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.

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.

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!

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.

I think we can all agree that we have been on a bit of a wild ride over the last 12 months in the real estate market. When the Fed decided to change its trajectory on interest rates in mid-2022, it created some chaos and confusion.

When big changes happen, it is a natural reaction to pause and wait for some certainty of how things will land. This happened when the pandemic hit, too. People paused in March and April of 2020 and once May settled in the market went bonkers. I have found that gathering data, whether it’s real-time data or studying historical trends, in order to make sense of it all is incredibly helpful to create clarity and empower strong decisions.

I am committed to studying the data on behalf of my clients and I am also fortunate to have Matthew Gardner, Windermere’s Chief Economist as a source to help guide this research. He speaks to the predictions that were made at the beginning of this year by several industry experts and breaks down their varied theories in this recent article. As a testament to the importance of gathering the data and applying knowledgeable analysis are the now renewed predictions from all of these sources. They are now very much more aligned with one another and in agreement that prices are not headed in a downward spiral, but are in fact on the rise year-over-year. Data is powerful!

Below is a chart I created with hyper-local data reflecting both King and Snohomish counties’ median prices over the last 18 months in relationship to the rising interest rates. While we are off the peak of 2022 when rates were at 5%, we are only slightly lower and up quite significantly from the bottom when rates hit 7%. Proof that the market is sustaining the higher rates is that we have found ourselves back near the 7% this summer and prices have not faltered.

Would the market welcome a drop in the rate? Absolutely! When this happens, which is predicted, we will see buyer demand increase. What we will also see is additional inventory come to market as would-be home sellers will be more comfortable relinquishing their low rate to indulge their need or want for a different home. The high rates are keeping inventory low in a high-rate environment, which is supporting price stabilization and growth. Simply put, the sky is not falling.

The market continues to churn, we are not in a free fall, and prices are stable. If you’ve thought about a move, consider the data and please ask me to help you gain understanding. I can adjust the graph featured here with your local zip code or city to give you an even more thorough look at your investment.

Real estate moves are most often a result of life changes. If you have found yourself questioning whether your four walls currently meet your needs, let’s talk! I will assess your goals and apply the data in an understandable way to help guide the best decision for you today or down the road.

The need for food assistance has never been greater due to the end of the Supplemental Nutrition Assistance Program’s (SNAP) Emergency Allotments and soaring food prices. As a result, more and more families across America are facing hunger. Our food banks are experiencing a surge in visitors and struggling to meet the increased demand.

The good news is that this incredible network of go-givers can do something about it!
Fueled by the collective generosity that Windermere is so well known for, I’m rallying my network to come together to help us towards our goal of raising $50,000.

I would be very grateful if you considered contributing to our campaign through our donation website. 

Thank you for your generosity!

One of the reasons why we are fortunate to have Matthew Gardener as our Chief Economist at Windermere is his transparency. Every year, Matthew makes predictions for the coming year based on his monumental research and years of experience. Just this week, he reviewed his 2023 predictions and recorded the video below. Most of his predictions were spot on and only two were slightly off. That is pretty good considering crystal balls don’t exist.

In the video recap below, he covers the trajectory of home prices, interest rates, inventory levels, the shift of the work-from-home trend, zoning changes, and affordability. All of these factors play into people making informed decisions about their real estate. He is certainly an asset that I can rely upon to help me guide my clients.

Overall, it is important to note that prices are heading in a positive direction, interest rates may take a bit longer to settle and inventory remains tight. I am seeing buyer demand return to the market and prices have grown since the first of the year.

He also mentions that real estate is local and that trends can vary by location. That is where I can help you. I am deeply invested in understanding the market in the communities and neighborhoods that surround us. If you are curious about how the trends relate to your real estate goals, please reach out. It is always my goal to help keep my clients informed and empower strong decisions.

Windermere Community Service Day

This is the 8th year that my office has spent our Community Service Day working to put fresh produce on the tables of local families who need a little help. We work with the Snohomish Garden Club, planting over a half-acre of veggies and fruits that will be harvested into thousands of pounds of fresh produce over the summer and into the fall.

If you’d like to pitch in, you can donate to our Summer Food Drive, or bring donations to my office, through August 4th. All donations will go to Volunteers of America Western WA food banks.

Since 1984, Windermere associates have dedicated a day of work to complete neighborhood improvement projects as part of Windermere’s Community Service Day. After all, real estate is rooted in our communities. And an investment in our neighborhoods gives us all a better place to call home.