Monthly Archives: October 2018

Balance “Finally returning” to Housing Market as Buyers Welcome More Choices, Moderating Prices

Source: NWMLS

KIRKLAND, Washington (October 4, 2018) – Housing inventory continued to improve during September
while the pace of sales slowed in many counties served by Northwest Multiple Listing Service. “Balance is
finally returning to the market, and with it, slowing home price growth,” stated OB Jacobi, president of
Windermere Real Estate.

A new report from Northwest MLS shows double-digit increases in inventory in several of the 23 counties it
serves, led by a 78 percent year-over-year gain in King County. Despite improving selection in the central
Puget Sound region, a dozen counties reported drops in the number of active listings compared to last year.

System-wide, the month ended with 2.56 months of supply of single family homes and condos, well below
the 4-to-6 months analysts use as an indicator of a balanced market between sellers and buyers. The current
level is the highest since February 2015 when member-brokers reported 3.56 months of inventory. In King
County, supply exceeded two months for the first time since January 2015.

Condo inventory remains sparse, with only 0.34 months of supply area wide, despite improving inventory (up
nearly 70 percent from a year ago). The shortage is expected to ease as construction progresses on several
recently-announced high-rise projects.

Brokers added 10,458 new listings of single family homes and condos to the MLS database during
September, slightly more than the year-ago figure of 10,120. At month end, buyers could choose from 19,526
listings, a 22.9 percent improvement from twelve months ago when selection totaled 15,888 listings.

Commenting on the wider selection, Mike Grady said buyers “are at long last now seeing properties that stay
on the market longer.” Listings that are priced appropriately, “and not based on the feverish market we saw
just a few months ago are still selling quickly, and home prices are still showing 8 percent appreciation year-
over-year – more than double the rate of inflation,” added Grady, the president and COO of Coldwell Banker
Bain.

With improving inventory, some brokers suggest the market may be showing signs of pausing, if not
softening. A market shift may be under way, but they believe activity will stay strong.

J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, encouraged would-be buyers to “put extra
focus on October,” which he described as the last great month for new listings until March 2019. “Over the
winter, new monthly resale listings will lower by approximately 50 percent compared to summer months.” He
also noted interest rates, currently in the upper 4 percent, are projected to rise in the coming months.

“This is a more traditional yearly market cycle taking the place of the unusually overheated real estate market
of the past several years,” said John Deely, principal managing broker at Coldwell Banker Bain.

A Decade Low in Housing Affordability Won’t Kill the Real Estate Boom

Source: Dr. Steve Sjuggerud, Stansberry Research

I’ve spent years urging anyone who would listen to buy a house…

Folks didn’t want to hear that story back in 2011, when I first began pounding the table. Investors were scared. Nobody wanted to buy.

That’s why housing was such a great deal, though. It was dirt-cheap and hitting all-time levels of affordability.

Plenty has changed since then…

U.S. home prices have steadily climbed, and housing affordability has fallen as a result.

Today, housing affordability is at a decade low. But as I’ll show, that doesn’t mean the boom is dead.

Let me explain…

The idea of housing affordability is simple. When someone buys a home, he doesn’t worry so much about the purchase price… He worries about the monthly payment. If he can afford the payment, he can afford the house.

The monthly payment includes a few numbers… namely the home’s price and the interest rate. Compare that with the person’s income, and you know how affordable (or not) a home would be.

Importantly, these numbers are similar for a lot of folks. So the National Association of Realtors uses median home prices, median income, and mortgage rates to build an overall measure of housing affordability in America.

This indicator tells us if housing is cheap, expensive, or somewhere in between.

Again, things have changed since I first began urging readers to buy real estate. Housing affordability is now at a 10-year low. Take a look…

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A high affordability number indicates housing is cheap… signaling a great time to buy. A low number indicates an expensive market, where folks will have to stretch to buy.

You can see that housing is getting less affordable. It recently fell to affordability levels not seen since 2008. But that doesn’t tell the full story.

Despite a decade low for affordability, we’re now right at the long-term average. Check it out…

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It’s true that the easy money in real estate might be behind us. But affordability hasn’t completely dried up.

We are clearly in the late innings of this boom. The great deals are getting harder to find, but certain markets still have plenty of value remaining.

I’ve personally put a large chunk of my net worth into Florida real estate. I’ve sold some of those properties for big profits… but I’ve been able to find new deals too.

So while affordability is down, I remain bullish on U.S. housing. We’re still near the long-term average for affordability in U.S. housing. And folks can still make money in U.S. real estate.

If you’re looking to put money to work, buying a house is still a solid deal today.