Western Washington Real Estate Market Update Q2

 

The following analysis of the Western Washington real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please reach out anytime!

 

REGIONAL ECONOMIC OVERVIEW

It appears as if the massive COVID-19 induced contraction in employment that Washington State — along with the rest of the nation — experienced this spring is behind us (at least for now). Statewide employment started to drop in March, but April was the real shock: total employment dropped almost 460,000 between March and April, a decline of 13.1%. However, this turned around remarkably quickly, with a solid increase of 52,500 jobs in May. Worthy of note is that, in May alone, Western Washington recovered 43,500 of the 320,000 jobs that were lost in the region the prior month. Although it is certainly too early to categorically state that we are out of the woods, the direction is positive and, assuming we respect the state’s mandates regarding social distancing and mask wearing, I remain hopeful that Washington will not have to re-enter any form of lockdown.

 

HOME SALES

  • There were 17,465 home sales during the second quarter of 2020, representing a drop of 22.2% from the same period in 2019, but 30.6% higher than in the first quarter of this year.
  • The number of homes for sale was 37% lower than a year ago, but was up 32% compared to the first quarter of the year.
  • Given COVID-19’s impacts, it’s not surprising that sales declined across the board. The greatest drops were in Whatcom and King counties. The smallest declines were in Grays Harbor and Cowlitz counties.
  • Pending sales — a good gauge of future closings — rose 35.7% compared to the first quarter of the year, suggesting that third quarter closings will grow as well.

 

 

 

HOME PRICES

  • Home-price growth in Western Washington rose by a relatively modest 3.5% compared to a year ago. The average sale price in the second quarter was $559,194.
  • Compared to the same period a year ago, price growth was strongest in Grays Harbor County, where home prices were up 14.3%. Clallam County also saw a double-digit price increase.
  • It was interesting to note that prices were up a significant 6.6% compared to the first quarter. This suggests that any concern regarding negative impacts to home values as a function of ​    COVID-19 may be overblown.
  • I will be watching for significant price growth in less urbanized areas going forward. If there is, it may be an indication that      COVID-19 is affecting where buyers are choosing to live.

 

 

 

DAYS ON MARKET

  • The average number of days it took to sell a home in the second quarter of this year matched the second quarter of 2019.
  • Across the entire region, it took an average of 40 days to sell a home in the second quarter. I would also note that it took an average of 14 fewer days to sell a home than in the first quarter of this year.
  • Thurston, King, Pierce, and Snohomish counties were the tightest markets in Western Washington, with homes taking an average of only 17 days to sell. All but two counties, Grays Harbor and Cowlitz, saw the length of time it took to sell a home drop compared to the same period a year ago.
  • Market time remains well below the long-term average across the region. This is due to significant increases in demand along with the remarkably low level of inventory available.

 

 

 

CONCLUSIONS

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

What a difference a quarter makes! Given that demand has reappeared remarkably quickly and interest rates remain historically low, it certainly remains a seller’s market and I don’t expect this to change in the foreseeable future.

The overall housing market has exhibited remarkable resilience and housing demand has rebounded faster than most would have expected. I anticipate demand to remain robust, but this will cause affordability issues to remain as long as the new construction housing market remains muted.

 

 

ABOUT MATTHEW GARDNER

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

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


Posted on July 23, 2020 at 10:14 pm
Carlene Sandstrom | Posted in Matthew Gardner Report | Tagged

LOCAL MARKET UPDATE – JULY 2020

While our lives are very different than they were a year ago, the local real estate market has recovered to 2019 levels. Record low interest rates are helping spur demand. Sales were up, home prices increased and multiple offers were common.

  • The number of pending sales, a measure of current demand, was higher in June than for the same period a year ago.
  • The supply of homes on the market remains very low, with just a month of available inventory.  When inventory is this low, quick sales over full price are common. That was the case in June when about 40% of homes sold for more than the asking price.
  • Home prices in King County rose 4% over a year ago. Snohomish County home prices increased 5%.
  • More sellers put their homes on the market. While total inventory remains low, the number of new listings in June was similar to the same time last year.

The monthly statistics below are based on closed sales. Since closing generally takes 30 days, the statistics for June are mostly reflective of sales in May.


