King County housing market soars skyward ahead of summer

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After a lull to start the year, the King County housing market is once again headed skyward.

Since February, the median closing price for residential homes in King County has yet to increase by more than 1 percent in any month, even falling by 5 percent in March. That’s not the case for May, where that median price climbed almost 7 percent ahead of the busy summer months.

“We had a pretty robust May,” Windermere Real Estate Chief Economist Matthew Gardner told KIRO Radio’s Dave Ross. “Essentially we saw mortgage rates drop precipitously down to about 4.2, 4.3 percent at the start of the month, down to 4 percent at the end. That got a lot of buyers off the fence.”

With more buyers entering the fray, pending sales in King County jumped 5 percent in May.

Even with that, though, prices are still well below 2018 levels, with the median residential home price falling 3.62 percent year-over-year. Year-over-year prices in King County have dipped in all but one month in 2019. The only exception occurred during February’s slight 0.78 percent bump.

According to Gardner, that’s been driven primarily by an increase in available homes.

“The number of homes are in the market continues to rise, with more choices for buyers,” he noted. “It’s still pretty tight, but we are seeing more inventory.”

While the summer months are typically the hottest both for weather and home prices, Gardner still expects increases to arrive “absolutely at more modest rates through the balance of the year.”

Down south, prices continued to drop in May, marked by a massive 5.24 percent dip in median residential prices in Pierce County.

“If you look at sales prices, let’s say for May — in King County: $645,000. In Pierce County? $365,000. A significant difference,” Gardner pointed out. “Based on affordability, that’s meaning a lot of people are heading down south.”

~My Northwest Staff

US long-term mortgage rates slip; 30-year average at 4.06%

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U.S. long-term mortgage rates fell slightly this week, marking a fourth straight week of declines to lure prospective purchasers in the spring homebuying season.

Mortgage buyer Freddie Mac said Thursday the average rate on the 30-year, fixed-rate mortgage slipped to 4.06% from 4.07% last week. By contrast, a year ago the benchmark rate stood at 4.66%.

The average rate for 15-year, fixed-rate home loans declined this week to 3.51% from 3.53% last week.

With mortgage rates at historically low levels, prospective homebuyers have been rushing in. Applications for mortgage loans jumped 2.4% in the week ended May 17 from a week earlier, according to the Mortgage Bankers Association.

Freddie Mac surveys lenders across the country between Monday and Wednesday each week to compile its mortgage rate figures.

The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates.

The average fee on 30-year fixed-rate mortgages was unchanged this week at 0.5 point.

The average fee for the 15-year mortgage held at 0.4 point.

The average rate for five-year adjustable-rate mortgages rose to 3.68% from 3.66% last week. The fee remained at 0.4 point.

~The Associated Press

April showers brought more good news for home buyers, but inventory is still below ‘balanced’

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Good news, buyers: The latest real estate report from the Northwest Multiple Listing Service shows that more balance is returning to the local market.

During April, housing inventory continued to grow, the rate of price increases slowed in many areas (sometimes even decreasing), and mortgage rates remained low. NWMLS statistics saw a 28.5% overall increase in active listings compared to April 2018, and there was a 5.8% gain in pending sales.

Of course, according to NWMLS director John Deely, principal managing broker at Coldwell Banker Bain that’s not news to many buyers hitting the market. After such a long run as the hottest market in the country, many buyers are starting to get smarter about navigating buying a house.

“With an increased supply of listing inventory, low interest rates, and a positive economic climate, buyers are confident that this is a good time to buy,” he reported, while noting a larger number of buyers are opting out of competing with other buyers.
“This year’s buyers and sellers are approaching the market with more caution and a focus on an analytical, versus emotional approach that has ruled the last several years.”

Increased inventory takes a lot of the responsibility for lightening the load on buyers: according to NWMLS, seven counties had double-digit growth in inventory from a year ago, led by King County, which reported a 78.5% growth, and Snohomish County (up nearly 57%).

