January 21, 2025 • 28 mins
What if navigating the real estate market could be your next strategic move, even amidst rising interest rates? Join hosts Dennis Day and Judy Grant as they unravel the complexities of the real estate landscape from 2020 through 2024, focusing on the remarkable recovery from the downturn in 2023. They explore the intriguing dynamics of home sales, which rose from 4.1 million to 4.6 million despite interest rates climbing into the 7% range. You’ll gain insights into national home price appreciation, with particular attention to regions like Washington State. Discover how the market is dealing with challenges like high prices, elevated interest rates, and limited inventory, and learn the savvy strategy behind "marry the house, date the rate" for making smart buying and refinancing decisions.
Looking forward, the episode anticipates shifts on the horizon in 2025, including more available home inventory and a solid 13% boost in new home construction, which promises opportunities for buyers and potential challenges for sellers. Dennis and Judy also delve into the nuances of the median percentage of original list prices and seasonal trends that impact home sales, offering valuable advice on timing your moves in the market. As a beacon of hope for renters, they highlight the stabilization of rental prices in areas like King County and Seattle. This engaging discussion promises to equip listeners with the knowledge needed to navigate the changing real estate market confidently.
00:00 Introduction and Podcast Rebranding
00:32 2024 Real Estate Market Overview
01:20 Interest Rates and Affordability
05:07 Regional Market Insights
12:41 Buying and Selling Strategies
18:43 2025 Market Projections
24:46 Conclusion and Contact Information
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Dennis Day (00:00):
Peter, good day everyone.
This is Dennis Day, withGetting your Edge how to
Downsize your Home With myco-host, judy Grant.
What's up with our name change?
Judy Gratton (00:12):
Hi Dennis and happy new year.
We're looking into the searchengine optimization, all the
technical details regarding ourpodcast.
We found that the name that wehad was a little too broad.
What we're really focusing onis downsizing.
Hopefully, with this namechange, we'll be able to help
more people.
Dennis Day (00:33):
Sounds good.
It's 2025.
Let's go over what happened in2020 with the real estate market
.
Are we ready?
Judy Gratton (00:42):
We are ready.
Dennis Day (00:43):
Hang on, oh, okay, judy, let's take a look at our
slides that have a littleinformation, not too wonky,
about what's going on in thereal estate market 2024.
Okay, let's look broadly at theentire United States.
We had a down year in 2023 and4 million homes a little over
(01:06):
4.1 million.
That was pretty low.
And 2024, this is entire USsold 4.6.
Well, you know, those numbersdoesn't seem much, but that is
500,000 more homes.
It was a better year.
Judy Gratton (01:22):
It was a better year and hopefully 2025 will
continue the climb.
If you look at that, whatyou're seeing here is in 2021
and 2022, we still have thoseemergency interest rates.
At one point I knew of someonewho actually got something in
the twos, but it was basicallybetween three and 4% because we
(01:44):
had COVID and as we came out ofCOVID and trying to slow the
inflation, they started to raisethe interest rates in 2022, and
people put the brakes on buying.
They're now up into the sevens,but it's still a pretty darn
good interest rate.
(02:04):
It kind of cuts your buyingpower in half and if you are a
first-time homebuyer or a medianprice homebuyer, that can make
a huge difference.
We're headed in the rightdirection.
Dennis Day (02:16):
The home price is overall you asked rose 4.3%.
So, interestingly enough, eventhough we had these high
interest rates, the homes werestill selling, just not at as
great a price.
Judy Gratton (02:29):
Remember this is a general United States overview.
In some places it was still acrazy market, which we will see
here.
Dennis Day (02:38):
This is not a happy slide.
This is for the entire USA.
Goldman Sachs puts out anaffordability index and this
tells you how affordable homesare and you can see the up and
down.
We're down at 70.
This is extremely low.
The combination of high prices,high interest rates, low
(03:02):
inventory has made housingextremely unenforceable for many
people in the country.
Judy Gratton (03:08):
Considering that most people, the wealth building
that occurs is in the home theybuy because appreciation pushes
them up, and it alwayshopefully it always will.
But because we don't make realestate anymore, we can build
houses on land, but when theland's gone home, prices will
(03:29):
always continue to go up.
In 2006 through 8, when theeconomy crashed, and so the
unemployment was huge and priceslost half their value in many
people's homes.
So there's your firstunaffordability, but the rebound
jumped incredibly.
(03:50):
A lot of people could afford tobuy because homes were still
relatively undervalued.
Then it leveled off again In2020, we had the emergency
interest rates start with COVID.
At that point, people couldafford to buy more home because
the interest rates were lower,and so you saw the affordability
(04:14):
become higher, and thatcontinued throughout COVID until
we got to where we startedraising interest rates again and
then down it goes, and itstayed down there.
Now because the interest People.
I hear people say I'm waitingfor the market to crash and it
probably won't.
If it does, we're going to haveanother emergency, which could
(04:39):
mean that when it crashes, youmay be unemployed.
If you are someone who has alot of money and it crashes,
well, yeah, you're probablygoing to make a killing because
home values will drop.
That is not something that Irecommend.
That people wish for.
A crashing market it would benice to see it stabilize at a
rate that people were accepting,but I wouldn't recommend saying
(05:02):
I'm waiting for the market tocrash.
Not a good idea.
Dennis Day (05:05):
Yeah, I'd love to have 3% interest rates for
everybody, but it meant that wewere in lockdowns, people,
millions of people were dying,and I'm not really ready to go
back to that myself.
So zoom in a little bitWashington State from 2023 to
2004.
Judy Gratton (05:31):
Six increase in 2024 alone.
That is referred to as yourappreciation.
