Sellers • October 25, 2021

Working with a Listing Agent

by Carlene Sandstrom

A man and a woman discuss selling their home with their Windermere real estate agent.

What is a Listing Agent?

Generally, a real estate transaction involves a listing agent representing the seller and a buyer’s agent representing the buyer. Listing agents will conduct a Comparative Market Analysis (CMA)—which uses recent housing market data to compare the seller’s home to other listings in their area—to accurately price the property. The agent will list the home, coordinate showings and open houses, and negotiate with buyers’ agents to find the best offer for their client. Once the transaction is complete, the listing agent and buyer’s agent will split the commission of the sale.

Hiring a listing agent removes the risks of selling your own home by placing the selling process in the hands of an experienced licensed professional. Once you’ve found the right agent, you can begin working together to form your selling strategy.

Advantages of Working with a Listing Agent

Accurately Pricing Your Home

Your listing agent will begin the selling process by finding the value of your home. There are various factors that influence home prices, including seasonality, market conditions, home features, and more. Agents have exclusive access to the data behind these trends, allowing them to conduct a thorough CMA to accurately price your home. Of all the costly mistakes in the selling process, an inaccurately priced home is perhaps the most consequential. An overpriced home will attract the wrong buyers, increase your home’s days on market, and could lead to serious post-sale complications, that, in some cases, could jeopardize the sale. An underpriced home leaves money on the table. With a listing agent’s CMA, you can rest assured that the price of your home is backed by current market data, which will set you and your agent up for successful negotiations.

Marketing Your Home

Listing agents are experienced professionals who possess a wealth of knowledge on how to market your home. Your agent will list your property on the Multiple Listing Service (MLS), an online database to which they have exclusive access. Getting your home listed on the MLS will greatly increase its exposure to interested buyers. Your listing agent will coordinate showings and open houses, opening the door to conversations with buyers and their agents.

Your agent will also make recommendations and help coordinate all marketing efforts, like staging and photography. They’ll also be able to recommend what, if any, repairs need to be made before you go live. Their expertise will streamline the selling process, getting your house ready and on the market quickly.

Offers / Negotiations / Closing

The complexities of the critical stages in the selling process highlight the value of an agent’s expertise. A listing agent will work on your behalf to field and assess incoming offers, communicate with buyers and their agents during negotiations, and ultimately, see the deal through to closing.

Local market conditions can often dictate how your agent approaches offers and negotiations. In a seller’s market, there’s a good chance you will have multiple competing offers on the table, contingencies are often waived, and all-cash offers may arise. Trying to pin down the best offer in these competitive situations can be overwhelming, but listing agents specialize in understanding the terms of these kinds of offers to identify the one that best aligns with your goals. If you’re selling in a buyer’s market, the buyer will have the leverage. Your listing agent will work with the buyer’s agent to reach an agreement on the buyer’s contingencies and finalize the terms of purchase.

From list to closing, your listing agent is there to answer any questions you may have, allay your fears, and guide you toward a successful sale. When searching for an agent, keep in mind that their ability to connect with you on a human level is just as important as their professional qualities. Selling your home can be an emotional roller coaster, and you’ll want someone by your side who you can trust on the journey ahead. Contact me and learn more about how I can help you sell your home.

Local News • October 10, 2021

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

by Carlene Sandstrom

Seahawks Player abstract in geometric designs in greens and blues.

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. Last year, we were able to donate $32,100 which brought our #TackleHomelessness total to $160,300 donated over the past five seasons. We look forward to raising even more this year!

Interested in following along with our progress this season? Follow us on Facebook, Twitter, Instagram, and LinkedIn for updates. Go Hawks!

Living • October 10, 2021

How to Fall Proof Your Home

by Carlene Sandstrom

An elderly couple climbs the stairs in their home.

Each object in a home serves a purpose, but for those who experience dizziness and numbness, many of them can also be a potential hazard. Taking steps to reduce the risk of falling in your home is a worthy exercise for any homeowner, especially if you have elderly family members or young children living in your home or visiting often. Here are some ways you can fall proof the rooms in your home.

How to Fall Proof Your Home

Kitchen

The kitchen is synonymous with spills and messes. When these accidents happen, be sure to clean them up quickly and thoroughly to reduce the risk of a falling injury. Slippery floors have been the culprit of countless broken bones and bruises, so it’s best to wait until the cleaned spot is dry until you resume cooking.

