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Buying Homes • Mortgages • February 14, 2022

The Different Types of Home Loans for Buyers

by Jill Langer
A woman sits down with her mortgage broker to look over different types of home loans.

Financing terms are the nuts and bolts of a successful home purchase. Once you’ve decided you’re ready to buy a house, it’s a matter of making the numbers work. So, which home loan is the right one for you? Knowing the different types of mortgage loans available to you will allow you to pinpoint the one that best fits your needs and is financially viable.

The Different Types of Home Loans for Buyers

Conventional Loans

Conventional loans are the most popular type of home loan issued to borrowers. Offered by private lenders, they are not backed by the government. Conventional mortgages divide into two subsets: conforming loans; which adhere to Federal Housing Financing Agency (FHFA) guidelines, and non-conforming loans; which do not. Due to the added risk taken on by the lender, non-conforming loans typically have higher rates. A jumbo loan is an example of a non-conforming loan, due to its loan amounts being higher than the amount limits laid out in the underwriting guidelines. The two most common conventional loans are 30-year and 15-year fixed-rate mortgages.

15-Year and 30-Year Fixed-Rate Mortgages

The terms of your loan will drastically impact all aspects of your mortgage. With a 30-year mortgage, you’ll have lower monthly payments and a higher interest rate than you’d have with a 15-year mortgage, meaning you’ll pay more in interest over the life of the loan. With a 15-year mortgage, you’ll pay less interest, but you’ll have a higher monthly payment. Compared to a 30-year mortgage, a 15-year mortgage can save you money over the life of the loan, simply because you’re in debt for half the time; however, the higher monthly payments may be unaffordable for some.

 

A woman sits at a table signing her mortgage paperwork.

Image Source: Getty Images – Image Credit: guvendemir

 

Government-Backed Loans

Whereas conventional loans are not backed by a federal entity, there are several unconventional loans that are backed by the U.S. government. These unconventional loans can often provide a path to homeownership for borrowers who don’t have the credentials to qualify for a conventional loan.

FHA and USDA mortgages are two common types of government-backed loans. Instead of having to make a 20% down payment on a conventional loan to avoid private mortgage insurance (PMI), an FHA loan allows buyers to qualify for a mortgage with a down payment as little as 3.5%. USDA loans enable buyers to purchase a home with reduced interest rates. VA loans offer several benefits for active service personnel and veterans looking to buy a home, including not having to purchase mortgage insurance.

Fixed-Rate vs. Adjustable-Rate Mortgages

Fixed-rate mortgages allow you to lock in a specified interest rate for the life of the loan. With an unchanging monthly mortgage payment, a fixed-rate mortgage makes financial planning easier. Adjustable-rate mortgages’ interest rates will go up and down based on market conditions. Many ARMs will start with a fixed-interest rate period followed by a variable interest rate until the loan amount is paid off. Keep in mind that a sudden change in your financial situation could make your monthly ARM payments unaffordable, which could result in a loan default.

Other Home Loans

There are other more niche financing options available for prospective home buyers. For example, a construction loan can be useful if you’re planning on building a home. Balloon mortgages and sub-prime mortgages can make homeownership feasible for those who aren’t financially prepared for the typical repayment structure of a mortgage. These loans, however, come with greater risks. Talk to a mortgage broker to understand the terms of these agreements before making a final decision.

This article originally appears on the Windermere Real Estate Blog, here.

Buying Homes • Community • Economic Forecasts & Trends • Giving Back • Matthew Gardner • Monthly Newsletters • Selling Homes • Windermere Foundation • February 14, 2022

Matthew Gardner’s 2022 Predictions

by Jill Langer

 
In January, my office hosted our 14th annual Economic Forecast Event with Matthew Gardner, Windermere’s Chief Economist. It was an hour-long presentation followed by lively Q & A that was packed with useful information to help guide us as we start the new year. Matthew journeyed the audience through a macro to micro approach, reflecting on all of the activity in 2021 and also analyzing future trends.

He started with a national overview of the economy overall and ended with a detailed accounting for King and Snohomish County housing markets, including some predictions. Below are some highlighted bullet points. Please reach out if you would like a digital copy of his PowerPoint and/or the link to the recording of his presentation.

National Economy:
The GDP (Gross Domestic Product) growth in 2021 was 3.9%, well above the long-term average of 2%. This indicates we are not in a recession and have recovered from the brief recession we experienced in the spring of 2020. A recession is defined by two consecutive quarters with declining GDP.

Matthew anticipates the U.S. to be back to full employment by the end 2022 after the fall-out of 2020 due to the pandemic shut-down.

Inflation:
Inflation peaked in Q4 of 2021 and is projected to start to slow as supply chain issues improve.  Certain industries such as used cars which are costing 25% more since February 2020 are having a huge influence on overall numbers. Food and energy prices are also volatile and affecting overall numbers.

