The Tree Tree Point store: a local institution just revived after years of neglect: stop by for a glass of vino, pastry or ice cream after a wonderful walk on the beach. https://vimeo.com/635670680
A little recap of our luxury real estate market throughout North America for September 2020. Click here to go to the report.
Location can often be more important than the home itself – while the interior can be changed to fit the homeowner’s vision, the natural surroundings generally remain the same. Of course, one can plant a beautifully landscaped lawn, but certain features, such as a seaside cliff or mature forest, can simply not be replicated. Fortunately, these homes offer these attributes and more.
The 20th Century saw numerous distinctive eras in terms of home architecture and design, varying from Tudor Revivals to Mid-Century Moderns. We take a look at several homes from the early to mid-1900s and marvel the great house trends of the past.
Check these homes out here!
Waterfront ownership: a unique lifestyle that many want to experience for the serenity and vacation-feel it brings. Whether you are looking for your future beachfront, want to assess value or simply understand your purchasing power along with the exclusivity of a potential destination & community, here is a detailed list of 2019 beachfront sales around the Greater Seattle Puget Sound area for you. Have fun discovering neighborhoods you may not even know of!
- Des Moines 3 sales from $1,175M to $1.782M
- Normandy Park 3 sales from $1.4M to $2.675M
- Three Tree Point 3 sales from $1,540M to $2.575M
- Shorewood 8 sales from $925K to $1.9M
- Magnolia/Ballard 3 sales from $1.3M to $6,670M
- Vashon Island 31 sales from $240k to $1.6M
- Bainbridge Island 37 sales from $655K to $4.25M
- Whidbey Island 77 sales from $240k to $1.475M
- Camano Island 52 sales from $215K to $2.625M
Following three years of “steroid markets” around the Puget Sound area, what is in stock for this year? Alarming media news talking about recession… Let’s look at what local experts have to say. The predictions below were taken from Denise Lones’ “State of the market – Tomorrow’s market based on Historical Perspectives” and Matthew Gardner‘s (Chief economist at Windermere Real Estate) forecast.
2018 biggest issues
- Steroid market with peak prices in May
- Seller’s greed
- Homeownership rate declining due to affordability
- Inventory increasing
- Pending sales declining
- Local panic: upcoming recession?
2018 Seattle median sales prices rose 8.5% year over year to $765,000 for the year. Bellevue median sales prices reached $1.273 million. King County residential median price went from $630,000 in 2017 to $680,000 in 2018. Eastside residential price went from $865,000 in 2017 to $936,500 in 2018. (NWMLS Market Stats)
Sellers are having a tougher time to readjust to a more balanced market where overpricing a home doesn’t work anymore and results in “Freezer Burned Listings” as Denise would put it. In King County, as of 1/4/2019, 60.1% of all active listings had been on the market for over 61+ days while homes on the market for less than 14 days represented only 10.4% of the market share.
The home ownership rate has declined to 63.4% in 2018 due to affordability and the shortage of new constructions and distressed properties. A growing number of properties being purchased by investors who rent them out.
2019 real estate market: what to expect?
- Severe shortage of new constructions to continue
- Increase in land prices & labor costs
- Potential increase of loan interest rates to 5.5%
- New profile of buyers: Millennials & Baby Boomers
Millennials (born between 1981 & 1997) have surpassed Baby Boomers representing 75.5 million of people. Both generations seem to be looking for similar properties however. Baby Boomers are attracted by active lifestyles close to urban centers and areas with great walkability. As such, they are competing with millennials. 35% of millennials live with their parents and are getting married later in life due to high student debts.
Washington State and Seattle: strong economy
- Washington State ranks first in the U.S for exports per capita.
- Seattle is a leading trade partner with Japan and China.
- Flights from SeaTac Airport reach Asia 1-2 hours faster than from Los Angeles or San Diego
- Seattle is the Gateway to Asia (deepwater ports and international air hub). The Seattle-Tacoma-Everett port region is the Third largest container complex in the United States.
- Seattle is experiencing an aggressive population growth with an educated workforce, steady migration and investors flooding to the Pacific Northwest. Seattle is expected to gain 29,000 new residences per year for the next 4 years.
- Concerns: Washington state is the most vulnerable trade state because of its proximity to China. Trade wars? Drop in state exports to China were off nearly $600 million following back and forth tariffs with China.
What to expect?
