August 2022 Real Estate Market Update

by Kari Haas

The summer continues to heat up, and patient buyers are being rewarded as market shifts create a new dynamic between buyers and sellers. After years of intense competition between buyers for the most desirable listings, increasing inventory and slower price appreciation across the region have caused a pivot, with sellers competing more strongly against each other than they have in previous years.

The Return to a Balanced Housing Market

While this may cause uncertainty in some sellers, the rise in active inventory is an indication that we are returning to a more balanced housing market as a whole. Sellers can still be very successful with their home sales, as long as they price their homes accurately and understand that they may not see the exorbitant offers that were typical a few months ago. This is a pragmatic approach, and we should see some relief in the “buyer gridlock” that had kept homeowners in place who wanted to sell and move but simply had no place to go.

Inventory, Affordability, & Median Sale Prices

Even with the increased inventory across the Puget Sound region, we may start 2023 with low supply, high demand, and multiple offer situations. Prices are coming down largely as a result of the previous rapid price appreciation and rising interest rates. However, Puget Sound’s underlying lack of supply and huge demand has not changed, although rates have improved. Seattle’s median price for single-family homes rose 6.4% year-over-year, from $896,500 to $954,500. That’s down slightly from the million-dollar median the city hit in April, and should help create a more inviting market for prospective buyers. The median price for condos is currently a more affordable $537,000, with 2.5 months of inventory.

King County as a whole is experiencing much the same phenomenon, with the median sale price for single-family homes decreasing from $938,225 in June to $890,000 last month. However, that’s still up 2.1% from $871,000 in July 2021. Single-family homes on the Eastside currently have the most inventory in the tri-county area, with 2.5 months’ supply. The median price for single-family homes has dropped to $1,420,000, down from $1,500,000 in June, but up 6.7% year-over-year. It’s important to note that this decrease in the median price is likely not due entirely to price depreciation, but from the fact that lower-priced homes made up a larger percentage of the overall sales in the area, thus lowering the median sold price. Real estate experts believe that the area continues to model a price correction based on the 2018 market, suggesting the median closed sales price will bottom out in about two months’ time around $1,300,000 or higher.

Snohomish continues to remain a more affordable area for buyers, with a median sold price for single-family homes of $770,000. Although that’s down from June, it is up a full 10% year-over-year, from $700,000 in July 2021. The area also has more active inventory—nearly two months’ supply. This, combined with the lower median price for condos of $500,000, makes it an appealing option for buyers with more constrained budgets.

Conclusion

The increase in active inventory across the region is not an indication of slowing demand. The majority of homes are selling in under two weeks, and prices continue to appreciate year-over-year. Builders are working diligently to meet demand, but until more projects come online, buyers and sellers will have to navigate these new market dynamics together.

If you have questions about these changes in the market or about real estate in general, please reach out to the Kari Haas Real Estate Team, we are happy to help!

Q2 Western Washington – The Gardner Report

by Kari Haas

The following analysis of the Q2 2022 Western Washington real estate market report is provided by Windermere Real Estate Chief Economist, Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact Kari Haas.

Regional Economic Overview

The most recent employment data (from May) showed that all but 2,800 of the jobs lost during the pandemic have been recovered. More than eight of the counties contained in this report show employment levels higher than they were before COVID-19 hit. The regional unemployment rate fell to 4.5% from 5.2% in March, with total unemployment back to pre-pandemic levels. For the time being, the local economy appears to be in pretty good shape. Though some are suggesting we are about to enter a recession, I am not seeing it in the numbers given rising employment and solid income growth.

Western Washington Home Sales

In the second quarter of 2022, 23,005 homes sold, representing a drop of 11% from the same period a year ago, but up by a significant 52% from the first quarter of this year.
Sales rose in Grays Harbor County compared to a year ago but fell across the balance of the region. The spring market, however, was very robust, likely due to growing inventory levels and buyers trying to get ahead of rising mortgage rates.
Second quarter growth in listing activity was palpable: 175% more homes were listed than during the first quarter and 61.98% more than a year ago.
Pending sales outpaced listings by a factor of 3:1. This is down from the prior year but only because of the additional supply that came to market.

