On April 23rd the Washington State Legislature adjourned after passing 10 new bills that will affect housing. Some of the bills are geared toward creating more transparency around brokerage transactions, some are intended to institute more opportunities for building density to provide more affordable housing, and some are more regulatory to help guide and ease the permitting process for building and development.

The bills that will improve real estate brokerage services are centered in transparency and cleaning up some laws that do not trend with market conditions. As of January 1, 2024, all real estate brokers will be required to engage in a buyer service agreement with the buyers they work with, similar to the requirement of having a listing agreement with a seller (SB 5191). These service agreements, better known as Buyer Agency Agreements (BAA) will address compensation, exclusivity, the duration of the relationship, and establish written consent for dual agency. This will create clearly defined broker representation for buyers from the onset of the relationship.

Short-term seller rent-backs after closing are now carved out of the landlord-tenant act if the rent-back is less than 90 days (SHB 1070). This will ease the angst involved with tenant rights, as the goal of a rent-back is to create a convenient transitionary period that intends for the seller to vacate, minimizing their tenant rights. This change aligns with the trends in the marketplace and makes this solution-based approach less tenuous. Lifetime listing agreements were also shortened (SSB 5399).

Washington State ranks last in the number of housing units per family nationally and officials project that the state will need roughly one million new homes by 2044. Many of the bills that passed last month will create policies to help provide more housing units and affordability. Matthew Gardner, Windermere’s Chief Economist has been speaking about our state’s lack of affordability for years and shares his thoughts here on the HB 1110 which will allow for the development of middle housing.

HB 1110, SB 5258, HB 1042, and HB 1337 were all created to create more housing units. HB 1110 addresses middle housing, SB 5258 modifies several laws relating to the construction of condos and townhomes, HB 1042 enables the creation of housing in existing, underutilized buildings, and HB 1337 will make it easier to build Accessory Dwelling Units (ADUs) in urban growth areas.

SB 5412, SB 5290, and HB 1293 are intended to ease the permitting and design review processes when applying for a building permit. These should help streamline and accelerate getting from point A to point B on a building project. With the goal of providing more housing units, the backend systems needed to be reevaluated to meet these goals in a timely fashion while adhering to important guidelines and procedures.

Lastly, HB 1474 will increase the document recording fees by $100 to fund a new state program to provide down payment and closing cost assistance to people, or heirs, impacted by racially restrictive covenants. This program is set to raise $75 million per year to improve housing affordability. The State also committed over $1.1 billion in budget funds to work towards investing in housing supply and homelessness prevention.

Click here for a detailed review of each new bill and the budget changes. It is always my goal to help keep my clients well-informed about the real estate market and in this case, knowing the direction our state is headed with the laws surrounding real estate and housing. If you have additional questions or want to discuss how these changes may affect your housing goals, please reach out.

ATTENTION GARDENERS: Windermere Community Service Day is coming and we’d love your help!

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 office will spend June 9th with the Snohomish Garden Club working to put fresh produce on the tables of local families who need a little help. We will plant over a half-acre of veggies and fruits that will be harvested over the summer and into the fall.

If you’d like to pitch in, we are looking for additional veggie starts. Let us know if you have some starts already going or if you would like to prepare some now that you would be willing to donate.

The garden specifically needs:

• Scallions
• Snow/Pod Peas (please no shelling peas)
• Chard
• Lettuce (the food banks require headed varieties, rather than loose-leaf)
• Squash (any kind, EXCEPT yellow crookneck)
• Cabbage/Broccoli/Kohlrabi/Cauliflower/Collards/Kale
• Peppers (early maturing varieties work great: ~70-day range)
• Herbs (never enough Basil and Parsley!)
• Flowers (marigolds, nasturtiums, or any annuals)

It is very important that consumers understand the difference between long-term interest rates and short-term interest rates. Long-term rates involve home mortgages such a conventional 30-year fixed, Jumbo, FHA, and VA loans. Short-term rates involve car loans, credit cards, and Home Equity Lines of Credit (HELOCs). While both types of rates have gone up over the course of the last year, they have not had the same trajectory.

In an effort to combat inflation and slow spending, the Fed has made consistent increases to the short-term rate over the last year. I am sure you are running out of fingers on your hands to count the number of times you have heard this as a top story on the news: “The Fed Raises Rates!”. A huge misconception has been that the rates the Fed are referring to are mortgage rates.

