My View of the Market – September 2024

by Josh Friend

Last week Jerome Powell announced what every Realtor or people looking to buy a home has been impatiently waiting for – a cut in rates. But, being the cautious observer I am, I waited a week to share what I see the cut has meant to our market. Taking in to account my own clients and chatting with other agents about their experiences, after only one week, wait for it…not much has changed. Yes, there have been more potential buyers exploring open houses. But given the hype, not as many as you might think. Maybe even a bigger surprise is that the rate cut has not led to an increase in written offers. In conventional wisdom, it’s baffling. With an increase in inventory, buyers have more options now than they have had in over 5 years. Throw in a .5% cut in rates and one would have thought it has to be a perfect scenario for current buyers.

But guess what? IMHO, buyers might just be feeling a little smug. The days of writing an offer on a house because it is “pretty close to what we want, we don’t want to lose it, and we are tired of looking” are gone. What we are witnessing is the return to the age-old lag for everything in real estate. Buyers are easing back into the psychology of homes sales that they can take their time and make the right decision. Add to that the fall chill where football and hockey seasons send people back inside for hibernation until after the holidays. What does a would-be seller do now? My expert advice: wait to list, but call me now to discuss how to prepare for next spring. If you are buyer? I’m asking, what are you waiting for? Get it now before the masses come out next spring and bring higher home prices. You heard it here first.

New Home Buyers • Tip of the Month • Uncategorized • July 31, 2024

Real Estate Leverage: The ultimate bang for your buck

by Josh Friend

When buying a home, most of us put down a down payment. This can be as low as 3.5% or maybe up to 50% of the value of the house – the mortgage company kicks in the rest. Over time the home appreciates based on its full value, not just your down payment. We call this real estate leverage.

Here’s how it works: if you put down 20% on a home, the appreciation you experience is based on the entire value of the home, not just your 20% investment. Let’s look at an example. Say you buy a $1,000,000 home and put 20% down. That’s $200,000. Now lets assume your home appreciates by 5% over the course of 1 year. Your net worth has increased by $50,000! ($1,000,000 x 5%). This appreciation could happen every year.

Compare that to choosing not buying a home and investing your would-be $200,000 in a stock portfolio that returned 5% in a year. That’s only a $10,000 increase in net worth ($200,000 x 5%). Would you rather have $50,000 or $10,000? Leverage is a major reason why real estate investing is so appealing. It’s a wealth builder.

Let’s take this one step further. Imagine if you used a down payment assistance program as I described above. With real estate leverage, the lower your down payment the bigger the potential long-term pay off. Using an assistance program you’ll have little to no out-of-pocket down payment, but you still reap appreciation benefits based on the full value of the property. Your investment is working even harder for you.

Tip for college students:
For college students graduating and starting jobs in their field of study, you don’t need a two-year work history to qualify for a loan! My broker recently helped a college graduate secure a condo just two months after graduation. This fast-track approval can provide a significant head start in homeownership.

If you or someone you know could benefit from learning more, have them reach out to me and I’m happy to walk them through their options.

Buyers • New Home Buyers • Uncategorized • July 31, 2024

A little known secret weapon for 1st time home buyers

by Josh Friend

I know most of my blog audience is probably past the “1st time home buyer” stage. But, if your kids have recently graduated from college or planning to get married, this information could be a game changer for them.

We all know a major hurdle for many first-time home buyers in the PNW is the hefty down payment. Even if monthly mortgage payments might be manageable, the upfront down payment can make home ownership seem out of reach.

Well, I may have a solution that can help turn your renters into home owners. I’ve just taken a class on grants for first-time home buyers. I was surprised to learn that there are over 30 programs that cater to new home buyers, with some having no credit score requirements and others requiring only a 580 credit score.

Some of these programs offer down payment assistance of up to $70,000! With these programs the assistance is provided as a zero-interest second mortgage, and here is the great part, it doesn’t need to be repaid for 30 years or upon selling or refinancing the home!

Not all homes qualify for these programs, but many condos and townhouses do. Some programs extend to homes priced up to $1.5 million. Household income limits vary, with some programs capping household income at $120,000 per year.

Did you know?
The mortgage industry considers a first-time buyer anyone who hasn’t owned a home in the last 3 years. So if you owned a home previously, but have been renting for more than 2 years – maybe due to divorce (note: I’m a Certified Real Estate Divorce Specialist™) or a relocation – you could qualify for an assistance program.

