Seattle Economic Indicators Feed

What’s Happening in the Market? Shift, Change, Adjustment or What?

JUNE-SEATTLE-2018-MONTHLY-TALKING-POINTS_Page_2We have all seen the news media articles over the past few weeks reporting that there has been an over 70% increase in our current market inventory, that the market is slowing down or that there is another recession coming, and so on. If you are a seller, let’s not panic or get into modes of desperation just yet.

We have to keep in mind, we see a seasonal slow down every year in our market during mid-summer (due to factors such as buyers and their agents being on vacation and sellers putting their homes up for sale at a higher rate in order to move before the school year starts, etc. - see photo for seasonal trends), so I wanted to chime in and speak to what I am actually seeing out here.

We are seeing, what I would call, a shift in the mindset of buyers. There are less multiple offer scenarios on both condos and single family homes as well as a lot of buyers doing more of a wait see approach to the offer review dates. This is quite opposite of what we were seeing earlier in the spring, which was a very aggressive approach of doing pre-inspections, waiving all contingencies, and being willing escalate well above list price. Also, there is a significant increase in the inventory. Homes and condos are still selling, but they are going into contract slower than they were in the spring.  We are also seeing the percentage over list price not being as aggressive. This will apply to most neighborhoods of Seattle, and appears to happening in most price segments as well. 

Now, does this change how I, as a broker, might approach the market? Yes, of course, our strategies must change with adjustments in market conditions. But does this mean we are in a changing market or a just a slightly more aggressive seasonal slowdown? I’m not sure yet. But my sense is we have some slowing due to general buyer fatigue and frustration and increased summer market inventory from sellers who are trying to ride the coattails of the spring sales pricing. Sadly, we are also seeing a lot of homes that just aren’t presented well, such as not being in the best of condition, poor quality flips, or disadvantaged locations, etc. These condos and houses might be too aggressively priced by sellers and agents that are just too optimistic that the hot market will have buyers buying anything they can. The buyer fatigue is stalling sales on homes that simply aren’t properly prepped and priced for the summer market conditions. I do think that these factors are causing some lethargic market conditions right now that are affecting even those homes and condos that are spruced up and ready to sell as the mere fear of a slowing market will cause more slowing in the market.

I’m predicting that the market will absorb, although slowly, the summer inventory and we’ll see a bit more of the frenzy return in the fall when buyers and their brokers are returning from vacations and ready to be realistic and get back to the market.  

Timing is everything, and we might have missed a bit of a window for some sellers, so holding off until fall might be a new thing to consider. If you are thinking about selling, make sure you are realistic about how long it will take to sell your home and what price you are likely to get.


2018 Housing Forecast by Matthew Gardner

Windermere's Chief Economist is the renowned Matthew Gardner. He put together his annual forecast of the real estate market for 2018 and we are summarizing what he sees in his crystal ball for the future of our market this year.

The Main Takeaways from Matthew Gardner's 2018 Housing Forecast:

  • The number of millennial home buyers will expand and they will be big influencers in the market
  • Interest rates will rise modestly to an average of 4.4%
  • New home sales will rise by 8%
  • Existing home sales will increase by 3.7% and this modest increase will take some heat off of the market meaning home prices will rise by 4.4%
  • We are not in a housing bubble but he is concerned about affordability as it relates to the long-term health of the housing market but he thinks that price growth will begin to taper and provide some relief

Much of Mr. Gardner’s numbers in his annual forecast are based on regional and national numbers, so I do predict that Seattle will see slightly higher price growth and less new home sales than these national numbers.

Matthew Gardner 2018 Forecast

 

 


Snapshot of Western Washington Real Estate Market

Windermere Real Estate's Chief Economist, Matthew Gardner, releases the Gardner Report every quarter analyzing Western Washington's real estate market by looking at both the residential and commercial/industrial markets, doing financial analysis, and looking into land use and regional economics.

