Inventory of for-sale homes across the U.S. improving

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While home prices are still rising, the pace of increased values has been slowing in recent months, as has the number of home sales. The long drought of listings, at least on a national basis, has finally broken, with Realtor.com reporting that new listings were up 4 percent in October 2018, compared with October 2017.

The majority of markets across the United States saw an increase in the number of homes for sale this October, compared with October 2017, with increases of more than 32 percent in San Jose, Seattle, San Francisco and Nashville.

One more indication that the housing market might be getting better for buyers is that the number of price cuts on homes for sale recently reached the highest level since 2014, according to researchers at Trulia. The number of price cuts was unchanged for the first half of 2018, compared with the first half of 2017. But in July and August the researchers began to see more price cuts, compared with those months in the previous year.

Price cuts vary widely by neighborhood and often are clustered in specific areas or price ranges. Typically, Trulia found that more price cuts can be found in more expensive neighborhoods.

The researchers found that there were more price cuts this August, compared with August 2017, in 63 of the largest 100 metro areas. In the Washington region, though, price cuts actually declined slightly, from 19.7 percent of all homes in August 2017 to 18.9 percent of all homes in August 2018.

~Michele Lerner, Washington Post

Fall real estate cool-down gives negotiating power to the buyers

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If you’re in the market to buy a house, you could be in luck. Compared to this time last year, house hunters have a better selection — and perhaps more negotiating power.
Even with the usual fall decline in houses going up for sale, there are still 4.7 percent more houses for sale now than October 2017, according to the Northwest Multiple Listing Service’s (NWMLS) latest report.

“The increase in standing listing inventory brought more choices to buyers and the meteoric price increases of the spring market have slowed,” MLS director John Deely, principal managing broker at Coldwell Banker Bain in Seattle, said. “Sellers responded by capturing available buyers with competitive pricing or by quickly adjusting pricing.”

Home and condo prices are also the lowest they have been in months, averaging $613,509 in King County, which is down $93,741 compared to last month. Homes are also on the market longer, which can leave sellers antsy to close — and ready to strike a (relative) bargain.

“Buyers are catching on to their newfound ability to negotiate. For the first time since 2012, closed sales system-wide rose from September to October,” said Robert Wasser, a branch manager with Windermere Real Estate in Bellevue.
Don’t get too excited by that drop, though — prices are actually up $48,509 compared to October of last year. Although, that increase could be good news for both buyers hoping to invest and sellers looking to make a buck in the long run.

“Home prices in King County are up nearly 8.6 percent year over year, so we’re still experiencing significant appreciation,” Mike Grady, the president and COO of Coldwell Banker Bain, said in the NWMLS report. “And sellers can still expect to get good prices. All this without the frenzy. A win-win.”

~Natalie Guevara, SeattlePI

Was this House Remodeled? How to Spot Home Repairs When You’re House Hunting

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Searching for that perfect fixer-upper to call home can be a bit overwhelming, can’t it? As a prospective buyer you’re really forced into some heavy duty priority juggling. Neighborhood, sale price, house features, yard features, cost of improvements and as-is condition are just a few of the big ones.

What about identifying problematic old repairs? What was done? Was it done right? Is something being covered up?

Even if you have a real estate professional on your side, and you should, the decision as to when and where to make an offer falls squarely on your shoulders. Once you’ve made your offer and the seller has accepted it, chances are you’re in for some expenses. Home inspectors, termite tests, surveys and more are usually at the buyer’s expense.

What if you had a little bit of knowledge that could help you narrow the field? What if you could recognize potential problem areas before making the offer and investing in an inspection?
While certainly not a comprehensive list, there are a few things that might alert you to a previous repair.

Wall or Ceiling Texture
Wall and ceiling surfaces can be very hard to match exactly. Look closely at the texture on the walls and ceilings, both within a room and from room to room. If you see a difference, you’ll know that someone did some wall or ceiling replacement somewhere along the line.

Mismatched Floorboards
Another hard-to-match surface is hardwood floors. Pay close attention to the floors as you walk through a prospective purchase. Look for “lines of demarcation” that show a difference in flooring. Look at the color, the wood grain, width of planks, visible nails, etc. Even a perfectly repaired floor usually leaves some telltale sign.

Newer Electrical Switches and Outlets
Also take a look at components like electrical outlets and switches. Are they different from one room to the next. If so, it’s a sure sign some remodeling or repair work has been done.

