No Relief In Heat, But Relief For Buyers

by Scott Penington

Last week I heard a quote from Mike Loftin of the Urban Institute that resonated with me.

“We need to stop seeing housing as a reward for financial success and instead see it as a critical tool that can facilitate financial success.” Homeownership as an investment has always been a long-term hold in order for it to make sound financial sense. In fact, according to Gallup 41% of

Americans see Real Estate as the best investment over stocks, gold, saving account interest, and bonds.

Since the start of 2021, we have seen the median price increase quite a bit in our region. Inventory has remained tight and interest rates remain historically low. This has contributed to the increase in prices, along with the thriving tech industry in the Greater Seattle area. I’ve been working on the front lines of one of the most intense markets in history and I can tell you first hand that buyers are tired! Here is what I’d like to share though – they shouldn’t give up!!

Month-to-date new listings are up 12% over May in Snohomish County and 8% in King County. This has helped reduce multiple offers and I’m starting to see some homes get just one offer. This is starting to level out the brisk price appreciation we saw from January through May. In Q1, almost every listing was getting multiple offers and bid up. Now, I’m seeing new listings benefit from the price growth since January and starting to level out in regards to additional price growth as we head into the second half of 2021. Beware that “cream puff” listings are still going bonkers. Buyers with a fixed budget may want to avoid those and be open to adjusting their search or being satisfied with 75% of their wish list. As we head into the second half of 2021, I predict we will start to see a tempering in price growth as the froth spills over the top of the cup of this market.

This will provide opportunities for buyers who put themselves on the sidelines or are just entering the market to successfully find a home. Interest rates remain incredible, and one must take into consideration the long-term savings that a low rate provides for your monthly payment. The average homeowner owns their home for 10 years in the U.S. Securing a low rate and utilizing that as a financial tool to help create wealth over the time of owning your home is a critical element for your financial success.

For example, two years ago rates were nearly a point higher, which would cost a buyer roughly $250 more per month for a $500,000 mortgage. Over ten years that is approximately a $30,000 savings in monthly cash flow. Now, look at the 10-year price growth in our area. In King County prices have grown by 111% over the last ten years and 127% in Snohomish County. Interest rate savings along with long-term price appreciation underscores why 41% of American’s think Real Estate is the best financial investment.

More so, I think this analysis typifies the point of the quote above. Real Estate is a tool to help build wealth, not an instant lottery ticket. The financial reward doesn’t happen when you sign your closing papers, it happens when you sell. You must make the purchase in order to sell in the future to reap the long-term reward. Real Estate is also where you live; it’s where you take shelter and create memories. It is one-part savings account and one-part safe haven. Both aspects should always be taken into consideration. Lifestyle changes lead most people to make a purchase; the byproduct is matching your home to your lifestyle needs and building wealth over time.

I know it’s been a rough go for buyers this year and the media is reporting dated news as they are often using closed data that is a month old. Please use me as a resource, as I can provide real-time data and help you analyze the best decision for you and your family. Also, Matthew Gardener, Windermere’s Chief Economist recently shared his thoughts on price appreciation. Check out the video below to hear his insights. In the meantime, please know it is always my goal to help keep my clients well informed in order to empower strong decisions. I pay close attention and urge you if you are considering a purchase to seize the day.

My office is collecting donations for local food banks! You can donate to our GoFundMe or drop off donations at my office during the month of July.

All donations will benefit The Volunteers of America Western Washington food banks. Let’s come together to help our neighbors in need!

Donate here or get directions to my office here.

Community Info • June 28, 2021

Fireworks & Events on July 4th

by Scott Penington

4^th of July: Fireworks & Events Around the Sound

In-person events are back! As we transition back to “normal” there are several local events and celebrations for the whole family to enjoy this 4^th of July! Some cities were not able to pull off such large events given the timing of opening and the circumstances surrounding the pandemic, but there are some great options in both Snohomish and King counties! Check it out:

Edmonds

https://edmondschamber.com/community_events/main_events/an_edmonds_kind_of_fourth/

An “Edmonds Kind of 4th” is back!

– Beat Brackett 5k race (registrations online only)

– Main Street parade

– Fireworks at Civic Field

Everett

https://www.visiteverett.com/1440/Fourth-of-July

Everett’s iconic Thunder on the Bay fireworks show returns to Legion Memorial Park.

Also, Everett’s first in-person concert since COVID: Rock the Fourth @ Boxcar Park (21+) featuring: Nite Wave, Petty Thief & Road Trip.

Marysville

https://marysvillewa.gov/1009/Marysville-4th-of-July

Marysville’s third annual celebration will feature festive photo opportunities, food trucks and fireworks.

