Real Estate Market Snapshot December 2019

Welcome to 2020 and happy New Year! I hope it will be an amazing year for you and all of us! The infographic you see below is for Washington in a whole. If you would like to see local stats I  am also providing you with the stats for Snohomish County and King County. 

December 2019 Market Snapshot Infographic

Why an Economic Slowdown Will NOT Crush Real Estate this Time

Why an Economic Slowdown Will NOT Crush Real Estate this Time

Why an Economic Slowdown Will NOT Crush Real Estate this Time | MyKCM

Last week, the National Association for Business Economics released their February 2019 Economic Policy Survey. The survey revealed that a majority of the panel believe an economic slowdown is in the near future:

“While only 10% of panelists expect a recession in 2019, 42% say a recession will happen in 2020, and 25% expect one in 2021.”

Their findings coincide with three previous surveys calling for a slowdown sometime in the next two years:

  1. The Pulsenomics Survey of Market Analysts
  2. The Wall Street Journal Survey of Economists
  3. The Duke University Survey of American CFOs

That raises the question: Will the real estate market be impacted like it was during the last recession?

A recession does not equal a housing crisis. According to the dictionary definition, a recession is:

“A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”

During the last recession, prices fell dramatically because the housing collapse caused the recession. However, if we look at the previous four recessions, we can see that home values weren’t negatively impacted:

  • January 1980 to July 1980: Home values rose 4.5%
  • July 1981 to November 1982: Home values rose 1.9%
  • July 1990 to March 1991: Home values fell less than 1%
  • March 2001 to November 2001: Home values rose 4.8%

Most experts agree with Ralph McLaughlin, CoreLogic’s Deputy Chief Economist, who recently explained:

“There’s no reason to panic right now, even if we may be headed for a recession. We’re seeing a cooling of the housing market, but nothing that indicates a crash.”

The housing market is just “normalizing”. Inventory is starting to increase and home prices are finally stabilizing. This is a good thing for both buyers and sellers as we move forward.

Bottom Line

If there is an economic slowdown in our near future, there is no need for fear to set in. As renowned financial analyst, Morgan Housel, recently tweeted:

“An interesting thing is the widespread assumption that the next recession will be as bad as 2008. Natural to think that way, but, statistically, highly unlikely. Could be over before you realized it began.”

The Home Connection for March

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March2019 back

Real estate-related community news (and a bit of awesomeness).

REAL ESTATE news

Sales of existing homes slipped 0.7 percent in July, fourth straight monthly decline

House

Lower priced homes are experiencing fewer price reductions than upper end properties

Why hospitals are investing in real estate

Home value growth slowing in several hot markets

MORTGAGE & FINANCE news

Young homebuyers funding home down payment from their retirement account

retirement

Before you buy that first investment property, read this

Massive student debt makes homeownership almost impossible

HOME trends

Guide to understanding your home’s value

Declutter your kitchen and double your storage space Kitchen

Questions to ask before buying a condo

LOCAL news

seattle

Seattle-area frenetic growth has cooled, but boom is still on

Buyers see hope on the horizon in cooling Seattle market

Seattle-area drops to the #12 market for home price growth

Home price acceleration slows, but it’s still a challenge if you’re a buyer

Seattle #2 on list of best cities for ice cream lovers

icecream

Performing arts and affordable housing come together in planned Rainier Valley development

Why do so many apartment buildings in Seattle look the same?apartment

New Hugo House opens in Seattle

The SR-99 tunnel gets its stripes (and some running stick figures)

Amazon leases Expedia’s entire Bellevue tower

Renton’s Kenworth Truck assembly plant celebrates 25 yearstruck

Port of Everett breaks ground on huge and historic modernization project

SunsetandGrand_Everett

Economic outlook for Washington State

Where do Washington State’s billionaires live?

Homes throughout the Northwest continue to appreciate

WEEKLY DOSE OF awesomeness

What do the smart home systems of the wealthy have that Alexa doesn’t?

future

(hint: Morgan Freeman)

Housing Inventory Shortage persists

KIRKLAND, Washington (June 6, 2016) – Just as expected, the month of May had an uptick in new listings (12,272), but just as many buyers (12,275) made offers on homes during the month to keep inventory depleted, according to the latest figures from Northwest Multiple Listing Service.

“Inventory is being squeezed from all directions,” reported Frank Wilson, branch managing broker at John L. Scott in Poulsbo. He said the pool of house-hunters includes young first-time buyers, renters whose rents are escalating, buyers who are returning to the market after recovering from a foreclosure or short sale, investors, and baby boomers who are purchasing for their retirement needs. Additionally, in Kitsap County where his office is located, there are military families who are transferring to a base there and want to buy.

By month end, member brokers reported 15,198 active listings in the Northwest MLS database. That’s down more than 22 percent from a year ago when buyers could choose from an inventory of 19,515 listings across the 23 counties served by the listing service.

“The May housing market was not just hot, it was frenzy hot,” commented J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. “Brokers are working like bees in a hive as the housing market creates a buzz of sales activity in the Seattle-Central Puget Sound area.”  By his analysis, 80 percent of the homes coming on the market in King and Snohomish counties are selling within the first 30 days. “Many sell within the first week,” Scott reported, adding, “A healthy/normal market would have 30 percent selling in the first 30 days.”

MLS figures show there is only 1.76 months of supply system-wide. In both King and Snohomish counties, there is barely more than one month of supply – well below the 4-to-6 months that many experts use as an indicator of a balanced market.

