Buying Homes • Economic Forecasts & Trends • November 16, 2024

Wealth-Building Opportunities Start at Square One

by Jill Langer

As 2024 starts to come to a close, I want to spend some time talking about first-time homebuyers. Even if you already own a home, this is an important message to share; it can change someone’s life! In 2023, according to the National Association of Realtors (NAR) 2023 Profile of Home Buyers and Sellers, first-time home buyers represented 24% of the market share, which was down from 32% in 2022. First-time homebuyers are a critical part of the real estate market cycle, and we need to empower this group to invest in their future. They are also the audience that purchases inventory, enabling sellers to move on to their next home, which creates a domino effect as it travels up the market.

Often, first-time homebuyers purchase entry-level properties such as condos, townhomes, or smaller single-family residential homes based on affordability. It is also important to note that a buyer does not need a 20% down payment to purchase a home. In fact, according to NAR, the typical down payment for a first-time homebuyer in 2023 was 8%. There are loan programs that only require 3% down payments and even assistance programs requiring zero down. It is important to explore options so one knows their opportunity potential. For example, lenders will often advise borrowers to focus on saving vs. paying down debt in order to better qualify for a loan.

Sometimes, first-time homebuyers are able to skip that first level of home ownership and purchase a home that they plan to be in for many years, yet that is rare. I have found that it is critical that first-time homebuyers are focused on what monthly payment they feel comfortable taking on and commit to shopping at that price point. They then apply that price point to a combination of location, property type, and the condition/features they can afford.

The primary benefit of ditching the rent payment and becoming a first-time homebuyer is getting on the trajectory of building household wealth. As you can see from the charts below, real estate has appreciated in both King and Snohomish counties over the last 10 years, whether it be a condo or a single-family residential property. This appreciation becomes a nest egg of savings for the homeowner over time.

For example, if you use the data from the Snohomish County Condo chart, a first-time homebuyer who bought a condo in 2020, the median price in the market was $379,000. That is now $533,000, which is a 41% gain. Granted, these are raw numbers and represent a 30,000-foot view of the market, which illustrates the trends. We can’t simply apply the percentage growth in the market overall; we would analyze comparable properties in the specific area of the subject property to find the accurate value. The appreciation trend, however, shows that the first-time homebuyer who bought in 2020 is now sitting on a healthy nest egg of savings to utilize to purchase their next home if they desire a different property based on life changes. Plus, there is no other investment vehicle that allows tax-free capital gains up to $500,000.I point this out because I often encounter would-be first-time homebuyers who call off their search because they cannot afford the type of home or area they want, and continue to rent in the hopes of saving more to afford what they want later. While I would never want anyone to buy a home they don’t want, I do encourage my clients to consider what they can compromise on in order to start building wealth through homeownership sooner rather than later. Even if you apply the home appreciation for condos in Snohomish County prior to the pandemic, the median price in 2015 was $246,000, and four years later, it was $353,000, which is a 44% gain. Most people would not be able to save that much over that period of time, hence the advantage of building wealth via homeownership.

An exercise I often use with my buyer clients is applying the Triangle of Buyer Clarity to their budget and search. I am the first person to say that shopping for a home is exciting and even romantic, which results in starry eyes focused on dream homes and HGTV lore. I find that the quicker a buyer is able to put the dreaming part aside and get to the brass tacks of the market, the quicker they succeed in a purchase. Monthly payment is the single most important element to focus on to bring clarity to a buyer’s search. This figure should direct the price range for a buyer, which will determine which location, condition/features, and property type they can afford.

As you can see from the example of the Triangle of Buyer Clarity, buyers often have to adapt their search to meet their budget needs; it is rarely the perfect balance of an equilateral triangle. That could mean adapting by buying a townhome instead of a single-family home, going to a location that is a little further out, or being OK with a 90’s kitchen instead of a perfectly modern masterpiece. Getting into the market is more important than finding the perfect fit. The good news is that market trends show that townhomes, all locations throughout each county, and even 90’s kitchens appreciate! One could even tap into their equity down the road once it is built up and remodel that 90’s kitchen.Homeownership provides many benefits. Wealth-building opportunities are huge because we all need a place to live, so why not pay your own mortgage and gain appreciation instead of building your landlord’s portfolio? There are tax benefits, too, as you can use the interest as a write-off. Plus, you get the freedom to make your house your own and build a community where you live. You can paint the walls and dig in the dirt, and you don’t have to answer to your landlord. Overall, homeownership provides stability, freedom, and community. Helping my clients gain tangible and intangible benefits is the primary goal I work towards.

This is why I couldn’t let 2024 end without giving a shout-out to the would-be first-time homebuyers out there. My best piece of advice if you are considering buying your first home is to come up with a plan. I offer all of my clients a buyer consultation meeting where we review the market trends, apply their goals and search criteria, get them connected with a reputable lender, and devise a custom plan for them. The plan could start right away or sometime in the future; what matters is working towards the goal.

My mission is to help people gain the benefits of homeownership when they are ready. When I hand off the keys to a first-time homebuyer, it is one of the most rewarding aspects of my job because I know we have changed their lives for the better. If you are a potential first-time buyer or know someone who is, please reach out, I’d be honored to help.

If you’re looking for a new home, you might notice something called the ” Walk Score^®” on property listings. But what does it really mean for you?

The Walk Score^® algorithm calculates a score of walkability based on distance to 13 categories of amenities (e.g., grocery stores, coffee shops, restaurants, bars, movie theaters, schools, parks, libraries, book stores, fitness centers, drug stores, hardware stores, clothing/music stores). A high walk score means your new home is within walking distance to essential amenities—making life more convenient and car-lite!