Home Prices

Even in the face of rising mortgage rates, home prices continue to rise at a well-above-average pace, with average prices up 13.3% year over year to $830,941.
I have been watching list prices as they are a leading indicator of the health of the housing market. Thus far, despite rising mortgage rates and inventory levels, sellers remain confident. This is reflected in rising median list prices in all but three counties compared to the previous quarter. They were lower in San Juan, Island, and Jefferson counties.
Prices rose by double digits in all but four counties. Snohomish, Grays Harbor, Mason, and Thurston counties saw significant growth.
List prices and supply are both trending higher, but this has yet to slow price growth significantly. I believe we will see the pace of appreciation start to slow, but not yet.

Mortgage Rates

Although mortgage rates did drop in June, the quarterly trend was still moving higher. Inflation—the bane of bonds and, therefore, mortgage rates—has yet to slow, which is putting upward pressure on financing costs.

That said, there are some signs that inflation is starting to soften and if this starts to show in upcoming Consumer Price Index numbers then rates will likely find a ceiling. I am hopeful this will be the case at some point in the third quarter, which is reflected in my forecast.

Days on Market

It took an average of 16 days for a home to go pending in the second quarter of the year. This was 2 fewer days than in the same quarter of 2021, and 9 fewer days than in the first quarter.
Snohomish, King, and Pierce counties were, again, the tightest markets in Western Washington, with homes taking an average of between 8 and 10 days to sell. Compared to a year ago, average market time dropped the most in San Juan County, where it took 26 fewer days for a seller to find a buyer.
All but six counties saw average time on market drop from the same period a year ago. The markets where it took longer to sell a home saw the length of time increase only marginally.
Compared to the first quarter of this year, average market time fell across the board. Demand remains very strong.

Conclusions

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

The economy remains buoyant, which is an important factor when it comes to the regional housing market, particularly as it affects buyers. Even though the number of homes that came to market has jumped significantly, which should favor those looking for a new home, demand is still robust, and the market remains competitive.

Much to the disappointment of buyers, rising listing prices suggest that sellers are clearly still confident even as financing costs continue to increase. While the pace of price growth is slowing, sellers are still generally in control. As such, I have moved the needle a little more in the direction of sellers. Until we see list-price growth and home sales slow significantly, we will not reach a balanced market.

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

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

This post originally appeared on the Windermere.com Blog.

For Buyers • Kari's Blog • Real Estate Related • Tips & Tricks • July 27, 2022

How to Successfully Move and Start a Business at the Same Time

by Kari Haas

If you’re moving house and starting a business at the same time, proper planning is key to easing stress and making smart decisions. Bellevue, WA has a lot to offer new business owners and homeowners, so it’s a great place to start your search. If you take the time to consider your needs, this venture can be an opportunity for the best start possible rather than an additional challenge.

Buying Your New Home

If you’re starting a home-based business, there are additional concerns to take into account. To help the process go smoothly, here are some steps you should take:

Secure a mortgage. It can be difficult for self-employed people to get home loans. If you don’t have a partner helping with expenses, you may want to keep your day job until after settlement.
Define your needs. List any special requirements of your business, whether that’s inventory storage or a separate entrance and waiting area for clients.
Hire a real estate agent. The right agent listens to your needs and budget and presents properties that meet those requirements.
Consider laws and regulations. Zoning laws and HOA regulations can restrict your ability to run a business from your home. Bellevue’s zoning regulations can be found online.

By following these steps, you’ll minimize the challenges that can come up during the buying process.