So, from what you paid for yourhome to what it's currently
worth, it went up 6.2%.
So, if you know, that's prettynormal in the Northwest to be
somewhere between 4% and 7%, sowe're still appreciating at a
good rate.
It was when they wereappreciating at 25% I think was
(05:55):
that 2020 or 2021, there was a25% appreciation.
That's where people begin tonot be able to buy because the
homes have raised so incredibly,even at 6%.
When you're saying I'm waitingfor interest rates to drop to
buy, if you can afford to getinto the real estate market, buy
(06:18):
it, because next year it'sgoing to be 6% more expensive
and you're just going to bechasing that until we have an
emergency crash.
You can always refinance at alower rate when rates get better
.
We have a saying marry thehouse, date the rate, because if
(06:38):
you get it now, you're gettingit at a better price and you'll
be able to get it next year mostlikely For buyers, this is not
that great.
Dennis Day (06:46):
You're paying $70,000 more than you were in
January 2023.
But if you got in beforeJanuary 2023, your equity rose
by about $70,000 or 6.2%.
That's good for the homeowner.
Judy Gratton (07:02):
Yes, that's excellent for the homeowner.
If you bought on a conventionalloan with 3% down, they're
going to require mortgageinsurance and a lot of people
don't like paying that mortgageinsurance.
If your home appreciates by 20%now, your home is worth 20%
more and you most likely will beable to get rid of the mortgage
(07:24):
insurance, Because once youhave 20% equity in the home, the
mortgage insurance onconventional loans generally
goes away.
You have to contact your lenderand they'll probably want to do
an appraisal, but it can beremoved.
You have to refinance out of anFHA mortgage to get rid of the
mortgage insurance.
So once you have 20% equity,you most likely would want to do
(07:49):
that.
Dennis Day (07:50):
This is an interesting comparison.
Here we look at the closedsales.
August 21 was kind of the peakof the frenzy time and we were
closing at 122,000 homes thatmonth.
This is just Washington State.
Now we're dropping down hereand you can see, well, we're
(08:11):
only closing 75.
That's a pretty significantdrop.
It's bottomed out at 71,000 permonth in March 2024.
Now it's a little bit comparingapples and oranges.
How's that?
Judy Gratton (08:32):
Well, in a way, this particular slide, I think
when we looked at it the firsttime, I was seeing August of
2024, and that's a differentstory.
We'll talk about that in aminute.
But this is not so much applesand oranges.
This is showing that the buyingpower of the public and
interest in buying has dropped.
The sellers are not sellingbecause they don't know where
they're going to go, becausethere are no homes on the market
(08:54):
.
So we're in this real catch-22period of time.
It started in 2023 when theinterest rates started to rise.
That's where you began to seeit dropping.
Homes have sold, they haveappreciated, they've gotten more
expensive.
So that means that these peoplethat wanted to buy don't
(09:15):
anymore because the interestrates are too high.
No, the houses are tooexpensive and there aren't that
many on the market.
And here we are now down herein January.
We're probably at about thatpoint that you see in December
2024.
Dennis Day (09:29):
So if we compare August 21 to August 24, you can
see how many months.
Judy Gratton (09:38):
Yeah, that would be homes.
Dennis Day (09:40):
So that's a lot 38% increase in closed homes.
Judy Gratton (09:44):
It's a lot for those people like us that make
our living selling homes too.
Dennis Day (09:50):
Again focusing in a little bit on Central Puget
Sound, and all right.
So we've got four differentareas in St Pierce, snohomish
and Kitsap County, and thatmakes up the bulk of
Washington's population.
Now there's a whole bunch moreland in Washington, but this is
(10:10):
the counties that most of thepeople live in.
Well, the median sales priceright here Want to explain to
people what that term meansMedian, which is something I
like better to use than averagetells you you know, right in the
middle you take them all andyou add them up and then divide
and you get an average price.
(10:32):
That tells you broadly how muchapproximately, but a median
tells you half are above thatprice and half are below that
price.
For me it's a more accuraterepresentation.
A $25 million Russell Wilsonhome selling can really skew the
(10:53):
average price, but the medianprice has less of an impact.
Judy Gratton (10:57):
Each of the counties varies.
When you look at the right-handbar, the median price went up
by 2.6% in King County, which isour largest populated county.
That's where Seattle is, andBellevue and places like that.
Pierce County went up by 4.9%and that's down in the Tacoma
area, which is another largecity.
(11:19):
Homish County had the greatestrise in median home values and
that was 12.2%.
So Homish County, coveringEverett, marysville, lake,
stevens and a lot of smallercities, monroe, places like that
.
Dennis Day (11:37):
Kitsaps County, the west Bremerton, bainbridge
Island, compared to what we wereseeing in 21, where 20 and 24
percent gains every year Killenespecially the new buyers.
Great for homeless.
Judy Gratton (11:53):
First time homebuyers yeah.
Dennis Day (11:54):
So we haven't changed a lot.
King County has grown over thepast two years somewhat.
King County has grown over thepast two years somewhat.
Snohomish County, like I said,been pretty significant but
relatively flat in Pierce andcounties.
Judy Gratton (12:15):
I wish this went back because, do you see, this
is 2023, 2024, right.
And so it'd be interesting tosee King County prior to COVID,
because when COVID happened,people in the Seattle area and
the people who lived in the citystarted moving to the suburbs
so they could have a house witha yard for their children to
(12:36):
play in, because we're all athome, and suddenly it was really
hard to live in a condo andkids weren't allowed to play
together in parks and thingslike that.
So King County really took abig hit.
A lot of people sold and gotout of King County and so some
of this may be rebounding,coming back into the larger
(12:56):
cities.