What are the scores?
90-100: Walker’s Paradise. Daily errands do not require a car.
70-89: Very Walkable. Most errands can be accomplished on foot.
50-69: Somewhat Walkable. Some errands can be accomplished on foot.
25-49 Car Dependent. Most errands require a car.
0-24: Car-Dependent. Almost all errands require a car.

Curious about finding a home in a walkable area? Let’s explore together!

What is your home worth and why do you want to know?

by Jill Langer

Your home is your shelter where you make memories, a large part of your financial nest egg, and a vehicle for creating wealth. Knowing what your home is worth is empowering and important. The reasons that may come up when you need to know your home’s value can have a direct impact on your financial health. Do you need to update your insurance, do some estate, tax, or financial planning, prepare for a re-finance, line of credit, or remodel, or are you considering a move? Relying on accurate home valuations for all of these endeavors will result in the best outcome.

To estimate your home’s value, you can easily jump on a public website that will spit out a value. This is called an AVM (Automated Valuation Model). There are a handful of free ones such as Zillow, Redfin, and RealEstimate. These sites are free for the consumer to visit and are based on a unique AI-generated algorithm that is typically a recipe of tax assessment data, CPI figures, market trend data, computer-picked comparable properties, and user-submitted data. They do not take into consideration important value points such as the condition of your home, improvements you’ve made, or nuances of the neighborhood; factors that only an actual person can evaluate.

It is important to note that on all three of these free sites, the algorithm and AVM tool are funded by the advertisers on the site, which are real estate brokers and lenders who want your business. The AVM is the carrot to get you in front of these high-paying advertisers who hope you click to connect so they can convert you into their real estate client. This is unlike the relationship-based business that I foster; this is more of a “sales-y,” transactional approach. Despite the sharks in the water, an AVM is a good starting point, like dipping your toe in the pool, but don’t get bit!

Here are the current AVM (Automated Valuation Model) values for a subject home from four sources (3 free and 1 fee-based). As you can see, the values vary. If you have a need to know the value of your home, don’t rely on an algorithm. According to Zillow, their accuracy varies by 7.49%; that is a huge variation! For example, that is $75,000, either high or low, for a $1M home. Depending on what you are planning for, that inaccuracy can severely cost you.

The AVMs above vary by 58%. If you apply the average Zillow accuracy percentage, the Zestimate® above could be off by $143,000 or more. It is important in this new world of AI that we do not underestimate the power of the human algorithm. Evaluating a home with all 5 senses, experience, and expertise is critical in establishing a home’s true value. Just like AVMs that vary, it matters who you align with, too. Hungry sharks who are paying to find clients, brokers who sell real estate as a hobby or side hustle, or brokers who are not engaged can all be detrimental. Seek out a professional who is committed to their craft, a student of the market, and up-to-date on market trends when you are assessing your largest asset.

If you want more precise information, consult a trusted advisor like me. By selecting accurate, comparable properties and analyzing today’s market trends, I will provide you with a much more comprehensive evaluation of your home’s value relative to its specific features, condition, and location. Please reach out if you are interested in having me tour your home and complete a Comparative Market Analysis (CMA) so you can plan for your future with confidence.

From saunas to gyms, more people are prioritizing private, custom spaces in their homes where they can focus on routine without distraction.

Saunas & Steam Showers
A steam shower is typically a stand-alone shower stall that can produce steam without running the hot water. The shower enclosure is sealed off from the rest of the bathroom, creating a self-contained humid environment that can also be used for bathing.

A steam shower is similar to a sauna in that it promotes relaxation with heat, but these two amenities require different equipment. A sauna—even a wet sauna—begins with dry heat from a stove or rocks. Users can choose to add some humidity with steam, but it rarely passes 60%, whereas steam showers provide close to 100% humidity. Saunas also aren’t equipped to handle running water like steam showers are. Saunas get substantially hotter than steam showers do, but because steam inhibits your sweat response, steam showers will allow you feel the effects of the heat more quickly and intensely than the sauna.

A home steam shower costs about as much to install as a home sauna. Both provide similar health and relaxation benefits, though steam offers more relief for dry skin and respiratory issues. If you’re considering including a sauna or steam shower as part of a bathroom remodel, the difference may come down to personal preference and available space.

Home Gyms & Studios
Your home’s design should include more than just your personal style; it also should accommodate your hobbies and lifestyle. If you’re committed to keeping active and working out regularly, a home gym might be a necessary part of the floor plan. Being able to fit a workout in when you have the spare time during the day without having to run across town can be life-changing.

Even better is a space that is beautiful and well thought out. A functional and aesthetic space can be welcoming and energizing. Start by bringing your own personal style into the space. Maybe a rattan light fixture or a fun wallpaper. If you don’t have room for a lot of equipment, opt for pieces that are designed to be easily stored out of the way, like a walking pad that can be folded and hung on the wall instead of a full stationary treadmill. Protect your floors from damage with rubber mats. They will also help to reduce the noise of the equipment, especially if you’re on the second floor of your home.

Wellness & Hobby Spaces
Wellness rooms can be about physical wellness, of course, but they’re also about mental well-being and can encompass anything that makes you feel calm, centered, connected, and rejuvenated. More people are realizing the importance of prioritizing their physical AND mental health. A wellness space can be for many different things: a music room, meditation, library, or even a dedicated space for hobbies. Think about what your goals are before designing your retreat.

Even a small nook exclusively devoted to your wellness space can be beneficial. No matter the size of your space, start with some basic elements and then build from there with things that bring you calm and happiness.

