Dip in Seattle home prices leads nationwide slowdown


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For months, Seattle-area home prices have been teetering between growth and decline.

They just dropped over the edge.

The cost of a single-family home in May dipped 1.2% from 12 months earlier, the first negative change in a major U.S. city in a number of years, according to the latest S&P CoreLogic Case-Shiller data.

“Whether negative YOY (year-over-year) rates of change spread to other cities remains to be seen,” said Philip Murphy, managing director at S&P Dow Jones Indices, in a statement. “For now, there is still substantial diversity in local trends.”

Nationwide, home prices have been slowing their gains for the past year — even in the Southwest, where the market is growing fastest. Las Vegas, which overtook Seattle as the nation’s hottest housing market last June, saw gains of 6.4%, still a slight decline over last year.

But an overall fall in Seattle-area prices masks the trend that north and south of Seattle, the market is only getting hotter. In Tacoma and Pierce County, median house prices rose 7.3% in June from 12 months earlier, according to data from the Northwest Multiple Listing Service. (The Case-Shiller index lags by one month and is a composite of prices in King, Pierce and Snohomish counties.) And prices in Kitsap and Skagit County both posted double-digit price increases.

Some of that variation is because prices for less expensive homes, which tend to be outside of Seattle, are still rising.

The Case-Shiller index divides homes into three even tiers: homes that cost more than $625,000, those that cost less than $400,000 and those in between. Of the three, in the Seattle metro area only homes in the least expensive tier posted price increases in May, a 2.74% jump since last year.

Northerly Skagit County, where median home prices hover in the low tier at $380,000, saw an 11.8% increase in prices from June 2018, according to the Northwest Multiple Listing Service data. Realtor Duane Gish, who’s been selling homes in Skagit County for 19 years, said that five years ago the homes he sold were in the $300-400,000 range. Now, they’re closer to $500,000.

While the Northwest Multiple Listing Service data charts growth in some ritzy suburbs like Bellevue and Mercer Island, that’s not the case for the city itself. Prices in the middle tier of real estate are stagnant, the Case-Shiller data shows, while the top tier has been losing value since early this year.

Those top two tiers include almost all the single-family real estate in Seattle proper, where the median home price is $714,600, according to Zillow.

Kelly Meister, a broker at Compass in Seattle, said buyers “don’t have the sense of urgency they did last year,” when prices for top-tier real estate were growing in the double digits.

Right now, she said, “the Seattle market is like a microwave: Super hot in some spots and cold in others.” Houses that would have been “a major grab” last year in neighborhoods like the Central District and Columbia City aren’t getting as much attention in a slower market.

Meanwhile, in tony neighborhoods like Mount Baker, Magnolia and Laurelhurst, there’s still a great deal of demand for “homes that check all the boxes,” said Barbara Shikiar, a Windermere broker working primarily in Northeast Seattle.

“But homes that are more idiosyncratic, in this type of market,” she said, “those tend to linger.”

Nationwide, the Case-Shiller index showed gains of 3.4% over the past 12 months. Growth is slowing because “buyers are no longer willing to pay any price,” Zillow economist Matthew Speakman said in a statement.

Buyers, he said, “took a breather … The fact that buyers — and prices — slowed their roll right through the middle of home-buying season indicates just how few homes are on the market.” And, he said, high land and labor costs mean builders aren’t putting up inexpensive homes fast enough to woo first-time buyers.

Even though home prices in Seattle are dropping, they remain high. A typical home in Las Vegas, the nation’s hottest market, might sell for $274,000, according to Zillow’s Home Value Index, less than half the median Seattle value.

~Katherine Kashimova Long, Seattle Times

After a brief pause, Seattle-area rents headed back up

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Last October, when Taylor and Ally Condrin went looking for an apartment in the Issaquah area, the rental market seemed almost friendly. The young couple found a 3-bedroom, 2-bath unit that was advertised for $2,200, but the property manager was so eager to sign a lease that they got a free month’s rent.

What a difference a year makes. Today, identical units in the complex are renting for around $2,800, says Taylor, a 27-year-old who owns his own digital-marketing agency.

Starting around last summer, much of the Seattle-King County market seemed to hit a pause in rent increases. So many new apartment buildings had come on line that supplies were finally catching up to demand. In dozens of neighborhoods, rents leveled off or actually began falling.

