Sellers • February 16, 2023

Simple Tips to Make Your Move Easier

by Don Koonce

Your needs as a homeowner change over time, and you need the right home to fit those needs. Accordingly, it’s highly likely that at some point in your future you will experience another moving day. While moving can be challenging, the following moving tips will make it easier. If you are remaining in your current area, your Windermere agent can continue to be a valuable resource on schools, utilities, transportation, recreational opportunities, and more.

If you are moving out of the area, your agent can help you with a referral to another reputable agent in your new community. Many agents also have relationships with real estate-related service companies in their area whom they can call upon for information regarding title, escrow, mortgages, temporary housing while you sell your home, and moving services. They can also help guide you in your search as you learn more about new communities and relocation services.

Preparing to Sell Your Home: A Complete Checklist

Helpful Moving Tips

Once you have decided to sell your home, it’s time to gather information and get organized. Begin by creating a “moving” file to keep track of your estimates, receipts, and other pertinent information. If you’re moving for a job, some expenses may be deductible, so you’ll want the paperwork when tax time comes.

If you are moving out of the area, start researching your new community and ask your agent for help in finding a referral agent. You’ll also want to determine whether you want to rent first or buy immediately. Your new agent should be able to help you with your decision. Once you know where you’re going, you’re also ready to get estimates from moving companies.

You’ve Decided to Sell Your Home—Now What?

A middle-aged Caucasian woman explores quotes from moving companies on her phone in her living room. She is surrounded by moving boxes.

Image Source: Getty Images – Image Credit: svetikd

Moving to Your New Home

After you have chosen a moving date and either hired a moving company or reserved a rental truck, it’s time to wrap things up in your old neighborhood and start establishing relationships where your new home is located. This is particularly important if you are moving to a new town/city. You may want to ask your current doctors, dentists, etc. if they have any referrals on care providers in your new location. Be sure to check their recommendations on your insurance company’s online provider search list. Once you arrive, you may also want to ask new coworkers, friends, or the school nurse for their recommendations.

Contact your children’s school and/or day care and arrange for their records to be transferred. Call your insurance agent about homeowners insurance coverage. Remember to contact utility companies to disconnect, transfer or end service in your current home and turn on service in your new home.

You’ll want to file a change of address form with the U.S. Postal Service, either online or at your local office. If you don’t know your new address, have them hold your mail at the post office in your new locale. Don’t forget to cancel or transfer magazine and newspaper subscriptions as well.

If you belong to a health club or other association, contact them about ending or transferring your membership. Some clubs require written notice before cancellation. Finally, contact your bank or credit union to transfer or close accounts; if you have a safe-deposit box, don’t forget to clean it out before you leave.

Preparing for Moving Day

With moving day in sight, it’s time to get organized. Here are a few moving tips to check off your list before you start packing:

Tie up loose ends. Be sure to send out an email or change of address cards with your new contact information to family, friends, and associates. Return library books and any other borrowed items you may still have.
Triage your possessions. Determine what you are taking with you, what you are giving away to friends, family, or a favorite charity, and what is going to the dump or recycling center. If you have time, you can hold a garage sale or post items for sale online.
Clean up. Drain all gas and oil from your mower, other machinery, gas grills, kerosene stoves and lamps, etc., before loading them onto a moving truck. Empty, defrost, and clean your refrigerator at least 24 hours before your move, and prepare other appliances for moving as well.
Have your car serviced. This is especially important if you are driving to your new home.

Moving Tips: Packing Strategies

If you are doing your own packing, start collecting boxes and/or buy them from your movers. It may take a few days to do your packing, so be sure to pack non-essential items first and label them carefully. If you have any valuables, it’s recommended that you take them with you as opposed to packing them. You risk the chance of losing those items if they’re packed away in boxes. It’s also smart to take along a box of essentials, including items such as toilet paper, paper towels, tape, soap, scissors, pens, paper, and your toiletries. That way you won’t have to track these items down once you’ve arrived in your new home.

For more information on how to make your move easier, visit our Moving Checklist here:

Moving Checklist: A Step-by-Step Guide

Featured Image Source: Getty Images – Image Credit: Edwin Tan

Living • February 14, 2023

Pros and Cons of Living in a Penthouse

by Don Koonce

Penthouses take the luxury lifestyle to new heights; they boast the best views in the city, offer unparalleled exclusivity, and often include outdoor spaces not typically found in other units throughout the same building. These perks, however, come at a cost. For those considering renting or purchasing a penthouse, the following information will help to inform your discussions with your real estate agent.

What is a penthouse?