That doesn’t mean the market is wholly balanced, unfortunately. As NWMLS report notes, though inventory is up drastically in some areas, there’s still just about 1.7 months of supply across the NWMLS’s 23 county system.
“That is still slim compared to the National Association of Realtors’ data showing a national average of 3.9 months of inventory,” Gary O’Leyar, designated broker and owner at Berkshire Hathaway HomeServices Signature Properties, said. “Despite the increase in inventory over last year at this time in King County, we are seeing a very robust spring market laced with multiple offers in many instances.”

Mike Grady, president and COO of Coldwell Banker Bain, put it thusly: “Buyers now have three-to-four weeks instead of three-to-four days to make a decision, so it’s still quite a ways from a balanced market.”

Zosha Millman, Seattle PI

2019 Homebuyer Forecast ~ Update

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On Tuesday, Realtor.com issued a revised forecast projecting a more robust market than originally predicted through the remainder of the year.

As mortgage rates fall and more homes hit the market, realtor.com has updated its homebuying forecast for the end of 2019. While the original forecast predicted mortgage rates to reach 5.5 percent by the end of the year, the adjusted forecast indicates rates will likely peak at 4.5 percent. The number of home sales, meanwhile, will experience a much smaller drop than initially forecasted. Realtor.com expects them to drop by only 0.3 percent instead of 2 percent.

“The 2019 housing market is different than what we predicted in fall 2018, primarily due to an unexpected drop in mortgage rates in January 2019,” said realtor.com Chief Economist Danielle Hale in a prepared statement.

Courtesy of Realtor.com

Home prices are the only metric not predicted to experience a shift toward affordability. Realtor.com predicts prices will grow by 2.9 percent instead of the original 2.2 percent. But overall, the anticipated slowdown in sales is not likely to take place. With lower mortgage rates, more homes are expected to trade hands than originally predicted.

“We believe 2019 will be characterized by lower, but still increasing mortgage rates that will buoy home prices and sales by boosting buyers’ purchasing power beyond what we initially projected,” Hale said. “This will create a slightly hotter, but still cooling housing market relative to the initial forecast five months ago.”

Veronika  Bondarenko,  Inman

Is spring going to be a Goldilocks housing season for everybody?

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Have we arrived at one of those rare Goldilocks moments in real estate, where the market works well for sellers and buyers, strongly favoring neither?

Maybe. Based on the latest national consumer-sentiment survey by mortgage investor Fannie Mae, American consumers appear to think so. They’re more positive about the overall direction of the housing market than they’ve been in nearly a year. Growing numbers think it’s a good time to sell and a good time to buy. They expect their own personal financial situations will improve this year, and they believe that interest rates for home loans will continue to remain relatively affordable.

Housing and mortgage economists tend to agree. As Michael Fratantoni, chief economist of the Mortgage Bankers Association, told me: Six months ago, “I was guardedly optimistic. Now I’m just plain optimistic.” Mark Fleming, chief economist of First American Title Insurance, says: “So far in 2019, we’ve seen mortgage rates decline and wages rise — both trends work to boost home-buying power and fuel greater market potential for home sales, setting the stage for a stronger than expected” season.

Yet some economists warn that things are not necessarily as rosy as Fannie’s consumer survey would suggest. They point to troubling signs: Total home sales on a national basis continue to decline. That pattern historically has been a leading indicator that prices could actually fall during the year ahead, ending years of nonstop appreciation. Plus, houses are taking longer to sell — many owners are having to cut their asking prices. The days of widespread bidding wars are over.

So what’s really going on, and how do you relate it to your own situation, either as a potential buyer or seller? Some hard facts:

●Prices are still rising, but at a slower rate than in recent years past. The median home listing price hit $300,000 last month for the first time ever, a 7 percent jump over the previous year, according to Realtor.com. Fratantoni predicts price increases will moderate to an average of just 4 percent this year, 3 percent next year and 2.5 percent in 2021.

