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!

There has always been a direct correlation between interest rates and home prices. The rule of thumb has always been when rates go up prices go down, and vice versa. This was temporarily proven true in the summer of 2022 when rates quickly rose by 2% (3.5%-5.5%) over 5 months. It created a price correction in the second half of 2022 as buyers retreated from the market due to affordability. One should note that price acceleration was rapid from May 2020 to May 2022 and in that two-year period prices grew upward of 50% in King and Snohomish Counties. That was an unsustainable pace. In all honesty, this was inflation’s role in the housing market, and increasing the rates was the Fed’s way of getting control.

While there was a correction from May 2022 to January 2023, since then prices have started to grow again despite the rates hovering in the 6-7% range. In fact, the median price is up from the bottom (Jan/Feb 2023) by 13% in King County and 9% in Snohomish County. Further, the median price in July 2023 was even with July 2022 in King County and down by only 2% in Snohomish County. This is a sign of price stabilization. Historically, the impact rising rates have on prices year-over-year is not negative. We are in the midst of proving that same theory.

Believe it or not, the higher rates are keeping prices stable because it is limiting the available inventory for sale. You see, there are plenty of buyers out looking for homes right now, and inventory levels are tight because potential sellers are waiting to make a move because they are holding on to their low rate. Our job market is good, we have people moving to our area and the millennials are out in full force searching for their first homes.

There are two interesting phenomena going on with potential home sellers right now. First, according to ATTOM Data, 68.7% of homeowners have at least 50% equity and only 2.1% have negative equity. This is the number one indicator that we are not in a housing crisis or bubble. Second, according to FHFA, 70% of homeowners with a mortgage have a rate 4% or lower. This is causing people who are no longer happy with where they live to stay a bit longer because they don’t want to give up their payment just yet.

Here’s the deal though, housing is a reflection of life! According to the US Census, 66% of homeowners would like to upgrade to a nicer home with features that better match their lifestyle, and 45% would like to move to a home to better match the changing size of their household. Life changes motivate moves! Many people are waiting out these life changes until rates come down so they can better afford their desired transition. This has put downward pressure on inventory, limiting selection for buyers, hence creating price growth and stabilization.

So, what is going to happen when rates come down? Experts across the board predict that rates will recede as inflation gains control. This will be a gradual process over the next 12-18 months. The biggest indicator will be inflation reaching the 2% year-over-year mark. Once we hit this point, which we are close to, experts predict the Fed will be comfortable easing off the higher rates. This will cause more homes to come to market as the delta between the rate a homeowner currently holds and what they are willing to take on to indulge their desire to move, will become more attainable. Plus, as rates recede it will increase buyer demand.

We find ourselves in a delicate dance with inflation, rates, inventory, and prices. Someone who desires a move has to consider the impact the rates can have on their payment. Many of these buyers are taking the leap and finding creative ways to offset the rate such as ARM financing, rate buy downs, or they are preparing to re-finance their purchase when rates come down. This way they will have secured a good price which is the basis of their loan.

So, do you stay or do you go? According, to the lyrics from the classic song from The Clash, “if I stay there will be trouble, but if I go there will be double.”  This is up to you to decide. Where I can help is to gather the data and help you analyze the market in order to empower you to make the best choice for you and your family. For some, the right time is now and for others, waiting a bit longer will be a good plan.
What I do know, is that when we hit the inflation rate that the Fed is comfortable with and they ease off of rates, the market will tilt. This will be a benefit for some and a challenge for others. In other words, there is not one right answer for everyone and that is where I think I have the opportunity to serve my clients best.

Helping people navigate the ever-changing market is a skill, an art, and a calling. I am here for it and find great satisfaction in helping people make big life decisions that help bring joy, solve problems, and make them money! My job is a huge responsibility and it is an honor to serve my clients. If you or someone you know are wondering about how today’s market conditions affect your goals, please reach out. We can dig into the data, assess your dreams and devise a plan.

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!

One of the reasons why we are fortunate to have Matthew Gardener as our Chief Economist at Windermere is his transparency. Every year, Matthew makes predictions for the coming year based on his monumental research and years of experience. Just this week, he reviewed his 2023 predictions and recorded the video below. Most of his predictions were spot on and only two were slightly off. That is pretty good considering crystal balls don’t exist.

In the video recap below, he covers the trajectory of home prices, interest rates, inventory levels, the shift of the work-from-home trend, zoning changes, and affordability. All of these factors play into people making informed decisions about their real estate. He is certainly an asset that I can rely upon to help me guide my clients.

Overall, it is important to note that prices are heading in a positive direction, interest rates may take a bit longer to settle and inventory remains tight. I am seeing buyer demand return to the market and prices have grown since the first of the year.

