2019 Year-in-Review

Speaker 1: [0:09] Hello, hello, and welcome to the Awesome in Seattle podcast. I am Christian Nossum, here with the Awesome Nossum Group, and, uh, with me to my right is the wonderful

Speaker 2: [0:18] Charlotte Reynolds Uh, Sarah Kate Davis

Speaker 1: [0:21] Jason, as always. Jason, as always. Just like last week. Good job, Jason. So this week we're doing a year-end review of what's going on in the market, uh, in the Seattle real estate market, but also nationally. So first off, we're gonna, we're gonna compare and contrast last year to this year, then we're gonna give some kinda highlight of predictions for next year as well.

Speaker 4: [0:45] Yeah, it's our last episode of the year. 13, what, 14 episodes now. Oh, yeah. This is exciting. I'm… So- It'll be interesting to see in a year, looking back on this episode, how things compare.

Speaker 1: [0:57] Yeah, and at the end, stay tuned, 'cause we're each gonna give our personal opinion and prediction on the Seattle area market, and what it's gonna do. So hold us accountable to that.

Speaker 2: [1:07] Yeah.

Speaker 1: [1:07] Pay attention. And we have a

Speaker 2: [1:08] $5 bet, so.

Speaker 1: [1:09] Exactly. Yeah. It's very risky. It's,

Speaker 2: [1:10] the stakes are high. Money on the line.

Speaker 1: [1:12] Woo. All right, so let's get started. So year in review. Looking at the national market, so I'm gonna start nationally, then I'm gonna go Seattle. So nationally, home prices increased 4.7% to a whopping $231,000. That is- Very

Speaker 4: [1:28] representative of Seattle market.

Speaker 1: [1:31] Or not.

Speaker 2: [1:32] Jason, don't

Speaker 1: [1:33] tell lies. The opposite. Uh, one interesting stat that we found was only 80% of the US housing has recovered from the housing crash, the bubble bursting back in '07, ' Speaker 4: 08. In other words, 80% of the markets have not recovered their prices to the peak that they were at before they crashed, right? Because they peaked right before it crashed. Exactly. On top of that, only… Or there, there are still 8% of homes that are underwater, meaning they owe more on their home than what the house is actually worth. That- Which is a little sad. That's

Speaker 4: [2:08] crazy, yeah. I

Speaker 1: [2:08] know. I mean, that's not at all what's going on in Seattle. In fact, our prices in Seattle have increased 43% over the peak back in 2007, 2008. So we're up 43%.

Speaker 2: [2:23] That is shocking.

Speaker 1: [2:24] Yeah. Uh, funny thing, though, we're not one of the top cities for recovery. So the reason why is because we didn't really take a huge dip.

Speaker 2: [2:34] Mm-hmm.

Speaker 4: [2:35] Yeah, we don't have much to recover from.

Speaker 1: [2:36] No.

Speaker 2: [2:37] Yeah.

Speaker 1: [2:38] Uh, overall, our prices for the year were actually down 3% from 2018, and that's median sale price. And that was kinda interesting, but not super shocking. Part of the reason I think that's going on there, or part of what I think is going on there is home prices just weren't increasing, you know, $100,000 over the asking price in three days or seven days, like they were a year ago. Mm-hmm. So I don't think home prices increased as much due to that, 'cause some people were overpaying for houses. Um, the time that a house is staying on the market has actually almost doubled from eight days to 14 days. That's actually not 100% accurate, we think. And what I mean by that is the eight days from a year ago was probably, it should've and could've been closer to one, two, or three days on the market. But we were, as agents and as home sellers, we were waiting a week to review offers. So we would put the house on the market on Wednesday. On Tuesday of the following week or Wednesday of the following week, we would review offers. So we were artificially inflating the number of days on market. That's clearly not happening anymore, 'cause now we're up to 14 days on the market, and that's, that's a good sign for buyers because you can now negotiate. When a house has been on for 14 days or more, you have a better chance of negotiating.

Speaker 2: [3:59] Yeah, that review period was pretty rough for people out there-

Speaker 1: [4:03] Yes … Speaker 2: trying to compete against, you know, what, 15 other offers on the same place? Exactly. Exactly. And we'll see what happens this next year, because there might potentially be some people that are waiting to see what happens with the election.