U.S. Housing Market:
Improved supply chain and labor forces will increase the number of new builds, increasing inventory to help quench buyer demand. This will slow national year-over-year price growth to 6.5% in 2022.

Regional Economy:
Jobs are increasing and will recover from the spring 2020 fall-out twice as fast as the job losses we saw during the Great Recession of 2008. In fact, he expects local jobs to fully return by the end of 2022!

Our diverse economy which includes tech, aerospace, biotech, and manufacturing will help our overall economy thrive as we are not dependent on just one industry for a full recovery.

Mortgage Rates:
Mortgage rates are predicted to slowly rise in 2022. Matthew along with the National Mortgage Brokers Association, Fannie Mae, and the National Association of Realtors expect rates to end the year just under 4%. This is well below the long-term average of 7.5%!

Prices:
In 2021, prices were up 14% year-over-year in King County and 24% in Snohomish County. He predicts housing prices to rise 13% in King County and 14% in Snohomish County in 2022. This is well above the long-term average of 5.5% year-over-year!

The Work from Home phenomenon has had a huge influence on price growth in the suburbs. Many buyers have eliminated long commutes or are only having to drive into work a handful of days a month. This has driven many buyers to consider the suburban markets which is why the price growth in Snohomish County was much higher than King. Seattle saw a bit of a correction as this new lifestyle shift came to be. He anticipates 2022 to be kind to urban markets and a continued attraction to the suburbs.

In 2021, net in-migration in both King and Snohomish Counties was up, which is continuing to have a strong influence on buyer demand. In fact, new listings were up in 2021 over 2020; it was increased buyer demand that whittled down inventory levels and drove prices up.

Homeowner Equity:
Prices have been growing since 2012 and have had historic growth over the last two years. In King County, 59% of homeowners have 50% or more equity in their homes and in Snohomish County, 55% of homeowners have 50% or more home equity.

This uptick in home equity and the Work from Home shift has reduced the average tenure a homeowner spends living in their home to just shy of 7 years in 2021 from 10 years just two years ago. This is another indicator of buyer demand.

Are we Headed Towards a Housing Bubble?
Simply put, no!  Even with forbearance being a viable option to weather the fall-out from the pandemic, there will not be a wave of foreclosures on the horizon. Homeowners have too much equity to walk away, they will sell and take their profits in order to recover if need be.

Prices have made a big run, but if you take interest rates and inflation into consideration, monthly payments are only up 26% since 2000 in King County and 34% in Snohomish County. That is parallel to raw home prices being up 249% since 2000 in King County and 272% in Snohomish County.

Financial indicators such as recovering jobs, deep homeowner equity, stringent lending practices, strong buyer demand, and low interest rates combat any inkling of a housing bubble. There are 600k Millennials in King County and 171k in Snohomish County that are coming of age and will want to buy a house.

Condominiums:
Condo sales stalled when the pandemic hit as people decided if they wanted to live in such density, and the downtown core suffered due to the shutdown. Since then, the stall started to move forward and condo prices are up 7% year-over-year in King County and 23% in Snohomish County. Condos provide a more affordable option, especially for first-time buyers, and single-level, maintenance-free living for retirees. Condos are predicted to appreciate 4% in King County in 2022 and 7% in Snohomish County.

Luxury Market:
2021 was the year that the $1M home sale price became more common. In 2021 there we 11k sales over $1M in King County compared to 7k in 2020. In Snohomish County, there were just shy of 2k sales over $1M in compared to 590 in 2020. The $1M price point may not be synonymous with the definition of luxury any longer. It is more so a depiction of affordability in our region. With that said, homes in the very high-end have had brisk movement and marked appreciation.

Overview:
The Work from Home lifestyle is real and has created lots of movement in the marketplace, especially towards the suburbs. This has caused an upward trajectory on price appreciation along with continued low interest rates. New listings outpaced 2020, but buyer demand gobbled up the inventory leaving us at the lowest levels we have ever seen as we start 2022. Price appreciation will continue but is predicted to decelerate after record-breaking levels in 2021.  Interest rates will creep up by the end of 2022 and inflation will improve as the supply chain recovers. Homeowner equity is at an all-time high and jobs are recovering, offsetting any big crash to the housing market. Affordability is our biggest roadblock as the landscape of the PNW has changed with tech jobs the heart of our renewed economy.

 
If you attended our Virtual Economic Forecast Event last week with Matthew Gardner, did you see the mountain of socks?! Matthew is a bit of a sock aficionado, and we usually give him a gift of some fun or funny socks at our yearly event. This year, we decided to collect socks and donate them in Matthew’s name to Beautiful Soles for local kids in need. I am happy to report we collected 523 pairs of socks and $125 amongst our brokers.
 