Moving In

Getting professional assistance for your move can be useful. Movers can pack and transport the majority of your belongings while you concentrate on your most important possessions. These important possessions include paperwork, your computer, any inventory you have, and other tools or equipment that let you do your work. It can be best to put this all in one box or bag that you move yourself so that it remains easy to access. If your new property doesn’t have space for everything, you can look at alternative storage. This can be a temporary or more permanent solution for storing inventory. In the Bellevue, WA area, 5×5 storage units start at $45.

Launching Your Business

The next step is to launch your business. The Small Business Administration has a good guide that can help you through the process, from market research to opening a business bank account. You can also look into getting a business degree to cover all the ins and outs of being a successful entrepreneur. You can choose to study online to better balance your studies with your other responsibilities.

Spend some time deciding on the structure of your business. Your options include sole proprietorship, partnership, corporation, or limited liability company. An LLC limits your personal liability, which can protect your assets, such as your new home. In Washington, you can register your LLC online. This helps you avoid legal fees.

Also, keep track of your finances. No matter what your business structure is, it’s important to keep personal and business expenses separate. Consider using business accounting software that can keep track of income, business receipts, and expenditures. Accurate records can help you at tax time, especially when it comes to the deductions you’re allowed for a home office.

The Right Help

No matter how well you plan, having the right assistance can be essential to your success. The right real estate agent can also help you make your home and business ownership dreams come true. While we might not be able to help you start a business, we are prepared to take the weight of home buying off your shoulders. Contact Kari Haas to start your journey.

We pride ourselves in having the best track to success in real estate and while we aren’t business advisors, we do have a long list of referrals for those seeking help. i.e., a financial advisor, property manager, and more.

Image via Pexels

This post was originally written by a guest blogger, Lisa Walker.

For Buyers • For Home Owners • For Sellers • Real Estate Market Updates & Insight • Real Estate Related • July 14, 2022

July 2022 Real Estate Market Update

by Kari Haas

what's happening in the market july 2022

Cooler temperatures and a cooler regional real estate market have been this summer’s hallmark thus far. After months of blazing hot sales and a breakneck pace, buyers are finally seeing inventory levels accelerate and price gains slow. With inspection and financing contingencies once again becoming the norm, the region may, at last, be shifting toward a more balanced market.

Area home prices were down across the board last month. The median sold price for King County single-family homes dropped to $938,225, slightly lower than May’s near million-dollar price ($998,888). Year-over-year, however, King County prices were still up by 9%, despite the higher 1.5 months of available inventory.

Seattle mirrored the county’s trend, with the median price dropping from $1,025,500 in May to an even $1,000,000 in June. This price was still up 12% year-over-year, indicating continued demand for housing in the city.

Real estate experts have pointed out that areas that saw the greatest appreciation earlier this year will likely see a more significant dip in prices as the market rebalances. The Eastside market bore out this theory in June as the median sold price for single-family homes was $1,500,000 — down almost $100k from May’s median price of $1,590,000. That said, last month’s Eastside median sold prices were still up over June 2021, increasing 10% year-over-year in the residential market and 12% in the condo market. And with two months’ supply of homes currently listed, Eastside buyers have significantly more options to choose from than they would have had earlier in the year.

Snohomish County — long a refuge for buyers seeking more bang for their buck — followed a similar trend. The median sold price for single-family homes dropped to a more attainable $799,950, down from May but still up 11% year-over-year. Snohomish County condo prices dipped in June as well, with the median sold price of $500,000 down 9% from May and up a meager 1.6% from June of last year.

While these recent price dips may cause concern for some sellers, local real estate experts reiterate that this is a necessary step toward a more balanced market. “The increase in listings has started to slow the rapid pace of price gains that we’ve experienced,” said Matthew Gardner, Windermere’s Chief Economist. “This is a good thing, not a cause for concern.”

Other factors influencing the summer real estate market are higher mortgage rates, higher post-pandemic rates of travel, and typical seasonal buyer patterns. With graduations occurring and school years finishing up, many potential buyers are scratching their itch for travel and family time, putting off their home search until a little later in the year.

