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Western Washington Real Estate Market Update 2018 Q1
The following analysis of the Western Washington real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact me.
ECONOMIC OVERVIEW
The Washington State economy added 96,900 new jobs over the past 12 months, representing an annual growth rate of 2.9%—still solidly above the national rate of 1.5%. Most of the employment gains were in the private sector, which rose by 3.4%. The public sector saw a more modest increase of 1.6%.
The strongest growth was in the Education & Health Services and Retail sectors, which added 17,300 and 16,700 jobs, respectively. The Construction sector added 10,900 new positions over the past 12 months.
Even with solid increases in jobs, the state unemployment rate held steady at 4.7%—a figure that has not moved since September of last year.
I expect the Washington State economy to continue adding jobs in 2018, but not at the same rate as last year given that we are nearing full employment. That said, we will still outperform the nation as a whole when it comes to job creation.
HOME SALES ACTIVITY
- There were 14,961 home sales during the first quarter of 2018. This is a drop of 5.4% over the same period in 2017.
- Clallam County saw sales rise the fastest relative to the first quarter of 2017, with an increase of 16.5%. In most of the other markets, the lack of available homes for sale slowed the number of closings during this period.
- Listing inventory in the quarter was down by 17.6% when compared to the first quarter of 2017, but pending home sales rose by 2.6% over the same period, suggesting that closings in the second quarter should be fairly robust.
- The takeaway from this data is that the lack of supply continues to put a damper on sales. I also believe that the rise in interest rates in the finalquarter of 2017 likely pulled sales forward, leading to a drop in sales in the first quarter of 2018.
HOME PRICES
- With ongoing limited inventory, it’s not surprising that the growth in home prices continues to trend well above the long-term average. Year-over-year, average prices rose 14.4% to $468,312.
- Economic vitality in the region is leading to robust housing demand that far exceeds supply. Given the relative lack of new construction homes— something that is unlikely to change any time soon—there will continue to be pressure on the resale market. As a result, home prices will continue to rise at above-average rates in the coming year.
- When compared to the same period a year ago, price growth was strongest in Grays Harbor County at 27.5%. Ten additional counties experienced double-digit price growth.
- Mortgage rates continued to rise during first quarter, and are expected to increase modestly in the coming months. By the end of the year, interest rates will likely land around 4.9%, which should take some of the steam out of price growth. This is actually a good thing and should help address the challenges we face with housing affordability—especially in markets near the major job centers.
DAYS ON MARKET
- The average number of days it took to sell a home dropped by seven days when compared to the same quarter of 2017.
- King County continues to be the tightest market in Western Washington, with homes taking an average of 24 days to sell. Every county in the region saw the length of time it took to sell a home either drop or remain essentially static relative to the same period a year ago.
- In looking at the entire region, it took an average of 61 days to sell a home in the first quarter of this year. This is down from 68 days in the firstquarter of 2017 but up by eleven days when compared to the fourth quarter of 2017.
- Anyone expecting to see a rapid rise in the number of homes for sale in 2018 will likely be disappointed. New construction permit activity—a leading indicator—remains well below historic levels and this will continue to put increasing pressure on the resale home market.
CONCLUSIONS
This speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors. For the first quarter of 2018, I have left the needle at the same point as fourth quarter of last year. Price growth remains strong even as sales activity slowed. All things being equal, 2018 is setting itself up to be another very good year for sellers but, unfortunately, not for buyers who will still see stiff competition for the limited number of available homes for sale.
Mr. Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has more than 30 years of professional experience both in the U.S. and U.K.
Originally posted April 25 2018, 11:00 AM PDT by Matthew Gardner, Chief Economist, Windermere Real Estate
Western Washington Real Estate Market Update Q4 2017
ECONOMIC OVERVIEW
The Washington State economy added 104,600 new jobs over the past 12 months. This impressive growth rate of 3.1% is well above the national rate of 1.4%. Interestingly, the slowdown we saw through most of the second half of the year reversed in the fall, and we actually saw more robust employment growth.
Growth continues to be broad-based, with expansion in all major job sectors other than aerospace due to a slowdown at Boeing.
With job creation, the state unemployment rate stands at 4.5%, essentially indicating that the state is close to full employment. Additionally, all counties contained within this report show unemployment rates below where they were a year ago.
I expect continued economic expansion in Washington State in 2018; however, we are likely to see a modest slowdown, which is to be expected at this stage in the business cycle.
HOME SALES ACTIVITY
- There were 22,325 home sales during the final quarter of 2017. This is an increase of 3.7% over the same period in 2016.
- Jefferson County saw sales rise the fastest relative to fourth quarter of 2016, with an impressive increase of 22.8%. Six other counties saw double-digit gains in sales. A lack of listings impacted King and Skagit Counties, where sales fell.