Speaker 4: [4:15] Yeah, generally speaking, it looks like, uh, during election years, it's not that, uh, elections slow down home sales. What really happens is it, it puts a pause on them because people are like, "I wanna wait to figure out what's gonna happen. I don't wanna buy or sell right now because a lot, there's a lot of uncertainty with an election." So it just pushes back, basically, the, uh, those purchases and those sales a year or two after the election. So it'll be interesting to see how this plays out.

Speaker 3: [4:48] Yes, we have some hot, hot neighborhoods- Whoop, whoop … of 2019. I don't

Speaker 4: [4:55] know why that- … deserves

Speaker 3: [4:56] a whoop, but it did. Well, it's exciting. It can be exciting. Uh, so I know Tacoma is not Seattle, but it was named the hottest housing market in the nation in 2019, and I think that is partly due to what some call the Amazon effect, and people are just getting priced out of Seattle and looking for another lovely neighborhood on the water to live in, and its homes are really affordable there. I wanna say the average in 2018 was $280,000 for a single family home, so.

Speaker 4: [5:28] In Tacoma?

Speaker 3: [5:29] In Tacoma, yeah. So-

Speaker 1: [5:30] Interesting.

Speaker 4: [5:31] Yeah, I think what, uh, at least just anecdotally, it looks like so much focus was on North Seattle for the last, like, 10 years, and- Yep. Mm-hmm … now North Seattle, or north of Seattle, like No- Snohomish County, it's, it's pretty expensive. Yeah. And so now, you know- The growth is finally going south … the growth is going south. Not only that, light rail, I think, uh, is al- also opening the door for a lot of people that are like, "Okay, the commute is not what it used to be- Exactly … or it won't be for much longer," so.

Speaker 1: [5:55] And not just light rail, but the Sounder train, the actual train train. Yes. Mm-hmm. Uh, that is a packed train every day from Tacoma to Seattle. Um, I've heard that they had to increase capacity on those trains because so many people have moved down there that work in Seattle still, so.

Speaker 3: [6:10] Yeah.

Speaker 1: [6:10] Interesting.

Speaker 3: [6:11] Very

Speaker 2: [6:11] true. Yeah, and I can speak personally to the Tacoma market w- 'cause I had buyers down there.

Speaker 1: [6:17] Mm-hmm.

Speaker 2: [6:19] In like sort of the third quarter of the year, and it was like everything that was coming on had multiple offers, and it was- Yeah … so competitive, and they had another place to sell, so it didn't really help their case, you know, having to put a contingent offer in, but

Speaker 1: [6:33] it was- You made it work.

Speaker 2: [6:33] It w- We did it.

Speaker 3: [6:35] Yay.

Speaker 2: [6:36] Yeah. Um, with the help of Christian Yeah … who was listing their condo. But, um, yeah, it was tough, and it was, it was pretty frustrating for them, but-

Speaker 1: [6:43] Mm-hmm.

Speaker 3: [6:43] There's a few other notable neighborhoods, I would say more Seattle proper, such as White Center. Um, I think a lot of the North Seattle and Seattle proper businesses were opening up extensions and second locations there.

Speaker 1: [6:56] Like restaurants and bars and stuff like that.

Speaker 3: [6:57] Restaurants, bars, yeah, tattoo shops, hair shops, all those kinds of things- Mm-hmm … that people were already familiar with, and, uh, super affordable and an easy commute to, uh, downtown, where a lot of our tech employees work.

Speaker 1: [7:08] Mm-hmm.

Speaker 3: [7:08] Uh, Shoreline as well, I feel like people just, you know, from that North Seattle, a little Ballard, Green Lake, which is always pretty steadily popular, um, people are moving a little further north, where they could still stay kind of comfortable and familiar in North Seattle, but, um, find something that's a little more affordable for them and their family, and it… Most of the neighborhoods have a real, like, neighborhood feel, so-

Speaker 1: [7:29] Yeah … I

Speaker 3: [7:30] think people like that for their-

Speaker 1: [7:31] We just looked at a house in

Speaker 3: [7:33] Shoreline today … for their families. We

Speaker 2: [7:34] did. I wanna buy it.

Speaker 3: [7:36] Uh, Ballard, always super hot.

