The following analysis of the Western Washington real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere agent.

ECONOMIC OVERVIEW

Washington State employment jumped back up to an annual growth rate of 2.4% following a disappointing slowdown earlier in the spring. As stated in the first quarter Gardner Report, the dismal numbers earlier this year were a function of the state re-benchmarking its data (which they do annually).

The state unemployment rate was 4.7%, marginally up from 4.5% a year ago. My current economic forecast suggests that statewide job growth in 2019 will rise by 2.6%, with a total of 87,500 new jobs created.

HOME SALES

• There were 22,281 home sales during the second quarter of 2019, representing a drop of 4.8% from the same period in 2018. On a more positive note, sales jumped 67.6% compared to the first quarterof this year.
• Since the middle of last year, there has been a rapid rise in the number of homes for sale, which is likely the reason sales have slowed. More choice means buyers can be more selective and take their time when choosing a home to buy.
• Compared to the second quarter of 2018, there were fewer sales in all counties except Whatcom and Lewis. The greatest declines were in Clallam, San Juan, and Jefferson counties.
• Listings rose 19% compared to the second quarter of 2018, but there are still a number of very tight markets where inventory levels are lower than a year ago. Generally, these are the smaller — and more affordable — markets, which suggests that affordability remains an issue.

HOME PRICE

• Year-over-year price growth in Western Washington continues to taper. The average home price during second quarter was $540,781, which is 2.8% higher than a year ago. When compared to first quarter of this year, prices were up 12%.
• Home prices were higher in every county except King, which is unsurprising given the cost of homes in that area. Even though King County is home to the majority of jobs in the region, housing is out of reach for many and I anticipate that this will continue to act as a drag on price growth.
• When compared to the same period a year ago, price growth was strongest in Lewis County, where home prices were up 15.9%. Double-digit price increases were also seen in Mason, Cowlitz, Grays Harbor, and Skagit counties.
• The region’s economy remains robust, which should be a positive influence on price growth. That said, affordability issues are pervasive and will act as a headwind through the balance of the year, especially in those markets that are close to job centers. This will likely force some buyers to look further afield when searching for a new home.

DAYS ON MARKET

• The average number of days it took to sell a home matched the second quarter of 2018.
• Snohomish County was the tightest market in Western Washington, with homes taking an average of only 21 days to sell. There were five counties where the length of time it took to sell a home dropped compared to the same period a year ago. Market time rose in eight counties and two were unchanged.
• Across the entire region, it took an average of 41 days to sell a home in the second quarter of 2019. This was the same as a year ago but is down 20 days compared to the first quarter of 2019.
• As stated above, days-on-market dropped as we moved through the spring, but all markets are not equal. I suggest that this is not too much of an issue and that well-priced homes will continue to attract attention and sell fairly rapidly.

CONCLUSIONS

This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors. I am leaving the needle in the same position as the first quarter as demand appears to still be strong.

The market has benefitted from a fairly significant drop in mortgage rates. With average 30-year fixed rates still below 4%, I expect buyers who have been sitting on the fence will become more active, especially given that they have more homes to choose from.

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

The following analysis of the Western Washington real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere agent.

ECONOMIC OVERVIEW

Washington State employment slowed to an annual growth rate of 1.7% — a level not seen since 2012 — and continues a trend of slowing that started in the summer of 2018. I was a little surprised to see such a significant drop in employment growth, but it may be due to the state re-benchmarking their data (which they do annually). As such, I am not overly concerned about the lower-than-expected numbers but will be watching to see if this trend continues as we move through the spring months. The state unemployment rate was 4.5%, marginally below the 4.6% level a year ago.

My latest economic forecast suggests that statewide job growth in 2019 will be positive but is expected to slow. We should see an additional 84,000 new jobs, which would be a year-over-year increase of 2.2%.

HOME SALES

• There were 13,292 home sales during the first quarter of 2019. Year-over-year, sales were down 12.3% and were 23.4% lower than the fourth quarter of 2018.​
• It is quite likely that part of the slowdown can be attributed to the very poor weather in February. That said, anecdotal information from our brokers suggests that March was a very active month and I expect to see sales rise again through the spring selling season. Notably, pending home sales were only off by 3.5% from the first quarter of 2018.​
• All counties contained in this report saw sales drop when compared to a year ago. The greatest drops were in the relatively small counties of San Juan, Clallam, Island, and Kitsap.​
• The decline in interest rates during the first two months of the quarter nudged many home buyers off the fence. I believe this will cause a significant bump in sales activity in the second quarter numbers.

HOME PRICES

• In combination with the factors discussed earlier, the 40% increase in listings has caused home price growth to taper to a year-over-year increase of 3.3%.
• Home prices were higher in every county except Clallam. While the growth of prices is slowing, the strong local economy, combined with lower interest rates, will cause home prices to continue rising through 2019.
• When compared to the same period a year ago, price growth was strongest in San Juan County, where home prices were up 36.4%. Only one other county experienced a double-digit price increase.
• As I have said for quite some time now, there must always be a relationship between incomes and home prices, and many areas around Western Washington are testing this ceiling. That said, the region’s economy continues to perform well and incomes are rising, which, in concert with low interest rates, will allow prices to continue to rise but at a significantly slower pace.

DAYS ON MARKET

• The average number of days it took to sell a home matched the same quarter of 2018.
• Pierce County was the tightest market in Western Washington, with homes taking an average of 40 days to sell. There were seven counties that saw the length of time it took to sell a home drop compared to the same period a year ago. Market time rose in seven counties and one was unchanged.
• Across the entire region, it took an average of 61 days to sell a home in the first quarter of 2019. This matches the level seen a year ago but is up by 10 days when compared to the fourth quarter of 2018.
• In the last two Gardner Reports, I suggested that we should be prepared for days-on-market to increase, and that is now occurring. Given projected increases in inventory, this trend will continue, but this is typical of a regional market that is moving back toward balance.

CONCLUSIONS

This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors. I am again moving the needle toward buyers as price growth moderates and listing inventory continues to rise.

I do not see any clouds on the horizon that suggest we will see a downturn in sales activity in 2019. That said, this will be the year we move closer to balance. Buyers who were sidelined by the significant increase in listings in the second half of 2018 are starting to get off the fence as mortgage rates drop. I foresee a buoyant spring market ahead.

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.