Should I Move or Remodel? Now That is a Good Question!

 

There are a number of things that can trigger the decision to remodel or move to a new home. Perhaps you have outgrown your current space, you might be tired of struggling with ancient plumbing or wiring systems, or maybe your home just feels out of date. The question is: Should you stay or should you go? Choosing whether to remodel or move involves looking at a number of factors. Here are some things to consider when making your decision.

Five reasons to move:

1. Your current location just isn’t working.

Unruly neighbors, a miserable commute, or a less-than-desirable school district—these are factors you cannot change. If your current location is detracting from your overall quality of life, it’s time to consider moving. If you’re just ready for a change, that’s a good reason, too. Some people are simply tired of their old homes and want to move on.

2. Your home is already one of the nicest in the neighborhood.

Regardless of the improvements you might make, location largely limits the amount of money you can get for your home when you sell. A general rule of thumb for remodeling is to make sure that you don’t over-improve your home for the neighborhood. If your property is already the most valuable house on the block, additional upgrades usually won’t pay off in return on investment at selling time.

3. There is a good chance you will move soon anyway.

If your likelihood of moving in the next two years is high, remodeling probably isn’t your best choice. There’s no reason to go through the hassle and expense of remodeling and not be able to enjoy it. It may be better to move now to get the house you want.

4. You need to make too many improvements to meet your needs.

This is particularly an issue with growing families. What was cozy for a young couple may be totally inadequate when you add small children. Increasing the space to make your home workable may cost more than moving to another house. In addition, lot size, building codes, and neighborhood covenants may restrict what you can do. Once you’ve outlined the remodeling upgrades that you’d like, a real estate agent can help you determine what kind of home you could buy for the same investment.

5. You don’t like remodeling.

Remodeling is disruptive. It may be the inconvenience of loosing the use of a bathroom for a week, or it can mean moving out altogether for a couple of months. Remodeling also requires making a lot of decisions. You have to be able to visualize new walls and floor plans, decide how large you want windows to be, and where to situate doors. Then there is choosing from hundreds of flooring, countertop, and fixture options. Some people love this. If you’re not one of them, it is probably easier to buy a house that has the features you want already in place.

 

Five reasons to remodel:

1. You love your neighborhood.

You can walk to the park, you have lots of close friends nearby, and the guy at the espresso stand knows you by name. There are features of a neighborhood, whether it’s tree-lined streets or annual community celebrations, that you just can’t re-create somewhere else. If you love where you live, that’s a good reason to stay.

2. You like your current home’s floor plan.

The general layout of your home either works for you or it doesn’t. If you enjoy the configuration and overall feeling of your current home, there’s a good chance it can be turned into a dream home. The combination of special features you really value, such as morning sun or a special view, may be hard to replicate in a new home.

3. You’ve got a great yard.

Yards in older neighborhoods often have features you cannot find in newer developments, including large lots, mature trees, and established landscaping. Even if you find a new home with a large lot, it takes considerable time and expense to create a fully landscaped yard.

4. You can get exactly the home you want.

Remodeling allows you to create a home tailored exactly to your lifestyle. You have control over the look and feel of everything, from the color of the walls to the finish on the cabinets. Consider also that most people who buy a new home spend up to 30 percent of the value of their new house fixing it up the way they want.

5. It may make better financial sense.

In some cases, remodeling might be cheaper than selling. A contractor can give you an estimate of what it would cost to make the improvements you’re considering. A real estate agent can give you prices of comparable homes with those same features. But remember that while remodeling projects add to the value of your home, most don’t fully recover their costs when you sell.

 

Remodel or move checklist:

Here are some questions to ask when deciding whether to move or remodel.

1.      How much money can you afford to spend?

2.      How long do you plan to live in your current home?

3.      How do you feel about your current location?

4.      Do you like the general floor plan of your current house?

5.      Will the remodeling you’re considering offer a good return on investment?

6.      Can you get more house for the money in another location that you like?

7.      Are you willing to live in your house during a remodeling project?

8.      If not, do you have the resources to live elsewhere while you’re remodeling?

If you have questions about whether remodeling or selling is a wise investment, we can help you.  Feel free to contact us.