Speaker 1: [7:38] Yeah.

Speaker 3: [7:39] Everyone loves Ballard all the time. And then I would say West Seattle as well is a l- uh, close to White Center, and has that same, uh, commute time, lots of bars, restaurants, walkable, and then of course the beautiful beaches. Yeah,

Speaker 1: [7:51] exactly.

Speaker 3: [7:51] So those were, those were some hot neighborhoods in Seattle in ' Speaker: 19. Charlotte, looking back at mortgage interest rates, what were they doing? What happened there?

Speaker 2: [8:00] So there's a couple interesting things that happened with rates this year. Um, where we are now, first of all, is much lower than what they predicted-

Speaker 1: [8:10] I remember that at the

Speaker 2: [8:11] beginning of the year.

Speaker 1: [8:12] Yeah. Yeah. Beginning of the year they were saying… I don't even remember what they were saying, but it was much higher.

Speaker 2: [8:15] Yeah, definitely higher. So the year started at just over 4.5%, and right now we're sitting around 3.75.

Speaker 1: [8:22] And we're towards the end of 2019 right now.

Speaker 2: [8:25] Mm-hmm. Yeah, so it's interesting that the predictions were obviously quite far off, and we're much lower, which is-

Speaker 4: [8:32] Mm-hmm

Speaker 2: [8:33] definitely a good thing, really good for buyers. It'll help increase your purchasing power there. Um, the other interesting thing that happened was the federal rate drops this year. So there were three federal interest rate drops, in July, September and October. Um, and what that means is that they drop federal interest rates to essentially keep the economy strong, and, um, enabling people to spend more money.

Speaker 1: [8:59] Mm-hmm.

Speaker 2: [8:59] Um-

Speaker 1: [9:00] And that's not a direct impact on mortgage rates- No … it's an indirect, but it did impact interest rates for, for buying a house.

Speaker 2: [9:07] Yeah.

Speaker 4: [9:07] It basically makes cash cheap.

Speaker 1: [9:09] Yep. Yeah. Right. Exactly.

Speaker 2: [9:10] Definitely. So- One kind of thing we have to say about this is having a real estate friendly president. Mm-hmm. So he's definitely more in favor of kind of any of the positive real estate policies that's gonna help enable that. Um, so that's kind of the big two things with rates. The other interesting that happened was the new loan limit.

Speaker 1: [9:33] Mm-hmm.

Speaker 2: [9:33] Um, so that was increased from, oh gosh,

Speaker 1: [9:36] what was it before? 726.

Speaker 2: [9:38] Okay. Yeah.

Speaker 1: [9:39] $726,000 and like 125 bucks or something like that.

Speaker 2: [9:42] And yeah, and now it's, um, just under 742.

Speaker 1: [9:45] So that's, that's taken into effect, uh, January 1st.

Speaker 2: [9:48] Okay.

Speaker 1: [9:49] So yeah.

Speaker 2: [9:49] Yeah, so that was announced just at the end of November, just like right before Thanksgiving, and why that's important for buyers is that's another way to increase your purchasing power.

Speaker 1: [9:57] Mm-hmm. Yep. So now you can do a 5% loan on top of that high loan limit of 742, 5% on top of that, and now you can almost buy, I mean with 5% down, an $800,000 house.

Speaker 4: [10:11] Mm-hmm.

Speaker 1: [10:12] So, uh, all right, let's look at what's gonna happen next year. I'll kind of give you a quick recap of what all the major real estate sources, portals, all that stuff are, are predicting. Um, I always like to get a sense for what they're saying nationally and locally and, and this is kind of a recap of what they're all doing. So- Uh, nationally, prices are predicted to go up 3.6% in 2020 and 3.5% in 2021, and this is according to realtor.com. Uh, real estate, this is from, uh, Lawrence Yun, who's the National Association of Realtor, um, their main financial guy. I don't remember his official title. I probably should, but I don't remember his official title. Uh, but he says that real estate is on firm ground with little chance of a shakeup. More housing is needed, though. The lack of supply is the biggest issue that we are going to face in 2020 and 2021. And this is also what I've heard from numerous sources. Basically all the big sources out there for real estate are predicting that. You know, as a nation, not just Seattle, which we've already had that shortage of homes for sale, but the national market is also going to have a shortage of homes for sale. Um, one of the big things that we all heard at the beginning and to the, about halfway through the year was recession, recession, recession. It's gonna happen any day now. It didn't happen, and in fact, Zillow reported up until the halfway point of the year, yes, we're definitely gonna have one. Then they changed their, their tune in the third quarter of 2018, and the fourth quarter as well, saying now that the chance of having a recession is much less than what they were thinking. Um, so now they're not quite sure if there is gonna be one. Interesting side note. I'm sure there will be at some point, but again, we did a podcast on if that actually affects housing prices. It didn't really. Yeah. Other than two instances, one of which being the housing bubble, but that was caused by housing, so.

