The Gardner Report January 27, 2021

Q4 2020 Western Washington Real Estate Market Update

The following analysis of the Western Washington real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere agent.

 

REGIONAL ECONOMIC OVERVIEW

After the COVID-19-induced declines, employment levels in Western Washington continue to rebuild. Interestingly, the state re-benchmarked employment numbers, which showed that the region lost fewer jobs than originally reported. That said, regional employment is still 133,000 jobs lower than during the 2020 peak in February. The return of jobs will continue, but much depends on new COVID-19 infection rates and when the Governor can reopen sections of the economy that are still shut down. Unemployment levels also continue to improve. At the end of the quarter, the unemployment rate was a very respectable 5.5%, down from the peak rate of 16.6% in April. The rate varies across Western Washington, with a low of 4.3% in King County and a high of 9.6% in Grays Harbor County. My current forecast calls for employment levels to continue to improve as we move through the spring. More robust growth won’t happen until a vaccine becomes widely distributed, which is unlikely to happen before the summer.

WESTERN WASHINGTON HOME SALES

❱ Sales continued to impress, with 23,357 transactions in the quarter. This was an increase of 26.6% from the same period in 2019, but 8.3% lower than in the third quarter of last year, likely due to seasonality.

❱ Listing activity remained very low, even given seasonality. Total available inventory was 37.3% lower than a year ago and 31.2% lower than in the third quarter of 2020.

❱ Sales rose in all counties, with San Juan County seeing the greatest increase. This makes me wonder if buyers are actively looking in more remote markets given ongoing COVID-19 related concerns.

❱ Pending sales—a good gauge of future closings—were 25% higher than a year ago but down 31% compared to the third quarter of 2020. This is unsurprising, given limited inventory and seasonal factors.

 

WESTERN WASHINGTON HOME PRICES

❱ Home price growth in Western Washington continued the trend of above-average appreciation. Prices were up 17.4% compared to a year ago, with an average sale price of $617,475.

❱ Year-over year price growth was strongest in Lewis and Grays Harbor counties. Home prices declined in San Juan County which is notoriously volatile because of its small size.

❱ It is interesting to note that home prices were only 1% higher than third quarter of 2020. Even as mortgage rates continued to drop during the quarter, price growth slowed, and we may well be hitting an affordability ceiling in some markets.

❱ Mortgage rates will stay competitive as we move through 2021, but I expect to see price growth moderate as we run into affordability issues, especially in the more expensive counties.

 

 

 

DAYS ON MARKET

❱ 2020 ended with a flourish as the average number of days it took to sell a home in the final quarter dropped by a very significant 16 days compared to a year ago.

❱ Snohomish County was again the tightest market in Western Washington, with homes taking an average of only 15 days to sell. The only county that saw the length of time it took to sell a home rise compared to the same period a year ago was small Jefferson County, but it was only an increase of four days.

❱ Across the region, it took an average of 31 days to sell a home in the quarter. It is also worth noting that, even as we entered the winter months, it took an average of five fewer days to sell a home than in the third quarter of last year.

❱ The takeaway here is that demand clearly remains strong, and competition for the few homes available to buy continues to push days on market lower.

 

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.

Demand has clearly not been impacted by COVID-19, mortgage rates are still very favorable, and limited supply is causing the region’s housing market to remain incredibly active. Because of these conditions, I am moving the needle even further in favor of sellers.

2021 is likely to lead more homeowners to choose to move if they can work from home, which will continue to drive sales growth and should also lead to more inventory. That said, affordability concerns in markets close to Western Washington’s job centers, in combination with modestly rising mortgage rates, should slow the rapid home price appreciation we have seen for several years. I, for one, think that is a good thing.

 

ABOUT MATTHEW GARDNER

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; 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 the University of Washington where he also lectures in real estate economics.

 


This post originally appeared on the Windermere.com Blog

Housing Market NewsThe Gardner Report April 23, 2020

Western Washington Real Estate Market Update

 

The following analysis of the Western Washington real estate market is provided by Windermere Real Estate Chief Economist, Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere agent.

 

A MESSAGE FROM MATTHEW GARDNER

Needless to say, any discussion about the U.S. economy, state economy, or housing markets in the first quarter of this year is almost meaningless given events surrounding the COVID-19 virus.

Although you will see below data regarding housing activity in the region, many markets came close to halting transactions in March and many remain in some level of paralysis. As such, drawing conclusions from the data is almost a futile effort. I would say, though, it is my belief that the national and state housing markets were in good shape before the virus hit and will be in good shape again, once we come out on the other side. In a similar fashion, I anticipate the national and regional economies will start to thaw, and that many of the jobs lost will return with relative speed. Of course, all of these statements are wholly dependent on the country seeing a peak in new infections in the relatively near future. I stand by my contention that the housing market will survive the current economic crisis and it is likely we will resume a more normalized pattern of home sales in the second half of the year.

 

HOME SALES

  • There were 13,378 home sales during the first quarter of 2020, a drop of only 0.2% from the same period in 2019, but 27% lower than in the final quarter of 2019.
  • The number of homes for sale was 32% lower than a year ago and was also 32% lower than in the fourth quarter of 2019.
  • When compared to the first quarter of 2019 sales rose in eight counties and dropped in seven. The greatest growth was in Cowlitz and Lewis counties. The largest declines were in Island and Snohomish counties.
  • Pending sales — a good gauge of future closings — rose 0.7% compared to the final quarter of 2019. We can be assured that closed sales in the second quarter of this year will be lower due to COVID-19.

