“2% Inflation Objective”

After every Fed meeting where they decide whether to raise, lower, or leave the federal funds rate unchanged, it is explicitly stated that they are trying to meet a “2% inflation objective.” I don’t know how many people think about that goal but what it essentially means is that the prices of goods and services will double in only 35 years, assuming inflation consistently hits their “2% objective.”

One part of the Federal Reserve’s mandate says that they are supposed to ensure “stable prices,” so it’s surprising how normal that statement of a “2% inflation objective” has become. Most of us know that our US dollar buys a lot less than it did several decades ago, but many seem to be unaware that their purchasing power decreases that quickly over time and especially over one’s lifetime.

Of course, one benefit of inflation is that it tends to inflate away debt. That can help the government, companies, and even individuals. After all, it’s not a bad strategy to pay off a mortgage over 30 years with ever devaluing dollars. But savers or those who are on a fixed income are clearly punished in an inflationary environment.

Most of us do invest and plan for retirement because we know we need our assets to keep up with inflation and to ideally exceed it. A balanced portfolio must include some physical assets, such as real estate. Buying a home should always prove to be a sound investment over time, as you can convert that property back into newly valued dollars at some point in the future. In other words, your home will always be “tradeable” for something else worth a very high value, regardless of what the dollar bill in your pocket is worth a generation from now.

Posted on November 7, 2018 at 3:32 pm
Ryan Francescutti | Category: Uncategorized

“Momentum building” in Seattle area

“Momentum building” in the Seattle area housing market. Latest news release from the NW Multiple Listing Service… http://ow.ly/5byWx

Posted on June 6, 2011 at 4:08 pm
Ryan Francescutti | Category: Uncategorized

Seattle Area Real Estate Recap for April 2011

Like I’ve mentioned recently, it’s going to be tough to compare this year’s early statistics to last year because we had the tax credit in effect through last April. So, again it is not surprising to see that sales numbers this April are lighter than last year. Nevertheless, they’re holding up pretty well.

Sold and closed homes did decrease 7.2% from March and that is down 18% from last April. But Pending sales were up 5% from March, although that is still down over 18% from last April. Active listings are up only slightly from March, but down over 14% from last year. It’s really unusual not to see more new listings come on the market in the early spring, however our wetter than usual weather could be a contributing factor.

The average sales price for King and Snohomish Counties combined was $388,000 and $178/sqft. That is up 1.5-2% from March but down 5-6% from last April.

The average “Consecutive Days on Market” dropped from 129 to 111 and the “Sales Price as a Percentage of the Original Listing Price” ticked up 1% to 92%. The “Months of Inventory” based on Pending Sales dropped slightly to 3.9 months. That is almost as low as it was last year, again when we had the benefit of the tax credit. Obviously there’s no tax credit this year, but we do have fewer new listings with almost as many buyers so essentially we have a little more demand but with less supply.

My conclusion is that things are quite positive and while there’s been talk of a “double dip” in home prices- which there actually has, it is my humble opinion that this is a dip to buy. Low interest rates and a narrowing rent vs. own ratio is likely to keep demand strong for a while.

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Posted on May 9, 2011 at 11:23 am
Ryan Francescutti | Category: Uncategorized

Housing market “warming.”

Housing market “warming.” Latest news release from the NW Multiple Listing Service… http://ow.ly/4OekM

Posted on May 5, 2011 at 2:13 pm
Ryan Francescutti | Category: Uncategorized

Seattle Area Real Estate Statistics for March 2011

Considering that we’re comparing data to last year when we had the tax credit, the housing market is actually holding up quite well. Pending and sold properties increased about 35-40% over February, which is typical as we head into spring. Sold properties declined about 15% from last March but pending sales are about flat compared with last year, which is very impressive. Interestingly, active listings have held flat since February and are down over 13% from last year. It is abnormal not to have a steadily increasing inventory of new listings come on the market going into spring. My theory is that the rainy weather in March might have kept some people from being able to get their homes in perfect shape for listing. Regardless, there are buyers out there so don’t wait until summer time, it’s a great time to be on the market right now.

