Amazon confirms major office lease in Bellevue

That space is currently occupied by Expedia, but the travel booking company plans to decamp to a newly refurbished corporate campus on Elliott Bay in Seattle next year.The lease marks the second major Eastside expansion for Amazon, which was founded in Chief Executive Jeff Bezos’s Bellevue home in 1994 and moved to Seattle a year later.

In late 2016, in the midst of its frantic expansion in Seattle’s South Lake Union and Denny Triangle districts, the company established a beachhead across Lake Washington with the lease of the 16-story, 354,000-square-foot Centre 425 building at Northeast Fourth Street and 106th Avenue Northeast. About 2,000 people work there now, said Sam Kennedy, an Amazon spokesman. He said the new lease brings space for an additional 2,500 workers.

That’s poised to make Bellevue an important outpost in Amazon’s expanding constellation of North American research and development and sales offices, which collectively employ at least 17,500 people, with announced plans for some 10,000 more. The Puget Sound Business Journal spotted the regulatory filing confirming the new Bellevue lease earlier Tuesday.

Some in Seattle’s business and real estate community have speculated that Amazon, which is also seeking to place a second headquarters campus in one of 20 finalist regions, could turn to Bellevue as an outlet for office space that is growing increasingly expensive in its hometown. The lease also follows Amazon’s threat this spring to halt some development in Seattle as the city council debated a tax on large businesses to fund homelessness services. Bolstered in part by Amazon’s stand, Seattle’s business community rallied behind a repeal push that convinced the city to nix the measure before it could take effect.

Amazon’s footprint in Seattle includes about 10 million square feet of office space, with plans for an additional 4 million square feet by 2022. The company topped 45,000 employees in Seattle early this year. Kennedy, the Amazon spokesman, declined to disclose an updated figure Tuesday.

To read article on SeattleTimes.com, click here.


Posted on August 23, 2018 at 11:33 am
Mallory Hanley | Posted in Uncategorized |

Local Market Update – August 2018

For the first time in years, the real estate market is finally starting to deliver good news for buyers. The region experienced its third straight month of significant growth in inventory.  Homes are sitting on the market longer, prices are moderating, and multiple offers are becoming more rare. Despite the surge in homes for sale, it is still a seller’s market.  Inventory would need to triple to reach what is considered a balanced market.

Eastside

>>>Click image to view full report.

Inventory on the Eastside soared 47 percent over the same time last year. There was a slight increase in new listings, but the jump was mostly due to homes staying on the market longer. Price drops have become more common.  With buyers having more choices, sellers need to work with their broker to make sure they price their home correctly the first time. After setting a new high of $977,759 in June, the median price of a single-family home dropped to $947,500 in July.  While offering some hope that prices may have started to moderate, the median is still 10 percent higher than it was the same time a year ago.

King County

>>>Click image to view full report.

King County saw the biggest increase in inventory in a decade, with the number of homes for sale jumping 48 percent over a year ago.  However, at 1.5 months of supply that’s still well below the 4-6 months of inventory that is considered balanced.  The median price of a single-family sold in July was $699,000. That represents an increase of 6 percent from a year ago, but is down 4 percent from the record high of $725,000 set in April. Perceptions that the market is cooling needs to be kept in perspective. Homes here took an average of 15 days to sell.

Seattle

>>>Click image to view full report.

Seattle saw inventory shoot up 60 percent over a year ago, bringing the supply to its highest level in over three years.  Even with the sharp increase, much more inventory is needed to meet the demand for homes in the city and sellers may well decide to jump into the market. According to a Zillow study, more than 97 percent of homes in Seattle are worth more now than the peak level before the housing market crashed. Median home prices are 29 percent above the bubble peak level with the median price in July landing at $805,000; up 7 percent from last July and down from the record $830,000 reached in May.

Snohomish County

>>>Click image to view full report.

Snohomish County also had double-digit increases in inventory, though not nearly as great as King County. The number of homes for sale in July increased nearly 16 percent over the same time a year ago, but inventory continues to be very tight. The median price of a single-family home rose 9 percent year-to-year to $495,000. That figure is down from the record high of $511,500 set in June. A move towards a more moderated market is encouraging for buyers and an incentive for sellers to list their homes soon.

