Bidding wars becoming more common as demand outpaces supply in local real estate market

 

By Evan Caldwell  | June 23, 2020

 

 

Home sales have remained surprisingly steady since the start of the coronavirus pandemic, but new listings have not.

Fewer homes than ever are for sale in the Stanwood-Camano area, further pinching a market that already had historically low inventory, according to new data from the Northwest Multiple Listing Service.

“Inventory is shockingly low,” said Marla Heagle, an owner of Windermere Stanwood Camano. “When people face uncertainty, like this pandemic, they tend to freeze their plans to put their home on the market.”

There were just 48 homes for sale on Camano Island in May — down 47% from a year ago. Meanwhile, Stanwood’s 98292 Zipcode had 74 homes for sale, a drop of 14% from a year ago. Five years ago, there were a combined 353 homes for sale in the area.

“We’re hoping to see more new construction,” said Renae Kettler, owner of two local RE/MAX offices. “New construction is what will help with inventory, and we know that more is on the way in Stanwood.”

Meanwhile, the high demand and low supply have pushed prices higher than ever. In Stanwood and Camano, May’s median home price reached about $515,000, up from about $430,000 a year prior in both locations. There were 87 homes sold in the area last month, down from 108 a year ago but up 28 from April 2020.

The steady demand — particularly in the $300,000 to $600,000 range — is leading to an increasing number of sellers seeing multiple offers the day a home hits the market.

“Homes here have been selling quickly for several years, but seeing multiple offers and some bidding wars is something new,” Kettler said.

Heagle said it still depends on the house.

“Not every home in that price range is getting multiple offers, but it’s getting more common,” she said.

 

Looking back at the combined housing inventory in the Stanwood and Camano Island Zip codes during the month of May for the past eight years.

The abundance of caution surrounding the COVID-19 pandemic also has affected the real estate market. Gov. Jay Inslee’s stay-at-home order allowed real estate to continue in a limited fashion. In-person meetings with customers were prohibited except to sign a document or view a property. Property viewings were limited to two people at once, with social distancing, and on-site open houses were not permitted.

Realtors said some sellers opted to not put their homes on the market because they did not feel comfortable opening their houses up to people, even on a limited basis, due to health concerns.

Agents quickly embraced new rules when showing homes, such as requiring masks, social distancing, and disinfecting between visits. The efforts, they said, have been increasingly making buyers and sellers more comfortable.

Under Inslee’s phased reopening plan, more real estate activities will be allowed during Phase 2 and even more under Phases 3 and 4.

Construction was affected by the pandemic, as well. Builders largely went silent during March and April before being allowed to restart existing construction projects with COVID-19 safety precautions. Additional construction was allowed during Phase 2, according to Inslee’s plan.

Across most of Washington, brokers added a total of 9,871 new listings to the MLS database during May, which compares to 14,689 for the same period a year ago. At month’s end, the selection included 10,357 active listings; that volume was 5,766 fewer than the total of 16,133 a year ago.

“The constraint on available inventory makes it feel like we’re running out of homes to sell,” J. Lennox Scott, chairman, and CEO of John L. Scott Real Estate said in a news release. Buyers are “eagerly waiting for each home to come on the market with an increased focus on homes in the more affordable and mid-price ranges.”

Kettler and Heagle said in addition to the area’s traditional house hunters — such as new young families and out-of-state retirees — they’re seeing more people from Seattle.

“We’re seeing a lot more 206 area codes call us,” Heagle said. “I think the fact that more people can now work from home, they’re choosing to get out of the city and come here.”

Contact reporter Evan Caldwell at ecaldwell@scnews.com and follow him on Twitter @Evan_SCN for updates throughout the week and on Instagram @evancaldwell.scn for more photos.


Posted on June 24, 2020 at 10:35 am
Windermere Stanwood Camano | Posted in News |

Home sales brisk before COVID-19 slowdown

 

By Evan Caldwell  | April 15, 2020

 

 

The local real estate market remained hot in March despite the slowdown related to the COVID-19 pandemic, but that is expected to change in April and May.

