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

Last week, my office had the pleasure of hosting Windermere’s Chief Economist, Matthew Gardner for his 2023 Economic and Housing Forecast. During this jam-packed hour of insightful delivery, he reported on the U.S. and local economies along with the U.S. and local housing markets specific to King and Snohomish Counties. If you are interested in receiving the recording of the event and/or his PowerPoint slides, please reach out. You can also access the link at the bottom of this newsletter to get his concise forecast for the U.S. housing market.

Across the nation, we saw a real estate market correction in 2022 as interest rates doubled. Interest rates started the year at just over 3%, peaked in November at just over 7%, and ended at just under 6.5%. Since the first of the year, we are closer to 6% and anticipate rates to continue to improve towards 5% throughout 2023. The Feds utilized rising interest rates to combat inflation in an effort to create a short recession to slow the cost of all products and services after record-breaking increases during the pandemic. This has reduced spending due to money becoming more expensive to borrow and corrected prices across many industries, including housing.

The trends across the nation are consistent, but as your local expert, along with the national forecast I am committed to reporting hyper-local facts, figures, and trends to help you understand what is happening and what will happen right in our own backyard. Our local housing market was not immune to the effects of rising interest rates. Our prices peaked in the spring and as rates climbed over 6%, prices took a tumble from the spring highs inflated by cheap money. However, prices are still higher than they were in 2021 which was a recording-breaking year of price growth.

In King County, prices were up 22% in 2021, and in Snohomish County, they were up 23%. We started 2023 with higher prices over 2021, but off the peak of 2022. This is a price reversion, not a housing recession! In fact, in King County, 64% of homeowners with a mortgage have over 50% home equity and in Snohomish County, 63% of homeowners with a mortgage have over 50% home equity. Homeowners are fortified with strong cash positions which is a clear indicator we are nowhere near a housing crisis; we are actually incredibly healthy! While the highs of 2022 were wiped out, the long-term growth we have had over the last decade is the foundation and guiding light of our market. If you bought in 2022, don’t fret, just hold, values will eventually return.

The worst of this correction seems to be behind us as rates are expected to continue to improve throughout 2023 and consumers are adjusting to a more normalized market. Prices are starting to stabilize and are near, if not at the bottom, and should have modest growth in the second half of 2023. We are already starting to see pending sales pick up. Month-to-date (MTD), pending sales are up 25% in King County over December (month-over-month, MOM) and up 21% MOM in Snohomish County. This increase in pending sales is coupled with available inventory being down 15% MOM in King County and down 18% MOM in Snohomish County. Inventory remains tight with MTD inventory levels shifting from a balanced market to a moderate seller’s market based on pending sales rates in both counties.

It seems that buyer demand is improving and activity is becoming more plentiful. Buyers should take note and be ready to transact if they are poised to make a move. It is a delicate dance between prices and interest rates. Buyers must understand that they can’t change their sale price once they’ve bought, but they can always refinance and change their rate. I have even heard of lenders guaranteeing a future refinance when the rate hits a certain point. Real estate is a long-term hold investment and also where you live. If where you are at doesn’t currently meet your needs, consider a move if you plan to stay there for 5+ years.

Affordability has been a challenge in our area, so if a buyer can obtain a good price this year and then adjust their rate later by refinancing, they will have a much more affordable monthly payment down the road. This takes strategizing and planning and the guidance of a trusted lender and real estate broker. Utilizing adjustable-rate mortgages, rate buydowns, and other creative financing options has put savvy buyers in the catbird seat as they navigate this environment and make exciting moves.

Matthew’s closing words summarized the wild ride of coming off of the pandemic and where we are headed. “2023 will be a transition year when the housing market comes off the high that we saw during the pandemic when borrowing costs were artificially low. I don’t see any reason for buyers or sellers to panic at all! By the end of this year, most markets will have already corrected themselves and we will see prices and demand pick up again, but at a far more normalized pace.”

Real estate is an investment and a lifestyle decision. I am committed to following experts like Matthew and others. I also study the local market trends daily. Markets change quickly and the changes are often reported far after the actual shift. I have understood these shifts due to my daily connection to the market. I take great pride in helping empower my clients to make well-informed decisions about where they live and the financial impact it has on their lives. I love what I do because it is centered in helping people with one of the biggest decisions they will make in their life. If you or someone you know are curious about how the trends relate to your goals, please reach out. I’d be honored to help educate you and help guide and strategize your next move. Here’s to a happy and healthy 2023!