 

 
Thank you to everyone who gave to our Healthcare Worker Meal Drive in December! We raised $4,360 which enabled us to deliver meals and snacks to frontline workers at Providence in Everett, Swedish Edmonds, and UW Medicine Northwest Hospital. We partnered with We Got This Seattle, who helped us coordinate the restaurants we ordered from and set up our contacts at the hospitals.  I am so grateful for ALL of our local frontline workers who have been working so long and hard under the most difficult circumstances.
Buying Homes • Economic Forecasts & Trends • Gardner Reports • Matthew Gardner • Monthly Newsletters • Selling Homes • November 12, 2021

The Zillow Algorithm vs. The Human Algorithm – what is best for the consumer?

by Jill Langer
 

The recent news of Zillow’s plan to shut down their iBuyer program due to a $328 million loss in the third quarter has heads spinning in the real estate world and on Wall Street.  Sadly, Zillow plans to eliminate 25% of its workforce because of its decision to move away from the practice of purchasing and re-selling homes due to their mismanagement of property price evaluations.  “Fundamentally, we have been unable to predict the future pricing of homes to a level of accuracy that makes this a safe business to be in,” Zillow CEO Rich Barton.

This is a bold statement from a CEO who built their company on a computer algorithm that spits out a home value called, the Zestimate.  A Zestimate is an AVM (Automated Valuation Model).  The product of an automated valuation technology comes from analysis of public record data and computer decision logic combined to provide a calculated estimate of a probable selling price of a residential property.  An AVM generally uses a combination of two types of evaluation, a hedonic model and a repeat sales index.  The results of each are weighted, analyzed, and then reported as a final estimate of value based on a requested date.

Zillow’s iBuyer program sought to find eager home sellers who wanted a quick, no-nonsense sale.  They would present a cash offer based on their algorithm and close on a mutually agreed-upon date.  After closing, Zillow would turn these properties around with some improvements and bring them back to the market.  This is often labeled a “flip”.  The problem was Zillow overpaid for the majority of their purchases which proved that their computer-generated evaluation (AVM) lacks market accuracy.

On average, they re-sold these homes for $80,800 less than what they purchased them for.  Thorough market research that includes touring the subject and neighboring properties, seeking info from other brokers about the terms of recent sales and overall experience helps to determine accurate market conditions in comparison to the swirl of data used to establish the Zestimate.  Computers can’t do this type of in-depth research, nor do they have the instinct to predict shifts in the market, but humans (real estate brokers) can!

Often times when I am talking with potential sellers, their Zestimate (or other AVMs) come up in the overall conversation. I understand why, too. This is information that is relatively easy to access and gives the seller a starting point on the value of their home. Where an AVM can become dangerous is when a consumer thinks it’s the be-all, end-all. Even worse, when a consumer makes a major financial decision solely based on this information. According to Zillow, 39% of all Zestimates in the Seattle metro area are not within 5% of the actual value. In fact, they publish an accuracy report that you can access here.

In October, the median home price in the Seattle Metro area was $850,000. With 39% of all Zestimates not within 5% of the actual value, that is a beginning margin of error of $42,500! Further, they claim that 82% of their Zestimates are within 10% of the actual value, which is a marked difference – up to $85,000. Where AVMs are incomplete is that the basis of their formula is tax records, which in my experience are often inaccurate. Also, and most importantly, an AVM does not take into consideration the condition of the home, the neighborhood, and other environmental impacts such as school district, road noise, and unsightly neighboring homes, to name a few.

So why does the Zestimate exist? Zillow is a publicly-traded company (ZG) and their website is the vehicle to create profit. The Zestimate drives consumers to the website who are often dipping their toes in the pool to see what their home might be worth or searching available homes for sale. When a consumer is searching on Zillow’s website they are surrounded by real estate broker and mortgage broker ads on every page. These real estate brokers and mortgage brokers are paying for that advertising space, which is how Zillow makes its money and why there is a Zestimate. The Zestimate is not a public service, it is a widget to bring eyes to their advertising space which in turn, sells more ads to brokers looking for leads.

The moral of the story is this: use Zillow as one of the many tools in your real estate evaluation and search toolbox. Zillow provides a great starting point and contains a ton of information to whet your palate when embarking on a real estate endeavor. However, we live in a time of information overload and we are overstimulated at best. Nothing beats the evaluation and discernment of a knowledgeable and experienced real estate broker to help you determine accuracy, which will lead to the empowerment of clarity.  At Windermere, we like to call this, The Human Algorithm.