The median price of houses sold in the Stanwood area hit a record high last month, and Camano Island prices were near a record as home-buying remained steady, according to March data from the Northwest Multiple Listing Service.

“We expect that all numbers will decline in April and May as a direct result of the governor’s “Stay Home” order that became effective on March 26,” stated Mike Grady, president and COO at Coldwell Banker Bain. He also said he expects April and May will be “bridge months” before the market returns to a “more normal” activity level, “assuming we all abide by Governor Jay Inslee’s directives.”

Despite limitations, Northwest MLS brokers added 10,291 new listings during March, outgaining February by 2,505 listings and nearly matching the 10,516 new listings a year ago.

However, Snohomish County continues to have one of the lowest supplies of homes for sale. Only 135 homes were for sale in March in the Stanwood-Camano area, down from 153 the same time a year ago, according to the Northwest Multiple Listing Service.

“Inventory here is still low,” said Marla Heagle, an owner of Windermere Stanwood Camano. “And most people are sitting still, freezing right now, and not thinking of putting their home on the market.”

On Camano Island, where the 30 home sales in March was the same as a year ago, the median price was $488,000, about $120,000 more than the same time last year.

The pace was brisker in the Stanwood ZIP code with 74 homes sold in March, up from 60 a year ago. The median price of the Stanwood homes sold last month reached an all-time high of $519,000, about $48,000 more than March 2019.

Most sales that closed in March were initiated before the slowdown from the pandemic.

“Spring was off to a great start,” Heagle said. “Hopefully, this will be a V-shaped recession where we climb out fast. … When we come out of this, there’s nothing indicating the housing market won’t just jump right back.”

Meanwhile, real estate agents are adapting to a new way of conducting business. According to Inslee’s order, brokers are able to take new listings and send contracts electronically, and arrange for appraisals and inspections to be conducted as needed. They may also show listings with strictly limited group sizes at a safe distance.

“We’re still seeing people looking for homes,” Heagle said. “There are still people who need to move, but mostly, people know this is temporary.”

Contact reporter Evan Caldwell at ecaldwell@scnews.com and follow him on Twitter @Evan_SCN for updates throughout the week and on Instagram @evancaldwell.scn for more photos.


Posted on April 15, 2020 at 2:08 pm
Windermere Stanwood Camano | Posted in News |

Strong regional economy putting pressure on local housing market

real estate forecast

 

 

By Evan Caldwell  | Jan. 29, 2019 

 

 

Stanwood, Wash. – Economic growth doesn’t come without some burden.

“We are suffering from our own successes,” said economist Matthew Gardner. “We have a robust economy, and that means growing pains.”

The solid economy equates to more jobs — and more people — moving to the region, putting continued pressure on infrastructure and housing markets, he said. Gardner spoke about the national, state and local economic past, present and future to about 250 people at an economic forum Friday, Jan. 24, at the Camano Center.

“If you want a job, you can certainly find a job,” said Gardner, citing Snohomish County’s low 2.5% unemployment rate. “And jobs and income growth should increase this year.”

Snohomish County continues to be one of the fastest-growing counties in the nation. By 2025, an estimated 250,000 people are predicted to join the 800,000 already living in the county, according to estimates by the state Office of Financial Management.

However, finding affordable places to live is the current challenge, said Gardner,

Gardner is the chief economist for Seattle-based Windermere Real Estate and also sits on the Washington Governor’s Council of Economic Advisors. He chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington and is an advisory board member at the Runstad Center for Real Estate Studies at UW, where he also lectures in real estate economics.

“People are coming, that’s for sure, you can see it in the housing demand,” he said. “We need to be building more homes.”

In the Stanwood and Camano ZIP codes of 98292 and 98292, the number of new listings per month continued a steady downward trend in 2019, according to Northwest MLS data. In December 2019, there were 129 homes for sale in the area, down from 148 in December 2018.

Prices have climbed. The average median price for a home in Stanwood increased to $443,000 in 2019 from $430,000 in 2018 and $389,995 in 2017, according to Northwest Multiple Listing Service data. On Camano Island, the median cost of a home rose to $434,000 in 2019 from $410,000 in 2018 and $394,975 in 2017.