- Homes are still in HIGH demand. Backlog of buyers is to return in the Spring.
- Better opportunity for buyers with more selections and better pricing yet higher interest rates
- Sellers have to finally sell at “market value”. We have hit the high point of the house appreciation run
- House prices will decelerate in certain markets
- Rents are high making investors happy to continue to invest
Why not to fear a housing crash?
- Foreclosures hit a 11 year low
- New construction not keeping up with the demand
- Homeowners have high equity in their homes
- Lending standards are tougher
Here are the highlights for last year’s Washington State real estate market produced by the Northwest Multiple Listing Service:
CLOSED SALES $47.2 billion including single family homes & condos
MEDIAN CLOSED SALES $402,000 with the highest range for King County $620,000 & $154,000 for Ferry County.
INVENTORY BELOW “BALANCED MARKET” Overall supply under 1.8 months which is well under buyer’s demand.
HIGHEST PRICE Among the 23 counties, King County had the highest median price for Single Family Home at $680,000, a gain nearly 8.5% from the previous year.
NEW CONSTRUCTION Newly-built homes accounted for 12% of sales in 2018.
PEAK ACTIVITY TIME New listings and pending sales peaked in May and June had the highest volumes of closed sales.
PRICE & SCHOOL DISTRICTS In 2 school districts, median single home prices topped $1M led by Mercer Island at $1.7M and Bellevue at $1.2M.
LUXURY SALES MLS members sold 6,101 family homes priced over $1M or higher including 61 that sold over $5M. The most expensive home was in Medina and closed for $26,750M. More than 400 condos sold over $1M with the 3 most expensive in Kirkland.
NWMLS MEMBERS This report reflects the work of 31,700 brokers in 2300 member offices.
Interest rates have been trending higher since the fall of 2017, and I fully expect they will continue in that direction – albeit relatively slowly – as we move through the balance of the year and into 2019. So what does this mean for the US housing market?
It might come as a surprise to learn that I really don’t think rising interest rates will have a major impact on the housing market. Here is my reasoning:
1. First Time Home Buyers
As interest rates rise, I expect more buyers to get off the fence and into the market; specifically, first time buyers who, according to Freddie Mac, made up nearly half of new mortgages in the first quarter of this year. First-time buyers are critical to the overall health of the housing market because of the subsequent chain reaction of sales that result so this is actually a positive outcome of rising rates.
2. Easing Credit Standards
Rising interest rates may actually push some lenders to modestly ease credit standards. I know this statement will cause some people to think that easing credit will immediately send us back to the days of sub-prime lending and housing bubbles, but I don’t see this happening. Even a very modest easing of credit will allow for more than one million new home buyers to qualify for a mortgage.
3. Low Unemployment
We stand today in a country with very low unemployment (currently 4.0% and likely to get close to 3.5% by year’s end). Low unemployment rates encourage employers to raise wages to keep existing talent, as well as to recruit new talent. Wage growth can, to a degree, offset increasing interest rates because, as wages rise, buyers can afford higher mortgage payments.
There is a clear relationship between housing supply, home prices, and interest rates. We’re already seeing a shift in inventory levels with more homes coming on the market, and I fully expect this trend to continue for the foreseeable future. This increase in supply is, in part, a result of homeowners looking to cash in on their home’s appreciation before interest rates rise too far. This, on its own, will help ease the growth of home prices and offset rising interest rates. Furthermore, if we start to see more new construction activity at the lower end of the market, this too will help.
5. National versus Local
Up until this point, I’ve looked at how rising interest rates might impact the housing market on a national level, but as we all know, real estate is local, and different markets react to shifts in different ways. For example, rising interest rates will be felt more in expensive housing markets, such as San Francisco, New York, Los Angeles, and Orange County, but I expect to see less impact in areas like Cleveland, Philadelphia, Pittsburg, and Detroit, where buyers spend a lower percentage of their incomes on housing. The exception to this would be if interest rates continue to rise for a prolonged period; in that case, we might see demand start to taper off, especially in the less expensive housing markets where buyers are more price sensitive.
For more than seven years, home buyers and real estate professionals alike have grown very accustomed to historically low interest rates. We always knew the time would come when they would begin to rise again, but that doesn’t mean the outlook for housing is doom and gloom. On the contrary, I believe rising interest rates will help bring us closer to a more balanced real estate market, something that is sorely needed in many markets across the country.