●A notable percentage of sellers’ asking prices are being reduced.

●Interest rates have been a great stimulus and are key to a strong spring. Lower rates are good for buyers, good for sellers. Last fall, average rates for a fixed-rate 30-year mortgage hovered near 5 percent, according to data from investor Freddie Mac. In the first week of April they averaged 4.08 percent. Homeowners and would-be buyers have responded enthusiastically to the lower rates, sending applications soaring by 18.6 percent during the week ending March 29 compared with the week earlier, according to the Mortgage Bankers Association.

●Inventories of available homes for sale continue to rise — meaning more choices for shoppers, according to National Association of Realtors researcher Michael Hyman. Listings nationwide were up by 3.2 percent year-over-year in February. That’s generally a good sign for buyers because it helps keep price pressures down. But homes for sale in the primary entry segment for first-time home buyers — houses priced under $200,000 — dropped by 9 percent year-over-year, according to Realtor.com, while they grew by 11 percent in the upper price brackets over $750,000.

All this is well and good, says Issi Romem, chief economist for realty marketing and data site Trulia, but the reality is that the housing market is in cyclical slowdown mode. Inventories of available homes may be increasing, but part of the reason is that houses are staying on the market unsold for longer times in many areas. The price cuts and longer days-on-market times reveal that significant numbers of “sellers are facing greater difficulties in selling.”

Romem and Trulia Senior Economist Cheryl Young issued a report last week that runs counter to the cheery outlook prevailing in the industry. “[It] is possible,” they say, that “by fall or next year prices might modestly decline.”

What that means is that the Goldilocks theory and perceptions of balance between sellers and buyers may not be quite right.

Advantage: buyers.

 

Kenneth R. Harney, The Washington Post

Like spring, Seattle’s real estate season is just getting started

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A month out from “peak real estate season” in Seattle, and the local market is still not among the hottest in the country.

That is, likely, more than alright for a number of home-buyers, who might’ve been burnt out from last year’s market which seemed to go nowhere but up in median price. But it’s also a bit surprising — and not confined to Seattle, according to a new monthly report from CoreLogic.

According to CoreLogic’s numbers, Washington’s growth in February 2019 for single-family home prices year-over-year was just 4.6%, only marginally more than the national average, 4%. Both those numbers represent something of a cooldown, according to Dr. Frank Nothaft, chief economist for CoreLogic.

“During the first two months of the year, home-price growth continued to decelerate,” Nothaft said in their most recent report. “This is the opposite of what we saw the last two years when price growth accelerated early.”

That doesn’t mean that housing is suddenly cheap, either locally or nationwide; CoreLogic’s report also looked at the top 50 markets based on housing stock. They found 40% were overvalued, 18% were undervalued, and 42% were at value in February 2019.

And according to Nothaft, the peak season is primed for prices to go up even further.

“With the Federal Reserve’s announcement to keep short-term interest rates where they are for the rest of the year, we expect mortgage rates to remain low and be a boost for the spring buying season,” he said in the report. “A strong buying season could lead to a pickup in home-price growth later this year.”

And while Seattle had some other things on its mind in February that might’ve contributed to a cool down, local analysts agree that it’s shaping up to be a good season too.

After all, even with the Snowmageddon, home prices in King, Snohomish and Pierce counties rose significantly, ending the month-over-month declines that started last May. And as CoreLogic notes in their report, Seattle’s market was considered “at value” in February.

“Similar to previous months, prices are moving upwards the most consistently in exurban areas along the Interstate 5 corridor,” James Young, director of the Washington Center for Real Estate Research at the University of Washington, said in the latest Northwest Multiple Listing Service report.

“Look for prices outside the major urban areas to continue rising as the weather improves and the main selling season arrives.”

~Zosha Millman, Seattle P-I

Seattle-area home price cool-down stands out among U.S. cities

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The housing market is getting better for buyers across the country, but Seattle’s shifting market continues to stand out compared to other regions.

