Page not found – Real Estate https://andreawetzelhomes.com Real Estate Mon, 11 Mar 2024 19:50:36 +0000 en-US hourly 1 Phill was Right! Spring Arrives Early for our Local Real Estate Market https://andreawetzelhomes.com/2024/03/08/phill-was-right-spring-arrives-early-for-our-local-real-estate-market https://andreawetzelhomes.com/2024/03/08/phill-was-right-spring-arrives-early-for-our-local-real-estate-market#respond Fri, 08 Mar 2024 20:49:54 +0000 https://andreawetzelhomes.com/?p=2717 When Punxsutawney Phill climbed up to his perch at Gobblers Knob on February 2nd and did not see his shadow, an early spring was predicted. Little did we know that he would be referring to the real estate market! As we experience temps in the 30s and scattered snow showers in the first week of March, we […]

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When Punxsutawney Phill climbed up to his perch at Gobblers Knob on February 2nd and did not see his shadow, an early spring was predicted. Little did we know that he would be referring to the real estate market! As we experience temps in the 30s and scattered snow showers in the first week of March, we are also experiencing a white-hot seller’s market.

We started 2024 with the lowest amount of inventory we have seen since the beginning of 2022. Over the last 2 years, we have experienced a correction and recovery in the real estate market due to inflation and interest rates. The market peaked in April 2022 in Snohomish County when the median price reached $830,000, and in May 2022 in King County when prices reached $1M. Prices started to correct when rates crested 5% in April 2022 and then found themselves squarely at 7% by October 2022. This rapid 2-point increase put downward pressure on prices and stalled buyer and seller demand.

Loan servicing affordability caused prices to bottom out in Snohomish County in February 2023 at $685,000, and in King County in January 2023 at $800,000. The bulk of the correction took place in 2022, and 2023 was the year of resetting price stability and the return of appreciation. What was fascinating about this growth is that interest rates still averaged around 7% throughout 2023.


In Snohomish County prices were up 6% in February 2024 over February 2023, and in King County they were up 16%, and rates are still hanging around 7%. Since the first of the year, it was like a switch went off for many buyers and demand flooded the market. The feedback that I am hearing is that many buyers have adapted to the new normal of interest rates and will refinance when rates come down; but they want to buy now. The increase in buyer demand coupled with the lowest inventory we’ve seen in two years has caused a flurry of multiple offers, price escalations, and an early start to the spring market.

Now that we are certain buyers are back, the next effective change in the market would be the addition of more inventory. This would meet the demand and create more movement in the market. We are well aware that many homeowners are reluctant to make a move because they don’t want to give up their low rate/payment. We also know that because of this, many would-be sellers are living in homes that do not match their needs and wants.

This pent-up seller demand is starting to come to market, but more is needed. The average level of equity in Snohomish County was reported at the end of 2023 at 57.5% and in King County at 60%. With the recent uptick in median price, this level is growing, which will allow many sellers to move their equity into a home that better fits their lifestyle. This growth should also be supported by interest rates slowly coming down throughout 2024.

The latest predictions from the Home Price Expectation Survey (HPES) have rates decreasing to 6% by the end of 2024 which will only add to buyer demand, highlighting the need for more listings. If you are a homeowner and your house is not matching your life, now might be the time to consider a move! What has already transpired in the first 2 months of 2024 has been encouraging for seller gains.

Writing a playbook and creating a strategy to make these transitions requires a well-curated plan. It is my mission and passion to help clients make these moves. There can be challenges to overcome along the way, such as does one sell or buy first and how to do you get your home ready for market. Tools such as the Windermere Bridge Loan, The Windermere Ready Loan, and other alternative financing have helped make these dreams become a reality. That is why hiring a professional who is well-versed in market knowledge, creative planning, expert marketing, and keen negotiations is key!

Please reach out if you or someone you know is curious about the market and how it relates to your financial and lifestyle goals. Real estate reflects life and if there is one constant in life, it is change! Helping people match their homes to their lives is one of the most rewarding aspects of my job. The adjustments over the past two years got in the way of many people making those matches. As the market and consumer confidence continue to open up, don’t let this opportunity pass you by. It is my goal to help keep my clients well-informed and empower strong decisions whether that works for you now or sometime down the road. Let’s talk it out, dig deep into the trends, and start your strategic planning with no pressure.