Stay low to the ground as much as possible by keeping your most used items like spices, cooking utensils, and hand towels within reach to reduce the number of times you need to use a step stool.

Bathroom

In the bathroom surfaces are often slippery and slick, and the hard tile makes for an unforgiving landing spot. It’s common for homeowners to place a non-slip mat in the shower or tub to reduce the risk of slipping and falling. Grab bars are a more permanent option for making the bathroom safer. For those interested in installing a grab bar but have reservations about the aesthetics of installing a grab bar, look at pieces that align with your existing décor. Match the grab bar with your shower head, shower rod, and towel racks to make it fit with the space.

Bedroom

The key to preventing falls in the bedroom is visibility. Bedrooms are cozy, intimate spaces, which means that space can often be limited. Keep all pathways clear and make sure that your nightstands and bedside lamps are well within reach. Stow any cords next to your bed to avoid tripping over them in the night.

Staircases

We’ve all taken a tumble on the stairs at some point or another. To mitigate the risk of falling, keep your stairs organized at all times. It’s easy for clutter to build up at the top or bottom of the stairs or on platforms between floors, but these objects are tripping hazards. Consider installing a handrail if you don’t have one or add a second one if you currently only have a handrail on one side.

Market News • Matthew Gardner • October 3, 2021

9/27/2021 Housing and Economic Update from Matthew Gardner

by Carlene Sandstrom

This video is the latest in our Monday with Matthew series with Windermere Chief Economist Matthew Gardner. Each month, he analyzes the most up-to-date U.S. housing data to keep you well-informed about what’s going on in the real estate market.

Hello there! I’m Windermere Real Estate’s Chief Economist, Matthew Gardner, and welcome to the latest episode of Mondays with Matthew.

Today we are going to take a look at the latest Home Purchase Sentiment Index survey that was just put out by Fannie Mae. And for those of you who may not be familiar with this survey, it’s actually pretty important and one that I track closely as it’s the only national, monthly, survey of consumers that’s focused primarily on housing.

The survey shows the responses of 1,000 consumers across the country to roughly 100 survey questions on a wide range of housing-related topics. Now, don’t worry, we aren’t going to look at all 100 questions – just the ones that solicit consumers’ evaluations of housing market conditions and that also address topics related to their home purchase decisions.

So, as you can see here, the overall index was trending higher pretty consistently until the pandemic happened which had massive, but temporary, impacts. And looking the last 3-years, you can get a better idea as to the speed of the pandemic induced drop – pretty remarkable.

Now, you will also see that the index recovered quite quickly; however, it fell again last fall as the pandemic was not going away at the speed many had hoped for – it rose again this spring but has been pulling back for the past few months but, that said, the August index level essentially matched the level seen in July.

Now let’s look at the questions that are used to create of the index number and how consumers responded.

When asked whether it was a good time to buy a home, the percentage who agreed with that statement rose from 28 to 32%, while the share who thought that it is a bad time to buy dropped from 66 to 63%. And, as a result, the net share of those who say it is a good time to buy jumped 7 points month over month and its notable that this is the first time the net share number has improved in the past 4-months.

What I see here is that – although improving modestly, the general consensus is that it is not a good time to buy and that sentiment is being driven by two things: One – there are still not enough homes on the market, and two, rapidly rising prices are scaring some people.

And when asked if they thought it was a good time to sell their homes it was interesting to see that share drop from 75 to 73% while the percentage who said that it’s a bad time to sell dropped 1 point to 19% and as a result, the net share of those who said it was a good time to sell pulled back by 1% but it still indicates that more owners think that it is a good time to sell than don’t.

Looking now at the direction of home prices over the next 12-months, the percentage who think that home prices will rise fell from 46 to 40%, while the percentage who expected home prices to drop rose from 21 to 24%.

As a result, the net share of Americans who say home prices will go up dropped by 9 points – from 25%, down to 16%.

Although this may sound concerning, I should add that the share of respondents who thought that home prices will remain static over the next year rose from 27% to 31%.

