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W Report •
October 24, 2023
W Report – October 2023
Buying •
October 9, 2023
What to Do After Moving Into a New Home
Nothing beats the feeling of buying a new home. You’ve worked hard with your agent to find the right home for you, you’ve worked with the seller to finalize the deal, and you’ve signed all the paperwork to transfer ownership. Congratulations! Everything has led to securing your new home, so now that you’re officially moving, what do you do next? Here’s a quick guide to the move-in process to help you get settled into your new home.
Moving Day
The day you move, you’ll be juggling all kinds of timelines at once. You’re coordinating with movers, arranging for trucks to be picked up and dropped off, and making sure that nothing gets damaged in the process. The best thing you can do on this chaotic but exciting day is to be available. Being on hand at your new home to answer the mover’s questions will help speed up the process.
It helps to have a checklist of your important items to make sure nothing has gotten lost during the moving process. Check these items off one by one as the movers bring them in. Next, you’ll want to confirm that the utilities have been turned on and are ready for use. Check all lights, smoke detectors, appliances, CO2 alarms, your home security system, fire extinguishers, etc. Finally, install new locks and make sure your keys work properly.
Image Source: Getty Images – Image Credit: skynesher
What to Do After Moving In
- Clean and Unpack: Before you start emptying your boxes, it’s a good idea to wipe down the surfaces to keep your items from getting dirty. A full deep cleaning of your home may not be in the cards just yet since there’s still plenty of moving to be done, which inevitably brings more dust and dirt in the house.
- Childproof and Pet-Safe Home: If you’ve got little ones and/or pets, this is the time to set up their accommodations. Learn more about how to properly childproof your home so your kids can feel like it’s home sweet home from day one. When preparing to house your pets, keep in mind that some cleaning methods are more pet-friendly than others.
- Setup and Organize: Now it’s time to get everything in its right place. Organize room by room, storing items in logical places where you won’t forget them as soon as they’re stowed away. The first rooms you’ll want to tackle are the bedrooms, bathrooms, and kitchen. These are the rooms you’ll need the most during the first few days in your new home, so having them put together will better position you to tackle the rest of the house. Getting your closets, bathroom cabinets, and kitchen drawers organized from the start will make for a more enjoyable moving process.
- Update Your Information: You’ll also want to update your address everywhere it’s applicable as soon as possible, consider setting up mail forwarding to ensure you don’t miss any important mail in the meantime.
For more information on the moving process, visit our comprehensive Moving Checklist, available as a interactive webpage and downloadable PDF here:
Market News • Matthew Gardner •
September 26, 2023
How Low Inventory Is Affecting the Housing Market
Windermere Chief Economist Matthew Gardner demonstrates how the U.S. housing market is adapting to low inventory levels. He touches on the new construction industry, supply changes in large metro areas, median home sale prices, and more.
This video is the latest in our Monday with Matthew series with Windermere Chief Economist Matthew Gardner. Each month, he analyzes the most up-to-date U.S. housing data to keep you well-informed about what’s going on in the real estate market.
Low Inventory Housing Market
Hello there, I’m Windermere Real Estate’s Chief Economist Matthew Gardner and welcome to this month’s episode of Monday with Matthew. As we are all aware, the housing market has softened considerably with the number of existing homes available to buy close to record lows. Today we are going to talk about supply, and how the market is starting to adapt to low inventory levels.
Housing Market Inventory
This chart shows the average number of homes on the market by year. Although year to date we have seen a little bit of an uptick, it’s clear the country remains supply-starved. And with just over three months of inventory—as opposed to the normal four to six—the market is clearly out of balance. But even though inventory levels have risen nationally, as I’ve said many times before, not all markets are equal.
Housing Inventory Changes in Metro Areas
This chart shows how supply levels have changed. The data here is representative of the 100 largest metropolitan areas in the country. The horizontal axis shows the change in inventory versus the second quarter of 2022, while the vertical axis shows the difference and the number of homes for sale versus the second quarter of 2019. I think you’ll agree that the difference is stark. Although two-thirds of the metropolitan areas have seen the number of homes for sale improved versus the same period a year ago, just one (Austin, TX) had more homes for sale higher in the second quarter of this year than it had in the second quarter of 2019.
- And even more stark was the fact that inventory levels in 53 of the 100 largest metropolitan areas were down by more than 50% compared to the same period three years ago.
