The financial benefits of owning real estate significantly outweigh the option of renting. Renting is certainly a must for some, and is what one may have to do while they build up to becoming a homeowner. Becoming a homeowner requires solid employment, good credit, and some type of down payment. Savings can all be built over time and if achieved can provide incredible long-term financial growth by becoming a down payment on a home. In fact, many people think you need a 20% down payment in order to purchase a home and that is just not the case.  There are various loan programs available requiring much less than 20% down.

The savings of your nest egg that you would put into a home purchase is the single most powerful investment vehicle to build household wealth and financial security. Did you know that the average net worth of a homeowner is 40 times higher than one of a renter? There are many factors that play into this statistic.  Take in my outline below as well as the video link below from Matthew Gardner, Windermere’s Chief Economist who also weighs in on this subject.

Over time, your mortgage payment becomes easier to afford. Fixed

 mortgage payments do not go up, but rent inevitably does. While your mortgage stays fixed your income often increases, making the monthly payment easier to handle.

Real estate is a solid long-term investment. Historical home price appreciation is on your side. The historical average is 3-5%, and in some cas

es, that figure has been much higher. Only

 once, during the Great Recession, did

 we see multiple-year price declines. However, the people that held onto those homes since that time have been handsomely rewarded with phenomenal equity. Real estate is a long-term hold investment that provides shelter and financial opportunity. 

You cannot live in your stock certificate. Real estate is an investment that you can touch, feel, smell, live in, and improve! You have to live somewhere and allocate a portion of your income to shelter. Why not pay your shelter budget towards an asset that is growing for your financial future? You can also make improvements to your property that you can enjoy which will also increase the value of the asset. Diversifying your investments is important, stocks are a natural option, but real estate should be in the mix as well. I have even seen first-time buyers keep their starter home as a rental, move on to their next home and start to build their own real estate portfolio.

Every mortgage payment goes towards paying down your loan principle. Right now, mortgage rates are up a bit, leading to conversations about the impact of rates. One thing I know for sure is that the interest rate on rent is 100%! None of that money ever comes back to you. Your mortgage payment goes back into your asset and becomes a forced savings account. This piles your money safely away all while your asset is appreciating year-over-year which builds long-term wealth.

Owning real estate provides tax benefits. Depending on the state you live in, you can write off your real estate taxes and mortgage interest. This can offset your tax burden and save you significant money every year. There are also capital gains tax exemptions on your primary residence that you have lived in for at least two years of the last 5 years (make sure to consult your tax expert on the details). You can have tax-free gains of up to $250,000 for a single person and up to $500,000 for a married couple. This is a wonderful opportunity to move your wealth towards your future when planning for big lifestyle improvements such as retirement.

I will leave you with this: it can seem overwhelming to take on the task of buying your first home or to prepare to own again after renting. Start by understanding that shopping in the price range you can afford matters. Often times people want to get their forever home right off the bat and that makes the accomplishment of becoming a homeowner much harder. Figure out how much you can afford now and put your nest egg to work sooner rather than later to start building wealth. Maybe it is a small condo that fits your budget now, but over time the money saved and the equity built can turn into the down payment needed to purchase your forever home.

Owning real estate is a step-by-step journey that takes time and sacrifice. Your patience and commitment will be rewarded with compounded savings which will lead to building long-term wealth. It also creates a fond memory lane of that first condo or small house that you loved making a home, which then became the vehicle to afford the next home that better suited your lifestyle. If you are curious about the prospect of owning real estate or have a special person in your life who is poised to become a homeowner, please reach out. It is my goal to help people understand the process, align them with a trusted lender, help them make strong financial decisions, and match their living situation to their lifestyle. 

You’re invited to our annual Paper Shredding Event & Food Drive. We partner with Confidential Data Disposal to provide a safe, eco-friendly way to reduce your paper trail and help prevent identity theft. 
  
Saturday, April 15th, 10AM to 2PM* 
4211 Alderwood Mall Blvd, Lynnwood 
Bring your sensitive documents to be professionally destroyed on-site. Limit 10 file boxes per visitor. 
  
