S is for Summer Shift

From what I can tell "Shift" will be the word of the summer for the real estate market. With mortgage rates increasing 2% from 3% to 5%+ since the beginning of the year, the market was bound to downshift as affordability is squeezed and buyers regroup to adjusting their plans and goals.

Big Picture
First, it's important to acknowledge our local market has experienced the longest and most prosperous period in history with home prices increasing more than 175% in King County and 223% in Snohomish County since early 2012. Unlike the financial meltdown of 2008 which was fueled by foolish lending standards and unregulated financial markets, we find the challenges we face today substantial but not predominantly related to real estate and therefore less likely to have similar impacts to what we saw in 2007-2012.

Recession Does Not Equal Price Declines for Housing
In fact, just like we have in 5 of the 6 last recessions (see the shaded areas in the graph), we'll likely see home prices continue to rise as even in recession housing is a core need for people and many will move money into real estate during uncertain economic times as it is often a much more stable long-term investment.

Navigating The Shifting Market
As you look to understand and adapt to these changing times, I would suggest focusing on three key areas to lower your stress, build long term wealth, and take advantage of today's opportunities.

Experience
As an 'old dog' with more than 20 years of experience, I was stunned to learn recently that the average broker has less than 5 years’ experience. They've never experienced anything but a strong Seller's market, which means they may not be well equipped to guide clients through this evolving market. In our time, we've navigated multiple dramas in the market... 2000 (Dot Com), 2001 (911), 2008 (Financial Crisis) & 2020 (Covid 1.0) and these experiences are incredibly valuable in how we consult with clients to ensure we are reducing risks and creating opportunities.

Long Term Outlook
Real estate is an amazing long term (5-10 year) investment with relatively stable returns which are hedged against inflation and build wealth. While it can be tempting to take a narrower view of just 1-2 years, this short timeline can be a risky bet in any market as minor market dramas and transactional costs can leave you underwater. However, in more than 70 years of market history most 'downturns' only last a few quarters and provide substantial returns to those who bought 'at the peak' after 5 years. Even those who bought at the peak of the market in 2007 (the biggest crisis aside from the depression) broke even in about 7 years and within 10 years saw price growth of nearly 15% from their purchase.

Strategic Analysis
Tomorrow's market will need a higher level of strategic analysis focused on market conditions, pricing & offer strategy, and appraisal analysis to best protect your interests. Some local markets and specific homes will continue to be highly competitive, while others will be overpriced and will languish on the market... the differences can be subtle, and great analysis and strategy will be the key to unlocking which one is which. Do not hesitate to expect this kind of analysis from your brokers in any market, and especially in today's market.

Of course, we can help with all these areas and many more as we love leveraging our experience and passion for helping clients make the best of any market. Please do not hesitate to call us with your questions and concerns about today's market, or to discuss your short- and long-term plans and goals. Find out if now is a great time to take the next step.

Call us at 206-489-4920 or email us at Info@ReeceHomes.com