Last week, my office hosted our 16th Annual Economic Forecast Event featuring Matthew Gardner. Matthew is a sought-after economist focused on the national and local economies and has a deep understanding of the housing market across the country and right in our own backyard. He is an economic advisor for the State of Washington, Governors Council, lectures on real estate economics at the University of Washington, and is found quoted in various media outlets throughout the year as a respected expert. He is certainly a trusted real estate advisor that I look to to stay informed to help educate my clients.

The event was virtual and I have the recording and his PowerPoint in a PDF that I am happy to share with you, please reach out if you would like me to email it to you. So much was shared in his 60-minute presentation that was focused on the national economy and a deep dive into both King and Snohomish Counties, followed by Q & A. I can’t quite cover it all here, but here are some highlights!

1. Inflation levels have dropped from their peak and are now tracking with more normalized levels. This has caused interest rates to start to drop, which is a trend he sees continuing in 2024.

2. The U.S. unemployment rate measured at 3.8% at the end of 2023 and is forecasted to rise ever so slightly and remain under the long-term average of 4.5%. In King and Snohomish Counties the unemployment rate averaged 4% at the end of 2023.

3. There is a major labor gap in both King and Snohomish Counties, with job postings heavily outweighing labor supply. Biotech is the darling of the moment which will balance out the IT side in the overall jobs picture.

4. Interest rates are predicted to gradually decrease throughout 2024 as inflation softens. The Fed will slow-play these reductions to get them right, so they do not have to raise them again.

5. The Tri-County area of Snohomish-King-Pierce Counties had massive organic population growth from 2020-2022, much of which was international vs. domestic.

6. Homeowner equity averages 60% in King County and 57.5% in Snohomish County. According to the median price in King County in December 2023 that is $511,200 and $391,000 in Snohomish County. Homeownership proves to have the strongest impact on household wealth.

7. There will NOT be a bubble in the housing market! Given that prices remained stable in 2023 amongst the highest interest rates we’ve seen in two decades along with inflation at a high, the housing market has proven to be a fortuitous economic marker. Rates and inflation are both improving, which will bode well for home values. Our biggest challenge is the lack of inventory and affordability.

8. Price growth in King and Snohomish Counties was flat year-over-year (2022 to 2023) after massive growth from 2020-2022, which was positive given the correction in prices and rise in interest rates. Prices are forecasted to modestly increase in 2024. Tight inventory and continued buyer demand will drive this growth while interest rates temper.

Please reach out if you would like to learn more and receive the documents and recording. Also, you can count on me to follow the trends, statistics, and rhythm of the market throughout the year. It is my goal to gain knowledge and understanding so I can help keep you informed. This level of service helps empower my clients to make thoughtful, sound decisions when navigating their investments and big life choices.

On January 1, 2024, major changes to the Law of Agency will go into effect. These changes result from the real estate industry in the state of Washington wanting to elevate the level of transparency and consumer protection surrounding buyer representation. Senate Bill 5191 was voted into law requiring adjustments in how brokers operate when working with buyers.

Before I get into the details of the specific changes below, I wanted to explain why these changes are being made and the benefits to the consumer. It has been a long time coming for the buyer side of a transaction to be better defined with regards to representation, compensation, and the level of commitment the buyer and broker have to each other.

The seller side of a transaction has always required a separate contract (a Listing Agreement) that outlines these three important items. It has always been a bit shocking to me that the state did not require such a contract for a buyer and broker. Under new legislation set to take effect on January 1, 2024, buyers and brokers will be required to have a signed contract, a Buyer Brokerage Service Agreement (BBSA). This new contract will provide a consistent and professional guidepost to help everyone understand the buyer and broker relationship, just like a seller and broker do when they enter into a listing agreement.

The opportunity to set clear expectations through this new agreement and give both parties the choice to willingly agree to them will help buyers understand how their broker gets paid, cover industry norms, dig into who represents who and where that advocacy starts and ends, and communicate a transparent commitment to each other. I think this is powerful and meaningful for both buyers and brokers. Buying a home is a serious matter and outlining via a contract what is mandated by state law both clarifies and formalizes the relationship for both sides. Most importantly, it is a choice of who the buyer and broker enter into a contract with. The conversations that will surround these choices will be empowering for all parties involved.

Let’s face it, buying a house is not an easy task, nor is guiding someone successfully through the process. It is about time the law follows the call of duty and requires a clear explanation of how buyer representation works and encourage a clearly communicated partnership. I’ve always believed that having consistent processes in my business leads to a better outcome for my clients. This advancement for our industry will elevate these processes and in turn, raise the bar.