If you are curious about the value of your home in today’s market, please contact me. I can provide an annual real estate review of all of your real estate holdings, and can even dive deep into a complete comparative market analysis if you would find that helpful. It is my goal to help keep my clients informed and empower strong decisions.

Zillow® and Zestimate® are trademarks of Zillow, Inc.
 

Matthew Gardner is the Chief Economist at Windermere and a sought-after expert on real estate, both locally and across the country. Every quarter, Matthew breaks down the real estate market by region and provides the Gardner Report; you can read this quarter’s full report here.

If you have any questions or curiosity about the current real estate market that you would like to discuss, please reach out. Are you curious about the value of your home, are you contemplating a move, or considering a new purchase? I can help! It is always my goal to help empower my clients to make strong financial decisions and to help them understand how real estate can positively affect their lifestyle.
Buying Homes • Economic Forecasts & Trends • Matthew Gardner • Monthly Newsletters • November 12, 2021

The Triangle of Buyer Clarity – Finding Buyer Success in a Seller’s Market

by Jill Langer
 

Embarking on a home purchase in a seller’s market can be intimidating, but it can be done. Long-term price growth confirms that owning a home is a key element to building household wealth. Home equity gained over time is typically the largest asset that contributes to a household’s net worth. Homeownership is not only an investment, but also provides shelter and fits the lifestyle needs of the owner. We have seen many lifestyle-driven moves during the pandemic highlighting the value of location and features for buyers. Also, with the advent of remote work, many buyers have been able to be more flexible in determining their top locations. This has contributed to stronger price growth in suburban and rural locations.

Buyers having a well-thought-out plan is paramount to finding success in today’s market. Partnering with their broker to assess their budget and how it relates to the location(s) and features they desire is the strategic formula that helps a buyer gain clarity. Buyer clarity is what leads a buyer to be able to make a sound decision to offer on a home. If a buyer is not clear, they will not be empowered to make a decision; in turn elongating the process and costing them more money. We have seen intense price growth since the beginning of the year illustrating the cost of waiting. In King County median price is up 16% year-over-year and up 21% in Snohomish County.

The tool that we use to help a buyer determine a productive search for their new home is The Triangle of Buyer Clarity. It is an expert tool for a buyer to help determine the parameters of their home search in order to save them time and money. The relationship between Price, Location, and Features/Condition is paramount in helping a buyer gain clarity and efficiency in their search.

Helping buyers stay focused on the reality of what their budget can afford them by applying The Triangle is an effective tool. For instance, if a buyer is set on a turn-key home that requires minimal updates, they may have to go up in price or further out in location, or both. The sides of The Triangle are often adjusted to make an uneven triangle, resulting in an effective home search and a successful purchase. An equilateral triangle is like a unicorn; buyers often have to adjust at least one side of the triangle to match the market with their ability to perform. Now here’s the geometry lesson: a buyer will often start the process with an equilateral triangle in mind, but will find success with either an isosceles (two equal sides) or a scalene (no equal sides) triangle. The moral of the geometry lesson is we have to be willing to compromise.

 

Understanding that compromise is OK and that it is actually a tool is when a buyer gains the clarity they need to successfully move forward. This is even further nuanced when two people are buying a home together; the adjustments must be done as a team. A skilled broker is well-versed in helping guide this process and making sure each participant is being heard and hearing each other. At the end of the day, real estate is a relationship business, and effectively curating this process is dependent on trust and care.

Helping buyers find their next home is one of the most joy-filled activities I have the honor of being a part of. It may appear simple, but it is not. The crucial conversations, contemplation, and planning that happen in order to find success are intentional. Taking the time upfront to analyze my buyers’ goals instead of just jumping in the car and starting to look at homes is a responsible part of my process that builds trust and effectively leads to success. It is my goal to help keep my clients well informed in order to empower thoughtful decisions. If you have any questions about the market or you’re ready to dive in, please reach out.

 
 

On this episode of “Monday with Matthew,” Matthew analyzes the latest Home Purchase Sentiment Index survey by Fannie Mae which helps us understand how buyers and sellers are feeling about the housing market.
Buying Homes • Economic Forecasts & Trends • Giving Back • Monthly Newsletters • Seahawks • Selling Homes • Windermere Foundation • September 29, 2021

Monthly Newsletter – Real Estate Market Recap

by Jill Langer

 
I’ve said it before and I’ll say it again, the 2021 real estate market has been a head-turner! In the second half of 2020, once we started to emerge from the COVID lockdown, the real estate market started to bustle with activity. 2020 ended up being a robust real estate year driven by low interest rates and many COVID-influenced moves due to remote working and retirement. Who would have thought a global pandemic would have such a profound effect on the demand for real estate? Many people decided to retire and exit the state, many people entered our state and exited another, and a large portion of buyers who were no longer anchored by their commute followed their hearts to the suburbs and more rural locations.