“Because inventory is so tight, housing prices will continue to rise in 2020 .. and it could be a very tight market for a very long time,” Gardner said. “So, why aren’t there more homes for sale? They’re living in them longer and moving less frequently for jobs.”

Americans nowadays are staying in their homes for about eight years before moving – up from four years from 2000-09, according to Attom Data Solutions, a real-estate data firm.

In addition to newcomers, millennials are starting to enter the housing market, adding increased pressure in the first-time homebuyer category, Gardner said. Even the few hundred new homes and about 150 new apartment units planned to be built in Stanwood in the next few years are insufficient to meet demand, Gardner said.

“To better compete, we need to create housing people can afford to live in — the teachers, the firefighters,” he said. “And certainly cities will need to address infrastructure needs, and governments will need to work on mass transit options.”

However, several factors can stymie new home construction, such as cost of land and materials, permitting constraints and an expensive construction workforce. In Snohomish County in 2019, there were 2,221 permits to build new single-family homes, down from 5,719 permits in 2005. On Camano in 2018, there were 375 permits for new home construction, down from a high of 752 in 2005.

Gardner said the U.S. economy is due for a minor recession in the coming years. The U.S. was last in recession from 2007-09.

“We might have a recession in 2021 in some segment of the economy, but it’ll be OK; it’ll be modest,” Gardner predicted, citing data showing major companies slowing the pace of hiring in the run up to the presidential election. “What do companies do when they’re worried? Nothing. Like a deer in headlights, they freeze, they’re being cautious.”

This article was originally published on goskagit.com.


Posted on January 29, 2020 at 10:25 am
Windermere Stanwood Camano | Posted in Community, Housing Trends, News, Press Releases | Tagged , , , , , ,

Economist to talk about 2020 job, housing markets at free forum

 

 

By Evan Caldwell  | Jan. 15, 2019 

 

 

 

Stanwood, Wash. – Matthew Gardner returns with his crystal ball to peek at what 2020 holds for the local economy and housing market.

Gardner, the chief economist for Seattle-based Windermere Real Estate, is the keynote speaker for the 2020 Economic and Housing Forecast community forum 6 p.m. Friday, Jan. 24, at the Camano Center, 606 Arrowhead Rd. on Camano Island. The forum will take a macro and micro look at the economy, the economic forecast and housing.

“In 2020, I expect payrolls to continue growing, but the rate of growth will slow as the country adds fewer than 1.7 million new jobs,” Gardner wrote in his 2020 forecast last month. “Due to this hiring slow down, the unemployment rate will start to rise, but still end the year at a very respectable 4.1%.”

Gardner, who spoke to a packed house at last year’s event, wrote “many economists, including me, spent much of 2019 worried about the specter of a looming recession in 2020. Thankfully, such fears have started to wane.”

The forum is free and open to the public, but reservations are required. Call 360-387-4663 or visit windermerestanwoodcamano.com/2020-forecast. Doors open at 6:30 p.m. for a cocktail and appetizer hour, followed by Gardner’s presentation and then a question-answer session with the audience.

This article was originally published on goskagit.com.


Posted on January 15, 2020 at 3:24 pm
Windermere Stanwood Camano | Posted in Community, Housing Trends, News, Press Releases | Tagged , , , , ,

You, too, can go ‘Green at the Beach’ — for $1.45 million

Now on the real estate market, this Warm Beach waterfront home is eco-friendly from top to bottom.

By | Saturday, May 11, 2019 1:30am

 

It hit Dave Porter back in 2004 that he was a hypocrite.

After giving a speech to home builders and real estate agents about the importance of green design and building, Porter realized he didn’t practice what he preached.

“We had a decadent car and a house that was too big for our needs,” said Porter, a certified green building speaker who has toured the nation in the name of eco-friendly design. “It was time for a do-over.”

In 2005, Porter and his wife, Anna, sold their too-big house and, in 2007, started rebuilding a 100-year-old beachfront home in Warm Beach. They were determined to make it green from top to bottom — capable of meeting even the strictest green-home guidelines.