Interestingly, on a percentage basis, smaller metro areas saw the greatest decline compared to three years ago. For example, in Hartford, CT, the average number of homes on the market in the second quarter was just over 900, down by 80% from the second quarter of 2019 where there was an average of over 4,400 units for sale. Supply levels were down by 78% in Stamford, CT; 75% in New Haven, CT; and 74% in Allentown, PA.
It is true that supply levels are generally higher when compared to a year ago, with the greatest increase being seen in select markets in Florida, Tennessee, Texas, and Oklahoma; however, other than in Austin, supply levels remain well below their long-term averages. So, how is the market adapting? The answer is rather interesting. Even with all the talk of escalating material, land, and labor costs, it’s the new home industry that has been taking advantage of the lack of housing supply.
New Construction Market Trends
This chart shows the share of new homes on the market compared to their resale counterparts—here we are just looking at single-family homes. Historically, new construction makes up roughly 10% of active listings at any one time, but as you can see here, that share has been rising not just since the end of the pandemic but for the past several years. Although off the high seen a few months ago, 30% of the single-family homes for sale this July were brand new. I find this particularly interesting because, historically speaking, a premium was paid in order to buy a new home rather than an existing one.
Median Sale Prices: New and Existing Homes
- As you can see here, the spread in median sale prices, which was pretty stable from 1990 until the bursting of the housing bubble, grew significantly starting in 2011 and in 2022. The premium averaged 16%. But when we look a bit closer at the numbers, they gives us a somewhat different picture.
- You can see here the spread has dropped to just 6%. And in June of this year, the difference was a mere $1,000.
With the share of new homes for sale holding at a four-decade high, the share of sales themselves is at a level we haven’t seen since 2005. But even though we know that there is demand for housing, shouldn’t sales be constrained by mortgage rates? Well, what is happening is that builders are attracting buyers through incentives, and here we’re talking about mortgage rate buydowns which are becoming increasingly prevalent across the country.
In fact, a recent survey from John Burns Consulting suggested that 30% of home builders reported using interest buydowns more in the second quarter of this year than they had previously. And this is attracting buyers to visit new development communities.
An example of these buydowns is the 2/1 program that DR Horton—the largest home builder in the country—is offering at some communities. This program gives buyers a mortgage rate that starts at 3% for the first year, rises to 4% in year two, and then goes to 5% for the balance of the 30-year term. That’s pretty compelling, given where mortgage rates are today.
The bottom line is that as far as I can see, the new home industry will continue to take an outsized share of the market for the balance of 2023 and likely through most of 2024. That said, once the market starts to normalize, I expect them to pull back from these incentive programs, making them more likely to start raising asking prices, and we will return to the traditional spread between the prices of new and resale homes.
Although it’s pleasing to see more homes being built, I still believe that the country will still be running a housing deficit when it comes to meeting demographic demand and this will continue to hurt first-time buyers who continue to be priced out of the market.
As always, I’d love to hear your thoughts on this subject so feel free to leave your comments below. Until next month, stay safe out there and I’ll see you soon. Bye now.
To see the latest real estate market data for your area, visit our Market Update page.
About Matthew Gardner
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.
Selling •
September 12, 2023
Understanding Contingent Offers: A Seller’s Guide
Whether you’ve listed multiple homes or you’re a first-time home seller, you’ve likely come across the word “contingent” before. Contingent home sales, though very common, aren’t as simple as a real estate transaction without them. With contingencies, there are additional factors at play and added criteria that need to be met for the deal to go through. As a seller, being aware of these offers will help to inform your discussions with your agent once you know it’s time to sell your home.
What is a contingent offer?
Contingent offers in real estate give the buyer or seller the right to back out of the contract if the conditions aren’t met. There are different types of contingencies that determine what must happen for the deal to go through, which means buyers have options. Depending on their situation, whether they are selling their current home while making an offer on yours, unsure whether they can secure the right financing, or want to wait for the results of the home inspection before finalizing their offer, they’ll explore contingencies with their real estate agent as they build their offer.
This may feel a bit like buyers want to have their cake and eat it too, but every homeowner can understand the desire to protect their investment before fully diving in. In a seller’s market, there are fewer homes available, which means buyers will do whatever they can to make their offer stand out. Because sellers have the leverage in these market conditions, you’ll often see buyers waiving their contingencies. Talk to your agent for more information about the local market conditions in which you’re selling.
