Many of you have asked me where the market is headed, up or down? I recently had the privilege to attend a private presentation with Chief Economist Matthew Gardner in March 2019, which was highly informative. Here is a Recap and some of my key Takeaways / Predictions / Analysis. (Please note, this is my personal analysis & opinion. No one has a crystal ball.)
There is a lot of information out there on the internet, confusing articles from the local news outlets, speculation from friends/ family/ co-workers, and other agent’s opinions. Much of the info out there is inaccurate and/or just not being analyzed correctly. Of course, no one has a crystal ball, but when it comes to making important financial decisions about real estate, I highly recommend talking to us first before you make a decision. Don’t try to DIY. I have heard many horror stories, and I personally learned this lesson the hard way, making several uninformed real estate decisions before consulting with a real estate professional.
-Matthew Gardner referred to our current market status as the “Goldilocks Period”, where everything is “just right”. Buyer confidence is higher, and inflation is low. The U.S. has had 101 months of continuous job growth (a record), 4% unemployment, wages are increasing, 2% GDP growth, and 1.3% job growth.
–Most home values in King County are predicted to RISE around +6-7% in 2019!
-Interest rates have gone down recently and will stay under 5% this year. There are No increases planned by the FED in 2019! That is great news for buyers, and also sellers that locked in a higher mortgage rate. It might be a good time to refinance. (Ask me about our new zero-fee loan offered by Keller Mortgage.)
-It is still a Seller’s Market, with Months-of-Inventory at only 1.5 months in most areas (this is incredibly low inventory levels!). A balanced market is 4-6 months-of-Inventory. The last time we had a “normal, balanced” market was 1999, over 10 years ago! In some markets & price points, Buyers have more choices & negotiating power than year’s past, but some areas are experiencing bidding wars again! It depends on the neighborhood & price point. As a team, we have won 5 bidding wars (out of 7) this year so far! And 3 of our last 4 listings have had multiple offers! We have great strategies to win, or create bidding wars for our clients.
-There is a shortage of new homes being built, especially “affordable” new homes. “Dirt” is limited in Seattle and surrounding areas, since we are surrounded by water & mountains. No new roads are being built. Nationally only 800,000 homes are being built, versus the demand of 1.1M homes (that’s a 300K shortage of homes!) There are 4 components that make up the cost of a home, and costs are increasing: Land – Labor – Materials – Regulation (right now 24 cents of every dollar goes towards regulations!).
–There is a shortage of plumbers, electricians, etc. which is driving up cost of new homes. Most students are attracted to STEM careers (Science, Technology, Engineering, and Math) versus the trades/ vocational jobs.
-A big part of the problem is Seattle’s unwillingness to change zoning laws. 70% is zoned Single Family Residence (SFR). We must increase density closer to job centers to keep up with demand/ housing needs. N.I.M.B.Y (Not in my backyard) is the prevalent attitude in many Seattle neighborhoods (for example Magnolia, Queen Anne, etc) where current residents lobby/ reject any efforts to increase density in their backyards.
-Mass migration from California to Washington, b/c homes are cheaper by about a 50% discount! Salaries here are slightly less, but the Cost of living and taxes is much lower.
-Home ownership is back to the historic average of 65%! mainly because of millennials – which accounted for 45% of Seattle homes sales in 2018! There are over 79 million millennials in the U.S.
-Seattle/ Eastside is becoming more attractive market for East Coast investment firms & global investors. Top cities: New York, Los Angeles, then Seattle. Our job growth is around 2.9%, versus California’s 1.9%. We’re expecting around 40K new jobs this year!
-Seattle has a diversified economy, and is one of the smartest cities in the U.S. It constantly ranks in the top cities to live.
-Since unemployment is so low, incomes are finally projected to rise this year about 4-5%! We have a talent shortage. Plus we have over 7 million job openings nationwide right now.
–No bubble! The average FICO score of a borrower is 750! Because of stricter lending practices, most buyers are “overqualified”. Much different from 2008 where many buyers were underqualified. Downpayments are higher, and 25% of homes have 50% equity or more! (WOW!) Most homes purchased in 2012 have doubled in value. What are you doing with your home equity? Let’s talk.
I’m happy to talk more about any info in here. Please contact me anytime: firstname.lastname@example.org