Dennis Day (12:57):
Median days on the market again not an average half
above, half below, and thisslide shows the cyclical nature
of the real estate market.
See how days on the marketnearly 40 days up here and it
slides down until we're gettingin below 10 days.
Judy Gratton (13:21):
In mid-summer mid-summer weather-related kids
are out of school.
People can move more easily inthe summer than they can in the
winter months.
Dennis Day (13:30):
Then we're bouncing back up to 30 days at the start
of winter.
When we get to April it's backto six, seven days, probably
getting multiple offers, perhapsbidding wars, Not as big as the
peak of 2021.
Judy Gratton (13:49):
Right now, buyers are becoming more accepting of
the current rates.
They want to get into a home.
They have reasons they need tobuy, Rather than hoping that the
rates are going to drop to 3%again.
People are beginning to moveNot as many.
Dennis Day (14:04):
Median percentage of original list price Do you want
to explain that?
Yeah, median percent.
A homeowner puts the house onthe market and the original
price is what they ask for thefirst time when it enters the
market.
Judy Gratton (14:23):
Would you like to explain what that means?
Dennis Day (14:27):
Yeah, the median again is half above, half below.
But you put a home up for saleit has an original list price.
Then the percentage is of theoriginal list price.
Then the percentage is of theoriginal list price, how much
you got at sold.
If it's below, like it was 97,98%, meaning the seller is not
(14:51):
getting full price for the saleof their home.
If it's up here at 100%, thatmeans you list a home.
You're likely, if you price itright, to get 100% of what your
asking price is.
Even had a little spike herewhere we are above asking price.
Judy Gratton (15:12):
And if you notice, that is in Snohomish County
where we had the largestincrease in number of sales in
the same time frame.
Dennis Day (15:22):
Right, it also shows when is the best time to buy.
Judy Gratton (15:26):
Yes, If you're a buyer and you want to get any
kind of deal on a home, yourchances are much better as you
get closer to December or thebeginning of January.
Once you start moving out ofJanuary, prices begin to climb
and you saw that on that oneslide that in April is where
(15:48):
there were the least number ofdays for a home to be listed
until it goes under contract.
That's what we refer to as dayson market.
For a seller, you would bebetter to try and put your home
on the market sometime betweenApril and September.
The appreciation is going tohappen in that first portion of
(16:09):
April, may and then June, july.
It's going to level off.
You'll be at the top of theappreciation in most cases and
then start going down again aswe head into winter.
The decision you make, if youcan, on when you're going to buy
or sell.
There are some statistics thatshow you when the best times are
to do those two things.
Dennis Day (16:29):
Some people can't choose when they buy or sell.
So if you're a buyer, decembermight be.
If you're looking for a lowerprice might be a good time to
buy.
We also saw in an earlier slide, however, there's less homes
for sale, so your inventory isnot as great.
Judy Gratton (16:46):
I always tell sellers if they have to sell in
the winter months.
There's not going to be as manybuyers out there, but they're
really serious buyers becausethey're moving in the winter
months and the rain and schooland all of that Right.
Dennis Day (17:02):
Let's recap they grew in Washington State 2024
also, but 6.2, so a little abovethe national average.
500,000 more homes were sold in24 than 23.
23 was a down year for sales.
It's picked up 500,000 homes.
That's over the whole course ofthe United States.
(17:24):
It seems like a huge number andit's not insignificant, but it
doesn't compare to what we weredoing at 2020 levels, where
we're selling 120,000 homes in amonth.
The inventory is still wellbelow 2022 levels.
Judy Gratton (17:39):
I guess we're too big and we're hoping that that
inventory will begin to go up.
There's a lot goes into that,you know zoning changes, permits
and ease for builders to beable to get those permits to
build.
I know in our area I see a lotof those notices from the city
saying that they are going tosomething build and it's
(17:59):
normally apartments or homes,because we have more people now
than we had 10 years ago.
Dennis Day (18:06):
But really, if you reasonably price your home, it's
going to sell at about 100%.
That's not bad.
Took a little longer.
Judy Gratton (18:13):
Continuous days on market is from the time it is
listed on the multiple listingservice until you're under
contract, not until you close.
That's how many days you canexpect people to be pulling in
and out of your house.
Dennis Day (18:27):
Summertime.
You're looking at 10 daysDecember.
It probably will still sell.
Judy Gratton (18:33):
We sold the house in four days.
It just depends on where it isand what the market will bear.
Dennis Day (18:39):
And what area you're in depends on where it is and
what the market will bear andwhat area you're in.
Judy Gratton (18:43):
I mean the area, the price point.
The more expensive the homegenerally, the longer it will
sit on the market.
When you start getting up intoyour luxury homes they generally
do sit a little bit longerbecause there aren't as many
people out there buying that.
But your middle class, but yourmiddle class suburban homes,
(19:04):
that's what most people go intoand so that's going to go a
little bit faster than luxury.
I would say entry-level homesare probably going to go faster
than all-standing.
Condos are kind of iffy becausethat's not what people
generally start out looking for.
Some people do, but most peopleare looking for a freestanding
home.
(19:25):
The greater number of people.
Dennis Day (19:27):
All right.
What do we expect in 2025?
Judy Gratton (19:30):
Very important.
Dennis Day (19:32):
I've added my notes down here.
Judy Gratton (19:35):
This is where I'm getting the information.
Dennis Day (19:37):
I did some research on this and I want to give
credit to the organizations.
Inventory for homes will grow,but so will home prices, Not at
the 20% clip.
They were talking about more atthe 3.5 to 6% Washington.
Judy Gratton (19:57):
And that's normal.