Their coastal-inspired, two-story home featuring a lighthouse cupola was named the 2008 Custom Home of the Year by the National Association of Home Builders and was given a Leadership in Energy and Environmental Design gold certification by the U.S. Green Building Council, among other national awards and designations.

Now it’s on the market for $1.45 million.

“It’s not only a fun and beautiful house, but it’s got this incredible background of green building when green building was just getting to be known,” said Linda Evans, the listing real estate agent for the property. “I don’t know of any other house that has this depth.”

Evans, who works for Windermere Real Estate Stanwood and Camano Island, said the 3,147-square-foot, three-bedroom, four-bath home is unique for having carefully chosen materials, such as insulation made from recycled blue jeans, formaldehyde-free doors and recycled glass countertops.

Snohomish County values the home at $744,900 for property tax assessments.

The Porters meticulously researched every piece of the house, keeping several questions in mind: Is it an earth-friendly product? Is it healthy or unhealthy? Does it help reduce their carbon footprint?

Not ones to waste anything, they salvaged more than 80 percent of their building materials from the original home, built in 1907, to keep it from going to the landfill.

The patio, walkway, parking pad and road easement are paved with pervious concrete, which drains water into the ground rather than flushing it into Port Susan nearby. They also have a rainwater catchment system, solar panels and a geothermal heat pump.

The couple, who are moving to Ashland, Oregon, to be closer to family, said they hope the next owners appreciate all the work that went into the house.

“It’s probably been the best experience we’ve ever had,” said Dave Porter, a sales manager for loanDepot. “It’s the longest we’ve ever lived in a home.”

The Porters wanted their experience to be educational for others, so they documented their rebuild, including every material used in the house, on their Going Green at the Beach website.

They’ve also opened their doors to about 5,000 people — including architects, realtors and elementary school students —for educational tours.

The green building materials are a big part of the price tag, Evans said, but not the only justification. The house has a number of other features, including a 1,100-bottle wine cellar, a detached guest retreat and lighthouse-themed cupola, which is a small dome on top of a roof.

But even the cupola, which has 360-degree views of the surrounding area and Port Susan, was designed to be green. The house doesn’t have mechanical air conditioning; open the windows in the cupola and fresh air funnels down to the rest of the house.

All of the green-home details still boggle Evans’ mind.

“Every time I go there, I learn something new,” she said.

Read the full article

 


Posted on May 11, 2019 at 9:01 pm
Windermere Stanwood Camano | Posted in News |

What Paine Field means for county’s real estate

Connections to West Coast cities will allow easy travel for our residents and bring tourists here.

Monday, May 6, 2019

It’s finally time to go after that second “dream home” you’ve been longing for since your 30s. You’ve earned it after a career of hard work, buckling down, and saving your pennies. When retirement or empty nesting occurs, many of us seek a home-away-from-home that offers a way to slow down, relax, and enjoy life. So now that the time’s right and you’re ready to make a move, what considerations should you take into account when looking for a second home?

Many soon-to-be retirees in our region have spent years in the grind of Seattle traffic that has only gotten worse, in a region that is one of the fastest growing in our nation. While many of us look to “get away from it all” as we retire, seeking privacy and immersion in natural beauty, we also want to preserve access to the luxuries and conveniences of city living. Access to things like travel as well as the simple but finer things in life like coffee shops, dining options, and even Amazon delivery can make all the difference when choosing a place to call “second home.” The reality is that most of us do enjoy many aspects of city living and we’re not completely ready to give up as we sail into the sunset.

There is no bigger “city” convenience than access to travel, and a strong regional airport in particular. Air travel allows us to enjoy the epic summers in the Pacific Northwest, yet get away to Maui or Palm Springs in the winter, or to the snow of the rugged West for some time on the ski hills.

Insert Everett’s new Paine Field Passenger Terminal, a regional transportation development that has the potential to change how retirees think about that dreamy second home, and in particular, how they look at options like Camano Island which is just 20 minutes northwest of Everett. Paine Field has recently begun buzzing with commercial airlines, bringing the world closer to Camano Island and the rest of Snohomish County than ever before. Alaska Airlines and United Airlines will connect Everett to a host of U.S. cities including Phoenix, Denver, Los Angeles, San Francisco and Las Vegas.