Between June 2017 and June 2018, according to Zillow, the median price across all rental properties — from apartments to rental homes — in King County fell by 0.5%, to $2,383. In Seattle, median rent fell by 1.5%, to $2,486, with the median 2-bedroom unit going for $2,100.

But that pause is now history. Aside from a few pockets of oversupply — found mostly in high-end neighborhoods such as Belltown and downtown Seattle — the regional rental market is swinging back in favor of landlords.

In Seattle as a whole, the median rental price across all properties in June was up 3.3% year over year, to $2,569, according to Zillow. In Bellevue, median rent climbed 3.9%, to $2,835, in the same period, while in King County, the median rent jumped 3.6% over last June, to $2,469.

The market “has digested that extra supply,” says Zillow economist Jeff Tucker, and nearly all the data indicates “that rents are starting a slow march back upward.”

What’s not clear yet is whether that slow march will continue, or whether the region will snap back to the torrid hikes of 2014-2016, when many neighborhoods in the region endured yearly rent increases of 10% and more.

Certainly, in some parts of the broader Puget Sound region, renters are already seeing substantial increases, and many didn’t even see much of a break in 2018. In Bremerton, median June rent was up 6.4% year over year, to $1,641, according Zillow. In Tacoma, it was up 6.7%. to $1,714, while Everett saw a 7.4% increase, to $1,935.

In tiny Sultan, on State Highway 2, June rents were up 7.7% over last year, to $1,887. “It’s ridiculous,” said Debbie Copple, executive director of the Sultan-based Sky Valley Chamber of Commerce. Rentals “are almost impossible to find — almost as soon as they come on the market, they’re snapped up,” she said, adding that the scarcity means landlords “can pretty much charge anything they want.”

Whether Seattle and close-by cities follow suit depends on several factors, experts say.

One is how quickly apartment builders can keep bringing new apartments onto the market.

According to RealPage, a housing market data firm, as of June, Seattle had 19,345 apartment units in the construction pipeline, the fifth most of any city in the United States. But that’s a 19% decline from June 2018, when 24,000 apartment units were under construction, according to RealPage.

The bigger unknown is demand. There’s increasing evidence that last year’s dip in rents wasn’t just about new supply: Demand also appears to have tapered. Data from RealPage shows that the number of newly occupied, or “absorbed,” rental units during the first half of 2018 was down 19% from the same period in 2017.

That echoes census data showing that in 2018, for the first time this decade, more people left King County than moved here from within in the U.S. Similarly, 2018 marked the second annual decline in the number of driver’s licenses issued to new King County residents from out of state, according to an analysis by The Seattle Times.

And, significantly, 2018 also saw a sharp drop-off in completions of office space, which is often an indicator of expected job growth (the average employee represents 150 square feet of office space) and, by extension, housing demand.

In 2018, Seattle got 1.3 million square feet of new office space, which is roughly half of what the city averaged for each of the three prior years, according to the Seattle office of CBRE, a commercial real estate services and investment firm.

But that lull in demand is over. CBRE estimates that Seattle will see 3.3 million square feet of new office space in 2019 and another 2.8 million square feet in 2020.

Apartment absorption rates have also recovered, rising by 42% in the first half of 2019 over the same period in 2018, according to RealPage.

As demand for rentals has recovered, vacancy rates have plummeted. Between December 2018 and June 2019, Seattle’s vacancy rate fell from 3.7% to 2.7%, according to a regional rental survey by O’Connor Consulting Group and Commercial Analytics.
In some neighborhoods, demand has pushed vacancies even lower. In Greenwood, vacancy dropped from 4.7% last June to 1.0% this June, according to the O’Connor/Commercial Analytics survey. In Northgate, year-over-year vacancy fell from 3.4% to 1.5%. In Kirkland, it dropped from 4% to 1.8%

The shifting market is translating into higher rents, and, for many renters, a case of sticker shock. Julie Cooke says she and her husband decided to move from their 2-bedroom Shoreline apartment after learning rent would go up from $1,655 to $1,890. “It’s just too expensive,” said Cooke of the 14% increase.

Even in South Lake Union, which has seen a veritable explosion of apartment building in recent years, vacancies have fallen from 3.4% to 2.7%–a tightening that is gradually returning bargaining power to landlords.

Eduardo Esparza, a 30-year-old tech employee who lives in South Lake Union, says prospective tenants who want to live near where they work are once again resigned to paying $2,000 and more for “350 square feet [of studio] with tiny window looking out at another huge building.”