Prices ticked up a percent or so from February, but that is still off 7-8% from last March. Specifically, the average sales price for all of King and Snohomish counties combined was $382,000 and $176/sqft.

Days on market did continue to increase and is now at 129 days. The “Sales Price as a percentage of the Original List Price” held steady at 91%.

Finally, since the new listings didn’t increase at all, the pop in the pending sales made the months of inventory (based on pending sales) decrease to only 3.6 months. That’s lower than the lowest point reached last year which was 3.7 months in April.

In my opinion, these statistics bode well for activity for the next few months at least. Hopefully interest rates will continue to stay low for a while longer so that more people can take advantage of the ideal combination of low rates and already lower prices.

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Posted on April 11, 2011 at 12:59 pm
Ryan Francescutti | Category: Uncategorized

Housing market doing “surprisingly well

Housing market doing “surprisingly well.” Latest news release from the NW Multiple Listing Service… http://ow.ly/4xNPN

Posted on April 11, 2011 at 10:58 am
Ryan Francescutti | Category: Uncategorized

Seattle Area Real Estate Statistics for February 2011

The new year started off very well with busy open houses in January and a lot of inventory getting sold in February. We don’t have the same tax credit incentive that we had going into last April, but optimism still seems high for a good spring housing market this year. It will be hard to compare sales numbers this spring to last spring because of the tax credit, but if we can continue to get modest month over month increases in sales, that should reflect a healthy and sustainable trend. A sustained trend is what is needed to give evidence of some serious stability in the housing market after this multi-year down cycle. For the past year and a half, we have really just been bouncing along the bottom- that’s not a bad thing, it’s just not indicative of any kind of imminent rebound.

As for the February statistics for King and Snohomish Counties combined, the most glaring number to me is that pending sales increased 9% over last February, and that’s without the infamous tax credit! Now, closed sales are still off about 11% from last year, but the increase in pending sales bodes well for March closings. Active listings are pretty flat compared with January and down about 7% from last February. Since a lot of inventory has been sold over these first couple of months of the year, we are a little light on homes to choose from, but I expect that a new influx of homes will come on the market soon as the weather improves.

As far as prices go, we did have a little dip in January, but have popped back up slightly to an average of $382,000 and $174/sqft. That is off about 8% from last year at this time. Last month I mentioned that the January dip could be more of a headfake than the beginning of a new leg lower. At this point it could be just that- a headfake, but one month doesn’t tell the whole story so we’ll just have to wait and see what happens in the coming months.

Consecutive Days on Market continued its trend higher to 126 while the “Selling Price as a Percentage of Original Listing Price” bumped up slightly to 91%. The “Months of Inventory” based on CLOSED sales is staying fairly high at 8.6 months, but just like last month, if you look at it based on PENDING sales, it has continued to decline and is now at only 4.5 months.

I’m looking forward to an exciting and busy spring season! Now that the weather is slowly improving, if you are thinking about selling, please contact me today so I can help guide you in getting your home in tip-top shape for the market.

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Posted on March 9, 2011 at 4:00 pm
Ryan Francescutti | Category: Uncategorized

Latest MLS Press Release… “February h

Latest MLS Press Release… “February housing activity yields reason for optimism…” http://ow.ly/47xLu

Posted on March 4, 2011 at 9:45 am
Ryan Francescutti | Category: Uncategorized

Seattle Area Real Estate Statistics for January 2011

Stats are out for January and there are some interesting things to look at. After the “calm” of the holiday season, we are off to a brisk start to the new year. Open houses were very busy in January and that has seemed to translate into contracts written.

Closed sales decreased in January, which is fairly normal, but pending sales shot up almost 34% from December and over 12% from last January. And active listings decreased slightly from December rather than increasing like they did last January. Remember last year, we had the tax credit that was extended until the end of April so it will be nice this year to NOT have that arbitrary “deadline” for people to make moves. The market should be a little more steady as we roll through the spring and summer seasons.