Since the local market peaked last spring, single-family home prices have fallen twice as fast in the Seattle metro area as in any other region in the country, according to the monthly Case-Shiller home-price index, released Tuesday.

The total drop for the full metro area in that seven-month span, from June to January, totals 6 percent. The typical U.S. city actually saw a slight uptick in home values over that period, but prices dropped about 3 percent in the San Francisco and San Diego regions, and about 1 percent each in Portland and Chicago.

There are a lot of ways to slice the data, though they all show the local market falling behind the national one

On a month-over-month basis, Seattle-area home costs slipped down another 0.3 percent in January, a slightly bigger drop than the national average.

On a year-over-year basis, prices still went up 4.1 percent, but that was slightly less than the national average – the first time that’s happened in seven years.

And even those gains are masked by big differences across the region. As has been the case, prices are growing for low-cost homes typically found in the outer areas of the region like Tacoma, and staying flat in higher-cost places like Seattle.

The index, which covers King, Snohomish and Pierce counties, divides homes into three tiers. For the cheapest group of homes (those priced below $380,000), prices increased 8 percent over the year. But the most expensive ones (homes priced over $605,000), saw prices tick up less than 2 percent, or slightly less than inflation.

In the middle tier, prices grew 4.5 percent.

Overall, the last time the local market was this cool was 2012, back when prices were still bottoming out from the recession.

The cool-down trend is a broad one. The national home-price gain of 4.3 percent over the past year represents the smallest since 2015. Across the 20 metro areas tracked by the index, only Phoenix saw bigger price gains in January than in December. Las Vegas was the only region in the country where price increases topped 7.5 percent.

There are signs that the local market has bottomed out, however. More recently, prices in February grew $45,000 in King County, the most ever for a single month in dollar terms, though that bounceback isn’t yet reflected in the national Case-Shiller data, which lags behind by a month.

The current median cost of a single-family house is $655,000 in King County, $475,000 in Snohomish County and $355,000 in Pierce County. The Pierce County figure is tied for a record high, while King and Snohomish are well below their peaks reached last spring.

~Mike Rosenberg, Seattle Times

Market turnaround? King County home prices take biggest one-month jump ever

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King County home prices had dropped $116,000 since last spring, falling to a two-year low in January.

But in February, home prices bounced back as the median sale rose by $45,000 from the month prior, according to new data released Wednesday. It was the first time in eight months that prices actually went up, on a month-over-month basis.

And it was no small increase, either: In dollar terms, it’s the biggest one-month jump since records have been kept.

One month of data does not necessarily guarantee a new trend. But there’s evidence the market could be picking up speed as buyers start slowly coming out of the woodwork: Sales increased 1 percent on a year-over-year basis, a small amount but nevertheless the first increase since April 2018, back when Seattle was still the hottest market in the country. Brokers and buyers are reporting more traffic in open houses and the slow return of bidding wars.

And while prices usually grow in February coming out of the winter doldrums, this year’s bump was triple the average increase from the previous five years. It’s an ominous sign for buyers, given that prices almost always rise the most in spring, which is just around the corner.

King County’s median single-family house sold for $655,000 in February, up 7.4 percent from a month prior but still comfortably below record highs reached last spring, according to the Northwest Multiple Listing Service.

“Everything has picked back up,” said Grant Burton, a Seattle-based Redfin agent. He’s working on two buyer offers right now, and has four pending sales — all featuring bidding wars, which had all-but disappeared in the second half of last year.

“When we noticed the cool-down last spring, buyers were fatigued, they were burnt out on the crazy market and not having enough time to do their due diligence,” Burton said. But then things went in the opposite direction — homes sitting unsold longer, prices being negotiated down — for long enough that buyers have started to feel comfortable enough to come back.