That's normal appreciation, atleast for the state of
Washington, and so we're in anormal area there.
And if more homes come on themarket, if we start seeing more
new construction for buyers,that's good for sellers.
Now you have more competition,so you have to weigh all this
(20:17):
information to figure out ifthis is the right time for you
to sell and where you're goingto go.
Dennis Day (20:23):
They're projecting that they're going to increase
the amount of new homeconstruction by 13%.
That's pretty significant.
It could add up to over amillion homes nationally.
Doesn't solve the housingcrisis of needing more homes,
but it's an improvement overprevious years.
(20:43):
For the renters, rental pricesin the King County and Seattle
area has just been going upastronomically and they really
are saying that they'reflattening out and they should
remain pretty good.
Seattle area has a significantnumber of apartments and
condominiums and homes goingthat will flood the market later
(21:07):
this year, so it should helpwith prices a little bit.
It's tough on renters becausethey're paying a lot even though
they're not getting that equitygrowth of a homeowner.
Judy Gratton (21:18):
Another big part of this that we didn't discuss
but we actually had acongressman on to talk about it
last year is the fact that hedgefunds have invested heavily in
real estate and they're buyingproperties and then becoming
landlords.
They bought 26% of all the realestate in 2023 in the country,
(21:40):
so that's another reason thatthere's a shortage of homes in
your area, wherever you are,because they're owned by hedge
funds.
They're making money off of itby renting them out, so it makes
it very difficult for peoplewho want to be homeowners in
middle-income areas to buy whenyou're competing against hedge
(22:01):
funds that normally pay cash.
Dennis Day (22:03):
On the bright side.
I did see from Realtorcom thathome builders are going to build
smaller, more affordable homes.
What they've been building, atleast in this area, has been
3,000 square foot on a postagestamp lot makes them the most
money, but they're finding thatpeople now are requesting
(22:27):
smaller homes, maybe a littlemore yard and more affordable.
You couldn't consider goinginto a new home in our central
Puget Sound area a brand newhome for less than a million
dollars.
They're just not there, unlessyou're buying a town.
2025 will bring mortgage rateswill drop incrementally.
We had two price drops in fallof 2024 and the rates went up.
Judy Gratton (22:55):
They're not solely connected to what the Fed does
with rates.
They're also connected to thebond market, the US bonds.
So people invest in bonds whenthe stock market looks shaky,
and when they're investing inbonds, the interest rates will
(23:16):
drop.
When the stock market is great,they don't invest in bonds and
the interest rate might even goup.
That's what loans are tied toEspecially first time.
Dennis Day (23:27):
Don't expect a huge drop and you will not see 3%
interest rates unless we havehuge disaster Catastrophe.
Judy Gratton (23:34):
Emergency interest rate.
I don't see how it would happenbut, like I said, a lot of
people don't believe six andseven is good.
I've seen higher interest rates, even in the last 10 years.
Dennis Day (23:47):
The affordability index is going to remain the
same low.
High interest rates, highprices, low inventory the
perfect storm for making homesless and less affordable.
Don't expect any big changes,unless we have something hugely
(24:07):
significant happen.
Judy Gratton (24:08):
There's a lot of uncertainty about what's going
on globally and nationally.
The Fed has said they will onlylower the rate twice, but that
hasn't really affected ourmarket because it's tied to what
the stock market does and whatthe bond market does.
So there's a lot of uncertainty, but people have to move.
(24:30):
Frequently people have to moveand we're beginning to see that
maybe people who had to move arekind of going.
I can't wait any longer, I haveto, and so that's where we
still have buyers.
We also have a largeinternational market that comes
in and buys, at least in ourarea.
As a middle-class first-timehomebuyer, you have a lot of
(24:53):
competition.
I wish that was not the case,but for sellers it's absolutely
wonderful, although they do haveto decide where they're going
to go next, and that's where therub has been.
Dennis Day (25:04):
Do you think this is the year that baby boomers
decide I can't stand this house?
I've been waiting because I gota 3% mortgage.
I don't want to move.
Prices are high, Interest ratesare high.
Is this the year that they'llstart that process of downsizing
?
Judy Gratton (25:20):
I don't know.
That's really what we are allabout trying to help you make
that informed decision.
When is the right time for youto go?
The right time is when you can.
The really hard time is whenyou can't and you have to.
If you're thinking about it,you need to really weigh the
pros and cons of, then talk toan experienced agent who can
(25:44):
show you what's out there, helpyou find something that's going
to work for you Preferably us ifyou're in Washington.
Dennis Day (25:50):
All right, that's it for our recap of 20, some
projections of 2025.
If you have any questions abouttoday's topics or any other
real estate questions, contactus through our website at
edteamcom.
Any last thoughts, judy?
Judy Gratton (26:11):
I think 2025 is going to be a great year for all
of us.
Dennis Day (26:15):
That people get off the fence and start moving.
If you are a baby boomer or ahomeowner who's been in their
home for 20, 30 years, find outwhat your equity is.
You might be able to sell thathome and use the equity to buy
your next.
Judy Gratton (26:32):
One of the things I would like to point out.
These statistics that we'veshown you are telling you the
current market we're alwayslooking backwards to see where
we've adjusted to up down and itdetermines.
Every time someone's home sellsnear yours, it changes the
value of your home.
(26:52):
So it's very important for you,as a homeowner, to stay
informed with what's going onaround your home.
How's your values changing?
What is your equity?
How much money do you have inthe house?
What could you conceivably dowith that money?
How much money do you have inthe house?
What could you conceivably dowith that money?
All of those are questions thatwe can help you answer.
We have a program that could setyou up to automatically receive
(27:14):
a monthly market analysis, soyou know pretty close what your
home would sell for at any givenmoment.