Posted on March 14, 2019 at 6:16 pm
Becky and Steve Larsen | Category: Helpful Information, Strategy

Rent vs. Own? What’s the Best Investment?

The current break-even horizon* in the Seattle Metro area is 1.69 years!

 

*The amount of time you need to own your home in order for owning to be a superior financial decision.

With expensive rental rates, historically low interest rates, and home prices softening, there are advantages to buying versus renting.

In fact, the Seattle Metro area has seen some of the sharpest rent hikes in the country over the last few years! There are several factors to consider that will lead you to make the best decision for your lifestyle and your financial bottom line. Zillow Research® has determined the break-even point for renting versus buying in our metro area. In other words, the amount of time you need to own your home in order for owning to be a superior financial decision. Currently in Seattle, the break-even point is 1.69 years – that is quick! What is so great about every month that ticks away thereafter, is that your nest egg is building in value.

I am happy to help you or someone you know assess your options; please contact me anytime.

These assumptions are based on a home buyer purchasing a home with a 30-year, fixed-rate mortgage and a 20 percent down payment; and a renter earning five percent annually on investments in the stock market.

Read the full article on the Zillow Research website here

Posted on March 14, 2019 at 5:33 pm
Becky and Steve Larsen | Category: Statistical Information, Strategy

Recent Decrease in Interest Rates Spurs Opportunity

 

Most recently, we have experienced an uptick in market activity. In fact, in King and Snohomish counties we saw a 53% increase in pending sales from December to January. While it is seasonally normal to see activity increase at the first of the year, it was 16% higher than the previous January. This increase is being driven by multiple factors, such as our thriving economy and job market, price acceleration softening, and the recent decrease in interest rates.

Currently, rates are as low as 4.5% for a 30-year fixed conventional mortgage – 0.75 points down from the fourth quarter of 2018. In fact, the interest rate in November was the highest we’ve seen in five years!  The current rate level is the lowest we have seen in a year. This is meaningful because the rule of thumb is that for every one-point increase in interest rate, a buyer loses ten percent in purchase power. For example, if a buyer is shopping for a $500,000 home and the rate increases by a point during their search, in order to keep the same monthly payment, the buyer would need to decrease their purchase price to $450,000. Conversely, for every decrease in interest rate, a buyer can increase their purchase price and keep the same monthly mortgage payment.

Why is this important to pay attention to? Affordability! If you take the scenario I just described and apply it to the link above, you can see that the folks who choose to jump into the market this year will enjoy an interest cost savings when securing their mortgage. This lasts the entire life of the loan and can have a huge impact on the monthly cash flow of a household. This cost savings is also coupled with a slow-down in home-price appreciation. Complete year-over-year, prices are up around 8% in both King and Snohomish counties, but note that from 2017 to 2018 we saw a 14% increase. Price appreciation is adjusting to more normal levels and is predicted to increase 4-6% in 2019 over 2018.

As we head into spring market, the time of year we see the most inventory become available, the interest rates will have a positive influence on both buyers and sellers. Naturally, buyers will enjoy the cost savings, but sellers will enjoy a larger buyer pool looking at their homes due to the demand the lower rates are creating. Further, would-be sellers who are also buyers that secured a rate as low as 3.75% via a purchase or re-finance in 2015-2017, will consider giving up that lower rate for the right move-up house now that rates are not as big of a jump up as they were during the second half of 2018.

This recent decrease in rate is making the move-up market come alive. What is great about this, is that it opens up inventory for the first-time buyer and helps complete the market cycle. First-time buyers are abundant right now as the Millennial generation is gaining in age and making big life transitions such as buying real estate. According to Nerd Wallet, 49% of all Millennials have a home purchase in their 5-year plan.

Will these rates last forever? Simply put, no! According to Matthew Gardner, Windermere’s Chief Economist, rates should increase into the 5’s in 2019. While still staying well below the 30-year average of 6.85%, increases are increases, and securing today’s rate could be hugely beneficial from a cost-saving perspective. Just like the 1980’s when folks were securing mortgages at 18%, the people that lock down on a rate from today will be telling these stories to their grandchildren. Note the 30-year average – it is reasonable to think that rates closer to that must be in our future at some point.