I plan to embrace these changes, as I see them as a benefit to my clients and our industry. The clarity these agreements provide will lead to fewer surprises, stronger bonds, and higher efficiency. I am prepared and excited to embrace this as a benefit for all parties involved in a real estate transaction.

Key Revisions
For years, real estate brokerage firms were only required to enter into written agreements with sellers, not buyers. Beginning on January 1, 2024, the Agency Law will require firms to enter into a written “brokerage services agreement” with any party the firm represents, both sellers and buyers. This change is to ensure that buyers (in addition to sellers) clearly understand the terms of the firm’s representation and compensation.

The services agreement with buyers must include:

• The term of the agreement (how long the buyer and broker are committed to working together);
• The name of the broker appointed to be the buyer’s agent;
• Whether the agency relationship is exclusive or non-exclusive;
• Whether the buyer consents to the individual broker representing both the buyer and the seller in the same transaction (referred to as “limited dual agency”);
• Whether the buyer consents to the broker’s designated broker/managing broker’s limited dual agency;
• The amount the firm will be compensated and who will pay the compensation; and
• Any other agreements between the parties.

All of these options are outlined in the new BBSA contract and will be presented and discussed before deciding to embark on the home-buying journey together. It will eliminate any guesswork and encourage a strong work relationship surrounding an incredibly important task. This will help my clients understand my level of commitment and professionalism, and how I help my clients achieve effective results.

I have provided the links to the new Agency Pamphlet and the revisions to Senate Bill 5191 below for your review. If you have any questions or are thinking about making a purchase in 2024, please reach out. It is always my goal to help keep my clients well-informed and empower strong decisions. I am happy to bring this information to you ahead of the change, so you are well prepared should you have any real estate changes coming your way in the future.

Revised Pamphlet. The pamphlet entitled “Real Estate Brokerage in Washington” provides an overview of the revised Agency Law.
Revised Agency Law. Substitute Senate Bill 5191 sets forth the revised Agency Law in its entirety.

Check out the latest Mondays with Matthew (Matthew Gardner, Windermere’s Chief Economist) that addresses inventory levels, interest rates, existing home sales, and the price stability we have experienced since the first of the year. Despite higher interest rates, historically low inventory has kept prices stable!

Please note that I will be hosting a Virtual Economic Forecast Event with Matthew on the evening of Wednesday, January 17th, 2024. There will be a lot to cover as 2023 was a transitional year and 2024 is an election year! Be on the lookout for more information and save the date if you would like to attend.

Lately we have talked about life changes leading to real estate moves. Sometimes moves are brought on by joyful advancements in life and sometimes they are motivated by hardship. Then there are times when your actual house just doesn’t fit your life anymore and it is time for something different. Whatever might be calling someone to make a move, they also have to assess the affordability.

There are three aspects to affordability: price, interest rate, and income. Price and interest rate will determine your monthly payment, and your income will provide the means to maintain and build your investment. One way I have been able to help my clients strategize affordability with higher interest rates are some creative financing options.

Most often a home buyer will procure a home loan with a 30-year term and the current interest rate. In the month of August, the 30-year conventional interest rate averaged 7.25%. While 7.25% is reflective of the average over the last 30 years, it is 2-3% higher than what we have experienced over the last 5 years. According to several experts, rates are predicted to decrease as we finish out 2023 and head into 2024. That also means that it is very likely prices will increase when that happens.

I have helped some of my clients overcome the higher interest rates and secure today’s prices by helping them arrange with their lender an interest rate buy-down. Sometimes we have even been able to get the seller to financially assist in paying for the buy-down. There are two types of buy-downs: a permanent buy-down and a temporary buy-down.

A permanent buy-down requires about 3% of the purchase price to buy the rate down by a point for the 30-year term of the loan. A good rule of thumb to remember is that every 1-point in rate equals 10% in buying power. For example, if the rate is 7% and you are qualified for a home at $800,000, if the rate went down by 1 point to 6% you could now afford $880,000 and have a very similar payment. Another way to look at this is simply the monthly payment itself. An $800,000 purchase with 20% down with a 6% interest rate would save a buyer $420.82 a month vs. the payment at 7%.

A permanent buy-down is a useful tool and so is a temporary buy-down. It is actually one of the most powerful tools in today’s market. It costs far less than a permanent buy-down and with rates predicted to decrease over the next 12-18 months as inflation settles, you could easily find yourself in a position to refinance.

Here is an example, let’s say you are shopping for a house and have the same $800,000 budget and a 20% down payment with today’s rate of 7%. The monthly principal and interest payment would be $4,257.94. You could do a 2-1 buydown (2 points lower in year one and 1 point lower in year 2) which would have your payment in year one be based on an interest rate of 5% with a monthly principal and interest payment of $3,435.66 – a savings of $822.28 a month. For year two, the monthly principal and interest would be based on 6%, resulting in a monthly payment of $3,837.12, a $420.82 savings. The total savings in monthly payments with the 2-1 buy-down over the two years would be $14,917.18.

