2017 Real Estate Recap

Happy New Year! The real estate market was a tale of two halves in 2017 in North King and South Snohomish Counties. January through June was a frenzy of multiple offers and escalating prices. The lowest average sales price during the year was in January at $582,000. That ballooned 18% through June to a high of $689,000. Prices then leveled off and closed the year at $671,000. Average Price per SQFT also started the year at a low of $266/sqft and jumped over 16% to $310/sqft in the summer. It too leveled off and ended the year at $301/sqft.

While sales prices didn’t technically rise in the second half of the year, the market was still brisk and many good homes at fair prices continued to receive multiple offers. Seller’s asking prices did continue to rise, creating a pretty wide gap between what some sellers wanted and what buyers were willing to pay. That caused many overpriced homes to sit on the market and the “Days on Market” rose from a monthly low of 17 days in June to 31 days by December.

I know the “low inventory” theme sounds like a broken record, but December had a modern history record low of only 1988 homes for sale in all of King and Snohomish Counties combined. Last year’s high was 4700 active listings in September. As a striking comparison, there were over 15,000 active homes for sale when prices peaked during the housing bubble in the summer of 2007.

My takeaway is that until inventory rises substantially, companies in our area stop hiring, interest rates rise significantly, or some combination thereof, I don’t see too much of a change in the price appreciation trend, although likely at a more modest rate of increase.

Posted on January 9, 2018 at 3:57 pm
Ryan Francescutti | Category: Listings, Real Estate Stats and Trends

Spring Fever in the Seattle Housing Market!

This is officially the wildest housing market I have seen in my 15+ years in the business! 2005-2007 was wild too but the exuberance wasn’t quite as high, especially outside core Seattle. Now, bidding wars are escalating home prices significantly (sometimes 10% or more) over the asking price nearly everywhere. However, overpricing your home will still backfire! My clients have been most successful by pricing fairly and letting buyers fight over it.

While it may seem “easy” to sell your home, it is still a complicated process. Some sellers are finding buyers themselves and selling it off market. That sounds good, except I would argue that you will get more money, and/or better terms, if you expose your home to the whole market, especially right now. How can it hurt to have a dozen buyers interested instead of just one?

I am also seeing a frustrating trend of sellers (and their agents) who are willing to accept the first offer that comes in, sometimes on day one on the market. I believe it always benefits the sellers to wait at least a few days and then review offers on a set advertised date. I’ve had 3 cases recently where a great offer came in early, but per my advice, the sellers respectfully declined it and waited until the scheduled review date. In two of those cases, the same buyers submitted new offers that were significantly better than their first offer! In the third case, the buyer did not submit a new offer but we received two other much better offers that were $50k over the asking price!

This extra enthusiastic market really just started in February and prices have increased a lot since January. So, if you are thinking it might be time to sell or if you would just like to update a 3-month-old market analysis, please contact me today for a no-obligation consultation!

Posted on April 27, 2017 at 2:44 pm
Ryan Francescutti | Category: Listings, Real Estate Stats and Trends, Seller Tips

How Rising Mortgage Rates Affect Home Affordability (2017 Update)

I made a similar post a few years ago as mortgage rates were rising slightly, but low and behold, they then turned lower again. Now, rates have increased noticeably since the election and are forecast to continue to rise, albeit at a moderate pace. So again, I thought I would talk a little about mortgage interest rates and how, as rates rise, affordability decreases. Rates for a 30 year fixed mortgage are currently hovering around 4.25%. Prior to the election, the same 30 year fixed rate averaged 3.50%. According to the Mortgage Bankers Association, rates are projected to hit 5.0% in 2018. If you are thinking about making a move and can’t decide whether to do it this year or next, let’s look at an example of house payments with the different rates.

A $500,000 loan last year at 3.5% would have equaled a monthly principal and interest payment of $2,245. That same $500K loan right now would be $215 more per month at $2,460. A year from now, if the projections hold, that same payment at 5.0% will be $2,684 per month, which is $224 per month more than right now. In other words, it will cost you $2,688 more per year if you wait until next year, and that equals $80,787 over the life of the loan, if you hold it the full 30 years. And while the price of homes may slow from the recent 10% per year rise, we could still easily see an increase of another 5% in sales prices over the next year, thus further decreasing your purchasing power.

