2019 Economic and Housing Forecast

2019 Economic and Housing Forecast 
By Matthew Gardner, Chief Economist, Windermere Real Estate 

What a year it has been for both for the U.S. economy and the national housing market. After several years of above-average economic and home price growth, 2018 marked the start of a slowdown in the residential real estate market. As the year comes to a close, it’s time for me to dust off my crystal ball to see what we can expect in 2019.

The U.S. Economy

Despite the turbulence that the ongoing trade wars with China are causing, I still expect the U.S. economy to have one more year of relatively solid growth before we likely enter a recession in 2020. Yes, it’s the dreaded “R” word, but before you panic, there are some things to bear in mind.

Firstly, any cyclical downturn will not be driven by housing.  Although it is almost impossible to predict exactly what will be the “straw that breaks the camel’s back”, I believe it will likely be caused by one of the following three things: an ongoing trade war, the Federal Reserve raising interest rates too quickly, or excessive corporate debt levels. That said, we still have another year of solid growth ahead of us, so I think it’s more important to focus on 2019 for now.

The U.S. Housing Market

Existing Home Sales

This paper is being written well before the year-end numbers come out, but I expect 2018 home sales will be about 3.5% lower than the prior year. Sales started to slow last spring as we breached affordability limits and more homes came on the market.  In 2019, I anticipate that home sales will rebound modestly and rise by 1.9% to a little over 5.4 million units.

Existing Home Prices

We will likely end 2018 with a median home price of about $260,000 – up 5.4% from 2017.  In 2019 I expect prices to continue rising, but at a slower rate as we move toward a more balanced housing market. I’m forecasting the median home price to increase by 4.4% as rising mortgage rates continue to act as a headwind to home price growth.

New Home Sales

In a somewhat similar manner to existing home sales, new home sales started to slow in the spring of 2018, but the overall trend has been positive since 2011. I expect that to continue in 2019 with sales increasing by 6.9% to 695,000 units – the highest level seen since 2007.

That being said, the level of new construction remains well below the long-term average. Builders continue to struggle with land, labor, and material costs, and this is an issue that is not likely to be solved in 2019. Furthermore, these constraints are forcing developers to primarily build higher-priced homes, which does little to meet the substantial demand by first-time buyers.

Mortgage Rates

In last year’s forecast I suggested that 5% interest rates would be a 2019 story, not a 2018 story. This prediction has proven accurate with the average 30-year conforming rates measured at 4.87% in November, and highly unlikely to breach the 5% barrier before the end of the year.

In 2019, I expect interest rates to continue trending higher, but we may see periods of modest contraction or levelling.  We will likely end the year with the 30-year fixed rate at around 5.7%, which means that 6% interest rates are more apt to be a 2020 story.

I also believe that non-conforming (or jumbo) rates will remain remarkably competitive. Banks appear to be comfortable with the risk and ultimately, the return, that this product offers, so expect jumbo loan yields to track conforming loans quite closely.

Conclusions

There are still voices out there that seem to suggest the housing market is headed for calamity and that another housing bubble is forming, or in some cases, is already deflating.  In all the data that I review, I just don’t see this happening. Credit quality for new mortgage holders remains very high and the median down payment (as a percentage of home price) is at its highest level since 2004.

That is not to say that there aren’t several markets around the country that are overpriced, but just because a market is overvalued, does not mean that a bubble is in place. It simply means that forward price growth in these markets will be lower to allow income levels to rise sufficiently.

Finally, if there is a big story for 2019, I believe it will be the ongoing resurgence of first-time buyers. While these buyers face challenges regarding student debt and the ability to save for a down payment, they are definitely on the comeback and likely to purchase more homes next year than any other buyer demographic.

Originally published on Inman News. Then Posted to Windermere Eastside.