View on WindermereEastside.com


Posted on August 10, 2018 at 10:58 am
Mallory Hanley | Posted in Uncategorized |

Seattle housing market is under pressure as Chinese buying ‘dries up’

By,  CNBC

Seattle has been arguably one of the hottest housing markets in America, with home prices rising annually by double digits fueled by scorching demand. There is, however, one outside force that is starting to throw cold water on all that heat: new weakness from once-intense Chinese buyers.

The Pacific Northwest city has been one of the greatest beneficiaries of the recent wave of Chinese buyers of U.S. real estate. Both Chinese investors and families hoping to send their kids to American universities have fueled demand for housing in Seattle, which has long enjoyed a strong Asian culture.

In just the last two years, that demand increased dramatically. In 2016, nearby Canadian city Vancouver slapped a 25 percent tax on international homebuyers in an effort to cool its own overheated housing market. Chinese investors, who had been strong in that market, simply moved south of the border to escape the tax.

 “Chinese buyers are flooding into Seattle,” said Jonathan Woloshin of UBS in a 2016 interview.

But the Chinese yuan’s recent fall in value against the U.S. dollar has made housing more expensive for Chinese buyers. Now, Woloshin said, Seattle could see the opposite of the buying frenzy it had two years ago.

“I’m not telling you there is going to be a crash in prices, but do I think there is going to be a drop in the rate of increase? yes,” said Woloshin.

In the Seattle metropolitan area, home prices skyrocketed 45 percent between August 2016 and now, according to Woloshin. On a currency-adjusted basis, for Chinese buyers, they are up 54 percent.

“The Chinese have a very long time horizon, so if they are buying that home as a second or third home or they’re going to buy it for their child, that’s fair, but the huge run-up in prices, the depreciation in the yuan is going to have an impact,” he added.

Seattle housing is already cooling. The number of homes for sale in King County (where Seattle resides), shot up 47 percent in May compared with a year ago, according to the Northwest Multiple Listing Service. Pending home sales, which represent signed contracts, dropped nearly 9 percent.

Stephen Saunders is a managing broker with Coldwell Banker Seattle and works with Chinese investors in the Seattle market. “It’s drying up,” he said. “I just don’t see the same kind of volume. The downtown Seattle condo market has come to a grinding halt, and that’s where Chinese buyers were.”

Most of his clients are looking for properties in the $1 million to $3 million range, but he said the slowdown in buying is not all about the yuan.

“It’s not necessarily the decline in the currency, it is the increasing restrictions on getting money out. It’s just getting tighter and tighter,” he said, adding that the trade war between the U.S. and China is hitting the finances of some of his investor clients. As for Chinese families looking to buy homes for their children in the area, in just the past six to 10 months, “that’s dried up substantially,” he said.

Despite the increase in the supply of Seattle homes for sale, inventory is still incredibly low at barely two months’ worth, based on the level of sales. This is the same trend throughout the West, where overheated home prices have caused buyers to pull back.

“Although signs of an inventory turnaround are encouraging, whether they mean good news for buyers remains to be seen,” wrote Danielle Hale, chief economist at Realtor.com, in a release. “But high prices and fast-selling homes are causing some buyer hesitation which is reflected in fewer home sales.”

The Seattle housing market has benefited enormously from the region’s largest employer, Amazon. While there was concern earlier this year that a local “head tax” on employers would cause a hiring slowdown, that tax was quickly repealed after enormous pressure from Amazon.

The e-commerce giant, however, did report its first decline in its number of employees since 2009.

After strong hiring throughout the first half of 2017, job postings for open positions at Amazon headquarters dropped sharply last December, according to a report from The Seattle Times. Amazon is also planning to open a second headquarters, commonly called HQ2, although it has yet to announce the location. It currently employs more than 40,000 workers at its Seattle headquarters, according to quarterly filings.

Hiring shifts in Amazon’s home market would certainly affect local housing. The Seattle area, however, is also home to Microsoft and other tech companies.

“I think it will slow down,” said Skylar Olsen, director of economic research at Seattle-based Zillow. “Amazon is certainly a huge player, but they were a catalyst that started a lot of growth in tech. It wasn’t just Amazon that was booming local neighborhoods, it was other start-up players.”

On the other hand, Olsen said she actually thinks the devaluation of the yuan could spur homebuying in Seattle.

“If they’re investment buyers in the first place, then really you just move down in your price point, but you’re still really interested in the rate of return. If you expect the yuan to continue to drop, then you have every reason to buy an asset that’s not valued in yuan,” she added.

 

To read the full article from CNBC, click here.