The roughly $15,000 in monthly payment savings is paid upfront at closing and in some cases paid by the seller. The buyer still needs to qualify based on the 7% interest rate as the payments will convert to the payment based on the 7% in year three moving forward. The strategy here is to never have the payment increase to 7% amount because the buyer plans to refinance when rates come down and will permanently fix their rate below 7%. A bonus is that if the entire $15,000 credit has not been used yet, in some cases those funds can be applied towards the refinance.

This strategy has been effective in helping buyers secure a monthly payment that is more affordable so they can make a move now based on life’s needs and wants. It also helps them secure today’s prices. If we find a home that has had a little longer market time, a home seller is likely to assist with the $15,000 credit vs. reducing their price by 3% to accommodate a lower payment for 30 years. The temporary assistance in reducing the payment for 1 to 2 years is a viable tool for both the buyer and seller to create a win-win.

I felt it was important to bring these options to light and to encourage people to not just take today’s market at face value. Creativity, collaboration, and calm have led to some of the most rewarding sales this year for both buyers and sellers. When people logically work together to accomplish moves in an environment that seems difficult, they find success. Ultimately, I am here to help my clients match their real estate to their lives despite where the rates are today.

I love rolling up my sleeves and creating a plan to help my buyers and sellers accomplish their goals. It is my mission to help keep my clients informed and empower strong decisions. If you or someone you know are curious about how today’s market matches your needs, please reach out.

Thank you to everyone who pitched in during the Summer Food Drive! Through your generosity, we collectively donated $3,060 and 1,503 pounds of food to Volunteers of America Western Washington food banks! This is all going directly into our communities to help our neighbors in need.

Thank you!

I think we can all agree that we have been on a bit of a wild ride over the last 12 months in the real estate market. When the Fed decided to change its trajectory on interest rates in mid-2022, it created some chaos and confusion.

When big changes happen, it is a natural reaction to pause and wait for some certainty of how things will land. This happened when the pandemic hit, too. People paused in March and April of 2020 and once May settled in the market went bonkers. I have found that gathering data, whether it’s real-time data or studying historical trends, in order to make sense of it all is incredibly helpful to create clarity and empower strong decisions.

I am committed to studying the data on behalf of my clients and I am also fortunate to have Matthew Gardner, Windermere’s Chief Economist as a source to help guide this research. He speaks to the predictions that were made at the beginning of this year by several industry experts and breaks down their varied theories in this recent article. As a testament to the importance of gathering the data and applying knowledgeable analysis are the now renewed predictions from all of these sources. They are now very much more aligned with one another and in agreement that prices are not headed in a downward spiral, but are in fact on the rise year-over-year. Data is powerful!

Below is a chart I created with hyper-local data reflecting both King and Snohomish counties’ median prices over the last 18 months in relationship to the rising interest rates. While we are off the peak of 2022 when rates were at 5%, we are only slightly lower and up quite significantly from the bottom when rates hit 7%. Proof that the market is sustaining the higher rates is that we have found ourselves back near the 7% this summer and prices have not faltered.

Would the market welcome a drop in the rate? Absolutely! When this happens, which is predicted, we will see buyer demand increase. What we will also see is additional inventory come to market as would-be home sellers will be more comfortable relinquishing their low rate to indulge their need or want for a different home. The high rates are keeping inventory low in a high-rate environment, which is supporting price stabilization and growth. Simply put, the sky is not falling.

The market continues to churn, we are not in a free fall, and prices are stable. If you’ve thought about a move, consider the data and please ask me to help you gain understanding. I can adjust the graph featured here with your local zip code or city to give you an even more thorough look at your investment.

Real estate moves are most often a result of life changes. If you have found yourself questioning whether your four walls currently meet your needs, let’s talk! I will assess your goals and apply the data in an understandable way to help guide the best decision for you today or down the road.

The need for food assistance has never been greater due to the end of the Supplemental Nutrition Assistance Program’s (SNAP) Emergency Allotments and soaring food prices. As a result, more and more families across America are facing hunger. Our food banks are experiencing a surge in visitors and struggling to meet the increased demand.

The good news is that this incredible network of go-givers can do something about it!
Fueled by the collective generosity that Windermere is so well known for, I’m rallying my network to come together to help us towards our goal of raising $50,000.

I would be very grateful if you considered contributing to our campaign through our donation website. 

Thank you for your generosity!