McGarty Minute: Debt and Traffic
Welcome back, it’s your weekly reminder that it’s Friday and it’s already Memorial Day weekend, the unofficial start to summer. It’s time to break out your white suits, but most importantly it is our opportunity to honor the men and women who died while serving in our military.
If you are joining the masses and plan to head out on an adventure this weekend, be sure to check out WSDOT’s traffic prediction charts and pack your patience. And for a good chuckle, follow their twitter and instagram.
Speaking of traffic, wow it’s bad out there every day now that Amazon is back to work. GeekWire dove into the data and found that “commute speeds dropping by as much as 35% on routes in and out of Seattle.” And by speed, they mean actual speed of miles-per-hour.
It was a mixed bag in real estate this week. As expected, sellers held off listing homes in advance of the holiday weekend. The buyer pool shrunk because of mortgage rates moving back above 7%, FUD about the debt ceiling as well as the upcoming holiday weekend. However, there was still enough demand for bidding wars at the hot properties which we’ll dive into in the Notes From The Field. There was no new local real estate news to report, but there was some international real estate news worth mentioning. We were quoted in another Nikkei article this week. Using Google Translate (it pops up if you’re using Chrome), it said that I said, “‘We’re still seeing a lot of bidding wars on good properties,’ said Rob McGarty of Bushwick, a real-estate agent in Seattle. ‘It sold for a high dollar'” Using another web browser, the translation was “Rob McGarty of Bushwick, a real estate agent in Seattle, 「 There are still many bid matches in a well-conditioned property. Eleven hopes of buying a house for $875,000 in the suburbs, even in the suburbs, say 」 sold at a high price of $1 million.” Either way, the message came through, the market is still hot for good homes.
The debt ceiling is top of mind for many and is not doing us any favors with mortgage rates. Altos Research dove into some of the data about what impact this will have on the real estate market. NPR has a good explainer for what’s going on.
Quick reminder of what we’re talking about—The “debt ceiling” or “debt limit” is a cap on how much debt the federal government is allowed to accumulate. Congress is constitutionally required to authorize the issuance of debt. Doing so then allows the government borrow to meet its existing legal obligations like Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds and other payments.
You should care about this because if the US defaults, the economy will become a disaster and your investments will likely lose a ton of value. But what can you do about the debt ceiling? The answer is likely nothing. Instead focus on controlling the controllables—and swaying the government’s mind is likely not one of those. This means ensuring that your financial house is in order. Hit reply and we can personally help you with the basics as well as connect you with a perfectly matched financial planner for the rest.
Since there’s no real estate news/data to report this week, we’re making our own. We just refreshed the pending (homes that went under contract) data year to date and we’re still seeing slow and steady growth on the number of homes going under contract every week (see purple 7-day moving average), but it’s still nothing like a typical year. I was surprised to see such a spike at the end, right before the holiday weekend. Expect next week’s chart to take a breather.
For reference, here’s our annual cycle of pending sales over the last five years. We are currently sitting at levels typically only seen around the holidays.
Diving into the mortgage news, Mortgage News Daily reported that “Mortgage Rate Highest in More Than 6 Months“. We’re now back above 7%. Reminder, you can always refinance to a lower rate in the future.
Ending on a fun note—some of our favorite and five-time clients’ home remodel was just featured in West Sound Magazine. It’s amazing to see D&B’s vision come to life. It looks nothing like what they started with. Wow! Do you have a home project that you’d like to share? Hit reply!
By The Numbers
This week we saw 206 new listings hit the Seattle / Bellevue / Kirkland areas, down 34% from last week’s 314 which was no surprise heading into the holiday weekend!
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Welcome back, it’s your weekly reminder that it’s Friday and, wow, did I need that reminder as this week was a blur. It all began with my 7pm flight from the conference in Texas, which ended up getting delayed until midnight. Activity in the field was slower than we’ve seen in a while, and there’s still no clear logic as we’ll dive into below. Typically the spring market peaks around Memorial Day, and this year it’s looking like we’re not getting a typical spring market.
But we are getting a return to office which is bringing life back to downtown and all the businesses that have been suffering since the pandemic. We can confirm that traffic feels back to pre-pandemic levels, if not worse, with Wednesday being nearly impassable, even in the middle of the day when we can typically zip from house to house.