Speaker 4: [12:12] Yeah, and I know in Seattle, the, the prediction is for us to increase our population in the Seattle metro area by one million people by the year 2035. So- Woo … um, that's about a quarter increase from, I think we're at, like, 1… Uh, 4.2 million at the moment in Seattle metro. But, but yeah, that, that should really sustain a lot of this growth in terms- Mm-hmm of construction and, and, and that sort of thing. Hopefully. Hopefully will.

Speaker 1: [12:39] So moving on to Seattle specifically, uh, numerous sources were saying anywhere between 5 and 6% price increase, um, for Seattle. That's kinda what they're all predicting. Um, and again, same thing, no inventory. There's gonna be very, very little inventory out there, so we're gonna see multiple offers again most likely at some point in 2020. Home builder confidence. This is an interesting one. So because of this lack of inventory, there is not much supply. There's not much supply of land. Home builders like that. That means that they, what the land that they already have, they're going to be able to build on, and they are very happy that they're gonna be able to increase prices, increase profits, and, and sell those homes very quickly. Um, interesting side note, somewhat of a side note, millennial buyers. So the average age of the first time, or the median age of, of a first time buyer is between 22 and 23 years old. Uh, the-

Speaker 2: [13:38] 32. 30, 32 and 33.

Speaker 1: [13:39] I'm sorry. 32 to

Speaker 2: [13:41] 33. I was trying to turn the page. Whoa,

Speaker 1: [13:42] that's very young. Trying to turn the … I bought my first house when I was 22, but that was a different story. Um, so yeah, 32 to 33, and because of that, if you look at how many people are that age currently and where they're, like if you look at the 26, 27-year-old age group, there's a, there's 4.8 million 26, 27-year-olds. There's 4.3 million 32-year-olds. So there's a big group of home buyers in between 27, 26, and 32 that are going to be buying in the next five years. Um- Because of that, we're seeing a potential housing bull rush of, of buyers, really first time buyers. Uh, and a lot of people I know scoff at that and go, "Millennials can't buy a house. They don't make any money. They're all in the service industry." And that's not true, especially in Seattle. No. Maybe in other parts of the country, but not here. So interestingly, we're seeing in Seattle, 'cause I was like, "Oh, interesting. If there's a ton of millennials that are supposed to buy, what is our millennial population like?" We have about 25% of our population in Seattle are millennials, which kinda blew my mind. That's a fourth of our population are millennials. That's a ton of buyers. That means our market in Seattle might increase quite a bit over the next five years. So just throwing that out there. Another thing that is hurting the inventory is that people are staying in their homes longer than they were. So back in 2010, people on average were staying in their homes around eight years. That's increased to 13 years now. So they're just aging in place. They're much less likely to sell and move. And I think we talked about this yesterday, we think that that's probably because, I mean, that's great that they can sell their house for so much, but what the hell are they gonna buy? Where

Speaker 3: [15:32] are they gonna go?

Speaker 1: [15:32] Where are they gonna go? They can't afford in their own neighborhood anymore. So I think that's kinda part of what's going on.

Speaker 4: [15:37] Yeah, and that metric in 2010 obviously was impacted by the housing, uh, bubble that we saw, where people definitely were not staying in their houses very long, so keep that in mind. But there is a generational shift. A, a lot of people are reporting that the, we are slowly but surely increasing the amount of time that, that we're staying in our houses, which is awesome because we're making them work. And in Seattle, there's a lot of legislation and regulation that is really out there to encourage people to stay in their property and make it work for them by renovating or increasing square footage, building an ADU. Yeah. We've had multiple podcasts about those. Yes. So feel free to listen. But yeah.