Posted on December 18, 2018 at 6:48 pm
Caleb Jessup | Posted in Uncategorized |

Holiday Happenings in the Seattle Area 2018

2018 Holiday Happenings in the Seattle AreaMerry & Bright: Holiday Happenings Around the Sound
Our Northwest holidays may be wet, but they’re still bright!  Make the most of the season with Seattle favorites—such as dazzling light displays and the Parade of Boats—along with new additions like the “Enchant” event with light mazes and ice skating inside Safeco field.  Scroll down for all the details…

WildLights at Woodland Park Zoo

5500 Phinney Ave. N, Seattle, WA 98103
www.zoo.org/zoolights
click here to get tickets

  • Dates/Times:Open nightly 11/23/18 – 1/5/19  |  5:30 – 8:30 pm
  • Cost:$9.95 – $14.95 per person (ages 2 and under are free)
  • Promotion:Get a 10% group discount on WildLights tickets for groups of 20+ (12/14/18 – 1/5/19).
  • Parking: Free parking is available at all lots after 4:30 pm (admission at both gates)
  • Food: Refreshments are available at food kiosks, Pizza Corner, and at the Pacific Blue Chowder House (with covered seating provided). You are also welcome to bring your own food and non-alcoholic beverages.
  • Special activities: Carousel, fire pits, select indoor animal exhibits, ZooStore, & indoor snowball fights at the Snowmazium
  • Closures:December 12, 24 & 25, 2018

Image courtesy of https://zoo.org/zoolights


Winterfest at Seattle Center

305 Harrison Street, Seattle, WA 98109
www.seattlecenter.com/winterfest

Map


Enchant at Safeco Field

1250 1st Ave S, Seattle, WA 98134
https://enchantchristmas.com/seattle/
click here to get tickets

  • Dates/Times:11/23/18 – 12/30/18  |  Sun-Thu from 4 – 10 pm, Fri-Sat from 4 – 11 pm
  • Cost:$19 – $32.99 per person (ages 3 and under are free)  |  VIP passes with dinner starting at $64.99
  • Promotions:Discount days on 11/27, 12/4 & 12/11  |  Discount on final 2 hours of any day  |  Group discounts for 15 or more
  • Parking:$8 – $60 at Safeco Field Garages or check out the city’s Interactive Parking Map
  • Food: Seasonal food and treat concessions throughout
  • Activities:Ice skating trail, light maze, visits with Santa & Mrs. Claus, nightly live music & shows, gift market
  • Closures:11/26, 12/3 & 12/10

Enchant Ice Skating Trail


Garden d’Lights at Bellevue Botanical Garden

12001 Main Street, Bellevue WA 98005
https://bellevuebotanical.org/garden-dlights/
click here to get tickets

  • Dates/Times:Open nightly 11/24/18 – 12/30/18  |  4:30 – 9:00 pm
  • Cost:$5 per person (ages 10 and under are free)
  • Promotion:Free admission nights on November 24, 25, 26, 27, 28 & 29
  • Parking:Premium parking is $5 per car in the Garden’s lot (cash only) as space allows OR park for free at Wilburton Hill Park
  • Food: Hot drinks and snacks are available at the Aaron Education Center
  • Activities:Gingerbread village, live music
  • Holiday Closures:None

Image courtesy of https://gardendlights.org/


Snowflake Lane at the Bellevue Collection

Bellevue Way & NE 8th Street, Bellevue WA 98004
http://snowflakelane.com/


Christmas Ship Festival

Launch locations include Lake Union Park, Kirkland City Dock, Hyatt Regency Lake Washington, Des Moines Marina, Port of Poulsbo, Seattle Waterfront – Pier 55, Tacoma (Dock Street Marina), Edmonds, and Shilshole Bay Marina

www.argosycruises.com
click here to get tickets


Ivar’s Clam Lights at Gene Coulon Memorial Beach Park

1201 Lake Washington Blvd N, Renton, WA 98056
https://rentonwa.gov/clamlights

  • Dates/Times:Open nightly 11/30/18 – 1/1/19 | 5 – 9 pm
  • Cost:Free for all ages
  • Parking: Park for free at the Gene Coulon Memorial Beach Park parking lot
  • Kickoff Event on November 30th, 2018, 5:30-8:30:Music, selfie-station with Santa & Mrs. Claus in their sleigh, official lighting ceremony, Parade of Boats viewing, and a visit from the Christmas Ship and Dickens Carolers
  • Holiday Closures:None

