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!

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.

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.

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data. With over 30 years of professional experience, he provides valuable insights into the real estate industry and housing market, including quarterly regional reports, monthly videos, and timely analysis of the latest trends. Below the Top 10, you will find information inviting you to the live, virtual Economic Forecast Event I am hosting in January. Please reach out if you would like to attend.

1. Still no housing bubble
This was number one on my list last year and, so far, my forecast was spot on. The reason why I’m calling it out again is because the market performed better in 2023 than I expected. Continued price growth, combined with significantly higher mortgage rates, might suggest to some that the market will implode in 2024, but I find this implausible.

2. Mortgage rates will drop, but not quickly
The U.S. economy has been remarkably resilient, which has led the Federal Reserve to indicate that they will keep mortgage rates higher for longer to tame inflation. But data shows inflation and the broader economy are starting to slow, which should allow mortgage rates to ease in 2024. That said, I think rates will only fall to around 6% by the end of the year.

3. Listing activity will rise modestly
Although I expect a modest increase in listing activity in 2024, many homeowners will be hesitant to sell and lose their current mortgage rate. The latest data shows 80% of mortgaged homeowners in the U.S. have rates at or below 5%. Although they may not be inclined to sell right now, when rates fall to within 1.5% of their current rate, some will be motivated to move.

4. Home prices will rise, but not much
While many forecasters said home prices would fall in 2023, that was not the case, as the lack of inventory propped up home values. Given that it’s unlikely that there will be a significant increase in the number of homes for sale, I don’t expect prices to drop in 2024. However, growth will be a very modest 1%, which is the lowest pace seen for many years, but growth all the same.

5. Home values in markets that crashed will recover
During the pandemic, there were a number of more affordable markets across the country that experienced significant price increases, followed by price declines post-pandemic. I expected home prices in those areas to take longer to recover than the rest of the nation, but I’m surprised by how quickly they have started to grow, with most markets having either matched their historic highs or getting close to it – even in the face of very high borrowing costs. In 2024, I expect prices to match or exceed their 2022 highs in the vast majority of metro areas across the country.

6. New construction will gain market share
Although new construction remains tepid, builders are benefiting from the lack of supply in the resale market and are taking a greater share of listings. While this might sound like a positive for builders, it’s coming at a cost through lower list prices and increased incentives such as mortgage rate buy-downs. Although material costs have softened, it will remain very hard for builders to deliver enough housing to meet the demand.

7. Housing affordability will get worse
With home prices continuing to rise and the pace of borrowing costs far exceeding income growth, affordability will likely erode further in 2024. For affordability to improve, it would require either a significant drop in home values, a significant drop in mortgage rates, a significant increase in household incomes, or some combination of the three. But I’m afraid this is very unlikely. First-time home buyers will be the hardest hit by this continued lack of affordable housing.

8. Government needs to continue taking housing seriously
The government has started to take housing and affordability more seriously, with several states already having adopted new land use policies aimed at releasing developable land. In 2024, I hope cities and counties will continue to ease their restrictive land use policies. I also hope they’ll continue to streamline the permitting process and reduce the fees that are charged to builders, as these costs are passed directly onto the home buyer, which further impacts affordability.

9. Foreclosure activity won’t impact the market
Many expected that the end of forbearance would bring a veritable tsunami of homes to market, but that didn’t happen. At its peak, almost 1-in-10 homes in America were in the program, but that has fallen to below 1%. That said, foreclosure starts have picked up, but still remain well below pre-pandemic levels. Look for delinquency levels to continue rising in 2024, but they will only be returning to the long-term average and are not a cause for concern.

10. Sales will rise but remain the lowest in 15 years
2023 will likely be remembered as the year when home sales were the lowest since the housing bubble burst in 2008. I expect the number of homes for sale to improve modestly in 2024 which, combined with mortgage rates trending lower, should result in about 4.4 million home sales. Ultimately though, demand exceeding supply will mean that sellers will still have the upper hand.