• Add sounds of nature or aromatherapy to lift your mood
• Choose nature’s colors for your eyes to land on, such as blues, greens, and neutrals
• Clear away any distractions
• Surround yourself with plants on the ground, table surface, and hanging
• Make your space comfortable with a cozy throw

Buying Homes • Economic Forecasts & Trends • Selling Homes • October 2, 2024

Rates Down, Inventory Up: Opportunity Knocks!

by Jill Langer

As we celebrate the start of autumn, the season of change, the leaves on the trees are not the only things that are falling. Interest rates have gradually fallen throughout the year. Just 11 months ago, rates were almost 2 points higher; in the frothy spring market, they were nearly 1.5 points higher. During this same time, the median price in King County and Snohomish County grew. In King County, the median price was recorded at $975,000 this August and at $775,000 in Snohomish County, which are both up 7% year-over-year from August 2023.

Another trend that we are witnessing is a rise in available inventory for sale. August recorded the highest level of available homes for sale since the fall of 2022, two years ago. There were 3,105 available homes for sale in King County in August 2024 compared to 1,207 in January 2024, and 1,147 in Snohomish County in August 2024 compared to 374 in January 2024.

The combination of lower borrowing costs and more selection should be a welcome change for buyers. When the inventory was much tighter in the first half of 2024 and interest rates were higher, prices were increasing at a rapid rate. We are starting to see new buyers enter the market and some who have sidelined themselves return. This indicates that prices will remain stable as we finish out 2024.

Currently, buyers have more selection and the opportunity to grab a lower monthly payment. As you can see from the chart below, buyers have a significant opportunity to afford a higher price point at a lower rate or stay at the same price point and have a lower monthly payment. The reduction in rate over the last year is reducing monthly payments and creating great long-term savings over the life of the loan. The rule of thumb for affordability is a 1-point shift in rate affects a buyer’s buying power by 10%. For example, a home priced at $800,000 with a 7% interest rate will have a similar monthly payment as a home at $880,000 with a 6% rate.

The hesitation I am seeing in

the marketplace is a desire for rates to come down even further. The good news is that they are predicted to continue this gradual decline. Where I am concerned is a decrease in selection. If we look at seasonality, it is common for inventory to be low in the first half of the year, especially in Q1 (see the King & Snohomish graphs above). If rates continue their slide and fewer new listings come to market, buyers will find themselves duking it out in 2025. Right now, while there are multiple offers on some properties, there are more properties that are being negotiated into contracts with one buyer.

This has created a more nimble market, particularly for buyers who also have to sell their homes to reposition their equity into a downpayment. While tight inventory provides great leverage for a seller, many sellers are also buyers. Analyzing the market conditions to align the environmental influences to create the best possible outcome for your goals is paramount, and it will not be the same for everyone. Depending on my client’s goals, timing can vary.

Oh, and another sentiment I often hear is, “Will rates under 5% ever be back?” That is rather unlikely and will go down as a historic time in our economy. With that said, if you are in your “forever home” and you captured a historically low rate, kudos to you! Truly, so awesome! If you are not in the home that is right for you, now may be the time to curate a plan to get you into your next home. If homes were selling at a rapid rate and prices were appreciating this last spring with 10% less buyer power, I imagine next spring will be much of the same, if not more.

One final item to note is the election. History shows that post-election year markets are brisk with sales and experience price growth and rate decreases. I am paying attention to key indicators such as inflation figures, unemployment measurements, the gap between the 10-year treasury yield and mortgage rates, and our local market conditions in order to provide my clients with the most accurate and up-to-date information to empower strong decisions.

Are you curious how all of this affects you? Real estate is the number one tool for building wealth, and you also get to live there. I think that is pretty important, and I love nothing more than providing valuable insights, having strategic conversations, and helping people align their homes with their lives. Home is where the heart is and also where your nest egg has the most reliable long-term growth. Please reach out if you’d like to dig into the details and apply them to your housing and investment goals.

Buying Homes • Economic Forecasts & Trends • Selling Homes • September 8, 2024

End of Summer Market Update

by Jill Langer

Summer 2024 welcomed an increase in available inventory, a drop in interest rates, and continued price stability, which has upheld strong home equity levels. After a double-digit ramp-up in price appreciation in the first half of 2024, prices have slightly come off the peak of May 2024 and found stability. This trend is historically consistent with seasonal patterns and nothing to be alarmed about.

Increased selection for buyers was a welcome relief as inventory was extremely tight in the spring. While there are still homes getting multiple offers and escalating, we have also seen some buyers make purchases contingent on the sale of their current home. The market has become a bit more nimble for buyer’s terms in some cases. It is important to understand the nuances of each location, product, and price point, as the environment can vary which would indicate whether a buyer would need to compete or be able to negotiate more.

These trends are coupled with rates dropping below 7% in June and they have recently sat in the mid-6%. Rates were a point and a half higher in October 2023; this is a great improvement! We anticipate rates slowly dropping further which will put upward pressure on prices. The Fed meets again this month and if rates come down even more, buyer activity will increase. Between the lower rates and higher inventory, buyers should be excited and ready to act!

As you can see from the chart below, this shift in rate directly relates to a buyer’s monthly payment. Homes are expensive, so the cost to carry a loan is critical. These recent drops are helping out and should be paid close attention to as buyers are payment-driven in most cases. The opportunity to secure a home now with today’s rate could mean a buyer could enjoy a stable price and choose to re-finance or adjust to a lower rate later keeping their same basis. Buyers should also understand that homeownership is a key component to building wealth.

I anticipate a healthy late summer and fall market. Over the Labor Day Weekend, buyer traffic was busy despite the holiday and activity is bubbling up. The lower rates are helping some folks jump off the fence. Even some sellers are getting ready to sell and relinquish their lower rate, so they can move to a home that better fits their needs. I’m excited about the real estate market for the remainder of 2024 and into 2025. If you are curious about how the trends relate to your goals, please reach out. I am committed to staying connected and up-to-date on the latest trends so my clients make well-informed decisions.