Should I accept a contingent offer on my house?
Each home sale is different, and each seller has a unique story. What you’re looking for in an offer may be different from what someone else in your neighborhood is looking for when selling their home. It all depends on your circumstances, your timeline, your next steps, and your local market conditions. The extra stipulations in a contingent offer require the attention of an experienced real estate agent who can interpret what they mean for you as you head into negotiations.
- How to Negotiate as a Seller
How often do contingent offers fall through?
Contingent offers can fall through more often than non-contingent ones, but there’s no general rule of thumb. Whether a sellers and buyer are able to agree on the terms of a deal is a case-by-case situation. Different contingencies may carry different weight among certain sellers, and local market conditions usually play a significant role. For up-to-date information about your local market, visit the Market News category of our blog.
Image Source: Getty Images – Image Credit: jacoblund
Pros and Cons of Contingent Offers for Sellers
Pros: Accepting a contingent offer means you don’t have to take your home off the market quite yet, since the conditions of the deal haven’t been met. If the buyer backs out of the deal, you can sell without having to re-list. In certain cases, some buyers may be willing to pay extra to have their contingent offer met.
Cons: Home sales with contingent offers are usually slower than those without. It takes time to satisfy a buyer’s contingencies and additional time to communicate that they have been met. And of course, there’s always the risk that the deal could fall through.
Connect with me for guidance when facing contingent offers.
Design •
August 29, 2023
5 Features of Mediterranean Interior Design
There’s so much beauty in the countries that border the Mediterranean Sea, it’s no wonder the design style derived from this area of the world has the same effect on a home’s interior. Mediterranean interior design, part of the larger coastal design family, creates interiors that harmonize with the outdoors. Here are a few of its most common features.
5 Features of Mediterranean Interior Design
1. Mediterranean Materials
This style borrows primarily from the longstanding traditions found in Greece, Spain, and Italy, with additional influence from Mediterranean countries like Morocco and France. People have lived in this area of the world for thousands of years, each civilization attaining high levels of achievement in art and culture. Accordingly, the common materials that make up this interior design style show a timeless appeal. Dark wood, marble, or terra cotta tile are popular flooring choices, while the walls are typically made of stucco or plaster.
Mediterranean interior design bathroom | Image Source: Getty Images – Image Credit: FollowTheFlow
2. Mediterranean Color Palette
Prepare to be inspired. The colors found in a typical Mediterranean palette are tailor-made to make your interior come to life. Each hue is a rich variation of the colors we’re most familiar with in interior design. Golden yellows, olive greens, rich reds, and cobalt blues form the basis of the Mediterranean style. These colors all pop against a white stucco backdrop and evoke liveliness while being grounded in natural and organic elements like the sun, trees, and water.
Mediterranean interior design bedroom | Image Source: Getty Images – Image Credit: amriphoto
3. Harmony with Nature
The ultimate Mediterranean interior is at one with nature; it’s somewhere you can walk around barefooted while a gentle breeze blows through the room. From its exposed wood beams to natural stone walls, everything about Mediterranean interior design embraces the outdoors and the elements derived from it. Open-air patios are often the central entertaining space, putting an emphasis on indoor-outdoor living.
Mediterranean interior design living room | Image Source: Getty Images – Image Credit: Julieanne Birch
4. Mediterranean Decorative Elements
Overall, Mediterranean design takes a less-is-more approach to home décor. Relying on the natural beauty of its elements, its philosophies on design have more in common with mid-century modern interior design than, say, eclectic style. Common decorative items include textured walls, tapestries, mosaic inlays, and Italian-style pottery and art. The countries that form the inspiration for Mediterranean style all have their unique take on sculpture art, commonly found in historical buildings and traditional architecture. Accordingly, sculpted detailing is a fitting décor feature in this style.
5. Bringing People Together
At the end of the day, people are an important part of Mediterranean interior design. Family spaces are a priority, as are communal seating arrangements in areas like the living room, dining room, and outdoor patio. Once you design your home this way, you can’t help but invite family and friends over to celebrate together. The open spaces and natural elements create a welcoming environment that is meant to be shared. Happy hosting!