When the calendar turned to 2021 the real estate market exploded! Inventory was depleted as 2020 did not provide the normal amount of new listings in tandem with a jump in demand. This combination created price escalations in 2021 that were beyond our wildest imagination. The price points for neighborhoods were re-established almost overnight with benchmark sales elevating the value proposition for the communities in which we live.

Seasonality has always had an effect on the market even in 2021. The first quarter of the year typically has the lowest amount of new listings as sellers make their way out of the short, dark days with soggy yards and projects on their to-do lists to prepare their properties for the spring market. The homes that sold in Q1 2021 saw above-normal gains over the list price. In fact, in Snohomish County, the average list-to-sale price ratio in March was 108%, and in King County 106%. As I mentioned earlier, almost overnight price appreciation established new home values for our communities.

Once the seasonal spring listings started to show themselves and buyers had additional selection, the price gains actually increased! The classic law of supply and demand relates the amount of supply against the amount of demand, and in turn provides a value. In the case of the 2021 spring market, the increase in supply actually was not enough to meet demand and put upward pressure on prices. Recorded sales from March to June saw the highest list-to-sale price ratios peaking at 110% on average in April in Snohomish County and at 108% in May in King County.

Since January the median price in Snohomish County has increased by 16% and in King County by 17%. Prices peaked in Snohomish County in June with the median price at $700,000 and in July in King County at $875,000. In August, both counties recorded prices 2% off the peak but were still sitting on top of a heap of price growth since the first of the year. Historically, markets will peak in the late spring, early summer as the ceiling of pricing starts to find itself. That appears to be where we are at. Although the figures this year have been intense and well above the norm, it is comforting to see typical seasonality still happening.

There is also this illusion that this type of market environment is easy. Yes, sales happen quickly and demand is high. I would be a fool to say that a sign in the yard and a feature on the internet couldn’t likely get a home sold. I must point out though that this market is nuanced and that obtaining the best results (top dollar and a smooth process) depends on how well all the steps are taken to prepare a property, price-position a property, and how carefully the negotiations and multiple offers are handled along the way by the broker. My office, Windermere North has continued to outperform the market in 2021 with shorter days on market and a higher list-to-sale price ratio than the market average. Check out our YTD comparison to the market averages to help understand how this elevated level of service makes a tangible difference for our clients.

As we head into fall and start to round out 2021, new homes that are coming to market are standing on the shoulders of the sales that took place earlier this year which created these increased home value levels. List-to-sale price ratios are starting to decrease as sellers are stair-stepping their pricing based on the freshly recorded home sales and the market is finding its peak for the year. Sellers that expect to stair-step and to escalate like homes did earlier in the year may find themselves disappointed and overpriced.

We are starting to see market times increase and expect a small surge in fall listings to help satisfy the buyer demand that remains. Low interest rates continue to provide buyers the flexibility to make moves with minimal debt service. As long as rates remain low, demand will continue. The good news is, not every home sale is a multiple-offer frenzy like we saw at the beginning of 2021. The new normal has established itself and buyers are becoming more savvy navigating this market. In my next newsletter, I will outline some expert buyer tools that have helped buyers succeed in this market.

The remainder of 2021 should complete a banner year in real estate. Sellers have made amazing returns and buyers are obtaining homes that better match their lifestyle goals with low debt service. COVID shook up how we value where we live. Remote work increased the value of our suburbs, retirees pushed prices in rural locations, and people having more time to reflect, shifted how they prioritize their homes’ features. Some folks even “got out” of Washington, but it wasn’t a mass exodus, as just as many are leaving other states for ours.

I see this last year and a half as a re-organization of our communities through housing, which comes with some positives and some negatives. Change can be uncomfortable, but change is certain. 2021 has been a year unlike any other! Seasonality, research, and relationships have been the stable markers that have helped me help my clients find success in this new environment and have helped me navigate some occasional choppy waters along the way. It is always my goal to help keep my clients well informed and empower strong decisions. Please reach out if you’d like to learn more about how the current market relates to your goals. If you know of anyone who needs real estate help, I would be honored to help take care of them as well.

 
Windermere Partners with the Seattle Seahawks
for Another Season to #TackleHomelessness
 

All of us at Windermere Real Estate are proud to kick off another season as the “Official Real Estate Company of the Seattle Seahawks.” Since 2016, we’ve partnered with the Seahawks to #TackleHomelessness by donating $100 for every Seahawks defensive tackle made in a home game. And for the third season in a row, the money raised will go to Mary’s Place, a non-profit organization dedicated to supporting homeless families in the greater Seattle area. Mary’s Place works to provide safe and inclusive shelter and services that support women, children, and families through their journey out of homelessness.