It does show you how muchequity you have.
If there's a loan, you know howmuch of it you pay down.
There's a lot of informationthat we'd be happy to share with
you.
Please drop us a note.
You can reach us atedgegroupteamcom and we would be
(27:36):
happy to send that out.
There's no charge, noobligation.
Dennis Day (27:40):
And we can give you a market analysis and let you
know a snapshot right now.
Judy Gratton (27:46):
Oh, very accurate.
Dennis Day (27:47):
All right, that's it for Getting your Edge.
Judy Gratton (27:50):
We'll see you in a couple of weeks on our next
podcast.
Dennis Day (27:54):
Thank you, hope this information was helpful.
See you next time.
Thanks for watching.
Bye.
Peter, good day everyone.
This is Dennis Day, withGetting your Edge how to
Downsize your Home With myco-host, judy Grant.
What's up with our name change?
Judy Gratton (00:12):
Hi Dennis and happy new year.
We're looking into the searchengine optimization, all the
technical details regarding ourpodcast.
We found that the name that wehad was a little too broad.
What we're really focusing onis downsizing.
Hopefully, with this namechange, we'll be able to help
more people.
Dennis Day (00:33):
Sounds good.
It's 2025.
Let's go over what happened in2020 with the real estate market
.
Are we ready?
Judy Gratton (00:42):
We are ready.
Dennis Day (00:43):
Hang on, oh, okay, judy, let's take a look at our
slides that have a littleinformation, not too wonky,
about what's going on in thereal estate market 2024.
Okay, let's look broadly at theentire United States.
We had a down year in 2023 and4 million homes a little over
(01:06):
4.1 million.
That was pretty low.
And 2024, this is entire USsold 4.6.
Well, you know, those numbersdoesn't seem much, but that is
500,000 more homes.
It was a better year.
Judy Gratton (01:22):
It was a better year and hopefully 2025 will
continue the climb.
If you look at that, whatyou're seeing here is in 2021
and 2022, we still have thoseemergency interest rates.
At one point I knew of someonewho actually got something in
the twos, but it was basicallybetween three and 4% because we
(01:44):
had COVID and as we came out ofCOVID and trying to slow the
inflation, they started to raisethe interest rates in 2022, and
people put the brakes on buying.
They're now up into the sevens,but it's still a pretty darn
good interest rate.
(02:04):
It kind of cuts your buyingpower in half and if you are a
first-time homebuyer or a medianprice homebuyer, that can make
a huge difference.
We're headed in the rightdirection.
Dennis Day (02:16):
The home price is overall you asked rose 4.3%.
So, interestingly enough, eventhough we had these high
interest rates, the homes werestill selling, just not at as
great a price.
Judy Gratton (02:29):
Remember this is a general United States overview.
In some places it was still acrazy market, which we will see
here.
Dennis Day (02:38):
This is not a happy slide.
This is for the entire USA.
Goldman Sachs puts out anaffordability index and this
tells you how affordable homesare and you can see the up and
down.
We're down at 70.
This is extremely low.
The combination of high prices,high interest rates, low
(03:02):
inventory has made housingextremely unenforceable for many
people in the country.
Judy Gratton (03:08):
Considering that most people, the wealth building
that occurs is in the home theybuy because appreciation pushes
them up, and it alwayshopefully it always will.
But because we don't make realestate anymore, we can build
houses on land, but when theland's gone home, prices will
(03:29):
always continue to go up.
In 2006 through 8, when theeconomy crashed, and so the
unemployment was huge and priceslost half their value in many
people's homes.
So there's your firstunaffordability, but the rebound
jumped incredibly.
(03:50):
A lot of people could afford tobuy because homes were still
relatively undervalued.
Then it leveled off again In2020, we had the emergency
interest rates start with COVID.
At that point, people couldafford to buy more home because
the interest rates were lower,and so you saw the affordability
(04:14):
become higher, and thatcontinued throughout COVID until
we got to where we startedraising interest rates again and
then down it goes, and itstayed down there.
Now because the interest People.
I hear people say I'm waitingfor the market to crash and it
probably won't.
If it does, we're going to haveanother emergency, which could
(04:39):
mean that when it crashes, youmay be unemployed.
If you are someone who has alot of money and it crashes,
well, yeah, you're probablygoing to make a killing because
home values will drop.
That is not something that Irecommend.
That people wish for.
A crashing market it would benice to see it stabilize at a
rate that people were accepting,but I wouldn't recommend saying
(05:02):
I'm waiting for the market tocrash.
Not a good idea.
Dennis Day (05:05):
Yeah, I'd love to have 3% interest rates for
everybody, but it meant that wewere in lockdowns, people,
millions of people were dying,and I'm not really ready to go
back to that myself.
So zoom in a little bitWashington State from 2023 to
2004.
Judy Gratton (05:31):
Six increase in 2024 alone.
That is referred to as yourappreciation.
So, from what you paid for yourhome to what it's currently
worth, it went up 6.2%.
So, if you know, that's prettynormal in the Northwest to be
somewhere between 4% and 7%, sowe're still appreciating at a
good rate.
It was when they wereappreciating at 25% I think was
(05:55):
that 2020 or 2021, there was a25% appreciation.
That's where people begin tonot be able to buy because the
homes have raised so incredibly,even at 6%.
When you're saying I'm waitingfor interest rates to drop to
buy, if you can afford to getinto the real estate market, buy
(06:18):
it, because next year it'sgoing to be 6% more expensive
and you're just going to bechasing that until we have an
emergency crash.
You can always refinance at alower rate when rates get better
.