Market News • Matthew Gardner •
August 22, 2023
U.S. Home Prices and Housing Affordability in 2023
Windermere Chief Economist Matthew Gardner gives an updated look at U.S. home prices and housing affordability in 2023 by examining two key second-quarter reports from ATTOM Data Solutions and the National Association of Home Builders (NAHB).
This video is the latest in our Monday with Matthew series with Windermere Chief Economist Matthew Gardner. Each month, he analyzes the most up-to-date U.S. housing data to keep you well-informed about what’s going on in the real estate market.
U.S. Home Prices 2023
Hello there, I’m Windermere Real Estate’s Chief Economist Matthew Gardner and welcome to this month’s episode of Monday with Matthew. Today we are going to look at home prices and housing affordability. To do this I will be looking at the second quarter sales price data from ATTOM Data Solutions and we will also look at the just released National Association of Home Builders Housing Opportunity Index for the second quarter.
Are home prices dropping?
Starting with the year-over-year change in sale prices at the state level, there aren’t any great surprises. For the past several months I’ve been saying that as the Western U.S. saw the greatest price growth during the pandemic, so it’s not surprising to see most states sale prices in the quarter below the level seen a year ago. But it was pleasing to see that sale prices in 36 states either matched the level seen a year ago or were higher, and in some instances quite significantly so.
U.S. Home Sale Prices 2023 By State
And when we compare second quarter sale prices to their 2022 peaks, 33 states are at or above the highs seen last year, but most of the Western States have yet to fully recover. In the South, Louisiana is still lagging by a good amount, as is New York State on the East Coast.
But as you are all very aware, all markets are different. I thought it would be interesting to dig a little deeper into the data to see which metro markets have seen significant gains over the past 12 months. It’s going to be interesting specifically because of the fact that mortgage rates have risen so much.
Metro Areas: Home Sale Prices 2023
These are markets where sale prices are far above their 2022 peak sale prices. Now I must add that I only looked at markets where more than 1,000 transactions occurred in the last quarter, which takes out some of the volatility. Notably, even though the state of Virginia’s home prices in the quarter were flat when compared to their 2022 peak, the Roanoke market was up by over 9%. And in Pennsylvania, where state prices were only 1.2% above their 2022 peak, Reading is up by 7.6% and York by 7.4%. And in Georgia, where state sale prices were up a modest 1.6%, homes in Macon have leapt by over 13% and prices are up by 6.9% in Savannah.
But, on the other end of the spectrum, there are markets which are underperforming their respective states and, unsurprisingly, California tops the list with three of their metros seeing prices significantly below that of the state as a whole. In other parts of the country, several metro areas which were relatively affordable before the pandemic saw an influx of remote workers and this led prices to skyrocket, and these will take some time to recover. This is particularly true in the Austin and Boise market areas.
I would add that, of the counties across the country where there were more than 1,000 transactions in the second quarter, half have met or exceeded their prior peak and—of the half where sale prices were still lower—the average shortfall is only around 4% and there are just seven counties in the country where sale prices are down by more than 10% from their 2022 peaks.
Now, what I see in the data is that the U.S. housing market, although certainly not fully healed, is headed in the right direction even when faced with mortgage rates that remain remarkably high. So, with sale prices recovering and still faced with stubbornly high financing costs, what does affordability look like?
U.S. Housing Affordability 2023
Well, according to the National Association of Homebuilders (NAHB), of the 241 metros that they track, just 40.5% of sales in the second quarter were affordable to households making the area’s median income—that’s the second lowest share of sales seen since they started generating this dataset a decade ago. Now, their data does go back to 2004, but the interest rate series that they used to use was discontinued, so it’s not accurate to compare their data today with anything before 2012.
Most Affordable U.S. Housing Markets
These were the most affordable markets in the second quarter and their locations should not be of any great surprise. Average sale prices in these markets were measured around $203,000—that’s just marginally above 50% of the national sale price in the quarter, which was $402,600.
Least Affordable U.S. Housing Markets
And unfortunately this should not surprise you either. On the other end of the spectrum, the top-10 least affordable housing markets were all in California, but it gets worse than that. The top 15 least affordable markets again, all in California, and 19 out of the top 25 were in the Golden State!