Here is a quick update on a topic I have been keeping you up-to-date on all year. On August 17, 2024, the NAR Settlement requirements were enacted. This required significant changes to real estate practices across the country. This made big news and stirred headlines. The good news is in WA state we made the majority of these changes back on January 1, 2024, when the law surrounding buyer agency was changed.

Since January 1, 2024, we have been required to obtain Buyer Brokerage Services Agreements (BBSAs) with buyers we are providing real estate brokerage services. These agreements can be exclusive or non-exclusive, must establish clear buyer brokerage compensation parameters, have a defined agreement term, and call out whether dual agency is allowed. I have embraced these changes and have brought value to my clients through this modernized process.

Our local MLS, the NWMLS, chose to opt out of the NAR settlement in May 2024. They felt confident that the risk for exposure was low due to advancements they have been making since 2019 to elevate transparency around brokerage compensation. Their proactive consumer-focused approach along with the new WA state law have had our state ahead of the curve.

The majority of the required practice changes required by the settlement were already in place in WA state as of January 1, 2024. Due to their choice to opt out, the NWMLS will not have to comply with the requirement to not publish a seller’s offer of compensation to a buyer’s brokerage. This is confusing to all parties of a transaction and the opposite of transparency. I am proud to run my business as a member of the progressive NWMLS and under the new law established by our state on January 1, 2024.

On August 15th, 2024, the NWMLS made some slight updates to some of their forms to coincide with the final settlement details. Most notably, buyer brokerage compensation was made more clear in the Purchase and Sale Agreement. It can be connected to what the seller is offering in their listing, what is agreed upon in the BBSA, or both. Sellers can choose to offer buyer brokerage compensation, choose not to, or request to negotiate it as a term in a buyer’s offer. Depending on how the established BBSA aligns with the Purchase and Sale Agreement, the buyer brokerage compensation will be paid by the seller, buyer, or a combination of both.

If you have any questions about the settlement and all of the changes we have navigated since 2019 until now, please reach out. I am committed to providing valuable services and clear communication to the buyers and sellers I serve. I understand that purchasing and selling real estate is one of the largest financial decisions a person ever makes and it is often related to big life changes. Navigating such importance takes great skill and care and I am committed to obtaining the best results for my clients while creating an enjoyable experience along the way.

Thank you to everyone who pitched in during the Summer Food Drive! Through your generosity, we collectively donated $1,240 and 1,058 pounds of food to Volunteers of America Western Washington food banks! This is all going directly into our communities to help our neighbors in need.

Thank you!

Buying Homes • Economic Forecasts & Trends • Selling Homes • August 29, 2024

How Election Years Affect the Real Estate Market

by Jill Langer

As we approach November and the Presidential election nears, it would be good to look back on how election years have historically affected the real estate market. There is certainly a lot going on and this stimulation can cause pause. Buying and selling real estate is a big life event and the election is a big national event. Some buyers and sellers will delay their moves until after they know how the election is going to pan out. Sometimes this delay is caused by pure distraction and sometimes there is a level of uncertainty that is created until a decision is made.

Here is some interesting data that illustrates the trends of consumer behavior surrounding a Presidential election. Interest rates, the rate of home sales, and price growth are all analyzed below. Looking back to look forward provides some concrete evidence of how a Presidential election can affect the performance of the housing market.

First, interest rates! We have recently experienced a nice drop in rates. Rates have been extremely volatile over the last two years. Last October, rates peaked at almost 8%, came down to 6.75% in January 2024, went back up to 7.4% in April 2024, and have recently dropped to the lowest level we have seen since April 2023 and are hovering around 6.5%. This is largely due to inflation finally settling and a recent jobs report showing increased unemployment. This trend is predicted to continue as the Fed considers a rate cut in September with the plan of easing rates as we finish 2024 and head into 2025.

The chart below shows what rates have done over the last eleven election cycles and it certainly looks like the current trend with rates follows historical norms. This is an opportunity for buyers to jump into the market as this reduction in rate is accompanied by an increase in inventory. With lending costs lower and more selection buyers could even find themselves in a position to negotiate a further reduction in rate to help with the overall affordability of a purchase.

The market is very much driven by what a buyer's monthly payment would be. Lending costs are a huge factor that will play into consumer confidence and the amount of sales happening. Further, we expect more home sellers to come to market as rates ease as they will be more inclined to give up their low rate to move to a home that is a better fit for their lifestyle.

The chart below shows the increase in home sales in nine out of the eleven past election cycles. In fact, the first year after an election is historically robust with activity. If history repeats itself in 2025, buyers who are ready may want to consider making a move now. With the dip in rate, increased selection, and some buyers sidelined it could be a great time to make a purchase with a little less competition.

Even better news is that historically prices increase after an election year. In seven out of the last eight post-election years, prices increased. The only year they did not, was 2008 which was in the hollows of the Great Recession. Of course, we will not be able to measure this until a year from now and this will be something that I will be paying close attention to.

So far, 2024 has been a year of price growth. We experienced huge gains in the first half of the year over 2023. 2024 marks the year of recovering from the 2022 post-pandemic correction and re-gaining price stability. Equity levels in our area are very strong with close to 60% of homeowners having at least 50% home equity. We expect the movement of this equity to become more nimble as the cost of borrowing money comes down.

What we have in store over the next three months will be distracting, stimulating, and just a lot. I hope the information above provides some history that helps ground the facts during a time of heightened angst and uncertainty. As always, life dictates changes in real estate needs. If you or someone you know has come up on some life changes that indicate a move would be beneficial, please reach out.