Monroe

https://evergreenspeedway.com/events/july-4th-2021-usa-birthday-bash-at-evergreen/

Rain or shine, Monroe’s USA Birthday Bash will feature a Demo Derby and Fireworks!

Bellevue

https://www.bellevuedowntown.com/events/family-4th

Bellevue Family 4^th will look a little different this year. There will not be any entertainment or other activities, but there will be a live firework show downtown.

Tacoma

http://freedomfair.com/

Tacoma’s Freedom Fair & Air Show will feature military and classic planes. It is a drive-in only event, so check the website for parking spot reservations.

Seattle

Seattle Seafair is NOT hosting an in-person Fourth of July fireworks show this year. The majority of the Seattle Seafair headline events will be virtual for the second year in a row. Despite the lifting of restrictions, there was not enough time to produce these very large events. More info: Hybrid Seafair Summer 4th 2021

However, instead of the traditional Fourth of July Fireworks show over Lake Union, Seafair will produce an hour-long TV special featuring past fireworks shows. The show will air on KING 5 at 10 p.m. More info: Seafair’s Fourth of July fireworks in Seattle, hydroplane races to be virtual | king5.com

Community Info • Newsletters • June 28, 2021

Food Drive!

by Scott Penington

On June 11th, my office spent our annual Windermere Community Service Day with the Snohomish Garden Club constructing trellises, weeding and staking beds, and planting and labeling a half-acre of produce! We also assembled a pole shed, built out a composting area and a rock bench on the property for the Garden Club to use throughout the year. The Snohomish Garden Club will harvest the half-acre, which will yield close to 10,000 pounds of fresh produce to be donated to local food banks in Snohomish County.

My office is also conducting a Food Drive in the month of July via The Windermere Foundation, in tandem with this planting project with a goal to donate $5,000 to the Volunteers of America Food Banks across Snohomish County. You can donate to our GoFundMe, or drop off non-perishable donations at my office through the month of July.
For more information on these great organizations and how you can lend a hand, please visit:

– VOAww.org/FoodBank

– SnohomishGardenClub.com

Windermere’s Community Service Day was established in 1984 to offer agents and staff a chance to volunteer a workday to give back to the neighborhoods in which they live and work.

Quarterly Reports & Local Market Trends/Analysis • May 26, 2021

Year-to-Date Real Estate Recap

by Scott Penington

Here we are, one-third into 2021, and boy what a ride it has been so far. We all know that 2020 was a unique year full of challenges and change. The pandemic made us pause and reevaluate many aspects of our lives including where and how we live. The impact of the pandemic on the real estate market was significant, as people started to shift their housing priorities during the second half of 2020. Then the calendar turned to 2021 and the frenzy of all market frenzies began.

I had the misguided notion that closing out 2020 was going lead to more normalcy in our industry as we all yearned to move on to the new year. Boy, was I shocked as Q1 unfolded; 2021 had its own agenda in store! What the new year brought, was its own set of drama as the economy headed towards recovery and the vaccine emerged. The continued historically low interest rates have fueled the housing pivots being made across our region and our country. Lifestyle moves have driven demand, but interest rates along with hearty equity levels have helped financially enable these life-changing moves. Interest rates have hovered around 3% since the beginning of the year. Additionally, 38% of all homeowners own their homes free and clear, and over 50% of homeowners have up to 50% equity.

The work-from-home phenomenon (either permanent or hybrid) has re-shaped the housing market, driving many people to consider the suburbs or rural locations. Eliminating the daily commute into urban work centers has created flexibility for homeowners to live farther away from work and enjoy larger spaces and more affordable housing in comparison to cities like Seattle and Bellevue. In fact, the median home price in Snohomish County is up 15% complete year-over-year in comparison to King County at 10%. This is proof that suburban and rural housing is on the rise.

Demand (defined above) has helped to push price appreciation levels along with a shortage in available inventory. We have functioned in a lower-than-normal inventory market for over six years now. Zero to three months of inventory is defined as a seller’s market, three to six months a balanced market, and over six months a buyer’s market. This figure is established by estimating how long it would take to sell out of homes based on the closing or pending rate if no new homes came to market. In the second half of 2018, we eclipsed three months briefly but have mainly existed under three months for quite a while. In 2021, we have not breached one month, and in many submarkets have only had up to two weeks of available inventory.

2020 left a void of available inventory because we were in quarantine and many people were not comfortable opening their homes up to strangers. Plus, some people needed to pause and see how this was all going to shake out for them. I think the turn of the new year coupled with the vaccine has empowered people to make the moves they have been considering while they won the wait at home. We have a smattering of generations at the helm all wanting to make moves for different reasons. First-time home buyers, retirees, and move-up buyers are all hoping to take advantage of low debt service and pivot to a home with a better fit for their lifestyle goals.