RealPage chief economist Greg Willett believes Seattle-area rent growth will remain “relatively sluggish” at around 2% to 3% over the next two to three years, roughly in line with national trends. “There will be too much new supply moving through lease-up for rent growth to accelerate to the robust levels sustained in 2011 through 2016,” he predicts.

Zillow forecasts somewhat sharper increases. By June 2020, Zillow expects median rents to jump by 4.4% in Seattle, 4.9% in Bremerton, 5.2% in Tacoma, and a painful 9.6% in Everett.

But housing experts are also keeping an eye on several possible wild-card factors.

One is future employment growth. Although companies in King, Pierce, and Snohomish counties are still adding jobs at a rapid clip, new job postings in June were actually down 4.5% from last June and 6.2% from June 2017, according to the state Employment Security Department.

Likewise, office-space completions in Seattle are expected to drop somewhat in 2021, to 2.3 million square feet, according to CBRE. That drop is partly a reflection of the longer timeframe, as not all developers know what they’ll be building two or three years out, says Jon Hallgrimson, vice-chair at CRBE’s Seattle office.

But Hallgrimson says the predicted drop-off may also reflect a desire by many large Seattle employers, including Amazon, Facebook, and Google, to move some business operations to the Eastside.

~According to CBRE, the Eastside now has a stunning 11.8 million square feet of new office space in the construction pipeline — 6.2 million square feet in Bellevue alone. That’s a huge increase for a region that has averaged around half a million square feet a year for the last decade, says Hallgrimson.

Another unknown: How many renters will decide to keep renting, as opposed to taking the plunge into homeownership.

Brian O’Connor with O’Connor Consulting says that the percentage of Seattle-area residents looking to buy instead of rent has grown from almost nothing in the aftermath of the recession, when few people wanted to buy, to 50% today.

As this growing population of prospective homebuyers moves out of the rental market, their departures may be sufficient to help blunt rental demand and keep rents from soaring.

But outside Seattle and the Eastside, chances for a kinder, gentler rental market may not be as good. In many outlying communities, existing rental stock is now being snapped up by newcomers, many of them residents priced out of the big urban markets.

~Paul Roberts, Seattle Times

 

 

Key Indicators Point to Strong Summer Housing Market

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KIRKLAND, Washington (July 8, 2019) – Inventory, pending sales and prices all increased during June compared to a year ago, according to the latest report from Northwest Multiple Listing Service. The same report, which covers 23 counties in Washington state, shows year-over-year drops area-wide in both the volume of new listings and closed sales.

“Clearly we now see that the market is moderating – that is we’re definitely moving from a ‘hyper-market’ to one where a correction is underway compared to last year,” remarked Mike Grady, president and COO of Coldwell Banker Bain. “While it’s the best time to buy that we’ve seen in some time, and buyers are getting some relief, it is still a seller’s market,” he added, noting some buyers are experiencing multiple offer situations, or considering inspection waivers, or are even forced to consider markets outside King County for affordability.

Three Northwest MLS directors from Pierce and Kitsap counties suggest their counties are attracting some of the frustrated buyers from King County.

“The darling of the Puget Sound real estate market is Tacoma/Pierce County,” stated Dick Beeson, principal managing broker at RE/MAX Northwest Realtors in Gig Harbor, pointing to low inventory and appreciating values. “The secret is out about Pierce County,” agreed Mike Larson, the president at ALLEN Realtors in Lakewood. “You can buy twice the house for about half the price. You just have to be willing to deal with the traffic if you work north or south of here,” he proclaimed.

“The Kitsap market continues to be robust and is maintaining its velocity in sales,” added Frank C. Leach, broker/owner at RE/MAX Platinum Services in Silverdale. He believes Kitsap County will continue to be strong given its economic foundation together with its affordability factor and quick access to Seattle, but noted it is constrained by available inventory (currently at 1.4 months of supply).

MLS figures show the median price for single family homes and condos that sold last month in King County was $637,675. In Pierce County it was $372,500, about 58 percent of the King County price, and in Kitsap County it was $387,000, about 60 percent of the sales price in King County.

System-wide prices increased more than 3.5 percent from a year ago, from $425,000 to $440,000, although four counties registered declines, including Douglas, Ferry, Jefferson, and King. June’s median price was unchanged from May.