Westlake Center Tree Lighting & Holiday Activities

400 Pine St., Seattle, WA 98101 (Westlake Park)
http://redtri.com/seattle/westlake-center-tree-lighting/

  • Dates/Times:Tree lighting ceremony on 11/23/18 at 4:30 pm.  Holiday market Fri-Sun beginning 11/23 through 12/23.  Carousel and other festive attractions through January 1st, 2019
  • Cost:Free for all ages
  • Parking: Access the Republic Parking garage from Olive Way between 4th & 5th Ave, or check out this interactive map of city parking
  • Activities: Carousel, Holiday Market at Westlake Park

Image courtesy of http://redtri.com


Zoolights at Point Defiance Zoo & Aquarium

5400 N Pearl St, Tacoma, WA 98407
www.pdza.org/event/zoolights
click here to get tickets

  • Dates/Times:Open nightly 11/23/2018 – 1/6/2019  |  5 – 9 pm
  • Cost:$10-$12 (free for kids 2 & under)
  • Promotions: $6 for zoo members; Scout discount night 12/4; Military discount nights Nov. 26, 28 & Dec. 3, 5, 10, 12, 17, & 19
  • Parking:Free parking in zoo lots (carpooling recommended)
  • Food: Warm drinks & treats available at the cafe and kiosks
  • Activities: Camel rides, carousel, aquarium, Kids’ Zone with animals
  • Holiday Closure:12/24
https://www.pdza.org/wp-content/uploads/2018/05/Hero-zoolights-1440x500.jpg
This article was put together and originally posted on windermeremercerisland.com/blog
Enjoy – Cheers!

Posted on November 27, 2018 at 10:13 pm
Caleb Jessup | Posted in Uncategorized |

Commute Home…How Far Are You Willing To Drive?

Commute vs. Home Price Trade-Off: How Far Are You Willing To Drive? Author: Windermere Eastside, reposted by Caleb Jessup x Windermere

Would you be willing to swap a longer commute time for a lower monthly mortgage payment? With prices of homes near city centers skyrocketing, many buyers are rethinking their priorities and choosing to “keep driving until they can afford it.”

Housing Search Trade-Off: Price vs. Commute Time

We examined active listing on the Northwest Multiple Listing Service and their drive-time proximity to downtown Seattle. Looking at homes within a 30-minute radius from downtown, the median home price was $1,612,500. Homes located within a 31 to 60-minute commute from downtown had a median price of $890,000–that’s 45 percent less. This means if you are willing to commute over an hour, the price of the average home in the area would be $1 million less than if you lived close to the city.

Search for Homes by Commute Time on Windermere.com

The Drive Time Search function on CalebJessup.com allows you to customize the search criteria with your work address, time of day that you commute, and maximum amount of time you want to spend driving to and from work. The results will exclusively show homes for sale within your preferred drive time. 
Search By Drive Time

Posted on July 16, 2018 at 7:48 pm
Caleb Jessup | Posted in Market Update | Tagged , ,

Local Market Update – July 2018

The local real estate market looks like it might finally be showing signs of softening, with inventory up and sales down. More sellers have opted to put their homes on the market. Inventory was up 47 percent in King County and price increases were in the single digits. Despite the increase in inventory and slowdown in sales, it’s still a solid seller’s market. Over half the properties purchased in June sold for more than list price.

Eastside

A booming economy offered little price relief for buyers looking on the Eastside. In a recent study of economic strength by state, Washington ranked number one in the country. An additional report targeting cities ranks the Seattle-Bellevue-Tacoma market as the nation’s fourth strongest economy.  The median price of a single-family home on the Eastside rose 10 percent over a year ago to $977,759 setting another record. There is some good news for buyers. Inventory rose to its highest level in three years, with the number of homes for sale increasing 46 percent from the same time last year.

King County

The number of homes on the market in King County soared 47 percent from a year ago, the biggest increase since the housing bubble burst. Despite the increase, there is just over one month of available inventory, far short of the four to six months that is considered a balanced market.  The median price of a single-family home increased 9 percent over last June to $715,000. That’s down 2 percent from the $726,275 median in May. Home prices haven’t dropped from May to June in King County since the last recession.