As you can see from the chart above, the short-term rate has had a consistent upward trend and the long-term rate has had a more volatile journey. In some cases, when the Fed has increased the short-term rate, the long-term rate has gone down! My point in all of this is to illustrate that what the media reports is not always about mortgage rates and that it is important to stay connected to accurate data.

Matthew Gardner, Windermere’s Chief Economist recently recorded a video update featured below that speaks to some of the misconceptions about interest rates, specifically mortgage rates. Many consumers are confused and misinformed which is dangerous. Investing in real estate is the single largest wealth-building opportunity and to not be accurately connected to the latest trends could get in the way of a successful financial picture.

Prices in many markets have already bottomed out from the 2022 correction and mortgage rates have come down off the peak. In some areas, we are already seeing appreciation again! This quote from Matthew sums up where we are headed. “Myself, and every economist I know, believe that rates will slowly pull back as we move through 2023, and I haven’t seen a single forecast suggesting that mortgage rates will rise to a level this country hasn’t seen in decades”.

With inflation slowing and year-over-year CPI (Consumer Price Index) numbers becoming less extreme, mortgage rates will start to soften. In fact, there are some important reports coming up in May that will tell this story. Real estate is a long-term hold investment that has been the cornerstone of wealth in our country. The wave we have had to ride post-pandemic related to supply chain issues and consumer demand is coming to the shore and real estate will remain an investment safe haven.

Another point to consider is while real estate is an investment is it also where you live. Life changes, good or bad, lead to moves. All this to say, remain nimble by being well-informed. Knowledge empowers strong decisions and accuracy matters. You can count on me to provide you with the information you need to successfully navigate your real estate decisions. Please reach out if you’d like to discuss how the current trends relate to your goals.

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 2,000 pounds of food and $3,372 which will go to our neighbors in need. Thank you for your generosity!

ATTENTION GARDENERS: Windermere Community Service Day is coming and we’d love your help!

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 office will spend the day with the Snohomish Garden Club working to put fresh produce on the tables of local families who need a little help. We will plant over a half-acre of veggies and fruits that will be harvested over the summer and into the fall.

If you’d like to pitch in, we are looking for additional veggie starts. Let me know if you have some starts already going or if you would like to prepare some now that you would be willing to donate. Our planting day is Friday, June 9^th; I can arrange the details with you for drop off or pick up!

The garden specifically needs:

• Scallions
• Snow/Pod Peas (please no shelling peas)
• Chard
• Lettuce (the food banks require headed varieties, rather than loose-leaf)
• Squash (any kind, EXCEPT yellow crookneck)
• Cabbage/Broccoli/Kohlrabi/Cauliflower/Collards/Kale
• Peppers (early maturing varieties work great: ~70-day range)
• Herbs (never enough Basil and Parsley!)
• Flowers (marigolds, nasturtiums, or any annuals)

Three key elements to pay attention to when assessing prices and the real estate market.

As we round out the first quarter of 2023, three real-time trends to pay close attention to in order to truly understand what is happening in the real estate market are absorption data, interest rates, and inventory levels. Right now, we are in the midst of the market heating up due to seasonality, pent-up buyer demand, and rates finding their new normal. The media will often lag in reporting the latest information (pending sale data) and will latch onto closed sale data, which is outdated. I am here to keep you on the frontline of market activity so you are connected to the most current data to keep you well informed.

Let’s start with absorption data. Month-to-date (3/1/23-3/27/23), days on market are shrinking and sale price to original list price ratios are climbing. This means that houses are selling faster and negotiations are becoming more competitive for buyers. I was able to determine that these trends are fluid from Snohomish County to King County by analyzing four zip codes: 98296 (City of Snohomish), 98020 (Edmonds), 98155 (East Shoreline), 98117 (Ballard).

Available inventory is constricting due to an increase in absorption and new listings lagging. As we head into spring, we will see a seasonal uptick in new listings which will be welcomed by a healthy buyer audience. Month-to-date, inventory levels based on pending sales show a seller’s market (0-2 months). You calculate months of inventory by taking the number of available homes and dividing it by the number of pending sales. If no new homes came to market the trend suggests we would sell out of homes in this amount of time. Month-to-date the actual number of homes available in each zip code is quite limited and a welcome sign for more new listings as we head into Spring.  Again, I pulled the data for the four zip codes to represent a sampling of both Snohomish and King Counties.