Despite the chaos of the election, you can never plan too early for these big life transitions and there might be some great opportunities amongst the noise. Whether it's a purchase, a sale, or both, I am equipped to help you assess your goals and help you devise a plan. The best time to make a move is when you're ready and I'm here to help.

Buying Homes • Selling Homes • July 10, 2024

How are we half way through 2024 already?

by Jill Langer

As we approach the mid-point of the year, I want to take a moment to explain all that has happened in the 2024 real estate market and where we might be headed. We have had strong price growth since December 2023, and in May 2024 prices matched the peak we saw in spring 2022. The interest rate increase and inflation-induced correction that took place in the spring of 2022 has shown very strong signs of recovery and stabilization. The chart below shows the last 17 months of median prices in both King and Snohomish Counties and also tracks the ebb and flow of interest rates.

Despite interest rates fluctuating between 6.75-7.5% from January through May 2024, price growth has been on an upward trajectory. Most recently, rates have hovered close to 7%. Inventory started the year very low! In King County, there were only 1,324 new listings in January and 534 in Snohomish County. This trend continued throughout Q1 2024 and has started to increase in Q2. In May 2024 there were 3,245 new listings in King County and 1,272 in Snohomish County. That was a 145% increase in King County from January to May and 138% in Snohomish County. Markedly, there was a 27% jump in new listings from April 2024 to May 2024 in King County and 34% in Snohomish County.

Adequate selection for buyers was limited, which drove prices up over the past five months. Buyers are starting to see some relief! There is healthy net in-migration into the Greater Seattle area, a stable job market, and the Millennial generation is out in force making their first purchases and some even moving up from their first homes. Since December 2023, the median price in King and Snohomish Counties has increased by 21%. One must take seasonality into account which elevates that growth, but there has certainly been a recovery in home values in the correction. Sellers are sitting on tons of equity as it was measured in November 2023 that homeowners in King County had at least 60% home equity and 57.5% in Snohomish County. This figure does not take into account the price growth we have seen in 2024 thus far.

So, what does all of this mean going forward? We typically will reach our seasonal peak in prices in May or June. This phenomenon is a result of price growth decelerating due to inventory growth over the second half of the year. The rate of price growth will slow as more homes come to market; this is not price depreciation, but deceleration. Homeowners are standing on the shoulders of immense growth over the last 5 months and need to keep that and the long-term growth in perspective. If the rapid rate of price growth continued, it would not be sustainable and would create market volatility. Moderation and price stability benefit the overall health of the real estate market and economy over prolonged extreme price increases.

As we head into the summer months, I anticipate more selection for buyers which will temper price growth. Sellers will enjoy the gains that have been made over the last 2 years and so far in 2024, not to mention the last 10 years. The recent increase in inventory has given buyers more opportunities to make a move. The constriction we started the year off with was restrictive for some buyers to enter the market and we see that changing. Buyers who were discouraged earlier this year may consider re-engaging so they can benefit from the increase in selection.

As far as interest rates, experts predict they will slowly recede and be dependent on inflation calming which has been stubborn. Affordability has been a dance of balancing home prices, rates, and monthly payments. Some buyers have been creative with rate buy-downs to manage the monthly expense and some are purchasing based on today's rates with the hope of re-financing in the future. A sound piece of advice for buyers is to buy based on payment, not on the peak of what you can qualify for. Your monthly output needs to be sustainable and somewhat comfortable to make sense.

Real estate is an investment and a key component to building wealth. While it might seem scary or risky to make a purchase, the long-term gains are favorable in comparison to other investment vehicles. Plus, you get to live in your home, love your home, and make memories in your home while it creates a nest egg. Life changes create reasons to move. Assessing where you want to be and how it matches your lifestyle is where the decision-making starts. If you have experienced some life changes and are curious about how the market relates to your housing goals, please reach out. It is my goal to help keep my clients informed and empower strong decisions.

Buying Homes • Economic Forecasts & Trends • Selling Homes • May 15, 2024

Spring Market Highs: Demand, Rates & Equity

by Jill Langer

As we sit almost five months into 2024 in the middle of the spring market and I reflect on how the year is going, I am grateful, amazed, and locked in on the stats. You see, the last four years since the start of the pandemic have been an eventful and wild ride. 2020 saw a brief halt in sales when the shelter-in-place order went into effect, and once protocols were established to make real estate essential, the market started to take off. Many people utilized that time to re-evaluate where they wanted to live, whether that meant in a different state, from an urban location to a rural setting, or from a shared condo building to a single-family residential house.

This re-organization of where people wanted to live was coupled with historically low interest rates that hovered in the 3% range, leading to the highest number of recorded closed sales in 2020 and 2021 that we had seen in over a decade. All of this activity took place while inflation was on a stubborn uphill trajectory, causing the Fed to make some big rate increases to help combat consumer spending in 2022.

Rates increased by three percentage points from February 2022 (3.9%) to October 2022 (7%) and have remained in that higher range ever since. This quickly put a stall on buyer demand as monthly payments quickly became more expensive, putting downward pressure on affordability. This caused a correction in prices from the peak in spring 2022 to the first quarter of 2023 when prices bottomed out.

In King County, prices corrected from the peak to the bottom by 20%, and in Snohomish County, 17%. Prices started to bounce back from the bottoming out in the spring of 2023, and since then have increased 24% in King County and 13% in Snohomish County. While prices were stabilizing and then growing from Q1 2023 until now, interest rates have hovered in the 7% range. Buyer demand slowly regained its footing throughout 2023 and when the calendar turned to 2024, buyers started to come out in force despite the interest rates never returning to historic lows. It is safe to say that many buyers have accepted the higher interest rates as the new normal.