“It helps that there’s more inventory, and having more time (to decide on a house) has been a little bit easier for buyers to digest. And I think maybe people were trying to take advantage of not as many buyers to compete with,” he said.

The market isn’t back to red-hot by any means. On a year-over-year basis, prices rose a bit less than 1 percent. And the number of homes sitting unsold still doubled in that span. Brokers say instead of bidding wars with 10 buyers driving up prices way above the list price — which was common for years — now there might be two or three bidders on sought-after homes, willing to go slightly above list price.

 

 

In Seattle, the median home price hit $730,000, up from $711,000 the previous month but still down from a year ago.

The biggest gains came in Southeast King County, where prices grew from $450,000 to $473,000 in the last month – led by gains of $100,000 in Renton.

But the turnaround hasn’t started on the Eastside. There, prices fell to $900,000 — down from a month ago and a year prior.

Also helping nudge buyers back into the market: mortgage interest rates, which had grown last fall, have fallen back down in the last few months.

Despite a shift in single-family home values, condo prices continue to fall — down 8.4 percent from a year ago across King County, the biggest decline in seven years. The median condo across the county sold for $380,000, down from a record high of $466,000 last spring. The number of condos sitting unsold more than tripled in the past year while sales continued to decline.

The cool-down also continues in Snohomish County, where the cost of the median single-family house fell 2.1 percent from a year prior — the county’s first annual drop since 2012. The median Snohomish house sold for $475,000, down from last spring’s peak of $511,000.

Pierce and Kitsap counties, which have been mostly immune from the recent slowdown as buyers seek out cheaper alternatives, continue to see prices grow.

In Pierce, the median house sold for $355,000 — up 9.2 percent in the past year, and matching the record highs reached last spring. In Kitsap, prices grew 3.7 percent, to $341,000.

~Mike Rosenberg, The Seattle Times

CEOs of Seattle area’s biggest companies: We need more housing for the middle class

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The CEOs of King County’s largest businesses — from Amazon and Boeing to Starbucks and Nordstrom — are pushing for more housing for middle-income workers at a time when professionals like nurses, teachers and cops are increasingly being priced out and new housing is aimed mostly at higher earners.

Challenge Seattle, a group of 17 local CEOs led by former Gov. Christine Gregoire, released a report Wednesday that amounts to a call for action on more housing aimed at households making between $54,000 and $108,000 (or less for individuals). The group also includes the chief executives of Microsoft, Costco, Zillow, Weyerhaeuser, Alaska Airlines, Expedia and the Bill & Melinda Gates Foundation, among others.

Except for Microsoft, the companies thus far have not contributed their own financial resources to spur investment in new housing. Instead, they are advocating for things Gregoire concedes should prove challenging to implement, like zoning reform and changes to real-estate investment that could lower profits.

The basic problem is this: Over the past decade, local home prices and rents have soared twice as fast as incomes. The biggest impact has been on low-income residents, but now about 40 percent of middle-income earners spend more on housing than they can afford (defined as more than 30 percent of their income).

Seattle and a couple of suburbs have seen an epic building boom, yet new housing aimed at middle-class workers has been almost nonexistent.

This decade, 85 percent of new county apartments have been luxury units where rents top $2,000 a month — developers do that because it’s the most profitable. On the other end, some nonprofits and public agencies have been building subsidized housing aimed at the lowest wage earners, helped by tax credits and gifts that make those projects work financially.

The report outlines some of the effects: A local utility, apparently Puget Sound Energy, has just three after-hours responders left living in the service area that spans Renton, Bellevue, Kirkland, Mercer Island and Newcastle, slowing response times. Local cops, even the police chief of Bellevue, have had to move to cities outside where they serve. The share of commuters driving at least 90 minutes one-way has grown 70 percent this decade.

“If a community cannot provide housing to those who are the heart and soul of it — those who respond to disasters, provide health care, teach our kids and so on — then what kind of community is that to live in?” Gregoire said in an interview.