This is a paper-only event. No x-rays, electronics, recyclables, or any other materials. 
  
We will also be collecting non-perishable food and cash donations to benefit Volunteers of America Western Washington food banks. Donations are not required, but are appreciated. Hope to see you there! 
  
*Or until the trucks are full 

Markets change fast! We experienced a substantial shift in 2022 with the first half of the year feeling like a completely different market than the second half of the year. A 3-point increase in interest rate was the main culprit along with inflation and affordability for the 2022 market correction we experienced.  
 
A market correction is defined by prices reverting by 10% or more. In January 2022 the median price in Snohomish County started at $700,000 then peaked at $830,000 in April, and ended the year at $689,000 (-17%). In King County, the median price started at $794,000 then peaked at $1,000,000 in May, and ended the year at $820,000 (-18%). Bear in mind that the December 2022 median price was also up 17% over the January 2021 median price in Snohomish County and up 12% in King County. This illustrates that the correction was only off the peak of spring 2022 not off of the strong equity that was built prior to that intense run-up. 
 
As we find ourselves in mid-Q1 2023 all data points and anecdotal stories are pointing to the worst of the market correction being behind us and yet again, another shift. Interest rates peaked in November 2022 at just over 7% and have since come down. Experts are predicting rates to find themselves under 6% as we travel through the easing of inflation in 2023. 
 
The well-defined price correction and interest rates lowering have brought many buyers back to the market. In fact, pending sales in Snohomish County in January 2023 were up 52% over December 2022 and were up 3% over January 2022. Even more so an indicator: pending sales are up 80% month-to-date (MTD) in February over January 2023! In King County, pending sales in January 2023 were up 63% over December 2022 and were up 2% over January 2022, and up 61% MTD over January 2023.   
 
This pent-up demand has come at a time when listing inventory is seasonally scarce and has tilted the market from a balanced market back to a seller’s market in many areas. Months of inventory is how we define market conditions. 0-2 months is a seller’s market, 2-4 months a balanced market, and 4 months plus a buyer’s market. In Snohomish County, we ended 2022 with 2.3 months of inventory based on pending sales, and in January 2023 had 1.2 months, and MTD is sitting at 0.9 months. In King County, we ended 2022 with 2.6 months of inventory based on pending sales, and in January 2023 had 1.3 months, and MTD is sitting at 1.1 months. 
 
After months of price reductions and searching for the bottom, we are now starting to come across some multiple offers and price increases. This is leaving clues that the bottom was reached and that we are now stabilizing and looking toward the predicted growth that 2023 has to offer. Buyers are eager for additional selection and will welcome the spring influx of new listings. If sellers are ready, they should not hesitate. Should rates lower as the new listings arrive, sellers will be well supported by a willing buyer audience ready to absorb any growth in inventory. 
 
Buyers need to understand that rates and prices are closely related and that waiting for rates to hit a certain point may be detrimental to securing a stabilized price. Many buyers are heading into today’s market with a refinance in mind down the road. They are aware that prices will rise as rates lower, so they are looking to obtain a lower price now with a higher rate and once the rate hits their desired level, they will refinance to lower their payment all while holding on to their lower basis point. 
 
For example, if a buyer bought now at $750,000 with 20% down and a rate of 6.5% their monthly principal and interest payment would be $3,792. If a year from now, rates are at 5.5% and prices are up 5% and that same buyer refinances, they will save $364 a month on their payment and $37,500 in principle. This would also be $192 lower than what the payment would be at the appreciated price with the lower rate!
 
Real estate moves are driven by life changes. It was completely understandable that many buyers took a pause as the market corrected. Now that the market is showing signs of stabilizing these life changes are pushing buyers to find the home that better fits their lifestyle. Sellers need to keep in mind that their homes need to be priced right and show up to the market well-appointed and properly prepared to get the best results. 
 
We’ve learned a lot over the last year. Once the historical 3-4% interest rate disappeared, consumers had to adapt to the new normal. Now that consumer sentiment is leaning towards a resurgence in demand, opportunity abounds for sellers who are ready to make a move. Please reach out if you are curious about the market trends and want to discuss your goals. It is always my goal to help keep my clients well-informed and empower strong decisions. 2023 is going to be a great year for real estate, I can feel it! 