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New Year, New Laws! What This Means for Consumers Moving Forward. https://andreawetzelhomes.com/2024/02/13/new-laws-elevate-transparency-for-consumers https://andreawetzelhomes.com/2024/02/13/new-laws-elevate-transparency-for-consumers#respond Tue, 13 Feb 2024 22:50:38 +0000 https://andreawetzelhomes.com/?p=2707 Effective January 1, 2024, the statute in Washington that governs real estate brokerage relationships (RCW 18.86) otherwise known as the “Agency Law” – was significantly revised. The revisions modernize the 25-year-old law, provide additional transparency and consumer protections, and acknowledge the importance of buyer representation. KEY REVISIONS For decades, real estate brokerage firms were only […]

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Effective January 1, 2024, the statute in Washington that governs real estate brokerage relationships (RCW 18.86) otherwise known as the “Agency Law” – was significantly revised. The revisions modernize the 25-year-old law, provide additional transparency and consumer protections, and acknowledge the importance of buyer representation.

KEY REVISIONS
For decades, real estate brokerage firms were only required to enter into written agency agreements with sellers, not buyers. The Agency Law now requires firms to enter into a written “brokerage services agreement” (agency agreements) with any party the firm represents, both sellers and buyers.

This change is to ensure that buyers (in addition to sellers) clearly understand the terms of the firm’s representation and compensation, much like a listing agreement. The new agreements are called Buyer Brokerage Service Agreements (BBSA) and they are to be initiated in writing prior to or upon rendering real estate brokerage services, such as showing homes.

The services agreement with buyers must include:

  • The term of the agreement (with a default term of 60 days and an option for a longer term);
  • The name of the broker appointed to be the buyer’s agent;
  • Whether the agency relationship is exclusive or non-exclusive;
  • Whether the buyer consents to the individual broker representing both the buyer and the seller in the same transaction (referred to as “limited dual agency”);
  • Whether the buyer consents to the broker’s designated broker/managing broker’s limited dual agency;
  • The amount the firm will be compensated and who will pay the compensation; and
  • Any other agreements between the parties.

Clearly communicated expectations between the buyer and their broker are an advantage to the buyer. Every party deserves representation and it has been a long time coming for the law to pay as much attention to buyers as it has to sellers. Having competent representation on both sides of a transaction makes the process go smoother and reduces liability during and after the transaction. After all, everyone deserves competent representation during one of the biggest transactions they will partake in.

These changes are intended to elevate transparency in agency relationships for the consumer and encourage more detailed conversations about representation, compensation, and the overall home buying process with the broker they chose to align with. This will also cause sellers to gain a better understanding of how buyer brokers are compensated.

What a seller chooses to offer a buyer broker could have a positive effect on their return. The only way a buyer can compensate their broker is with liquid cash or negotiating with the seller within the purchase and sale agreement when their BBSA doesn’t match the seller-offered compensation for the buyer broker. If their BBSA matches what the seller is offering in the listing for the buyer broker compensation, then the buyer does not have to rely on the prior.

Compensation offered in a listing that mirrors the BBSA will allow a buyer to solely focus on the offer price of the home as they will not have to calculate the math of the compensation against their down-payment funds, as lending regulations do not allow for broker compensation to be financed. If a buyer has to set aside funds for compensation it would likely reduce their down payment amount which would increase their monthly payment and make them more price sensitive. It will also eliminate the compounding effect of compensation and the offer price being simultaneously negotiated.

I have always run my business in a very detailed fashion and pride myself on having a deep knowledge of the laws and the forms, and these changes are paramount. As an independent contractor affiliated with Windermere Real Estate, the leading company in our region, it is up to me to dig into the research and gain understanding to help guide my clients through these advancements in a compliant and service-oriented fashion. There are even aspects of these new laws that I have been practicing before the changes, as transparency is a cornerstone of my value to my clients.

These are the biggest changes we have seen in our industry in over two decades. Be aware that not all brokers will adapt as quickly or accurately. We are already seeing a gross difference between the informed and not informed; who one chooses to work with matters! If you have any further questions about how these new laws affect you, please reach out. If you are considering a move, I am committed to navigating the process with the utmost compliance and my client’s success at the forefront.

REVISED PAMPHLET: The pamphlet entitled “Real Estate Brokerage in Washington” provides an overview of the revised Agency Law.
REVISED AGENCY LAW: Substitute Senate Bill 5191 sets forth the revised Agency Law in its entirety.