So what does this mean for you? If you have considered making a move, or even your first purchase, today’s rates are a huge plus in helping make that transition more affordable. If you are a seller, bear in mind that today’s interest rate market is creating strong buyer demand, providing a healthy buyer pool for your home. As a homeowner who has no intention to make a move, now might be the time to consider a refinance. What is so exciting about these refinances, is that it is not only possible to reduce your monthly payment, but also your term, depending on which rate you would be coming down from.

If you would like additional information on how today’s interest rates pertain to your housing goals, please contact me. I would be happy to educate you on homes that are available, do a market analysis on your current home, and/or put you in touch with a reputable mortgage professional to help you crunch numbers. Real estate success is rooted in being accurately informed, and it is my goal to help empower you to make sound decisions for you and your family.

Posted on February 22, 2019 at 2:02 am
Becky and Steve Larsen | Category: Statistical Information, Strategy

2019 Economic & Housing Forecast

Before you read the complete Matthew Gardner forecast below, here are a few thoughts about the Seattle area:

  • Seattle remains strong economically and our job market is thriving.
  • Interest rates are still historically low and will rise, but not beyond 6%.
  • It is still a seller’s market in our area, but price escalations are softening, creating more balance and sustainability. We are NOT experiencing a bubble.
  • 25% of homeowners in our region have 50% equity in their homes.
  • An economic recession is upon us in 2020. This one should be much like the 1991 recession; short and not based in housing.
  • Be careful how you process the media’s take on the market as they often use extreme month-over-month numbers vs. richer long-term data.
  • Prices are expected to rise 5-7% in 2019, which is more normal, but above the long-term average, yet lower than the recent double-digit year-over-year gains we’ve seen since 2012.


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.

Posted on Windermere.com in Market News by Matthew Gardner, Chief Economist, Windermere Real Estate

Originally published on Inman News.

Posted on January 25, 2019 at 11:41 pm
Becky and Steve Larsen | Category: Statistical Information, Strategy

2018 The Year in Review

2018 was a year of growth and change. The dynamic greater Seattle area and hottest real estate market in the country started to head toward some balance. After six years of expansion resulting in an extreme seller’s market, we encountered a market shift in the late spring. Where it is tricky, is the media paints a somewhat scary picture, cherry picking month-over-month statistics instead of looking at the entire year in review. I thought I’d take the opportunity to recap what led to this shift and where we might be headed.

In May, we saw a 40% increase in homes for sale. For so many years, the lack of inventory was the central theme of the market, with inventory levels as low as a two-week supply in the first quarter of 2018. These constricted inventory levels led to huge price escalations from buyers competing in multiple offers. It was not uncommon to have 10 buyers fighting over one house, resulting in a sale price 20% over the list price. That type of price growth is unreasonable and the result of the extreme market conditions. In May, that changed as many sellers started to come to market. Suddenly, buyers had more choices and multiple offers started to wane. This phenomenon led to a decrease in month-over-month price appreciation.

It just so happened that the increase in inventory was accompanied by two other influential factors. We had an increase in interest rate, and the now-repealed “Seattle Head Tax” was passed on May 14th, 2018 by the Seattle City Council.

Interest rates had been hovering in the low 4%s during all of 2017 and even in the high 3%s in 2016. We started 2018 in the low 4%s, but by May the rate had jumped a half-point. Coupled with extreme price jumps from limited inventory, affordability became an issue for many buyers. This started bringing folks to the sidelines.

A large contributor to the growth in our real estate market over the past 6 years was our robust job market, and the employment growth of companies such as Amazon. The “Seattle Head Tax” that passed in mid-May, but then repealed on June 12th, 2018, was a huge threat to our thriving economy. The angst it created in our region about the future of Seattle’s job market was palpable, and had companies like Amazon making bold moves such as halting all current construction projects. Also, we were in the midst of Amazon’s HQ2 search, and the head tax had Seattle on the line in regards to remaining the home to the big employers that have fed our job growth and economic rise.

The combination of a 40% increase in new listings, a half-point rise in interest rates, and the month-long battle over the head tax created pause in our real estate market. With more selection, more expensive money, and the drama in the Seattle City Council, folks were unsure of where we were headed. This created confusion, and when people are not clear they are less likely to make decisions. In retrospect, it was the perfect storm. Like any storm, it changed the environment, and like a washed-out road, we had to find a new route.