Whether you’re the retired parents of a Seattle tech worker looking for your second home near grandchildren, or you’re moving here to escape Seattle or San Francisco, there’s now a fantastic local airport at your doorstep, allowing you to avoid the arduous drive to Sea-Tac.

While Camano Island’s desirability is now matched with much-improved access to other well-traveled destinations, many view the island as a destination in its own right. Boasting stunning sandy beaches, abundant wildlife, and relaxed small-town charm, Camano Island is a haven for crabbers, water-skiers, and beach-lovers.

Rich in history and culture, Camano Island is home to a vibrant arts community as well as an array of local restaurants, shops, markets, events and festivals. The enduring appeal of Camano Island is that it offers an idyllic, island experience that feels away from it all, without actually being away from it all.

With no ferries and an always-open bridge, you can find yourself ensconced in a diverse community of families, retirees, artists and locals who value culture and the finer things in life, which now includes easy access to travel. Of course, the beauty of the Paine Field opening goes both ways. Visitors can hop a quick flight and visit you easier than ever before.

So check your frequent-flyer miles and come explore. You won’t be disappointed.

 

Read the full article

 


Posted on May 6, 2019 at 2:30 pm
Windermere Stanwood Camano | Posted in News |

Warm Beach home with lighthouse rotunda asks $1.45 million

By

A beach house with nautical details is one thing, but a built-in lighthouse is another. This home in Warm Beach—along semi-sandy Port Susan waterfront, facing Camano Island—goes above and beyond with waterfront whimsy. It was built in 2007 with all the trappings of a high-priced waterfront home, like big view windows, a wine cellar, and a network of outdoor decks and patios, has a lot of fun with the style.

The most obvious feature is the lighthouse-styled rotunda protruding from the roof, complete with a light, built for 180-degree water views. The builders added some other offbeat touches, though: a secret office through a bookcase door, a light-up “tide pool” countertop with beachcombed goods under glass, and driftwood fencing on the beach-facing side. Playful design aside, with three bedrooms and four baths, two fireplaces, and a hot tub, it also functions as a luxurious, waterfront home.

19126 Soundview Drive is listed for $1.45 million via Windermere.

 

Read the full article

 


Posted on May 1, 2019 at 2:22 pm
Windermere Stanwood Camano | Posted in News |

Warm Beach’s iconic eco-friendly home for sale

The award-winning house featured on TV and in magazines.

 

 

One of the area’s most iconic homes is for sale.

Easily identified along the Warm Beach waterfront by its lighthouse-inspired cupola, this ultra-green house is most famous for its sustainability.

“The goal was to build this as environmentally friendly as possible,” said Anna Porter, who owns it with her husband, Dave, who works in mortgage lending. “But a lot of the green building techniques we know today didn’t exist in 2007. We were developing and learning as we went. We made it into a public project so anyone could learn along with us.”

The effort paid off in the end.

The 2,700-square-foot, three-story house earned the “2008 Custom Home of the Year” award by the National Association of Home Builders. It also earned numerous additional design certifications, including: “LEED Gold” from the U.S. Green Building Council; ‘American Lung Association Health House;” Master Builders of King & Snohomish Counties, “Built Green 5 Star”; “Energy Star;” and “Environments for Living.”

The couple worked with a variety of local companies in 2007 to pioneer green additions for residential use.

“We were all learning as we went,” said Porter, who works in program development and project management.

At the time, the three-bedroom, four-bath home attracted widespread attention from media, the building industry and the public. By January 2013, more than 38,000 unique visitors browsed the project website, more than 3,000 people toured the home, and the project was featured in more than a dozen publications, including Natural Home, Smart HomeOwner and Environmental Design + Construction. It also appeared on the TV show “Renovation Nation.”

Among the sustainable features: geothermal heat; sustainably chosen construction materials; recycled wood and stone; and Forest Stewardship Council-certified flooring. Smaller details include opting for chemical-free cabinets and countertops made from recycled agriculture products instead of MDF fiberboard.