I believe this information could be a game-changer for those struggling to save for a down payment. Feel free to forward this newsletter to anyone who might benefit from it, or have them give me a call. I’d be more than happy to guide them in the right direction.

Housing Market • Interest Rates • My View of the Market • July 31, 2024

My View of the Market – July, 2024

by Josh Friend

We’re in an interesting place right now; poised on what could be a significant shift in our real estate market. With the Federal Reserve expected to discuss potential rate cuts in their upcoming meeting, there’s a chance they might lower rates now or leave a hint about when they will make cuts.

Mortgage companies tend to react swiftly to such signals, often reducing rates in anticipation. You know the cycle. Lower rates drive more buyers into the market. We’ve seen it happen many times. But this time may be different. Here’s what sets this situation apart:

Increased Inventory: We’re seeing the highest inventory levels in the past five years. Over the last two months alone, inventory has surged by 25% month-over-month. This rise in available homes creates a unique opportunity for buyers.
The “Sweet Spot”: With the Fed possibly cutting rates soon and more inventory available, there’s a potential “sweet spot” for buyers. This window of opportunity could exist between now and when the rates are officially cut, plus a couple of weeks for the market to fully adjust. Those who act quickly and get pre-qualified now will be better positioned to take advantage of this shift before potential multiple-offer situations become the norm again.
Seasonal Trends: Traditionally, the market slows down from September to December. However, this year could defy that trend, given the anticipated rate cuts and increased inventory.

If you’re considering buying a home in the near future, now might be the perfect time to get ahead of the curve. Getting pre-qualified will give you an edge and help you navigate this evolving market more effectively. Call me and I’ll connect you with a mortgage broker that can help you find the best rates.

Tip of the Month • Uncategorized • June 20, 2024

Tip of the Month – June 2024

by Josh Friend

We all love living in the PNW. We appreciate the mild the winters and go crazy for our wonderful summers. But the reality is that we just never get enough warm, dry days. How is talking about the NW weather a real estate tip? It’s all about timing and planning ahead. Are you even thinking about selling your home next year? If so and you wait to paint the exterior of your house next spring, you will be too late to take advantage of the typically stronger spring/summer market. Why? Even if you can find a painter to paint in the soggy, dark days of January -March (and be skeptical if they say they will), they will most likely not warranty it and/or the paint job may start bubbling in the summer due to trapped water behind the latex. The reality is, painting on wet wood makes it nearly impossible to produce a great paint job. So, you run the big risk of passing on a sub-par product to your buyers. Trust me no one wants to inherit a problem.

Now is the time to plan ahead. I am working with my friends and clients to get their homes painted this year for the sale of their homes next spring. Keep in mind, you’re already a bit behind the 8 ball as painters are already filling their exterior paint schedules. Good news for you, I work with several great painters that give me priority scheduling. Let me know if you or someone you know wants a high quality paint job at an affordable price and let’s get you scheduled and ready to sell next spring.

Sellers • Uncategorized • June 20, 2024

When should you sell in a balanced market?

by Josh Friend

With the market finally balancing out after so long, here is a question I get at least weekly these days: “When should I sell my home?” My answer is not the magic bullet most would-be sellers are hoping for because it depends on your circumstances. Are you selling because you want to buy a new house in the same market? Are you planning to downsize? Or upsize for a growing family? In the first instance, when you sell a home and buy another in the same local market you are basically a buyer and a seller in in the same market conditions. So, financially speaking, it doesn’t really matter if the market is hot or not. The only variable to consider is the 2nd or 3rd circumstance, whether you are downsizing or upsizing.

To determine when it makes sense for you to sell requires some calculation. Ok, I won’t bore you with math. But suffice to say the percentage increase or decrease in the value of your next home as compared to your current home dictates which is better for your circumstances. When upsizing it usually makes more sense to buy and sell in a balanced or down market. When downsizing, you should consider selling in the spring which is traditional more of a seller’s market. If you want to geek out on the numbers call me and I can draw out a detailed and mathematical proof.