Posted on July 13, 2020 at 10:45 pm
Carlene Sandstrom | Posted in Market News, Market Report | Tagged

WINDERMERE INSIGHTS: HOW LOW INVENTORY IS INFLUENCING THE MARKET

Although there was already ample concern about our region’s housing supply pre-pandemic, the inventory squeeze was exacerbated by the shutdown. Buyers never really stepped out of the market, despite the onset and risks of COVID-19, while sellers mostly stayed on the sidelines. The resulting demand-supply crunch creates a cycle in which buyers compete aggressively for fewer and fewer units, absorbing active inventory faster than the market can be resupplied.

“While we see more sellers getting ready to list,” observed Pat Grimm, owner of Windermere Capitol Hill, “every week that those homes don’t go on the market, we risk losing buyers to what I’d call a reasonable fatigue.”

Grimm pointed to Seattle’s imbalanced market activity in the first half of June. Pending sales of single family homes were up 21% from the same period last year, despite a 45% reduction in the number of active listings. By mid-month, there remained a paltry 0.8 months’ supply of homes for sale, based on pending sales. Low inventory led Seattle buyers to purchase homes and condos faster and for higher prices than in June 2019.

“Sellers should benefit from this dynamic,” Grimm said, “if they can undertake a move at this stage of the re-opening.”

On the Eastside, the market is undergoing a similar push-pull, according to Joe Deasy, co-owner of Windermere East Inc. “Active listings are being absorbed faster than we can get new For Sale signs up,” he observed. With month-to-date pending sales activity up 21% this June versus last, Deasy noted that the Eastside’s supply of homes is down to only 0.9 months.

Through the first half of June Eastside single family home listings were down 46% from the same period last year, while there were 28% fewer condo listings. “There’s a bottleneck happening, and we could see sales drop unless we bring more homes to market,” Deasy said. “But more listings will lead to more sales,” he added.

One community that has been keenly watching its real estate market dynamics is West Seattle. Hit by the double whammy of the shutdown and the bridge closure, brokers there were wondering how May and June numbers would stack up for this “small town” within the city.

It turns out that West Seattle is experiencing the same demand-supply issue as other local areas. In the first half of June, the supply of single family homes for sale was down 31% from last year. Based on a 9% increase in month-to-date pending sales, the supply of homes stands at just one month.

“Ours is still a seller’s market,” said Larry Johnson, general manager of Windermere’s West Seattle office. “June has seen faster market times and higher selling prices on the units that have gone pending.” The squeeze on West Seattle homes has also led buyers to move on condos, Johnson noted, with month-to-date pending sales up 56% over last year and average sold prices up by 22%.


Posted on July 2, 2020 at 10:42 pm
Carlene Sandstrom | Posted in Market News | Tagged

REOPENING REAL ESTATE, THE RIGHT WAY

As King County enters Phase 2 of reopening, residential real estate services providers must follow a strict set of rules. These control how brokers may conduct business inside and outside their offices and homes for sale (listings).

Windermere has developed protocols for reopening that meet or exceed all of the state requirements. From the beginning of the shutdown, we have lived by the mantra “Go slow, do no harm.” This philosophy remains firmly in place during the current reopening phase.

Staying Safe: Inside a Listing

Pete Richmond, owner of Windermere’s Greenwood office, discussed how brokers and their vendors must follow strict guidelines when inside a listed home. “For safety reasons, we can’t allow more than three people – including ourselves – inside a listing at once,” Richmond said. He noted that all visitors must observe social distancing guidelines and that all activities inside a listing must take place by appointment only. “So we can’t host open houses, other than by virtual means like live-streaming,” he added.

During Phase 2, brokers and their vendors must wear face coverings at all times when inside a listing. Richmond pointed out that Windermere brokers are encouraged to provide masks, gloves, booties and hand sanitizer to each vendor or client entering a listing.

“Normally we’re required to leave a business card in every home we preview,” Richmond said, explaining that this obligation has been suspended during COVID-19. “We’re also no longer traveling in the same car as clients or colleagues,” he added.

Staying Safe: In the Office

Windermere offices in King County have moved to reopen and are operating under a strict set of guidelines that brokers and staff must follow.

Deanne Wilson, co-owner of Windermere East Inc., and Laura Smith, co-owner of Windermere Co., used the state’s Safe Start guide to establish a reopening plan for their 12 offices. “We’re doing everything possible to keep everyone safe by following the protocols established by the state,” Wilson said.

Windermere’s reopened offices have implemented numerous rules, including restrictions on the amount of people allowed inside at any one time. While staff are permitted in the office to perform essential functions, employees rotate between being onsite and working from home. Total occupancy may not exceed 50% during Phase 2. Visitors must have appointments to enter the office and must limit visits to 30 minutes.