In this new normal, monthly payments are high as prices remain stable and have had extreme appreciation since the start of 2024. In King County, prices have grown by 16% from Dec 2023 to April 2024 and in Snohomish County by 14%. At the end of 2023, it was reported that the average homeowner had at least 60% home equity in King County and 57.5% in Snohomish County. That equity measurement doesn’t include the price growth we have experienced so far in 2024.

Rates have remained stubborn due to inflation still being a challenge. Inflation has tempered, but not to the 2% year-over-year level the Fed wants to see before easing interest rates. The Fed met at the beginning of May and indicated that rates will slowly come down in the second half of 2024 and into 2025 if inflation rates reach that 2% year-over-year mark. That will be a key marker to track as the Fed Chairman, Jerome Powell has made it clear that will be what it takes to cause rate relief.

Some buyers may wait to enter the market once rates have eased, and many are jumping in now as they are happy to secure today’s prices. Demand will only increase when rates improve, which should most likely cause additional price growth. Creative financing options such as interest rate buy-downs and ARM (Adjustable-Rate Mortgage) loans have helped buyers manage their monthly payments when making a purchase. The key factor I help the buyers I serve stay focused on, is the affordability of their monthly payments.

This focus has proven to be the most productive and strategic number to stay connected with to help a buyer remain confident and effective. Buyers often make adjustments in price point, features, and/or location to match up a manageable monthly payment with the home they buy. Analyzing the trends, stats, and values from one area to the next is an exercise that helps buyers gain clarity. We often say that when a buyer finds a home that matches 75-85% of their criteria they are in striking distance to make an offer. In a seller’s market like this, buyers must make compromises to succeed.

A bright light for buyers is that we have seen a recent jump in new listings. There were 30% more new listings in April 2024 over April 2023 in King County and 32% more in Snohomish County. With seller equity so high and pent-up seller motivation boiling over, we are finally starting to see additional inventory come to market. We are still experiencing tight inventory, but it is growing. This is providing some additional selection and should hopefully continue throughout 2024.

Continuing my daily, weekly, monthly, and annual commitment to studying the market is a benefit to the clients I serve. Understanding how inventory, rates, and prices all relate to each other helps me provide valuable insights for clients so they can appropriately strategize when they want to enter the market. These trends vary from one city to the next, in different price points and property types. If you are curious about how today’s trends relate to your real estate goals, please reach out. Further, if you know someone who needs my assistance, please direct them my way. It is my goal to help keep my clients well-informed to empower strong decisions.

Since 1984, Windermere associates have dedicated a day of work to complete neighborhood improvement projects as part of Windermere’s Community Service Day. After all, real estate is rooted in our communities. And an investment in our neighborhoods gives us all a better place to call home.

Our annual Community Service Day is coming up fast. On June 7th, my whole office will spend the day working to put fresh produce on the tables of local families who need a little help. We will work with the Snohomish Garden Club, planting over a half-acre of veggies and fruits that will be harvested into thousands of pounds of fresh produce over the summer and into the fall.

If you or someone you know has any vegetable starts or seeds you’d like to donate, please reach out!

Economic Forecasts & Trends • April 24, 2024

Three Hot Buttons in Real Estate

by Jill Langer

The real estate industry has been in the news a bit lately. Not so much about the trends and home values. More so about class action lawsuits, which have stolen a lot of attention away from the positive activity that is happening in our market. While the lawsuit is an important story to track, one critical item to mention is that WA has already complied with the majority of what the proposed lawsuit settlement is suggesting.

New laws went into place on Jan 1, 2024, that complemented changes our MLS started making in 2019. We have been smooth sailing for almost four months bringing heightened transparency to every real estate transaction we do with new laws, forms, and procedures. The national hype has caused a stir, so before I get into the three important trends, I wanted to let you know that WA is ahead of the curve. If you have any questions on how to distinguish the national headlines from the local truth, please don’t hesitate to contact me.

Inflation has been a hot topic for a few years now. We all know the cost of groceries, gas, and everyday items are higher than they were just a few years ago. This caused interest rates to increase in spring 2022, hovering between 6.25-7.5% over the last 2 years. Despite these rate increases we have watched the real estate market and home values recover and start to appreciate again. The median price in Snohomish County is up 5% in Q1 2024 over Q1 2023 and up 13% in King County. The spring market has sprung!

The lending costs to purchase a home have increased and it has limited and sidelined some buyers. However, many are finding ways to make it work and demand is strong with the return of multiple offers and price escalations on well-priced and presented listings. If you are waiting for rates to come down, also pay attention to prices as it is a delicate balance of affordability. The option to re-finance your interest rate down the road if rates dip will decrease your monthly payment while keeping your loan balance fixed.

Homeowners Insurance has also been hit hard by inflation and a heightened amount of claims over the last four years. Natural disasters such as fires, floods, and earthquakes have depleted many insurance companies’ reserves causing them to re-calibrate their rates across the board to keep up. You may have seen an increase in your rate. With home values and goods on the rise, it is important that you have your home and belongings adequately insured.

I’d suggest you check in with your carrier to make sure they have your home and your belongings properly valued. With market dynamics quickly shifting I’d caution you from grabbing your home value from an online estimator such as Zillow or your insurer’s automated program. Those algorithms are most often inaccurate which could leave you under-insured. I’m happy to help you assess the current value of your home in today’s market so you can properly calibrate your homeowner’s insurance in this volatile insurance environment.

According to ATTOM data, 67.4% of homeowners in the U.S. have at least 50% home equity, with 38.7% owning their homes free and clear. Locally, the average homeowner in Snohomish County has 57.5% home equity, and in King County 60%. Those local figures were reported in Q4 2023 and we have seen a jump in values since then indicating that those figures are now higher.

