I am not a financial professional.

-Tim Ritchie

Inflation. Inflation. Inflation. We’ve heard it so much and we see the impact in our everyday lives. Someone recently reached out to me asking if buying a home could be a good hedge against inflation. Because I am not a financial professional, I can’t speak to their specific situation, but I can say that I believe home ownership is an excellent hedge against inflation.

• As inflation rises, your home value should as well. Of course, home values are subject to highs and lows like any market, but over the long term home values have historically increased.
• The loan to value of your mortgage should decrease as your home value increases over time as you pay down the principle. If you have a fixed rate mortgage, your payments will remain the same as your home equity increases.
• High inflation impacts many product categories, including those products necessary for building new homes. As the cost of building new homes increases, their sale price must also increase. Increased prices for existing homes is a knock on effect.
• If you own rental property, it is likely you will be able to increase rents in a high inflationary environment.

The median sale price for a home rose from $329,000 in the first quarter of 2020 to $428,700 in the first quarter of 2022 according to the Commerce Department- that’s an increase of about 30%. Balance that against inflation of 11.5% for the same. And you are ahead of the game.

The Federal Reserve has few levers to pull to get inflation under control. Their primary tool is manipulating interest rates to accelerate or slow down the economy. We have seen record interest rate hikes over the last several months and I expect we will continue to see them until inflation moderates.

Contact me if you are inspired to find your next home.

I am not a financial professional. Please seek a financial advisor for guidance specific to your situation.

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• Rise of mRNA vaccines. mRNA vaccines had been in the lab since 1989 and proven effective once scientists figured out how to stabilize the vaccine. In March 2022, Moderna announced it would test and develop mRNA vaccines for 15 diseases. mRNA will allow for simpler and more rapid development of vaccines moving forward.
• Normalization of remote work. Sure, some remote working happened prior to the pandemic. But, often under management duress. That was sure my experience. I had the sense that management was suspicious when I worked from home or on the road. The truth is that the tools have existed for quite a while allowing productive remote work. With no options during the pandemic, those tools were refined and went mainstream as did the concept of working remotely.

Which brings me to my point.

Airbnb recently published a study identifying Seattle as one of the five most popular destinations for long-term rentals. What a great way to experience a new region.

Contact me to find a property to use as your escape from the ordinary or to offer as a short term rental.

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1. Noise
2. Not cleaning up after pets
3. Intrusive/nosy
4. Parking issues
5. Unsupervised children
6. Aggressive animals
7. Heavy/loud footsteps
8. Cigarette smoke
9. Unkempt landscaping
10. Passive aggressiveness
11. Overflowing garbage
12. Odors
13. Marijuana smoke
14. Grumpiness
15. Dirty home exterior
16. Overly chatty
17. Unsightly storage
18. Not cleaning up after children
19. Trespassing
20. Public intoxication

Unsurprisingly, the No. 1 annoyance was noise. And the homebuilder’s survey dug further into the issue. Within the noise category, the biggest complaints were, in order: loud music, shouting, loud children and noisy exterior work (like lawn care or construction). Most respondents agreed that loud noises should cease by 10 p.m.

The post Are you annoying? appeared first on Tim Ritchie Homes.

The market is still shifting. Active listings of both single-family homes and condos nearly doubled year over year. New listings grew nearly 15% to 11,805 from June to July. Pending sales are down 24% and closed sales decreased 30%, compared to July 2021.

It’s not all bad news for sellers. The median price of homes and condos in King County rose about 2.7% from June to July, from $789,000 to $810,000. The median price rose 5.4% in Kitsap County, 9.3% in Snohomish and 12.7% in Pierce. 

I’m happy to help you better understand this shifting market. Contact me if you are looking to buy or sell your home.

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To keep these charts reasonable, I used King County as an indicator of broader trends in the region. If you are interested in statistics from another area, send me a note and I’m happy to put that together for you. In June of 2021, there were 1,456 homes for sale in King County. The number has increased over 76% to 3,256 homes for sale in June of 2022.

At the same time, fewer transactions are closing. In June of 2021, 3194 transactions closed and in June of 2022, 2482 transactions closed.

One would normally expect with increased inventory and decreased demand that you would begin to see downward pressure on pricing. While I believe that is coming, we haven’t quite seen it yet. The median home value has increased 9.1% across all of King County from June of 2021 to June of 2022.

I believe the market will continue to degrade for sellers. So, if you are thinking about selling your home now maybe your best opportunity. On the other hand, if you are thinking about moving you finally have some leverage and may not be competing against 15 other families for the home of your dreams.
Let me know if I can help you in your home search or sale, I’m happy to.

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The post Seller’s market cooling down appeared first on Tim Ritchie Homes.

What does a cooling housing market feel like? What should you and your clients be on the lookout for when judging whether the price and demand of homes is leveling off?