First and foremost, it is most important to make a move when the timing is right for you and your family. But if the timing isn’t as critical, you may want to consider making that move sooner than later if you will be financing the purchase with a mortgage.

Posted on March 2, 2017 at 1:01 pm
Ryan Francescutti | Category: Buyer Tips, Listings, Real Estate Stats and Trends

7 Steps to Multiple Offer Success

Since multiple offers are so common right now, I thought I’d throw out some key tips for when you are sitting down with your broker to write an offer on a home. These aren’t exactly secrets, but it’s surprising how often one or more of these steps aren’t taken which can easily lead to buyers losing a home of their dreams. Now don’t get me wrong, it is almost impossible to guarantee a win in multiple offers because there often seems to be someone willing to either pay more, or willing to risk too much to get a house. But, following these few tips should at least guarantee you the best chance at a winning offer, even if you are not necessarily the highest priced offer.

  1. Get pre-approved! This is critical before any offer, but you obviously need to know exactly how much you can afford so get a pre-approval letter from your local mortgage broker and give it to your agent ahead of time. Do keep in mind that many homes are selling over their list price right now so consider looking at homes slightly lower than your max budget just in case you need to make an offer higher than the asking price or if you want to use an escalation clause.
  2. Be ready to pounce! Generally, you’ll want to take a look at new listings ASAP so be as nimble as you can with your schedule. Many new listings are postponing offers for several days to give as many buyers as possible the chance to view it and make offers, but don’t count on that extra time.
  3. 85% rule! Sorry, but the perfect house is probably above your budget. This is kind of a downer, but true. Most of our tastes tend to be out of our price range, so if you find the “85% house,” that’s likely to be as close to perfect as you’ll get. The sooner you can embrace that idea, the less frustrated you’ll be.
  4. Don’t over think it! After looking at a few homes and taking the 85% rule into consideration, you’ll know if one “just feels right,” so try not to wait until the last minute to decide to make an offer. This does not mean that you shouldn’t do your due diligence and make sure the home and neighborhood are what you expect, but the sooner you can start that process, the better.
  5. Pick your buyer’s agent wisely! When I’m a listing agent reviewing multiple offers with a seller, you’d be amazed at how often I either get hand written or sloppy contracts with pages missing, etc. In this computerized day and age, there is no excuse not to have a clean well written contract that hasn’t been scanned or faxed 15 times to the point of illegibility. Unless there is something extraordinary about the terms of the offer, all things being equal, these will definitely fall to the bottom of the list. Essentially, the listing agent may penalize a disorganized buyer’s agent (and therefore you) if he or she thinks choosing that offer could lead to challenging closing process.
  6. The fewer contingencies, the better! Most buyers need to have a financing contingency, but many of the others, such as inspection, title, neighborhood review, etc., are not always necessary. Again, I’m not saying that you should skimp on your due diligence, just try to do as much of it upfront as possible prior to submitting the offer. That is not always practical, but talk with your agent about what you can do to make your offer stand out.
  7. Personal letter? Consider writing a personal letter to the seller of the home. If the owner has lived there a long time, there is undoubtedly an emotional attachment to the home so it never hurts to try and appeal to their sensitive side. One caveat: be sincere! If you make stuff up and sound too cheesy, it may do more harm than good.

Remember, these are tips for buyers who know that they are going to be up against competing offers. In a slower market, or less active price ranges, you may not need to limit your contingencies, for example. But, if you visit an open house and there are 20 other families looking at the same time, you may very well need to dig into this bag of tricks. Happy house hunting!

Posted on January 25, 2017 at 3:54 pm
Ryan Francescutti | Category: Buyer Tips, Real Estate Stats and Trends, Seller Tips

Happy New Year!

As 2017 kicks off, I get to celebrate my 15-year anniversary at Windermere! I’m proud to be associated with such a great company, and I’m grateful to be able to work with so many enjoyable, well-educated, and ethical colleagues. In an ever-changing real estate market and political landscape, it’s nice to have some consistency.