The point is that home equity is strong for many homeowners, which allows homeowners who are looking to make a move to use creative options to make those moves smooth. We are in a competitive seller’s market so trying to purchase a home contingent on the sale of your current home is a challenging feat. At Windermere, we have the awesome Windermere Bridge Loan Program (WBLP) that helps people tap into their equity to make their next purchase instead of having to sell their homes first.

The WBLP does not require an appraisal like a Home Equity Line of Credit (HELOC), is quickly approved, and does not require monthly payments. The loan balance and any accrued interest are paid off when the collateral property is sold, allowing buyers who are also sellers to easily utilize their equity and not have to move twice. I’ve even seen the collateral property close first if strategized properly. This eliminates having to fund the Bridge Loan altogether, yet it was used to make that buyer’s offer competitive and helped them win the house for their next chapter in life.

One of the biggest tasks I assist clients with is preparing their homes for the market. How a home comes to market can make a huge difference in the bottom line. Remedying deferred maintenance, making home improvements, remodeling, clean-up, purging, and merchandising can all contribute to a seller making more money on closing day. Creating a punch list of items that will create the most favorable return is a service I provide my clients.

Identifying the available funds, hiring service providers, and just getting started can cause overwhelm and sometimes paralysis. As stated above, many homeowners have amazing home equity. Leveraging home equity can help a homeowner complete the projects that will make a better profit! At Windermere, we have the Windermere Ready Program (WRP) which allows home sellers to tap into their equity before coming to market to get their homes market-ready.

Like the WBLP, the WRP is quickly approved, does not require an appraisal, and monthly payments are not required. We figure out which projects we want to focus on, gather bids from trusted contractors, create a budget, and apply. The funds are provided within 2 weeks and we can line up the work and start the transformation immediately.

I’ve seen simple flooring replacements and fresh paint transform a house. We’ve even done a full kitchen remodel to completely change up the vibe. The projects that warm my heart are helping elderly sellers sort through years of living and clearing the space for potential buyers to envision themselves in the home. Did you know that there are companies that help people sort and purge their belongings, so they are prepared to move on to their next chapter? Lastly, we can solve property issues with the WRP! Earlier this year, we discovered a failed septic system on a listing and we were able to utilize the WRP to tackle that fix and made it to the closing table at top dollar.

Markets are fast-paced and dynamic! Helping clients navigate the environment to protect their investment, strategize financing, and/or prepare their property are tasks that I take very seriously. Even if it is as simple or complicated as clearing a house for the market. Whether we are evaluating these items for an immediate move or we are planning out years in the future providing this care matters to me! Please reach out if you or someone you know are curious about how the trends relate to their situation. It is my mission to help keep my clients well informed to empower strong decisions.

Shred Day & Food Drive was a Huge Success!

Big thank you to everyone who came by to utilize our free shredding services and drop off food or cash donations for the Volunteers of America Western Washington food banks!

We filled two trucks of shredding and collected over 1,700 pounds of food and $2,493 which will go to our neighbors in need. Thank you for your generosity!

Next up, is our Summer Food Drive that will coincide with our Annual Windermere Community Service Day where we will volunteer for a day with the Snohomish Garden Club planting fruits and veggies for the VOA Food Banks.

Events • Selling Homes • March 8, 2024

Spring Arrives Early

by Jill Langer

When Punxsutawney Phill climbed up to his perch at Gobblers Knob on February 2nd and did not see his shadow, an early spring was predicted. Little did we know that he would be referring to the real estate market! As we experience temps in the 30s and scattered snow showers in the first week of March, we are also experiencing a white-hot seller’s market.

We started 2024 with the lowest amount of inventory we have seen since the beginning of 2022. Over the last 2 years, we have experienced a correction and recovery in the real estate market due to inflation and interest rates. The market peaked in April 2022 in Snohomish County when the median price reached $830,000, and in May 2022 in King County when prices reached $1M. Prices started to correct when rates crested 5% in April 2022 and then found themselves squarely at 7% by October 2022. This rapid 2-point increase put downward pressure on prices and stalled buyer and seller demand.

Loan servicing affordability caused prices to bottom out in Snohomish County in February 2023 at $685,000, and in King County in January 2023 at $800,000. The bulk of the correction took place in 2022, and 2023 was the year of resetting price stability and the return of appreciation. What was fascinating about this growth is that interest rates still averaged around 7% throughout 2023.

In Snohomish County prices were up 6% in February 2024 over February 2023, and in King County they were up 16%, and rates are still hanging around 7%. Since the first of the year, it was like a switch went off for many buyers and demand flooded the market. The feedback that I am hearing is that many buyers have adapted to the new normal of interest rates and will refinance when rates come down; but they want to buy now. The increase in buyer demand coupled with the lowest inventory we’ve seen in two years has caused a flurry of multiple offers, price escalations, and an early start to the spring market.

Now that we are certain buyers are back, the next effective change in the market would be the addition of more inventory. This would meet the demand and create more movement in the market. We are well aware that many homeowners are reluctant to make a move because they don’t want to give up their low rate/payment. We also know that because of this, many would-be sellers are living in homes that do not match their needs and wants.

This pent-up seller demand is starting to come to market, but more is needed. The average level of equity in Snohomish County was reported at the end of 2023 at 57.5% and in King County at 60%. With the recent uptick in median price, this level is growing, which will allow many sellers to move their equity into a home that better fits their lifestyle. This growth should also be supported by interest rates slowly coming down throughout 2024.