Last week, my office had the pleasure of hosting Windermere’s Chief Economist, Matthew Gardner for his 2023 Economic and Housing Forecast. During this jammed-packed hour of insightful delivery, he reported on the U.S. and local economies along with the U.S. and local housing markets specific to King and Snohomish Counties. If you are interested in receiving the recording of the event and/or his PowerPoint slides, please reach out. You can also access the link at the bottom of this newsletter to get his concise forecast for the U.S. housing market.Across the nation, we saw a real estate market correction in 2022 as interest rates doubled. Interest rates started the year at just over 3%, peaked in November at just over 7%, and ended at just under 6.5%. Since the first of the year, we are closer to 6% and anticipate rates to continue to improve towards 5% throughout 2023. The Feds utilized rising interest rates to combat inflation in an effort to create a short recession to slow the cost of all products and services after record-breaking increases during the pandemic. This has reduced spending due to money becoming more expensive to borrow and corrected prices across many industries, including housing.

The trends across the nation are consistent, but as your local expert, along with the national forecast I am committed to reporting hyper-local facts, figures, and trends to help you understand what is happening and what will happen right in our own backyard. Our local housing market was not immune to the effects of rising interest rates. Our prices peaked in the spring and as rates climbed over 6%, prices took a tumble from the spring highs inflated by cheap money. However, prices are still higher than they were in 2021 which was a recording-breaking year of price growth.

In King County, prices were up 22% in 2021, and in Snohomish County, they were up 23%. We started 2023 with higher prices over 2021, but off the peak of 2022. This is a price reversion, not a housing recession! In fact, in King County, 64% of homeowners with a mortgage have over 50% home equity and in Snohomish County, 63% of homeowners with a mortgage have over 50% home equity. Homeowners are fortified with strong cash positions which is a clear indicator we are nowhere near a housing crisis; we are actually incredibly healthy! While the highs of 2022 were wiped out, the long-term growth we have had over the last decade is the foundation and guiding light of our market. If you bought in 2022, don’t fret, just hold, values will eventually return.

The worst of this correction seems to be behind us as rates are expected to continue to improve throughout 2023 and consumers are adjusting to a more normalized market. Prices are starting to stabilize and are near, if not at the bottom, and should have modest growth in the second half of 2023. We are already starting to see pending sales pick up. Month-to-date (MTD), pending sales are up 25% in King County over December (month-over-month, MOM) and up 21% MOM in Snohomish County. This increase in pending sales is coupled with available inventory being down 15% MOM in King County and down 18% MOM in Snohomish County. Inventory remains tight with MTD inventory levels shifting from a balanced market to a moderate seller’s market based on pending sales rates in both counties.

It seems that buyer demand is improving and activity is becoming more plentiful. Buyers should take note and be ready to transact if they are poised to make a move. It is a delicate dance between prices and interest rates. Buyers must understand that they can’t change their sale price once they’ve bought, but they can always refinance and change their rate. I have even heard of lenders guaranteeing a future refinance when the rate hits a certain point. Real estate is a long-term hold investment and also where you live. If where you are at doesn’t currently meet your needs, consider a move if you plan to stay there for 5+ years.

Affordability has been a challenge in our area, so if a buyer can obtain a good price this year and then adjust their rate later by refinancing, they will have a much more affordable monthly payment down the road. This takes strategizing and planning and the guidance of a trusted lender and real estate broker. Utilizing adjustable-rate mortgages, rate buydowns, and other creative financing options has put savvy buyers in the catbird seat as they navigate this environment and make exciting moves.

Matthew’s closing words summarized the wild ride of coming off of the pandemic and where we are headed. “2023 will be a transition year when the housing market comes off the high that we saw during the pandemic when borrowing costs were artificially low. I don’t see any reason for buyers or sellers to panic at all! By the end of this year, most markets will have already corrected themselves and we will see prices and demand pick up again, but at a far more normalized pace.”