Now as far as prices are concerned, it is a little surprising to see that they dipped to new lows in January… For King and Snohomish Counties combined, the average sales price was $375,000 and $167/sqft versus $412,000 and $181/sqft in December. Now, it’s possible some extra discounting took place to get homes sold at the end of the year, but time will tell if it’s the beginning of a new trend lower or just a headfake. I do see a lot of sellers working hard to make deals with buyers, but now that a lot of the existing inventory of well priced homes is getting sold, there might be a little more competition between eager buyers going forward. That’s pure speculation on my part but rising interest rates and fewer homes to choose from could at least give a little more of a bid under prices as we get into spring.

Consecutive days on market bumped up to 125 days while the “Selling Price as a Percentage of Original Lising Price” dipped slightly to 90%. The “Months of Inventory” based on CLOSED sales rose sharply to 9.3 months. But if you look at the same thing based on PENDING sales, inventory decreased sharply to only 5.2 months, which is lower than where it was last January when we had the benefit of the tax credit.

So it’s important to step back and look at the information in a broader context and realize that even the data for closed sales in January is backward looking- I like to look at pending sales to give a better idea of where things are going. And at this point, I’m very optimistic about the market this year and I am looking forward to a busy spring! 

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Posted on February 9, 2011 at 4:36 pm
Ryan Francescutti | Category: Uncategorized

Seattle Area Real Estate Market Statistics – December 2010

Happy New Year!  To kick off 2011, let's recap the last 5 years of the housing market in King and Snohomish Counties.  At the end of 2005, the market was running on all cylinders and nearly one in every two homes that came on the market sold in a month…  Put differently, there was only about 2 "months of inventory."  We peaked at about 15 months of inventory in early 2009 and we now sit at about 6 months, which historically is actually a pretty balanced market. 

Supply and demand is essentially what drives any market.  As you can see in the green and blue chart below, in 2005 there was a limited supply of homes for sale, yet there was a lot of demand from buyers which pushed prices up.  In 2008, you can see that there was a lot of supply but much less demand so prices came down.  Speaking of prices, we are back to the levels we were at in early 2005.  Sold prices peaked in the middle of 2007 at an average of $546,000 and an average dollar per square foot price of $250.  We are now at $415,000 and $182/sqft which are off 24-27% respectively from their highs. 

Keep in mind that sales prices have been essentially flat for over a year now.  However, one thing that is currently helping the market is that while those sales prices have been flat, listing prices have been consistently coming down.  That means that we are much closer to where buyers and sellers can agree on value versus a lot of the inventory being considered "way overpriced." 

"Consecutive Days on the Market" stood at 50 in 12/05 and that is now more than double at 117 days.  One of the most interesting stats to look at is that the "Sold Price as a Percentage of the Original List Price" was steadily at or above 98% in 2005 and now it is hovering around 91%.  That means that buyers were paying full price, or very close to the original listing price, in 2005.  Now, buyers are much less likely to pay full price, and/or there are many price reductions before a buyer makes an offer.  However, keep in mind that new listings in good condition and at competitive prices will NOT last long on the market, even today.  So, if you're in the market to buy, don't let a good opportunity slip away.  Similarly, there are many good homes that have been on the market a while and after several price reductions, are now at very competitive prices with eager sellers.  There are some great opportunities there as well.  Using a knowledgeable Realtor in the area you're looking at will help you identify those golden opportunities.

In 2011, I expect that the housing market will continue to slowly sell off the excess inventory but probably be pretty steady overall.  There may be a few percent more to the downside on price, but I believe we are really getting close to, or may have even passed, the point where waiting much longer to buy won't pay off much in the long run.  Even if you expect prices to go down more, increases in interest rates could offset any potential benefit of waiting.  So like I've said many times before, don't try to time the market perfectly because you'll usually lose.  If you need or want to make a move for family, job, or most any reason, just find an expert Realtor and do it! 

 

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Posted on January 6, 2011 at 3:00 pm
Ryan Francescutti | Category: Uncategorized