On the financing side, the share who think mortgage rates will rise over the next 12 months dropped from 57 to 53%, while the percentage who believed rates would be lower rose from 5% to 6% and, as a result, the net share of Americans who believed that mortgage rates will go down over the next 12 months rose by 5%, and with 35% of respondents thinking that that rates will hold steady – it’s clear to me that a vast majority are not worried about mortgage rates rising.

The takeaways for me so far are that consumers tempered both their recent pessimism about homebuying conditions and their upward expectations of home price growth.

Most notably, a greater share of consumers believe that it’s a good time to buy a home – though that population remains firmly in the minority at only 32% – while the ongoing plurality of respondents who expect home prices to go up over the next 12 months dropped but was still well above the 24% of consumers who believe home prices will fall.

Now, there are two more questions that are worth looking at which aren’t directly related to home buyers and sellers but are still important as they look at employment and incomes.

The percentage of respondents who said that they are not concerned about losing their job in the next 12 months remains very high at 82%, but it did drop by 2 points month-over-month, while the percentage who said that they are concerned ticked up to 15% from 13%. As a result, the net share of Americans who say they are not concerned about losing their job fell by 4 percentage points month over month, but remains well above the level seen a year ago.

And finally, when households were asked about their own personal finances, the percentage of respondents who said that their household income is significantly higher now than it was 12 months ago pulled back one point to 26%, while the percentage who said that their household income is significantly lower dropped to 12%.

As a result, the net share of those who said that their household income is significantly higher than it was a year ago rose by 1 percent month over month and came in 5 points higher than a year ago. It’s also worthwhile noting that most said that their household income is about the same as it was a year ago with that share rising from 56 all the way up to 59%.

Looking at all the numbers in aggregate, the index level was relatively flat in August with three of the index’s six components rising month over month, while the other three fell, and that tells me that the continued strength of demand for housing and definitely favorable conditions for home sellers may well be offsetting broader concerns about the Delta variant of COVID-19 as well as rising inflation that have both negatively impacted other consumer confidence indices.

Most consumers continued to report that it’s a good time to sell a home – but a bad time to buy – and they most frequently cite high home prices and a lack of supply as their primary rationale.

However, the ‘good time to buy’ component, while still near a survey low, did tick up for the first time since March, perhaps owing in part to the very favorable mortgage rate environment as well as growing expectations that home price appreciation will begin to moderate over the next year. A sentiment that I personally agree with.

Well, I hope that you have found this month’s discussion to be interesting. As always if you have any questions or comments about this topic, please do reach out to me but, in the meantime, stay safe out there and I look forward the visiting with you all again, next month.

Buyers • September 26, 2021

Is Co-Buying Right For You?

by Carlene Sandstrom

Two young women sit in their new home surrounded by boxes.

For some buyers, purchasing a home independently may be out of reach. Co-buying is an alternative approach to homeownership where two or more individuals purchase the property together and take on a joint mortgage. Get to know the benefits and drawbacks of co-buying before deciding whether it’s right for you.

How Does Co-Buying Work?

Just like a traditional home purchase, lenders use the buyers’ debt-to-income ratios and credit scores to determine their mortgage eligibility and formulate the terms of their loan. The lender will use the lowest median credit score to determine whether the co-buyers qualify. Before you purchase with a co-buyer, work with a real estate attorney to flesh out the details of the agreement including the distribution of shares, the responsibility of each party for the down payment and subsequent mortgage payments, and the home’s title. There are two main options for taking title to a home with a co-buyer.

Tenancy in Common (TIC)

When co-buyers hold a title as tenants in common, shares of the property can be divided equally or unequally. You and a co-buyer can decide to split ownership to reflect the amount invested. However, even if these amounts are unequal, no one individual may claim sole ownership of the property. If a co-buyer dies, their ownership passes along to their designated heir. With Tenancy in Common, a co-owner may sell their shares of the property at any time, without the need for approval from other co-owners.

Joint Tenancy

Joint Tenancy—or Joint Tenancy with Right of Survivorship (JTWROS)—requires that all co-buyers hold an equal interest in the property and that they all come into ownership through the same title at the same time. If one co-owner dies, ownership passes to the other co-owner—this is known as Right of Survivorship. Unlike Tenancy in Common, co-owners must receive approval before selling any property shares.