Real estate is an investment and a lifestyle decision. I am committed to following experts like Matthew and others. I also study the local market trends daily. Markets change quickly and the changes are often reported far after the actual shift. I have understood these shifts due to my daily connection to the market. I take great pride in helping empower my clients to make well-informed decisions about where they live and the financial impact it has on their lives. I love what I do because it is centered in helping people with one of the biggest decisions they will make in their life. If you or someone you know are curious about how the trends relate to your goals, please reach out. I’d be honored to help educate you and help guide and strategize your next move. Here’s to a happy and healthy 2023!

Are you curious about the economy during these changing times?  
Are you trying to make plans, but crave credible information to assist you?
 
Please join me for a very special virtual live event:
AN ECONOMIC FORECAST FOR 2023 & BEYOND
with Matthew Gardner, Chief Economist for Windermere Real Estate 
 
Wednesday, January 18, 2023  •  6:30pm – 8pm
 
Presentation from 6:30-7:30pm, Q&A to follow
 
Please RSVP by phone/text or email by January 13th, 2023 to receive an emailed link prior to the event.

What better way to celebrate Windermere’s 50^th anniversary than reaching $50 million in total donations to the Windermere Foundation? Windermere offices across the Western U.S. came together to raise over $4 million this year for low-income and homeless families! Thank you to everyone who helped us get here by giving their time and donating funds. To our clients: a portion of every home sold or purchased goes to the Windermere Foundation, so we couldn’t have done it without you. Here’s to $50 million raised!

Between holiday parties, family obligations, work, and the pressure of finding the perfect gift, this time of year can come and go in a flash. At Windermere North, we never want this season to go by without coming together to lift up our community and give back in meaningful ways.

Our office-wide annual holiday giving project is in two parts. First, all the brokers in my office joined together to provide $4,242 in grocery gift cards for 16 families, comprised of 48 individuals. Some of these families are dealing with grief and loss this season, some are coming out of domestic violence, some are homeless or unemployed. It is our privilege to partner with Pioneer Human Services for this every year, to help lift some of the burdens for these families.
 
We also had the joy of helping to bring some holiday cheer for homeless youth in our area. We partnered with WA Kids in Transition who works with social workers in Edmonds School District schools to collect wish lists from homeless students living in shelters, tents, cars, transitional housing or other temporary housing. We fulfilled the wish lists for 14 kids, plus several hygiene kits.
 
The other Windermere North holiday giving tradition that I love, is volunteering at Christmas House in Everett. Christmas House is a 100% volunteer, non-profit organization that provides an opportunity for qualifying, low-income, Snohomish County parents to select free holiday gifts for their children age infant-18. This is an amazing day helping families in need have a joyful Christmas.

We have been busy at our office holding various holiday events that have included the opportunity to give back to the local food banks through holiday food drives. When we bring people together to celebrate it is also a priority to weave in giving back to our community. When we do this, we are always thrilled to partner with Volunteers of America of Snohomish County who support various food banks and food pantries across the county. Just this week, VOA picked up a total of 1,820 pounds of food and $2,480 that resulted from our holiday events.  
 
With inflation still high, food insecurity is prevalent making these food drives an easy choice to direct our giving. If you are looking for a way to give back this holiday season, please reach out to VOA. They are a trusted local organization that will make sure your donation is placed to benefit those in need.

2022 has been an eventful year in the real estate market and the economy. After 2 years of pandemic-fueled demand and historically low interest rates, we experienced a shift. The Fed quickly raised rates (by 2 points) from April to October to combat inflation, curbing buyer demand as affordability took a hit. The overall economy is starting to settle back to pre-pandemic levels and the second half of 2022 was the time that was needed to make this adjustment.

We have recently seen rates drop as year-over-year inflation numbers start to show improvement. We anticipate this trend to continue slowly but surely as we head into 2023 and beyond. The upward trend in rates has put downward pressure on prices, but they are starting to stabilize as the new normal sets in. Price appreciation is still up year-over-year when you look at the average of the last 12 months and compare them to the previous 12 months, and certainly over the last 3-10 years as a whole.