The new route, while a bit bumpy and new to navigate, has been refreshing and necessary. For so many years, we have been begging for more inventory to help temper price growth and create more mobility in the market. From 2016 to 2017, we had 14% year-over-year growth in median price in both King and Snohomish counties. To put that in perspective, the average year-over-year appreciation rate over the last 19 years has been 6%. Home values growing at double-digit appreciation rates was unsustainable, and quite frankly not affordable. This balancing-out of the market is a healthy and more sustainable new route.

Year-to-date, Snohomish County’s median price has grown 10% over the previous year and King county, 9%. A large part of that growth happened in the first half of the year, and we have seen some month-over-month prices go down since, as the market starts to find some balance. The media loves to report these month-over-month numbers to create headlines, but buries the big picture of growth over the previous year and the fact that balance is healthy, in the last few paragraphs of any given article.

The mobility that this created has been a welcome change. People were not putting their homes up for sale because they feared the prospect of finding their next one, so they stayed put. The almost overnight increase in selection created a more comfortable environment for the seller who also had to buy their next home. We have even started to see home sale contingency offers come together as this market has started to balance out.

As we round out 2018, in Snohomish County we ended November with two months of inventory based on pending sales, and 2.4 months in King County. This is still a seller’s market, but not the extreme seller’s market that had only two weeks of inventory – and that is a good thing. A balanced market is when you hit four months of inventory, and we have a way to go to get there. Bear in mind that these measurements are of the entire county and do not take price points into consideration. We have seen inventory pile a little higher in the higher price points. The big news is that sellers are sitting on a ton of equity. In Snohomish County, we have seen a 62% increase in median price since 2012, and in King County, 66%. As long as sellers keep this in perspective and understand that pricing needs to reflect the inventory levels, they will find great success.

The opportunity to make a move-up, downsize, or even buy your first home is awesome right now. Selection is actually an option and interest rates are still historically low. Currently, we are hovering around 5%, and they have actually recently dropped. Rates are predicted to head toward the mid 5%s in 2019, making a purchase now very appealing.

If you are just curious about the value of your home in today’s market or you are considering a move in 2019, please reach out. I’d be happy to relate the current market conditions to your investment and your goals. Education and awareness led to clarity, and when one is clear, they are empowered to make strong decisions. It is my mission to help educate my clients and assist them in making these big life decisions. Whatever your goals are in 2019, it is my honor to help keep you informed on all things real estate related.

 

Posted on December 17, 2018 at 8:10 am
Becky and Steve Larsen | Category: Strategy

Wealth Building Opportunities for First Time Home Buyers

With the sharpest increase of available homes for sale in years, more opportunities are now available for buyers, including first-timers. Many first-time home buyers have sat on the sidelines and remained renters due to the constriction of inventory, which put major pressure on price affordability. Not only has affordability been an issue, but the terms required to prevail in a multiple-offer situation were often not within reach for someone entering the market for the first time.

For example, over the last 12 months in the Seattle Metro area we have seen a 66% increase in the selection homes for buyers to choose from. There is currently 1.8 months of available inventory based on pending sales versus 0.8 months that was available the same month last year. This is still a seller’s market (0-3 months), but it is providing more than twice as much selection than a year ago. This loosening up of the market has helped to temper price growth by reducing the amount of price escalations and the need to have super aggressive financing terms in order to secure a home.

You see, over the last 3-4 years we have experienced double-digit price appreciation (10-14%) year-over-year, each year. A normal rate of appreciation is 3-5%. Minimal amounts of available inventory, low interest rates, and rapid job growth lead to this increase in prices. Now that more homes are coming to market and job growth has stabilized a bit (still growing, but not as fast), price growth has slowed. This is good news for sustainability and affordability. Here’s the deal though – we are still experiencing growth in values, making home ownership a sound investment over renting.

According to the most recent survey from rentcafe.com, the average rent for an apartment in Seattle is $1,906 with an average square footage of 736 sq. ft. That is quite a bit of money for not a ton of space. Further, that monthly expenditure does not create any wealth for the renter, only for the landlord. With renting, rates can be increased at any time, and you are paying down someone else’s asset, not your own. Also, owning gives the homeowner control of their overhead, while getting to make their house their home by adding improvements such as painting.

