real estate blog
Jonna Hood | Managing Broker
Recently a buyer emailed me to ask a question about a listing I’d sent them. They noticed in the listing history that the home was sold just a year or two earlier for 25% less than it was listed for today – “THIS MUST BE A MISTAKE?” they asked. No. I think the majority of home owners in King and Snohomish County don’t have an up-to-date idea of what their home is worth and might be pleasantly surprised to learn what they appreciated in 2013 alone.
Here is one of my favorite success stories:
My friend and customer, we’ll call her Jane Doe, decided to buy a home in Ballard in autumn of 2011. We searched high and low for the perfect home for a stylish single woman and during our hunt she asked, “Should I wait? Could prices go down more?” And to be honest I didn’t know the answer to that. But with rates close to 3% and prices at historical century lows, I advised her that the two primary rules of thumb for investing in real estate are:
1. Buy low and sell high
2. Location, location, location.
And I couldn’t foresee a situation that was better poised for capitalizing on both. She closed on a home a month later for $342,500. Fortunately, the market grew gradually in 2012 and swiftly in 2013. We re-listed the home in August of 2013 and closed in less than 45 days at $480,000. That’s an increase of $137,500 or 40% gain in less than 2 years. And this is just one of many success stories I’ve been a pleasure to facilitate over the last ten years.
What if your home is worth 40% more today than when you bought it? Or even 20%? What ARE the benefits to listing NOW versus LATER?
1. It’s important to keep in mind that while your home is likely up in value, so are the homes you’ll be looking at. However, you may have the opportunity now to sell and re-invest in a style of home or location that might not be accessible in years to come.
2. Seasonally, spring and summer are the most popular seasons to list. But there are big benefits to being the early-bird on the market and listing before the peak season: Inventory is LOW so you have less competition plus, buyers will already be out looking so you’ll be positioned well in this “Seller’s Market”.(We’re still consistently seeing multiple offers and pre-inspects in the greater Seattle area.)
3. Interest rates are still very low but climbing slowly (approximately 4.5% currently). You can buy more with your money with today’s lower rates! Which may not sound like much but can sometimes push buyers out of a prices range.
If you are at all curious about what your home is worth – I am more than happy to generate a personalized Property Value Report for you at no cost anytime. Don’t rely on Zillow to “zestimate” your property value – with inventories so low, sites like Zillow have very little to work with in terms of recent comps and sales in your immediate neighborhood. This makes Zillow marginally less reliable than the data I can provide. Whether you’re ready to sell or not even considering it, I’d love to provide you (or anyone you know!) with valuable information on your home. Feel free to email or call me today! I can’t wait to hear from you.
2013 Real Estate from the Rear View Mirror:
- HOME PRICES UP ACROSS THE BOARD: Seattle Area Home Prices increased by 13.2% (According to Case/Shiller)
– King County Median Home Price increased to $414,000 (2011 average was $340,000)
– This was the largest increase since 2006
- RENTS UP: For current renters: Rents increased by 6.5% in King and Snohomish Counties in 2013 (according to Apartment Insights Washington). As rents continue to increase, it makes more and more sense to buy a home!
- HOME INVENTORY DOWN: (available homes for sale) Inventory was the lowest in over a decade in 2013 but showed signs of increasing toward the end of the year
– 75% of offers submitted by agents faced competitive offers in April 2013 (according to Redfin)
– 43% of offers submitted by agents faced competitive offers in November 2013 (according to Redfin)
- INTEREST RATES UP: Rates Increased Across the board but are still low by historical standards
– January 2013 Average 30 year fixed rate was 3.41% (according to Freddie Mac)
– November 2013 Average 30 year fixed rate was 4.26% (according to Freddie Mac)
Predictions for 2014
- HOME PRICES PROJECTED TO CONTINUE TO RISE: Home prices will continue to rise but possibly not past double digits like 2013. However, some predict higher increases if Everett lands the 777 and/or our Technology sector continues to grow & hire.
- RENTS PROJECTED TO CONTINUE TO RISE: Probably not as much of an increase as 2013, as more first time homebuyers should be entering the market, as inventories are projected to improve and rates increase. As rents continue to increase, it makes more and more sense to buy a home!
- HOME INVENTORY PROJECTED TO IMPROVE SLOWLY: We predict inventories will increase but will still remain relatively low by historical standards. The forecast for slight increase in inventory over 2014 can be partly attributed to:
-As values increase, more homeowners that were underwater are now able to sell
– New Home Construction is generally on the rise (Seattle Metropolitan Area Permits are up 9% from January through October 2013)
- INTEREST RATES PROJECTED TO INCREASE: Rates are projected to continue to increase but remain low by historical standards.
– The Fed has begun to taper the government bond buying program as of December 2013. This is projected to continue which has an indirect upward effect on rates.
– As rates continue to increase, home affordability decreases.
– OVERALL IMPRESSIONS FOR 2014: Home affordability is still good but will worsen over the next 12+ months. If you have been on the sidelines waiting to buy or sell, 2014 will be a great year to do either!
Finally! We (including the media) can all officially agree that the recession is over. As I’m sure you’ve seen on the news, housing prices are up nationally and growth is particularly strong in the Northwest thanks to our burgeoning Tech Industry and growing economy. With the close of the year I am ready to release the shackles of hibernation that was the last 5 years. By hibernation I refer to the state that most agents were forced to retreat to in order to survive and withstand our recent Great Recession. But those days are behind us and here are a few stats to back it up:
Inventory levels have finally returned to 2012 levels but are still below historical averages. Below are figures for our 4 county area showing the current median prices and appreciation from Aug 2012 to Aug 2013:
|County||Median Price||12 mo. appreciation|
(figures courtesy of NWMLS)
So you’re still probably asking yourself, “so yeah that’s good I guess but what does it mean for me?”
1. If you have not purchased a home you have just barely missed the bottom but it’s not too late. Interest rates are still at record lows (for now) and prices are only going to continue to rise (albeit at a more normalized pace soon). This IS the most affordable market we will see in the Seattle market for some time.
2. Did you buy a home and lose a ton of equity and are afraid to peek at your value on Zillow? Have no fear, it make still take a little time to fully recover but it doesn’t hurt to find out. Since your house is likely your biggest investment, it’s important to keep your finger on the pulse of your local market. And hey, you might be pleasantly surprised by what my market analysis has to say. If you do have equity and you think you might want to upgrade into “more house” in the near future – NOW is likely the best time given the steady increase in prices.
3. Did you find yourself in a Shortsale situation and vowed to avoid home-ownership forever after the experience? Now might be the time for a change of heart. Do you think you have to wait several years before you can purchase again? This is wrong. Ask me about the changes in lending guidelines nationally that now encourage buyers to get back in the market once their credit has recovered (which can be in as little as 1 year).
So my point is this: for once in a long time I can honestly say that in today’s market it is generally fun to be a buyer or a seller! Don’t hesitate to contact me with any questions you have. It’s my job!