We have a saying marry thehouse, date the rate, because if
(06:38):
you get it now, you're gettingit at a better price and you'll
be able to get it next year mostlikely For buyers, this is not
that great.
Dennis Day (06:46):
You're paying $70,000 more than you were in
January 2023.
But if you got in beforeJanuary 2023, your equity rose
by about $70,000 or 6.2%.
That's good for the homeowner.
Judy Gratton (07:02):
Yes, that's excellent for the homeowner.
If you bought on a conventionalloan with 3% down, they're
going to require mortgageinsurance and a lot of people
don't like paying that mortgageinsurance.
If your home appreciates by 20%now, your home is worth 20%
more and you most likely will beable to get rid of the mortgage
(07:24):
insurance, Because once youhave 20% equity in the home, the
mortgage insurance onconventional loans generally
goes away.
You have to contact your lenderand they'll probably want to do
an appraisal, but it can beremoved.
You have to refinance out of anFHA mortgage to get rid of the
mortgage insurance.
So once you have 20% equity,you most likely would want to do
(07:49):
that.
Dennis Day (07:50):
This is an interesting comparison.
Here we look at the closedsales.
August 21 was kind of the peakof the frenzy time and we were
closing at 122,000 homes thatmonth.
This is just Washington State.
Now we're dropping down hereand you can see, well, we're
(08:11):
only closing 75.
That's a pretty significantdrop.
It's bottomed out at 71,000 permonth in March 2024.
Now it's a little bit comparingapples and oranges.
How's that?
Judy Gratton (08:32):
Well, in a way, this particular slide, I think
when we looked at it the firsttime, I was seeing August of
2024, and that's a differentstory.
We'll talk about that in aminute.
But this is not so much applesand oranges.
This is showing that the buyingpower of the public and
interest in buying has dropped.
The sellers are not sellingbecause they don't know where
they're going to go, becausethere are no homes on the market
(08:54):
.
So we're in this real catch-22period of time.
It started in 2023 when theinterest rates started to rise.
That's where you began to seeit dropping.
Homes have sold, they haveappreciated, they've gotten more
expensive.
So that means that these peoplethat wanted to buy don't
(09:15):
anymore because the interestrates are too high.
No, the houses are tooexpensive and there aren't that
many on the market.
And here we are now down herein January.
We're probably at about thatpoint that you see in December
2024.
Dennis Day (09:29):
So if we compare August 21 to August 24, you can
see how many months.
Judy Gratton (09:38):
Yeah, that would be homes.
Dennis Day (09:40):
So that's a lot 38% increase in closed homes.
Judy Gratton (09:44):
It's a lot for those people like us that make
our living selling homes too.
Dennis Day (09:50):
Again focusing in a little bit on Central Puget
Sound, and all right.
So we've got four differentareas in St Pierce, snohomish
and Kitsap County, and thatmakes up the bulk of
Washington's population.
Now there's a whole bunch moreland in Washington, but this is
(10:10):
the counties that most of thepeople live in.
Well, the median sales priceright here Want to explain to
people what that term meansMedian, which is something I
like better to use than averagetells you you know, right in the
middle you take them all andyou add them up and then divide
and you get an average price.
(10:32):
That tells you broadly how muchapproximately, but a median
tells you half are above thatprice and half are below that
price.
For me it's a more accuraterepresentation.
A $25 million Russell Wilsonhome selling can really skew the
(10:53):
average price, but the medianprice has less of an impact.
Judy Gratton (10:57):
Each of the counties varies.
When you look at the right-handbar, the median price went up
by 2.6% in King County, which isour largest populated county.
That's where Seattle is, andBellevue and places like that.
Pierce County went up by 4.9%and that's down in the Tacoma
area, which is another largecity.
(11:19):
Homish County had the greatestrise in median home values and
that was 12.2%.
So Homish County, coveringEverett, marysville, lake,
stevens and a lot of smallercities, monroe, places like that
.
Dennis Day (11:37):
Kitsaps County, the west Bremerton, bainbridge
Island, compared to what we wereseeing in 21, where 20 and 24
percent gains every year Killenespecially the new buyers.
Great for homeless.
Judy Gratton (11:53):
First time homebuyers yeah.
Dennis Day (11:54):
So we haven't changed a lot.
King County has grown over thepast two years somewhat.
King County has grown over thepast two years somewhat.
Snohomish County, like I said,been pretty significant but
relatively flat in Pierce andcounties.
Judy Gratton (12:15):
I wish this went back because, do you see, this
is 2023, 2024, right.
And so it'd be interesting tosee King County prior to COVID,
because when COVID happened,people in the Seattle area and
the people who lived in the citystarted moving to the suburbs
so they could have a house witha yard for their children to
(12:36):
play in, because we're all athome, and suddenly it was really
hard to live in a condo andkids weren't allowed to play
together in parks and thingslike that.
So King County really took abig hit.
A lot of people sold and gotout of King County and so some
of this may be rebounding,coming back into the larger
(12:56):
cities.
Dennis Day (12:57):
Median days on the market again not an average half
above, half below, and thisslide shows the cyclical nature
of the real estate market.
See how days on the marketnearly 40 days up here and it
slides down until we're gettingin below 10 days.
Judy Gratton (13:21):
In mid-summer mid-summer weather-related kids
are out of school.
People can move more easily inthe summer than they can in the
winter months.
Dennis Day (13:30):
Then we're bouncing back up to 30 days at the start
of winter.
When we get to April it's backto six, seven days, probably
getting multiple offers, perhapsbidding wars, Not as big as the
peak of 2021.
Judy Gratton (13:49):
Right now, buyers are becoming more accepting of
the current rates.
They want to get into a home.