To recap the 2016 real estate market in King and Snohomish Counties combined, there were 14% fewer listings during the year, but 6% more homes sold in 2016 than in 2015. Inventory is near all time lows and average days on market is sitting at only 29 days, although most well priced homes sell much faster. The average sales price in our area rose about 8% in 2015 and rose another 11% in 2016 to end the year at $593,000 and $265/sqft.

I do believe the new Trump administration brings some uncertainty, but it may or may not affect the housing market much. Mortgage rates do need to be watched closely though as they have ticked up in the past two months. That is having a real effect on buyer’s purchasing power and some are already feeling pinched if they are searching at the top of their price range. Hopefully, rates don’t rise too far too fast. We are fortunate to live where we do as the Puget Sound economy is doing well and people are still moving here for jobs so I am fairly confident that the current seller’s market will continue through most of this year.

 

Posted on January 25, 2017 at 3:45 pm
Ryan Francescutti | Category: Listings, Real Estate Stats and Trends

How Rising Rates Affect Home Affordability

Happy almost spring! As far as I’m concerned, it can’t come soon enough! In this post, I thought I would talk a little about mortgage interest rates and how, as rates rise, affordability decreases. Rates for a 30 year fixed mortgage are currently hovering around 4.32%. In the first quarter of 2013, the same 30 year fixed rate averaged 3.5%. According to the Mortgage Bankers Association, rates are projected to be about 5.2% by next spring. Fannie Mae and Freddie Mac forecasts are also in that range at 5.0% and 5.3%, respectively. If you are thinking about making a move and can’t decide whether to do it this year or next, let’s look at an example of house payments with the different rates.

A $400,000 loan last year at 3.5% would have equaled a monthly principle and interest payment of $1,796. That same $400K loan right now would be $188 more per month at $1,984. A year from now, if the projections hold, that same payment at 5.2% will be $2,196 per month, which is $212 per month more than right now. In other words, it will cost you $2,544 more per year if you wait until next year, and that equals $76,320 over the life of the loan, if you hold it the full 30 years. And to put icing on the cake, the price of homes between now and the spring of 2015 are projected to increase 3.8%-5.6% as well, thus further decreasing your purchasing power.

First and foremost, it is most important to make a move when the timing is right for you and your family. But if the timing isn’t as critical, you may want to consider making that move sooner than later if you will be financing the purchase with a mortgage.

 

Posted on March 6, 2014 at 11:46 am
Ryan Francescutti | Category: Buyer Tips, Real Estate Stats and Trends, Seller Tips | Tagged , , , ,

Summertime Melt-up?

I hope everyone enjoyed our beautiful Pacific Northwest summer! While I've been able to enjoy some of it myself, I've also stayed very busy as the housing market continued to be strong over these past two months. I thought it might be a good time for a market update so below you will find a few data charts for King and Snohomish Counties combined. These charts are a good representation of what's going on in north King and south Snohomish Counties including cities like Lake Forest Park, Kenmore, Shoreline, Bothell, Brier, Mountlake Terrace, and Edmonds. 

 

 

 

The inventory of active homes for sale is finally higher than at any point last spring or summer. However, it is still historically low at only 2.2 "months of inventory" which means it technically remains a seller's market. New listings and closed sales fell off a bit compared with July, but pending sales (homes placed under contract) did increase slightly from last month.

 

 

 

 

 

 

 

 

 

 

 

 

This graph shows the pop up in months of inventory to back over 2 months. Will it stay there or fall back down like it did last year going into the fall months? 

 

 

 

 

 

 

 

 

 

 

 

Sold prices have appreciated very slightly from July to an Average of $466,000. This is up 12.8% compared to last August. More interesting is that the average Active asking price is coming down into more reasonable territory after a somewhat irrational exuberance by some sellers in the spring.

 

 

 

 

 

 

 

 

 

 

 

The average dollar per square foot value held basically flat since last month at $210/sqft.

 

 

 

 

 

 

 

 

 

 

 

 

The average selling price as a percentage of the original listing price is holding steady at 99%. There are still many multiple offer situations but that trend is cooling a bit.

 

The average consecutive days on market remains steady as well at 34 days. 