Brokers and staff must observe social distancing at all times. They also must wear face coverings when entering and leaving the office, while in common areas, and whenever not working alone. Windermere kitchens are closed, office entry is required through the primary entrance only, and smaller conference rooms where social distancing is not possible have been closed.

Windermere offices are providing masks, gloves and hand sanitizer to brokers, staff, and the limited number of guests who enter. Many offices have installed sneeze guards to protect front office personnel. They have also installed sanitizing stations at entry points and in common areas. “We’ve even rearranged furniture to encourage social distancing,” Wilson said.


Posted on June 30, 2020 at 7:09 pm
Carlene Sandstrom | Posted in Market News | Tagged , , , ,

LOCAL MARKET UPDATE – JUNE 2020

  • The Stay Home order, as expected, continued to impact the number of sales. However, the market is starting to move its way towards more normal activity. Pending sales, a measure of current demand, have risen every week since April.
  • The slight drop in median closed sale price is a result of a proportionately larger number of lower priced homes selling than is normal. It should not be interpreted as a decrease in individual home value.
  • There were significantly fewer homes for sale in May than the same time last year. With less than a month of available inventory, competition among buyers was intense. Bidding wars and all-cash offers were common.

The monthly statistics below are based on closed sales. Since closing generally takes 30 days, the statistics for May are mostly reflective of sales in April. If you are interested in more information, every Monday Windermere Chief Economist Matthew Gardner provides an update regarding the impact of COVID-19 on the US economy and housing market. You can get Matthew’s latest update here.  As we adapt to new phases of reopening, know that the safety of everyone remains our top priority.


Posted on June 11, 2020 at 8:44 pm
Carlene Sandstrom | Posted in Regional Market Updates | Tagged , , , ,

A Guide to Mortgage Assistance During COVID-19

Image Source: Shutterstock

 

For some homeowners who have been financially impacted by the COVID-19 pandemic, there is a high level of concern about paying their mortgage. Fortunately, there are options to aid struggling homeowners from governments, financial institutions, and loan providers. The following information is intended to provide clarity on which financial relief options are available to you during this time.

 

What are my mortgage relief options?

Newly placed into law, the Coronavirus Aid, Relief and Economic Security (CARES) Act, provides two protections for homeowners with federally backed mortgages:

 

  1. Your lender or loan servicer may not foreclose on you for 60 days following March 18, 2020. The CARES Act prohibits lenders and/or servicers from beginning a non-judicial foreclosure, or finalizing a foreclosure sale, against you within this time period. While 60 days has passed since this was put into place, it is still important to be aware of in the event that any of these actions were taken against you.
  2. You have a right to request a forbearance for up to 180 days if you experience financial hardship due to the COVID-19 pandemic. You can also apply for a 180-day extension beyond the forbearance period. This does not require submitting additional documentation beyond your claim, nor will you incur additional fees, penalties or interest beyond what has already been scheduled.

 

Forbearance is…

  • With forbearance, mortgage servicers and lenders allow you to pause or reduce your mortgage payments for a period of time while you get back on your feet financially.
  • Different types of loans beget different forbearance options, understanding the differences and which options apply to your loan is key to navigating the forbearance landscape.
  • Once your income is back to a normal level, contact your loan servicer and resume your payments.

 

Forbearance is not…

  • Forbearance is not a means to forgive or erase your payments. Any missed or reduced payments still require payment in the future.

 

Which relief options do I qualify for?

The first step in discovering your mortgage assistance qualifications is to contact your mortgage provider. If you are unsure of how to get in touch with them, look at your mortgage statement for contact information or see what contact options are available online.

After you have successfully made contact, find out if your mortgage is federally backed. To be eligible for assistance under the CARES act, your mortgage must either be backed federally, or by one of the entities in the list below. These links show the agencies’ current advise and related loan information:

 

For non-federally backed loans, contact your lender or servicer to learn more about their forbearance repayment options.

 

Today’s financial landscape can be stressful for homeowners, especially those that are struggling to keep up financially. Fortunately, these entities, institutions, and servicers have provided options to help lessen the burden. Knowing which options apply to you and your household will help you navigate through hardship as your finances recover.


Posted on June 11, 2020 at 8:42 pm
Carlene Sandstrom | Posted in Market News | Tagged , , , ,

SEATTLE POISED FOR FASTER RECOVERY THAN MANY OTHER CITIES

It may feel like a tired refrain after nearly two months of quarantine, but it remains true: it’s still too early to truly tell the toll COVID-19 will take on our economy — both locally and nationally — until we are able to fully reopen and jumpstart  area businesses.