But in 2011, Porter suffered a stroke, leaving her right leg and foot with limited use.

“Getting around is tedious — actually, it’s dangerous,” she said. “We’re ready to move to something smaller and closer to grandchildren.”

The home is listed at $1.45 million. It’s a price tag that’s becoming less uncommon around Stanwood and Camano Island.

In 2017, there were nine homes in the area that sold for more than $1 million. In 2018, that ballooned to 21.

And the Porter’s home may be the most unique one to hit the market.

“I can’t think of anything similar,” said Linda Evans, the listing agent with Windermere Stanwood Camano. “There are green houses that have some features, but this has all the features.”

In addition to a rock fireplace made from stones gathered from the beach in front of the house and recycled glass accents throughout, there’s a temperature-controlled 1,100-bottle wine cellar situated three stories below the landmark cupola. The wine racks — like a handful of other features in the house — were made from parts of the 1907 cabin that previously sat on the 0.37-acre lot.

“It’s bittersweet selling this home, it’s been such a great story,” Porter said. “But it’s time for a plot twist.”

Read the full article

 


Posted on April 29, 2019 at 2:40 pm
Windermere Stanwood Camano | Posted in News |

Local economy finding ‘balance’

Economist Matthew Gardner motioned his outstretched hand horizontally through the air. “Balance,” he said. “That’s what we’re trending back to.”

Gardner was addressing some 250 people during an economic forum Friday, Jan. 26, at the Camano Center.

After nearly 20 years of volatility in the housing market — the early 2000s boom, the Great Recession and the ensuing recovery — the economy should return to that of one resembling the 1990s with slow and steady growth, he said.

After huge leaps in home prices during the past few years in the Stanwood-Camano area, price increases should slow to about 5 percent this year, Gardner projects.

“It’s not bad — a move back to balance — it’s just that most people don’t remember what a balanced market looks like,” said Gardner, chief economist at Windermere Real Estate in Seattle. “Many people have only known volatility.”

Prices for homes increased about 10 percent in Stanwood, rising from an average median price of $389,995 in 2017 to $430,000 in 2018, according to Northwest Multiple Listing Service data. On Camano Island, the cost of a home rose 3.7 percent, increasing from $394,975 to $410,000.

The biggest change last year was the drop in the number of homes for sale in spring, which drove up prices because what few homes were for sale didn’t stay long on the market. Local housing inventory spent the rest of the year steadily rebounding from some of its lowest points ever in spring.

Further complicating inventory levels is a smattering of interesting trends: People choosing to live in their homes longer; constraints for homebuilders, such as a shortage of workers and costly regulations; people increasingly opting not to pull up roots and move for a new job; and people working longer instead of retiring.

Meanwhile, millennials are starting to search for homes, which is keeping demand high.

“Millennials are doing everything we did, just about five years later in life than we did,” Gardner said.

One of that generation’s largest impediments to buying a home has been the lack of wage increases in the past few years — a trend Gardner sees as reversing this year.

“Companies are having a really hard time finding workers,” he said. “To get them, you’ve got to pay them. And I think that will kick in this year.”

However, Gardner warned that the U.S. economy also is prime for a recession.

“Quite frankly, we’re due … we’re in the second longest economic expansion in U.S. history,” he said. “But it will look nothing like the Great Recession.”

He predicted a recession similar to that of 1991 where the economy posted a few quarters of negative economic growth.

Several factors could cause the recession — a trade war, the Federal Reserve raising rates too quickly, over-leveraged companies. With the U.S.’s gross domestic product growth slowing, it may take just one economic event to send growth below zero.

“There’s always an outside shock that causes a recession,” Gardner said. “But this one will not be caused by housing.”

During the Great Recession’s housing crisis, home values decreased — the only time that happened during a modern recession.

“Overall, we’re positioned well here,” he said. “I don’t see anyone here more exposed than elsewhere.”

Contact reporter Evan Caldwell at ecaldwell@scnews.com and follow him on Twitter @Evan_SCN for updates throughout the week and on Instagram @evancaldwell.scn for more photos.