The Seattle Times did a really well written review of the return to office with a quote that probably had more to do with the glorious weather than the return to work, “If anyone was unhappy about the three-day-a-week mandate, it didn’t show.”
Jon ended the article with this Churchill quote that also sums up the current real estate market, “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” The typical spring market is coming to a close and the next phase is our summer market which is typically marked by a significant slowdown of both buyers and sellers as everyone is distracted by the giant orb in the sky. The third act, after Labor Day, when everyone is back from Summer Break, typically sends the market back into action until we enter the rain, darkness and holidays. Then it starts all over again.
Here’s an example of how the current market is defying logic. We found two really good comps for our new Broadview listing, that both went under contract this week. One was just two blocks to the east on Evanston. Another was over on busy 3rd Ave NW. Initially I ignored the one on 3rd because it’s a terrible street.
After talking to the agent on Evanston, she said that she had great traffic, but only got one offer because several of her potential buyers offered on the house on 3rd instead. I called the agent on 3rd and was blown away to learn that they received 13 offers and are under contract for $231,000 over list price, 29% over!?! For a house on busy 3rd Ave. There are a few important takeaways here. First, buyers are flocking to the same shiny object. Second, there are still 12 willing, ready and able buyers in Broadview. Finally, it is critical that your agent is strategizing offer review timing. Think how many of those 12 could have driven the price of Evanston up.
For reference, here’s our annual cycle of pending sales over the last five years. We are currently sitting at levels typically only seen around the holidays.
Finally, part of this slowness is likely tied to “Mortgage Rates Now at 2 Month Highs” of 6.7% according to Mortgage News Daily. Reminder, you can always refinance to a lower rate in the future.
By The Numbers
This week we saw 314 new listings hit the Seattle / Bellevue / Kirkland areas, up 18% from last week’s 267. We’re finally getting some inventory!
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McGarty Minute: MOM
Welcome back, it’s your weekly reminder that it’s Friday and we’re heading into a Mother’s Day weekend heatwave. It’s going to be so hot that we’re going to skip open houses and celebrate mom. I’m coming to you from the semi-annual gathering of top real estate professionals to learn and share how to improve our personal and professional lives, so I’m going to keep this extra brief this week.
Which should be easier than usual because it’s mid-month, there’s no real estate news to report on. Even the Seattle Times was only able to syndicate an AP article about mortgage rates, “Average long-term US mortgage rate falls to 6.35% this week, lowest level in 5 weeks.” Rather than reading regurgitated news, let’s look at the data.
According to our go-to mortgage information source, Mortgage News Daily, rates ended the week up to 6.57% from last week’s 6.45% for a 30-year fixed mortgage. However you can see from the line I drew that we’ve been holding steady since March.
Enjoy the amazing weather and celebrate mom this weekend!
By The Numbers
This week we saw 267 new listings hit the Seattle / Bellevue / Kirkland areas, up 7% from last week’s 249
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McGarty Minute: Cuarto
Welcome back, it’s your weekly reminder that it’s Friday, and it’s not only May, but Cinco de Mayo, and we’re entering third winter or fake spring phase. How was it 80+ degrees and sunny last weekend and 40 and raining today? It’s not just the weather that is behaving erratically, the real estate market is doing the same thing. What we’ve been seeing in the field has been confirmed by the media, so it must be true!
The big news this week is that the Fed hiked rates for the third time this year. This is our reminder that the Fed rate does NOT equal mortgage rates. Matter of fact, mortgage rates went DOWN on that news.
The NWMLS went into overdrive and released the April stats yesterday (May 4th), which is about twice as fast as usual. Their report was fairly balanced and the summary was: We’re down from this time last year, but we’re up year-to-date. And by down, everything is down: new listings, sales, pending sales and prices. To quote the release “The key is we can’t compare today’s market to the record years we had during the pandemic.” This is especially true for last spring, when it was clear that the days of 3% mortgages was disappearing and buyers were frantically buying. However, we’re seeing the market spring back to life, we’re also seeing “homes that are well priced continue to receive multiple offers” in the field. Chief Economist Matthew Gardner predicts that mortgage rates will “hold below 6% in the second half of this year.” He also predicted that we’d end 2022 at 4%, so take that with a grain of salt.
