Monthly Archives: April 2019

It’s Still Smart to Bet on Housing

Source: Dr. Steve Sjuggerud

We are in the late stages of a massive wealth-creation event. When it’s over, we likely won’t see another opportunity like it for decades.

If you invested in housing in the last few years, you’ve likely made incredible gains… whether you bought a house or invested in real estate stocks.

Today, many investors are worried that the bull market is over… They’re worried that the massive gains we’ve seen in the housing market are behind us.

I hear this all the time…

“Steve, home sales fell hard in 2018. Houses aren’t as cheap as they were five years ago, either. Doesn’t that scare you?”

The concerns are understandable. But these ideas miss the bigger point.

Yes, home sales had a rough year last year. And yes, home prices have moved higher in recent years. But when you look under the hood, the housing market is actually healthier than you think.

It’s still smart to bet on housing now.

Let me explain…

First, let me be very clear… I’m not calling for another decade of booming housing prices.

Today’s opportunity isn’t the generational one we saw back in 2011. But there are a couple reasons why we should expect housing to do well over the next couple of years.

The first is that housing is a better deal than a lot of folks believe. That’s normal after a decadelong boom. But thanks to the recent decline in mortgage rates, housing isn’t out of reach for most.

Just a few months ago, 30-year mortgage rates were nearing 5%. Now, these rates are down to 4%. Take a look…

Falling mortgage rates tell us it’s getting cheaper to take out a home loan. That’s great for folks who are looking to buy in today’s market – and it should continue to drive demand.

On top of that, supply in the housing market is still extremely low… Homebuilders can’t keep up with demand.

You can see this by looking at existing home supply. It’s based on how many months it takes to sell the entire supply of existing homes on the market, according to current sales rates. Check it out…

The housing market is extremely tight. The number of existing homes on the market is historically low today.

That creates an interesting scenario…

With mortgage rates falling, housing has recently become more affordable. That should increase demand, bringing new buyers into the market. But they’ll be coming into a market with incredibly low supply.

New demand with limited supply… That’s a recipe for higher prices.

This isn’t what the average person would expect, of course. But it’s the reality of what’s going on in the housing market right now.

U.S. housing is much healthier than most people believe. And I expect the boom to continue in the coming years.

Good investing,

Steve

Housing market rebounds from February freeze

Source: NWMLS

KIRKLAND, Washington (April 5, 2019) – Both pending sales and new listing activity around Western
Washington surged during March as buyers, sellers, and brokers emerged from February’s record
snowfall.

Brokers added 10,516 new listings of single family homes and condos to the Northwest Multiple Listing
Service inventory last month, the highest monthly volume since August 2018. Compared to the same
month a year ago, new listings across the 23 counties in the report were down slightly (79 fewer units).
MLS members also reported 10,261 pending sales during the same timeframe, the highest number of
mutually accepted offers since July, and nearly matching the year-ago total of 10,311.

“After the housing adjustment in 2018, this year’s spring market is back to frenzied in the more affordable
and mid-price ranges,” remarked J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. Noting
March is the start of the prime-time selling season, he expects this year “will be no exception.” He also
commented on improved affordability from last fall’s price adjustments in the close-in job centers of
Seattle and the Eastside. “This improved affordability, along with lower interest rates and very strong job
growth, all point us in the right direction for red-hot acceleration again this year,” Scott stated.

Year-over-year prices area-wide were up 3.5 percent, rising from $401,761 to $415,950, with most
counties reporting gains. King County was an exception. Prices there were flat (down 0.4 percent),
slipping from the year-ago median of $625,000 to last month’s figure of $622,500, but rising from
February’s price of $604,000.

Compared to February, prices rose 2.2 percent system-wide. The four-county Puget Sound region had
larger month-to-month increases, led by Kitsap County, up 5.9 percent from February. Prices in
Snohomish County jumped nearly 5.5 percent, while King County’s median prices rose more than 3
percent when comparing February to March.

Commenting on the uptick in new listings and new sales, broker Dean Rebhuhn pointed to lower
mortgage interest rates and a growing selection of properties as drivers of activity. “Well-priced
properties are selling. Buyers who are getting fully underwritten loan commitments are winning the prize
– the home,” stated Rebhuhn, the owner of Village Homes and Properties in Woodinville.

At month end, there were 12,017 active listings of single family homes and condos in the Northwest MLS
database. That represents an increase of more than 36 percent from a year ago when there were only 8,825
active listings. Inventory more than doubled in King County compared to a year ago, rising from 2,060
active listings to 4,263 at the end of March. Nine counties reported less inventory than 12 months ago.

Even with improving inventory, there is less than two months of supply overall and in seven counties,
including Pierce (1.2 months), Snohomish (1.3 months), Kitsap (1.4 months) and King (nearly 1.9
months).