Pros and Cons of Co-Buying

Pros of Co-Buying

For those who don’t have the buying power to purchase a home on their own, co-buying presents an opportunity to combine assets and enter the market. Since lenders will be factoring in both of your incomes, you and your co-buyer will increase your chances of being approved for a mortgage and securing a low interest rate. Both of you will build equity over time as you pay back your joint mortgage. Even after the down payment and mortgage payments, there are a handful of costs that come with being a homeowner. Co-buying allows you to split these costs, saving money on bills, utilities, maintenance costs, and the like.

Cons of Co-Buying

Co-buying a home means you are relinquishing some control over the homeownership costs. At the end of the day, you can’t control your co-buyer’s finances. If a sudden life change leaves them financially unstable, the burden will fall on your shoulders, and you’ll have to make up the difference. Similarly, your credit score could take a hit if your co-buyer is unable to make their mortgage payments, even if you’ve consistently made yours.

Before entering a co-buying agreement, it’s important that you and your co-buyer are on the same page about the terms of ownership and your expectations as joint homeowners. Working closely together will help maintain the health of your finances, and most importantly, your relationship.

Market News • Market Report • Matthew Gardner Report • September 16, 2021

Q2 2021 Western Washington Real Estate Market Update

by Carlene Sandstrom

Q2 2021 Western Washington Market Trends

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 don’t hesitate to contact your Windermere Real Estate agent.

REGIONAL ECONOMIC OVERVIEW

Employment levels in Western Washington picked up in the late spring and early summer months. The region has now recovered 168,800 of the 297,210 jobs that were lost due to the pandemic. Although the recovery is palpable, there are still 128,000 fewer jobs than there were at the pre-COVID peak in February 2020. The most recent data (May) shows the region’s unemployment rate at a respectable 5.2%. This is significantly lower than the April 2020 high of 16.8%, but still not close to the 2020 low of 3.7%. The jobless rate was lowest in King County (4.8%) and highest in Grays Harbor County (7.6%). Although unemployment levels continue to drop, we cannot attribute all the improvement to job creation: a shrinking labor force also lowers the jobless rate. In short, job recovery continues but we still have a way to go.

WESTERN WASHINGTON HOME SALES

❱ Regardless of low levels of supply, sales in the second quarter rose 45.6% year-over year, with a total of 25,640 homes sold. Although comparisons to the same quarter a year ago are not informative due to the pandemic, I was pleased to see sales increase 61.3% from the first quarter of this year.

❱ Listing activity was 42.8% higher than in the first quarter, which was a pleasant surprise. Listings rose the most in Kitsap, Clallam, Island, and Mason counties, but there were solid increases across the region.

❱ Sales were up across the board, with sizable increases in San Juan, King, Whatcom, and Snohomish counties. Only Mason County experienced sales growth below 10%.

❱ Pending sales (demand) outpaced active listings (supply) by a factor of 6. Even with the increase in the number of homes for sale, the market is far from being balanced.

A bar graph showing the annual change in home sales for various counties in Western Washington.

WESTERN WASHINGTON HOME PRICES

A map showing the real estate market percentage changes in various counties in Western Washington.

❱ Home prices rose 31.4% compared to a year ago. The average sale price was $734,567—another all-time record.

❱ Year-over-year price growth was strongest in San Juan and Jefferson counties, but all markets saw prices rise more than 23% from a year ago.

❱ Home prices were a remarkable 15.7% higher than in the first quarter of this year, possibly due in part to the drop in 30-year fixed mortgage rates between the end of the first and second quarters. That said, the modest decline in mortgage rates is certainly not the primary driver of price growth; the culprit remains inadequate supply.

❱ Relative to the first quarter of the year, San Juan (+33%), Jefferson (+24.7%), and Island (+20.5%) counties saw the fastest rate of home-price appreciation.

A bar graph showing the annual change in home sale prices for various counties in Western Washington.

DAYS ON MARKET

❱ It took an average of only 18 days for a listed home to go pending. This was 22 fewer days than a year ago, and 11 fewer days than in the first quarter of 2021.

❱ Snohomish, Kitsap, Thurston, and Pierce counties were the tightest markets in Western Washington, with homes taking an average of only 7 days to sell in Snohomish County and 9 days in the other three counties. The greatest drop in market time compared to a year ago was in San Juan County, where it took 84 fewer days to sell a home.

❱ All counties contained in this report saw the average time on market drop from the same period a year ago. The same can be said when comparing market time in the current quarter with the first quarter.

