My View of the Market • Uncategorized • June 27, 2023

My View of the Market – June 2023

by Josh Friend

Well, there have been newsletters in the past where I feel like I have been repeating myself, but not in this market. Conditions over the last 6 months have been changing rapidly. For example, we had a very strong seller’s market in March and it held through May. Much of this is related to interest rates dropping down into the 6% range. Then, in early May rates dropped again, but as the month wore on they began climbing. And so here is where we are. Rates are now fluctuating almost daily with rates back in the 6-7% range. This has cooled the market slightly.

Some homes are making it through to review dates (usually on Mondays or Tuesdays) with solid offers. True, homes are still selling, but now buyers can wait to see if multiple offers are coming in to determine if they they are facing an over-asking bidding war.

So, what does this mean for you? Buyers: write a contract that is closer to the asking price and in some cases slightly below. Sellers: price your homes at current market value and not plan on escalation addendums to increase the price of your home. Adjust your expectations! This isn’t 2021 anymore! Your home will likely spend more days on the market to go under contract.

The good news is, many forecasters are predicting lower rates in the coming months. And while inventory remains low, falling rates typically give way to higher prices and multiple offer situations. Buyers shouldn’t wait. There are plenty of adjustable rate mortgage options out there that will allow you to jump to a lower rate quickly. Sellers shouldn’t wait either. If you know you are planning to sell, start preparing your home to list because there still aren’t enough homes on the market to meet demand.

Buyers • Sellers • Uncategorized • June 2, 2023

What is a Balanced Market?

by Josh Friend

The common real estate industry’s definition considers the market balanced if it takes 6 months for all inventory to be bought up with no new homes coming on the market. Common yes. PNW no. We just have too many buyers than sellers. The last time we truly had a balanced market in our area was just after the recession of ’08. A common timeframe for days-on-the-market in our area is 22-28 days, not even close to six months. So, as a seasoned Realtor in the great northwest, whatever the timeframe, I consider a balanced market to be when we have as many buyers as we do sellers. And trust me, this does not happen very often. We did see it last June and this year in January and February, but then it quickly reverted back to a seller’s market as more buyers than new listings hit the market.

So will we see a balanced market again (my definition, not the industry standard)? Maybe. If interest rates were to remain in the 7% range for a few months it is likely things will start to balance out. But, as soon as the rates drop back down into the sixes, we’ll steadily push back into a typical PNW seller’s market.

My View of the Market • Uncategorized • April 28, 2023

My View of the Market – April 2023

by Josh Friend

Don’t believe the gloom and doom. It is still a seller’s market. While January and early February saw an approximate equal number of buyers and sellers, there are currently more buyers than sellers. The lack of inventory persists. Last month, I predicted that the heat of the traditional spring market would be delayed by a month due to economic conditions. I was right. Things are now heating up. As we end the month of April, my sellers are seeing multiple offers and over-asking prices. I still believe the May 10^th core CPI report will help lower rates and bring even more buyers to the market. Which means sellers again have the advantage.

For Sellers

It’s a great time to sell. Contact me and let’s talk about how to prep your home for sale. Don’t wait. It can take a few weeks to get your home list-ready. I’ll pay for the home inspection and then help to remedy anything that needs to be dealt with. In my experience, most items can be done for very little money out of pocket.

For Buyers

My advice for buyers? Buy soon. I know this sounds like a sales pitch, but that’s not my style. Despite what you read in the media, prices have already risen over 7% in March from the beginning of the year. April has shown over-asking prices and bidding wars to once again be commonplace. This will only ramp up as rates start coming down in May. With prices rising and rates dropping, you don’t need a crystal ball to tell you that the longer you wait the more expensive your next home will be. If you’re worried you’ll lock in a higher interest rate, I can direct you to companies that will allow you to REFI for free in the first year of your loan. The mortgage industry is begging for your business. There are even down payment assistance programs for first time buyers. Call me and let’s talk about how we can get you into a new home this spring before the market overheats again.

I’m here to help! Call me!

Sellers • Uncategorized • April 28, 2023

Case & Point

by Josh Friend

As a follow up to my April View of the Market post, earlier this month I listed this little gem in West Seattle. It featured two separate living spaces as well as a 2-car garage w/additional parking. A big bonus for in-city living. While we painted and spruced it up, spaces like the kitchen had not been updated. When my clients moved out last summer, we discussed when to sell. I advised them to wait for the spring season due to the lethargic state of the market at the time. Boy, are they glad they did. In one weekend we reviewed more than 5 offers, some waiving all contingencies, and accepted one at more than $100,000 above ask.