Every local market is unique, but wherever you are, there are four indicators about whether your housing market is cooling or remaining ultra-competitive:

1. Reduced prices for local listings
2. Fewer mortgage applications
3. More homes on the market
4. Lighter attendance at home tours and showings

1. Reduced Prices for Local Home Listings

The first indication that your local housing market could be cooling is if you and your clients notice lower prices for local homes listings.

Low borrowing costs meant to cushion the effects of the COVID-19 pandemic rose housing prices by 35% in the past two years. Now, with the Federal Reserve raising interest rates to fight decades-high inflation, consumers in your market may be willing to pay less for homes, driving down the price.

Beyond simply lower home prices, look closely at whether a trend of reductions in price develops. If sellers are routinely marking down the price of homes already on the market, it’s an indication that your market is cooling and becoming more buyer-friendly. 

2. Fewer Mortgage Applications

Before buyers purchase a home, they have to apply for a mortgage. So, one indicator about the housing market’s competitiveness comes from the number of mortgage applications.

Overall, mortgage applications dropped 8.3% in the last week of April. This decline in mortgage applications may reflect a general softening in buyer demand homes. But a lower number of mortgage applications may also derive from a limited number of homes on the market.

Either way, keep an eye on the number of mortgage applications in your market. If mortgage applications are tumbling, the housing market may be tapering. If mortgage applications in your market maintain or even increase, your local market is likely still red-hot.

3. More Homes on the Market

If there’s one situation homebuyers and their agents are likely to have experienced in recent attempts to purchase a property, it’s a lack of homes on the market.

Indeed, home listings are at a record-low, and even with rising mortgage rates and sky-high home prices, a limited inventory of available properties has kept the real estate market competitive.

If you notice a wider available inventory of properties, the housing market may finally be cooling. More available homes would tamp down bidding wars and perhaps compel sellers to list their homes at lower prices.

Of course, there is typically an influx of listed properties in the spring and summer – so keep a close watch on how long those listings stay on the market, and whether the price they sell for is higher or lower than the initial ask.

4. Lighter Attendance at Home Tours and Showings

It’s important to crunch numbers and monitor trends. But as an agent exposed to the local markets, I have the ability to gauge the current state of your local market.

In particular, I’m watching attendance at local home tours and showings. In the last few weeks, things have slowed significantly from where it was in February, or even last summer. People are making less aggressive, cash-heavy offers to purchase homes, homes are selling closer to list price, and they are staying on the market longer.

In my opinion, we are in a cooling market that is going to continue to cool off in the coming weeks and months.

The post Is the market cooling? appeared first on Tim Ritchie Homes.

I listed a nice home in a desirable neighborhood for $1.7M in May. There was very little traffic through the home even though it had tons of exposure. After three weeks, we dropped the price to $1.5M and saw a modest uptick in activity and we accepted a solid offer within two weeks.

While this was an excellent result, the homeowner was disappointed that he didn’t see multiple offers at the original price. In some ways, he’s right to be disappointed. If we had listed in March, we likely would have sold this house above asking the first week. That’s how rapidly and radically the market has shifted.

Sellers need to re-set their expectations. We have seen the peak of the market, which is now softer and weakening.

Mike Larson, a member of the board of directors at Northwest Multiple Listing Service (NWMLS) believes “Home sellers really need to re-think their expectations” the days of “multiple offers and waived inspections, at least in Pierce County, are behind us.” This is certainly true of the markets I work in.

At the end of May there were 8,798 active listings on the NWMLS, up a whopping 59% from a year ago. Much of this is due to reduced demand resulting from higher interest rates. However, even with this uptick in inventory, there is still less than one month of housing inventory compared to what is considered a “balanced market” of four to six month’s worth of inventory.

So, is this an indication that the market is about to implode? You’ll have to read here for my thoughts on that topic.

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But let’s play devil’s advocate and assume we experience a 2008-style housing crash. If it does, the market will come back over time and home values in the Pacific Northwest will resume their climb. Here’s a chart of Pacific Northwest home values since 2008:

But maybe we just got lucky? Nope. This has happened before. See this chart from the mid-1970s to early 1990s.

Housing is a cycle. We have just experienced the top of our current cycle, which was fueled by historically low interest rates, which are now being right-sized. The fundamentals of the Puget Sound housing market remain strong. We have low unemployment, thousands of new high wage jobs moving into the area, and limited housing stock that is constrained by the Mountains and Puget Sound.

If you’re looking to draw a parallel, look to the Bay area, which has many of the same geographic constraints and has experienced the same type of explosive job growth. They are a decade or so ahead of the Puget Sound, but provide an excellent model of what is likely to come.

This is all good news if you’re a buyer. Housing prices have stabilized and inventory is more abundant, which means you won’t have to compete with five other families to buy something. You probably missed the top of the market if you are selling in the near term. However, if you put things in a historical context, this remains an incredible market to sell.

Contact me if I can help you make sense of the market, or if you need help buying or selling.

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