We started 2022 at 3.5%, peaked at just over 7%, and now find rates in the mid-6%.  Experts like Matthew Gardner are anticipating rates to settle in the high 5% sometime in 2023, which would be 2 points below the historical average. Currently, buyers are enjoying more favorable negotiations and are securing sale prices that are not escalating at a feverish pitch.

Some buyers are getting creative and using seller credits for a rate buy-down, some are securing adjustable-rate mortgages, and some just plan to re-finance when rates come down further next year. It is important for buyers to understand that as rates come down prices will start to fortify again.

Besides rates and prices, which are related, two additional factors to pay attention to are our local job market and estimating the recession. We have recently experienced some layoffs in our region, particularly in the tech sector. See the video from Matthew Gardner here which speaks to this. The bottom line is over 20,000 jobs were added in the information sector during the pandemic, and that number is now receding. Just like prices grew exponentially during the pandemic, so did many other aspects of the economy and everything is finding its equilibrium as we return to our new normal. Bear in mind, there are other sectors of our local job market that are growing.

I’d like to leave you with two pieces of advice as we head into 2023 and are forced to jump on the media roller coaster of their reporting economic and real estate news. Pay attention to long-term figures and understand that real estate is a lifestyle move, not just a financial chess move.

The media will paint the picture that the sky is falling and it simply is not. The recession is predicted to be short, much like the recession of 1990-91. Some economists are claiming that we are already through the worst of it.  This will be nothing like the Great Recession of 2007-2012, nothing!  It just happens to be the one closest in our rear-view mirror and easiest to recall, but that was made up of entirely different factors that do not compare to our current environment. Please reach out if you’d like to further discuss the differences.

We are not headed toward a bubble in the real estate market. Homeowner equity is incredibly strong with over 50% of all homeowners in WA state having over 50% home equity. Homes are not foreclosed on when there is equity—period, end of story. As numbers are reported in the first half of 2023 they will be compared to the peak prices of 2022 and those numbers will create negative headlines. We will spend the first half of 2023 adjusting off of those peaks, but where I am sure the media will fall short is reporting the overall growth in values since 2019.

Real estate is a long-term hold investment, it always has been. The ramp-up of the pandemic years may have clouded that long-term truth, but I can assure you double-digit and certainly 20%+ annual appreciation is not normal. The historical norm is 3-5% annually. 

For example, in Snohomish County when you take the last 12 months of median price and average it and compare it to the previous 12 months, prices are up 15%. When you take the median price in Nov 2022 and compare it to the median price in Nov 2021, prices are up 3%.  Further, when you take the median price in Nov 2022 and compare it to the median price two years ago in Nov 2020, prices are up 22%. We are experiencing a correction off of the peak, not a tumbling of long-term values. Hence, why there is no bubble.

In fact, experts are anticipating that we end 2023 with positive, yet slight year-over-year appreciation. This is more reflective of historical norms and much calmer than the intense pandemic-fueled years that were inflated with rates that we will quite possibly never see again in our lifetime.

Lastly and most importantly, real estate moves are most often motivated by life changes. Job changes, familial changes, and financial shifts lead to people changing their housing and location. These big life changes are delicate and exciting, and require strategic planning and care. I am all about helping my clients obtain successful financial results, but I am also committed to helping my clients navigate the details, challenges, emotions, and logistics of a move. I always approach the process with the end in mind, but also with the journey prioritized to be smooth and enjoyable.

I hope you call on me when your curiosity is piqued or you have an emergent need in your world related to real estate. I take pride in understanding the latest trends and helping you apply them to your goals. Also, if you know of anyone that needs real estate help, please pass my name along or get me in touch with them. Your people are my people, and helping them stay well-informed to empower strong decisions is my mission. As we encounter change and recalibrate, this expertise will be more important than ever; I am honored to have your trust and endorsement.

n honor of Windermere’s 50th anniversary, we’ve set a goal to reach $50 million in total donations to the Windermere Foundation in 2022 for our 50 in 50 campaign. To reach our goal, we need to raise $4 million in donations this year.

So far this year, through the month of October, $3,594,552 in donations has been raised for the Windermere Foundation. If you’d like to help us reach our goal, you can donate here!