Both of the trends above have been determined by buyers becoming more comfortable with the new normal of interest rates. The correction in the market that we experienced in 2022 was a result of a 3-point increase in interest rates. After prices adjusted to levels that would work with the higher rates, buyers started to return to the market. 2-3% and maybe even 4% interest rates will be folklore we tell our grandchildren about. People that want to make a move have come to terms with adapting to the higher rates and making these important life transitions. Today’s rates are much more in line with the average over the last 30 years.

At the start of 2023, the 30-year fixed mortgage was at 6.48%, then dropped to 5.99% in early February, peaked at 7.1% in early March, and is now back down to 6.54% at press time. Rates have been volatile as the Fed tries to manage inflation. You can access a video below from Matthew Gardner explaining the effect of the Fed and the recent bank failures on interest rates and the real estate market overall.

One item to note is that mortgage rates are long-term interest rates, and when you hear about the Fed raising rates they are referring to short-term rates such as car loans, credit cards, and home equity loans. The media does not make that distinction, often confusing the public. In fact, in some cases when the short-term rate has been increased, we have seen mortgage rates drop. Here is a great website to follow to get a real-time read on rates.

Interest rates finding their way, the psychological acceptance of the new normal, and people needing to make moves to adapt to their life changes have led to prices starting to stabilize and even grow in some markets. I pulled the month-to-date median price data for the four zip codes and it appears prices are leveling and growth is happening or will be in the near future. Bear in mind, that the bottom often comes in the form of a bounce before there is a consistent straight shot up.  All signs are pointing to recovery from the correction in these areas noted. This growth will be added to the immense long-term price gains we have seen. Currently, 93% of all homeowners in the U.S. have positive home equity and 48% of homeowners have more than 50% equity.

During this time of change, it is important that each neighborhood and price point is researched individually. From the four zip code breakdowns above, it is clear that the trends vary. When I am asked the question, “How’s the Market?”, I am always curious to know what you have heard and what you want to learn about. Sweeping statements are dangerous and I am committed to diving into the data to educate my clients on how the trends affect their investments and their lifestyle.

With the market correction of 2022 in the rearview mirror and the recovering market of 2023 upon us it is important to understand that opportunity abounds. That opportunity is rooted in research. Solid research and discerning the data gathered help empower strong decisions and build trust. This is my process and my passion and it is all about helping people! If you are curious about how the latest trends match up with your investment and lifestyle goals, please reach out and we can dive in.

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

Saturday, April 15th, 10AM to 2PM*
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! *Or until the trucks are full

The financial benefits of owning real estate significantly outweigh the option of renting. Renting is certainly a must for some, and is what one may have to do while they build up to becoming a homeowner. Becoming a homeowner requires solid employment, good credit, and some type of down payment. Savings can all be built over time and if achieved can provide incredible long-term financial growth by becoming a down payment on a home. In fact, many people think you need a 20% down payment in order to purchase a home and that is just not the case.  There are various loan programs available requiring much less than 20% down.

The savings of your nest egg that you would put into a home purchase is the single most powerful investment vehicle to build household wealth and financial security. Did you know that the average net worth of a homeowner is 40 times higher than one of a renter? There are many factors that play into this statistic.  Take in my outline below as well as the video link below from Matthew Gardner, Windermere’s Chief Economist who also weighs in on this subject.

Over time, your mortgage payment becomes easier to afford. Fixed mortgage payments do not go up, but rent inevitably does. While your mortgage stays fixed your income often increases, making the monthly payment easier to handle.

Real estate is a solid long-term investment. Historical home price appreciation is on your side. The historical average is 3-5%, and in some cases, that figure has been much higher. Only once, during the Great Recession, did we see multiple-year price declines. However, the people that held onto those homes since that time have been handsomely rewarded with phenomenal equity. Real estate is a long-term hold investment that provides shelter and financial opportunity.

You cannot live in your stock certificate. Real estate is an investment that you can touch, feel, smell, live in, and improve! You have to live somewhere and allocate a portion of your income to shelter. Why not pay your shelter budget towards an asset that is growing for your financial future? You can also make improvements to your property that you can enjoy which will also increase the value of the asset. Diversifying your investments is important, stocks are a natural option, but real estate should be in the mix as well. I have even seen first-time buyers keep their starter home as a rental, move on to their next home and start to build their own real estate portfolio.

Every mortgage payment goes towards paying down your loan principle. Right now, mortgage rates are up a bit, leading to conversations about the impact of rates. One thing I know for sure is that the interest rate on rent is 100%! None of that money ever comes back to you. Your mortgage payment goes back into your asset and becomes a forced savings account. This piles your money safely away all while your asset is appreciating year-over-year which builds long-term wealth.

