Western Washington Real Estate Market Update
Posted in Market News and Western Washington Real Estate Market Update by Matthew Gardner, Chief Economist, Windermere Real Estate
I’m happy to report that Washington State continues to add jobs at a steady rate. While the rate of growth is tapering, this is because many markets are getting close to “full employment”, during which time growth naturally slows. That said, I believe that the state will add around 70,000 jobs in 2017. Washington State, as well as the markets that make up Western Washington, continues to see unemployment fall and I anticipate that we will see this rate drop further as we move through the year. In all, the economy continues to perform at or above average levels and 2017 will be another growth year.
- There were 15,652 home sales during the first quarter of 2017. This is an increase of 9.5% from the same period in 2016, but 20.7% below the total number of sales in the final quarter of 2016.
- With an increase of 45.5%, sales in Clallam County grew at the fastest rate over the past 12 months. There were double-digit gains seen in an additional 10 counties, suggesting that demand remains very robust. The only modest decline in sales was seen in Grays Harbor County.
- The number of homes for sale showed no improvement at all, with an average of just 6,893 homes for sale in the quarter, a decline of 33% from the previous quarter and 25% from the first quarter of 2016. Pending sales rose by 2% relative to the same quarter a year ago.
- The key takeaway from this data is that 2017 will offer little relief to would-be home buyers as the housing supply remains severely constrained.
- With demand continuing to exceed supply, home prices continued to rise at above-average rates. Year-over-year, average prices rose by 9.5% but were 1.1% lower than in the final quarter of 2016. The region’s average sales price is now $409,351.
- Price growth in Western Washington is unlikely to taper dramatically in 2017 and many counties will continue to see prices appreciate well above their long-term averages.
- When compared to the same period a year ago, price growth was most pronounced in Kittitas County, which rose by 19.6%. Double-digit price growth was seen in an additional 10 counties. The only market where the average price fell was in the ever-volatile San Juan County.
- It is clear that rising interest rates have not taken much of a sheen off the market.
DAYS ON MARKET
- The average number of days it took to sell a home in the first quarter dropped by 16 days when compared to the first quarter of 2016.
- King County remained the tightest market, with the average time to sell a home at just 31 days. Island County was the only area where it took longer to sell a home than seen a year ago; however, the increase was just one day.
- In the first quarter of the year, it took an average of 70 days to sell a home. This is down from the 86 days it took in the first quarter of 2016, but up from the 64 days it took in the final quarter of last year.
- Given woefully low levels of inventory in all Western Washington markets, I do not expect to see the length of time that it takes to sell a home rising in 2017. In fact, it is likely that it will continue to drop.
This speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors. For the first quarter of 2017, I moved the needle a little more in favor of sellers. The rapid increase in mortgage rates during the fourth quarter of 2016 has slowed and buyers are clearly out in force.
How to Avoid the Most Common Buying and Selling Mistakes
There’s nothing more exciting, rewarding, and fulfilling than buying a home. However, it’s a complex transaction, and there are a number of steps along the path that can confuse, betwixt, and befuddle even the most seasoned buyers and sellers.
How can you avoid those potential pitfalls and common mistakes? Look to your real estate professional for advice and keep these guidelines in mind:
#1 Review your credit reports ahead of time
Review your credit report a few months before you begin your house hunt, and you’ll have time to ensure the facts are correct, and be able to dispute mistakes before a mortgage lender checks your credit. Get a copy of your credit report from Experian, Equifax, and TransUnion. Why all three? Because, if the scores differ, the bank will typically use the lowest one. Alert the credit bureaus if you see any mistakes, fix any problems you discover, and don’t apply for any new credit until after your home loan closes.
#2 Get pre-approved
Before getting serious about your hunt for a new house, you’ll want to choose a lender and get pre-approved for a mortgage (not just pre-qualified—which is a cursory review of your finances—but pre-approved for a loan of a specific amount). Pre-approval lets sellers know you’re serious. Most importantly, pre-approval will help you determine exactly how much you can comfortably afford to spend.
#3 Know what you want
You and your real estate agent should both be clear about the house you want to buy. Put it in writing. First, make a list of all the features and amenities you really want. Then, number each item and prioritize them. Now, divide the list into must-haves and really-wants. A good place to start is the “HUD Wish List,” which is available online for free at http://www.hud.gov/buying/wishlist.pdf
#4 Account for hidden costs
In addition to the purchase price of the home, there are additional costs you need to take into consideration, such as closing costs, appraisal fees, and escrow fees. Once you find a prospective home, you’ll want to:
- Get estimates for any repairs or remodeling it may need.
- Estimate how much it will cost to maintain (gas, electric, utilities, etc.).
- Determine how much you’ll pay in taxes monthly and/or annually.
- Learn whether there are any homeowner or development dues associated with the property.
#5 Get an inspection
Buying a home is emotionally charged—which can make it difficult for buyers to see the house for what it truly is. That’s why you need impartial third parties who can help you logically analyze the condition of the property. Your agent is there to advise you, but you also need a home inspector to assess any hidden flaws, structural damage or faulty systems.
#6 Evaluate the neighborhood and location
When house hunting, it’s easy to become overly focused on the number of bedrooms and bathrooms, the condition of the home and its amenities while overlooking the subtleties of the surrounding neighborhood. Take time to check crime reports, school options, churches and shopping. If schools are a key factor, do more than simply research the statistics; speak with the principal(s) and chat with the parents waiting outside.
#1 Avoid becoming emotional or sentimental about the sale
Once you decide to sell your house, it’s time to strip out the emotion and look at it as a commodity in a business transaction. If you start reminiscing about all the good times you had and the hard work you invested, it will only make it that much harder to successfully price, prepare, and market the home.
#2 Fix problems (or price accordingly)
Homes with deferred maintenance and repair issues can take far longer to sell and can be subject to last-minute sale-cancellations. These homes also often sell for less than their legitimate market value. If you simply can’t afford to address critical issues, be prepared to work with your agent to price and market your home accordingly.
#3 Don’t overprice your home (and/or refuse to negotiate)
Getting top dollar is the dream of every seller. But it’s essential that you let the market dictate that price, not your emotions or financial situation. Allow your agent to research and prepare a market analysis that factors in the value of similar homes in the area, and trust those results.
#4 Use quality photos
The vast majority of prospective buyers today search for homes online first. In order to make a good first impression, you need a wealth of high-quality photos of your home and surrounding grounds. You may also need to consider professional staging in order to position your home in the best possible light for prospective buyers.
The process of buying or selling a home can have plenty of twists and turns, but with some smart decision making, you can avoid the most common mistakes and pitfalls.