❱ It’s widely known that the area’s housing market is very tight and unfortunately, I don’t expect the number of listings to increase enough to satisfy demand in the near term. Furthermore, I’m seeing rapid growth in demand in the counties surrounding King County which is likely proof that buyers are willing to move further out given the work-from-home paradigm shift.

A bar graph showing the average days on market for homes in various counties in Western Washington.

CONCLUSIONS

A speedometer graph indicating a seller's market in Western Washington.

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.

Demand is maintaining its momentum, and, even with supply levels modestly improving, the market remains extraordinarily tight.

Mortgage rates are still hovering around 3%, but the specter of them starting to rise at some point is clearly motivating buyers. I am very interested to see significant interest outside of the Seattle metro area, although King County is certainly still performing well. I will be monitoring whether this “move to the ‘burbs” is endemic, or a temporary phenomenon. My gut tells me that it is the former.

At some point, the remarkable run up in home values will slow. Affordability constraints are becoming more widespread, and even a modest uptick in mortgage rates will start to slow down price increases. It’s worth noting that list-price growth is starting to taper in some markets. This is a leading indicator that may point to a market that is starting to lose a little momentum.

The bottom line is that the market still heavily favors sellers and, as such, I am moving the needle even more in their favor.

ABOUT MATTHEW GARDNER

Matthew Gardner - Chief Economist for Windermere Real Estate

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.

Buyers • Design • Living • September 13, 2021

A Guide to Remodeling Your Bathroom

by Carlene Sandstrom

A man repairs the plumbing in his bathroom.

There are a variety of reasons that a homeowner may decide to remodel their bathroom; they could be looking to increase the value of their home for a future sale, they may have discovered repairs that need to be made, or perhaps they’re simply looking to maximize their enjoyment of the space. Whatever your motivation may be, consider the following information before the hammer hits the tile to make sure your bathroom remodel turns out as successful as you’d hoped.

A Guide to Remodeling Your Bathroom

Which bathroom remodel projects have the highest ROI?

Before you decide which projects to tackle, it’s worth your while to identify which bathroom remodeling projects have the highest ROI. This can be especially helpful if you’re thinking about selling your home in the near future. According to recent nationwide data released by Remodeling Magazine, bathroom remodels can have as high as a sixty percent return on cost, while larger projects like bathroom additions return roughly fifty percent of their costs. The point is you likely won’t recoup every dollar you spend on your bathroom remodel, so choose your projects wisely. If you’re preparing to sell your home, talk to your agent about which bathroom projects are seeing the highest return in your local area.

How can I save on my bathroom remodel?

There are various ways to keep your costs down when remodeling your bathroom, but it depends on the scope of your project. If, while preparing to sell your home, you identify a handful of outstanding repairs that need to be fixed before you list, it may be difficult to pull off a low-budget bathroom remodel while still fetching a competitive sales price. Neglecting these issues can be a costly mistake, and in some cases can even jeopardize a sale.

One way to save money on your bathroom remodel is to do it yourself. Identify the pros and cons of either doing a project DIY or hiring a professional. Though you may save money on labor, if you get in over your head on a project the costs can add up quickly, and you may end up having to hire a contractor to remedy the situation. If you decide to hire a contractor, thoroughly research multiple companies, ask for referrals from family and friends, and get multiple quotes before deciding which is best for the job.

Simple Bathroom Upgrades

As the scope of a bathroom remodel changes, so do its costs. According to Remodeling Magazine’s 2021 Cost vs. Value Report, a midrange bathroom remodel cost an average of roughly $24,000 nationwide, while an upscale bathroom remodel was just over $75,000. But fear not, there are ways to give your bathroom a makeover without having to break the bank. Here are a few ideas for budget-friendly bathroom upgrades.

Refinish Your Tub: Remove all hardware from your tub and sand the entire surface smooth, evening out any chips or cracks and filling them with epoxy. Once the epoxy has dried, sand those areas one more time. Apply multiple layers of primer and topcoat as advised and buff the surface to finish off the job.
Add Décor: A well-decorated bathroom can revitalize the space. Add a fresh coat of paint to the walls, install a new faucet and shower head, and match your towel rods and shower curtains for a quick bathroom refresh.
Finishing Touches: The right bathroom lighting can make all the difference. Experiment with softer light bulbs or dimmers to create a sense of calm and relaxation. Add candles, scented oils, and new towels to make your bathroom feel like your own personal spa.