New Roofing
Sometimes it pays to have a closer look at things that are seemingly “wonderful upgrades,” such as a new roof, new siding, etc. These are certainly good things in and of themselves, but not if they are merely a Band-Aid atop a more serious problem.

What You Want to Know
You may be wondering what the point of all this is. The bottom line is that these little indications just give you something to ask about. They give you a reason to learn more about the house itself and the work that has been done. The more you know before you make your offer, the less likely you’ll be to get into a contract on a house that you really don’t want.

If there’s been a new roof, ask if there were leaks. Ask to see up in the attic and look for large sections of replaced roof decking. If you see that, look closer for rotten framing or damaged ceilings below.

If a wall or ceiling looks to have been repaired, ask why. What was done? Was there damage repaired or was it a remodel? Was the contractor who performed the repairs licensed and did he or she offer any sort of warranty on the work? Is that warranty transferable to a new owner?

Avoid Putting Sellers on the Defensive
One word of caution: Be careful not to sound like you’re just looking for a problem for the purpose of beating the price down or making trouble. It’s a fine art to ask about these things without putting the seller on the defensive. Once that happens, the deal can go south very quickly.

It’s worth the risk, however, to really know what has gone on and why. So keep your eyes and ears open! Previous repairs and remodels are part of a house’s history (if it’s more than a few years old), so don’t let your newfound eye for detail turn you away. Just enjoy the process of learning the history of a house.

~Tim Layton, RealEstate.com

Eastside Market Review – Third Quarter 2018

The Eastside Market Review is showing that the market has slowed somewhat in the 3rd quarter of 2018. It looks like we are transitioning into a more balanced market.  Read the full report below:

https://windermereeastside.com/2018/11/06/eastside-market-review-third-quarter-2018/

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Seattle home sellers are lowering list prices faster than anywhere else

Earlier this week the news was that the average Seattle-area homebuyer has been successfully able to negotiate a deal at below list price for the first time in four years.

But that’s only half the story: In a lot of cases, sellers are now doing the work for buyers by lowering the list price themselves.

At the start of the spring, when the local market was still on fire, just 5 percent of all homes on the market in the metro area had a reduced listing price, according to Zillow.

Now, 22 percent of all listings are being pitched at a reduced price, the most since Zillow began tracking the data in 2010.

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Nowhere else in the country has seen a change that dramatic.

On average,  sellers cutting their list price here have reduced it by 3 percent, the same as the national average. In the city of Seattle and the Eastside, that translates to a cut of about $25,000 to $30,000.

It’s a double advantage for buyers: Not only are list prices dropping, but the average buyer is then able to knock the price down further in negotiations, a reversal from recent years in which bidding wars designed to escalate list prices were the norm.

That’s another area where Seattle stands out on the national stage.

In the city of Seattle, homes now go for 0.6 percent below list price on average, after selling for 4.1 percent above list price a year ago. That 4.7 percentage-point shift is the biggest in the nation among the 50 biggest cities, according to data from Redfin.

However, the fact remains that Seattle has some of the most expensive real estate in the country, and the changes in recent months haven’t put much of a dent in that. Five years ago, the median house in Seattle cost $461,000. It peaked this spring at $830,000 — an 80 percent rise over five years.

~Mike Rosenberg, Seattle Times

 

Home prices have finally hit a wall on the West Coast

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Home sellers have had it easy over the last few years. Housing demand has risen along with the improving economy, and home builders have struggled to build at a pace that keeps up with that demand. The result was a shortage of housing inventory that allowed sellers to sit back and let buyers bid up the price of their home.

But data from the last two months suggests that the housing market is entering a new stage, especially on the West Coast, where home prices have risen beyond most people’s capacity to pay. Instead of bidding wars, houses are sitting on the market longer, and price cuts are becoming more common. Buyers are starting to regain the upper hand.

“If we’re right, nationally, we’ve already entered the early stages of a buyer’s market,” writes Rick Palacios Jr. director of research at John Burns Real Estate Consulting. “Should supply levels cross above five months we’ll be watching for flat [or] possibly declining resale prices in some markets, especially where affordability is already very stretched.”

Housing supply constraints have been a primary factor in driving prices up, but there are signs this is changing. Data from the National Association of Realtors shows that “months of supply”—a leading indicator of housing supply that divides the number of active listings by the pace of sales—has ticked up year-over-year in the last few months after years of declines.