For sellers looking to make the most of the current market, flexibility is key. Pricing their home correctly from the get-go and being willing to negotiate with buyers on terms can still result in a top-of-market sale, albeit one in which multiple offers are less expected.

If you have questions about real estate opportunities in the current market, please reach out for additional insights and analysis. The Kari Haas Real Estate Team is here for you! “Let’s Sell Your House & Find Your Home!”

Eastside

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King County

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Seattle

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Snohomish County

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This post originally appeared on GetTheWReport.com

For Buyers • For Home Owners • For Sellers • Kari's Blog • Real Estate Market Updates & Insight • June 13, 2022

June 2022 Real Estate Market Update

by Kari Haas

Windermere just released the market statistics from May, so let’s review what’s happening in the real estate market.

The tides of our local real estate market may, at last, be shifting, as buyers find relief in increasing inventory and the frenetic pace of sales slows noticeably. At the end of May, inventory across the 26 counties served by the Northwest MLS had increased by 59%, with 8,798 active listings in the database, compared to 5,533 active listings just a year ago. While this shift may cause concern from some who anticipate a drop in the market, Windermere’s Chief Economist Matthew Gardner had this to say: “What’s more likely to occur is that the additional supply will lead us toward a more balanced market, which after years of such lopsided conditions, is much needed.”

Are Price Hikes Slowing?

While inventory has increased, the meteoric price hikes seen in this first part of 2022 – including again in May’s closed sales – are expected to slow dramatically in the next half of the year. Seattle saw a historic first in April, with the median sold price for a single-family home topping $1 million for the first time. May home sales continued that trend, with the median sold price inching up to $1,025,500, which is a 12% increase from $919,000 in May 2021. King County as a whole mirrored this trend, with the median price of single-family homes reaching $998,888 in May, up from $995,000 in April, and up 14.8% from last May’s median price of $869,975.

Eastside & Snohomish Markets Cool

May closings reveal that the Eastside and Snohomish County didn’t follow this same pattern, instead experiencing a much-needed cooling of prices. On the Eastside, the median sold price for single-family homes fell from $1,722,500 in April to $1,590,000 in May. While last month’s median price is the lowest since January of this year, it was still up 22% year-over-year. The Eastside saw an increase in the percentage of homes that had a price change before selling, hitting 10% in May — double that of April. This is likely due to Eastside sellers needing to adjust their price expectations. While a majority of listings in the area — about 66% — still sold over list price last month, a full month of inventory and a 403% increase in active inventory on the Eastside from February to May means that buyers have more choice and agency than they’ve had in some time. Homes are still selling, but multiple offers are far fewer, and sellers are more likely than before to accept an offer written with contingencies.

Snohomish County also saw a shift in May, likely due to the combination of increasing inventory running headfirst into decreasing buyer budgets thanks to rising mortgage rates. With .85 months of inventory, prices reflected this, with the median sold price for single-family homes falling slightly to $815,000 last month, down from $839,298 in April. However, most homes sold for over list price and quite quickly, averaging less than two weeks on the market. It’s worth noting that these statistics largely reflect home sales that went under contract in prior months when the competition was at its fiercest. The median sold price for Snohomish County condos dropped just slightly to $545,000 last month, down from $550,000 in April. With only two weeks of inventory on hand, the county’s condo market is likely to remain competitive for a while.

A Chance for Buyers

Falling prices in the Puget Sound region may have caused concern for some, but most analysts see this as a necessary and long-overdue price correction. Prices for single-family homes (excluding condos) in King County rose from $775,000 in January to a whopping $995,000 in April, a change of $220,000 in only four months, or 28.4%. Last month, the Eastside saw prices decrease by only 8%, and this was likely only because prices had previously risen so astronomically in the area. Neighborhoods that saw the highest appreciation will likely experience a sharper correction, but this may serve to help some previously unlucky buyers re-enter the market and finally find success.

If you have questions about pricing trends in your neighborhood, or how to make the most of your purchase or sale, please reach out!