Market News • Matthew Gardner Report • Regional Market Updates • June 9, 2021

Matthew Gardner: What You Should Know About Today’s Real Estate Market

by Carlene Sandstrom

by Matthew Gardner

Understanding the housing market is a matter of analyzing its many data sets. In a recent piece for Inman News, Windermere Chief Economist Matthew Gardner offered his perspective on recent U.S. pending sales, new-home sales, and existing-home sales figures.

If you’re involved in the housing market, and I assume that most of you are, you know very well that this is a numbers business. All of us are surrounded by housing-related data day in and day out, and it can become a little overwhelming at times — even for an economist like myself.

Well, today I’d like to take a few minutes to talk about just a couple of the datasets that I think are particularly important to track and offer you my perspectives on them.

Housing

There’s no doubt that the ownership housing market really was a beacon of light as we moved through the pandemic period. Even though the market paused last spring as COVID-19 hit the nation, it snapped back remarkably quickly, unlike many other parts of the U.S. economy that are still suffering today.

This is important, as housing is a significant contributor to the broader economy. For example, last year, spending on the construction of new homes, residential remodeling and real estate brokers fees amounted to around $885 billion or 4.2 percent of gross domestic product.

But the real number is far greater than that when you add in all spending on all household services. The total amount of money spent on housing in aggregate was around $3.7 trillion or 17.5 percent of the country’s economy.

So, we know that the housing market is a very important part of our economy, but can that number continue to grow? Let’s take a look.

Inventory

The chart below shows the number of single-family homes for sale going back to 1983. As you can clearly see, there’s never been a time — at least since records were kept at the national level — where they were fewer homes for sale at any one time.

Line graph titled “inventory of homes for sale” along the x axis are the Months starting with January 1983 and ending with August 2020. On the y axis is 0 through 4. The line shows that in August 2020 there are fewer homes on the market than ever before. Source is NAR with Windermere Economics seasonal adjustments.

And this is a problem because the biggest issue the market faces today is that demand for homes is far exceeding supply.

A report I track very carefully — and I am sure that many of you do, too — is the National Association of Realtors pending home sales index, which is shown below.

Although it’s not a perfect indicator, as the survey only covers about 20 percent of all homes that go pending, it does give us a pretty good idea as to what the future may hold given that, all things being equal, about 80 percent of pending homes close within roughly two months, making it a leading indicator.

You can clearly see the massive pull back last spring because of the pandemic, but this was very quickly followed by a very significant surge.

It pulled back again last winter, but I would suggest that this was more a function of lack of homes for sale than anything else. However, look at the March spike.

Now, you might be thinking that this is a great number, but I would caution all of you not to pay too much attention to year-over-year changes, as they can be deceiving. You see, the index jumped because it was being compared with last March when the pandemic really started.

Closed sales

When we look at closed sales activity, it actually lines up pretty well with the pending home sales index, which fell in January and February. This is reflected in the contraction in closed sales that we saw this spring. And if the index is accurate, it suggests we may see closed sales activity pick up again over the next couple of months.

Line graph titled “Existing Home Sales” in millions seasonally adjusted. Along the x axis is months from January 2021 and April 2021. On the Y axis is numbers between 3.0 and 7.0, increasing by half points. The line shows a sharp decrease in April 2020 and a quick recover with a peak at 6.7 in October 2020. Source is NAR.

Of course, any time where housing demand exceeds supply, there is a solution — and that would be to build more homes.

But as you can see here, though more homes started to be built as we emerged from the financial crisis, the number today is essentially the same as it was two decades ago and has been declining for the past two years.

That’s significant, as the country has added over 12 million new households during the same period which has further fueled demand for housing. If there are no new homes to buy, well, that does one thing — and that’s to put more focus on the resale market, which has already led to very significant price increases.

New home market

But this particular report also offers some additional data sets, which I think give more clarity to the state of the new home market.

Before the housing market crashed, you can see that a majority of new homes that were on the market for sale were being built at that time, but — as the housing bubble was bursting — the market dropped, and the share of homes that were finished and for sale naturally rose.