Lifestyle demands, low rates, scarce inventory, and formidable equity have created a very competitive market. Large down payments due to moving equity from one home to the next, along with strict lending requirements have propped up the stability of the housing market. I am often asked if we are headed towards a housing bubble because of the rate of home appreciation, but it is important to understand that home values are supported by strong loan-to-value ratios and scrutinized lending. Unlike the Great Recession of 2008, when predatory lending (that involved low to no down payments and undocumented loans) formed an unstable foundation that eventually crumbled.

The biggest challenge I see in the housing market in our region is affordability. It is expensive to live in the Greater Seattle area, plain and simple. The work-from-home option has provided flexibility to live farther out, which has put upward pressure on prices everywhere. We have had a re-organization of where people live and it has been surprising which communities have become attractive and in-demand. I predict at some point this will settle down as these newly refined housing needs find their place. Additionally, May through August is when we seasonally see more homes come to market. This should hopefully make it a bit easier for buyers to secure a home, and help soften the ramp-up on prices. This has already started to show itself over the last few weeks.

Financial indicators in our region are positive. Only 3.6% of homes in Washington state are in mortgage forbearance (a fraction of where we were at a year ago), tech jobs continue to drive employment, and the overall local economy and home equity are very strong. Your home is intended to be a long-term investment. If price appreciation starts to soften as we climb out of our inventory deficit this will be more sustainable for affordability. Buyers will still be on the road to building wealth with some of the lowest interest rates ever, and we must remember that homeownership is not just an investment but where we live and create memories. Sellers will continue to enjoy large payoffs as long-term equity growth is abundant. Keeping a grounded perspective will be key as the market twists and turns from the extremes. If there is anything I can guarantee it is that the market is always changing and it can change fast.

If you are curious about how today’s market relates to your lifestyle and financial goals, please reach out. I’d love to discuss your needs, curiosities, and concerns as this has been an intense and eventful start to 2021. It is always my goal to help keep my clients informed and empower strong decisions.

June 11th is our annual Windermere Community Service Day; our office will be volunteering alongside the Snohomish Garden Club helping plant nearly an acre of fruits and vegetables that will be harvested for local food banks. This will be our 5th year working on this project that yields thousands of pounds of fresh produce for the food insecure across our region.

Windermere Community Service Day is a 40-year long tradition of giving back to the communities in which we serve, it is a valued part of our Windermere culture. If you would like to donate to help us provide additional veggie starts and supplies, please reach out. I will report back on our project in my next newsletter, let the planting begin!

Newsletters • May 5, 2021

Newsletter – Economy & Housing Market Update

by Scott Penington

Matthew Gardner is the Chief Economist at Windermere and a sought-after expert on real estate, both locally and across the country. Every quarter, Matthew breaks down the real estate market by region and provides the Gardner Report; you can read this quarter’s full report here. Additionally, he also provides a monthly video report touching on the latest trends and hot topics concerning the real estate market. Click on the image below to view his latest Monday with Matthew video.

If you have any questions or curiosity about the current real estate market that you would like to discuss, please reach out. Are you curious about the value of your home, are you contemplating a move, or considering a new purchase? I can help! It is always my goal to help empower my clients to make strong financial decisions and to help them understand how real estate can positively affect their lifestyle.

Thank you to everyone who came through our shredding event this year! The results from the food drive were overwhelming. Through all of your generous giving, we collected 2,290 pounds of food and $7,080 in cash! Concern For Neighbors Food Bank were thrilled to pick up so much tangible love and help. They will use the funds to purchase food to provide to the community in need over the next several weeks.

If you’d like to donate, please visit their website (above) to see their COVID-19 schedule and how you can help.

Quarterly Reports & Local Market Trends/Analysis • April 20, 2021

South King County Q1 2021 Quarterly Report

by Scott Penington

Q1 2021 signified a measurable shift in the real estate market. Demand since the first of the year has been brisk, proving Q1 2021 to be one of the most impactful times in market history! Interest rates remain historically low, helping to offset the cost of price appreciation. Rates and the lucrative tech-influenced job market have helped pending sales outpace new listings.

Additionally, the convergence of Millennials, Gen Xers, and Baby Boomers making big lifestyle moves due to the low cost of debt service, work-from-home options, and formidable equity has the market frothy. Nationally, 30% of all homeowners have over 50% equity in their home, leading people to make moves with large down payments.

Days on market were swift and price gains were well above average in Q1. As we head into Q2, we are confident the months ahead will provide traditional inventory gains providing buyers more selection. We would welcome a tempering in price growth as it has been abundant and is affecting affordability. If you or someone you know is curious about how today’s real estate market relates to your financial and lifestyle goals, please reach out. It is my mission to help keep my clients informed and empower strong decisions.