But real estate experts often say there’s no such thing as a national housing market—new homes for sale in New York, for example, don’t mean anything for people who live in San Francisco—and the spikes in supply are most pronounced on the West Coast.

Some of the biggest jumps are in markets that have been red hot over the last 5 years, namely the San Francisco Bay Area, Seattle, and Denver. Active real estate listings in September were up by a whopping 113 percent year-over-year in San Jose, 81 percent in Denver, 47 percent in Seattle, 33 percent in San Francisco, 34 percent in San Diego, and 12 percent in Los Angeles.

But the trend isn’t limited to the largest markets, as smaller cities across California, Colorado, Washington, and Oregon have seen jumps as well. Of the 30 markets that showed the highest spikes in active listings in September, 19 are in those four states.

While the number of active listings has risen, home sales have fallen dramatically across the U.S., as inventory woes and affordability constraints continue to drag down the market as a whole. But as with supply spikes, home sales are falling by double digits in some markets on the West Coast. In September, home sales were down 24 percent year-over-year in Seattle, 16 percent in San Jose, 16 percent in Los Angeles, and 13 percent in San Diego.

The combination of more homes on the market but fewer sales means that despite surging demand for housing, homes are sitting on the market. And given the affordability crisis sweeping across America, especially on the West Coast, this points to only one thing: Home prices have outpaced wages in these markets and people simply can’t afford to buy.

In Southern California, the year-over-year rate of home price appreciation—meaning the rate at which home prices are going up—began to decline in the spring and has continued to do so into the fall. Northern California was a little later to respond, but San Jose and San Francisco registered their first year-over-year declines in September.

 

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Another wild card in this dynamic is rising interest rates, which are once again approaching 5 percent. Rising rates were cited as a possible cause of last week’s stock market selloff, and the housing market is particularly sensitive it. When interest rates rise, monthly mortgage payments go up.

For markets where home prices have already hit their ceiling, rising rates will likely cause home prices to drop just because something will have to give for people to be able to buy a home. Unfortunately for home buyers, the price drop won’t result in lower payments, just that they will pay less on the principal of their mortgage and more on interest.

Regardless of where rates go, though, home prices on the West Coast markets where supply is up and sales are lagging appear to have nowhere to go but down.

~Jeff Andrews, Curbed

How Interest Rates Affect Buying Power

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Whether you are thinking about buying or selling a home, interest rate trends are an important factor to consider. Mortgage interest rates have been rising and experts, including Windermere Chief Economist Matthew Gardner, predict that they will continue to increase in 2019.

Interest Rates and Buying Power

The chart below shows the impact rising interest rates would have if you planned to purchase a $675,000 home while keeping your principal and interest payments at $3,500 a month.

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Every time interest rates increase by a quarter of a percent, your buying power decreases by about 3 percent.

What this means for buyers:
With prices moderating and interest rates slated to rise again, now is a good time to buy. If you’re betting on prices falling, you need to consider the strong possibility that an increase in interest rates would offset any potential price savings.

What this means for sellers:
Listing your home now means you will attract a larger buyer pool before interest rates rise.

Seattle’s hot real estate market begins to slow

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Real estate markets, including Seattle’s, are seeing a dramatic slowdown, according to an analysis by Redfin.

Seattle was one of 14 metro areas in the country this spring where half or more of the homes listed for sale between March 5 and April 29 went under contract within two weeks.

But things are changing, at least for now.

By mid-September, spring’s fastest-selling markets, including Seattle, saw big declines. About 35 percent of homes for sale in Seattle were off the market in two weeks or less over the summer – a drastic change from spring, when 72 percent were off the market within two weeks.

According to Redfin Chief Economist Daryl Fairweather, sellers are waiting longer for offers and many are having to drop their list price to attract buyers.

There are a few exceptions. Omaha, Nebraska; Grand Rapids, Michigan; and Boise, Idaho are still seeing more listing go pending faster than a year ago, though the markets have slowed since spring. The common factor, Redfin points out, is they’re smaller cities away from the coast where homes are more affordable.

“This points to a lack of affordability as potentially the biggest factor in why the previously red-hot markets have slowed so much this year,” the report states.

King County and much of the Puget Sound region saw housing inventory break past two months for the first time since January 2015, according to a recent report.