There are several factors to consider that will lead a person to make the best decision for their lifestyle and their financial bottom line. One of the biggest factors is interest rates! Currently, the rate for a 30-year fixed, conventional, conforming loan is hovering around 4.88%. Up from earlier this year and predicted to rise, but still historically low over the course of the last 30 years. These rates need to be considered the greatest opportunity of them all! With prices tempering and rates still under the 30-year average of 6.65%, buyers are able to secure a sound investment with very low debt service.

With interest rates predicted to rise over the next year, a good rule of thumb to remember is that for every one-point increase in rate, a buyer loses 10% of their buying power. For example, if the rate jumps from 4.75% to 5.75% and one wants to keep the same monthly payment, they must adjust their price point down by 10%. So, a $450,000 budget becomes a $405,000 budget, and that isn’t taking appreciation into consideration. If you assume an average appreciation rate of 4% year-over-year, today’s $450,000 house will be $468,000 next year. What side of the equity growth do you want to be on? As an owner now, or a buyer a year from now, when prices are higher and interest rates are most likely higher as well?

Once you secure a mortgage, the payment stays the same over the term of the entire loan. The long-term benefits of owning are abundant, including the stability of not being asked to move. These are important factors to consider for everyone, but especially millennials, who are enjoying the benefits of Seattle’s attractive job market. One myth to address is the common belief that you must have a 20% down payment in order to buy a home. That is simply not true. There are loan programs as low as 3% down, decreasing the need to have a large sum of money saved up before being able to buy.

Where folks are having to compromise the most due to affordability is commute times, and settling in less-urban neighborhoods. Worth pointing out, is the average home price in south Snohomish County is 34% less than Seattle Metro – that is a huge savings! Further, south King County is 74% more affordable than Seattle. Some people, mainly millennials, have not been willing to give up living in the core urban neighborhoods that have high walk scores and shorter commute times. That should be apt to change with more selection available in the purchase market, coupled with low interest rates. The advantages of moving out a little further and securing a home will start people on the track of building long-term wealth. If you or anyone you know is currently renting and is considering a change, please let me know, as I would be happy to get their questions answered and help them make an informed decision.

Posted on October 1, 2018 at 9:31 pm
Becky and Steve Larsen | Category: Strategy, Uncategorized

Is the Real Estate Market Finally Getting Back to Normal?

 

The housing market has been anything but normal for the last eleven years. In a normal real estate market, home prices appreciate 3.7% annually. Below, however, are the price swings since 2007 according to the latest Home Price Expectation Survey:

After the bubble burst in June 2007, values depreciated 6.1% annually until February 2012. From March 2012 to today, the market has been recovering with values appreciating 6.2% annually.

These wild swings in values were caused by abnormal ratios between the available supply of inventory and buyer demand in the market. In a normal market, there would be a 6-month supply of housing inventory.

When the market hit its peak in 2007, homeowners and builders were trying to take advantage of a market that was fueled by an “irrational exuberance.”

Inventory levels grew to 7+ months. With that many homes available for sale, there weren’t enough buyers to satisfy the number of homeowners/builders trying to sell, so prices began to fall.

Then, foreclosures came to market. We eventually hit 11 months inventory which caused prices to crash until early 2012. By that time, inventory levels had fallen to 6.2 months and the market began its recovery.

Over the last five years, inventory levels have remained well below the 6-month supply needed for prices to continue to level off. As a result, home prices have increased over that time at percentages well above the appreciation levels seen in a more normal market. 

That was the past. What about the future?

We currently have about 4.5-months inventory. This means prices should continue to appreciate at above-normal levels which most experts believe will happen for the next year. However, two things have just occurred that are pointing to the fact that we may be returning to a more normal market.

1. Listing Supply is Increasing

Both existing and new construction inventory is on the rise. The latest Existing Home Sales Report from the National Association of Realtors revealed that inventory has increased over the last two months after thirty-seven consecutive months of declining inventory. At the same time, building permits are also increasing which means more new construction is about to come to market. 

2. Buyer Demand is Softening

Ivy Zelman, who is widely respected as an industry expert, reported in her latest ‘Z’ Report:

 “While we continue to expect a resumption of growth in resale transactions on the back of easing inventory in 2019 and 2020, our real-time view into the market through our Real Estate Broker Survey does suggest that buyers have grown more discerning of late and a level of “pause” has taken hold in many large housing markets.

