Big Yellow Cranes

See all those big yellow cranes? We’re sorry to say that they’re probably not building your next home. Our current regulations make building offices and rental units more appealing to developers than condos, townhomes, single-family homes and mixed-use properties that serve the middle class.
Even if they were building homes to put on the market, we’re so far behind demand that it will take much, much more construction to catch us up. But it’s worth making the effort now: a study by the California Legislative Analyst’s Office has shown that building enough supply would result in lower prices. As more proof, Tokyo has not seen rapid home price appreciation because it meets all new demand by building more housing.

If you’re curious about all the construction, you’re not alone. Seattle in Progress is a free map tool that shows what’s being built all around Seattle. Explore the map

Today's blog courtesy of The Housing Translator.

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Seattle's Red Hot Housing Market

We’re all aware of the low inventory of single family homes and the price wars that ensue because of this.  However, an article from the Puget Sound Business Journal this past week highlighted that it isn’t just homes that are in short supply.  Demand for condos is also through the roof.  Last weekend the Nexus in downtown Seattle opened its doors to pre-sales with non-refundable deposits.  Despite the rain, a line grew AROUND THE BLOCK for people looking to secure a unit!  The units range from $350,000 to $3.5M, and the nonrefundable deposit was 5% of the purchase price (AKA $17,500 to $175,000 – these nonrefundable deposits weren’t exactly chump-change!).  The building isn’t even expected to open until mid-2019, yet by the end of the weekend 75% of the building’s 382 units had been purchased.  GET OUT OF TOWN!  This is officially crazy.  Link to this story is HERE. 

So it looks like single family homes, townhomes, AND condos are all in short supply, but where is all this demand coming from?  As discussed in this CNBC story, last year alone Seattle’s tech industry needed to import around 3,500 people with computer science degrees.  Really quick, let’s go back to simple economics:  high demand + short supply = increasing prices.  With Seattle and all its tech titans hiring faster than the UW/WSU and other area colleges can produce computer science graduates, the high demand and low supply of these candidates has resulted in the highest annual salary [adjusted for cost of living] in the country!  After accounting for cost of living, a computer science graduate has about $46,000 more annual spending power in Seattle than in San Francisco ($21,000 more than Chicago, and $47,000 more than New York).  No wonder the attraction to Seattle!  This article pretty much summarizes why I don’t think Seattle is in a housing bubble, and why prices aren’t going to fall anytime soon – Despite Seattle’s housing market appreciation, Seattle’s overall cost of living after accounting for average income is still much lower than many other large and desirable metropolitan cities nationwide.  I would contend that the appreciation rate will eventually slow, but I don’t see the housing market DEpreciating anytime soon.

Happy Investing!

Today's blog post courtesy of Kyle Bergquist, Guild Mortgage. 
Cell:  425-478-0961

Licensed Loan Originator NMLS - 918621

Guild Mortgage Company NMLS - 3274

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The information provided herein has been prepared by a third party company and has been distributed for education purposes only.  Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.

Monthly savings for qualified borrowers will vary based upon a variety of factors including, but not limited to loan amount, existing interest rate, and the rates the customer qualifies for.

None of the interest rates in this history represent interest rates that Guild Mortgage has offered or is currently offering. Rather, they are for informational purposes only and reflect historical interest rates that were available in the marketplace at some point during the period to which they relate. For current interest rates and annual percentage rates that Guild offers, contact Guild.

The positions, strategies, or opinions of the author do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates.

Hot, hot, hot!

MLS figures show there is only 1.76 months of supply system-wide. In both King and Snohomish counties, there is barely more than one month of supply – well below the 4-to-6 months that many experts use as an indicator of a balanced market.

Even though brokers say paltry inventory is limiting sales, the year-over-year volume of pending sales rose more than 7.4 percent last month. Members reported 12,275 mutually accepted offers, up from the year-ago total of 11,425. MLS data going back to 2004 shows that one-month total is the highest on record.

Prices also rose. The median price area-wide for last month’s 8,630 closed sales of single family homes and condominiums (combined) was $339,950. That’s up more than 7.2 percent from twelve months ago when purchasers paid $317,000 for the median-priced home. Ten counties reported double-digit price hikes.

In King County, the median price jumped more than 11.7 percent, from $434,000 to $485,000. Prices on single family homes surged nearly 16.5 percent, rising from $480,942 to $560,000. Condo prices were up 9 percent, but finding one proved challenging as inventory dropped 29 percent in King County.

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Hot, hot, hot!

The NWMLS reports that home prices in King County hit new highs in February as buyers tried to outbid each other for the sparse inventory in much of Western Washington.

With the number of single family homes for sale in King County down nearly 30 percent from a year ago, prices on last month’s sales surged 19.8 percent, jumping from $429,900 to $514,975. Ten other counties in the 23-county area served by Northwest Multiple Listing Service also reported double-digit price gains for single family homes that sold last month, according to its latest statistics. Condo prices surged 19.6 percent.

Member-brokers added 7,931 listings area-wide to inventory last month for a slight improvement from a year ago when they added 7,852 homes and condominiums to their database. At month end, they reported 12,107 active listings, a sharp drop from a year ago when there were 16,946 properties offered for sale.

Current levels of inventory translate to 2.4 months of supply, well below the four-to-six months that industry experts use to indicate a balanced market. In the four-county Puget Sound region, supply is hovering near or below two months, with King County having the lowest level at only 1.3 months of supply.

Seven counties, including King County, reported year-over-year declines in pending sales during February in the wake of inventory shortages. Pending sales in King County fell about 5.6 percent compared to twelve months ago. The selection in the state’s most populous county plummeted nearly 32 percent from year-ago levels while asking prices jumped about 22 percent.

This market is red hot for sellers, and a challenge for buyers...

Happy Investing!