Thanks to our diversified economy, strong tech sector and attractive, startup-friendly environment, the Seattle area is well-positioned for and capable of a nimble recovery.

Several recent studies analyzing our housing market, population density, and educational attainment (and jobs that require higher education) indicate that Seattle is primed for a recovery that may be quicker and shorter than other major metropolitan areas across the country.

ATTOM Data Solutions, a provider of real estate and property data, put together a special report comparing regions across the country and identifying the housing markets more and less vulnerable to COVID-19 impacts. Their research puts King County within the 50 least at-risk counties. Furthermore, their data shows the West Coast as a whole to be incredibly resilient, with only one West Coast county (in California) appearing in the top 50 most vulnerable markets.

Looking at population density and education, Moody’s Analytics assessed the 100 top metro areas in the country and identified the U.S. cities in the best and worst positions for post-pandemic recovery. Their research notes that the cities best prepared to bounce back have low population densities and high levels of educational attainment. Seattle ranked in the top five metros poised for a quick recovery.

While the recent economic contraction has been profound and carried many unseen ramifications, our region’s tech sector has remained strong. Dominating much of our local economy, tech’s presence here may help buffer our area’s economy from worse dips taking place elsewhere.

It is true that some sectors of our regional economy — particularly hospitality (restaurants and bars), leisure (hotels), tourism and travel — have been hit harder. Those businesses and employees feel the impacts more strongly and may experience a harder and more drawn-out recovery. The direct hits to these sectors — with shuttered businesses and job losses — will resonate through the economy at large. As noted by Windermere Chief Economist Matthew Gardner in a recent “Mondays with Matthew” post looking at how COVID-19 has affected employment, it’s likely that many workers in these sectors are renters, so their misfortunes are likely to impact the region’s rental market. As businesses are forced to close, many may struggle to find new employment until the economy is open and fully operational again.

Loss of tax revenue from the retail, hospitality and tourism sectors (especially from cruise ships, many of which will not be docking in Seattle for the foreseeable future), is already impacting state and local budgets, potentially causing painful future spending cuts over the next few years, as noted in The Seattle Times.

While our economy — city, state, and national — has shrunk dramatically in the second quarter of this year, economists still anticipate recovery beginning as soon as businesses reopen, and stay-at-home orders are lifted. Gains will advance slowly, but will continually increase through the remainder of the year. As Matthew Gardner predicts, the second half of 2020 should be significantly better than the first.


Posted on May 27, 2020 at 11:15 pm
Carlene Sandstrom | Posted in Market News | Tagged , , , ,

LOCAL MARKET UPDATE – MAY 2020

  • Business was better than expected under the Stay Home order. COVID-19 did reduce real estate sales in April as compared to a year ago, however the number of sales rose steadily each week of the month. Sales growth continued in early May and we expect sales to increase slowly week by week.
  • The number of new listings dropped, suggesting that would-be sellers are waiting until the shelter-in-place order is over to put their home on the market. With local technology companies continuing to hire, buyers will continue to face competition for limited inventory in the coming months.
  • Home prices remain stable, with the median price of homes sold in April up slightly from a year ago. Sellers appear to be pricing homes realistically and buyers are not finding deep discounts.

The monthly statistics below are based on closed sales. Since closing generally takes 30 days, the statistics for April are mostly reflective of sales in March. Next month’s data will offer a more telling trend of the effect of the virus on the local housing market.

If you are interested in more information, every Monday Windermere Chief Economist Matthew Gardner provides an update regarding the impact of COVID-19 on the US economy and housing market. You can get Matthew’s latest update here.

As our current situation evolves, know that the safety of everyone remains our top priority.


Posted on May 11, 2020 at 9:43 pm
Carlene Sandstrom | Posted in Market News, Regional Market Updates | Tagged , , , ,

Coming Together For Our Neighbors in Need

Every year for the past 35 years, Windermere Real Estate has closed its doors on the first Friday in June for its annual Community Service Day so that our 9,000-member team can head into our local neighborhoods and volunteer. This year, in light of COVID-19, we have made the decision to replace Community Service Day with an immediate fundraising challenge for our offices to help food banks whose operations, and the people they serve, have been heavily impacted by the virus.

Between now and Tuesday May 5, we are matching every dollar, up to $250,000, that our offices raise, with the goal of donating $500,000 to food banks in the communities across the Western U.S. where we operate. The public is also invited to participate by donating to the Windermere Foundation here. All donations will be directed to food banks with the greatest need.