Speaker 3: [16:15] I think some of the hot neighborhoods for next year that, uh, we may see some multiple offer scenarios in are South Park- We've talked amongst the group that we're seeing more clients venture out to the east side- Mm-hmm especially with the pending light rail station opening up in Bellevue.

Speaker 4: [16:35] And with the expansion of Amazon and all that. Correctamundo.

Speaker 3: [16:38] Yeah, we're seeing a lot of that. Yes, sir. Yeah. Yes, sir.

Speaker 1: [16:40] And there's also people that are switching, you know, the people that are leaving Seattle going to the east side, um, there's equal amount of people leaving the east side and going to Seattle because of Expedia.

Speaker 3: [16:52] Very true. We're just kinda swapping. So

Speaker 1: [16:53] we're just swapping.

Speaker 3: [16:54] Yeah. West side, east side. Uh, South Park is another one of those neighborhoods. I've feel like it's really growing slowly over the last few years. You're seeing more restaurants, bars- Mm-hmm … new builds, and, um, obviously if you are someone that works downtown, that is a very easy commute for you. Uh, Loyal Heights in Ballard, uh, Matthews Beach, Cedar Park area- Mm-hmm … the Burke Gilman I think is really attractive to people. Oh, yeah. Yep. Um-

Speaker 1: [17:21] There's a ton of people that use that every morning as a way to commute to work.

Speaker 3: [17:24] Yes, yes, very true, so I think that that's, that's a nice up-and-comer. Um, and then Highland Park is I think still on the up and up.

Speaker 1: [17:34] Mm-hmm.

Speaker 3: [17:35] There-

Speaker 1: [17:35] And that's in West Seattle as well.

Speaker 3: [17:36] Yeah, that is, yep, West Seattle. Uh, so I think, again, these neighborhoods are gonna be hot next year. We are seeing some neighborhood trends. Charlotte, are you also noticing this?

Speaker 2: [17:48] Yeah, I mean, we talked about some of these neighborhoods yesterday, so I just looked out of curiosity and found that a lot of houses in these neighborhoods are not sitting very long and selling for over the asking price, so we're kind of already starting to see that. Like, there was a house in Highland Park that sold on the market for one day for 25 over asking

Speaker 3: [18:06] price. Wow. Yeah. Yeah. I just drove through there. We did our little Santa Christmas ornament drop-offs for clients- Mm-hmm … and I hadn't been there in a couple months, and I was driving around, and it really is on the come up, and it's- Yeah a really cute, really, neighborhood, really close to 99 and I-5, so-

Speaker 4: [18:22] Yep … Speaker 3: I mean, I would buy a house in that neighborhood. I like it. Yeah.

Speaker 3: [18:24] It's really cute.

Speaker 4: [18:26] I don't know if y'all heard, but we voted recently, and there's, there was a quite a surprise vote on, um, repealing some levies placed on car tabs, and, uh, basically it's gonna make some, potentially some significant- impact to light rail and Sound Transit and that sort of thing. So it'll be interesting to see. Over the last year, our head has really been around light rail, the impact that's having in various neighborhoods like Northgate and, uh, Mount Lake Terrace. But, but now that the car tabs might be repealed, the impact on Sound Transit, we don't know what that'll be yet.

Speaker 1: [19:04] Mm-hmm.

Speaker 4: [19:04] So over the next year, um, who

Speaker 1: [19:07] knows? Well, there's, there's already lawsuits filed. Sound Transit's already issued statements saying that the wording isn't- Mm … actually affecting Sound Transit, so they're proceeding as normal. There's a lot of things going on, so we will see. It's gonna be a legal battle, if nothing else, to see if and when anything actually changes.