Mary’s Place’s mission and the work of the Windermere Foundation go hand-in hand. On Sunday, we were able to donate $6,300, which brought our #TackleHomelessness total to $166,600 adding to our donations over the past five seasons. We look forward to raising even more this year!

Go Hawks!
Buying Homes • Community • Economic Forecasts & Trends • Giving Back • Matthew Gardner • Monthly Newsletters • Seahawks • Selling Homes • Windermere Foundation • September 29, 2021

Monthly Newsletter – The National Housing Market & Seahawks Partnership

by Jill Langer

 

As I mentioned in my last newsletter, Windermere is empowered by the knowledge and research of our Chief Economist, Matthew Gardner. Below is his latest monthly video report which touches on the latest numbers surrounding the national housing market.

Here are some key data points derived from the final recorded July home sales numbers:

  • For every home that was sold, there was an average of 4.5 offers.
  • 50% of homes that closed sold for over the list price.
  • 23% of home sales were all-cash purchases.
  • 89% of homes sold in the same month they were listed.
  • The average number of days on market was 17 days.

Listen to the 12-minute video below to gain some additional insight on national trends concerning new construction, supply and demand, total home sales year-over-year, price appreciation, and affordability.

In my next newsletter, I will report on final closed sale data from August 2021 for both King and Snohomish Counties. This will help you gain a better understanding of where the market is at on a hyper-local level year-to-date. 2021 has been a head-turner in the real estate market and staying well informed has been the edge to create success. It is always my goal to help keep my clients well-informed, so they are empowered to make strong decisions. Please reach out if you are curious about how today’s market relates to you.

 

 

 
Windermere is proud to partner with the Seattle Seahawks for the fifth season to help #TackleHomelessness. For every Seahawks home game defensive tackle, Windermere will donate $100 to Mary’s Place, whose mission is to help families on their journey out of homelessness. To date, we’ve raised $128,000 through our #TackleHomelessness campaign and we’re looking forward to raising even more this season for our friends at Mary’s Place!

 
Buying Homes • Community • Economic Forecasts & Trends • Gardner Reports • Giving Back • Matthew Gardner • Monthly Newsletters • Selling Homes • Windermere Foundation • September 29, 2021

Monthly Newsletter – Gardner Report & Food Drive Results

by Jill Langer
 

At Windermere, we are fortunate to have Matthew Gardner as our Chief Economist. In fact, we are one of the only real estate companies in the country to have such a well-respected expert sitting in this role. Not only is Matthew an asset to Windermere brokers and their clients, but he is a coveted resource within the industry. He is often called upon by major media outlets and industry think tanks for his insights.

Every quarter Matthew produces The Gardner Report which re-caps various statistics and predictions for all of Western Washington. What is so great about this is you can read about where you live and also get a glimpse into other markets that may pique your interest.
Read the full Western Washington report here.  Additionally, since Windermere spans the entire Western Region of the United States, he also provides this same report for Washington (Western, Central & Eastern), Oregon, Idaho, California (Southern & Northern), Utah, Colorado, Nevada, and Hawaii (Maui & the Big Island).

There has been a lot of state-to-state moves over the last few years. Many of these moves have been prompted by retirement, second home purchases, and remote working due to COVID changes to the workforce. This is a great way to research other markets you may be interested in. Also, I am connected to the Windermere network of brokers and can easily find you a reputable broker who would be a stellar match for your real estate needs outside of my normal market area.

Further, I am also a part of a national and international network of real estate companies for referrals outside of the Windermere footprint.  This is through Windermere’s affiliation with Leading Real Estate Companies of the World. Bottom line, I can help provide information and can help align you with a trusted real estate advisor anywhere in the world. Please reach out of I can help!
Huge thanks to everyone who donated to my office’s Summer Food Drive! Collectively we provided 2,608 meals for our neighbors in need! We presented a check for $3,400 and 888 pounds of food to the Volunteers of America Western Washington food banks last week, and that’s all because of you! Thank you!
Buying Homes • Community • Economic Forecasts & Trends • Giving Back • Matthew Gardner • Monthly Newsletters • Selling Homes • Windermere Foundation • July 16, 2021

Monthly Newsletter: Summer Time 2021

by Jill Langer

 

Last week I heard a quote from Mike Loftin of the Urban Institute that resonated with me. “We need to stop seeing housing as a reward for financial success and instead see it as a critical tool that can facilitate financial success.” Homeownership as an investment has always been a long-term hold in order for it to make sound financial sense. In fact, according to Gallup 41% of Americans see Real Estate as the best investment over stocks, gold, saving account interest, and bonds.