Seattle

Seattle trails only Bay Area cities when it comes to greatest profits for home sellers.  That may help explain the surge in inventory in June. For example, the number of homes for sale in the popular Ballard/Green Lake area doubled from a year ago. Even though buyers are finally getting more choices, demand still exceeds supply. Homes sell faster in Seattle than in any other U.S. real estate market.  That demand propelled the median price of a single-family home to $812,500; up 8 percent over last June and down from the record $830,000 set in May.

Snohomish County

The largest jump in home prices in the region came in Snohomish County. While higher-priced markets in King County are seeing increases slowing slightly, the median price of a single-family home here jumped 14 percent to $511,500, a new high for the county.  Buyers willing to “keep driving until they can afford it” are finding Snohomish County an appealing destination.

Article originally posted on https://windermereeastside.com.


Posted on July 10, 2018 at 4:46 pm
Caleb Jessup | Posted in Market Update | Tagged , , , ,

What to Expect From Property Taxes in Washington State in 2018-2019

Why have property taxes gone up so much in Washington State this year and what can we expect them to do in 2019? Windermere Chief Economist Matthew Gardner answers the question that many homeowners are asking.

This post originally appeared on the Windermere Blog.


Posted on June 27, 2018 at 7:45 pm
Caleb Jessup | Posted in Uncategorized | Tagged , , , ,

Local Market Update – June 2018

Local Market Update – June 2018

Last month brought some long-awaited, positive news for buyers with May posting the most new listings in over a decade. Despite the uptick in inventory, most homes are selling in less than a month. Prices haven’t been impacted either, with the majority of the region continuing to experience double-digit home price increases.

Eastside

The median home price on the Eastside hit an all-time high of $960, 000 in May; a 10 percent gain over the same time last year. While there were a third more homes for sale in May than a year ago, the area still had only about a month of available inventory. Three to six months is considered a balanced market. Redmond, a city with a population of 64,000, currently has only 51 single-family homes on the market.

King County

First the good news: Those looking to buy a home in King County in May had almost 1,000 more homes to choose from compared to the previous month. The bad news: That boost in inventory did little to moderate home prices. The median price for a single-family home jumped 15 percent to $726,275, up slightly from the record high set in April.

Seattle

A strong economy and desirable lifestyle have kept Seattle a leading destination for job-seekers. The ever-increasing demand for housing has sapped supply and sent prices soaring. For 19 months Seattle has led the nation in rising home prices.  May saw the city set yet another record, with the median home price jumping 14 percent to $830,000.

Snohomish County

Soaring prices in King County combined with rising interest rates make Snohomish County an affordable alternative for those willing to extend their commute time.  The typical home cost $500,000 in May, an increase of 11 percent over the previous year, and down very slightly from last month.

Article originally posted by WindermereEastside.com.


Posted on June 11, 2018 at 6:05 pm
Caleb Jessup | Posted in Uncategorized |

Local Market Update – April 2018

Despite the typical seasonal surge in new listings, supply in our area continued to fall far short of demand in March. With just two weeks of available inventory in every market, competition for homes is intense. The result was another month of double-digit price increases as compared to a year ago. The region has now led the country in home price increases for 17 months in a row. The prediction for the spring market: HOT with no signs of cooling.

Eastside

The median price of a single-family home was up 6 percent over last March to $926,000, down slightly from the record-setting price last month. Sales were brisk at every price, including the luxury market. Sales of homes priced at $2 million or more were up 23 percent in the first quarter of 2018 as compared to the previous year.

King County

A booming economy combined with insufficient inventory propelled prices to an all-time high in March. The median price of a single-family home in King County jumped 15 percent to $689,950. Multiple offers remain the norm. Buyers here need to plan on moving very quickly and working with their agent on strategies to navigate bidding wars.

Seattle

The median home price in Seattle set a new record of $819,500 in March, up a whopping 17 percent from a year ago. Homes are selling within days of being listed. Only 19 single-family homes are currently on the market in Ballard and just 24 in Queen Anne. South Seattle, traditionally the most affordable part of the city, has seen the greatest increase in prices.  Home values in these neighborhoods have nearly tripled since the recession ended, while home values in the rest of the city have doubled.

Snohomish County

Once a less competitive market than King County, Snohomish County now has the lower amount of inventory of the two. The median price of a single-family home grew 12 percent over a year ago to $475,000. Prices here remain significantly lower than in King County and many buyers priced out of that market are trading a longer commute time for the opportunity of ownership.