Speaking of mortgage rates, rates were down this week to 6.45% for a 30-year fixed mortgage, according to Mortgage News Daily. This is the same pricing we saw back when the market sparked to life in February.
The Seattle Times’ take on the NWMLS stats was surprisingly tame this month. The clickbait from the homepage was “King County home prices down 12%. See what’s happening near you.” But they really didn’t get very hyperlocal. The 12% number was pulled directly from the NWMLS release “median price change year-over-year is down 12%.” However, the NWMLS release next sentence was much more positive, “Year to date, the median price is up 12%.”
Their chart was essentially the inverse of the mortgage chart above. All indicators are pointing to us having passed the bottom of the market. Even if mortgage rates hold high, inventory will be constrained by lack of sellers willing to give up their 3% mortgages.
The actual title of the Seattle Times article was not as enticing, “Seattle-area housing market kicks off spring season with a whimper.” And the article summed up the market just as nicely as the NWMLS release, “Home prices are ticking up, but are down from a year ago, as fewer buyers take the plunge and fewer homes hit the market. Some listings are attracting bidding wars, while others linger for weeks without offers.” Ending with a solid dose of reality—”There’s kind of no rhyme or reason to what goes quickly and what sits on the market.”
By The Numbers
This week we saw 249 new listings hit the Seattle / Bellevue / Kirkland areas, up 2% from last week’s 244.
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McGarty Minute: Cave of Ice
Welcome back, it’s your weekly reminder that it’s Friday and I can’t believe how quickly this week flew by after being off the grid last week uphill skiing in northeastern British Columbia, Canada. I can’t think of a better way to prepare for Earth Day than to be able to walk across some glaciers, explore a cave of ice and experience the vastness of the mountains.
It was truly a humbling experience. Particularly seeing how different the landscape is from just a few years ago. There are so many photos that I’d love to share with you, but this is one of the most magical. I felt like I was in the Fortress of Solitude from the set of the original Superman movie. Thankfully there was no kryptonite, but acclimating to the altitude coming from sea level definitely presented a challenge for my sea-level lungs.
Since we’re mid-month, there’s no real estate news to report on, which means it’s time to dive into the data and make our own news. This week’s thesis is that we’re seeing less and less activity in the field.
First we’re going to look at what’s going on with pending sales- this means a buyer made an offer that was accepted by the seller. The data aligns with what we’re seeing in the field, a slow start to the Spring buying season and a dip for spring break last week.
When we zoom out and look at pending sales over the last five years, you can see that we’re much lower than normal, including March 2020 when the world came to a standstill. Hopefully the new inventory we’re seeing this week (up 25%!) will give buyers some more options.
After inventory, the biggest headwind that we have is that mortgage rates are still over double where they were last spring. This week we’re seeing rates in the mid-6% range for a 30-year fixed mortgage, according to Mortgage News Daily.
In this week’s edition of Rob, the Armchair Economist, we’re diving into secular stagnation, a term I just learned about from an episode of Planet Money this week. First, secular here does not mean secular in the nonreligious way. It just means long term (see definition #4). Secular stagnation really just means long-term economic sluggishness.
Without getting too buried in the weeds, after the great recession, we were in a period of secular stagnation with no end in sight. And now the economy is running hot—inflation is high, and central banks are pushing up interest rates to fight it.
How did we get here, and is there an end in sight?
After the great recession, we had a glut of people saving and not a lot of people investing, which led the Fed to the incentivizing of borrowing—low rates. And we know what that did to the economy. Now the pendulum is swinging the opposite direction to less saving because aging, people getting old and spending their savings. We’ll save the cost of senior care for another day.
This combined with higher investment in green technology and in the military could mean higher interest rates going forward…but then they say “Yes. OK. I think that mortgage rates will come down substantially”
Bottom line, the economists gave solid advice to homebuyers. The same advice I give you, “If you love the house, you probably should. If the house is just an investment, you probably shouldn’t.”
By The Numbers
This week we saw 262 new listings hit the Seattle / Bellevue / Kirkland areas, up 25% from last week’s 209.
The biggest news in town this week was
that Amazon started their next round of layoffs just
as they announced a positive earnings
report last night. I can’t find a direct quote, but a couple articles are
attributing Andy as saying “turn that frown right-side-up, it’s layoff
time!” Which seems a little too direct, even for Amazon. The stock is trading down 3.5% this morning
and still down ~40% from the August 2020 to March 2022 run.