“With less than two months of inventory, every new listing seems to draw multiple offers,” Wilson remarked. He also said homeowners who want to move up in this same market know they face a conundrum: “If we sell today, will we be able to buy tomorrow?”

Buyers are becoming more and more aggressive with offers and pricing, and that concerns some brokers, said Northwest MLS director George Moorhead. As the gap between pricing and value widens, some would-be buyers may overextend themselves. Also, appraisers are struggling with a lack of comparable sales versus multiple offers that escalate well beyond the listing price, said Moorhead, the designated broker at Bentley Properties. Since lenders base loans on appraised values, buyers will likely need to make up the shortfall.

Even though brokers say paltry inventory is limiting sales, the year-over-year volume of pending sales rose more than 7.4 percent last month. Members reported 12,275 mutually accepted offers, up from the year-ago total of 11,425. MLS data going back to 2004 shows that one-month total is the highest on record.

Prices also rose. The median price area-wide for last month’s 8,630 closed sales of single family homes and condominiums (combined) was $339,950. That’s up more than 7.2 percent from twelve months ago when purchasers paid $317,000 for the median-priced home. Ten counties reported double-digit price hikes.

In King County, the median price jumped more than 11.7 percent, from $434,000 to $485,000. Prices on single family homes surged nearly 16.5 percent, rising from $480,942 to $560,000. Condo prices were up 9 percent, but finding one proved challenging as inventory dropped 29 percent in King County.

Former MLS board member Ken Anderson, the president/owner of Coldwell Banker Evergreen Olympic Realty in Olympia, said last month set records for both pending and closed sales. “Low inventory coupled with the huge number of buyers has our market moving at a record pace,” according to his calculations. “Well-priced homes are selling in an average of just 12 days – a full month faster than the peak of the market in 2006,” he commented.

Brokers offer various suggestions to prospective buyers as they vie for scarce inventory:

  • “The best advice I can offer to potential first-time buyers is to think outside the box” said Gary O’Leyar, a past chairman of the Northwest MLS board. He encourages buyers to consider purchasing a “stepping stone” property. Since the close-in neighborhoods in Seattle and Bellevue hold little opportunity for first-time buyers, their best option is to look further out, he suggests. “Consider future growth, such as in areas near light rail or other transit services, and areas that have good public schools,” said O’Leyar, the owner and designated broker at Berkshire Hathaway Home Services Signature Properties in Seattle. “Waiting on the sidelines to buy will likely lead to increasing rental costs, so why not make a real estate investment purchase and have some hedge against future inflation,” he added.
  • “Relationships are paramount in this market,” said Lennox Scott. “If you’re looking for a home, make sure your broker knows your story and can convey it in a compelling way.”
  • “Buyers must carefully study the market so they can make decisive but smart offers when new listings arrive on the market,” emphasized Anderson. “With the robust activity, success for buyers means making an offer that stands above the competition.” He also urges buyers to not forgo important protections like home inspection contingencies.

Wilson and other brokers do not see an easing in the inventory crunch “for some time to come.” Even if the Fed raises interest rates, he believes shortages will persist because of the backlog of buyers.

Moorhead noted new home construction is also seeing prices soar as many of the defunct projects from 2008 to 2012 are being completed and built out. “Finding land for new home plats is forcing more teardowns and pushing builders/developers farther out where services are not as prevalent. He said first-time buyers tend to be hardest hit since they’re priced out of many close-in areas and must look at commute times of 45 minutes or more.

“There’s good news for luxury homebuyers,” Scott suggests. It’s prime time to showcase such properties, he explains, and “this is the season when more luxury inventory hits the market. The good selection in King County is easing the pressure for homebuyers in the luxury ($1 million and above) market. A search of the MLS database shows there are currently more than 900 listings in King County with asking prices of $1 million or more.

Northwest Multiple Listing Service, owned by its member real estate firms, is the largest full-service MLS in the Northwest. Its membership of nearly 2,100 member offices includes more than 25,000 real estate professionals. The organization, based in Kirkland, Wash., currently serves 23 counties in Washington state.

 

February’s Home Connection

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Miracle Agent at your service!

Looking to buy? Looking to sell? Or know of anyone who might? I am here to personally assist you. Giving exceptional service and donating to Seattle Children’s on your behalf. Join my growing group of clients involved in helping families when they need it most. show lessCMN_Miracleagent-logos with CMN Hospitals logo and wordmark

Snohomish County Homes INC.com

Do you know about an exemption that can save you money when you sell?

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TAX TIP: The 121 Exemption When Selling Your Home

The reason to do a 1031 exchange is to avoid capital gains taxes on investment property. Almost once a week I get asked about the sale of a primary residence. When you sell your home, you have an exemption from most capital gains taxes. A great resource to get more details about that is an IRS Publication, updated annually, called Selling Your Home (Pub 245). You could go to IRS.gov to download that.

In short, there is a 121 Exemption for capital gains taxes up to $250K per individual or $500K per married couple filing jointly. You do have to have lived in the property as your primary residence for 2 out of the last 5 years, and you can only take this exemption, once every 2 years.

This has been used in a long term strategy to avoid paying capital gains on rentals by converting the property from investment to primary residence. The IRS got wise to this strategy and put some constraints on this.

It could still be part of a plan, but reach out to your tax advisor with questions and see if this is an option for you