The group asks local governments to relax zoning laws to allow for more density, especially near transit. That will be a tough sell in suburbs where housing construction is already weaker than its historical average as residents fed up over issues like traffic and noise fight to protect single-family neighborhoods. However, mayors of nine local suburbs, at the urging of Challenge Seattle and Microsoft, recently signed a letter committing to consider such changes.

The CEOs also ask governments to reduce impact fees that help fund projects to offset some of the issues development exacerbates, like traffic, to reduce construction costs. It wants the state to relax laws that make it easier for condo owners to sue developers in hopes the change would spur more condo construction, an effort already underway in Olympia this session. And it wants tax credits used to finance low-income projects to be extended to projects aimed at middle-income earners.

The group also wants to challenge the real-estate industry to essentially make less money in the short term, which figures to be an even harder sell. For instance, it wants socially conscious banks and investors to make loans for middle-income housing with below-market interest rates; asks equity partners that invest in developments in exchange for a stake in the project to receive their profits in smaller chunks over a longer time frame; and wants lenders to provide short-term loans for land, the riskiest time for investors to give out loans because projects aren’t certain at that stage.

Microsoft, a member of the coalition, made a big splash earlier this month with plans for a $500 million housing fund, including $225 million in loans to help finance middle-income housing at below-market interest rates. But no other member of the group has committed to spending its own money on the problem, even as the housing crisis affects their employees and communities where they are based.

Gregoire said the group will consider in the coming weeks creating a housing lending fund similar to Microsoft’s, with its member companies and perhaps other local businesses and even private citizens eligible to contribute.

“We’re by no means done,” she said.

~Mike Rosenber, Seattle Times

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Newest data predicts return to balance for Northwest housing market

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The latest data and estimates from a handful of Northwest Multiple Listing Service real estate professionals paint a picture of a much friendlier housing market for buyers in 2019.

As 2018 rolled to a close, the housing market in the Northwest saw a noted increase in eager sellers.

“Buyers in December were reaping the benefits of market-weary sellers who were willing to give up part of their bloated home equity to make a deal and move on,” said John Deely, principal managing broker at Coldwell Banker Bain, in the NMLS report.

That was confirmed by members across the NMLS, including Windermere Real Estate President OB Jacobi.

“The year ended with more of a splutter than a bang as home price growth continued to slow in December,” he noted.

That was rounded by a median closing price for houses of just $639,000 in King County, down from the 2018 high for the county of $726,275 back in May.

Ultimately, according to Jacobi, this is “bringing us closer to a more balanced market,” predicting slowed growth for home prices through 2019 (around 5.5 percent he estimates).

The reasoning for this drop can be found in a variety of factors, including unsustainable home price growth, rising interest rates, and a drop in consumer confidence.

The outlook for the year ahead continues to look positive for home-buyers, who may find that acting quickly might serve them best.

“Buyers should act now, act deliberately, act decisively, and act in conjunction with an experienced real estate professional,” advised Dick Beeson, the principal managing broker at RE/MAX Northwest in Gig Harbor.

Among the buyers in the market will be plenty of first-timers, as more millennials get married, have children, and build their respective households.

“Although many of them will face significant obstacles to buying due to student debt, lack of down payments, and Seattle’s high-priced housing, this group is likely to buy more homes in 2019 than any other demographic,” Jacobi predicted.

That being so, pushing out to more remote areas outside of Seattle’s expensive market is starting to drive up prices everywhere. The NMLS’s report noted that demand in those outlying markets has driven up prices in counties like Cowlitz, Lewis, and Thurston 12.4 percent over the last year.

Meanwhile in King County, condo listings have quadrupled in the last 12 months, as buyers look for alternatives to pricier houses.

All this remains consistent with a prediction from Redfin at the end of the 2018, where they expected “demand to cool the most” in 2019 for a handful of major markets across the country, including Seattle, Portland, and San Francisco among others.

~My Northwest Staff