Since the start of 2021, we have seen the median price increase quite a bit in our region. Inventory has remained tight and interest rates remain historically low. This has contributed to the increase in prices, along with the thriving tech industry in the Greater Seattle area. I’ve been working on the front lines of one of the most intense markets in history and I can tell you first hand that buyers are tired! Here is what I’d like to share though – they shouldn’t give up!!

 

Month-to-date new listings are up 12% over May in Snohomish County and 8% in King County. This has helped reduce multiple offers and I’m starting to see some homes get just one offer. This is starting to level out the brisk price appreciation we saw from January through May. In Q1, almost every listing was getting multiple offers and bid up. Now, I’m seeing new listings benefit from the price growth since January and starting to level out in regards to additional price growth as we head into the second half of 2021. Beware that “cream puff” listings are still going bonkers. Buyers with a fixed budget may want to avoid those and be open to adjusting their search or being satisfied with 75% of their wish list. As we head into the second half of 2021, I predict we will start to see a tempering in price growth as the froth spills over the top of the cup of this market.

This will provide opportunities for buyers who put themselves on the sidelines or are just entering the market to successfully find a home. Interest rates remain incredible, and one must take into consideration the long-term savings that a low rate provides for your monthly payment. The average homeowner owns their home for 10 years in the U.S. Securing a low rate and utilizing that as a financial tool to help create wealth over the time of owning your home is a critical element for your financial success.

For example, two years ago rates were nearly a point higher, which would cost a buyer roughly $250 more per month for a $500,000 mortgage. Over ten years that is approximately a $30,000 savings in monthly cash flow. Now, look at the 10-year price growth in our area. In King County prices have grown by 111% over the last ten years and 127% in Snohomish County. Interest rate savings along with long-term price appreciation underscores why 41% of American’s think Real Estate is the best financial investment.

More so, I think this analysis typifies the point of the quote above. Real Estate is a tool to help build wealth, not an instant lottery ticket. The financial reward doesn’t happen when you sign your closing papers, it happens when you sell. You must make the purchase in order to sell in the future to reap the long-term reward. Real Estate is also where you live; it’s where you take shelter and create memories. It is one-part savings account and one-part safe haven. Both aspects should always be taken into consideration. Lifestyle changes lead most people to make a purchase; the byproduct is matching your home to your lifestyle needs and building wealth over time.

 

 

I know it’s been a rough go for buyers this year and the media is reporting dated news as they are often using closed data that is a month old. Please use me as a resource, as I can provide real-time data and help you analyze the best decision for you and your family. Also, Matthew Gardener, Windermere’s Chief Economist recently shared his thoughts on price appreciation. Check out the video below to hear his insights. In the meantime, please know it is always my goal to help keep my clients well informed in order to empower strong decisions. I pay close attention and urge you if you are considering a purchase to seize the day.

 

 

 

 

My office is collecting donations for local food banks! You can donate to our GoFundMe or drop off donations at my office during the month of July.

All donations will benefit The Volunteers of America Western Washington food banks. Let’s come together to help our neighbors in need!

Donate here or get directions to my office here.

 

Buying Homes • Community • Economic Forecasts & Trends • Gardening & Landscaping • Giving Back • Monthly Newsletters • Seahawks • Selling Homes • July 16, 2021

Monthly Newsletter: Year-to-Date Real Estate Recap

by Jill Langer

Here we are, one-third into 2021, and boy what a ride it has been so far. We all know that 2020 was a unique year full of challenges and change. The pandemic made us pause and reevaluate many aspects of our lives including where and how we live. The impact of the pandemic on the real estate market was significant, as people started to shift their housing priorities during the second half of 2020. Then the calendar turned to 2021 and the frenzy of all market frenzies began.

 

I had the misguided notion that closing out 2020 was going to lead to more normalcy in our industry as we all yearned to move on to the new year. Boy, was I shocked as Q1 unfolded; 2021 had its own agenda in store! What the new year brought, was its own set of drama as the economy headed towards recovery and the vaccine emerged. The continued historically low interest rates have fueled the housing pivots being made across our region and our country. Lifestyle moves have driven demand, but interest rates along with hearty equity levels have helped financially enable these life-changing moves. Interest rates have hovered around 3% since the beginning of the year. Additionally, 38% of all homeowners own their homes free and clear, and over 50% of homeowners have up to 50% equity.

The work-from-home phenomenon (either permanent or hybrid) has re-shaped the housing market, driving many people to consider the suburbs or rural locations. Eliminating the daily commute into urban work centers has created flexibility for homeowners to live farther away from work and enjoy larger spaces and more affordable housing in comparison to cities like Seattle and Bellevue. In fact, the median home price in Snohomish County is up 15% complete year-over-year in comparison to King County at 10%. This is proof that suburban and rural housing is on the rise.

