2018 Housing Forecast: Where are we headed?

2018 Housing Forecast
What lies ahead for the local housing market in 2018? We sat down with Windermere Chief Economist Matthew Gardner to get his thoughts. Here are some highlights:

Home prices will continue to increase, but at a slower pace

The strong local economy, high demand and very low inventory will continue to boost home values in 2018, according to Gardner. However, he believes that the double-digit growth of 2017 will moderate, and predicts home prices in King County will rise by 8.5% in the new year.

Mortgage interest rates will rise slightly.

Gardner admits that interest rates continue to baffle forecasters. The rise that many economists have predicted the past few years has yet to materialize. His forecast for 2018 sees interest rates increasing modestly to an average of 4.4% for a conventional 30-year fixed-rate mortgage.

More Millennials will enter the housing market.

Despite the relatively high cost of homes in our region, Gardner expects more Millennials to buy homes in 2018. They are getting older and more established in their careers, enabling them to save more money for a down payment. Many are also having children and are looking for a place to raise their family.

The tax reform bill will have a limited effect on our housing market.

The recent changes to the income tax structure will have an impact on homeowners, but Gardner does not believe that impact will be significant here.

    • The mortgage interest rate deduction will be capped at $750,000 – down from $1,000,000. But according to Gardner, just 4% of the mortgages in King County exceeded $750,000 in 2017. Most buyers of more expensive homes have been making larger down payments, or buying homes for cash.
    • Since the $1,000,000 mortgage deduction cap is grandfathered in for those who have already purchased a home, some homeowners may opt to stay put rather than move. That could result in fewer homes being placed on the market.
    • The tax bill eliminates the deduction for interest on home equity loans. This is bound to slow down the trend of homeowners choosing to remodel their home rather than trying to find a new home our inventory-deprived market.

Bottom Line

The increase in home prices may moderate, but inventory will still be very tight. 2018 is on track to be a strong seller’s market.

This post originally appeared on the Windermere Eastside Blog.

Posted on January 6, 2018 at 12:20 am
Redmond Office | Category: Windermere Redmond Blog | Tagged , , , , , , , , , , , ,

The Home Connection – November 2017

The Home Connection Nov 2017

Posted on October 30, 2017 at 10:15 pm
Redmond Office | Category: The Home Connection, Windermere Redmond Blog | Tagged , , , , , , , , , , , , , , , , , , , , , ,

The Home Connection – September 2017

The Home Connection September 2017

Posted on August 30, 2017 at 9:00 am
Redmond Office | Category: The Home Connection, Windermere Redmond Blog | Tagged , , , , , , , , , , , , , ,

Are We in a Housing Bubble?

As home prices in King County have reached record highs, some people are wondering whether we are approaching another housing bubble.

While it’s true that home prices here have surpassed the last peak hit during the housing bubble, that doesn’t mean we are in bubble territory today. The last bubble was fueled by faulty mortgage practices. Today, loans are granted on much more sound principles.

More importantly, the local economy is flourishing. Seattle has the fastest growing population of any major city in the country. The demand for homes, and historically low inventory, have been the catalyst for rising home prices here.

Still not convinced that there is no bubble? Let’s take a look at the statistics.

King County Median Sales Price

According to data from the Northwest Multiple Listing Service, the median home price in King County rose steadily since 1993 (the first year the NWMLS reported median home figures), fell during the crash, and has risen since 2012.

Now, let’s assume there was no housing bubble and crash in the mid-2000s and that home prices appreciated at normal historic levels for King County, which has been an average annual rate of 6 percent for many decades. This graph compares actual home prices (blue bars) with what prices would have been with normal appreciation (orange bars) over the same period.

King County Median Sales Price

Bottom Line: Had there not been a boom and bust, based on historic appreciation rates home values would be close to where they are right now. However, there is no doubt that home prices have risen rapidly the past few years, and that rate of appreciation can’t be sustained over the long term. If you are considering buying a home today, make sure you can afford the payments, and choose a location that will appeal to you for years to come.

This post was originally seen on the Windermere Eastside blog.
Posted on August 28, 2017 at 5:11 pm
Redmond Office | Category: Windermere Redmond Blog | Tagged , , , , , , ,

The Home Connection – March 2017

Posted on February 25, 2017 at 12:17 am
Redmond Office | Category: The Home Connection, Windermere Redmond Blog | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

How Much Did Residential Home Prices Rise in 2016?

King County Residential Home Price-Increase in 2016

King County Residential home prices increased an average of 12.7%. Here is the list of median home price-increase in different areas.

Shoreline/Richmond Beach $439,725–> $503,393
Lake Forest Park $432,250–> $505,350
Ballard $587,000–> $655,000
North Seattle $575,000–> $679,950
Queen Anne/Magnolia $780,500–> $882,500
Central Seattle $689,999–> $774,995
SODO/Beacon Hill $420,000–> $501,975
West Seattle $450,000–> $511,500
Southeast Seattle $441,500–> $500,000
Kirkland/Rosehill $801,000–> $899,500
Redmond $650,000–> $709,793
West Bellevue $1,751,000–> $1,948,000
East Bellevue $638,950–> $730,000
East Lake Sammamish $645,000–> $736,001
South Bellevue/Newcastle $713,000–> $788,888
Mercer Island $1,195,000–> $1,315,000
Juanita/Woodinville/Bothell/Duvall $525,000–> $610,000

 

All data compiled from information supplied by Northwest Multiple Listing Association on 1/01/2017 Accuracy of information herein is not guaranteed.
This information was only taken of single-family homes, and does not include condominiums or vacant land.

 

This blog post originally appeared on the Bellevue Commons Blog.

Posted on February 2, 2017 at 4:57 pm
Redmond Office | Category: Windermere Redmond Blog | Tagged , , , , , , , , , , , , , , , , , , ,