As far as I can see, the ownership housing market is still showing remarkable resiliency, especially given that mortgage rates have more than doubled from their lows and they’ve risen from 4.8% at the start of the second quarter of last year to 7% at the end of the second quarter of 2023.
Now, I still expect to see rates starting to slowly move lower as we go through the second half of the year. This will help with prices and, to a degree, affordability, but until we see a significant increase in the number of homes listed for sale, the market is going to remain unbalanced.
As always, I’d love to hear your thoughts on this subject so feel free to leave your comments below. Until next month, stay safe out there and I’ll see you soon. Bye now.
To see the latest real estate market data for your area, visit our quarterly Market Updates page.
About Matthew Gardner
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.
Living •
August 11, 2023
How to Create a Balcony Garden
Gardens come in all shapes and sizes. For those who don’t have a flourishing backyard with acres of greenery, you’ve got to make do with the space you have to satisfy your inner green thumb. Creating a balcony garden can bring life to your terrace and give you some healthy options to add into your cooking. By plotting out the space, researching which plants will thrive on your balcony, and gathering the right materials, you’ll set yourself up for gardening success.
How to Create a Balcony Garden
First, consider your space. The amount of sunlight your balcony gets will determine what you’re able to grow and how quickly your garden will grow. Crops like tomatoes and strawberries need lots of sun to grow up healthy, while others like peas and herbs can still thrive in less sunlight. If your balcony is sunlight-deprived, you may need to invest in a grow light to give your plants the light they need.
What are your goals for your balcony garden? Are you looking to build out your collection of natural herbs or do you want to turn your terrace into your own personal exotic oasis? Whether your motives are culinary or aesthetic, planning out your garden will help you maximize space. Hanging and stack planters allow you to create a vertical garden, which helps save space. Climbing plants like honeysuckle, ivy, ferns, and different varieties of vines are perfectly suited for this kind of garden design. Before hanging any planting pots, hooks, trellises, shelves, or any kind of gardening equipment, check your governing Homeowners Association (HOA) policies to make sure your plans are within the rules.
Image Source: Getty Images – Image Credit: AleksandarNakic
Keep Your Plants Healthy
With any garden, your main concern is keeping your plants healthy. This means giving them plenty of water, treating your soil with care, and keeping up with seasonal demands depending on your local climate. If you’re looking to save money on your balcony gardening project, don’t focus your frugal efforts on soil. Soil is the lifeblood of your garden, so it’s important to give it a fresh, nutrient-rich mixture. Once you’ve selected your plants, research their needs to see which potting mix you need to pick up at your local gardening or hardware store. Depending on the chemical makeup of the potting soil, you may not need to fertilize your plants right away.
With a balcony garden, it’s also important to keep your neighbors happy. Put saucers underneath your pots to prevent excess water from dripping onto the neighbors beneath you. This will also cut down on wasted water, one of the main principles of sustainable gardening. Self-watering pots are helpful, especially if you’re not always around to water your plants. They prevent overwatering by metering the amount of water your plants receive, only feeding them when necessary.
You also need to consider how much weight you’re adding to your balcony. Yes, terra cotta pots have that quintessential Tuscan gardening look, but a dozen ceramic pots filled with water-soaked plants might bear more weight on your terrace than it’s prepared for. Look at more lightweight potting alternatives and different soil mixtures than can lighten the load on your balcony.
Market News • Matthew Gardner •
July 28, 2023
Q2 2023 Western Washington Real Estate Market Update
The following analysis of select counties 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 Real Estate agent.
Regional Economic Overview
As discussed in the first quarter Gardner Report, job growth continues to slow. Even though Western Washington added 54,391 new jobs over the past 12 months, which represented a decent growth rate of 2.3%, the slowdown in the creation of new jobs is palpable. The regional unemployment rate in May was 3.7%, which is marginally above the 3.4% of a year ago. As we enter the summer months, I have started to ponder the economic outlook for the balance of this year as well as looking ahead to 2024. Although many are still suggesting a looming recession, I remain unconvinced. However, if enough people expect to see an economic contraction, it can become a self-fulfilling prophecy, which has happened in the past!
Western Washington Home Sales
❱ In the second quarter of 2023, 14,997 homes sold. This was down 34.4% from the second quarter of 2022, but up 43.8% from the first quarter of 2023.
❱ The growth in quarter-over-quarter sales was due to the 21.7% increase in the number of homes for sale. While this is positive, it should be noted that inventory levels in the quarter were still 16% lower than a year ago.