 

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QUARTERLY REPORTS Q4 2023 https://andreawetzelhomes.com/2024/01/15/quarterly-reports-q3-2023-2 https://andreawetzelhomes.com/2024/01/15/quarterly-reports-q3-2023-2#respond Mon, 15 Jan 2024 20:54:08 +0000 https://andreawetzelhomes.com/?p=2687 The story of 2023 was balancing interest rates with home purchases and even home sales. The average weekly rate in 2023 was 6.8% and peaked in October at 7.94%. This caused some buyers to pause due to cost. Many sellers were reluctant to move and give up their low payments based on historically low rates, hence the […]

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The story of 2023 was balancing interest rates with home purchases and even home sales. The average weekly rate in 2023 was 6.8% and peaked in October at 7.94%. This caused some buyers to pause due to cost. Many sellers were reluctant to move and give up their low payments based on historically low rates, hence the large decrease in new listings in 2023.

Despite the highest rates we’ve seen in two decades, pending sales did not falter like new listings, indicating continued demand and resulting in a seller’s market. Inventory remained tight throughout 2023 and prices stable over 2022 (the peak) when the average rate was 5.34%. Since October, rates have come down by over 1%, bringing more buyers to the market. The Fed plans to continue this trend in 2024 which will increase buyer activity and new listings. 2024 will provide improved opportunities for all with a less stringent lending environment.

If you are curious about how the trends relate to your goals, please reach out. I strive to keep my clients well-informed and empower strong decisions.

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December is for Giving at Windermere North! https://andreawetzelhomes.com/2023/12/27/december-is-for-giving-at-windermere-north-2 https://andreawetzelhomes.com/2023/12/27/december-is-for-giving-at-windermere-north-2#respond Wed, 27 Dec 2023 19:45:27 +0000 https://andreawetzelhomes.com/?p=2677 The holiday season can come and go in a flash, with the pressure and stress of gift shopping, family obligations, and wrapping up the year. One thing that I love about my office is that we all make it a priority to come together to lift up our neighbors in need during this time of […]

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The holiday season can come and go in a flash, with the pressure and stress of gift shopping, family obligations, and wrapping up the year. One thing that I love about my office is that we all make it a priority to come together to lift up our neighbors in need during this time of year.

This year our holiday food drive brought in $3,115 and 1,787 pounds of food for Volunteers of America Western Washington food banks, just in time for the holidays. The current need in our area is high, and our local food banks need all the help they can get. These numbers are all thanks to friends and clients like you. Thank you for your generosity!

Next, we had the absolute joy to help bring some Christmas magic to homeless/housing insecure youth in our area. We partnered again this year with WA Kids in Transition, who work with social workers in the Edmonds School District to collect wish lists from students living in shelters, tents, cars, transitional housing or other temporary housing. Together, the brokers in my office provided gifts and hygiene items for 28 kids.

Then we provided $3,700 in grocery gift cards for 13 families, comprised of 60 individuals. Some of these families are unemployed or living in transitional housing, some are walking through grief and loss, and some are coming out of domestic violence. It is our privilege to partner with Pioneer Human Services, to help lift some of the burdens for these families.

Next, we always put together a volunteer group at Christmas House in Everett. Christmas House is a 100% volunteer, non-profit organization that provides an opportunity for qualifying, low-income, Snohomish County parents to select free holiday gifts for their children age infant-18. This is an amazing day helping families in need have a joyful Christmas.

 

 

 

 

Are you curious about the economy during these changing times?
Are you trying to make financial plans, but crave credible information to assist you?

Please join me for a very special virtual live event:

AN ECONOMIC FORECAST FOR 2024 & BEYOND
with Matthew Gardner
Notable Real Estate Economist

Wednesday, January 17, 2024  • 6:30 pm – 8 pm

Presentation from 6:30-7:30 pm, Q&A to follow

Please RSVP to me via phone, text, or email by January 12th, 2024 to receive an emailed link to access the event.

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Now or Later: When Rates Drop, Expect the Market to Tilt https://andreawetzelhomes.com/2023/11/15/now-or-later-when-rates-drop-expect-the-market-to-tilt https://andreawetzelhomes.com/2023/11/15/now-or-later-when-rates-drop-expect-the-market-to-tilt#respond Wed, 15 Nov 2023 20:47:28 +0000 https://andreawetzelhomes.com/?p=2661 The question that many potential buyers are asking themselves right now is: should I wait for rates to drop before I buy? Higher interest rates have certainly made monthly payments higher and challenged overall affordability, however it is important to consider creative financing options and what the impact on prices will be once rates lower. Experts […]

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The question that many potential buyers are asking themselves right now is: should I wait for rates to drop before I buy? Higher interest rates have certainly made monthly payments higher and challenged overall affordability, however it is important to consider creative financing options and what the impact on prices will be once rates lower.