- Housing inventory was down by 16.2% when compared to the fourth quarter of 2016, and down by 17.3% from last quarter. This isn’t terribly surprising since we typically see a slowdown as we enter the winter months. Pending home sales rose by 4.1% over the third quarter of 2017, suggesting that closings in the first quarter of 2018 should be robust.
- The takeaway from this data is that listings remain at very low levels and, unfortunately, I don’t expect to see substantial increases in 2018. The region is likely to remain somewhat starved for inventory for the foreseeable future.
HOME PRICES
- Because of low inventory in the fall of 2017, price growth was well above long-term averages across Western Washington. Year-over-year, average prices rose 12% to $466,726.
- Economic vitality in the region is leading to a demand for housing that far exceeds supply. Given the relative lack of newly constructed homes—something that is unlikely to change any time soon—there will continue to be pressure on the resale market. This means home prices will rise at above-average rates in 2018.
- Compared to the same period a year ago, price growth was most pronounced in Lewis County, where home prices were 18.8% higher than a year ago. Eleven additional counties experienced double-digit price growth as well.
- Mortgage rates in the fourth quarter rose very modestly, but remained below the four percent barrier. Although I anticipate rates will rise in 2018, the pace will be modest. My current forecast predicts an average 30-year rate of 4.4% in 2018—still remarkably low when compared to historic averages.
DAYS ON MARKET
- The average number of days it took to sell a home in the fourth quarter dropped by eight days, compared to the same quarter of 2016.
- King County continues to be the tightest market in Western Washington, with homes taking an average of 21 days to sell. Every county in the region saw the length of time it took to sell a home either drop or remain static relative to the same period a year ago.
- Last quarter, it took an average of 50 days to sell a home. This is down from 58 days in the fourth quarter of 2016, but up by 7 days from the third quarter of 2017.
- As mentioned earlier in this report, I expect inventory levels to rise modestly, which should lead to an increase in the average time it takes to sell a house. That said, with homes selling in less than two months on average, the market is nowhere near balanced.
CONCLUSIONS
This speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors. For the fourth quarter of 2017, I have left the needle at the same point as third quarter. Price growth remains robust even as sales activity slowed. 2018 is setting itself up to be another very good year for housing.
Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has more than 30 years of professional experience both in the U.S. and U.K.
Posted January 29 2018, 11:00 AM PST by Matthew Gardner, Chief Economist, Windermere Real Estate
2018 Housing Forcast
There have been many forecasts published right now for 2018, for politics, the economy, the weather, and so much more. Here is what I expect to see in 2018.
Interest Rates: Interest rates continue to be a great topic of discussion, with most predicting a rise. While the rates may rise a bit, I believe they will average around 4.4% for a 30 year fixed mort- gage by the end of the year.
National Home Sales: We should expect that home sales will continue to increase, and demand will exceed the inventory. Still, the inventory should begin to increase due to the rise of new home construction.
Home Buyer Profile: The millennial home buyers are going to continue to increase, particularly in the less expensive markets. Last year, millennials comprised of 34% of the buyers nationally.
Local Market Forecast: We too have been experiencing an increase of millennial buyers. With the strong economy and dramatic growth in Puget Sound, these folks are looking to Orcas and the San Juan’s as an optimal getaway. The homes here look enticingly affordable compared to what is available in the Seattle market currently. Our inventory is continuing to shrink, and unless some- thing dramatic happens nationally, the local market should continue to remain strong. However, unless we begin to see new inventory, we may experience a slow down in the market, as buyers struggle to find what they are looking for, and they appear willing to wait for the ‘right’ property. Please stop by the office, or give us a call, and we will be happy to discuss this further with you .
Sincerely,
John Dunning, Designated Broker/Owner
Property Assessments– What do they mean?
Our office and brokers have received many calls with questions regarding the newly received property value assessments.
According to the San Juan County Assessor’s website “State law requires that assessors appraise all taxable property within the county at 100% of its true and fair market value, according to the highest and best use of the property. Fair market value, or true value, is the amount of money that a willing and unobligated buyer is willing to pay a willing and unobligated seller.
“Each year, the County is responsible for reviewing the values of approximately 20,000 parcels. Whether you have purchased your property recently or not, the Assessor will still evaluate your property on an annual basis. These annual evaluations are based on research of sales of properties within the past year. For example, if 2016 sales are available, they are used to calculate the 2017 assessed values.
By State law, members of the Assessor’s office are re- quired to conduct a physical inspection of the property every 6 years. If new construction occurs, then this new construction will be physically inspected annually until construction is completed. These physical inspections are taken into consideration when updating the current assessed value.
Once the valuation is established, your taxes are calculated based on a tax rate. Many factors determine property tax rates, the amount of property tax due on com- parable properties will vary throughout a county. The three main factors that determine the tax rate include: various combinations of taxing districts in different areas of the county, budget amounts for each taxing district, and voter-approved special levies and bonds.