If I had told them to sell last July, they would have taken my advice. But, I knew that wouldn’t be the right move for them. I was confident they could make significantly more money by waiting. And, that’s my promise to all of my clients. I will always put your best interest first and give you my very best advice on the right time and right move for you.

Interest Rates • Uncategorized • March 28, 2023

Real Estate Forecast – Interest Rates

by Josh Friend

Of course I have to talk about interest rates. Interest rates are still volatile. It has been a roller coaster ride for the last month. Rates go up and go back down as the Fed and the stock market reacts to new information. Last week we received news that the Fed is planning on raising rates again. Ugh! Everyone is wondering if rates rise back up to 7% again? I’d say most likely yes in time. However, current market data suggests that mortgage rates will decline again soon, or even more in early May.

We are heading to that area when mortgage rates will be adjusted lower than the Fed’s rates to try and balance the real estate market. How long will they do that is the question.

For years I have followed someone I consider to be one of the best mortgage advisors in the nation. His insight is spot on. In fact, I haven’t known him to make a bad prediction yet. Here is his take on where interest rates and the real estate market are headed this spring. It’s well worth the hour of your time to listen if you are in the market to buy or sell this spring.

Bottom line, if you are looking to make a move in the next few months, there are many programs to reduce your mortgage rates. You just have to know where they are and how they work. And, again, I can help you figure out what options would be best for you.

My View of the Market • Uncategorized • March 27, 2023

My View of the Market – March 2023

by Josh Friend

There is (finally) some good news for the real estate market. For the first time in a long while we are in a balanced market. Even though inventory is still very low, there were more sales in January and February than new listings. January began a shift in buyer sentiment and still continues here at the end of the first quarter. Pricing has bottomed out and listings that are move-in ready are selling quickly. We’re back to commonly seeing multiple-offer situations. The difference from the heyday is that only a few are going over asking. Buyers are offering less money but including escalation clauses up to the asking price. With low inventory, buyers are struggling to find a house that meets their criteria. I have a handful of buyers that are sitting and waiting for the perfect property to come on the market. If you’re thinking of selling, now is the time to get your home on the market – and I can help!

Uncategorized • March 23, 2023

Recession?

by Josh Friend

The media may not have announced it yet, but if you’ve been paying attention, you know the long-forecasted recession is already upon us. Maybe after the summer spending has settled it will start showing up in the headlines – but the signs are there today. I’ve spoken with local builders and investors as well as my old subcontractor contacts. New construction is down by almost 80% in some areas. While that may seem stark and unsettling, this means your existing home is even more valuable – for now. As the recession takes effect, there will be less home buyers as people get laid off or their incomes get reduced. So, if you are planning to sell, do it before the recession hits and the buyer pool dries up.

There is some good news. In 8 of the last 9 recessions since 1970, home prices actually increased. Only in 2008 did prices drop. And, you’ll recall that it was the housing bubble itself that caused that recession.

New Home Buyers • Uncategorized • February 23, 2023

New Home Buyer Myths

by Josh Friend

If you’ve dreamed about owning your first home, you probably have an idea in your head about what type of home you want and maybe a vague notion of how the whole process works. In my experience, however, often times the image in your mind is quite different from reality.

Here are a few common misconceptions that first time homebuyers think, but aren’t actually true.

Myth #1: You need a perfect credit score to buy a house.

Reality: While a higher credit score is beneficial for securing a mortgage and potentially a lower interest rate, a “perfect” score is not required to purchase a home. According to Bankrate.com, the average credit score for a first-time homebuyer is 746. A conventional loan has a minimum of 620. An FHA loan goes down to 580. So, if you’re credit score isn’t perfect, you aren’t necessarily out of luck.

Myth #2: You need a 20% down payment.

Reality: Back in the day, yes. A 20% down payment was the norm. However, times have changed. In fact, in 2021, the average down payment for first time home buyers was only 7%.

Myth #3: Your first home should be as nice as your parents.

Reality: A good portion of whether this myth is busted is subjective; dependent on many factors, including location, employment, etc. But for many young, first-time buyers, housing price inflation is a primary reason why your first home may not be the dream home your parents were able to purchase. Since 1970, housing prices have skyrocketed 1608% while the Consumer Price Index rose only 630%. In the Seattle area, the past 20 years have been brutal for first time buyers, with home prices soaring more than 235%. So, my advice for first time buyers is to set realistic expectations. Most likely there is a home for you, you just may have to make some adjustments to your thinking.

Myth #4: Your down payment covers closing cost.