We are still seeing strong demand for
housing from most Amazon employees and as they are required to be back in the office next week, we
expect to see demand for homes closer to downtown pick up, especially condos.
Real estate news was light this week,
with the only data-driven news being the Case-Shiller data for February.
This is our monthly reminder that this data is so out of date, that it’s not
worth reporting on.
On the mortgage front, rates are
holding, but there’s a ton of confusing and misleading news about the FHFA Loan
Level Adjustments that many are describing as upside down mortgage policy. So
big that the FHFA released an official statement titled,
“Setting the Record Straight on Mortgage Pricing: A Statement from FHFA
Director Sandra L. Thompson.”
You don’t even need to go to TikTok to
find confusion, simply reading this USA Today article after
reading the FHFA statement illustrates the confusion. It’s worth pointing out
that USA Today also revised the article after the FHFA announcement, and it
still leads with the clickbait the FHFA was trying to clarify, “In some
cases, people with higher credit scores may end up paying more while those with
lower credit scores will pay less.”
While it might sound like pricing is
upside down, the FHFA describes it as “a pricing framework that is more
accurately aligned to the expected financial performance and risks of the loans
they back.”
TL;DR: FHFA is subsidizing a small
subset of borrowers like first-time buyers, increasing upfront loan level
pricing for many scenarios, and creating a new credit score tier with better
pricing.
Diving deeper into actual mortgage
rates, not upfront loan level pricing, we watched rates bounce around this week
and we ended up flat from last week at 6.67% for a 30-year fixed mortgage,
according to Mortgage News Daily.
Finally, the The New York Times syndicated this
column looking at the possibility: “Can we turn office
buildings into housing?” One of the guests on my ski trip a few weeks ago
was a Seattle architect working on this exact problem. He mentioned that of the
many challenges, the donut problem is the biggest challenge—what do you do with
all the space in the middle? See bottom right floor plan.
By The Numbers
This week we saw 244 new listings hit the Seattle / Bellevue / Kirkland areas, down 7% from last week’s 262.
This year we helped over 50 clients buy and sell – from $305k to $ 2.56m, from Mill Creek to Burien.
This year we helped over 50 clients buy and sell – from $305k to $ 2.56m, from Mill Creek to Burien.
We helped people buy and sell:
- 30 houses
- 10 townhomes
- 10 condos
- 1 piece of land
We owe a big thanks to everyone who entrusted us with the sale or purchase of their home!
]]>Backyard Upgrades That Offer High ROI, According to Top Agents
Summer has just about arrived in Seattle. After over a year of being in a pandemic, homeowners across the country have been looking for ways to make their homes more livable and entertaining for themselves due to social distancing guidelines. Now that things are opening back up and people are able to get back to their normal lives thanks to the vaccine, backyards are becoming a popular spot for friends and families to gather on warm summer days and nights. If you’re a homeowner in the Seattle area and have a backyard, now is the perfect time to look into some backyard upgrades. These renovations will increase the value of your home if you plan to sell and will also make your spot much more cozy. Here are some ideas:
Install that Dream Swimming Pool
Nowadays, backyard swimming pools are becoming increasingly popular. In fact, they might be some of the most in-demand backyard improvements among homeowners. Swimming pools are a pricey purchase, but you can likely recoup the cost if you ever decide to sell. According to top agents, people are buying pools at much higher rates than before the pandemic. Additionally, houses with pools are also becoming more valuable. If days spent by the pool are on your brain, now is an excellent time to make the commitment.
Build a Deck or Patio
If a pool isn’t necessarily your vibe, but you want to enjoy the outdoors comfortably, a patio or deck just might be the move. Patios and decks, when paired with comfortable outdoor furniture, allow both you and guests to have a nice spot to relax and enjoy each other’s company. Depending on your budget and the size of your backyard, you can also purchase a wide set of furniture that can include a bar, chairs, tables, couches, and even a fire pit. All of the items above can transform your backyard, add value and down the road, help you sell your home fast in Seattle. It’s a win-win!
Revamp the Grass and Landscaping
Before diving straight into backyard renovations, you’ll want to take a look at the actual state of your backyard first. If the grass is dull or dead and the foliage surrounding the space is unkept, then what really is the point of adding in a pool or a deck? Start from the bottom up. If you have a green thumb and a knack for landscaping, go the DIY way. If not, many lawn care and landscaping companies in the area do wonderful work and sometimes offer discounts.
