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For more information on preparing to sell your home, visit my Home Selling Guide:
Real Estate •
February 1, 2024
Tax Benefits Every Homeowner Should Know About
It’s tax season again, but being a homeowner might just make it rain at refund time. Check out the tax-deductible expenses, exemptions, and credits below. Whether you own a house, condo, or mobile home, they can save you big money when you file. Just be sure to compare your total itemized deductions against the standard deduction and see which is higher (you’ll have to choose between standard OR itemized on your return). It’s also good to know what you can’t deduct before you land in hot water with the IRS…
Mortgage Interest
A house payment is comprised of two parts: principal and interest. The principal goes toward reducing the amount you owe on your loan and is not deductible. However, the interest you pay is deductible as an itemized expense on your tax return. You can generally deduct interest on the first $750,000 of your mortgage (or $375,000 each if you’re married filing separately) if you purchased your home after December 15th 2017. Those who purchased earlier (10/14/1987 – 12/15/2017) can deduct interest paid on up to a $1m mortgage.
Property Taxes
You can deduct up to $10,000 of property taxes you paid (or $5,000 if you’re married filing separately). If you have a mortgage, the amount you paid in taxes will be included on the same annual lender statement that shows your loan interest information. If you paid the property taxes yourself but don’t have receipts, you should be able to locate the total tax amount on your county assessor’s website.
Home Improvements
Making improvements on a home can help you reduce your taxes in a few possible ways:
- If using a home equity loan or other loan secured by a home to finance home improvements, these loans will qualify for the same mortgage interest deductions as the main mortgage. Only the interest associated with the first $100,000 is deductible (and if you’ve already maxed out the interest deduction on your main mortgage, you won’t be eligible for any additional deduction for this loan).
- Tracking home improvements can help when the time comes to sell. If a home sells for more than it was purchased for, that extra money is considered taxable income. However, you are allowed to add capital improvements to the cost/tax basis of your home thereby reducing the amount of taxable income from the sale. Keep in mind that most taxpayers are exempted from paying taxes on the first $250,000 (for single filers) and $500,000 (for joint filers) of gains.
- Home improvements made to accommodate a person with a disability (yourself, your spouse, or your dependents who live with you) may be deductible as medical expenses. Examples include adding ramps, widening doorways/hallways, installing handrails or grab bars, lowering kitchen cabinets, or other modifications to provide wheelchair access.
- If you live in Washington State and apply with your county prior to construction, you may be able to get a 3-year property tax exemption for major home improvements (including an ADU or DADU) that add up to 30% of the original home’s value.
Home Office Deduction
If you run a business out of your home, you can take a deduction for the room or space used exclusively for work as your principal place of business. This includes working from a garage, as well as a typical office space. Unlike most of the other deductible expenses, you can deduct home office expenses even if you opt to take the standard deduction.
This deduction can include expenses like mortgage interest, insurance, utilities, and repairs, and is calculated based on “the percentage of your home devoted to business use,” according to the IRS.
Home Energy Tax Credits
For homeowners looking to make their primary home a little greener, either the Energy Efficient Home Improvement Credit or the Residential Energy Clean Property Credit can help offset the cost of energy efficiency improvements. Even better, these are credits, which means they directly lower your tax bill.
- Energy Efficient Home Improvement Credit: 30% of the cost for qualified high-efficiency doors, window, insulation, air conditioners, water heaters, furnaces, heat pumps, etc. Maximum credit of $1,200 (heat pumps, biomass stoves and boilers have separate max of $2,000).
- Residential Clean Energy Credit: 30% of the cost for adding qualified solar/wind/geothermal power generation, solar water heaters, fuel cells, and battery storage.
What You Can’t Deduct:
- Mortgage Insurance (this is a change as of 2022)
- Title Insurance
- Closing Costs
- Loan Origination Points
- Down Payment
- Lost Earnest Money
- Homeowner’s Dues*
- Homeowner’s/Fire Insurance*
- Utilities*
- Depreciation*
- Domestic staff or services*
*Unless it’s related to your home-office deduction—contact your tax pro to see if it’s a qualified deduction for you.
Do you have a low-income, disabled or senior homeowner in your life? Check out this article on King County property tax relief.
Psst…every homeowner’s financial situation is different, so please consult with a tax professional regarding your individual tax liability.