Indicative of this, our broker contacts rated buyer demand at 69 on a 0- 100 scale, still above average but down from 74 last year and representing the largest year-over-year decline in the two-year history of our survey.”

With supply increasing and demand waning, we may soon be back to a more normal real estate market. We will no longer be in a buyers’ market (like 2007-February 2012) or a sellers’ market (like March 2012- Today).

Prices won’t appreciate at the levels we’ve seen recently, nor will they depreciate. It will be a balanced market where prices remain steady, where buyers will be better able to afford a home, and where sellers will more easily be able to move-up or move-down to a home that better suits their current lifestyles.

Bottom Line

Returning to a normal market is a good thing. However, after the zaniness of the last eleven years, it might feel strange. If you are going 85 miles per hour on a road with a 60 MPH speed limit and you see a police car ahead, you’re going to slow down quickly. But, after going 85 MPH, 60 MPH will feel like you’re crawling. It is the normal speed limit, yet, it will feel strange.

That’s what is about to happen in real estate. The housing market is not falling apart. We are just returning to a more normal market which, in the long run, will be much healthier for you whether you are a buyer or a seller.

 

Posted on September 20, 2018 at 10:31 pm
Becky and Steve Larsen | Category: Strategy

Navigating the Changing Market!

The late spring market brought about some welcomed change to our local real estate markets. In May, we experienced the largest increase in inventory in a decade! North King County and South Snohomish County are two examples of what is happening in all the markets across the Puget Sound as we head into the second half of 2018. Below is a breakdown of the current environment; further is an explanation of what it all means.

North King County (Ship Canal to Snohomish County Line):

  • 38% increase in new listings from April to May 2018
  • 16% more new listings in May 2018 vs. May 2017
  • Overall 5% more new listings over the last 12 months vs. the previous 12 months
  • Average list-to-sale price ratios reduce to 104% from 105% in May 2018
  • Median Price up 15% complete year over year, but down 1% vs. the previous month, landing at $815K.

South Snohomish County (Snohomish County Line to Everett):

  • 27% increase in new listings from April to May 2018
  • 10% more new listings in May 2018 vs. May 2017
  • Overall 2% more new listings over the last 12 months vs. the previous 12 months
  • Average list-to-sale price ratios reduce to 102% from 103% in May 2018
  • Median price up 12% complete year over year, but equal with the previous month, landing at $500K.

This increase in inventory is awesome! It is providing more selection for buyers and is helping temper price growth, which was increasing at an unsustainable level. It is still a Seller’s market by all means, which is defined by having three or less months of available inventory. Both market areas are still just under one month of inventory based on pending sales, but not as low as the two-week mark they were experiencing in March.

The increase in inventory is the result of pent up seller demand. From 1985-2008 the average amount of time a homeowner stayed in their home was 6 years. From 2008-2017 it grew to 9 years. With a resounding amount of equity under their belts, many homeowners are now deciding to make moves. Some are moving up to the next best thing and others are cashing out and leaving the area for a new beginning or retirement. This is providing buyers with the selection they have been waiting for after a very tenuous, inventory-starved start to 2018. The buyers that have stayed on the forefront of the market are now being rewarded with choices. These choices are best accompanied with keen discernment in order to craft the best negotiations – the broker they choose to align with is key.

The price analysis above indicates strong equity positions for sellers, but also a leveling off in price growth. Over the first quarter we saw prices increase month-over-month quite handily; now that more inventory is appearing and demand is being absorbed, price growth is not as extreme. This has highlighted the importance of having a strategic pricing and marketing plan for sellers wanting the highest price and shortest market time. The broker they choose to align with is key.

The importance of both buyers and sellers aligning with a knowledgeable, well-researched and responsive broker is paramount. One might think that it is “easy” to sell a house in this market, but the pricing research, home preparation, market exposure, varied marketing mediums, close management of all the communication, and how negotiations are handled can make or break a seller’s net return on the sale. With market times increasing, having a broker with a tight grasp on the changing environment will help create an efficient market time, resulting in the best price and terms for a successful closing. It is important that sellers do not overshoot this market, and it takes a broker with a keen gut sense rooted in in-depth research to help get them their desired results.