Reality: Sorry. No. Your down payment will be applied to the cost of the house, but it will not cover your closing costs, which include escrow fees, title insurance and taxes to name a few. It will also not cover any pre-purchase costs for home inspections, appraisals or loan origination fees. All of these things can really add up. So, referring back to Myth #2, even though you may not need 20% of the home value for a down payment, you do need to figure in that closing costs will run you 2 – 5%.

Myth #5: New home buyers never owned a house.

Reality: This point is interesting. A first-time homebuyer is actually anyone who has not owned a home within the last 3 years. So, maybe you owned a home, got a divorce, rented for a few years and are looking to buy again. In the eyes of the IRS, you are a new home buyer and therefore qualify for certain tax advantages and special programs designated for first time home buyers.

Investopedia has a great resource: First-Time Homebuyer’s Guide. Or just call me to discuss your options. If you are planning on buying, now is the time to prepare and get all of the answers you need to set yourself up for home-buying success.

Feature of the Month • Sellers • February 23, 2023

Feature of the Month – Real Estate Resources for Seniors

by Josh Friend

Have you (or your parents) lived in your/their home for decades and are thinking moving to a warmer climate? Are you/they thinking about downsizing – finding a place with less upkeep? Maybe you are at a point where you/they want/need to consider an assisted living facility? The where’s, when’s and how’s can feel overwhelming for those of us over a certain age. That’s where it pays to seek the advice of a certified Senior Real Estate Specialist® (SRES) – spoiler alert – I am one!

How can an SRES (like me) help you?

SRES designees have unparalleled training and experience in dealing with the living situations seniors are dealing with. We help you or your parents manage the financial and emotional challenges of selling your long-held home. We can help you find the perfect final home whether it’s in a smaller home, a specialized care home locally or in another state. We help you sort through the process of clearing your belongings and emptying your house. We remove the stresses of a move by providing resources for each and every phase. Our team can provide information on reverse mortgages, 401(k) accounts, capital gains (see my blog from last month), and setting up trusts correctly so that your family is protected from a large tax bite or probate upon the death of a loved one.

There is so much to consider when making such a big life change. SeniorAdvice.com has a fantastic Senior Care and Assisted Living Guide specifically for the state of Washington. I encourage you to check it out. But ultimately, if someone you know is thinking about their final move, we are the first phone call you should make.

My View of the Market • Uncategorized • February 2, 2023

My View of the Market – February 2023

by Josh Friend

Let’s recap what started out as the greatest year in real estate, then ended in one of the worst closing quarters in real estate history. Interest rates climbed to as high as 7.25% in October. Now they are sitting right at 5.625% due to the last two months rate adjustments.

Inflation on home goods is not declining. Prices haven’t dropped and I predict if they do, they won’t drop much. Unfortunately, with this uptick, we have stablished a new baseline for home good prices moving forward. Remember, however, that mortgage rates are most closely tied to inflation. As inflation slowly declines nationally, mortgage rates will follow. We’ll see them start dropping this spring based on the Core Consumer Price Index (CCPI). With slight drops in the CCPI, I project by May we will see mortgage rates drop to around 5% plus or minus.

You, like most people, are probably wondering if we will drop back down to 3.5-4%. I feel that is highly unlikely since those rates were artificially driven by Quantitative Easing in response to the Covid-19 pandemic at the beginning of 2020. So what does this mean in the big scheme of real estate? For home pricing, right now we are at or very near the bottom. By May of this year, more buyers will re-enter the market causing more homes to sell faster and closer to their asking prices, with the best homes selling for over asking. But don’t just take my word for it. This is already happening with the first 3 weeks of January ’23 sales.

What about fears of a recession?

The demand for housing will increase even if, or when, we enter a small recession. In 8 of the last 9 recessions dating back to 1960, real estate did not drop in price during the economic downturns. Sales slowed but there were still enough buyers to keep prices from dropping. What was the one exception to this rule? 2008 of course. But, unlike 2008, today we are not in a housing bubble. Yes, there will some be foreclosures coming in the future. But, we will not see anything close to 2008.

Why won’t this be a repeat of 2008?

The reason is that in 2008 there were too many new construction homes built coupled with too many unqualified home buyers. There was simply too much supply. New construction homes have been on a steady decline for the last year and half due to builder sentiment. They learned their lesson from the 2008 housing bubble. So don’t plan on seeing homes sold at 65 cents on the dollar or less. Existing homes will be of higher value since there are not enough new homes to fill the first time home buyer inventory that is needed. Throughout the spring, there will be gradual increases in inventory and home sales as we approach May 10th when the CCPI report is released. As those rates drop, more and more people will start getting pre-qualified to buy again.

My advice:

Buy early. Sell later. Get your house ready to sell before May. Remember, interest rates always drop during a recession.