But what I want you to look at is the far right of the chart above. You see the spike in the share of homes for sale that have not yet been started?

Well, given the massive increase in construction costs builders have, understandably, become far more cautious and are trying to sell more homes before they start to build them to mitigate some of the risk. It also tells me that they see demand that is not being met by the existing-home market and are looking to take it advantage of this.

When we look at new home sales, you can see that the trend, in essence, follows the number of homes for sale, but I would caution you on a couple of things.

Firstly, these figures do not represent closed sales, as the Census Bureau, which prepares this dataset, considers a home sold once it has gone under contract. This makes sense, as a home can be sold before it has even broken ground. In essence, it’s more similar to NAR’s Pending Home Sales Index than anything else.

Look now at sales by stage of construction on the right. You can see that, as the pandemic was getting started, new homes that were ready to move into were what buyers wanted, and that accounted for over 42 percent of total new sales in April.

As the supply of finished homes dropped, homes that were being built took the lion’s share of sales — as they have done historically. However, look at April. The greatest share of sales — 37.7 percent — were homes that hadn’t yet been started.

Again, this supports the theory that builders remain cautious given ever-escalating costs, but it also shows that buyers’ needs are not being met by the resale market, so they were willing to wait, likely a considerable time, for their new home to be built.

Of course, the couple of datasets I’ve shared with you today are just the tip of the iceberg when it comes to the housing-related numbers you should all be tracking, as they can tell a story that can impact everyone involved in the development or sale of homes.

Mortgage rates

In addition to the data we have discussed today, you should be well versed in mortgage rate trends, demographic shifts, building permit activity and the economy in general — and you need to understand all these numbers at a local as well as national level.

For the vast majority of households, buying a home will be the most expensive thing that they will ever purchase in their lives. And given memories of the housing crash, as well as the significant increase in home prices that we’ve seen since last summer, it’s now more important than ever for you to be able to share your knowledge with your clients and be able to advise them accordingly.

Windermere’s Chief Economist, Matthew Gardner, often contributes to local and national publications with his insights to the housing market. Recently he offered his analysis of home sales numbers to Inman News, this is a repost of that video and article.

For more market news and updates from Matthew Gardner,

visit our Market Update page.

Market News • Regional Market Updates • May 4, 2021

Q1 2021 Western Washington Real Estate Market Update

by Carlene Sandstrom

REGIONAL ECONOMIC OVERVIEW

In the summer and fall of 2020, Western Washington regained some of the jobs lost due to COVID-19, but employment levels in the region have been in a holding pattern ever since. As of February, the region had recovered 132,000 of the 297,000 jobs that were lost, but that still leaves the area down by 165,000 positions. Given the announcement that several counties may have to roll back to phase 2 of reopening, I would not be surprised to see businesses hold off on plans to add to their payrolls until the picture becomes clearer. Even with this “pause” in the job recovery, the region’s unemployment rate ticked down to 6.1% from the December rate of 6.4% (re-benchmarking in 2020 showed the December rate was higher than the originally reported 5.5%). The lowest rate was in King County (5.3%) and the highest rate was in Grays Harbor County, which registered at 9.2%. Despite the adjustment to the 2020 numbers, my forecast still calls for employment levels to increase as we move through the year, though the recovery will be slower in areas where COVID-19 infection rates remain elevated.

WESTERN WASHINGTON HOME SALES

❱ Sales in the first quarter were impressive, with 15,893 home sales. This is an increase of 17.5% from the same period in 2020, but 32% lower than in the final quarter of last year—a function of low levels of inventory.

❱ Listing activity continues to be well below normal levels, with total available inventory 40.7% lower than a year ago, and 35.5% lower than in the fourth quarter of 2020.

❱ Sales rose in all counties other than Jefferson, though the drop there was only one unit. There were significant increases in almost every other county, but sales growth was more muted in Cowlitz and Thurston counties. San Juan County again led the way, likely due to ongoing interest from second-home buyers.

❱ The ratio of pending sales (demand) to active listings (supply) shows how competitive the market is. Western Washington is showing pendings outpacing new listings by a factor of almost six to one. The housing market is as tight now as I have ever seen it.

A bar graph showing the annual change in home sales for various counties in Western Washington

WESTERN WASHINGTON HOME PRICES

A map showing the real estate market percentage changes in various Western Washington counties

❱ Home price growth in Western Washington continues to trend well above the long-term average, with prices 21.3% higher than a year ago. The average home sale price was $635,079.

