    Cost Recouped: 72.9% 
     
  • Backup Power Generator
    Cost: $13,842
    Resale Value: $10,403
    Cost Recouped: 75.2% 
     
  • Master Suite Addition (Upscale)
    Cost: $262,073
    Resale Value: $197,515
    Cost Recouped: 75.4%
     
  • Major Kitchen Remodel (Upscale)
    Cost: $125,781
    Resale Value: $103,889
    Cost Recouped: 82.6% 
     
  • Major Kitchen Remodel (Mid-Range)
    Cost: $64,981
    Resale Value: $53,778
    Cost Recouped: 82.8%
     
  • Master Suite Addition (Mid-Range)
    Cost: $126,972
    Resale Value: $106,000
    Cost Recouped: 83.5%
     
  • Bathroom Remodel (Upscale)
    Cost: $61,383
    Resale Value: $52,432
    Cost Recouped: 85.4%
     
  • Two-Story Addition
    Cost: $180,558
    Resale Value: $154,472
    Cost Recouped: 85.6%

 

Cost vs. Value data © 2016 Hanley Wood Media Inc. Complete data from the Remodeling 2016 Cost vs. Value Report can be downloaded for free at www.costvsvalue.com


Posted on February 23, 2016 at 7:45 pm
Andrew Jackson | Posted in Seattle Real Estate | Tagged , ,

Matthew Gardner’s Western Washington Real Estate Market Update

I know many of you are wondering why we have seen such an increase in housing cost and lack of inventory.  Well just take a few minutes to read Matthew's report.  Western Washington continues to grow in the job sector especially in the tech markets.

 

The Washington State economy has added almost 370,000 jobs since the lowest point of the recession at the start of 2010. Additionally, total employment is 176,000 jobs higher than seen at the 2008 peak. 

The Bellevue and Seattle Metropolitan areas are showing a average market time of 31 day.  While this average includes all of king county, in many markets within King County market time is less than 7 days.  Many of the homes that sell within 7 days are because the Sellers and Listing Brokers have determined to wait 7 days prior to reviewing offers. 

To read the report in its entirety click here

 

 


Posted on February 23, 2016 at 7:06 pm
Andrew Jackson | Posted in Seattle Real Estate | Tagged , , ,