We earn the trust and loyalty of our brokers and clients by doing real estate exceptionally well. The leader in our market, we deliver client-focused service in an authentic, collaborative, and transparent manner and with the unmatched knowledge and expertise that comes from decades of experience.
© Copyright 2024, Windermere Real Estate/Mercer Island.
Adapted from an article that originally appeared on the Windermere Blog, written by: Chad Basinger.
Real Estate •
November 17, 2023
When is the Best Time to Buy or Sell a Home?
Market peaks, holidays, school, oh my! Once you’ve decided that you want to sell or buy a home, the when can be tricky to tackle. Many factors contribute to optimal timing. Scroll down for the pros and cons of selling or buying in each season.
While each season has its perks and challenges, your personal circumstances will be the most important consideration. Relocation, marriage, divorce, or other life changes may mean that it makes the most sense for you to move now regardless of market factors. If you have kids in school, it may be best to wait until after the school year to make your move.
If your timing is flexible, on the other hand, you’ll also want to consider things like the condition of your property—homes that need work or have challenges with location/layout may require a hot market (or serious lack of competing inventory) in order to sell. You’ll also want to analyze the micro-market in your neighborhood, including how many other listings are currently for sale. Check out our article on timing the market for some great tips on that.
Seasonal cycles are definitely worth considering. For sellers looking to get the maximum number of eyes on your home, it’s important to avoid listing during holiday weeks or inclement weather events like snow. Buyers might find it more difficult to purchase a home at the peak of the market when homes are selling like hotcakes. Below is a chart showing typical market activity based on a five-year average of pending sales.
When my clients ask for my advice on when to sell or buy, I typically analyze all of these factors along with seasonal pricing trends. Below are some of the pros and cons I tend to see for buyers and sellers in each season…
SELLING
BUYING
Pssst…I know decisions like this can feel overwhelming. Reach out any time for expert advice. I’m always happy to discuss your options and help you choose the best timing for your unique property, circumstances, and micro-market…
We earn the trust and loyalty of our brokers and clients by doing real estate exceptionally well. The leader in our market, we deliver client-focused service in an authentic, collaborative, and transparent manner and with the unmatched knowledge and expertise that comes from decades of experience.
© Copyright 2023, Windermere Real Estate/Mercer Island.
Real Estate •
September 20, 2023
To Sell or to Rent? The Perks and Pitfalls of Being a Landlord
Analyzing whether to sell or rent your home is a BIG deal…and it deserves careful consideration. Ultimately, the right choice for you depends on your financial situation, goals, and personal preferences. Here is a quick run-down to help you decide:
Renting Out Your Home Might Make Sense If…
- You don’t need the funds from your current home to purchase another home
- You’re moving temporarily and planning to return to the area
- You think your home’s value will drastically increase within the next few years
- The rental market is especially hot in your area
- You have the time and know-how to screen tenants, manage rent/collections, and make home repairs (or would have enough cash flow to pay for third-party management)
- Rental income is part of your long-term investment strategy
Selling Your Home Might Make Sense If…
- You need to use the equity from your current home to purchase another home
- Rent wouldn’t generate enough cash flow to cover things like vacancies, maintenance, repairs, and landlord insurance in addition to the existing mortgage, taxes, and HOA dues
- You don’t want to take on the risks, time commitment, and challenges of being a landlord
- You’re uncomfortable with the landlord-tenant laws in your area
- A home sale would generate a large profit (and has been your primary residence for at least 2 out of the last 5 years so that you’re eligible for capital gains tax exemptions)
- You’re concerned a future recession might negatively impact your finances
Before reaching a conclusion, it’s a good idea to familiarize yourself with the landlord-tenant-law specific to your state (and in some cases, separate relevant ordinances in the city and/or county that your property lies within). You should also do some market research to get a feel for price/condition of similar homes for rent and for sale in your neighborhood.
It probably makes sense to talk with a property management professional to clearly understand what you can expect to net as a landlord. You can also reach out to me any time for an accurate estimate of your home’s value should you decide to sell.
We earn the trust and loyalty of our brokers and clients by doing real estate exceptionally well. The leader in our market, we deliver client-focused service in an authentic, collaborative, and transparent manner and with the unmatched knowledge and expertise that comes from decades of experience.
© Copyright 2023, Windermere Real Estate / Mercer Island.