❱ Sales fell across the board compared to the same quarter in 2022 but were up in all markets compared to the first quarter of 2023.
❱ Pending sales rose in all counties compared to the first quarter of this year, suggesting that sales in the upcoming quarter may show further improvement.
Western Washington Home Prices
❱ Sale prices fell an average of 7.6% compared to the second quarter of 2022 but were 11.7% higher than in the first quarter of this year. The average home sale price was $773,343.
❱ Compared to the first quarter of this year, sale prices were higher in all counties except San Juan, which, as a small island county, is notorious for its extreme price swings.
❱ The year-over-year drop in sale prices was not a surprise given that the market was peaking due to rapidly rising mortgage rates. That said, prices in Lewis, Clallam, and Skagit counties exceeded those of a year ago.
❱ It was interesting to see list prices rising in all markets compared to the first quarter of the year. Even though inventory levels have risen, sellers still believe that they are in the driver’s seat.
Mortgage Rates
Although they were less erratic than the first quarter, mortgage rates unfortunately trended higher and ended the quarter above 7%. This was due to the short debt ceiling impasse, as well as several economic datasets that suggested the U.S. economy was not slowing at the speed required by the Federal Reserve.
While the June employment report showed fewer jobs created than earlier in the year, as well as downward revisions to prior gains, inflation has not sufficiently slowed. Until it does, rates cannot start to trend consistently lower. With the economy not slowing as fast as expected, I have adjusted my forecast: Rates will hold at current levels in third quarter and then start to trend lower through the fall. Although there are sure to be occasional spikes, my model now shows the 30-year fixed rate breaking below 6% next spring.
Western Washington Days on Market
❱ It took an average of 35 days for homes to sell in the second quarter. This was 20 more days than in the same quarter of 2022, but 21 fewer days compared to the first quarter of this year.
❱ Snohomish County became the tightest market in Western Washington, with homes taking an average of only 18 days to sell. Homes for sale in San Juan County took the longest time to sell at 81 days.
❱ All counties contained in this report saw average days on market rise from the same period in 2022. Market time fell across the board compared to the prior quarter.
❱ The greatest fall in days on market compared to the first quarter was in Clallam County, where market time fell 31 days. Also of note were Pierce, Thurston, and Whatcom counties, where market time fell 25 days.
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.
The increase in listing activity, while pleasing, still leaves the market short of inventory. Even with mortgage rates well above levels we’ve seen over the past few years, demand for homes still exceeds supply. Given that over 86% of homeowners with mortgages have an interest rate below 5% and more than a quarter have a rate at or below 3%, I see little incentive for them to sell if they don’t have to. This tells me that supply levels are unlikely to improve enough to meet demand until rates drop significantly.
With this supply-demand imbalance, it’s no surprise that prices are rising again following the decline in the second half of 2022. I expect prices to rise modestly as we move through the second half of 2023. Rising list and sale prices, shorter time on market, and higher pending and closed sales all offset higher mortgage rates. Given these factors, I have moved the needle in favor of sellers.
About Matthew Gardner
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.
Market News • Matthew Gardner •
July 24, 2023
Housing Market 2023: Home Prices, U.S. Demographics, and More
Harvard University’s latest edition of “The State of the Nation’s Housing” has arrived, and Windermere Chief Economist Matthew Gardner is here to break down what the data presented in the report means for the U.S. housing market in 2023 and beyond.
This video is the latest in our Monday with Matthew series with Windermere Chief Economist Matthew Gardner. Each month, he analyzes the most up-to-date U.S. housing data to keep you well-informed about what’s going on in the real estate market.
Housing Market 2023
Hello there, I’m Windermere Real Estate’s Chief Economist Matthew Gardner, and welcome to this month’s episode of Monday with Matthew. I spend a lot of time reading reports that relate to the housing market, but there is one in particular I’m always impatiently waiting for, and it’s published by my colleagues at the Joint Center for Housing Studies at Harvard University. Every year they release the The State of the Nation’s Housing report and it’s packed full of fascinating data about the ownership and rental housing markets, demographics, and it also discusses the challenges that lay ahead. So today, I wanted to touch briefly on just a few of the report’s high points, but I highly recommend you download it from their website.