At midyear, the overall median price was $424,517, which compares to $405,000 for the first six months of 2018, an increase of 4.82 percent.

“As long as interest rates stay low and people seek value outside of King and Snohomish counties, house prices should continue their upward momentum,” stated James Young, director of the Washington Center for Real Estate Research (WCRER) at the University of Washington.

House hunters had a broader selection to consider as inventory at month end totaled 16,800 active listings, about 9.5 percent larger than at the same time a year ago. Brokers added 11,977 new listings during the month, a drop from both a year ago when they added, 13,153 new listings, and from May, when they added 14,689 new listings.

About half the counties reported gains in inventory, led by King County where the selection grew nearly 32 percent from a year ago.

“June listing inventory in King County exceeded the levels posted for this month over the past six years,” said John Deely, principal managing broker at Coldwell Banker Bain. “Currently, we are approaching 2012 listing inventory levels,” he noted.

Northwest MLS figures for King County show there were 5,931 active listings at the end June, the highest for that month since 2012 when the selection totaled 6,500 listings.

“Every summer, we see the highest level of new listings and homes going under contract. After the surge of new listings in May, areas close to the job centers saw listings return to the normal seasonal pattern in June,” commented J. Lennox Scott, chairman and CEO of John L. Scott Real Estate.

The Northwest MLS report indicates there is 1.76 months of inventory area-wide (matching May), with eight counties having less than two months of supply.

OB Jacobi, president of Windermere Real Estate, commented on a “considerable rise” in the number of listings priced above $1.5 million in King County. “This could be because of the changes to the Washington State Real Estate Excise Tax (REET) that take effect in 2020, which will significantly impact the tax burden of sellers whose homes sell for more than $1.5 million. I suspect we’ll see even more owners of higher priced homes trying to sell in the coming months in order to avoid the hike in taxes they’ll have to pay starting next January,” he stated.

The new tax measure changes the REET rate from a flat 1.28 percent of the selling price to a graduated rate for real property sales, with exceptions for timberland and agricultural land.

Commenting on the latest report from Northwest MLS, WCRER’s Young said “The perfect storm of low interest rates and falling inventory continues along the I-5 corridor, with double-digit house price increases also continuing.”

Beeson says the “new normal” inventory levels of 2-to-3 months of supply, rather than the traditional 4-to-6 months, makes Puget Sound different than most of the rest of the nation. In Puget Sound, homes sell twice as quickly as a traditional ‘normal’ market,” he stated, but acknowledged, “It feels kinda like things have slowed down. Folks are taking deeper breaths.”

Several brokers commented that buyers are becoming more deliberate in their searches and offers.

“Market savvy buyers are taking advantage of premium location and value pricing due to increased inventory. Price reductions are more commonplace as sellers align their expectations with today’s market,” according to Deely. He said demand remains strong, but “buyers are methodical in their search, and taking more time to jump into an offer.” Also, he noted there have been fewer multiple offers and fewer all-cash buyers in the mix when a listing has several buyers lined up to compete.

Buyers are more “tuned-in” than ever before, Beeson remarked, adding, “Buyers today have educated themselves on the vagaries of the home buying process and are better prepared to meet sellers on firmer ground. They are attentive, vigilant, and discerning toward the marketplace, knowing what they want in a home – and they are willing to wait longer to get it.”

Leach concurred. “Buyers are being very careful about what they buy and at what price,” he stated.

Commenting on King County’s numbers for new listings and new pending sales, Dean Rebhuhn said multiple offers are still occurring in the median price range, noting the 1.9 percent dip in year-over-year prices. “Buyers are seeing higher home availability while taking advantage of low interest rates.” Rebhuhn, the owner of Village Homes and Properties in Woodinville, believes those factors, coupled with summer weather and job creation will “continue to create a very active market for buyers and sellers.”

Scott also expects a “quick-action market” for many buyers when new listings come on the market, especially with interest rates in the upper threes. Looking to the months ahead, Scott anticipates strong sales activity close to job centers, while the surrounding area will experience intense, “frenzy-level sales activity” in the more affordable to mid-price ranges.

Larson believes “the big three” – interest rates, the economy, and consumer confidence – all point to a strong summer for the housing market, while contrasting King and Pierce counties. “For years, King County has been a bit like a top fuel dragster – high performing, thrilling, but maybe a bit temperamental. It got the headlines and values skyrocketed, but now it’s experiencing a bit of a hangover. Pierce County’s market is more like a diesel truck – steady, consistent, and less prone to dramatic market changes.”