Owning real estate provides tax benefits. Depending on the state you live in, you can write off your real estate taxes and mortgage interest. This can offset your tax burden and save you significant money every year. There are also capital gains tax exemptions on your primary residence that you have lived in for at least two years of the last 5 years (make sure to consult your tax expert on the details). You can have tax-free gains of up to $250,000 for a single person and up to $500,000 for a married couple. This is a wonderful opportunity to move your wealth towards your future when planning for big lifestyle improvements such as retirement.

I will leave you with this: it can seem overwhelming to take on the task of buying your first home or to prepare to own again after renting. Start by understanding that shopping in the price range you can afford matters. Often times people want to get their forever home right off the bat and that makes the accomplishment of becoming a homeowner much harder. Figure out how much you can afford now and put your nest egg to work sooner rather than later to start building wealth. Maybe it is a small condo that fits your budget now, but over time the money saved and the equity built can turn into the down payment needed to purchase your forever home.

Owning real estate is a step-by-step journey that takes time and sacrifice. Your patience and commitment will be rewarded with compounded savings which will lead to building long-term wealth. It also creates a fond memory lane of that first condo or small house that you loved making a home, which then became the vehicle to afford the next home that better suited your lifestyle. If you are curious about the prospect of owning real estate or have a special person in your life who is poised to become a homeowner, please reach out. It is my goal to help people understand the process, align them with a trusted lender, help them make strong financial decisions, and match their living situation to their lifestyle.

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

Saturday, April 15th, 10AM to 2PM*
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!

*Or until the trucks are full

Between holiday parties, family obligations, work, and the pressure of finding the perfect gift, this time of year can come and go in a flash. At Windermere North, we never want this season to go by without coming together to lift up our community and give back in meaningful ways.

Our office-wide annual holiday giving project is in two parts. First, all the brokers in my office joined together to provide $4,242 in grocery gift cards for 16 families, comprised of 48 individuals. Some of these families are dealing with grief and loss this season, some are coming out of domestic violence, some are homeless or unemployed. It is our privilege to partner with Pioneer Human Services for this every year, to help lift some of the burdens for these families.

We also had the joy of helping to bring some holiday cheer for homeless youth in our area. We partnered with WA Kids in Transition who works with social workers in Edmonds School District schools to collect wish lists from homeless students living in shelters, tents, cars, transitional housing or other temporary housing. We fulfilled the wish lists for 14 kids, plus several hygiene kits.

The other Windermere North holiday giving tradition that I love, is volunteering at Christmas House in Everett. Christmas House is a 100% volunteer, non-profit organization that provides an opportunity for qualifying, low-income, Snohomish County parents to select free holiday gifts for their children age infant-18. This is an amazing day helping families in need have a joyful Christmas.

What better way to celebrate Windermere’s 50^th anniversary than reaching $50 million in total donations to the Windermere Foundation? Windermere offices across the Western U.S. came together to raise over $4 million this year for low-income and homeless families! Thank you to everyone who helped us get here by giving their time and donating funds. To our clients: a portion of every home sold or purchased goes to the Windermere Foundation, so we couldn’t have done it without you. Here’s to $50 million raised!

Are you curious about the economy during these changing times?  

Are you trying to make plans, but crave credible information to assist you?

Please join me for a very special virtual live event:

AN ECONOMIC FORECAST FOR 2023 & BEYOND

with Matthew Gardner, Chief Economist for Windermere Real Estate

 Wednesday, January 18, 2023  •  6:30pm – 8pm

Presentation from 6:30-7:30pm, Q&A to follow

Please RSVP by phone/text or email by January 13th, 2023 to receive an emailed link prior to the event.

2022 has been an eventful year in the real estate market and the economy. After 2 years of pandemic-fueled demand and historically low interest rates, we experienced a shift. The Fed quickly raised rates (by 2 points) from April to October to combat inflation, curbing buyer demand as affordability took a hit. The overall economy is starting to settle back to pre-pandemic levels and the second half of 2022 was the time that was needed to make this adjustment.

We have recently seen rates drop as year-over-year inflation numbers start to show improvement. We anticipate this trend to continue slowly but surely as we head into 2023 and beyond. The upward trend in rates has put downward pressure on prices, but they are starting to stabilize as the new normal sets in. Price appreciation is still up year-over-year when you look at the average of the last 12 months and compare them to the previous 12 months, and certainly over the last 3-10 years as a whole.

