Economists Predict: Recession Coming
The local economy is booming, and nationally we are experiencing the second-longest bull market in history. That’s great news, but it can’t last forever. The economy runs in cycles and we’re long overdue for our overheated market to cool down a bit. According to a survey of top economists by Zillow, almost half of experts said they expect the next recession to begin some time in 2020.
Experts Say Recession Could Hit by Early 2020
A Recession Means a Slow-Down, Not a Crisis
A recession means the economy has slowed down. It does not mean we are experiencing another housing crisis. The housing crash of 2008 caused the last recession. However, that crash was primarily due to faulty lending practices that encouraged people to purchase homes they could not afford. Current lending practices make that unlikely to occur today.
Housing Won’t Be the Problem
According to economists, monetary and trade policy are the most likely triggers for the next recession, not housing.
“If a recession is to occur, it is unlikely to be caused by housing-related activity, and therefore the housing sector should be one of the leading sources to come out of the recession.” – Mark Fleming, chief economist for First American
The last recession that was caused by the housing crash was an anomaly. During the previous five recessions home values actually appreciated. If the US experiences a recession you can expect a slow-down of home price increases, not a housing crisis.
Whether you’re thinking about buying or selling, it’s important to have the most current information about the market. I can provide you with statistics and economic forecasts, as well as answers to any questions you may have.
This post originally appeared on the WindermereEastside.com Blog.
The Gardner Report – First Quarter 2018
The following analysis of the Western Washington real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions.
Economic Overview
The Washington State economy added 96,900 new jobs over the past 12 months, representing an annual growth rate of 2.9%—still solidly above the national rate of 1.5%. Most of the employment gains were in the private sector, which rose by 3.4%. The public sector saw a more modest increase of 1.6%.
The strongest growth was in the Education & Health Services and Retail sectors, which added 17,300 and 16,700 jobs, respectively. The Construction sector added 10,900 new positions over the past 12 months.
Even with solid increases in jobs, the state unemployment rate held steady at 4.7%—a figure that has not moved since September of last year.
I expect the Washington State economy to continue adding jobs in 2018, but not at the same rate as last year given that we are nearing full employment. That said, we will still outperform the nation as a whole when it comes to job creation.
Home Sales Activity
- There were 14,961 home sales during the first quarter of 2018. This is a drop of 5.4% over the same period in 2017.
- Clallam County saw sales rise the fastest relative to the first quarter of 2017, with an increase of 16.5%. In most of the other markets, the lack of available homes for sale slowed the number of closings during this period.
- Listing inventory in the quarter was down by 17.6% when compared to the first quarter of 2017, but pending home sales rose by 2.6% over the same period, suggesting that closings in the second quarter should be fairly robust.
- The takeaway from this data is that the lack of supply continues to put a damper on sales. I also believe that the rise in interest rates in the final quarter of 2017 likely pulled sales forward, leading to a drop in sales in the first quarter of 2018.
Home Prices
- With ongoing limited inventory, it’s not surprising that the growth in home prices continues to trend well above the long-term average. Year-over-year, average prices rose 14.4% to $468,312.
- Economic vitality in the region is leading to robust housing demand that far exceeds supply. Given the relative lack of new construction homes— something that is unlikely to change any time soon—there will continue to be pressure on the resale market. As a result, home prices will continue to rise at above-average rates in the coming year.
- When compared to the same period a year ago, price growth was strongest in Grays Harbor County at 27.5%. Ten additional counties experienced double-digit price growth.
- Mortgage rates continued to rise during first quarter, and are expected to increase modestly in the coming months. By the end of the year, interest rates will likely land around 4.9%, which should take some of the steam out of price growth. This is actually a good thing and should help address the challenges we face with housing affordability—especially in markets near the major job centers.
Days on Market
- The average number of days it took to sell a home dropped by seven days when compared to the same quarter of 2017.
- King County continues to be the tightest market in Western Washington, with homes taking an average of 24 days to sell. Every county in the region saw the length of time it took to sell a home either drop or remain essentially static relative to the same period a year ago.
- In looking at the entire region, it took an average of 61 days to sell a home in the first quarter of this year. This is down from 68 days in the first quarter of 2017 but up by eleven days when compared to the fourth quarter of 2017.
- Anyone expecting to see a rapid rise in the number of homes for sale in 2018 will likely be disappointed. New construction permit activity—a leading indicator—remains well below historic levels and this will continue to put increasing pressure on the resale home market.
Conclusions
This speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors. For the first quarter of 2018, I have left the needle at the same point as fourth quarter of last year. Price growth remains strong even as sales activity slowed. All things being equal, 2018 is setting itself up to be another very good year for sellers but, unfortunately, not for buyers who will still see stiff competition for the limited number of available homes for sale.
Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has more than 30 years of professional experience both in the U.S. and U.K.
This article originally appeared on the Windermere.com blog.
Help Us Keep Homeless Youth Warm Again This Winter
All of us at Windermere are very excited to be in the midst of the second season of our partnership with the Seattle Seahawks, and continuing our campaign to help #tacklehomelessness. For every home game tackle made by the Seahawks, the Windermere Foundation is donating $100 to YouthCare, a non-profit that provides critical services to homeless youth throughout the Puget Sound area.
As proud as we are of our #tacklehomelessness campaign and the money we’re raising, we know we can do more. That’s why we’re hosting another Windermere “We’ve Got You Covered” winter drive to benefit YouthCare. Each night in the greater Seattle area, nearly 1,000 young people are homeless. And with the winter months quickly approaching, YouthCare is in dire need of survival supplies to keep homeless youth warm and dry during the long, wet winter.
Here’s what we are collecting:
- Warm socks
- Hats
- Scarves
- Gloves/mittens
*New items only please
From October 16 through November 10, you can drop off donations at the Windermere Redmond office at Redmond Town Center or one of the other participating Windermere offices listed below. Our friends at Gentle Giant Moving Company are generously donating their time and trucks to pick up all of the donations from our offices. Donations can also be dropped off directly to YouthCare, Monday through Friday from 9am-5pm, at 2500 NE 54th St, Seattle, WA 98105.
We hope you will consider making a donation to our “We’ve Got You Covered” winter drive. Feel free to contact your Windermere agent or local office for more information, or email justask@windermere.com.
**Windermere Winter Drive Drop-Off Locations
Property Management – Bellevue
This blog post originally appeared on the Windermere.com blog.
Windermere and the Seahawks are Back for Another Season to #TackleHomelessness!
All of us at Windermere are very excited to kick off our second season as the Official Real Estate Company of the Seattle Seahawks!
Once again, our #tacklehomelessness campaign is front-and-center, with the Windermere Foundation donating $100 for every Seahawks home-game tackle during the 2017 season to YouthCare, a Seattle-based non-profit organization that has been providing services and support to homeless youth for more than 40 years. Last year, the Seahawks helped us raise $35,000 through our #tacklehomelessness campaign, and this year we are looking forward to raising even more money – and awareness – for this important cause.
Our partnership with the Seahawks and YouthCare fits perfectly with the mission of the Windermere Foundation which is to support low-income and homeless families in the communities where we have offices. Through the #tacklehomelessness campaign, we hope to be able to do even more.
A “score card” will be posted after each home game that shows how much was raised during that game. You can follow our progress throughout the Seahawks season on our Facebook page at Facebook.com/WindermereRealEstate
This post was originally published on the Windermere Eastside Blog.