Posted on August 10, 2018 at 10:45 am
Mallory Hanley | Posted in Uncategorized |

Housing crash a distant memory for Seattle homeowners, Zillow says

by Karina Mazhukhina / KOMONews.com

 

Based on a new study released by Zillow, now’s the best time to sell in Seattle, considering that more than 97 percent of homes are worth more now than before the housing market crash 10-plus years ago. (Photo: Pete Saloutos)

SEATTLE – Now may be the best time to sell in Seattle, considering more than 97 percent of homes are worth more now than the peak level before the housing market crashed in 2008, according to a new Zillow study released on Thursday.

The median home value is 29.2 percent above the bubble peak level, with the average home worth $492,700 – an 11.4 percent increase compared to a year ago.

Unfortunately, the same can be said about rent, with a 1.9 percent increase over the past year and a median cost of $2,176.

The rest of the housing market around the country is doing pretty well, too, with half of all U.S. homes more valuable now than before the 2008 recession. The median home value stands at $217,300 — that’s 8.3 percent higher than last year. Home values have risen by 8.4 percent since the height of the housing bubble.

Similarly, six of the 35 largest housing markets – including five cities in Texas (Austin, San Jose, San Antonio, Dallas-Fort Worth, and Houston), and Denver, Colorado – have more than 95 percent of homes worth more now than pre-recession peak. Portland, Oregon comes in close, with 94.8 percent of homes more valuable now.

But, there are many home buyers across major U.S. cities still struggling to recover from the recession. Las Vegas remains one of the worst cities, with only 0.8 percent of homes more valuable than before the crash. Orlando, Florida comes in second, Riverside, California third, and Baltimore, Maryland and Phoenix, Arizona topping the list for the least valuable homes since the recession.

“Despite widespread and consistent home value growth today, the scars of the recession still run deep for millions of longer-term U.S. homeowners, and it may take years of growth for their home to regain the value lost a decade ago,” Zillow Senior Economist Aaron Terrazas said. “And while stabilizing growth in rents is likely a relief for those renters saving to become homeowners, many of those would-be buyers in a number of the nation’s hottest markets will be contending with home prices that are as high as they’ve ever been.”

 

(Photo Credit: Pete Saloutos)

Click here to view full article on KomoNews.com.


Posted on August 3, 2018 at 11:09 am
Mallory Hanley | Posted in Uncategorized |

The Gardner Report – Second Quarter 2018

Economic Overview

The Washington State economy added 83,900 new jobs over the past 12 months, representing an annual growth rate of 2.5%. This is a slowdown from the last quarter, but employment growth remains well above the national rate of 1.6%. Employment gains continue to be robust in the private sector, which was up by 2.8%. The public sector (government) grew by a more modest 1.1%.

The strongest growth sectors were Retail Trade and Construction, which both rose by 4.8%. Significant growth was also seen in the Education & Health Services and Information sectors, which rose by 3.9% and 3.4%, respectively.

The State’s unemployment rate was 4.7%, down from 4.8% a year ago. Washington State will continue adding jobs for the balance of the year and I anticipate total job growth for 2018 will be around 80,000, representing a total employment growth rate of 2.4%.

Home Sales Activity

  • There were 23,209 home sales during the second quarter of 2018. This is a drop of 2.3% compared to the same period a year ago.

  • Clallam County saw sales rise the fastest relative to the same period a year ago, with an increase of 12.6%. Jefferson County also saw significant gains in sales at 11.1%.

  • The number of homes for sale last quarter was down by a nominal 0.3% when compared to the second quarter of 2017, but up by 66% when compared to the first quarter of this year. Much has been mentioned regarding the growth in listings, but it was not region-wide. King County saw a massive 31.7% increase in inventory, though all but three of the other counties covered in this report saw the number of listings drop compared to a year ago.

  • The takeaway from this data is that while some counties are seeing growth in listings — which will translate into sales down the road — the market is still out of balance.

Home Prices

  • Home prices continue to trend higher across Western Washington, but the pace of growth has started to slow. This should please would-be buyers. The spring market came late but inventory growth in the expensive King County market will give buyers more choices and likely lead to a slowing down of price growth as bidding wars continue to taper.

  • When compared to the same period a year ago, price growth was strongest in Mason County, which was up 17.4%. Eleven other counties experienced double-digit price growth.