Real Estate •
June 7, 2023
7 Simple Ways to Boost Your Curb Appeal
When it comes time to sell your home, first impressions are crucial. Improving your curb appeal will catch buyers’ attention and go a long way toward selling quickly and for the best price. Here are seven affordable changes you can make that have a big impact…
1. Lush Up Your Lawn
A healthy, well-tended lawn will make your home look even more impressive when you start hosting open houses. Clean up all weeds, leaves, and debris, and consistently water to give it that fresh green look. Mow regularly, but not too short or you’ll damage the grass and invite weeds (experts recommend a minimum 3″ height for the Pacific NW). Consider a nitrate-rich fertilizer to keep the grass extra lush and green.
2. Refresh Your Door
Your front door is an opportunity to make a tasteful statement. Look at bold color choices that are within or slightly stretch your home’s exterior color palette. Take time to prepare the surface for a fresh coat of paint to make the color pop as much as possible and try stylish doorknob options that accentuate the aesthetic to give your door some added flair.
3. Update Your House Numbers
New and stylish house numbers are an easy, eye-catching addition to how your home is perceived by buyers. Look for styles that match with your exterior color palette and any exterior lighting fixtures.
4. Plant Colorfully
Adding colorful variety to your front yard will grab buyers’ attention. Align smaller plants like ground cover and flowers neatly within your flower beds, aiming for symmetry when possible. Use larger plants and trees to frame in your entryway or walkup. If your front yard doesn’t have flower beds, try adding hanging planters or window boxes. Because you’ll be competing against nearby listings, it’s landscaping projects like these that can make all the difference in your listing photos.
5. Upgrade Your Lighting
Adding landscape lighting will boost your curb appeal during nighttime, accentuate your shrubbery, and add a welcoming touch for potential buyers, lighting the way to your door.
While we’re on the subject, make sure your house lights are functional. Consider replacing dated fixtures with stylish new versions. Features like automatic dawn-to-dusk sensors will also come in handy if the home will be vacant while it’s listed.
6. Power Wash
Pressure washing your walkways and driveways can instantly improve your curb appeal. If buying a pressure washer is outside your budget, explore rental options from hardware stores in your area.
7. Add an Inviting Touch
Incorporating classic front porch elements like a porch swing, sitting bench, and other outdoor furniture gives a welcoming aura to your home’s entry and creates a sense of comfort for prospective buyers.
Adapted from an article that originally appeared on the Windermere blog April 19th, 2023. Written by: Sandy Dodge.
We earn the trust and loyalty of our brokers and clients by doing real estate exceptionally well. The leader in our market, we deliver client-focused service in an authentic, collaborative, and transparent manner and with the unmatched knowledge and expertise that comes from decades of experience.
© Copyright 2023, Windermere Real Estate/Mercer Island.
Real Estate •
May 19, 2023
Buying a Home: A Start-to-Finish Guide
You want to buy a home.
Where do you begin?
When you’re ready to buy—or maybe just ready to start seriously thinking about it—there’s a lot you can do to prepare. Here is a checklist to help you get started…
1. Determine a Price Range
Step one is finding out your budget for your new home. The best way to do that is to meet with a mortgage professional who will review your income, assets, and credit history in order to pre-approve you for a loan. Not only does getting pre-approved allow you to narrow your home search, but it also makes your offer stronger when it comes time buy. If you don’t currently have a mortgage professional, I would be happy to recommend one.
You can also use my Home Monthly Payment Calculator to experiment with different principal amounts, interest rates, down payments, taxes, and insurance to get an idea of what you can afford. Keep in mind that these calculations are meant to be estimates—interest rates change weekly and will be determined by your credit score.
2. Make a Wish List
Imagine your ideal home. How many beds/baths does it have? How big is the backyard? How close is it to the local park? Use our Wish List to guide you in your search online and with me.
3. Start Your Searching
Once you know how much you can afford and what you’re looking for in a home, it’s time to start your search. My online search tool makes it easy to search for homes, keep track of your favorites and subscribe to property alerts when a fitting listing hits the market in your area. I can also send you potential homes and take you to tour them in person once you’re ready to get serious.
4. Know What to Avoid
As you prepare to buy, knowing what not to do can often be just as helpful as knowing what to do. By understanding the pitfalls buyers can fall into, you can identify the signs of these common buying mistakes ahead of time. Check out this article on buying homes that have been flipped, too.
You’ve found the home.
What now?