My View of the Market • Uncategorized • June 20, 2024

My View of the Market – June 2024

by Josh Friend

As we roll into summer, let’s do a quick recap. Real estate around here has been booming this year. The first 3 months saw massive multiple offer situations on new listings. April continued the trend of multiple offer situations, but the numbers dropped to 2-5 offers as opposed to previous months of 10+ offers. May and June have still seen homes go under contract by the end of the first weekend of listing, but these were homes that were either completely move-in ready or they were priced appropriately (or even slightly under market). This was around the time, about 4 weeks ago, when interest rates jumped almost a full point into the high 7’s. Everyone was holding their breath to see if this trend would last. Luckily, rates have come back down in the last two weeks – back to the mid to high 6’s.

Even with that reduction, the average number of days on market has increased as of late. Why? Well, if you remember my last newsletter from earlier in the spring, I said my sources (i.e. home inspectors) were busy. And busy home inspectors usually means more inventory is coming on line – which, as I predicted, did in fact happen over the past couple of months. So more inventory plus maddeningly-fluctuating interest rates means we are as close to a balanced market as we have seen in the last 5 years. Will it continue through the summer? Here’s hoping.

My View of the Market • April 30, 2024

April 2024 – My View of the Market

by Josh Friend

Normally, I have a solid prediction of what the market will do in the coming year. This year I am in a wait-and-see mode. Let me explain. For starters, it was a pretty-hot early spring for real estate. As has been the case for months now, we had many more buyers than sellers, especially in February and March. Homes were selling quickly with multiple offers at above asking price.

Yet, as we get later into spring, I’m seeing the numbers of offers being reduced as we get further away from March. Just a month ago it wasn’t unusual to see more than 10 offers per home. Here in April, yes, we are still seeing multiple offers on appropriately priced homes, but now there are maybe up to 3-5 offers on average. So, while this is typically the hottest time of year in our market, demand has lessened slightly.

Don’t misunderstand, it is still a seller’s market. And recognizing that fact, plus the time of year, I’ve seen an increase in inventory in the last few weeks that looks to continue. My barometer is always my network of home inspectors, and they tell me they have been very busy. So, that leads me to suspect that there is even more inventory coming. Buyer’s hang in there. You’ll see the balance shifting more your way as we head into summer.

Client Story • April 29, 2024

Featured Client Story

by Josh Friend

Thankfully it’s been a busy spring after a drought that lingered through the early part of the year. I’ve had the opportunity to work with a number of buyers and sellers. One of my buyers, newlyweds Adam & Lydia, just closed on a condo on Cougar Mountain. They had been looking for the right first home for a while.

Now remember, inventory has been low – especially in the starter market. So they were excited that after several months of looking we finally found a condo that they were interested in writing an offer on. We wrote one offer. It was accepted. No bidding wars. No back and forth. We presented a good, solid offer.

With multiple offers on the table, how did my clients have the winning one? They chose to work with an experienced agent. Someone who is actively involved in the market. (I’m talking about me in case you weren’t paying attention.)

Why does experience matter so much for buyers? When an agent is active with both buyers and sellers, they understand the state of the market best. They know what it takes to have your offer accepted given current conditions. They know there is an art form to presenting a winning offer. Bottom line, if you are thinking of entering the market to buy a home, give me a call and we can set up a consultation on what the market is doing today and what the market might look like when you’re ready. Let’s make a plan to set you up with a winning offer when the time is right for you.

Interest Rates • April 25, 2024

Adding to the uncertainty: those stubborn interest rates

by Josh Friend

Here we go again. In the last 2 weeks, mortgage rates have risen over .75% – taking us back to above 7%. Thus my hesitancy to predict what happens next kicks in at a higher level.

We know higher rates bring fewer buyers to the table. Just like I noted above. This has held true as we’re seeing fewer offers in April.

But, there is still a demand for homes because there hasn’t been enough inventory. What will happen as more inventory comes on line? I think that homes prices will hold this year. We might see a bit of a dip fall into winter as we have the past couple of years, but even with that happening year-over-year home prices increased 19% on the Eastside and 14% in King County in 2024.

The Fed meets again on April 30th, but no one expects they are going to make much of a change right now – they’ll want to wait and see what happens with inflation. If that holds true, rates aren’t coming down anytime soon.

So if you’re a buyer and think it is a good idea to wait, with all due respect, I think you are making a mistake. Interest rates aren’t going anywhere and any increase in home values diminish any savings you think you may be gaining by waiting.