  • Mortgage rates, which had been rising significantly since the start of the year, have levelled off over the past month. I believe rising rates are likely the reason that inventory levels are rising, as would-be sellers believe that this could be the right time to cash out. That said, the slowing in rate increases has led buyers to believe that rates will not jump soon, which gives them a little more breathing room. I do not expect to see any possible slowdown in demand until mortgage rates breach the 5% mark.

Days on Market

  • The average number of days it took to sell a home dropped by seven days compared to the same quarter of 2017.

  • King County continues to be the tightest market in Western Washington, with homes taking an average of only 13 days to sell. Every county in the region other than Clallam saw the length of time it took to sell a home drop when compared to the same period a year ago.

  • Across the entire region, it took an average of 41 days to sell a home in the second quarter of this year. This is down from 48 days in the second quarter of 2017 and down by 20 days when compared to the first quarter of 2018.

  • Although we did see some inventory increases when compared to the first quarter of the year, we are essentially at the same level of homes on the market as a year ago. The market has yet to reach equilibrium and I certainly do not expect to reach that point until sometime in 2019.

Conclusions

This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors. For the second quarter of 2018, I have moved the needle very slightly towards buyers, but it remains firmly a seller’s market. This shift is a function of price growth tapering very slightly, as well as the expectation that we should see more homes come on the market as we move through the balance of the year.

 

Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has more than 30 years of professional experience both in the U.S. and U.K.

 

This post originally appeared on the Windermere.com Blog.


Posted on July 27, 2018 at 11:51 am
Mallory Hanley | Posted in Uncategorized |

Another ‘Manhattan moment’: Seattle’s new $19,265-a-month apartment

By

Danny Westneat

Seattle Times staff columnist

The latest signpost pointing to our city’s shiny future — or bleak destiny, depending on where you stand — is taking shape in South Lake Union directly across from my office.

I’ve never seen it, though. And based on the cheapskate crowd of reporters and nonprofit types I tend to hang out with, I probably never will.

It’s up in the sky, a $19,000 apartment. I don’t mean per year — the advertised rent is $19,000 per month. Actually $19,265. Though up in air that thin, it’s hard to see why they bothered tacking on the $265.

(Historical asterisk: My first apartment, a Capitol Hill studio in 1985 with a view of the Sound, has now officially become but a rounding error in Seattle’s brutal new math. It rented for $220 per month.)

Nineteen grand could be a record for a Seattle apartment (it’s hard to tell for certain because some penthouse rents are not advertised publicly.)

But regardless, the inflation in luxury living is remarkable. Just three years ago, the most expensive apartment on the market in Seattle was $6,800 a month, for one of the units in the Belltown luxury building Escala. Recently a penthouse on top of One Lincoln Tower in Bellevue was going for $20,000 a month, but at more than 4,000 square feet it’s a third larger than the apartment at the under construction Kiara building.

Says Dean Jones, founder of Seattle’s Realogics Sotheby’s International Realty: “It’s a Manhattan moment, that’s for sure.”

Unit 4009 is a 3,000-square foot penthouse in one of those 41-story towers sprouting like bamboo in the Amazon jungle. From the outside the building has all the style of an ’80s office tower. But inside it promises sky lounges, an “elevated oasis … with meandering paths,” concierge services and Instagram-able views.

“We’re not just renting apartments. We’re building a community,” says the Kiara promotional material.

Jones, who was kind enough to explain to me how high-end rentals work, said there are three likely categories of renters who could be willing to pay nearly a quarter-million dollars a year in rent. One is the wealthy looking for a temporary in-city pad while they are “between houses.” Another could be a tech executive or high-level recruit taking Seattle’s temperature (“maybe they want to try one of our winters first, before committing.”) Three could be a corporation that plans to use the suite as a recruiting tool.

“People who rent at this price want to be limber,” he said. “They don’t want to make a commitment to the market yet, for a variety of reasons. They like the luxury of liquidity.”

This sounds to me less like community and more like the arrival in Seattle of a phenomenon just chronicled with great angst in the July issue of Harper’s Magazine.

 

“The Death of a Once Great City,” is about New York, which is years if not decades ahead of us. But it contains a warning for Seattle about that city’s “urban crisis of affluence.”

It notes two fascinating trends. One is that increasingly it’s money that lives in pricey real estate, not actual people. One-third of the apartments in midtown Manhattan apparently sit empty for at least 10 months of the year because they are used primarily by the superrich as “an investment, a pied-à-terre, a bolt-hole, a strongbox.”