Speaker 4: [19:25] That being said, uh, what? In a year now they're gonna open, I think it's in like in a y- almost a year- Yeah. Yeah … Speaker: they're gonna open, uh, the g- uh, the stations in Northgate. Roosevelt. Roosevelt. Roosevelt. Yeah. And all the way over to, like, uh, to Bellevue and that sort of thing. And-

Speaker 1: [19:41] And

Speaker 4: [19:41] U

Speaker 1: [19:41] District … Speaker 4: and U District. And we've been talking for a while about, you know, if you're within, like, a quarter mile of these light rail stations, you see a dramatic in- uh, increase, appreciation in your property values, because people wanna live close to light rail st- stations. I have a feeling, you know, now that they're gonna be adjusting the bus routes, so you take a bus to the light rail station, you cut over basically to the light rail station, and then you grab a light rail train to go to work. I think that's the, you know, the i- impact of light rail now is gonna start spreading now that- Yeah … it's opening up- Mm-hmm … and widening. Yeah, I agree. So. Yeah, the, the way that Sound Transit has set up these stations, the light rail stations, is that's the hub, and all the spokes are the bus and, um, basically bike lanes. Right. So they want people to not drive to the light rail and park. They want them to take public transit or walk or ride their bike and, and get into the light rail station from all these different areas.

Speaker 3: [20:38] Have you guys heard, sorry, this is slightly off topic, but in large cities like New York, they are now imposing a tax if you drive in the city.

Speaker 1: [20:47] Same with London. Yeah.

Speaker 3: [20:48] So yep, London as well. So I'm wondering if that's gonna trickle down to Seattle now that our, um, you know, public transit system is- Is expanding … is expanding. Yeah. Yeah. To really discourage people from driving.

Speaker 2: [20:58] We have a long way to go before they can start taxing people to drive in the

Speaker 1: [21:00] city. Yeah, we'll see.

Speaker 2: [21:01] I mean, it's a step forward,

Speaker 3: [21:02] but it's not comparable- That's a, like, 2023 prediction. Yeah.

Speaker 1: [21:04] Yeah. All right, let's go over some predictions that we each think for the Seattle area market. So Charlotte, I'm starting with you. What do you think? What are you predicting the Seattle market, Seattle m- not metro, but actual City of Seattle prices are gonna go up in 2020? My prediction- Or down. Or down. Or sideways.

Speaker 2: [21:20] Sorry. My prediction- I assume … is an increase of

Speaker 1: [21:20] 4%. Ooh. Interesting. Okay. Sarah Kate?

Speaker 3: [21:30] Mine's a little lower. I'm going 2% increase.

Speaker 1: [21:33] Hmm. Okay. Jason?

Speaker 4: [21:37] Now I sound like I'm just copycatting, which I'll do it. I'm copying Charlotte, 4%.

Speaker 1: [21:44] Really?

Speaker 4: [21:45] Yeah.

Speaker 1: [21:45] Oh, I think 5 to 7.

Speaker 4: [21:47] Yeah.

Speaker 2: [21:47] Okay, mister- I'm- … I'm gonna give a range to- … CMA. Yeah,

Speaker 1: [21:52] exactly. Yeah. That's what I do. Yeah. W- I've actually, when we had the Seattle Real Estate radio show, actual radio show, we did, uh, one of these every single year, and it was always fun to look back, so- Yeah. It'll

Speaker 2: [22:04] be fun … now

Speaker 1: [22:04] that we got the podcast, it's the same. I'm excited to look back in a year and- Yeah … see what we all think and-

Speaker 2: [22:08] This'll be fun … Speaker: who gets 20 bucks. Who, who's gonna win the 20

Speaker 3: [22:12] bucks? It's 20 now? I thought it was five. Yeah, it's

Speaker 1: [22:13] five each. Five each.

Speaker 3: [22:15] Oh. Duh. Techn- technically you win

Speaker 2: [22:18] 15.

Speaker 1: [22:18] Yeah, technically you-

Speaker 4: [22:19] But we deposit in, it, it into an interest-bearing account-

Speaker 1: [22:23] starting today, so it's gonna be more than tw- No, I'm kidding. Oh my God. Thanks, Jason. With

Speaker 3: [22:24] CIT

Speaker 1: [22:26] Bank at 2.38%.

Speaker 3: [22:28] Woo.

Speaker 1: [22:29] All right. So that is our show for today. Thank you very much for listening. If you got something out of this show, please like us, leave a comment, uh, on your favorite podcast, and follow us, share it, tell your friends. Um, and happy holidays, of course.

Speaker 3: [22:44] Happy holidays, everyone. Woo-woo.