Those who struggle with poverty and depend on food programs are having difficulty meeting their basic needs. Our mission is to help local food banks in our communities keep their shelves stocked and keep food on the tables of those families.

Due to COVID-19, food bank representatives expect the number of people they normally serve to double. The increased consumer demand on grocery stores has slowed the pipeline of food bank donations, which are crucial to their ability to serve their communities. With these complicating factors, every food bank has the same answer when it comes to their greatest need: dollars.

Neighbors in Need is the latest example of the Windermere family coming together in support of our local communities during the COVID-19 epidemic. The positive impact we have seen across our footprint thus far gives us confidence in our ability to meet our total donation goal of $500,000. If you would like to help, you can donate here:


Posted on April 30, 2020 at 9:09 pm
Carlene Sandstrom | Posted in Regional Market Updates | Tagged , , , ,

THE GARDNER REPORT – FIRST QUARTER 2020

 

The following analysis of the Western Washington real estate market is provided by Windermere Real Estate Chief Economist, Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please contact me anytime.

 

A MESSAGE FROM MATTHEW GARDNER

Needless to say, any discussion about the U.S. economy, state economy, or housing markets in the first quarter of this year is almost meaningless given events surrounding the COVID-19 virus.

Although you will see below data regarding housing activity in the region, many markets came close to halting transactions in March and many remain in some level of paralysis. As such, drawing conclusions from the data is almost a futile effort. I would say, though, it is my belief that the national and state housing markets were in good shape before the virus hit and will be in good shape again, once we come out on the other side. In a similar fashion, I anticipate the national and regional economies will start to thaw, and that many of the jobs lost will return with relative speed. Of course, all of these statements are wholly dependent on the country seeing a peak in new infections in the relatively near future. I stand by my contention that the housing market will survive the current economic crisis and it is likely we will resume a more normalized pattern of home sales in the second half of the year.

 

HOME SALES

  • There were 13,378 home sales during the first quarter of 2020, a drop of only 0.2% from the same period in 2019, but 27% lower than in the final quarter of 2019.
  • The number of homes for sale was 32% lower than a year ago and was also 32% lower than in the fourth quarter of 2019.
  • When compared to the first quarter of 2019 sales rose in eight counties and dropped in seven. The greatest growth was in Cowlitz and Lewis counties. The largest declines were in Island and Snohomish counties.
  • Pending sales — a good gauge of future closings — rose 0.7% compared to the final quarter of 2019. We can be assured that closed sales in the second quarter of this year will be lower due to COVID-19.

 

 

 

HOME PRICES

  • Home-price growth in Western Washington rose compared to a year ago, with average prices up 8.7%. The average sale price in Western Washington was $524,392, and prices were 0.4% higher than in the fourth quarter of 2019.
  • Home prices were higher in every county except San Juan, which is prone to significant swings in average sale prices because of its size.
  • When compared to the same period a year ago, price growth was strongest in Clallam County, where home prices were up 21.7%. Double-digit price increases were also seen in Kitsap, Skagit, Mason, Thurston, and Snohomish counties.
  • Affordability issues remain and, even given the current uncertain environment, I believe it is highly unlikely we will see any form of downward price pressures once the region reopens.

 

 

 

 

 

 

DAYS ON MARKET

  • The average number of days it took to sell a home in the first quarter of this year dropped seven days compared to the first quarter of 2019.
  • Pierce County was the tightest market in Western Washington, with homes taking an average of only 29 days to sell. All but two counties — San Juan and Clallam — saw the length of time it took to sell a home drop compared to the same period a year ago.
  • Across the entire region, it took an average of 54 days to sell a home in the first quarter of the year — up 8 days compared to the fourth quarter of 2019.
  • Market time remains below the long-term average across the region. This is likely to change, albeit temporarily, in the second quarter due to COVID-19.

 

 

CONCLUSIONS

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

Given the current economic environment, I have decided to freeze the needle in place until we see a restart in the economy. Once we have resumed “normal” economic activity, there will be a period of adjustment with regard to housing. Therefore, it is appropriate to wait until later in the year to offer my opinions about any quantitative impact the pandemic will have on the housing market.

 

 

ABOUT MATTHEW GARDNER

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

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


Posted on April 18, 2020 at 9:01 pm
Carlene Sandstrom | Posted in Matthew Gardner Report | Tagged , , , ,