“We are becoming a city of transients,” author Kevin Baker writes.

The second trend is that Manhattan’s real estate is so superheated by investment capital that it is weirdly disconnecting from human reality. The article recounts finding “188 vacant storefronts along Broadway … this on a main commercial avenue in an incredibly wealthy city, in the eighth year of an economic expansion.” The value of the real estate is so stratospheric as an investment that the rent roll no longer matters.

This was the germ of an idea I was trying to get at last year when I coined the term “prosperity bomb,” to describe what has hit Seattle. Those of us who were lucky enough to arrive here decades ago and buy a house have been showered with prosperity. While many who don’t own are being blasted out of town, including scores of small businesses.

“Jane Jacobs’s ‘intricate ballet’ of the streets is being rapidly eradicated by a predatory monoculture,” the Harper’s author depressingly concludes, name-checking the enthusiastic urbanist who wrote “The Death and Life of Great American Cities.”

So here’s the question: Is it possible to square a $19,000 per month rent with “building a community?” Can they coexist? Or is extreme affluence a sort of benign virus that can only hollow out the diverse life of a city.

I don’t know, but I guess the prosperity bomb is more like a neutron device. What’s guaranteed to thrive after it goes off isn’t the people. It’s the real estate.

To read the article on SeattleTimes.com, click here.


Posted on July 16, 2018 at 11:37 am
Mallory Hanley | Posted in Uncategorized |

Local Market Update – July 2018

The local real estate market looks like it might finally be showing signs of softening, with inventory up and sales down. More sellers have opted to put their homes on the market. Inventory was up 47 percent in King County and price increases were in the single digits. Despite the increase in inventory and slowdown in sales, it’s still a solid seller’s market. Over half the properties purchased in June sold for more than list price.

Eastside

>>>Click image to view full report.

A booming economy offered little price relief for buyers looking on the Eastside. In a recent study of economic strength by state, Washington ranked number one in the country. An additional report targeting cities ranks the Seattle-Bellevue-Tacoma market as the nation’s fourth strongest economy.  The median price of a single-family home on the Eastside rose 10 percent over a year ago to $977,759 setting another record. There is some good news for buyers. Inventory rose to its highest level in three years, with the number of homes for sale increasing 46 percent from the same time last year.

King County

>>>Click image to view full report.

The number of homes on the market in King County soared 47 percent from a year ago, the biggest increase since the housing bubble burst. Despite the increase, there is just over one month of available inventory, far short of the four to six months that is considered a balanced market.  The median price of a single-family home increased 9 percent over last June to $715,000. That’s down 2 percent from the $726,275 median in May. Home prices haven’t dropped from May to June in King County since the last recession.

Seattle

>>>Click image to view full report.

Seattle trails only Bay Area cities when it comes to greatest profits for home sellers.  That may help explain the surge in inventory in June. For example, the number of homes for sale in the popular Ballard/Green Lake area doubled from a year ago. Even though buyers are finally getting more choices, demand still exceeds supply. Homes sell faster in Seattle than in any other U.S. real estate market.  That demand propelled the median price of a single-family home to $812,500; up 8 percent over last June and down from the record $830,000 set in May.

Snohomish County

>>>Click image to view full report.

The largest jump in home prices in the region came in Snohomish County. While higher-priced markets in King County are seeing increases slowing slightly, the median price of a single-family home here jumped 14 percent to $511,500, a new high for the county.  Buyers willing to “keep driving until they can afford it” are finding Snohomish County an appealing destination.


Posted on July 13, 2018 at 10:23 am
Mallory Hanley | Posted in Uncategorized |

Home Inventory Jumps, Demand Stays Strong. 

 

New news: Inventory is finally up.

New listings and total home inventory took a big leap recently. In King County, more people put their homes on the market in May than any May in the past 10 years. And the total number of homes for sale increased by 40 percent from a year ago. Why the big leap? Home prices have risen so sharply that sellers are finally jumping into the market. That’s good news for buyers, who have more choices than they’ve had in years.

Old news: There still aren’t enough homes to meet demand.

While King County now has about a month of available inventory, four to six months of inventory is considered a balanced market. Despite the increase in listings, it’s still a seller’s market.