He also mentions that real estate is local and that trends can vary by location. That is where I can help you. I am deeply invested in understanding the market in the communities and neighborhoods that surround us. If you are curious about how the trends relate to your real estate goals, please reach out. It is always my goal to help keep my clients informed and empower strong decisions.

Windermere Community Service Day

This is the 8th year that my office has spent our Community Service Day working to put fresh produce on the tables of local families who need a little help. We work with the Snohomish Garden Club, planting over a half-acre of veggies and fruits that will be harvested into thousands of pounds of fresh produce over the summer and into the fall.

If you’d like to pitch in, you can donate to our Summer Food Drive, or bring donations to my office, through August 4th. All donations will go to Volunteers of America Western WA food banks.

Since 1984, Windermere associates have dedicated a day of work to complete neighborhood improvement projects as part of Windermere’s Community Service Day. After all, real estate is rooted in our communities. And an investment in our neighborhoods gives us all a better place to call home.

On April 23rd the Washington State Legislature adjourned after passing 10 new bills that will affect housing. Some of the bills are geared toward creating more transparency around brokerage transactions, some are intended to institute more opportunities for building density to provide more affordable housing, and some are more regulatory to help guide and ease the permitting process for building and development.

The bills that will improve real estate brokerage services are centered in transparency and cleaning up some laws that do not trend with market conditions. As of January 1, 2024, all real estate brokers will be required to engage in a buyer service agreement with the buyers they work with, similar to the requirement of having a listing agreement with a seller (SB 5191). These service agreements, better known as Buyer Agency Agreements (BAA) will address compensation, exclusivity, the duration of the relationship, and establish written consent for dual agency. This will create clearly defined broker representation for buyers from the onset of the relationship.

Short-term seller rent-backs after closing are now carved out of the landlord-tenant act if the rent-back is less than 90 days (SHB 1070). This will ease the angst involved with tenant rights, as the goal of a rent-back is to create a convenient transitionary period that intends for the seller to vacate, minimizing their tenant rights. This change aligns with the trends in the marketplace and makes this solution-based approach less tenuous. Lifetime listing agreements were also shortened (SSB 5399).

Washington State ranks last in the number of housing units per family nationally and officials project that the state will need roughly one million new homes by 2044. Many of the bills that passed last month will create policies to help provide more housing units and affordability. Matthew Gardner, Windermere’s Chief Economist has been speaking about our state’s lack of affordability for years and shares his thoughts here on the HB 1110 which will allow for the development of middle housing.

HB 1110, SB 5258, HB 1042, and HB 1337 were all created to create more housing units. HB 1110 addresses middle housing, SB 5258 modifies several laws relating to the construction of condos and townhomes, HB 1042 enables the creation of housing in existing, underutilized buildings, and HB 1337 will make it easier to build Accessory Dwelling Units (ADUs) in urban growth areas.

SB 5412, SB 5290, and HB 1293 are intended to ease the permitting and design review processes when applying for a building permit. These should help streamline and accelerate getting from point A to point B on a building project. With the goal of providing more housing units, the backend systems needed to be reevaluated to meet these goals in a timely fashion while adhering to important guidelines and procedures.

Lastly, HB 1474 will increase the document recording fees by $100 to fund a new state program to provide down payment and closing cost assistance to people, or heirs, impacted by racially restrictive covenants. This program is set to raise $75 million per year to improve housing affordability. The State also committed over $1.1 billion in budget funds to work towards investing in housing supply and homelessness prevention.

Click here for a detailed review of each new bill and the budget changes. It is always my goal to help keep my clients well-informed about the real estate market and in this case, knowing the direction our state is headed with the laws surrounding real estate and housing. If you have additional questions or want to discuss how these changes may affect your housing goals, please reach out.

ATTENTION GARDENERS: Windermere Community Service Day is coming and we’d love your help!

Since 1984, Windermere associates have dedicated a day of work to complete neighborhood improvement projects as part of Windermere’s Community Service Day. After all, real estate is rooted in our communities. And an investment in our neighborhoods gives us all a better place to call home.

Our office will spend June 9th with the Snohomish Garden Club working to put fresh produce on the tables of local families who need a little help. We will plant over a half-acre of veggies and fruits that will be harvested over the summer and into the fall.

If you’d like to pitch in, we are looking for additional veggie starts. Let us know if you have some starts already going or if you would like to prepare some now that you would be willing to donate.

The garden specifically needs:

• Scallions
• Snow/Pod Peas (please no shelling peas)
• Chard
• Lettuce (the food banks require headed varieties, rather than loose-leaf)
• Squash (any kind, EXCEPT yellow crookneck)
• Cabbage/Broccoli/Kohlrabi/Cauliflower/Collards/Kale
• Peppers (early maturing varieties work great: ~70-day range)
• Herbs (never enough Basil and Parsley!)
• Flowers (marigolds, nasturtiums, or any annuals)