 

 

 

HOME PRICES

  • Home-price growth in Western Washington rose compared to a year ago, with average prices up 8.7%. The average sale price in Western Washington was $524,392, and prices were 0.4% higher than in the fourth quarter of 2019.
  • Home prices were higher in every county except San Juan, which is prone to significant swings in average sale prices because of its size.
  • When compared to the same period a year ago, price growth was strongest in Clallam County, where home prices were up 21.7%. Double-digit price increases were also seen in Kitsap, Skagit, Mason, Thurston, and Snohomish counties.
  • Affordability issues remain and, even given the current uncertain environment, I believe it is highly unlikely we will see any form of downward price pressures once the region reopens.

 

 

DAYS ON MARKET

  • The average number of days it took to sell a home in the first quarter of this year dropped seven days compared to the first quarter of 2019.
  • Pierce County was the tightest market in Western Washington, with homes taking an average of only 29 days to sell. All but two counties — San Juan and Clallam — saw the length of time it took to sell a home drop compared to the same period a year ago.
  • Across the entire region, it took an average of 54 days to sell a home in the first quarter of the year — up 8 days compared to the fourth quarter of 2019.
  • Market time remains below the long-term average across the region. This is likely to change, albeit temporarily, in the second quarter due to COVID-19.

 

 

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.

Given the current economic environment, I have decided to freeze the needle in place until we see a restart in the economy. Once we have resumed “normal” economic activity, there will be a period of adjustment with regard to housing. Therefore, it is appropriate to wait until later in the year to offer my opinions about any quantitative impact the pandemic will have on the housing market.

 

ABOUT MATTHEW GARDNER

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; 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 the University of Washington where he also lectures in real estate economics.

 


This post originally appeared on the Windermere.com Blog

Home BuyingHousing Market NewsSelling Your HomeThe Gardner Report October 28, 2019

Western Washington Real Estate Market Update – Q3 2019

The following analysis of the Western Washington real estate market is provided by Windermere Real Estate Chief Economist, Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact me!

ECONOMIC OVERVIEW

Washington State employment has softened slightly to an annual growth rate of 2%, which is still a respectable number compared to other West Coast states and the country as a whole. In all, I expect that Washington will continue to add jobs at a reasonable rate though it is clear that businesses are starting to feel the effects of the trade war with China and this is impacting hiring practices. The state unemployment rate was 4.6%, marginally higher than the 4.4% level of a year ago. My most recent economic forecast suggests that statewide job growth in 2019 will rise by 2.2%, with a total of 88,400 new jobs created.

HOME SALES

  • There were 22,685 home sales during the third quarter of 2019, representing a slight increase of 0.8% from the same period in 2018 and essentially at the same level as in the second quarter.
  • Listing activity — which rose substantially from the middle of last year — appears to have settled down. This is likely to slow sales as there is less choice in the market.
  • Compared to the third quarter of 2018, sales rose in five counties, remained static in one, and dropped in nine. The greatest growth was in Skagit and Clallam counties. Jefferson, Kitsap, and Cowlitz counties experienced significant declines.
  • The average number of homes for sale rose 11% between the second and third quarters. However, inventory is 14% lower than in the same quarter of 2018. In fact, no county contained in this report had more homes for sale in the third quarter than a year ago.

HOME PRICES

  • Home price growth in Western Washington notched a little higher in the third quarter, with average prices 4.2% higher than a year ago. The average sales price in Western Washington was $523,016. It is worth noting, though, that prices were down 3.3% compared to the second quarter of this year.
  • Home prices were higher in every county except Island, though the decline there was very small.
  • When compared to the same period a year ago, price growth was strongest in Grays Harbor County, where home prices were up 22%. San Juan, Jefferson, and Cowlitz counties also saw double-digit price increases.
  • Affordability issues are driving buyers further out which is resulting in above-average price growth in outlying markets. I expect home prices to continue appreciating as we move through 2020, but the pace of growth will continue to slow.

DAYS ON MARKET

  • The average number of days it took to sell a home dropped one day when compared to the third quarter of 2018.
  • Thurston County was the tightest market in Western Washington, with homes taking an average of only 20 days to sell. There were six counties where the length of time it took to sell a home dropped compared to the same period a year ago. Market time rose in six counties, while two counties were unchanged.
  • Across the entire region, it took an average of 38 days to sell a home in the third quarter. This was down 3 days compared to the second quarter of this year.
  • Market time remains below the long-term average across the region and this trend is likely to continue until more inventory comes to market, which I do not expect will happen until next spring.

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. I am leaving the needle in the same position as the first and second quarters, as demand appears to still be strong.

The market continues to benefit from low mortgage rates. The average 30-year fixed rates is currently around 3.6% and is unlikely to rise significantly anytime soon. Even as borrowing costs remain very competitive, it’s clear buyers are not necessarily jumping at any home that comes on the market. Although it’s still a sellers’ market, buyers have become increasingly price-conscious which is reflected in slowing home price growth.

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; 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 the University of Washington where he also lectures in real estate economics.

This post originally appeared on the Windermere.com Blog.