Posted on June 29, 2018 at 11:59 am
Mallory Hanley | Posted in Uncategorized |

Why High Home Prices And Rising Mortgage Rates Aren’t Stopping Sales

 

 

Mortgage rates hit their highest point in seven years last month, and home prices have jumped 6.5% since mid-2017. On the West Coast, many cities are seeing double-digit gains in home appreciation. But somehow, home buying isn’t slowing down.

In fact, according to the most recent Ellie Mae Origination Insight Report, purchase loans were at their highest share since 2014 in April, and builder confidence is strong, with most feeling good about new home sales for the next six months.

So what gives? With rates high, prices rising and affordability seemingly on the downslope, what’s keeping today’s home buyers in the game? According to experts, there are lots of factors at work.

 

Buyers Want to Lock in Rates … Before They Rise Again

Rising mortgage rates worry would-be homebuyers, spurring them to lock in the current ones—even though they’re less than ideal.

According to Mark Fleming, chief economist at First American, “The fact that rates are rising actually causes demand—particularly first-time homebuyer demand—as they try to crowd into the market and lock in a mortgage rate and price before both go even higher.”

Increasing rates also push uncertain buyers into the market, ones who may have been on the fence about buying in the first place.

“As rates initially move up, there is an impetus for people that are thinking about buying a home to get off of the sidelines,” said Daniel Beckerman, founder of Beckerman Institutional. “If people anticipate higher interest rates in the future, there is an incentive to buy a property and lock in today’s interest rate.”

Apparently, these proactive moves are founded.

According to the Housing and Mortgage Market Review from Arch Mortgage Insurance, interest rates are only expected to increase as the year goes on. In fact, projected monthly payments to buy the same-priced home could jump 10 to 15% over the next year.

As Arch’s global chief economist Ralph DeFranco bluntly puts it, “Interest rates may not be this low again for decades.”

 

It’s the American Dreamand Renting’s Not Much Better

At the end of the day, owning a home is still the American Dream, and some people just want to buy a house. As Gina Ko, agent at Triplemint Real Estate explains, “Overall, people always want to buy a home to start a family, build a legacy and move forward in their life.”

Take Tylor Tourville as a prime example. He and his wife, Chelsey, recently braved the hot Boston market for five months to land their dream home—and the process wasn’t without its challenges.

“My wife and I got married in 2016 and have rented for the last two years,” Tourville said. “We decided we were ready to take the next step on our journey and pursue homeownership.”

Tourville said he and Chelsey “fully acknowledged” that they were home hunting at a difficult time. “We decided from the start that we weren’t going to let fear of market timing dictate our lives and deter us from moving our lives forward and accomplishing our goals,” he said.

Though chasing the American Dream was one factor in the equation, Tourville said he and his wife also saw buying as an opportunity to get out of the heated rent race.

“Buying a house is expensive, there’s no other way around it,” he said. “However, rent prices have been relentlessly rising year after year. Plus, we saw the added benefit of putting our money into something tangible, rather than seeing rent money disappear into the abyss of some landlord’s bank account each month.”

According to the recent Rental Affordability Report from ATTOM Data Solutions, renting a three-bedroom property is more expensive than buying a median-priced home in 54% of major markets. The average three-bedroom costs renters 38.8% of their annual income.

“Even if the percent of income that goes to payments on a home you own is on par with that number, it’s still money you’re putting toward building equity in the home, rather than going into someone else’s pocket,” said Sean Black, cofounder at Knock.com and founding team member at Trulia. “And as a homeowner, you benefit come tax time when you make some of that money back. As a renter, once that money is gone, it’s gone forever.”

 

Rates Actually Aren’t That Highand Buying Power’s Still Strong

Though nominal rates and home prices might be higher than in past years, in the grand scheme of things, experts agree they’re not as bad as it seems on paper.

“I would say that there is a certain degree of sensationalism when you’re looking at and discussing these numbers, and how certain cities like those on the West Coast inflate overall national numbers,” Black said. “Everything is relative—yes, affordability is low compared to where it was following ’08, but that does not mean that every home in every market is unaffordable.”

Thanks to improving incomes, employment and the economy, housing is actually still affordable in much of the U.S. In fact, according to the recent Real House Price Index from First American, consumer-home buying power is up 14.3% since 2011, and “real” home prices—which are adjusted for changes in incomes and rates—are 32.5% lower than their housing boom peak.

If they did reach that peak, Fleming says people would still continue buying homes.

“Even when both mortgage rates and real, consumer house-buying power-adjusted house prices were significantly higher than they are today, people still bought homes,” he said. “Our home purchase decisions are often less financially motivated than personal preference driven.”

