This week I have decided to step back briefly and look at the market from a macro level as well as discussing predictions for 2015 that were shared at a recent conference. It’s interesting and exciting to see where the housing market is headed, as well as the economic health of the real estate market as we head into 2015. Before I dive into that information, as of October 27th, 2014 King County is at about 2.6 months supply of inventory while Snohomish County is hovering around 3.1 months supply of inventory. Those numbers are a 4.2% increase from October 2014 in King County and a 6.2% increase in Snohomish. With interest rates at a 16 month low, it is a great time to get in there and take advantage of this market if you are thinking of buying or selling your home.
What is the state of the real estate market? Well, we are currently down 10.6% nationally from peak values in 2006, however, we are slowly making our way back up as demonstrated by the graph below.
As demonstrated above, all but one top 30 metro areas show annual home value appreciation. Seattle Metro leads the Puget Sound in annual home value gain at 8.3%, while other areas of the country who were drastically impacted by the recession are seeing a big jump in annual appreciation as well.
Seattle Metro is currently down 11.5% from it’s peak, compared to the national average of 10.6%.
Although Seattle Metro is slightly below the national average, what we are seeing is a steady increase in inventory, resulting in a healthier and more sustainable market as well as softening the rate of appreciation (which is still significant, regardless). The nature of markets are to rise and fall (think rolling hills), however, slow and steady is preferred over sharp inclines and falls.
Are you ready for some good news?
According to the National Association of Realtors and as demonstrated by the Zillow Real Estate Research for Professionals tool, negative equity has declined steadily since quarter 1 of 2012, which is great news for home buyers and home owners alike. However, negative equity remains at 17% nationally and is highest in the bottom value tier. The number of homes underwater is above 25% nationally and 30% in the Seattle area. The middle value tier is 13% and the top value tier is 6% in the Seattle area. Although these numbers are declining annually, there are still many homeowners who are underwater, especially in the bottom value tier.
As we move into 2015, mortgage rates are expected to rise, with interest rates expected to reach the 5% mark (which is still fantastic, historically), while rent affordability is below the historical average on a national level. Renter households are forming faster than owner households for the first time since the late 1980’s and the market is responding with higher rental rates and a shortage of available rentals while the market struggles to keep up with the demand. (translation: don’t rent if you can buy!)
Below are some year over year percent change forecasts for Snohomish County, by city. Appreciation rates are expected to continue to gain, however, slightly less than in 2014. With rental rates skyrocketing, as well as a shortage of available rentals and low interest rates, now is a great time to get into a home for a first time home-buyer. Investment properties in the bottom value tier to generate rental income are also a great option, it’s an exciting time in the real estate market around the country. Please contact me with any questions you have at firstname.lastname@example.org or call/text 425.324.0302. I am available to help with any of your real estate needs.
And in other Simple Tranquil Living news, the holidays are quickly approaching! Okay, so that may not be news to you, but here at Simple Tranquil Living we have a lot of fun with holiday festivities so stay tuned for a special Halloween post and perhaps another GIVEAWAY! Happy Monday everyone!