Monthly Archives: December 2017

Holiday shoppers include homebuyers, but inventory is still a challenge

Source: NWMLS

KIRKLAND, Washington (December 6, 2017) – “Normal seasonal slowdowns” are reported by some
real estate leaders with Northwest Multiple Listing Service, but other brokers say this holiday season is
still drawing crowds at open houses along with competitive bidding in some neighborhoods.
Both inventory and pending sales dipped to their lowest levels since April, while prices still increased by
double-digits in most of the 23 counties served by Northwest MLS.

MLS members reported 8,304 pending sales of single family homes and condos, a slight (1.6 percent)
gain over the year-ago figure of 8,173. Last month’s mutually accepted offers surpassed the number of
new listings (6,098) by 2,206 properties to keep supply tight.

“Until we see a balanced rate of 4-to-5 months of supply, instead of hovering around one month, we’re
not likely to see much change,” remarked George Moorhead, designated broker at Bentley Properties.
“However,” he added, “since we have seen these low inventory levels since 2013, maybe this is going to
be the new normal.”
Moorhead, a member of the Northwest MLS board of directors, also said this time of year is actually one
of the best times to find a home. “There is less competition and sellers who list their homes at this time
are usually motivated to make their move. Some of the best pricing can be attained from December
through early February,” he indicated.

Buyers seem to be undeterred by winter weather, holiday festivities or other seasonal or – for the most
part — political distractions.

Gary O’Leyar, designated broker/owner of Berkshire Hathaway HomeServices Signature Properties, said
December “may well provide an unexpected holiday reprieve for our local, weary real estate shoppers.
Combined with the seasonal pace change and real estate industry pundits’ consternation over the effect of
the federal income tax bill working its way through Congress, buyers could be getting some relief.” He
urged potential sellers to take note as “This could be the signal they’ve been waiting for as a good time to
sell before the pending tax laws that affect real estate ownership take effect.”

For those who are both prepared and patient, OB Jacobi, president of Windermere Real Estate, said the
holidays can actually be a great time to buy “because there is usually less competition and sellers are
motivated to close out the year with a sale.”

Housing in 2018: Where Are Home Values Headed?

Source: Suzanne DeVita/RISMedia

Analysts are expecting even higher home prices in 2018 than originally projected, according to new research.

Zillow’s 2017 Q4 Home Price Expectations Survey reveals experts are anticipating a 4.1 percent hike in the new year, up from the 3 percent they forecasted a year ago. Over 100 experts, including economists, participated in the survey.

Their reasoning? Home-building has not panned out as planned—yet.

“The American labor market is stronger than it’s been in decades, and Americans, particularly young Americans, are increasingly feeling confident enough to buy homes,” says Aaron Terrazas, senior economist at Zillow. “Home-building has not kept pace with this surge in demand and remains well below historical norms. We don’t expect that these demand-supply imbalances will fundamentally shift in 2018. Demand will continue to grow and, though supply should increase somewhat, we still won’t build enough new homes to meet this demand, contributing to higher prices.”

Less than 20 percent of experts forecast home-building to pick up next year, the survey shows. Approximately 313,000 new homes were on the market in October, representing 4.9 months supply, according to the U.S. Census Bureau. Entry-level homes, especially, are scarce—down 20.4 percent year-over-year over the summer, reports Trulia.

Additionally, experts foresee increasing mortgage rates, with the 30-year, fixed rate ranging anywhere from 4.28 to 4.70 percent. Currently, the 30-year averages 3.90 percent, according to Freddie Mac.

“Higher mortgage rates will eat into buyers’ budgets, putting even more price pressure on the most affordable homes for sale,” Terrazas says. “Unless there is a fundamental shift in the number and type of homes for sale, this is the new normal of the American housing market.”

One factor in the health of the housing market is the homeownership rate; experts predict it, too, will rise, though slightly, to 64 percent. The homeownership rate has improved twice thus far this year, up to 63.9 percent in third quarter, according to the Census.

Beyond 2018, analysts are divided.

“Our most optimistic group of experts projects average annual home value appreciation of almost 5 percent annually through the five-year period ending in 2022, while the most pessimistic group expects an average annual rate of just 1.4 percent,” says Terry Loebs, founder of Pulsenomics, which conducted the survey in conjunction with Zillow. “I don’t foresee a stronger consensus emerging until we have greater clarity concerning tax reform and the pace of entry-level home building.”