Once you’ve found the home you can see yourself living in, what’s next? There are many steps to go through before you can officially call yourself a homeowner. I will guide you through this process, but in the meantime, here’s a preview of what you can expect.
1. Negotiation
When making an offer on a home, I will negotiate on your behalf in order to attain the best terms for you. This can include negotiating the price, repair costs, timelines, and contingencies.
2. Purchase & Sale Agreement (Contract)
This is the legal contract you and the seller will enter into once your offer has been accepted by the seller. It outlines the terms and conditions of the sale and is signed by both parties.
3. Inspection
Once the Purchase and Sale Agreement is signed, a home inspector is hired to examine the home’s health, safety, and major mechanical systems. If any issues arise from an inspection, you may be able to renegotiate.
In a competitive offer situation where you wish to waive your inspection contingency in order to make your offer more appealing, I may advise you to conduct a “pre-inspection”—that is, an inspection that is conducted before you put an offer in on the house.
4. Financing
After your offer is accepted, the next step is to get final loan approval. During this process the lender will decide if they’re willing to approve your mortgage based on things like your creditworthiness and the title history and appraisal of the home you want to buy.
5. Title Report
This is a report for you and your lender detailing the history of the home you’re buying to ensure there are no legal barriers to purchasing it.
6. Escrow
Escrow is an impartial third-party process in which documents and funds are deposited by buyers, sellers, and lenders to facilitate the closing of a transaction. To learn more, read this short guide to understanding escrow.
7. Closing
During this final step of the home buying process, ownership is transferred from the seller to the buyer, closing costs are paid, and several legal documents are prepared and signed, all leading to the closing date. After closing is finalized and recorded and the funds are disbursed, the home is yours!
8. Moving Day!
Check out my printable Moving Checklist as you get ready for the big day.
© Copyright 2023, Windermere Real Estate/Mercer Island.
Real Estate •
March 15, 2023
7 Ways to Make Life Easier When Selling Your Home
When it’s time to sell a home, we all dream of a flawlessly executed transaction where everything goes smoothly and ends with a win-win for you and the buyer. Here are seven tips to help make that happen—and avoid surprise expenses along the way…
1. Repair Your Home First
Making repairs to your home before you sell not only makes it more appealing to buyers, but it can also help you avoid the additional costs that can result from the buyer’s inspection. Disclosing any repairs that still need to be made will help you move smoothly to closing and avoid problems that could otherwise kill the deal. Consider conducting a pre-listing inspection to make sure everything is out in the open before you sell.
2. Make Sure Your Price is Right
The key to selling your home quickly is to find the right buyers. To find the right buyers, your home must be correctly priced. I use a Comparative Market Analysis (CMA)—a thorough, data-backed examination of your home and how it compares to other listings in your area—to accurately price your home. Without an agent’s CMA, it’s easy for your home to be listed at the wrong price.
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- Avoid Overpricing: Overpricing your home will attract the wrong buyers because you will force your home into competition with other listings that are fundamentally superior or have more to offer. When comparing other homes to yours, buyers will focus on the discrepancies and the features your home lacks. Overpricing will often cause homes to sit on the market for extended periods of time and become less appealing to buyers.
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- Avoid Underpricing: Under competitive market conditions, intentionally underpricing a home is a common strategy to attract buyer attention with the goal of starting a bidding war to drive the price of the home up. However, several things must go correctly for this to happen. In all other cases, underpricing your home reflects a lack of knowledge about where its market value fits into the fabric of current local market conditions and can leave you, the seller, unsatisfied with the price your home ultimately fetches.
3. Invest In Staging & Professional Photography
First impressions matter when selling a home. The vast majority of buyers are searching online and taking virtual tours of homes they’re interested in. As such, it’s well worth the time and money to hire a high-quality photographer and I always provide this for my sellers. The right photography can make all the difference in the minds of buyers.
Home staging is also a critical element for getting the most value for a home and selling it quickly. You can even DIY if you have the time and modern decor. It’s also the perfect time to inspect your home for any minor or cosmetic repairs that can be addressed quickly. An aesthetically pleasing home will attract more eyes, and any edge you can give your home over competing listings may be just the ticket to getting it sold.