Larson also offered advice for passive and first-time house hunters. “Every buyer, particularly at the entry level, needs to understand they can’t simply dip their toe in the water when competing for a home. They need to do a belly flop. They need to put their best foot forward right out of the gate.” He also urged buyers to work with a Realtor who understands the market and who can guide them through the process.

Several representatives from Northwest MLS also suggested sellers need to learn the “new normal” as Beeson calls it. “If you overprice your home or fail to get it in good condition for selling, it will cost you time and money in the end, he stated, adding, “Seller’s can’t afford to be tuned out to what the market is saying.”

For sellers in Kitsap County, broker Frank Wilson says pricing is becoming more important. “Our county is starting to feel some of the changes King County has experienced. List price has to more accurately reflect what the home will sell for in today’s market,” explained Wilson, Kitsap regional manager and branch managing broker at John L. Scott Real Estate in Poulsbo. Although Wilson reported multiple offer situations and good traffic at open houses, he emphasized sellers “can no longer chance shooting for the moon, pricewise, or they risk getting stuck on the launch pad.”

Condo activity was mixed during June with year-over-year declines in the number of new listings added to inventory, as well as in the volume of pending and closed sales. Total inventory grew more than 41 percent, although at month-end there was only about 1.9 months of supply. Prices overall were nearly unchanged from a year ago. The median price for June’s sales was $367,000, up about a percentage point from a year ago when the median price was $363,500.

~NW Multiple Listing Service

Seattle City Council votes to reduce barriers to building ADUs

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On Monday, the Seattle City Council approved legislation that could make it easier to build accessory dwelling units (ADUs)—like backyard cottages and mother-in-law apartments—along with language that would rein in McMansions in single-family zones.

More specifically: The legislation allows two ADUs on one lot instead of one, and axes a requirement for off-street parking, a sometimes onerous and expensive hurdle for homeowners to jump. Homeowners were previously required to live on the lot containing an ADU in order to rent it out, but the legislation eliminates that requirement, too.

ADUs gain more livable space, too: The ordinance increases maximum ADU size from 800 square feet to 1,000, and slightly increases the allowable height.

It also sets the floor-area ratio (FAR) limit in single-family zones, which limits how much square footage a house can have in relation to its lot, to .5—for example, a single-story house could only have a footprint of half the lot, or a quarter for a two-story house with equal square footage.

City councilmember Mike O’Brien, who represents District 6 on the Seattle City Council and has championed the legislation for years, said in advance of the vote that despite record growth in Seattle’s population, “We’ve seen the population in our single family zoning decline over the years because there’s not really opportunity to add capacity in single family zones.”

 

While it’s been in the works for longer, the major idea behind ADU reform is around affordability: ADU reform was among the recommendations of the Housing Affordability and Livability committee (HALA) in 2015.

It also paves the way for more homeowners to participate in programs like the Block Project, which builds backyard cottages to house those experiencing homelessness.
The final legislation made some exemptions to the FAR rules. Up to 250 square feet of garage won’t count against it. Neither will up to 35 square feet of dedicated bike parking. Houses that already exist on the lot get a one-time pass to expand up to 20 percent past the limit so as not to step on planned remodels. Basements don’t count either.

Here’s where the ADUs come in: They don’t count against FAR, ideally encouraging more of them to be built.

Single-family zoning in Seattle is currently extremely permissive, and has no FAR limit—essentially, you can build as massive of a home as you want, as long as it’s just one home. This allows one major factor in what’s colloquially known (popularized by Curbed columnist Kate Wagner) as McMansions to thrive: being dramatically out-of-scale with the neighborhood.

This legislation has been in the works since 2014, but it’s been tied up in appeals. Most recently, a city study released back in October was appealed by the Queen Anne Community Council (QACC)—led by Marty Kaplan, a longtime opponent of backyard cottage reform. (The same group was successful in appealing an earlier impact study in 2016.) A hearing examiner cleared the legislation to move forward back in May.

There are a few concerns that have arisen during the heavy public comment around this process, though. The loudest is probably worries about parking impacts—that nixing the off-street parking requirement will result in crowded on-street parking. Other themes include worries about developer speculation in light of removal of the owner-occupancy requirement, and whether the legislation will actually create more affordable housing and not just vacation rentals like those listed on Airbnb.