Experts predict rates to decrease over the next 12-18 months. In fact, we have seen rates drop half a point over the last 30 days. Currently, the 30-year conventional rate is hovering about 7.5%. We saw a correction in prices when rates jumped by a point and crested 6% in mid-2022. Since Dec 2022, prices found their bottom, and price appreciation started happening again. Year-to-date, the average interest rate has been around 7% and prices have not been in a free fall, they have grown and remain stable.

Just like the correction that happened in 2022, it is safe to say there is a correlation between prices and rates. If the experts are correct and rates fall over the course of the next year or so, we should anticipate prices to increase. That is what hangs in the balance when making the decision of whether to buy now or later. The example to the right shows the effect that price appreciation will have despite rates being lower. It was not that long ago that we were experiencing bidding wars where homes escalated in the double digits. As you can see, the higher price results in a higher payment even with the lower rate.

If one is able to afford a purchase now with today’s rate, they can refinance when rates go down and save themselves a lot of money on their payment while keeping a fixed price. Additionally, if a buyer can secure a rate buydown, such as a 2-1 buydown, the higher rates can be overcome and a refinance can fix the rate when the rates drop.

Here is an example: let’s say you are shopping for a house and have the same $800,000 budget and a 20% down payment with today’s rate of 7.5%. The monthly principal and interest payment would be $4,475.00. You could do a 2-1 buydown (2-points lower in year one and 1-point lower in year 2) which would have your payment in year one be based on an interest rate of 5.5% with a monthly principal and interest payment of $3,534 – a savings of $841.00 per month. For year two, the monthly principal and interest would be based on 6.5% resulting in a monthly payment of $4.045.00, a $430.00 per month savings. The total savings in monthly payments with the 2-1 buy-down over the two years would be $15,252.00.

The roughly $15,000 in monthly payment savings is paid upfront at closing and in some cases paid by the seller. The buyer still needs to qualify based on the 7.5% interest rate as the payments will convert to the payment based on the 7.5% in year three moving forward. The strategy here is to never have the payment increase to 7.5% because the buyer plans to refinance when rates come down, and will permanently fix their rate below 7.5%. A bonus is that if the entire $15,000 credit has not been used yet, in some cases those funds can be applied towards the refinance.

You see, there are many options to consider when a buyer is balancing rates, prices, payments, and their desire to make a move. I understand that I am in the business of helping people navigate big life changes while ensuring their financial investment is sound. I felt it was an important message to share these examples in case you or someone you know was thinking about making a purchase but was feeling confused or stifled by the current rate environment. If you want to learn more or need a referral to a reputable lender, please reach out. It is always my goal to help keep my clients well-informed and empower strong decisions.

 

 

 

As we approach the Thanksgiving holiday, I want to let you know how grateful I am for YOU! Your friendship, support, and referrals have helped fuel my business and support my family. Thank you!

Real estate is a career that gives me the opportunity to be a meaningful part of my clients’ lives as they navigate important moves that have a great financial impact. I take the responsibility of guiding my clients through this process very seriously and know that when someone places this trust in me that it is a big deal! It is an honor to be a part of your big-picture planning and to help you execute these life changes with care and success.

My Thanksgiving would not be complete without taking a moment to say thank you and that I appreciate you so much! I hope your holiday is filled with happiness, rest, and all the people that are nearest and dearest to your heart.

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New Agency Law Changes: Transparency, Consumer Protection & Commitment https://andreawetzelhomes.com/2023/10/23/new-agency-law-changes-transparency-consumer-protection-commitment https://andreawetzelhomes.com/2023/10/23/new-agency-law-changes-transparency-consumer-protection-commitment#respond Mon, 23 Oct 2023 20:49:02 +0000 https://andreawetzelhomes.com/?p=2655 On January 1, 2024, major changes to the Law of Agency will go into effect. These changes result from the real estate industry in the state of Washington wanting to elevate the level of transparency and consumer protection surrounding buyer representation. Senate Bill 5191 was voted into law requiring adjustments in how brokers operate when working with […]

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On January 1, 2024, major changes to the Law of Agency will go into effect. These changes result from the real estate industry in the state of Washington wanting to elevate the level of transparency and consumer protection surrounding buyer representation. Senate Bill 5191 was voted into law requiring adjustments in how brokers operate when working with buyers.

Before I get into the details of the specific changes below, I wanted to explain why these changes are being made and the benefits to the consumer. It has been a long time coming for the buyer side of a transaction to be better defined with regards to representation, compensation, and the level of commitment the buyer and broker have to each other.