What’s happening in the housing market?
As we all know, the for-sale housing market started softening in mid 2022 in response to rising interest rates and deteriorating affordability. What was particularly notable was that seasonally adjusted home prices fell month over month last July and that was the first monthly drop in over a decade. And over in the rental market, asking rents—while still up year over year—also saw their pace of growth slow considerably, and that is a concern.
Is home construction slowing down?
As you see here, multifamily construction continued to rise last year even as rental demand was softening. In fact, 547,000 new multifamily units were started in 2022, the highest number since the mid-1980s, and the 960,000 units under construction in March 2023 was the highest number seen in half a century. On the ownership side, it wasn’t surprising to see single-family construction falling significantly as buyers reacted to sharply higher borrowing costs.
The report also suggested that the decline in new construction was particularly acute for lower-priced homes. Builders just can’t produce entry-level product with current material, labor, and land costs; limited lot availability; and regulatory barriers such as minimum lot sizes that restrict production of entry-level housing production.
U.S. Population Demographics
Now turning to demographics. Population growth—naturally the primary long-term driver of household growth—remains historically low. Overall, the U.S. population grew by 1.26 million people last year, or just 0.38%. Now, while this does represent a slight uptick from previous years that’s really not saying much as U.S. population growth hit 100-year lows in 2019, 2020, and 2021.
Increases in a country’s population come in two ways. The first is “natural” growth—which equals the number of persons born minus the number that have died—and the second is via immigration. Now, gains from immigration can be fickle because they are subject to unpredictable government policy changes as well as economic cycles here in the U.S. as well as in other countries. But natural growth is more predictable because it is driven by slow-moving factors like birth and mortality rates. Until last year, natural growth had been the primary source of population growth in the U.S., but, as you saw in that last chart, things have shifted.
U.S. Population Growth & Migration
This map shows counties with the highest level of natural growth and it’s dominated by large metro markets in California, Texas, Southern Florida and parts of the Northwest. But, what I found very interesting was that the numbers were remarkably low. Only six counties—three in California, two in Texas, and one in New York—saw natural growth above the 10,000 level and 75% of counties across the country saw negative natural growth.
So with natural growth slowing, states will understand the importance of attracting new residents from other markets as domestic migration will become a more important driver of household growth and housing demand. Here you see that Maricopa County, AZ saw the largest gains from domestic migration but, statewide, Florida dominated last year with 319,000 people moving there. Texas came in second with a net gain of over 230,000 people. But on the other end of the spectrum, California was the biggest loser with net 343,000 people leaving, followed by New York who lost 300,000 residents.
It was international migration that accounted for a full 80% of total growth last year and it was the largest source of total population growth for 26 states and 29% of all counties across the country. The biggest winners were LA County in California, Miami-Dade County in Florida, and Harris County, Texas.
These were just some of the highlights of the report and the biggest conclusions I found were that, in the ownership market, supply will remain tight in the resale arena and new construction will not fill that void, especially as it comes to the entry level product. Housing affordability will not improve. This will continue to be a big issue across the country.
An oversupply of apartments coming online will further moderate rents, but renters will also find affordability to be a big concern. Demographic trends suggest that low domestic population growth going forward will lower new household formations and it’s quite likely that population and household growth will start to rely wholly on immigration earlier than the government expects.
So, there you have it. As always, I’d love to hear your thoughts on this subject so feel free to leave your comments below. Until next month, stay safe out there and I’ll see you soon. Bye now.
To see the latest real estate market data for your area, visit our quarterly Market Updates page.
About Matthew Gardner
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.
Market News • Matthew Gardner •
June 29, 2023
2023 Top 10 Predictions | Mid-Year Update
2023 Top 10 Predictions | Mid-Year Update
Windermere Chief Economist Matthew Gardner revisits his Top 10 Predictions for 2023. Reviewing his forecasts for home prices, mortgage rates, and more, he highlights recent changes in the real estate market and updates his predictions for the near future.
This video is the latest in our Monday with Matthew series with Windermere Chief Economist Matthew Gardner. Each month, he analyzes the most up-to-date U.S. housing data to keep you well-informed about what’s going on in the real estate market.