Key point: these tax rates vary year to year, depending upon the County annual budget. If assessed values go up (or down) it does not necessarily mean that your taxes will go up (or down).
If you disagree with your new property assessed value, there is an appeal process via the Board of Equalization that you may undergo. Keep in mind that you must reg- ister the appeal within 30 days of the original filing of the new valuation of your property.
The San Juan County Assessor’s website is an excellent resource for additional information:
www.sanjuanco.com/149/Assessor
John Dunning, Designated Broker/Owner
Real News – Article 4
AFFORDABLE HOUSING — WHAT COULD BE DONE
This column is the second on the affordable housing issue. We all know what is needed, but it seems we don’t have a clear vision of how to accomplish it.
Last time I mentioned an affordable housing solution on San Juan Island that appears to have served that island well since its development in 1982. It’s called The Oaks. Located in a rural area and buffered from surrounding properties, most Islanders don’t even think about it and some don’t even know it exists.
In a time of less restrictive zoning regulations, the developer acquired 7 contiguous parcels of rural land totaling approx. 40 acres. They installed streets, sidewalks and utilities serving 76 home sites for double wide manufactured homes. The land is leased to the homeowners who own the units, which can be resold by owners moving off-island, or to other properties. Sales prices have ranged from around $100—$200K depending on location and size of the homes. The property lease includes water, sewer and road maintenance such that the area appears well maintained. There are relatively few sales of these homes because turnover of residents is low.
Today, due to County zoning regulations, it would be almost impossible to do an Oaks. Yet we can see it works and addresses affordable housing needs, at least on San Juan Island by being a product that naturally falls into the right price point. Our County needs to encourage affordable housing development by creating new zoning regulations to allow projects like this to occur today. Of course, the devil is in the details, and zoning modification would have to include safeguards such that neighbors would not be adversely affected.
Orcas Island has areas of forested and/or buffered land where thoughtfully-designed high-density development could occur on otherwise low-density land. This would be an excellent topic for each of us to address with our Commissioners. The time may now be right for such a discussion.
Since I started this column, I have received a fair amount of thoughtful feedback and I encourage you to give me a call or drop by to say hello and discuss any Island issue you feel is important. My intention is to make this column thought provoking and helpful in some small way.
John Dunning, Designated Broker/Owner
Real News – Article 3
In a past article I discussed where our Buyers are coming from, but in this article, I think you might like to see how our 2017 sales market stacks up against last year at this same time….
The total number of Orcas sales has increased from 42 in 2016 to 53 this year to date. But that doesn’t tell the whole story, because the price points where the sales have occurred are significantly different year-to-year.
The 2016 and 2017 number of properties sold between $150 and $350K are very similar. But, starting at $400K thru $550K, there have been almost twice as many sales in 2017. Interestingly, homes priced in the $600K range sold better in 2016 with the $700K range being very similar year-to-year.
The real change is from $800K and up. Last year there were no sales in the $800K range but there have been a number of sales this year. 2016 sales between $900K and $1,400K were stronger than 2017, but 2017 exceeded from $1,500K and above.
What can we draw from all of these statistics? Honestly, no real pattern other than the availability of inventory is our largest determinant of what sells. We have a shortage of properties currently on the market, and yet many buyers are still coming into our offices on a daily basis, still looking for their dream home or second home. Isn’t this just the way it always happens?
For those owners who have been hesitant to list their Land or Homes, we haven’t seen a better time than now! And that isn’t just hyperbole. We are approaching our prime selling season of the year.
People visit Orcas during the summer, fall in love with the Island, return home to mainland America, and start trying to figure a way to make our home their home. They return in September with money in pocket, ready to make their move. It’s just the way this business works.
Enough of statistics….we wish everyone a wonderful fall in the Islands and hope to see many of you in the office, where the coffee is always on and the conversation interesting and friendly.
Until next time,
John Dunning, Designated Broker/Owner
Real News – Article 2
A few months ago, the Wall Street Journal published an article stating that the San Juan Islands are the fastest growing luxury home market in the country. This article has created many discussions in the local real estate world all revolving around the question: “What does this statistic mean?”. It also asks the question: “Who is really buying on Orcas Island?”
It may surprise you to find out that in the past twelve months, of the 191 sales of both land and residential properties on Orcas Island, 75 of those sales were represented by Buyers already living on Orcas Island. No wonder the locals pay such close attention to the real estate market!
In addition to these 75 purchases, 48 of the sales were by Buyers from the Seattle metropolitan area, and 11 from greater Washington State. That equates to 70% of our Buyers being from Washington State.
The graph below illustrates the breakdown of where our Buyers are coming from overall.
I hope you find these statistics as interesting as I do. If you have any questions, or would like more information, stop by our office here in Eastsound to speak with any one of our highly qualified Brokers….We always love to talk real estate!