WWA Gardner Report Q3 2017_Single Page_Page_4Here is a snapshot of The Gardner Report's Third Quarter 2017  analysis:

  • Economic Overview
    • Washington State economy added 79,600 new jobs over the last 12 months - a growth rate of 2.4% 
    • State unemployment rate continues to fall - it is currently at 4.6%, which is essentially full employment
    • Matthew Gardner anticipates that the Washington State economy will continue to outperform the US  due to this expansion and solid income growth

Continue reading "Snapshot of Western Washington Real Estate Market" »


Housing Bubble in Seattle? Not according to our Chief Economist

Housing Bubble GraphicRight away I know some people reading this will think, I’m just saying that there is not a real estate bubble in Seattle because I’m a Realtor and I want people to keep buying. But that is not true; I genuinely want people to do what’s right for them, at any particular time in their lives. But the discussions I’m hearing out there about pricing leading to a bubble that is about to burst is just not true and can cause buyers and sellers to not make informed decisions.

So let’s set the record straight. There is no bubble coming any time soon here in Seattle. I felt this was a great credible article in the PSBJ last week on this subject that furthers this opinion because our economist here at Windermere, Matthew Gardner, considers factors and forces beyond just the numbers of real estate when making his predictions. He uses factors such as job growth, health of the economy, both local and national indicators and averages. I feel his approach to this topic is a very valid and healthy approach to the question of bubble or no bubble.

So my message to buyers is to stay in the hunt and work really hard to find the right condo. Prices and demand for housing are not going to come down anytime time soon, so buy now if you can. Hang in there, be creative, stretch your budget if needed, and don’t let the frustrations of the lack of inventory and multiple offers discourage you. Don’t put your home search on hold, hoping for a better “buyers’ market” because it could be a loooong ways away.

Happy home hunting! No Bubble here.

 


Another Source of Buyers Fueling our Seattle Market are the Boomerang Buyers

Boomerang BuyerThis article was an interesting read, even though it wasn’t about a local buyer, it still is relevant so I wanted to share it with our readers.

Ever heard of the term boomerang buyer? If not, it is something you might want to be aware of if you thinking about buying or selling. The boomerang buyer is someone who went through a short sale or foreclosure during the most recent recession but are poised to come back into the real estate market as those credit transgressions fall off of their credit reports. If you are thinking of selling your condo or house but fear things might be slowing down, this might make you think twice as boomerang buyers are great candidates and they are motivated to own a home and are adding additional demand to the marketplace. Or if you are a person wanting to buy a new home but fear your past credit issues resulting from the recession will prevent that, this is worth a read as you might be a boomerang buyer.

Continue reading "Another Source of Buyers Fueling our Seattle Market are the Boomerang Buyers" »


Seattle's Population is Booming

Population GrowthThe Seattle Times article, Seattle's population boom approaching gold rush numbers, is pretty telling noting that, according to census data, since 2010 our city has grown at an average rate of 14,511 people per year. One would have to go as far back as the Klondike Gold Rush to see numbers this staggering.

To break it down even further, between 2012 and 2013 Seattle gained 18,000 people and was the fastest growing big city in the country during that time. In comparing this boom to others we have had, it appears to be the largest in-migration of new arrivals the city has seen, due to the gold rush era boom numbers including annexing unincorporated areas into the city.

Where have all these people landed? Well, South Lake Union and the Denny Triangle mostly. But Ballard, the University District, the Central Area and Rainier Valley also saw a bump.

What does this mean for real estate? Population increases are always a direct indicator to where real estate is heading. If there are an average of around 14,500 people moving here each year, the demand for housing will be greater. And the prices will respond to the increase in demand with an increase of their own. Of course, some of our new arrivals will rent, pushing up rents across the city as well.

Those are my thoughts and if you have any thoughts or comments, we would love to hear them.

Source: Seattle Times; Photo: courtesy of the Seattle Times

By Marco Kronen with Seattle Condo Review: A guide to Seattle downtown condos.