They have reasons they need tobuy, Rather than hoping that the
rates are going to drop to 3%again.
People are beginning to moveNot as many.
Dennis Day (14:04):
Median percentage of original list price Do you want
to explain that?
Yeah, median percent.
A homeowner puts the house onthe market and the original
price is what they ask for thefirst time when it enters the
market.
Judy Gratton (14:23):
Would you like to explain what that means?
Dennis Day (14:27):
Yeah, the median again is half above, half below.
But you put a home up for saleit has an original list price.
Then the percentage is of theoriginal list price.
Then the percentage is of theoriginal list price, how much
you got at sold.
If it's below, like it was 97,98%, meaning the seller is not
(14:51):
getting full price for the saleof their home.
If it's up here at 100%, thatmeans you list a home.
You're likely, if you price itright, to get 100% of what your
asking price is.
Even had a little spike herewhere we are above asking price.
Judy Gratton (15:12):
And if you notice, that is in Snohomish County
where we had the largestincrease in number of sales in
the same time frame.
Dennis Day (15:22):
Right, it also shows when is the best time to buy.
Judy Gratton (15:26):
Yes, If you're a buyer and you want to get any
kind of deal on a home, yourchances are much better as you
get closer to December or thebeginning of January.
Once you start moving out ofJanuary, prices begin to climb
and you saw that on that oneslide that in April is where
(15:48):
there were the least number ofdays for a home to be listed
until it goes under contract.
That's what we refer to as dayson market.
For a seller, you would bebetter to try and put your home
on the market sometime betweenApril and September.
The appreciation is going tohappen in that first portion of
(16:09):
April, may and then June, july.
It's going to level off.
You'll be at the top of theappreciation in most cases and
then start going down again aswe head into winter.
The decision you make, if youcan, on when you're going to buy
or sell.
There are some statistics thatshow you when the best times are
to do those two things.
Dennis Day (16:29):
Some people can't choose when they buy or sell.
So if you're a buyer, decembermight be.
If you're looking for a lowerprice might be a good time to
buy.
We also saw in an earlier slide, however, there's less homes
for sale, so your inventory isnot as great.
Judy Gratton (16:46):
I always tell sellers if they have to sell in
the winter months.
There's not going to be as manybuyers out there, but they're
really serious buyers becausethey're moving in the winter
months and the rain and schooland all of that Right.
Dennis Day (17:02):
Let's recap they grew in Washington State 2024
also, but 6.2, so a little abovethe national average.
500,000 more homes were sold in24 than 23.
23 was a down year for sales.
It's picked up 500,000 homes.
That's over the whole course ofthe United States.
(17:24):
It seems like a huge number andit's not insignificant, but it
doesn't compare to what we weredoing at 2020 levels, where
we're selling 120,000 homes in amonth.
The inventory is still wellbelow 2022 levels.
Judy Gratton (17:39):
I guess we're too big and we're hoping that that
inventory will begin to go up.
There's a lot goes into that,you know zoning changes, permits
and ease for builders to beable to get those permits to
build.
I know in our area I see a lotof those notices from the city
saying that they are going tosomething build and it's
(17:59):
normally apartments or homes,because we have more people now
than we had 10 years ago.
Dennis Day (18:06):
But really, if you reasonably price your home, it's
going to sell at about 100%.
That's not bad.
Took a little longer.
Judy Gratton (18:13):
Continuous days on market is from the time it is
listed on the multiple listingservice until you're under
contract, not until you close.
That's how many days you canexpect people to be pulling in
and out of your house.
Dennis Day (18:27):
Summertime.
You're looking at 10 daysDecember.
It probably will still sell.
Judy Gratton (18:33):
We sold the house in four days.
It just depends on where it isand what the market will bear.
Dennis Day (18:39):
And what area you're in depends on where it is and
what the market will bear andwhat area you're in.
Judy Gratton (18:43):
I mean the area, the price point.
The more expensive the homegenerally, the longer it will
sit on the market.
When you start getting up intoyour luxury homes they generally
do sit a little bit longerbecause there aren't as many
people out there buying that.
But your middle class, but yourmiddle class suburban homes,
(19:04):
that's what most people go intoand so that's going to go a
little bit faster than luxury.
I would say entry-level homesare probably going to go faster
than all-standing.
Condos are kind of iffy becausethat's not what people
generally start out looking for.
Some people do, but most peopleare looking for a freestanding
home.
(19:25):
The greater number of people.
Dennis Day (19:27):
All right.
What do we expect in 2025?
Judy Gratton (19:30):
Very important.
Dennis Day (19:32):
I've added my notes down here.
Judy Gratton (19:35):
This is where I'm getting the information.
Dennis Day (19:37):
I did some research on this and I want to give
credit to the organizations.
Inventory for homes will grow,but so will home prices, Not at
the 20% clip.
They were talking about more atthe 3.5 to 6% Washington.
Judy Gratton (19:57):
And that's normal.
That's normal appreciation, atleast for the state of
Washington, and so we're in anormal area there.
And if more homes come on themarket, if we start seeing more
new construction for buyers,that's good for sellers.
Now you have more competition,so you have to weigh all this
(20:17):
information to figure out ifthis is the right time for you
to sell and where you're goingto go.
Dennis Day (20:23):
They're projecting that they're going to increase
the amount of new homeconstruction by 13%.
That's pretty significant.
It could add up to over amillion homes nationally.
Doesn't solve the housingcrisis of needing more homes,
but it's an improvement overprevious years.
(20:43):
For the renters, rental pricesin the King County and Seattle
area has just been going upastronomically and they really
are saying that they'reflattening out and they should
remain pretty good.