The seller side of a transaction has always required a separate contract (a Listing Agreement) that outlines these three important items. It has always been a bit shocking to me that the state did not require such a contract for a buyer and broker. Under new legislation set to take effect on January 1, 2024, buyers and brokers will be required to have a signed contract, a Buyer Brokerage Service Agreement (BBSA). This new contract will provide a consistent and professional guidepost to help everyone understand the buyer and broker relationship, just like a seller and broker do when they enter into a listing agreement.

The opportunity to set clear expectations through this new agreement and give both parties the choice to willingly agree to them will help buyers understand how their broker gets paid, cover industry norms, dig into who represents who and where that advocacy starts and ends, and communicate a transparent commitment to each other. I think this is powerful and meaningful for both buyers and brokers. Buying a home is a serious matter and outlining via a contract what is mandated by state law both clarifies and formalizes the relationship for both sides. Most importantly, it is a choice of who the buyer and broker enter into a contract with. The conversations that will surround these choices will be empowering for all parties involved.

Let’s face it, buying a house is not an easy task, nor is guiding someone successfully through the process. It is about time the law follows the call of duty and requires a clear explanation of how buyer representation works and encourage a clearly communicated partnership. I’ve always believed that having consistent processes in my business leads to a better outcome for my clients. This advancement for our industry will elevate these processes and in turn, raise the bar.

I plan to embrace these changes, as I see them as a benefit to my clients and our industry. The clarity these agreements provide will lead to fewer surprises, stronger bonds, and higher efficiency. I am prepared and excited to embrace this as a benefit for all parties involved in a real estate transaction.

Key Revisions
For years, real estate brokerage firms were only required to enter into written agreements with sellers, not buyers. Beginning on January 1, 2024, the Agency Law will require firms to enter into a written “brokerage services agreement” with any party the firm represents, both sellers and buyers. This change is to ensure that buyers (in addition to sellers) clearly understand the terms of the firm’s representation and compensation.

The services agreement with buyers must include:

  • The term of the agreement (how long the buyer and broker are committed to working together);
  • The name of the broker appointed to be the buyer’s agent;
  • Whether the agency relationship is exclusive or non-exclusive;
  • Whether the buyer consents to the individual broker representing both the buyer and the seller in the same transaction (referred to as “limited dual agency”);
  • Whether the buyer consents to the broker’s designated broker/managing broker’s limited dual agency;
  • The amount the firm will be compensated and who will pay the compensation; and
  • Any other agreements between the parties.

 

All of these options are outlined in the new BBSA contract and will be presented and discussed before deciding to embark on the home-buying journey together. It will eliminate any guesswork and encourage a strong work relationship surrounding an incredibly important task. This will help my clients understand my level of commitment and professionalism, and how I help my clients achieve effective results.

I have provided the links to the new Agency Pamphlet and the revisions to Senate Bill 5191 below for your review. If you have any questions or are thinking about making a purchase in 2024, please reach out. It is always my goal to help keep my clients well-informed and empower strong decisions. I am happy to bring this information to you ahead of the change, so you are well prepared should you have any real estate changes coming your way in the future.

Revised Pamphlet. The pamphlet entitled “Real Estate Brokerage in Washington” provides an overview of the revised Agency Law.
Revised Agency Law. Substitute Senate Bill 5191 sets forth the revised Agency Law in its entirety.

 

Check out the latest Mondays with Matthew (Matthew Gardner, Windermere’s Chief Economist) that addresses inventory levels, interest rates, existing home sales, and the price stability we have experienced since the first of the year. Despite higher interest rates, historically low inventory has kept prices stable!

Please note that I will be hosting a Virtual Economic Forecast Event with Matthew on the evening of Wednesday, January 17th, 2024. There will be a lot to cover as 2023 was a transitional year and 2024 is an election year! Be on the lookout for more information and save the date if you would like to attend.

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QUARTERLY REPORTS Q3 2023 https://andreawetzelhomes.com/2023/10/23/quarterly-reports-q3-2023 https://andreawetzelhomes.com/2023/10/23/quarterly-reports-q3-2023#respond Mon, 23 Oct 2023 17:52:42 +0000 https://andreawetzelhomes.com/?p=2637 Tight inventory and buyer demand helped fuel the market in the third quarter of 2023 despite rising interest rates. There have been fewer listings in 2023 than in 2022 which has created price growth since the first of the year. Prices peaked in spring 2022, corrected in the second half of 2022, and then they […]

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Tight inventory and buyer demand helped fuel the market in the third quarter of 2023 despite rising interest rates. There have been fewer listings in 2023 than in 2022 which has created price growth since the first of the year. Prices peaked in spring 2022, corrected in the second half of 2022, and then they started to rise again in 2023. Home equity is high with over 50% of all homeowners having 50% or more equity in their homes.

