The real estate market continues to benefit from low interest rates — just below 4 percent for a 30-year fixed conventional mortgage. With these low rates, buyers are relishing their great timing and banks are inundated with homeowners who are refinancing.
Did you know that the Seattle and Eastside markets saw approximately 71 percent appreciation in residential real estate between 2012 and 2018? Using 3 percent annual appreciation as a guideline, this region is approximately 24 years ahead of schedule.
When people prognosticate about the flat appreciation in 2019 or a slight decline, this doesn’t leave the smallest dent in the huge appreciation gains that have been made in the past eight years. In fact, it signals that the market is balancing out from years of extreme undersupply of inventory, causing frequent bidding wars.
The area continues a long-term housing demand trend that has seen leaps in appreciation in the past five years. This is primarily because:
Locals are buying their first homes, moving into larger homes, and buying investment properties;
Newcomers stream into the region for highly skilled tech positions at Microsoft, Google, Expedia, Facebook, and other growing business sectors; and
Parents and grandparents are moving here to be closer to their adult children and grandchildren.
Although it still is a seller’s market with strong demand, it is more balanced and slower. This means less stress for buyers and ideal home-buying conditions where prices and terms are more negotiable. This is a great relief to homebuyers, who waived off contingencies in bidding wars in recent years. There still are hot neighborhoods where homes sell in less than a week at full price and with significant opposition from other buyers. However, these days, bidding wars are waged just above full price, instead of in the stratosphere, as we saw three years ago.
Buyers have become increasingly price-conscious, which is reflected in slowing home price growth. And cities in the vicinity of Seattle and across the Eastside are expanding as buyers seek more affordable housing options.
This is an ideal time to buy a new home contingent on the sale of your current home. The more balanced market finds sellers more willing to accept contingent offers.
I like to remind my clients that we should always focus on regional and hyper-local neighborhood trends. If you’re buying or selling in downtown Kirkland, what’s happening in Kansas is irrelevant. Sure, the national economy is related, but not as closely as one might think.
When the most recent recession came to Washington, it was one of the last states affected and one of the first to recover due to a growing, strong, and diverse local economy. And the Eastside and Seattle are building new neighborhood developments, including The Village at Totem Lake, The Spring District, Kirkland Urban, and the Alaskan Way Waterfront Park in Seattle.
According to Windermere Real Estate Chief Economist Matthew Gardner, “The state unemployment rate was 4.6 percent, marginally higher than the 4.4 percent level of a year ago. The most recent economic forecast suggests that statewide job growth in 2019 will rise by 2.2 percent, with a total of 88,400 new jobs created.”
The short-term outlook is a perfect storm for buyers taking advantage of low interest rates and a more negotiable real estate market. For sellers, the market is still solid, and they still are capitalizing on the huge amount of recent appreciation they earned. The market pace hastened in November, and a hot spring market is expected.