Seattle area has a significantnumber of apartments and
condominiums and homes goingthat will flood the market later
(21:07):
this year, so it should helpwith prices a little bit.
It's tough on renters becausethey're paying a lot even though
they're not getting that equitygrowth of a homeowner.
Judy Gratton (21:18):
Another big part of this that we didn't discuss
but we actually had acongressman on to talk about it
last year is the fact that hedgefunds have invested heavily in
real estate and they're buyingproperties and then becoming
landlords.
They bought 26% of all the realestate in 2023 in the country,
(21:40):
so that's another reason thatthere's a shortage of homes in
your area, wherever you are,because they're owned by hedge
funds.
They're making money off of itby renting them out, so it makes
it very difficult for peoplewho want to be homeowners in
middle-income areas to buy whenyou're competing against hedge
(22:01):
funds that normally pay cash.
Dennis Day (22:03):
On the bright side.
I did see from Realtorcom thathome builders are going to build
smaller, more affordable homes.
What they've been building, atleast in this area, has been
3,000 square foot on a postagestamp lot makes them the most
money, but they're finding thatpeople now are requesting
(22:27):
smaller homes, maybe a littlemore yard and more affordable.
You couldn't consider goinginto a new home in our central
Puget Sound area a brand newhome for less than a million
dollars.
They're just not there, unlessyou're buying a town.
2025 will bring mortgage rateswill drop incrementally.
We had two price drops in fallof 2024 and the rates went up.
Judy Gratton (22:55):
They're not solely connected to what the Fed does
with rates.
They're also connected to thebond market, the US bonds.
So people invest in bonds whenthe stock market looks shaky,
and when they're investing inbonds, the interest rates will
(23:16):
drop.
When the stock market is great,they don't invest in bonds and
the interest rate might even goup.
That's what loans are tied toEspecially first time.
Dennis Day (23:27):
Don't expect a huge drop and you will not see 3%
interest rates unless we havehuge disaster Catastrophe.
Judy Gratton (23:34):
Emergency interest rate.
I don't see how it would happenbut, like I said, a lot of
people don't believe six andseven is good.
I've seen higher interest rates, even in the last 10 years.
Dennis Day (23:47):
The affordability index is going to remain the
same low.
High interest rates, highprices, low inventory the
perfect storm for making homesless and less affordable.
Don't expect any big changes,unless we have something hugely
(24:07):
significant happen.
Judy Gratton (24:08):
There's a lot of uncertainty about what's going
on globally and nationally.
The Fed has said they will onlylower the rate twice, but that
hasn't really affected ourmarket because it's tied to what
the stock market does and whatthe bond market does.
So there's a lot of uncertainty, but people have to move.
(24:30):
Frequently people have to moveand we're beginning to see that
maybe people who had to move arekind of going.
I can't wait any longer, I haveto, and so that's where we
still have buyers.
We also have a largeinternational market that comes
in and buys, at least in ourarea.
As a middle-class first-timehomebuyer, you have a lot of
(24:53):
competition.
I wish that was not the case,but for sellers it's absolutely
wonderful, although they do haveto decide where they're going
to go next, and that's where therub has been.
Dennis Day (25:04):
Do you think this is the year that baby boomers
decide I can't stand this house?
I've been waiting because I gota 3% mortgage.
I don't want to move.
Prices are high, Interest ratesare high.
Is this the year that they'llstart that process of downsizing
?
Judy Gratton (25:20):
I don't know.
That's really what we are allabout trying to help you make
that informed decision.
When is the right time for youto go?
The right time is when you can.
The really hard time is whenyou can't and you have to.
If you're thinking about it,you need to really weigh the
pros and cons of, then talk toan experienced agent who can
(25:44):
show you what's out there, helpyou find something that's going
to work for you Preferably us ifyou're in Washington.
Dennis Day (25:50):
All right, that's it for our recap of 20, some
projections of 2025.
If you have any questions abouttoday's topics or any other
real estate questions, contactus through our website at
edteamcom.
Any last thoughts, judy?
Judy Gratton (26:11):
I think 2025 is going to be a great year for all
of us.
Dennis Day (26:15):
That people get off the fence and start moving.
If you are a baby boomer or ahomeowner who's been in their
home for 20, 30 years, find outwhat your equity is.
You might be able to sell thathome and use the equity to buy
your next.
Judy Gratton (26:32):
One of the things I would like to point out.
These statistics that we'veshown you are telling you the
current market we're alwayslooking backwards to see where
we've adjusted to up down and itdetermines.
Every time someone's home sellsnear yours, it changes the
value of your home.
(26:52):
So it's very important for you,as a homeowner, to stay
informed with what's going onaround your home.
How's your values changing?
What is your equity?
How much money do you have inthe house?
What could you conceivably dowith that money?
How much money do you have inthe house?
What could you conceivably dowith that money?
All of those are questions thatwe can help you answer.
We have a program that could setyou up to automatically receive
(27:14):
a monthly market analysis, soyou know pretty close what your
home would sell for at any givenmoment.
It does show you how muchequity you have.
If there's a loan, you know howmuch of it you pay down.
There's a lot of informationthat we'd be happy to share with
you.
Please drop us a note.
You can reach us atedgegroupteamcom and we would be
(27:36):
happy to send that out.
There's no charge, noobligation.
Dennis Day (27:40):
And we can give you a market analysis and let you
know a snapshot right now.
Judy Gratton (27:46):
Oh, very accurate.
Dennis Day (27:47):
All right, that's it for Getting your Edge.
Judy Gratton (27:50):
We'll see you in a couple of weeks on our next
podcast.
Dennis Day (27:54):
Thank you, hope this information was helpful.
See you next time.
Thanks for watching.
Bye.
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