❱ Compared to the same period a year ago, price growth was strongest in Grays Harbor and Mason counties, but all markets saw double-digit price growth compared to a year ago.

❱ Home prices were also 2.9% higher than in the final quarter of 2020, which was good to see given that 30-year mortgage rates rose .4% in the quarter.

❱ I expect to see mortgage rates continue to trend higher as we move through the year, but they will remain significantly lower than the long-term average. Any increase in rates can act as a headwind to home-price growth, but excessive demand will likely cause prices to continue to rise.

A bar graph showing the annual change in home sale prices for various counties in Western Washington

DAYS ON MARKET

❱ The market in early 2021 continued to show far more demand than supply, which pushed the average time it took to sell a home down 25 days compared to a year ago. It took 2 fewer days to sell a home than it did in the final quarter of 2020.

❱ Snohomish and Thurston counties were the tightest markets in Western Washington, with homes taking an average of only 15 days to sell. The greatest drop in market time was in San Juan County, where it took 52 fewer days to sell a home than it did a year ago.

❱ Across the region, it took an average of only 29 days to sell a home in the quarter. All counties saw market time decrease from the first quarter of 2020.

❱ Very significant demand, in concert with woefully low levels of supply, continues to make the region’s housing market very competitive. This will continue to be a frustration for buyers.

A bar graph showing the average days on market for homes in various counties in Western Washington

CONCLUSIONS

A speedometer graph indicating a seller's market in Western Washington

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.

Demand is very strong and, even in the face of rising mortgage rates, buyers are still out in force. With supply still lagging significantly, it staunchly remains a seller’s market. As such, I am moving the needle even further in their favor.

As I mentioned in last quarter’s Gardner Report, 2021 will likely see more homeowners make the choice to sell and move if they’re allowed to continue working remotely. On the one hand, this is good for buyers because it means more listings to choose from. However, if those sellers move away from the more expensive core markets into areas where housing is cheaper, it could lead to increased competition and affordability issues for the local buyers in those markets.

ABOUT MATTHEW GARDNER

Matthew Gardner - Chief Economist for Windermere Real Estate

Buyers • April 23, 2021

Buying with Gardening in Mind

by Carlene Sandstrom

Every home buyer has a list of must-have amenities that they’re just not willing to compromise on. For some, it could be an open floor plan or maybe a certain number of bedrooms. For others, that priority is a place to garden.

A garden provides a place where one can nurture the earth, feel connected to other living things, and have a positive impact on the environment. If you’re a home buyer who requires space to garden, here are a few things to consider:

The Hardiness Zone

When searching for a home, location is always high on the list of priorities, and for gardeners, it’s no different. If having a garden is important to you, the first thing you should do is check the hardiness zone to determine what you can realistically grow at any home you are considering buying.

Hardiness Zones are used by gardeners and growers around the United States to determine which plants will grow best in their region. The USDA uses the average annual minimum water temperature in the area to establish the zones, making it a great place to start when looking for your next garden.

Hardiness Zones don’t change by street like neighborhoods do but knowing where you are in the zones map can be a helpful guide to what to expect, especially if you’re moving to a completely new region.

Outdoor Space

Your Windermere agent will be able to use a combination of property metrics, photos, and land surveys to help narrow down your search to homes with adequate outdoor space for a garden.

Ask your agent about lot size versus the home size to make sure there is enough land to build and sustain a garden. Prior to visiting homes in person, check the exterior photos to get an idea of the area.

Local Wildlife

Local wildlife organizations have resources about the animals that might appear in your backyard. Knowing this will not only help you protect your veggies, herbs, and other plantings, but also aid in creating a wildlife-friendly sanctuary. The National Wildlife Foundation offers suggestions on how to do this and offers tips on how to attract songbirds and butterflies to your garden.

Infrastructure Requirements

Depending on the size of your garden, you may need to set up appropriate infrastructure for easier care, like a sprinkler system, raised beds, or outbuildings. If the land is uneven, consider installing raised beds that will help flatten the growing surface for your veggies and fickle flowers. A greenhouse can help you control humidity and light levels but be sure to consider the construction costs alongside your home loan amount.