Higher interest rates have been a factor that buyers are having to manage. Some buyers are getting creative with interest rate buy-downs to help ease their monthly payments. Experts predict that rates will decrease over the next 18 months making temporary rate buy-downs attractive.

As we finish out 2023, we anticipate inventory to remain tight and buyer demand to continue. Sellers who are deciding to cash in their equity now are finding success. If you are curious about how the real estate market relates to your goals, please reach out. It is my goal to help keep my clients informed and empower strong decisions.

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The Low Inventory Effect: Nationally & Close to Home https://andreawetzelhomes.com/2023/10/02/the-low-inventory-effect-nationally-close-to-home https://andreawetzelhomes.com/2023/10/02/the-low-inventory-effect-nationally-close-to-home#respond Mon, 02 Oct 2023 20:52:53 +0000 https://andreawetzelhomes.com/?p=2629 The video below from Matthew Gardner, Windermere’s Chief Economist, refers to the effects of constricted inventory levels on the national housing market in a higher interest rate environment. Review the localized numbers that I gathered that pertain to King and Snohomish Counties and then check out what he has to say about the national trends. […]

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The video below from Matthew Gardner, Windermere’s Chief Economist, refers to the effects of constricted inventory levels on the national housing market in a higher interest rate environment. Review the localized numbers that I gathered that pertain to King and Snohomish Counties and then check out what he has to say about the national trends.

Overall, inventory has been tight in 2023! Many people made moves in the pandemic-fueled market and are deciding to stay put. They utilized the lower interest rates to secure their long-term home and don’t see a need to move anytime soon. Did you know the average person stays in their home for 10 years?

Others are not completely satisfied with their homes but feel attached to the lower rate and are pushing through the discomfort until rates settle. Some are deciding to come to market because their homes do not fit their lives anymore and some are bucking the rates and getting creative with financing. The buyers working the creative financing route with rate buy-downs will be rewarded when rates lower and prices go up.

Year-to-date new listings in King County are down 30% over 2022 and down 37% in Snohomish County. Closed sales are down 27% over 2022 in King County and down 27% in Snohomish County. Even though there have been fewer new listings year-over-year, the closed sale percentage is tracking more favorably which demonstrates buyer demand. This is why inventory is tight. In August 2023 there were 1.3 months of inventory in King County and 1.1 months in Snohomish County. This illustrates a seller’s market.

Closed sales peaked in 2021 in both counties at 20,132 in King County and 8,663 in Snohomish County. As we venture away from these outlier pandemic years, consumers are wrapping their heads around the changing environment. Year-to-date, King County has had 16,069 closed sales and 5,344 in Snohomish County. Year-to-date, King County is pacing slightly higher than 2019, which was a normal market prior to the pandemic and Snohomish County is lagging behind by just a bit.

The pace of inventory has helped stabilize prices and created price growth since the start of 2023. Buyer demand exists because people’s lives change and we have the Millennial generation out in full force. If your life is leading you to consider a move, please reach out. Please do not rely on the noise in the media, they will lead you astray.

I can help you dig into the data and devise a plan that relates to YOUR life. With equity levels astoundingly high (over 50% of homeowners in the U.S. have over 50% equity), moves are being made with great success. For buyers, the rates can be overcome with some creativity, lived with for now, or you can set a benchmark for when you’re ready. If you are curious about how today’s market relates to your goals or want to make a plan for the future, let’s talk! It is always my goal to help keep my clients informed and empower strong decisions.

 

 

 

 

 

 

 

 

Were you like me and turned the heat on when the rain came this week?  It’s that time of year when our heating systems need to be attended to, to be properly prepared for the colder months ahead.

Have your air and ventilation systems inspected by the professionals to ensure efficient and healthy airflow. This will also ensure that your systems are running safely and lower your risk of fire.  Note: if you need to purchase or replace any major household appliances, September and October are usually when the latest models are revealed.