Be Creative with Lighting
Summer nights are just as fun as summer days, so as long as you can see where you’re going. If you plan on using your backyard, then adequate lighting is a must. Start with the basics of walkway lighting and sconces. Once the space is nicely lit, add in some fun pieces like string lights and pendants. The possibilities are endless!
These backyard additions provide a lot of options to really get the most out of your backyard this summer. Additionally, the value added to your property will make looking at a net proceeds calculator much more fun. If you’re planning on selling your home this summer or in the upcoming months, contact Bushwick Real Estate in Seattle, today!
]]>Americans Decide to Work Where They Vacation as Second-Home Purchases Rise
The flight from the city to the country was well-documented at the outset of the COVID-19 pandemic, as people who once loved the public-transit, walkable lifestyle of the city realized that it put them at risk for the virus. Throughout the months of the pandemic, there has been a strong trend toward buying second homes or relocating permanently to vacation homes, as more jobs gain the option for working remotely. Here are some of the ways that Americans have adjusted their behaviors regarding second-home purchases and occupancy.
What Agents Are Seeing
According to HomeLight’s Q4 2020 Survey, there are multiple trends occurring in vacation home sales. First, there is a marked trend toward people moving from first homes to their second homes that had previously been rental properties that were used only occasionally for vacation. The thought process is that working remotely has allowed people to relocate from a less-desirable property that was well-located for work commuting. Now, they feel untethered and want to work from a space that is more usually associated with vacationing.
For those who haven’t lost work or income during the pandemic, there is also a trend toward making one’s second home purchase. Low interest rates, less demand for living near work, and a desire for home to be spacious and an oasis in a world with very little communal entertainment all contribute to this trend. It’s pretty easy to sell a house fast in this economy, and some folks who might find a vacation home purchase to be a stretch are using that purchase to start renting another home out.
What Vacation Home Shoppers Want
It’s only reasonable that people looking for a second home or vacation home are going to have slightly different priorities than their peers who are shopping for a primary residence. Agents are seeing nationally that 45.1% of shoppers for second homes want warm weather, as well as an affordable price at 44.9%. After that, the potential for earning rental income, being close to a body of water, and having low maintenance costs are all high ranking factors.
Given the high price of real estate in the Pacific Northwest, it is understandable that our region values the potential rental income a little higher here than in other parts of the country. Still, the possibility to ride out the remaining time of social distancing from a vacation home that will eventually bring in rental income for your family is certainly appealing!
Top real estate agents are noticing that the ultra-hot seller’s market has continued, in no small part due to the ultra-low interest rates on mortgages. While inventory in many areas is low, if you can find a vacation home in your price range and aren’t tied to a particular commute, you might have the opportunity to make home a bit more comfortable and beautiful for the coming months if you choose to live where you vacation.
]]>Is it Spring Yet?
Well, no. Just look outside. We’re in our gray and wet days of winter.
But now is the time for Seller’s (is that you?) to get ready for the Spring Real Estate Market!
If you want to command a higher sale price, you must prepare your home!
Homes that are clean, appealing, and in top shape simply sell for more than properties in less desirable conditions. Buyers know the home won’t require a ton of work upon move-in, and for that, they’re willing to pay a premium.
A prepped home is also just more marketable. That usually means a faster sale, and maybe even a bidding war — which equals more profits at the closing table.
One of our jobs as your broker is to help you prepare your home to hit the market. Some homes need a “spruce up” on the interior and exterior, which could involve painting, cleaning, new fixtures, power washing, landscaping and such. While some homes need extensive TLC which goes beyond mere cosmetics to redoing flooring, cabinetry and countertops, bathroom upgrades, roofing and more.
We can help with all of these things, getting the bids, meeting the contractors, coordinating staging, and all the necessary things that need to be done for your home to be presented in it’s best light.
BUT this all takes time – to be prepared for the Spring Real Estate Market you need to be talking to us now!
We would also love to speak with you about the many ways we work toward the successful sale of your home– providing knowledge about what buyers are thinking, what the current market value of your home is, how many homes are moving during any given week, how many buyers are out looking, effectively marketing your property, and more. Please feel free to reach out to us anytime!
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