 

Demand (defined above) has helped to push price appreciation levels along with a shortage in available inventory. We have functioned in a lower-than-normal inventory market for over six years now. Zero to three months of inventory is defined as a seller’s market, three to six months a balanced market, and over six months a buyer’s market. This figure is established by estimating how long it would take to sell out of homes based on the closing or pending rate if no new homes came to market. In the second half of 2018, we eclipsed three months briefly but have mainly existed under three months for quite a while. In 2021, we have not breached one month, and in many submarkets have only had up to two weeks of available inventory.

 

2020 left a void of available inventory because we were in quarantine and many people were not comfortable opening their homes up to strangers. Plus, some people needed to pause and see how this was all going to shake out for them. I think the turn of the new year coupled with the vaccine has empowered people to make the moves they have been considering while they won the wait at home. We have a smattering of generations at the helm all wanting to make moves for different reasons. First-time home buyers, retirees, and move-up buyers are all hoping to take advantage of low debt service and pivot to a home with a better fit for their lifestyle goals.

 

Lifestyle demands, low rates, scarce inventory, and formidable equity have created a very competitive market. Large down payments due to moving equity from one home to the next, along with strict lending requirements have propped up the stability of the housing market. I am often asked if we are headed towards a housing bubble because of the rate of home appreciation, but it is important to understand that home values are supported by strong loan-to-value ratios and scrutinized lending. Unlike the Great Recession of 2008, when predatory lending (that involved low to no down payments and undocumented loans) formed an unstable foundation that eventually crumbled.

 

The biggest challenge I see in the housing market in our region is affordability. It is expensive to live in the Greater Seattle area, plain and simple. The work-from-home option has provided flexibility to live farther out, which has put upward pressure on prices everywhere. We have had a re-organization of where people live and it has been surprising which communities have become attractive and in-demand. I predict at some point this will settle down as these newly refined housing needs find their place. Additionally, May through August is when we seasonally see more homes come to market. This should hopefully make it a bit easier for buyers to secure a home, and help soften the ramp-up on prices. This has already started to show itself over the last few weeks.

 

Financial indicators in our region are positive. Only 3.6% of homes in Washington state are in mortgage forbearance (a fraction of where we were at a year ago), tech jobs continue to drive employment, and the overall local economy and home equity are very strong. Your home is intended to be a long-term investment. If price appreciation starts to soften as we climb out of our inventory deficit this will be more sustainable for affordability. Buyers will still be on the road to building wealth with some of the lowest interest rates ever, and we must remember that homeownership is not just an investment but where we live and create memories. Sellers will continue to enjoy large payoffs as long-term equity growth is abundant. Keeping a grounded perspective will be key as the market twists and turns from the extremes. If there is anything I can guarantee it is that the market is always changing and it can change fast.

 

If you are curious about how today’s market relates to your lifestyle and financial goals, please reach out. I’d love to discuss your needs, curiosities, and concerns as this has been an intense and eventful start to 2021. It is always my goal to help keep my clients informed and empower strong decisions.

 

June 11th is our annual Windermere Community Service Day; our office will be volunteering alongside the Snohomish Garden Club helping plant nearly an acre of fruits and vegetables that will be harvested for local food banks. This will be our 5th year working on this project that yields thousands of pounds of fresh produce for the food insecure across our region.

Windermere Community Service Day is a 40-year long tradition of giving back to the communities in which we serve, it is a valued part of our Windermere culture. If you would like to donate to help us provide additional veggie starts and supplies, please reach out. I will report back on our project in my next newsletter, letting the planting begin!

Windermere and the Seattle Seahawks partnered for the fifth season to #TackleHomelessness, raising an additional $32,100 for Mary’s Place to support homeless children and families, bringing our total raised to $160,300! Read more on the Windermere blog.

Community • July 16, 2021

Windermere Community Service Day & Food Drive

by Jill Langer

On June 11th, my office spent our annual Windermere Community Service Day with the Snohomish Garden Club constructing trellises, weeding and staking beds, and planting and labeling a half-acre of produce! We also assembled a pole shed, built out a composting area and a rock bench on the property for the Garden Club to use throughout the year. The Snohomish Garden Club will harvest the half-acre, which will yield close to 10,000 pounds of fresh produce to be donated to local food banks in Snohomish County.

My office is also conducting a Food Drive in the month of July via The Windermere Foundation, in tandem with this planting project with a goal to donate $5,000 to the Volunteers of America Food Banks across Snohomish County. You can donate to our GoFundMe, or drop off non perishable donations at my office through the month of July.

For more information on these great organizations and how you can lend a hand, please visit:
Windermere’s Community Service Day was established in 1984 to offer agents and staff a chance to volunteer a workday to give back to the neighborhoods in which they live and work.
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