4. Keep Your Emotions in Check
Selling your home is an act of learning how to let it go. Once you know you’re ready to sell, you’ll need to be able to look at it with an objective eye. This will allow you to approach decisions from a neutral standpoint and work towards what is best for the sale of the home. Having clear judgement will also help you get through the negotiating process and steer yourself toward a smooth closing. Stepping back can be tough, but a good agent will always be happy to give you guidance and help you keep perspective.
5. Wait Until You’re Ready
It may be tempting to rush your listing to take advantage of local market conditions, but waiting until you have all your ducks in a row will make life so much easier. Knowing when to sell your home is a mixture of being financially prepared, having the right agent, and understanding how your home fits into the current local market landscape. Once you’re ready, here are some tips on timing the market.
6. Use an Agent
…and I’m not just saying it because I’m an agent! Selling a home “For Sale By Owner” (FSBO) can save on commission fees, but is a complex and risky process that can easily lead to serious costs. An agent will help you front marketing costs, provide sound advice to help you avoid legal trouble, and ultimately shoulder some of the liability for the transaction. Being represented by an experienced professional will help you avoid mistakes during the offer process, negotiations, and closing that could otherwise be costly or jeopardize the sale. It’s no wonder that a vast majority of sellers choose to work with an agent.
7. Be Willing to Negotiate
Approaching buyers’ offers with an open mind will ensure you don’t miss any opportunities. Before the offers start to come in, it’s important to work with your agent to understand your expectations and strategize which terms and contingencies you’re willing to negotiate on. That way, you can quickly identify the right offer when it comes along. Showing a willingness to work with buyers will also keep them engaged and make sure you don’t leave potential deals on the table.
© Copyright 2023 Windermere Mercer Island.
Adapted from articles that originally appeared on the Windermere blog, November 22, 2021 & April 7, 2021, by Sandy Dodge.
Real Estate •
February 17, 2023
Preparing to Sell Your Home: A Complete Checklist
Getting your home ready to sell can feel like a circus act. Without the right organization, juggling the countless moving parts involved in this stage of the selling process can take its toll. This is the perfect opportunity to create a checklist to keep yourself on track and within your budget. The following information will illuminate the key responsibilities you face as a homeowner as you prepare to hit the market.
We’ve included a comprehensive checklist below of the common tasks required to get your home ready to sell. It is also available as a downloadable pdf here:
EXTERIOR
This list of value-adding curb appeal projects will help to form buyers’ first impressions of your home and make your ever-important exterior listing photos stand out amongst the competition.
- Remove peeling and chipped paint; replace with a fresh coat
- Fix loose trim and fencing
- Clear gutters and downspouts
- Make sure there is good exterior lighting and all walkway lights and front-door lanterns work
- Clean and repair the roof as needed
- Clear garage of clutter and tidy shelves
- Inspect chimney for cracks and damage
Yard
- Mow and trim grass; re-seed and fertilize where necessary
- Prune all overgrown trees and shrubs
- Weed flower beds
- Remove or replace dead or diseased plants, shrubs, and trees
- Clean grease and oil stains from driveway
Decks/Patios
- Paint or stain worn areas on wood decks
- Remove grass growing in concrete cracks; sweep off debris from shrubs and trees
- Clean all deck rails and make sure they’re secure; replace missing slats or posts
- Clean outdoor furniture
Front Door
- Add a fresh coat of paint to get rid of nicks
- Clean the glass on the storm door; make certain the screen is secure
- Make sure the doorbell operates properly and there are no squeaks when the door opens and closes
Windows
- Clean all windows inside and out
- If needed, add a fresh coat of paint to the window trims and sills
- Make sure all windows open and close easily
- Replace cracked windowpanes and those with broken seals
- Make sure window screens are clean and secure; replace any screens with holes or tears
Front Entry
- Clean entryway floors and area rugs
- Downsize clutter in the entry and entry closet to give the appearance of spaciousness
- Double-check entry lighting to make sure it works
INTERIOR
Not only will these interior projects get your house sparkling clean, but they’re also preparatory steps for staging your home and hosting open houses.