Post originally published by Windermere Eastside


Posted on April 9, 2018 at 7:09 pm
Caleb Jessup | Posted in Market Update | Tagged , , , , , ,

Local Market Update – February 2018

With competition for homes growing and inventory shrinking, the real estate market in January was as hot as ever.  Home prices were up by double digits as buyers chased severely limited inventory. The number of homes for sale hit a record low for the month of January, which should strongly favor sellers as we move into the prime spring selling season.  The average home seller in our area now makes a 64 percent profit, the fourth-highest rate of any region in the country, according to ATTOM Data Solutions.

Eastside

>Click image to view full report.

Home prices on the Eastside continue to climb. The median price of a single-family home was up 18 percent over last January to $938,000 —­ virtually unchanged from the record high set a month ago. West Bellevue, King County’s most expensive area,  saw the median home price surge to a record high of $2.72 million. With less than a month of available inventory, prices aren’t expected to cool any time soon.

King County

>Click image to view full report.

Single-family home prices in King County soared 20 percent over a year ago to $628,388, with double-digit increases recorded in every area of the county.  Lack of inventory continues to fuel the market.  There were 21 percent fewer homes for sale here as compared to a year ago, with inventory hitting a record low for the month of January. The region has now been the hottest housing market in the country for 15 months in a row.

Seattle

>Click image to view full report.

An ongoing shortage of inventory combined with an economy that continues to add jobs has kept the Seattle housing market very competitive and increasingly expensive. Seattle’s median price hit a new record in January jumping 19 percent to $757,000.  Despite the increase in prices, brokers are reporting open house traffic that can number in the hundreds of interested buyers.

Snohomish County

>Click image to view full report.

Home price increases in Snohomish County were more moderate than those in King County. The median price of a single-family home grew 10 percent over a year ago to $450,000. That number is down from the high of last year, and reflects a more common seasonal slowdown.

Originally posted in Windermere Eastside.


Posted on February 8, 2018 at 5:21 am
Caleb Jessup | Posted in Market Update | Tagged , , , , , , ,

Tesla, Home Depot and the Eastside? (probably not)

With the Tesla announcement last week to start selling Powerwalls and Solar panels at over 800 Home Depot stores, I started playing around on the website to check out how much it would really cost if I wanted to have a Tesla roof installed here on Seattle’s Eastside. With our current market conditions making it more and more difficult to find affordable housing – more people then ever are choosing remodeling staying over moving.
Using the Tesla website estimator, this is what came up for my home in Bothell:
  • Cost of roof ($50,900)
  • Cost of Powerwall battery ($7,000)
  • Tax credit (+ $14,200)
  • Net cost over 30 years ($18,300)

A traditional roof on my house would be likely around $8-$10k in comparison. While the appeal of energy costs savings is strong and being guy with the Tesla roof sounds kinda nice – this expense (for my situation) just doesn’t make sense anytime soon. My real follow-up question would be – who is the ideal candidate for a sleek/energy efficient/expensive roof like this?


I pulled all the information below from the Tesla website dedicated to providing the general public with information as the product and installation rollout comes along.

Value of energy

The value of energy your Solar Roof is expected to produce over 30 years is based on the average price of electricity in your area, adjusted for inflation by 2% annually. Your ability to realize the full value depends on your home’s electricity usage, amount of energy storage available, and utility regulations on solar in your area. Electricity price estimates are sourced from the Energy Information Administration and solar production estimates are based on irradiance data from NASA.

Cost of roof

The estimated cost of your Solar Roof includes materials, installation, and the removal of your old roof. Taxes, permit fees and additional construction costs such as significant structural upgrades, gutter replacement, or skylight replacements are not included. The Solar Roof cost is based on estimated roof square footage for your home, provided by Google Project Sunroof where available, and the portion of your roof covered with solar tiles.

Cost of Powerwall battery

The estimated cost of your Powerwall includes the battery, supporting hardware and installation cost. We recommend that every Solar Roof be installed with a Powerwall battery to enable you to use more of the solar power your roof produces and keep your home running during a grid outage. In states that do not have Net Energy Metering policies, we estimate and recommend a number of Powerwalls that will enable you to realize the full benefit of the energy your Solar Roof produces.