The latest predictions from the Home Price Expectation Survey (HPES) have rates decreasing to 6% by the end of 2024 which will only add to buyer demand, highlighting the need for more listings. If you are a homeowner and your house is not matching your life, now might be the time to consider a move! What has already transpired in the first 2 months of 2024 has been encouraging for seller gains.

Writing a playbook and creating a strategy to make these transitions requires a well-curated plan. It is my mission and passion to help clients make these moves. There can be challenges to overcome along the way, such as does one sell or buy first and how to do you get your home ready for market. Tools such as the Windermere Bridge Loan, The Windermere Ready Loan, and other alternative financing have helped make these dreams become a reality. That is why hiring a professional who is well-versed in market knowledge, creative planning, expert marketing, and keen negotiations is key!

Please reach out if you or someone you know is curious about the market and how it relates to your financial and lifestyle goals. Real estate reflects life and if there is one constant in life, it is change! Helping people match their homes to their lives is one of the most rewarding aspects of my job. The adjustments over the past two years got in the way of many people making those matches. As the market and consumer confidence continue to open up, don’t let this opportunity pass you by. It is my goal to help keep my clients well-informed and empower strong decisions whether that works for you now or sometime down the road. Let’s talk it out, dig deep into the trends, and start your strategic planning with no pressure.

You’re invited to our annual Paper Shredding Event & Food Drive. We partner with Confidential Data Disposal (CDDshred.com) to provide a safe, eco-friendly way to reduce your paper trail and help prevent identity theft.

Saturday, April 13th, 10AM to 2PM (or until the trucks are full)
4211 Alderwood Mall Blvd, Lynnwood
Bring your sensitive documents to be professionally destroyed on-site. Limit 10 file boxes per visitor.

This is a paper-only event. No x-rays, electronics, recyclables, or any other materials.

We will also be collecting non-perishable food and cash donations to benefit Volunteers of America Western Washington food banks. Donations are not required, but are appreciated.

Hope to see you there!

Buying Homes • Selling Homes • March 1, 2024

New Year, New Laws! What This Means for Consumers Moving Forward.

by Jill Langer

Effective January 1, 2024, the statute in Washington that governs real estate brokerage relationships (RCW 18.86) otherwise known as the “Agency Law” – was significantly revised. The revisions modernize the 25-year-old law, provide additional transparency and consumer protections, and acknowledge the importance of buyer representation.

KEY REVISIONS
For decades, real estate brokerage firms were only required to enter into written agency agreements with sellers, not buyers. The Agency Law now requires firms to enter into a written “brokerage services agreement” (agency agreements) with any party the firm represents, both sellers and buyers.

This change is to ensure that buyers (in addition to sellers) clearly understand the terms of the firm’s representation and compensation, much like a listing agreement. The new agreements are called Buyer Brokerage Service Agreements (BBSA) and they are to be initiated in writing prior to or upon rendering real estate brokerage services, such as showing homes.

The services agreement with buyers must include:

The term of the agreement (with a default term of 60 days and an option for a longer term);
The name of the broker appointed to be the buyer’s agent;
Whether the agency relationship is exclusive or non-exclusive;
Whether the buyer consents to the individual broker representing both the buyer and the seller in the same transaction (referred to as “limited dual agency”);
Whether the buyer consents to the broker’s designated broker/managing broker’s limited dual agency;
The amount the firm will be compensated and who will pay the compensation; and
Any other agreements between the parties.

Clearly communicated expectations between the buyer and their broker are an advantage to the buyer. Every party deserves representation and it has been a long time coming for the law to pay as much attention to buyers as it has to sellers. Having competent representation on both sides of a transaction makes the process go smoother and reduces liability during and after the transaction. After all, everyone deserves competent representation during one of the biggest transactions they will partake in.

These changes are intended to elevate transparency in agency relationships for the consumer and encourage more detailed conversations about representation, compensation, and the overall home buying process with the broker they chose to align with. This will also cause sellers to gain a better understanding of how buyer brokers are compensated.

What a seller chooses to offer a buyer broker could have a positive effect on their return. The only way a buyer can compensate their broker is with liquid cash or negotiating with the seller within the purchase and sale agreement when their BBSA doesn’t match the seller-offered compensation for the buyer broker. If their BBSA matches what the seller is offering in the listing for the buyer broker compensation, then the buyer does not have to rely on the prior.

Compensation offered in a listing that mirrors the BBSA will allow a buyer to solely focus on the offer price of the home as they will not have to calculate the math of the compensation against their down-payment funds, as lending regulations do not allow for broker compensation to be financed. If a buyer has to set aside funds for compensation it would likely reduce their down payment amount which would increase their monthly payment and make them more price sensitive. It will also eliminate the compounding effect of compensation and the offer price being simultaneously negotiated.

I have always run my business in a very detailed fashion and pride myself on having a deep knowledge of the laws and the forms, and these changes are paramount. As an independent contractor affiliated with Windermere Real Estate, the leading company in our region, it is up to me to dig into the research and gain understanding to help guide my clients through these advancements in a compliant and service-oriented fashion. There are even aspects of these new laws that I have been practicing before the changes, as transparency is a cornerstone of my value to my clients.

These are the biggest changes we have seen in our industry in over two decades. Be aware that not all brokers will adapt as quickly or accurately. We are already seeing a gross difference between the informed and not informed; who one chooses to work with matters! If you have any further questions about how these new laws affect you, please reach out. If you are considering a move, I am committed to navigating the process with the utmost compliance and my client’s success at the forefront.

REVISED PAMPHLET: The pamphlet entitled “Real Estate Brokerage in Washington” provides an overview of the revised Agency Law.
REVISED AGENCY LAW: Substitute Senate Bill 5191 sets forth the revised Agency Law in its entirety.