 

Home Buying Has Other Benefits, Too

No matter where rates or prices go, when a fixed-rate mortgage is involved, homeownership always offers more consistency than renting—and that’s not going to change. Even Tourville, who’s closing on his Boston home later this month, said that reliability was a big reason he and his wife decided to buy in today’s hot market.

“We almost saw buying as a way to lock in our monthly housing payment, even if it would be at a slight premium compared to our current rent,” he said.

Michael Micheletti, director of corporate communications at Unison Home Ownership Investors, said this consistency is one of the biggest benefits homeownership can offer today’s consumers—especially amidst rising costs elsewhere.

“To me, the biggest benefit is the ability to control housing costs—a major component in the household budget—giving you an ability to take care of rising healthcare costs, saving for a kid’s education, transportation, food and other quality of life issues that the average American faces,” Micheletti said.

According to Laura Conry, executive vice president of consumer originations at FirstBank, homeownership also cuts out all the relocation costs that renters deal with on a regular basis.

“Not only can owning be more affordable, but it allows people to control their housing costs and ensure they are not forced to relocate as opposed to choosing to relocate,” she said. “Rising rent costs cause tenants to move often, which can be difficult, costly, and causes instability for families.”

 

Millennials are Finally Buying in

According to experts, Millennials are behind much of today’s price-resistant housing demand as they finally reach the point where they can both afford a home and desire one.

“The majority of first-time buyers/Millennials have been waiting to enter the marketplace to purchase a home,” Micheletti said. “They have saved enough over the past few years to qualify, and when they do the math on renting versus buying, in most cases, it makes sense for them to buy now.”

Data from the National Association of Realtors shows that Millennials currently account for 36% of all home purchases. And though student loans have long been holding this cohort back from buying, Brendan McKay, owner of McKay Mortgage Company, said improving jobs and income have helped alleviate some of the financial pressure.

“The job market has improved, “McKay said. “There was a dearth of young people buying homes over the last five years. They were buried in student loans, and their income allowed for little in the way of savings. This is less the case now than it was then. Those same people are a little older, have better jobs, and feel stable enough to take on a mortgage payment in addition to their student loans.”

And at 27, Tourville and his wife are two of those Millennials. He says he and Chelsey budgeted, knew what they could pay, and stuck to it. The rest is history.

“We had to be firm about what we were willing to pay, and not compromise,” Tourville said. “In a market where bidding wars are the norm and waiving inspection contingencies is becoming dangerously common, sticking to a number and having an ‘If it’s meant to be, it will be’ mentality helped us not get too high or too low when making offers on houses we liked.”

As Tourville put it, “It takes time, patience, and thick skin. But that doesn’t mean it’s impossible.”

To view article on Forbes.com, click here.


Posted on June 20, 2018 at 11:14 am
Mallory Hanley | Posted in Uncategorized |

Local Market Update – June 2018

Last month brought some long-awaited, positive news for buyers with May posting the most new listings in over a decade. Despite the uptick in inventory, most homes are selling in less than a month. Prices haven’t been impacted either, with the majority of the region continuing to experience double-digit home price increases.

Eastside

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The median home price on the Eastside hit an all-time high of $960, 000 in May; a 10 percent gain over the same time last year. While there were a third more homes for sale in May than a year ago, the area still had only about a month of available inventory. Three to six months is considered a balanced market. Redmond, a city with a population of 64,000, currently has only 51 single-family homes on the market.

King County

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First the good news: Those looking to buy a home in King County in May had almost 1,000 more homes to choose from compared to the previous month. The bad news: That boost in inventory did little to moderate home prices. The median price for a single-family home jumped 15 percent to $726,275, up slightly from the record high set in April.

Seattle

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A strong economy and desirable lifestyle have kept Seattle a leading destination for job-seekers. The ever-increasing demand for housing has sapped supply and sent prices soaring. For 19 months Seattle has led the nation in rising home prices.  May saw the city set yet another record, with the median home price jumping 14 percent to $830,000.

Snohomish County

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Soaring prices in King County combined with rising interest rates make Snohomish County an affordable alternative for those willing to extend their commute time.  The typical home cost $500,000 in May, an increase of 11 percent over the previous year, and down very slightly from last month.


Posted on June 15, 2018 at 10:15 am
Mallory Hanley | Posted in Uncategorized |

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