Tax credit

The 30% Solar Investment Tax Credit applies to the cost of the solar tiles and associated solar energy equipment as well as the cost of the Powerwall batteries. To receive the full tax credit, you must have federal income tax liability that’s at least equal to the value of the tax credit. This credit may be carried over to future tax years. Additional state, local or utility solar incentives may apply but are not included in this calculation.

Monthly loan payment

Customers can choose to finance their Solar Roof through their home mortgage. The loan amount is equal to the total Solar Roof cost, less the estimated 30% federal tax credit. The monthly loan payment is amortized over the selected loan term at the selected interest rate. Tesla is not a mortgage lender. Values depicted above are for illustrative purposes only.

Mortgage interest deduction

A benefit of financing a Solar Roof through a home mortgage is the tax deduction customers may receive on their mortgage interest. This value decreases over time as the mix of principal and interest paid per month shifts. The value of the mortgage interest deduction will vary depending on customers’ tax rates and individual financial information. This is not tax advice. Please consult your tax advisor.

Traditional roof cost

A typical asphalt shingle roof cost starts at $5 per square foot. The monthly loan payment for a traditional roof is estimated using the same loan term and interest rate as is selected for the Solar Roof for a given roof size.

Recommended solar tile coverage for your home

We recommend the portion of solar tiles for your roof that we estimate will produce enough electricity to cover your home energy usage. To customize your usage, enter your average monthly electric bill. If you choose to increase the portion of your roof covered with solar tiles, your home may generate more electricity than it needs. In this case, you may not realize the full value of energy your Solar Roof produces. Your entire roof is not eligible to be covered with solar tiles due to building regulations and obstructions. Recommended solar tile coverage is based on estimated eligible roof area for solar.

Warranty and specs

All warranties and ratings apply to the United States only. Similar warranties and ratings will be developed for other markets. Our tile warranty covers the glass in the tiles. The power warranty covers the output capability of the solar tiles. Weatherization means that there will be no water leaks or other weather intrusions during the warranty period that result from our installation.

Installation timing

Initial trial installations are complete and customer installations are underway with plans to ramp up in 2018. When Solar Roof is rolled out in a particular market, Solar Roof customers will be installed based on when their order was placed.

For more info visit: https://www.tesla.com/solarroof


Posted on February 5, 2018 at 10:49 pm
Caleb Jessup | Posted in Uncategorized | Tagged , , , ,

Local Market Update – January 2018

 

 

 

2017 closed out the year with historically low inventory and record-breaking price gains. A strong local economy and brisk population growth has helped fuel a steep discrepancy between supply and demand. As long as this imbalance remains, 2018 is on track to remain a very strong seller’s market.

 Eastside

Click image to view full report.

Defying the usual winter slow-down in home prices, December broke new records on the Eastside. The median price of a single-family home soared 17 percent over a year ago to $938,240 – an all-time high for the region. Appreciation in higher-end areas, like West Bellevue and Mercer Island, topped 20 percent. Homeowners, especially those considering downsizing, may want to take advantage of the sharp increase in equity.

King County

Click image to view full report.

King County recorded the lowest inventory since records began in 2000. And demand just keeps rising. As a result, the price of a single-family home here jumped 15.5 percent over the same time last year to $635,000. Those looking buy a condo as a more affordable option were out of luck. The median price tag of $402,000 is a relative bargain when compared to a single-family home, but there are only about 200 condos on the market, another record low.

Seattle

Click image to view full report.

While below the high point last summer, the median price of a home in Seattle jumped 14 percent year over year to $725,000. Supply and demand is again the culprit. There are just two weeks of available inventory on the market. Not only are homes here selling quickly, but fewer people are putting their homes up for sale. Most economists are predicting a moderate slowdown in cost increases here in 2018, with prices still rising but not as sharply as they did in 2017.

Snohomish County

Click image to view full report.

Prices in Snohomish County continue to rise at a rapid pace. The median price of a single-family home here grew 12.5 percent from a year ago to $449,950. With less than a month of available inventory, prices are projected to remain high.


Posted on January 15, 2018 at 10:03 pm
Caleb Jessup | Posted in Market Update | Tagged , , , , , , , , ,