Sincerely,
John Dunning, Designated Broker/Owner
*Source: NWMLS & Realist
Real News
As the owner of the Windermere agency on Orcas, I am often asked; How’s the market? The answer is that the market is continuing to improve, and we are grateful to be past the challenging times of 2009 – 2012. But, this answer warrants further comment.
We have come a long way from 2009, when four months passed without a single real estate sale occurring on Orcas Island. In contrast, during the first six months of 2017, 45 homes sold, leaving us with only 113 active Orcas listings today. It’s easy to understand why our Buyers are struggling to find their “perfect home.”
It is evident, however, that pricing correctly is still the key to achieving a sale. The average number of days on the market for the homes that have sold within the past 6 months is 185 in contrast to an average of 248 days for the active listings, with many having been for sale for more than a year.
When we look at the residential market by price range, the bulk of the activity is still occurring in the $300,000 -$599,000 range, where 26 of the 45 homes sold this year were located. The median number of days on market for homes in this range has decreased to 52 days.* Currently 17 homes are in escrow, which means it will take 6.6 months to absorb the current listed inventory.
As you can see, there truly is a bit more to answering the “How’s the Market” question. If you would like more information, or to inquire as to your property’s value today, please stop in to visit with one of our 22 Orcas-based brokers. We always love to talk about the market!
John Dunning, Designated Broker/Owner
*Source: Real Market Reports.
The Gardner Report – Q2 2017
ECONOMIC OVERVIEW
The Washington State economy has been expanding at a rapid pace but we are seeing a slowdown as the state grows closer to full employment. Given the solid growth, I would expect to see income growth move markedly higher, though this has yet to materialize. I anticipate that we will see faster income growth in the second half of the year. I still believe that the state will add around 70,000 jobs in 2017.
Washington State, as well as the markets that make up Western Washington, continue to see unemployment fall. The latest state-wide report now shows a rate of 4.5%—the lowest rate since data started to be collected in 1976.
I believe that growth in the state will continue to outperform the U.S. as a whole and, with such robust expansion, I would not be surprised to see more people relocate here as they see Washington as a market that offers substantial opportunity.
HOME SALES ACTIVITY
- There were 23,349 home sales during the second quarter of 2017. This is an increase of 1.1% from the same period in 2016.
- Clallam County maintains its position as number one for sales growth over the past 12 months. Double-digit gains in sales were seen in just three other counties, which is a sharp drop from prior reports. I attribute this to inventory constraints rather than any tangible drop in demand. The only modest decline in sales last quarter was seen in Grays Harbor County.
- The number of homes for sale, unfortunately, showed no improvement, with an average of just 9,279 listings in the quarter, a decline of 20.4% from the second quarter of 2016. Pending sales rose by 3.6% relative to the same quarter a year ago.
- The key takeaway from this data is that it is unlikely we will see a significant increase in the number of homes for sale for the rest of 2017.
HOME PRICES
- Along with the expanding economy, home prices continue to rise at very robust rates. Year-over-year, average prices rose 14.9%. The region’s average sales price is now $470,187.
- Price growth in Western Washington continues to impress as competition for the limited number of homes for sale remains very strong. With little easing in supply, we anticipate that prices will continue to rise at above long-term averages.
- When compared to the same period a year ago, price growth was most pronounced in San Juan County where sale prices were 29.2% higher than second quarter of 2016. Eight additional counties experienced double-digit price growth.
- The specter of rising interest rates failed to materialize last quarter, but this actually functioned to get more would-be buyers off the fence and into the market. This led to even more demand which translated into rising home prices.
DAYS ON MARKET
- The average number of days it took to sell a home in the quarter dropped by 18 days when compared to the same quarter of 2016.
- King County remains the tightest market; homes, on average, sold in a remarkable 15 days. Every county in this report saw the length of time it took to sell a home drop from the same period a year ago.
- Last quarter, it took an average of 48 days to sell a home. This is down from the 66 days it took in the second quarter of 2016.
- Given the marked lack of inventory, I would not be surprised to see the length of time it takes to sell a home drop further before the end of the year.
CONCLUSIONS
This speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors. For the second quarter of 2017, I moved the needle a little more in favor of sellers. To define the Western Washington market as “tight” is somewhat of an understatement.
Inventory is short and buyers are plentiful.
Something must give, but unless we see builders delivering substantially more units than they have been, it will remain staunchly a sellers’ market for the balance of the year.
Furthermore, increasing mortgage rates have failed to materialize and, with employment and income growth on the rise, the regional housing market will continue to be very robust.
Posted July 26 2017, 11:00 AM PDT by Matthew Gardner, Chief Economist, Windermere Real Estate. Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has over 25 years of professional experience both in the U.S. and U.K. Find the original post here