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Win-Win: How to Overcome Interest Rate Pressure with Creative Financing https://andreawetzelhomes.com/2023/09/08/win-win-how-to-overcome-interest-rate-pressure-with-creative-financing https://andreawetzelhomes.com/2023/09/08/win-win-how-to-overcome-interest-rate-pressure-with-creative-financing#respond Fri, 08 Sep 2023 17:44:42 +0000 https://andreawetzelhomes.com/?p=2615 Lately we have talked about life changes leading to real estate moves. Sometimes moves are brought on by joyful advancements in life and sometimes they are motivated by hardship. Then there are times when your actual house just doesn’t fit your life anymore and it is time for something different. Whatever might be calling someone to make […]

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Lately we have talked about life changes leading to real estate moves. Sometimes moves are brought on by joyful advancements in life and sometimes they are motivated by hardship. Then there are times when your actual house just doesn’t fit your life anymore and it is time for something different. Whatever might be calling someone to make a move, they also have to assess the affordability.

There are three aspects to affordability: price, interest rate, and income. Price and interest rate will determine your monthly payment, and your income will provide the means to maintain and build your investment. One way I have been able to help my clients strategize affordability with higher interest rates are some creative financing options.

Most often a home buyer will procure a home loan with a 30-year term and the current interest rate. In the month of August, the 30-year conventional interest rate averaged 7.25%. While 7.25% is reflective of the average over the last 30 years, it is 2-3% higher than what we have experienced over the last 5 years. According to several experts, rates are predicted to decrease as we finish out 2023 and head into 2024. That also means that it is very likely prices will increase when that happens.

I have helped some of my clients overcome the higher interest rates and secure today’s prices by helping them arrange with their lender an interest rate buy-down. Sometimes we have even been able to get the seller to financially assist in paying for the buy-down. There are two types of buy-downs: a permanent buy-down and a temporary buy-down.

A permanent buy-down requires about 3% of the purchase price to buy the rate down by a point for the 30-year term of the loan. A good rule of thumb to remember is that every 1-point in rate equals 10% in buying power. For example, if the rate is 7% and you are qualified for a home at $800,000, if the rate went down by 1 point to 6% you could now afford $880,000 and have a very similar payment. Another way to look at this is simply the monthly payment itself. An $800,000 purchase with 20% down with a 6% interest rate would save a buyer $420.82 a month vs. the payment at 7%.

A permanent buy-down is a useful tool and so is a temporary buy-down. It is actually one of the most powerful tools in today’s market. It costs far less than a permanent buy-down and with rates predicted to decrease over the next 12-18 months as inflation settles, you could easily find yourself in a position to refinance.

Here is an example, let’s say you are shopping for a house and have the same $800,000 budget and a 20% down payment with today’s rate of 7%. The monthly principal and interest payment would be $4,257.94. You could do a 2-1 buydown (2 points lower in year one and 1 point lower in year 2) which would have your payment in year one be based on an interest rate of 5% with a monthly principal and interest payment of $3,435.66 – a savings of $822.28 a month. For year two, the monthly principal and interest would be based on 6%, resulting in a monthly payment of $3,837.12, a $420.82 savings. The total savings in monthly payments with the 2-1 buy-down over the two years would be $14,917.18.

The roughly $15,000 in monthly payment savings is paid upfront at closing and in some cases paid by the seller. The buyer still needs to qualify based on the 7% interest rate as the payments will convert to the payment based on the 7% in year three moving forward. The strategy here is to never have the payment increase to 7% amount because the buyer plans to refinance when rates come down and will permanently fix their rate below 7%. A bonus is that if the entire $15,000 credit has not been used yet, in some cases those funds can be applied towards the refinance.

This strategy has been effective in helping buyers secure a monthly payment that is more affordable so they can make a move now based on life’s needs and wants. It also helps them secure today’s prices. If we find a home that has had a little longer market time, a home seller is likely to assist with the $15,000 credit vs. reducing their price by 3% to accommodate a lower payment for 30 years. The temporary assistance in reducing the payment for 1 to 2 years is a viable tool for both the buyer and seller to create a win-win.

I felt it was important to bring these options to light and to encourage people to not just take today’s market at face value. Creativity, collaboration, and calm have led to some of the most rewarding sales this year for both buyers and sellers. When people logically work together to accomplish moves in an environment that seems difficult, they find success. Ultimately, I am here to help my clients match their real estate to their lives despite where the rates are today.

I love rolling up my sleeves and creating a plan to help my buyers and sellers accomplish their goals. It is my mission to help keep my clients informed and empower strong decisions. If you or someone you know are curious about how today’s market matches your needs, please reach out.

Thank you to everyone who pitched in during the Summer Food Drive! Through your generosity, we collectively donated $3,060 and 1,503 pounds of food to Volunteers of America Western Washington food banks! This is all going directly into our communities to help our neighbors in need.

Thank you!