We started 2022 at 3.5%, peaked at just over 7%, and now find rates in the mid-6%.  Experts like Matthew Gardner are anticipating rates to settle in the high 5% sometime in 2023, which would be 2 points below the historical average. Currently, buyers are enjoying more favorable negotiations and are securing sale prices that are not escalating at a feverish pitch.

Some buyers are getting creative and using seller credits for a rate buy-down, some are securing adjustable-rate mortgages, and some just plan to re-finance when rates come down further next year. It is important for buyers to understand that as rates come down prices will start to fortify again.

Besides rates and prices, which are related, two additional factors to pay attention to are our local job market and estimating the recession. We have recently experienced some layoffs in our region, particularly in the tech sector. See the video from Matthew Gardner here which speaks to this. The bottom line is over 20,000 jobs were added in the information sector during the pandemic, and that number is now receding. Just like prices grew exponentially during the pandemic, so did many other aspects of the economy and everything is finding its equilibrium as we return to our new normal. Bear in mind, there are other sectors of our local job market that are growing.

I’d like to leave you with two pieces of advice as we head into 2023 and are forced to jump on the media roller coaster of their reporting economic and real estate news. Pay attention to long-term figures and understand that real estate is a lifestyle move, not just a financial chess move.

The media will paint the picture that the sky is falling and it simply is not. The recession is predicted to be short, much like the recession of 1990-91. Some economists are claiming that we are already through the worst of it.  This will be nothing like the Great Recession of 2007-2012, nothing!  It just happens to be the one closest in our rear-view mirror and easiest to recall, but that was made up of entirely different factors that do not compare to our current environment. Please reach out if you’d like to further discuss the differences.

We are not headed toward a bubble in the real estate market. Homeowner equity is incredibly strong with over 50% of all homeowners in WA state having over 50% home equity. Homes are not foreclosed on when there is equity—period, end of story. As numbers are reported in the first half of 2023 they will be compared to the peak prices of 2022 and those numbers will create negative headlines. We will spend the first half of 2023 adjusting off of those peaks, but where I am sure the media will fall short is reporting the overall growth in values since 2019.

Real estate is a long-term hold investment, it always has been. The ramp-up of the pandemic years may have clouded that long-term truth, but I can assure you double-digit and certainly 20%+ annual appreciation is not normal. The historical norm is 3-5% annually.

For example, in Snohomish County when you take the last 12 months of median price and average it and compare it to the previous 12 months, prices are up 15%. When you take the median price in Nov 2022 and compare it to the median price in Nov 2021, prices are up 3%.  Further, when you take the median price in Nov 2022 and compare it to the median price two years ago in Nov 2020, prices are up 22%. We are experiencing a correction off of the peak, not a tumbling of long-term values. Hence, why there is no bubble.

In fact, experts are anticipating that we end 2023 with positive, yet slight year-over-year appreciation. This is more reflective of historical norms and much calmer than the intense pandemic-fueled years that were inflated with rates that we will quite possibly never see again in our lifetime.

Lastly and most importantly, real estate moves are most often motivated by life changes. Job changes, familial changes, and financial shifts lead to people changing their housing and location. These big life changes are delicate and exciting, and require strategic planning and care. I am all about helping my clients obtain successful financial results, but I am also committed to helping my clients navigate the details, challenges, emotions, and logistics of a move. I always approach the process with the end in mind, but also with the journey prioritized to be smooth and enjoyable.

I hope you call on me when your curiosity is piqued or you have an emergent need in your world related to real estate. I take pride in understanding the latest trends and helping you apply them to your goals. Also, if you know of anyone that needs real estate help, please pass my name along or get me in touch with them. Your people are my people, and helping them stay well-informed to empower strong decisions is my mission. As we encounter change and recalibrate, this expertise will be more important than ever; I am honored to have your trust and endorsement.

Holiday Events = Holiday Giving
at Windermere North

We have been busy at our office holding various holiday events that have included the opportunity to give back to the local food banks through holiday food drives. When we bring people together to celebrate it is also a priority to weave in giving back to our community. When we do this, we are always thrilled to partner with Volunteers of America of Snohomish County who support various food banks and food pantries across the county. Just this week, VOA picked up a total of 1,820 pounds of food and $2,480 that resulted from our holiday events.

With inflation still high, food insecurity is prevalent making these food drives an easy choice to direct our giving. If you are looking for a way to give back this holiday season, please reach out to VOA. They are a trusted local organization that will make sure your donation is placed to benefit those in need.