General Interior Cleaning
- Clean all floors, carpets, walls, and trim
- Replace burned-out light bulbs
- Empty trash
- Remove family photos, valuables, and prescription drugs
- Tidy up clutter
Kitchen
- Fix dripping faucets
- Organize pantry and cupboards so they appear clean, neat, and spacious
- Make sure the refrigerator and freezer are defrosted and free of odors
- Clean the oven and cooktop thoroughly
- Set the table
Living/Family/Dining Rooms
- Give rooms a fresh coat of paint as needed
- Repair cracks and holes in ceiling and walls
- Make sure all wallpaper is secure
- Repaint any woodwork that is worn or chipped
- Clean or replace draperies and blinds; open them to maximize light
- Make sure draperies and blinds open and close
- Steam-clean carpets
- Clean rugs and wood flooring, and remove any stains or odors
- Position the furniture to showcase the size and space of the room
- Remove and replace any attached items, such as chandeliers and draperies, that you wish to move with you
- Put away toys and hobby supplies; remove extra magazines and books from tables
Bathrooms
- Make sure sinks, tubs, showers, and countertops are clean and free of stains
- Repair any leaky faucets
- Remove grout and soap stains from tile
- Replace any missing or cracked tiles or grout
- Make sure all joints are caulked
- Make sure all fixtures, including heat lamps and exhaust fans are operating
- Install a new shower curtain and buy matching towels
- Store all supplies, such as toilet paper, shampoo bottles and cleansers, out of sight
Bedrooms
- Repair cracks in ceiling and walls
- Apply a fresh coat of paint if necessary
- Make sure all wallpaper is secure
- Clean draperies and blinds; open them to maximize light
- Put away toys, clothes, and clutter
- Neatly make up the beds
Basement
- Check for water penetration or dampness; call for professional repairs if necessary
- Get rid of musty odors
- Clean furnace, hot water heater, and drains
- Make sure light fixtures work
- Arrange storage area in a neat and organized manner
- Make sure stairway handrail is secure
Tidy Extras
- Use air fresheners or bake treats to make the house smell good
- Plant flowers to brighten the walkway and enrich the entry
- Remove any indoor houseplants that are brown or losing their leaves
- Remove all “fixer” cars, campers, and boats from the property
- Tidy and declutter all closets
- Hide or get rid of worn-out throw pillows
- Store pet supplies
- At night, turn on the porch light and outdoor lighting
This article originally appeared on the Windermere blog June 29th, 2022. Written by: Sandy Dodge.
© Copyright 2023, Windermere Real Estate/Mercer Island.
Real Estate •
February 1, 2023
Q4 2022 Western Washington Economic & Real Estate Update
The following analysis of select counties of the Western Washington real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. I 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 me.
Regional Economic Overview
Although the job market in Western Washington continues to grow, the pace has started to slow. The region added over 91,000 new jobs during the past year, but the 12-month growth rate is now below 100,000, a level we have not seen since the start of the post-COVID job recovery. That said, all but three counties have recovered completely from their pandemic job losses and total regional employment is up more than 52,000 jobs. The regional unemployment rate in November was 3.8%, which was marginally above the 3.7% level of a year ago. Many business owners across the country are pondering whether we are likely to enter a recession this year. As a result, it’s very possible that they will start to slow their expansion in anticipation of an economic contraction.
Western Washington Home Sales
❱ In the final quarter of 2022, 12,711 homes sold, representing a drop of 42% from the same period in 2021. Sales were 34.7% lower than in the third quarter of 2022.
❱ Listing activity rose in every market year over year but fell more than 26% compared to the third quarter, which is expected given the time of year.
❱ Home sales fell across the board relative to the fourth quarter of 2021 and the third quarter of 2022.
❱ Pending sales (demand) outpaced listings (supply) by a factor of 1:2. This was down from 1:6 in the third quarter. That ratio has been trending lower for the past year, which suggests that buyers are being more cautious and may be waiting for mortgage rates to drop.
Western Washington Home Prices
❱ Sale prices fell an average of 2% compared to the same period the year prior and were 6.1% lower than in the third quarter of 2022. The average sale price was $702,653.
❱ The median listing price in the fourth quarter of 2022 was 5% lower than in the third quarter. Only Skagit County experienced higher asking prices. Clearly, sellers are starting to be more realistic about the shift in the market.
❱ Even though the region saw aggregate prices fall, prices rose in six counties year over year.
❱ Much will be said about the drop in prices, but I am not overly concerned. Like most of the country, the Western Washington market went through a period of artificially low borrowing costs, which caused home values to soar. But now prices are trending back to more normalized levels, which I believe is a good thing.