Top 10 Real Estate Market Predictions 2023 | Mid-Year Update
Hello there, I’m Windermere Real Estate’s Chief Economist Matthew Gardner and welcome to this month’s episode of Monday with Matthew. You may remember that at the end of last year, I published my Top-10 Predictions for 2023 and, as we hit the mid-year mark, some of you have been asking me how well my forecasts have been holding up. So, I thought it would be interesting to take another look at them to see how accurate they have or have not been! These were the predictions I made last November, and they covered everything from my expectations for home sales and prices to shifting government policies.
U.S. Home Sale Prices
My first forecast suggested that sale prices would fall in 2023; however, I was not expecting any sort of systemic decline in values. Here you can see that year-over-year prices are down by a bit less than 2%, but when you look at how prices have changed month over month, they rose by 3.6% in April and are up by more than 6% since the end of last year.
I stand by my forecast that the median sale price in 2023 will be modestly lower than the 2022 number; and the monthly increase in sale prices that we have seen so far this year also supports my forecast that we are not seeing any long-term decline in home values.
2023 Mortgage Rates
Although mortgage rates have broken above 7% eight times so far this year—the first time because of the banking crisis, and the second because of the looming debt ceiling—I expect them to become a little less frantic as we move through the second half of the year. That said, my call for them to drop below 6% this year is now likely to be inaccurate given where they are today. I still expect them to drop into the “fives” though, but not until early next year.
Is housing inventory increasing?
Listing activity saw a very modest late spring bump, but for perspective, the number of homes for sale is running at about 40% of its long-term average, and I still don’t see much growth this year. Why? Well, by my calculations, there could be over 20 million homeowners with mortgage rates around 3%. Why would they move!
Is 2023 a buyer’s or seller’s market?
And with limited inventory, the market still “technically” favors home sellers. Now, this is a little speculative because what defines a traditional “buyer’s” or “seller’s” market varies by location, but with relatively few homes on the market and the share of homes with price reductions dropping and list prices rising again, I just can’t see a buyer’s market appearing this year.
Are home prices falling?
Well, this doesn’t look to be meeting my forecasts, does it! Sellers have been pretty bullish so far this year, but I would add that this is not true across the whole country. List prices are still down significantly in markets such as Hailey, Idaho; Jasper, Alabama; and Elko, Nevada, where list prices for single-family homes are down between 30 and 50% from their peak. So, I admit that the country has outperformed my forecast for list prices.
Return to Office Statistics 2023
As I had expected, the pace of workers heading back to the office has not been very robust. In fact, the share of people in the office full time dropped to 42% in the second quarter of 2023, down from 49% in the first quarter, that according to The Flex Report. Meanwhile, the share of offices with hybrid work arrangements hit 30% in the quarter, up from 20% the previous quarter. But I still expect to see more workers heading back to their offices, albeit very reluctantly.
New Home Permits and Starts Have Fallen
With new home permits down 21% year-over-year, and new home starts off by 28%, I think its accurate to say that activity in the new construction sector has slowed. Builders continue to be hit by high financing rates as well as high material prices.
Are U.S. home prices dropping?
As we all know, not all markets are created equal, and this chart shows how far below their 2022 highs some of the country’s metro areas are. On the opposite end of the spectrum, there are some markets where prices have already exceeded the highs seen last year (see map below).
Housing Affordability 2023
Affordability has not improved, mainly due to home prices that remain out of sync with incomes as well as financing costs that remain well above the level that buyers had become used to. I still believe that this will not improve in 2023.
And finally, I told you that governments would start to move to address the significant housing shortage that the country is experiencing, and they have. As you can see, in Washington State, Governor Inslee recently signed House Bill 1110 into law which allows the development of duplex up to six-unit buildings within any area zoned for single-family-only development. Additionally, jurisdictions in a significant number of states are either pursuing legislation to tackle this problem or have at least created task forces to look at the issue. It’s a good start, but more needs to be done.
Although it’s really cheating to grade one’s own work, I think that I have been pretty accurate with my forecasts. Yes, I was too pessimistic when it came to list prices and a little optimistic regarding the direction of mortgage rates. But other than those two items, the data seems to suggest that the housing market is headed in the direction that I had suggested.
What do you think? I’d love to hear your thoughts on this subject so leave your comments below. As always, stay safe out there and I’ll see you all next month. Bye now.
To see the latest real estate market data for your area, visit our quarterly Market Updates page.
About Matthew Gardner
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.