 

 

 

 

 

 

 

 

To conclude, the market is still very strong, although it did level off in the late summer. The early fall months typically bring a new crop of buyers and sellers out who want to make a move before the holidays and the end of the year. It'll be interesting to see if that trend holds true once more. Stay tuned!

 

 

 

 

Posted on September 11, 2013 at 10:29 am
Ryan Francescutti | Category: Buyer Tips, Listings, Real Estate Stats and Trends, Seller Tips | Tagged , , , , , , , ,

Rational Exuberance?

Is the housing market in a state of rational exuberance? Since the beginning of this year, activity, sentiment, and even prices, have taken a turn for the better. And it does seem that a solid case can be made that the housing market finally bottomed in late 2011 into the beginning of 2012. BUT, let’s not get too far ahead of ourselves and let’s not get too excited that prices are going to skyrocket and go up at a bubble inducing 10% per year again. However, if you look at the past 2 months in King County, “asking” prices are indeed skyrocketing up while sales prices have only increased a modest amount. Take a look at this chart for average For Sale and Sold prices in King County over the past 15 months:

The average listed price (the green line) is currently $693,000. That is up 5.5% over last month alone and up 19.5% from May 2011! The red line is the average sold price and you can see that it has bumped up a bit since the beginning of the year, but it is only up $1,000 from April and is still actually down nearly 2% from last May. Here’s the same chart over the past 9 years:

To me, that recent blip in asking prices seems a bit irrationally exuberant to me, given what we’ve been through. However, if you dive a little more deeply into the numbers, inventory numbers are very low under $500k and staying low up to the $1million mark. So it looks like a good part of this widening of the gap between bid and ask is that the lower priced and more affordable homes are just selling quick and often. Higher priced homes are staying on the market longer and therefore the average price of “for sale” homes is simply a higher average price. If you’ve been looking to buy a home lately, you’ll know that inventory is very tight, to nonexistent, under $500k and when something does come on the market, especially in desirable neighborhoods, it’ll often be met with a bidding war.

It is essentially a sellers market in the Seattle area right now, especially in the lower price ranges. However, that does not mean you can ask 20% more for your home than you could have last year, it just means that you can lean toward the top end of your price range rather than have to settle at the bottom of the range to undercut your nearest competition like we’ve had to do the past few years. Right now, you may not have any competition in your neighborhood because it has all sold.

The moral of the story is that sellers can be rationally exuberant about selling right now, but just don’t be too irrationally exuberant when it comes to pricing your home. The same laws apply: if you price it fair, present it right, and your home is in top condition, you will sell quickly.

Posted on June 13, 2012 at 10:23 am
Ryan Francescutti | Category: Listings, Real Estate Stats and Trends, Seller Tips | Tagged , , , , , ,

More Support for a Housing Turnaround

The latest NW Multiple Listing Service press release title says that the “Western Washington housing market is energized and showing signs of a definite turnaround.” You can read the entire release here. One big fact given is that the year-over-year change in selling prices was positive for the first time in four years! It was a modest 1.27% but still positive.

Inventory remains tight which is creating a sellers market in some areas. However, the article goes on to say that while we may technically be in a sellers market in many areas, enthusiasm needs to be tempered because that in and of itself, doesn’t mean homes are worth more money. It basically just means that the homes that are priced and presented well will more likely see an offer sooner rather than later.

 

Posted on May 3, 2012 at 3:25 pm
Ryan Francescutti | Category: Real Estate Stats and Trends | Tagged ,

Has the Housing Market Reached the Bottom?

The latest NW Multiple Listing Service press release titled ‘Washington Homebuyers Realizing “Market may have Reached Bottom of Cycle”‘ suggests that confidence in a market bottom is increasing across the Puget Sound. Very low inventory and very low interest rates contributed toward a huge pending sale increase in February. For example, the release states: “Within King County, pending sales were particularly robust in the Lake Forest Park/Kenmore neighborhoods (up 73 percent), Kent (up 61 percent), Burien/Normandy Park (up 58 percent) and central Seattle (up 56 percent). The northeast portion of Snohomish County also experienced strong sales (up 63 percent from a year ago).” You can read the full article here.

Posted on March 12, 2012 at 1:27 pm
Ryan Francescutti | Category: Real Estate Stats and Trends | Tagged , , , ,