Housing inventory – or how long it would take to sell all homes on the market – sat at 2.83 months in King County, which is a 78 percent increase over last year. Snohomish (2.18 months), Pierce (2.01 months), and Kitsap (1.93 months) counties all saw increases in inventory as well.

Inventory in King County has steadily risen about 40 percent since May.

~King5 News

How backyard cottages could open up Seattle’s housing market

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Seattle City Council took a step closer toward legislation that would make “accessory dwelling units” easier to build, helping to offset mortgage costs for Seattle homeowners.

This comes hot on the heels of a study released by the City Council, evaluating “the potential environmental impacts of proposes changes to the City’s Land Use Code intended to remove barriers to the creation of accessory dwelling units (ADUs) in single-family zones.”

In layman’s terms, the city is looking to simplify and streamline the process for homeowners to build ADUs on their properties, known colloquially as backyard cottages or in-law units.

Homeowners would then be able to rent these units out, providing an additional source of income that could then be put toward anything from day-to-day living to mortgage payments. Alternatively, it also opens up more housing options for renters.

“We believe that backyard cottages will allow homeowners to increase the number and variety of housing choices in single-family zones,” said Councilmember Mike O’Brien in a press release announcing the release of the study.

Imagine buying a home with a mortgage outside of your price range, but being able to balance that out — or even completely cover the mortgage cost — by collecting rent from a backyard cottage. Opening up zoning requirements to make that easier is the goal for the City Council, touting it a small, creative fix to help offset Seattle’s ballooning housing market.

A planned bill would “remove some barriers to building ADUs, including changes to off-street parking rules, owner-occupancy requirements, and design standards.” The Seattle Times estimates that this would add approximately 2,500 ADUs in the next 10 years, and prevent 500 houses from being torn down to build “McMansions.”

Up until recently though, the City of Seattle has been charging an arm and a leg in zoning fees for anyone trying to build an ADU on their property.

“Most of the municipalities in the Pacific Northwest are in the fee-generating business,” noted KIRO Radio’s Ron Upshaw. “What this entire thing has been structured for up until this point is for them to collect fees.”

Hopefully, homeowners are about to see some relief once the City Council finally settles on new legislation.

Between this, and a promising report from Northwest Multiple Listing Service (MLS), it seems as though the local housing market could finally be softening for new buyers on a budget.

“In the South Sound the market has shifted into neutral and is idling at the moment,” Dick Beeson of RE/MAX Professionals said in the Northwest MLS report. He went on to point out how housing availability improved in Pierce and Thurston counties, “but nowhere near what King County has experienced.”

“Buyers are taking deep breaths as they survey this new territory,” said Beeson, claiming that potential buyers will soon see more homes available for sale for the first time in three years.

If homeowners are made able to both offset their own costs and provide additional housing to renters, that can only mean good things for anyone looking to buy in Seattle in the near future.

~My Northwest

Condo prices in Seattle continue to speak to the strength of the real estate market

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You may have heard Seattle is experiencing a cool down. Not so fast.

The market is definitely slowing within the city (if not Thurston County), but that doesn’t mean that prices have dipped all that much. The median closed sale price fell by about $45,000 from the month before, but it was still up $30,000 from the same time last year, according to the latest Northwest Multiple Listing Service report.

The NWMLS report writes, nearly 60 percent of the current inventory of homes and condos has an asking price of $750,000 or higher, making affordability an ongoing concern. And while the single-family home is still king in Seattle and King County, condos are also seeing higher prices.

The median closed sale price for condos in Seattle during August (the last month for which information was available) was $504,500. That’s a 6.21 percent increase from the same time last year.  Area-wide, that jump looks more like 8.1 percent, while across King County the jump in median condo prices was 11.3 percent.

Some good news is that condo prices are going through the same market-wide cool down as single-family homes: Active listings jumped nearly 58 percent, and closed transactions dropped off by about 15 percent.

But that’s not necessarily enough to turn what was once seen as a “starter home” into an affordable option. It’s also not a sign of a pending bubble or rapid inflation, as far as brokers can tell; like all the other changes in the city, blame it on the strong local economy.

“Even with some doom and gloom about sales being down in many counties, inventory doubling in some areas, and appreciation holding at around 8 percent for the year, our market is still very healthy and recovering from the depleted inventory of the past three years,” George Moorhead, designated broker and owner, Bentley Properties, Bothell said in the report.

~Zosha Millman, Seattle PI