Mortgage Rates
Rates rose dramatically in 2022, but I believe that they have now peaked. Mortgage rates are primarily based on the prices and yields of bonds, and while bonds take cues from several places, they are always impacted by inflation and the economy at large. If inflation continues to fall, as I expect it will, rates will continue to drop.
My current forecast is that mortgage rates will trend lower as we move through the year. While this may be good news for home buyers, rates will still be higher than they have become accustomed to. Even as the cost of borrowing falls, home prices in expensive markets such as Western Washington will probably fall a bit more to compensate for rates that will likely hold above 6% until early summer.
Western Washington Days on Market
❱ It took an average of 41 days for homes to sell in the fourth quarter of 2022. This was 17 more days than in the same quarter of 2021, and 16 days more than in the third quarter of 2022.
❱ King County was again the tightest market in Western Washington, with homes taking an average of 31 days to find a buyer.
❱ All counties contained in this report saw the average time on market rise from the same period a year ago.
❱ Year over year, the greatest increase in market time was Snohomish County, where it took an average of 23 more days to find a buyer. Compared to the third quarter of 2022, San Juan County saw average market time rise the most (from 34 to 74 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 regional economy is still growing, but it is showing signs of slowing. Although this is not an immediate concern, if employees start to worry about job security, they may decide to wait before making the decision to buy or sell a home. As we move through the spring I believe the market will be fairly soft, but I would caution buyers who think conditions are completely shifting in their direction. Due to the large number of homeowners who have a mortgage at 3% or lower, I simply don’t believe the market will become oversupplied with inventory, which will keep home values from dropping too significantly.
Ultimately, however, the market will benefit buyers more than sellers, at least for the time being. As such, I have moved the needle as close to the balance line as we have seen in a very long time.
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.
This article originally appeared on the Windermere blog January 26th, 2023. Written by: Matthew Gardner.
© Copyright 2023, Windermere Real Estate/Mercer Island.
Real Estate •
November 17, 2022
What is an Adjustable-Rate Mortgage (ARM)?
Securing the most advantageous financing for your situation is an integral part of the success formula of buying a home. After getting pre-approved but once you’ve found the home you’d like to pursue, one of your primary tasks is exploring different loan products to see which best fits your situation. This is the fork in the road where you’ll need to decide between a fixed-rate mortgage and an adjustable-rate mortgage (ARM). The following information will help you gain a better understanding of ARMs to help you decide whether they’re right for you.
What Is an Adjustable-Rate Mortgage (ARM)?
After your down payment, your mortgage will finance the remainder of your home purchase. Whereas fixed-rate mortgages allow you to lock in a specific interest rate and payment for the life of your loan, adjustable-rate mortgages’ interest rates will fluctuate over time, thus changing your loan payment. It’s typical for ARMs to begin with a low introductory interest rate, but once that first stage of the loan has passed, they will begin to shift up and down. ARMs generally have a cap that specifies the maximum rate that can occur for that loan.
Let’s say you secure an adjustable-rate mortgage with 30-year terms, the first five of which are at a fixed rate. When the variable interest portion of the loan kicks in, your mortgage’s fluctuations will be measured against an index. If the index is higher than when you secured the loan, your rate and loan payment will go up—and vice versa. How often your ARM rates change depends on your agreement with your lender. Talk to your mortgage broker to learn more about the characteristics of adjustable-rate mortgages.
Pros and Cons of an Adjustable-Rate Mortgage (ARM)
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Different Types of Adjustable-Rate Mortgages (ARMs)
Hybrid ARM: As outlined above, a hybrid ARM begins with a fixed-rate introductory period followed by an adjustable-rate period. Typically, a hybrid ARM’s fixed-rate period lasts anywhere between three to 10 years, and its rates adjust at an agreed-upon frequency during the adjustable-rate period, such as once every six months or once a year.
Interest-Only ARM: With an interest-only ARM, you pay just the interest on the loan for a specified introductory period, then the principal payments kick in on top. The longer the introductory period, the higher your payments will be when the delayed principal payments enter the equation.
Payment-Option ARM: Not all states allow these loan products because they can get home buyers into hot water quickly if rates increase. They include flexibility to choose your monthly payments with a payment-option ARM, including interest-only payments and minimum payments that don’t cover interest.
Home Monthly Payment Calculator
To get an idea of how your mortgage payment will fit into your budget, use our free Home Monthly Payment Calculator by clicking the button below. With current rates based on national averages and customizable mortgage terms, you can experiment with different values to get an estimate of your monthly payment for any listing price.