~Sarah Anne Lloyd, Curbed Seattle

Seattle makes affordable housing mandatory in upzoned neighborhoods

Architects and developers building across much of Seattle will soon have to meet the city’s new Mandatory Housing Affordability (MHA) requirements, a set of rules passed with a spate of recent comprehensive zoning changes designed to ensure that “new commercial and multifamily residential development contributes [new] affordable housing.”

The MHA regulations were approved this spring and are expected to add over 6,000 new low-income housing units to the city’s housing stock over the next decade. The changes are part of the city’s Housing Affordability and Living Agenda, a three-pronged effort undertaken by city agencies several years ago to increase housing supply in order to stem escalating rents and property values across the thriving region. The fiercely contested changes in land use will allow for a greater level of residential density in many of the city’s neighborhoods and will ask builders to either include affordable housing on-site or pay into a general fund that can be used by city agencies to create new affordable housing in other areas.MHA-Maps_Credit_Courtesy-City-of-Seattle-1-645x895

The new regulations span five categories of development density, from low-rise detached and row house neighborhoods to taller mixed-use districts where buildings will be allowed to rise to a height of 95 feet or more. The efforts will upzone roughly 6 percent of the city’s single-family zones. Single-family zones ultimately make up over 80 percent of the city’s residential areas.

MHA regulations, according to planning documents provided by the City of Seattle, will be pegged to the degree of upzoning that takes place: Under the plan, areas that have been upzoned most significantly will be required to add a relatively higher proportion of new affordable housing. The required fees administered in lieu of on-site affordable housing construction will start at $5.58 per square foot for projects located in low-rise areas outside downtown Seattle and will go as high as $35.75 per square foot for larger mixed-use developments, according to city agencies.

~Antonio Pacheco, The Architect’s Newspaper

 

Would-Be Sellers Appear Ready to Boost Inventory

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There’s a fresh sign that more inventory may be coming to the market, as homeowners deepen their faith in selling. The percentage of consumers who are “strongly” optimistic that now is a good time to sell hit 46% in the second quarter of this year, a significant increase from the 37% who said the same thing in the first quarter, according to the National Association of REALTORS®’ Housing Opportunities and Market Experience Survey, which was released Wednesday.

Home prices have begun moderating in recent months, which may be prompting homeowners to consider selling sooner in order to cash in before prices go any lower. “With home price appreciation slowing, home sellers understand the days of large price gains from holding an extra year are over,” says NAR Chief Economist Lawrence Yun.

Homeowners have been putting off a move in recent years, reluctant to give up low interest rates on their current loans and fearing the difficulty of finding another home to buy amid an inventory crunch. The inventory problem, though, could be eased if more would-be sellers decide to put their homes up for sale.

Other findings from the HOME Survey include:

Not just seller optimism. More Americans also believe now is a good time to buy. Thirty-eight percent of respondents to NAR’s survey say they “strongly agree” that now is the right time to purchase a home, and 27% “moderately agree.” Thirty-five percent say it’s not a good time to buy, according to the survey.
Confidence in the overall economy. A rosier economic outlook may be generating some of the optimism in the housing market. Fifty-five percent of consumers now say they think the economy is improving, up from 53% in the first quarter of 2019. Consumers who are the most upbeat about the economy tend to earn $100,000 or more and reside in rural areas, the survey shows.
Generation X offers important clues. The most notable change in consumer economic perceptions, Yun says, is among Gen Xers, who have tended to face the most financial pressures in recent years compared to other age groups. Fifty-three percent of Gen Xers say they believe the economy is improving, up from 50% in the first quarter. “Many in the Generation X population find themselves needing to purchase multigenerational homes,” Yun says. “Also, they may be feeling financial stress from caring for aging parents and children of all ages. Nonetheless, they have an optimistic outlook about the future.”
Mortgage rates boost sales. Overall, of the respondents surveyed who don’t currently own a home, 27% say they believe it would be difficult to qualify for a mortgage due to their financial situation; 30% said it would be somewhat difficult to qualify. Mortgage affordability showed some improvement in the second quarter, and the trend likely will continue, Yun says. “Lower mortgage rates, along with job and wage growth, will lead to an increase in sales and thereby contribute positively to economic growth in the upcoming quarters.”

~Realtor Magazine

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