Downtown Seattle Condo and Apartment Demand Continues

CranesLast week, the Downtown Seattle Association (DSA) held its annual breakfast where they delivered the 2015 State of Downtown Report.  The recent article by the Puget Sound Business Journal did a great job of highlighting some of the key points of the DSA’s Report, and I thought it would be interesting to share information from the article regarding the upcoming demand for downtown housing, which includes both condo units as well as rental units.  I often get questions from buyers and sellers with regards to whether or not Seattle is building too many downtown housing units and whether or not we will see a glut of units that might cause a softening in the condo sales market or a softening in the rental market in the near future.  

While the report didn’t specifically say yes or no to the question of whether or not there is a bubble coming or a future glut of inventory, one key item in the PSBJ article and the report from the DSA that I feel might calm this concern a bit, is the overall increase in downtown’s residential population and job growth. 

Key Points:  

  • Since 2010, downtown’s permanent population has increased 8%, which equates to 65,000 people who now live in the downtown area.  That number is expected to increase 10% more in five years.
  • About 3,000 units are under construction now.
  • 2,650 more units are planned for 2016.
  • According to the article, “The overall job growth in downtown is twice that of the region as a whole. 243,995 Seattleites work downtown”. 

Although, according to the DSA’s report, a combined 5,650 units are coming between now and end of 2016, I believe that with millions of square feet of office space coming, this will result in a continued increase in the downtown area workforce.  This growing workforce will likely increase the desire to live in or near the downtown area for many reasons, but most likely due to our traffic issues that seem to be continuing to get worse.  This will continue to increase the demand for housing downtown, and at least to me, seems to reason this demand will easily gobble up all the upcoming condo and apartment units that are under construction or planned.

By Marco Kronen with Seattle Condo Review: A guide to Seattle downtown condos.


Zillow Market Trends

We attended Zillow's 2015 Housing Market Seminar this week, taught by one of Zillow's senior economists. The information was interesting enough that we thought our readers might enjoy seeing some of the stats. Please note these stats are not specific to condos only, but the trends and stats overall seem to be valuable indicators for condo buyers and sellers as well. 

Major Takeaways for us Based on Zillow's Data & Predictions:

  • Because the amount of rental households is steadily increasing, those who rent should expect a steady increase in their rent rates year over year VS. for those who buy with a fixed rate interest rate, their mortgage payment will not increase year over year while they own that property
  • The market will begin to stabilize with appreciation coming down to around 5-6% a year, which is considered "normal and healthy"
  • Seattle is a strong market in comparison to the nation as a whole due to job growth and in-migration

Zillow Market Trend Infographic

Please note: Zillow's stats for Seattle do refer to the Metro area of King, Snohomish, and Pierce county, and because Seattle is a stronger market overall, you can expect these numbers to be conservative when thinking only of Seattle


Seattle Rated Best City to Buy

At the risk of getting flamed for sharing positive news about the Seattle market, I figured I'd share a recent story on CNN about two economists analyzing forecasted future home prices and rental prices to see whether a city is better to rent or buy.

How much better buying will be depends on location. Of the 23 cities Beracha and Johnson looked at, Seattle is the best place to buy right now. When renters invest in portfolios that include stocks, the appreciation rate required over the next eight years there is 4.84% and the area's historical average is 6.06%.

Here's the article and here's the Seattle detail page.

-Wendy


Seattle Tech Economy: #1 in Job Growth Nationwide

SeattlecondooasisNice to see a positive article once in a while amid all the scary news about oil prices and real estate troubles in the rest of the country.  Will be interesting to see if Seattle manages to maintain it's relatively soft landing while national prices appear to be bumping along the bottom (and likely to do so for at least another year).

Now for the good news:

The Seattle area added the greatest number of high-tech jobs in 2006, outpacing Boston, San Francisco and more than 50 other U.S. cities, according to the Cybercities report from the American Electronics Association.

The report, released Tuesday, is another indication that the high-tech economy in the Seattle area continues to purr as companies such as Microsoft, Google, Amazon.com and dozens of startup enterprises add new workers. (The P-I recently reported on Microsoft's record employment growth, with 38,856 workers in the Puget Sound region and 89,809 worldwide as of May 31.)

See the full summary in the PI here.