Adapted from an article that originally appeared on the Windermere blog September 28, 2022. Written by: Sandy Dodge.
© Copyright 2022, Windermere Real Estate/Mercer Island.
Living & Trends •
September 13, 2022
Your Fall Home Maintenance Checklist
A clever person solves a problem;
a wise person avoids it.
As the days shorten, you can mitigate many mid-winter headaches with some preemptive prep. Proper weatherizing can help protect your home from preventable damage, save money on energy costs, and, most importantly, keep you and your loved ones safe and warm throughout the winter season. Here is a useful checklist to manage your weatherization project. Setting aside some time on a couple of weekend days should be more than enough to knock this out. Scroll down for helpful tips and click here for a printable checklist!
1. Clean the Gutters
After all the leaves, pine cones, pine needles, and other autumnal debris have fallen, clear them out from your rain gutters. This will avoid gutter damage from ice or melted snow draining improperly. Even in warmer locales, gutter buildup & leakage can put undue stress on your roof and home. Make sure your downspouts are pointing away from your home’s foundation to prevent basement leaks and flooding.
2. Look at the Roof
Check for any damaged shingles, corroded flashing, or leaky vents that need to be repaired. When the first heavy rain comes after a long dry spell, check the underside of the roof for moisture on joints or insulation. Mark any spots that you find and then hire a roofing specialist to repair these leaks. If you wait until spots show up on your ceiling, insulation and sheet rock will have also been damaged and you could have a mold problem too. You can find tips on how to solve roof & gutter issues in this great article from http://FamilyHandyman.com.
3. Check the Siding
While the weather is still nice, look for any gaps or cracks and seal them with exterior caulk (here are some tips). You should also touch up any old or loose paint to ensure your home’s exterior has a weatherproof seal.
4. Trim Tree Limbs
If your property has large trees, check for loose branches and call someone to trim back any limbs that may fall in your yard, on your roof or even damage a window. Branches that touch your house and overhang your roof are convenient on-ramps for pests, so trim back branches so they’re at least four feet from the house.
5. Reverse Ceiling Fans
If you have ceilings fans in your home, there is a handy trick you can use to improve your home’s heating efficiency. By reversing the direction of your ceiling fan—running the blades in a clockwise direction—you’ll create a slight updraft, forcing warm air near the ceiling downward.
6. Weatherize Doors
If an exterior door doesn’t have a snug seal when closed, replace the weather stripping; self-adhesive foam stripping is much simpler to install than traditional vinyl stripping but has a shorter lifespan. If there is a gap under the door (which can happen over time as a house settles), you may need to realign the door and replace the vinyl door bottom and/or door sweep.
7. Service the Furnace
Preventative maintenance is crucial for your home’s heating and air-conditioning systems. Fall is a smart time to have your systems checked and tuned up. Don’t wait for extreme temperatures to arrive, when service companies are slammed with emergency calls. Replace filters if you use a furnace and clear out any vents and ducts that carry heat through them. If you have baseboard heaters, wipe them of dust and remove any debris that might catch fire.
8. Check the Chimney
Make sure to have chimneys and air vents inspected and cleaned early in the season if you are planning on warming your home with a wood-burning source. When your fireplace is not in use, make sure to close the damper—some resources estimate an open damper can increase energy consumption by as much as 30%, increasing your bill about $200.
9. Test Safety Devices
Most house fires happen in the fall and winter, with holiday cooking and heating systems both being common causes. Deadly carbon monoxide can also be released by furnaces, stoves, fireplaces, and space heaters. Protect your household by replacing any smoke detectors and carbon monoxide monitors as needed. Check the indicators on your fire extinguishers to make sure they’re still good (or install them if you don’t have them—a Class B extinguisher for the kitchen is a good place to start, but you might need more according to this guide).
10. Winterize Plumbing
Make sure any pipes in unheated spaces—such as the crawl space, basement, or garage—are properly insulated to prevent freezing and bursts. Disconnect hoses and install hose bib covers on all outdoor faucets. Winterize your in-ground sprinkler system…here’s a great wikiHow article with 3 different methods.
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Adapted from articles that originally appeared on the Windermere blog December 21, 2020, by Sandy Dodge; October 7th, 2019 by Meaghan McGlynn; and September 16, 2016 by Windermere Staff.