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Should You Stay or Should You Go? Interest Rates Limit Inventory and Stabilize Prices https://andreawetzelhomes.com/2023/08/21/should-you-stay-or-should-you-go-interest-rates-limit-inventory-and-stabilize-prices https://andreawetzelhomes.com/2023/08/21/should-you-stay-or-should-you-go-interest-rates-limit-inventory-and-stabilize-prices#respond Mon, 21 Aug 2023 17:21:03 +0000 https://andreawetzelhomes.com/?p=2595 There has always been a direct correlation between interest rates and home prices. The rule of thumb has always been when rates go up prices go down, and vice versa. This was temporarily proven true in the summer of 2022 when rates quickly rose by 2% (3.5%-5.5%) over 5 months. It created a price correction in the […]

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There has always been a direct correlation between interest rates and home prices. The rule of thumb has always been when rates go up prices go down, and vice versa. This was temporarily proven true in the summer of 2022 when rates quickly rose by 2% (3.5%-5.5%) over 5 months. It created a price correction in the second half of 2022 as buyers retreated from the market due to affordability. One should note that price acceleration was rapid from May 2020 to May 2022 and in that two-year period prices grew upward of 50% in King and Snohomish Counties. That was an unsustainable pace. In all honesty, this was inflation’s role in the housing market, and increasing the rates was the Fed’s way of getting control.

While there was a correction from May 2022 to January 2023, since then prices have started to grow again despite the rates hovering in the 6-7% range. In fact, the median price is up from the bottom (Jan/Feb 2023) by 13% in King County and 9% in Snohomish County. Further, the median price in July 2023 was even with July 2022 in King County and down by only 2% in Snohomish County. This is a sign of price stabilization. Historically, the impact rising rates have on prices year-over-year is not negative. We are in the midst of proving that same theory.

Believe it or not, the higher rates are keeping prices stable because it is limiting the available inventory for sale. You see, there are plenty of buyers out looking for homes right now, and inventory levels are tight because potential sellers are waiting to make a move because they are holding on to their low rate. Our job market is good, we have people moving to our area and the millennials are out in full force searching for their first homes.

There are two interesting phenomena going on with potential home sellers right now. First, according to ATTOM Data, 68.7% of homeowners have at least 50% equity and only 2.1% have negative equity. This is the number one indicator that we are not in a housing crisis or bubble. Second, according to FHFA, 70% of homeowners with a mortgage have a rate 4% or lower. This is causing people who are no longer happy with where they live to stay a bit longer because they don’t want to give up their payment just yet.

Here’s the deal though, housing is a reflection of life! According to the US Census, 66% of homeowners would like to upgrade to a nicer home with features that better match their lifestyle, and 45% would like to move to a home to better match the changing size of their household. Life changes motivate moves! Many people are waiting out these life changes until rates come down so they can better afford their desired transition. This has put downward pressure on inventory, limiting selection for buyers, hence creating price growth and stabilization.

So, what is going to happen when rates come down? Experts across the board predict that rates will recede as inflation gains control. This will be a gradual process over the next 12-18 months. The biggest indicator will be inflation reaching the 2% year-over-year mark. Once we hit this point, which we are close to, experts predict the Fed will be comfortable easing off the higher rates. This will cause more homes to come to market as the delta between the rate a homeowner currently holds and what they are willing to take on to indulge their desire to move, will become more attainable. Plus, as rates recede it will increase buyer demand.

We find ourselves in a delicate dance with inflation, rates, inventory, and prices. Someone who desires a move has to consider the impact the rates can have on their payment. Many of these buyers are taking the leap and finding creative ways to offset the rate such as ARM financing, rate buy downs, or they are preparing to re-finance their purchase when rates come down. This way they will have secured a good price which is the basis of their loan.

So, do you stay or do you go? According, to the lyrics from the classic song from The Clash, “if I stay there will be trouble, but if I go there will be double.”  This is up to you to decide. Where I can help is to gather the data and help you analyze the market in order to empower you to make the best choice for you and your family. For some, the right time is now and for others, waiting a bit longer will be a good plan.
What I do know, is that when we hit the inflation rate that the Fed is comfortable with and they ease off of rates, the market will tilt. This will be a benefit for some and a challenge for others. In other words, there is not one right answer for everyone and that is where I think I have the opportunity to serve my clients best.

Helping people navigate the ever-changing market is a skill, an art, and a calling. I am here for it and find great satisfaction in helping people make big life decisions that help bring joy, solve problems, and make them money! My job is a huge responsibility and it is an honor to serve my clients. If you or someone you know are wondering about how today’s market conditions affect your goals, please reach out. We can dig into the data, assess your dreams and devise a plan.

 

 

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