Read the full article


Posted on January 30, 2019 at 8:43 am
Windermere Stanwood Camano | Posted in News |

2019 Economic and Housing Forecast

What a year it has been for both the U.S. economy and the national housing market. After several years of above-average economic and home price growth, 2018 marked the start of a slowdown in the residential real estate market. As the year comes to a close, it’s time for me to dust off my crystal ball to see what we can expect in 2019.

 

The U.S. Economy

Despite the turbulence that the ongoing trade wars with China are causing, I still expect the U.S. economy to have one more year of relatively solid growth before we likely enter a recession in 2020. Yes, it’s the dreaded “R” word, but before you panic, there are some things to bear in mind.

Firstly, any cyclical downturn will not be driven by housing. Although it is almost impossible to predict exactly what will be the “straw that breaks the camel’s back”, I believe it will likely be caused by one of the following three things: an ongoing trade war, the Federal Reserve raising interest rates too quickly, or excessive corporate debt levels. That said, we still have another year of solid growth ahead of us, so I think it’s more important to focus on 2019 for now.

 

The U.S. Housing Market

Existing Home Sales

This paper is being written well before the year-end numbers come out, but I expect 2018 home sales will be about 3.5% lower than the prior year. Sales started to slow last spring as we breached affordability limits and more homes came on the market. In 2019, I anticipate that home sales will rebound modestly and rise by 1.9% to a little over 5.4 million units.

Existing Home Prices

We will likely end 2018 with a median home price of about $260,000 – up 5.4% from 2017. In 2019 I expect prices to continue rising, but at a slower rate as we move toward a more balanced housing market. I’m forecasting the median home price to increase by 4.4% as rising mortgage rates continue to act as a headwind to home price growth.

New Home Sales

In a somewhat similar manner to existing home sales, new home sales started to slow in the spring of 2018, but the overall trend has been positive since 2011. I expect that to continue in 2019 with sales increasing by 6.9% to 695,000 units – the highest level seen since 2007.

That being said, the level of new construction remains well below the long-term average. Builders continue to struggle with land, labor, and material costs, and this is an issue that is not likely to be solved in 2019. Furthermore, these constraints are forcing developers to primarily build higher-priced homes, which does little to meet the substantial demand by first-time buyers.

Mortgage Rates

In last year’s forecast, I suggested that 5% interest rates would be a 2019 story, not a 2018 story. This prediction has proven accurate with the average 30-year conforming rates measured at 4.87% in November, and highly unlikely to breach the 5% barrier before the end of the year.

In 2019, I expect interest rates to continue trending higher, but we may see periods of modest contraction or levelling. We will likely end the year with the 30-year fixed rate at around 5.7%, which means that 6% interest rates are more apt to be a 2020 story.

I also believe that non-conforming (or jumbo) rates will remain remarkably competitive. Banks appear to be comfortable with the risk and ultimately, the return, that this product offers, so expect jumbo loan yields to track conforming loans quite closely.

 

Conclusions

There are still voices out there that seem to suggest the housing market is headed for calamity and that another housing bubble is forming, or in some cases, is already deflating. In all the data that I review, I just don’t see this happening. Credit quality for new mortgage holders remains very high and the median down payment (as a percentage of home price) is at its highest level since 2004.

That is not to say that there aren’t several markets around the country that are overpriced, but just because a market is overvalued, does not mean that a bubble is in place. It simply means that forward price growth in these markets will be lower to allow income levels to rise sufficiently.

Finally, if there is a big story for 2019, I believe it will be the ongoing resurgence of first-time buyers. While these buyers face challenges regarding student debt and the ability to save for a down payment, they are definitely on the comeback and likely to purchase more homes next year than any other buyer demographic.

If you enjoyed this article and would like to hear more about the market forecast join us and Matthew Gardner Jan. 25 at 6 PM at the Camano Center on Camano Island. Space is limited, reserve your seat here!


Posted on December 30, 2018 at 12:08 pm
Windermere Stanwood Camano | Posted in Buying, Community, Housing Trends, News, Selling |