If you’re a buyer, it is overwhelmingly important that you are aligned with a broker that knows how to win in this market. The increase in selection has left some room for contemplation in some cases. Considering possible terms and price based on thorough market research as you head into negotiations are what set a highly capable selling broker apart and are required to prevail. With more selection coming to market, buyers have more to consider, and having a broker alongside them to help craft a strategy of negotiations will ensure they don’t overpay.

If you have any curiosities or questions regarding the value of your current home or purchase opportunities in today’s market, please contact us. It is our goal to help keep you informed and empower strong decisions.

Posted on July 26, 2018 at 11:26 pm
Becky and Steve Larsen | Category: Strategy

Selling Your House on Your Own Could Cost You

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In this extremely hot real estate market, some homeowners might consider selling their homes on their own which is known as a For Sale by Owner (FSBO). They rationalize that they don’t need a real estate agent and believe that they can save the fee for the services a real estate agent offers.

However, a study by Collateral Analytics reveals that FSBOs don’t actually save anything, and in some cases may be costing themselves more, by not listing with an agent.

In the study, they analyzed home sales in a variety of markets. The data showed that:

“FSBOs tend to sell for lower prices than comparable home sales, and in many cases below the average differential represented by the prevailing commission rate.” (emphasis added)

Why would FSBOs net less money than if they had used an agent?

The study makes several suggestions:

  • “There could be systematic bias on the buyer side as well. FSBO sales might attract more strategic buyers than MLS sales, particularly buyers who rationalize lower-priced bids with the logic that the seller is “saving” a traditional commission. Such buyers might specifically search for and target sellers who are not getting representational assistance from agents.” In other words, ‘bargain lookers’ might shop FSBOs more often.
  • “Experienced agents are experts at ‘staging’ homes for sale” which could bring more money for the home.
  • “Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.” If more buyers see a home, the greater the chances are that there could be a bidding war for the property.

Conclusions from the study:

  1. FSBOs achieve prices significantly lower than those from similar properties sold by Realtors using the MLS.
  2. The data suggests the average price was near 6% lower for FSBO sales of similar properties.

Bottom Line

As Dave Ramsey, America’s trusted voice on money, explains:

“Research has shown that, between mistakes, lack of negotiating skills, pricing errors and general exposure on the market, you’ll cost yourself more than the real estate commission…You’ll come out slightly better and with a lot less hassle if you use a top-shelf agent.”

 

Posted on May 27, 2018 at 11:25 pm
Becky and Steve Larsen | Category: Strategy

When’s the Best Month to Sell Your Home? You might be surprised?

 

This Just In: Data Says May is the Best Month to Sell Your Home | Keeping Current Matters

According to a newly released study by ATTOM Data Solutions, selling your home in the month of May will net you an average of 5.9% above estimated market value for your home.

For the study, ATTOM performed an “analysis of 14.7 million home sales from 2011 to 2017” and found the average seller premium achieved for each month of the year. Below is a breakdown by month and even by date!

Top 5 Months/Dates to Sell:

  • June 28th – 9.1% above market
  • February 15th – 9.0% above market
  • May 31st – 8.3% above market
  • May 29th – 8.2% above market
  • June 21st – 8.1% above market

It should come as no surprise that May and June dominate as the top months to sell and that 4 of the top 5 days to sell fall in those two months. The second quarter of the year (April, May, June) is referred to as the Spring Buyers Season, when competition is fierce to find a dream home, which often leads to bidding wars.

One caveat to mention though, is that when broken down by metro, ATTOM noticed that while warmer climates share in the overall trend, it turns out that they have different top months for sales. The best month to get the highest price in Miami, FL, for instance, was January, and Phoenix, AZ came in with November leading the charge.

If you’re thinking of selling your home this year, the time to list is NOW! According to the National Association of Realtors, homes sold in an average of just 30 days last month! If you list now, you’ll have a really good chance to sell in May or June, setting yourself up for getting the best price!

Bottom Line:  We can show you the market conditions in your area and get the most exposure to the buyers who are ready and willing to buy!  There’s no time like the present!

Posted on May 2, 2018 at 5:49 pm
Becky and Steve Larsen | Category: Strategy