This week Matthew Gardner, Chief Economist for Windermere Real Estate, discusses housing affordability and what we can expect moving forward. On average median housing prices nationwide are have increased by 23.5% above the 2008/2009 recession. While there has been some impact on values due to COVID-19, high demand from buyers in a market with limited inventory will continue to increase prices. What’s the solution? There’s high demand for entry level housing, but there’s no easy answer as to how to create affordability.
The number of homes available for sale declined in April and May for obvious reasons – there were health and economic concerns brought on by the COVID-19 pandemic. Since late May local home sales have been ahead of the same period last year. Buyer demand remains high but what is different about this year compared to last year is there are fewer homes for sale. The graph below, provided by the Northwest Multiple Listing Service for the Seattle Times, shows that new pending sales are well above the same period last year but new listings of homes for sale are 20% below the same period last year.
With barely a one month supply of inventory in many areas, homes are selling quickly. Multiple offers are more common, and many homes are selling above the list price. Buyers are finding more competition for the weekly supply of newly listed houses and condominiums coming on the market.
What’s driving this demand? Interest rates are at record lows making mortgages more affordable. Potential buyers can afford a larger home. And, after three months of quarantine, owners and renters whose homes offered adequate space when working off-site are seeking larger homes with more indoor space, a dedicated home office area and more outdoor live/play space. Buyers are ready to buy, but sellers don’t appear to be as motivated right now.
This week Matthew Gardner, Windermere’s Chief Economist, looks at high frequency data sets, data that is issued more frequently than the typical monthly or quarterly reports we’re used to reading. Using data from real estate, hospitality and travel sources Matthew provides interesting information on how close our economic growth is to getting back to normal.
This week Matthew Gardner, Chief Economist with Windermere Real Estate, provides updated news about the mortgage forbearance program. The program has provided a safety net for homeowners but isn’t likely to have any long term negative economic impact.
King County has progressed to Phase 1.5 of the Governor’s “Safe Start Proclamation”. How does that impact buyers and sellers as they search for homes or list their homes for sale?
- Real estate firms may open their offices again. In compliance with State guidelines, staff, brokers and guests will be required to wear face masks when in the office. Common areas and conference space will have restricted access. The number of staff and brokers permitted to be in the office will need to follow State guidelines.
- The most significant change is that now three people (vs. two) are permitted at a property for real estate activities. This permits a husband and wife or partners to view the property together along with their broker. A buyer may now attend an inspection along with the broker and inspector.
- Sign installation companies are again permitted to install/remove real estate signs.
As we begin to move about more freely, an abundance of caution will continue in an effort to keep everyone healthy. Showing homes will continue to be by appointment only with sufficient time between appointments. Buyers and brokers will be required to wear face masks while inside a home and observe all health protocols required by the State along with any additional guidelines requested by the homeowner. Public open houses are still prohibited. Brokers, in an effort to maintain social distancing guidelines, will not transport clients in their car but continue to meet them at properties.
These guidelines are in place to continue to keep everyone safe and healthy as we begin to resume our normal lives. Brokers have become more comfortable working within these guidelines and assuring buyers and sellers that they can safely search for or sell their homes. This is the new normal and we aren’t likely to see the “old normal” for a while.
We’re 12 weeks into more experience dealing with the impact of COVID-19 on the economy and specifically the local real estate market. After a significant market decline in new listings, buyer interest and closed sales in March and April (not at all surprising) real estate came back strong starting in early May.
- the number of pending sales is trending higher and homes are selling quickly
- more new housing inventory is coming on the market reflecting prices comparable to February prior to the COVID-19 pandemic and Washington State’s stay home/stay healthy order
- sales prices in the last two weeks are also rising with multiple offers more common and homes selling above list prices
- buyer applications for new mortgages are on the rise – interest rates are at record lows making buying a home more affordable
Matthew Gardner, Chief Economist for Windermere Real Estate provides his weekly look at the economy and specifically the real estate marketplace in our area.
Matthew Gardner offers insight into how the coronavirus pandemic may impact urban housing, condos, single family housing, suburbs, second homes and short term rentals.
It’s not surprising to know home sales declined in mid-March as we sheltered at home. Moving into mid-April both buyer activity and pending sales began increasing, all while home prices remained strong. Nationally median home prices rose in every region of the US in April.
Locally buyer activity and home values also gained momentum. Short market times and multiple offers were more common by late April, especially in affordable price ranges. Even the high end market, hit harder by the health crisis and volatile stock market, began to recover with more expensive homes coming back into the market.
What can we expect for the local condo market this summer? Over the last 30 days 131 condos in the Eastside marketplace have sold. The average time on market was just 15 days with an average sales price of $620,420. The average sale price vs. list price was 100.08% with 78 of those 131 homes selling at or over the list price. Condos currently under contract with sales pending have been on the market an average of just 14 days. As reported by the Mortgage Bankers Association and National Association of Realtors®, buyer mortgage loan applications are up for the fourth consecutive week – a strong indication buyers are back in the market and ready to take advantage of record low interest rates.
Recovery of the local economy will have an impact on the real estate market as we move toward summer. Based on buyer activity and mortgage applications, as we find our “new normal” it’s clear buyers are ready to step into home ownership. Available housing inventory is still lagging behind compared to the same time last year. It remains to be seen if there will be enough housing inventory to meet buyer demand this summer. Low inventory will certainly keep pressure on prices resulting in fewer discounts in the marketplace.
These are interesting and complex times. As the COVID-19 pandemic continues to develop, brokers are following strict recommendations from public health officials and government agencies to ensure we are helping to reduce its impact. Ensuring that agents, office staff and clients are safe and healthy is the top priority.
Real estate is still happening – homes are still being listed for sale and buyers are still purchasing those homes, exhibiting a surprising high level of interest. Matthew Gardner provides good information and perspective on the current market and the health crisis vs. the housing crisis experienced in 2008.
During the shelter-at-home order in Washington State, board or HOA meetings are currently prohibited. This may create complications for homeowner associations trying to conduct business that needs a majority vote regarding matters impacting the HOA and owners.
Homeowner/community associations are required to follow their governing documents when handling association matters. This includes owners and directors voting on association matters which is most often done in person. Due to the COVID-19 pandemic and stay-at-home order, the Governor of Washington has amended the Emergency Proclamation to address issues relating to homeowner/community associations.
- Owners and directors in homeowner/community associations are permitted to vote on association matters by mail, electronic mail and proxy, even if the association’s governing documents do not permit them to do so.
- Owners and directors in homeowner/community associations may attend meetings by conference phone call or other similar communication that allows all participants to hear each other at the same time, even if the governing documents do not permit them to do so.
- The Emergency Proclamation prohibits homeowner associations from charging owners late fees and interest on delinquent assessments and from imposing fines on owners for violating their governing documents.
This proclamation expires at 11:59 PM May 17, 2020.