At its core, a penthouse is a luxury apartment/condominium. Located on the top floor of an apartment building, condominium complex, hotel, or tower, its luxury features differentiate it from the building’s lower-level units. The living space of a penthouse is usually set back from the building’s outer edge and the remaining square footage of the roof deck is typically used as a yard, hot tub, pool, outdoor kitchen, etc.

Pros

The View: Even in a densely populated metropolitan area, living in a penthouse is your best chance at an unobstructed view of the city. Perched above the vast majority of other apartment and condominium buildings, a penthouse provides a bird’s eye view of your surroundings without being blocked by neighboring units.
Indoor and Outdoor Space: A penthouse is more than a luxury apartment; it’s your own private outdoor terrace. With access to the outdoors, you have more room for your favorite at-home activities, plus an array of entertaining opportunities. Penthouses are typically designed with open-concept floorplans which emphasize their extra square footage. For those looking to increase their living space while remaining in the city, a penthouse may be the perfect solution.
Privacy: Because penthouses only have neighbors below them, a penthouse floor sees fewer visitors than the lower floors in a building. Some penthouse floors have a separate, private entrance for added security.

Cons

High Price: Gaining access to this exclusive lifestyle is expensive. The high price tags reflect its unique characteristics: being far away from street noise, having more square footage and outdoor space, added privacy, etc. In some places, the costs to purchase or rent a penthouse can outpace the average monthly mortgage payment for a single-family home in the area, especially if you have Homeowners Association (HOA) fees tacked on.
Home Maintenance: Having more indoor and outdoor space means there’s more to maintain. Owning or renting one of these units comes with a longer to-do list than a smaller apartment or condominium. You’ll either have to carve out additional time for upkeep or consider hiring a professional to clean your home regularly.

Work closely with your real estate agent to determine whether renting or purchasing a penthouse is right for you. Learn more about other housing types and the differences between them here:

House vs. Townhouse vs. Condo

Featured Image Source: Getty Images – Image Credit: skynesher

Buyers • February 9, 2023

What’s a Home Warranty and Why Do You Need One?

by Don Koonce

To be a homeowner is to understand that things can change at a moment’s notice. It’s only a matter of time before the systems in your home break and your appliances are on the fritz. But this inevitable truth isn’t meant to be all doom and gloom. Fortunately, you can protect yourself against these events with a home warranty.

The Life Expectancy of Your Home

What is a home warranty?

A home warranty and homeowners insurance both protect homeowners against unexpected events. A standard homeowners insurance policy typically covers your home, your belongings, injury, or property damage to others, and living expenses if you are unable to live in your home temporarily because of an insured disaster.

The policy likely pays to repair or rebuild your home if it is damaged or destroyed by disasters, such as wildfires, a winter storm, or lightning. Your belongings, such as furniture and clothing, are also insured against these types of disasters, as well as theft. Some risks, such as your home flooding, are routinely excluded from homeowners insurance policies.

A home warranty picks up where homeowners insurance leaves off by covering some or all of your HVAC, electrical systems, plumbing, and major appliances. A home warranty contract pays for the repair costs associated with these household items. However, if something in your home has not been properly maintained, your home warranty likely won’t cover it. Clarify the specifics of your policy’s language regarding proper maintenance with your warranty provider to avoid potential disagreements. Most home warranties are good for one year with the ability to renew annually.

What does a home warranty cover?

Home warranty policies vary by provider and location. Different coverages offer different protections among your home’s systems and appliances, or a combination of the two. Fees vary as well, based on your plan’s coverages and applicable service fees.

A young interracial heterosexual couple sits at their dining room table in the open concept kitchen of their new home reviewing their home warranty policy printed out with their laptop open.

Image Source: Getty Images – Image Credit: PeopleImages

Why do you need a home warranty?

Home warranties have several benefits both for buyers and sellers. For buyers, you can rest assured that your appliances are covered if and when they break down. This saves you from unexpected repair bills from having to hire a contractor. And when selling your home, a home warranty can serve as a way to differentiate your property over other listings. When buyers know a home is protected with a warranty, they can buy with confidence.

Finding the Right Home Warranty

As with anything in the home buying or selling process, it’s important to shop around when searching for the right home warranty policy. During your discovery process, ask questions about the policy’s costs, its dollar amount limit, which items it covers, and its applicable fees including service calls. Talk to your agent about trusted warranty providers in your area.

For more information on protecting your home, visit the Living section on our blog:

Windermere Blog – Living

Featured Image Source: Getty Images – Image Credit: Pekic

Real Estate News & Information • February 7, 2023

Q4 2022 Western Washington Real Estate Market Update

by Don Koonce

The following analysis of select counties of the Western Washington real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere Real Estate agent.

Regional Economic Overview

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.

A map showing the real estate home prices percentage changes for various counties in Western Washington. Different colors correspond to different tiers of percentage change. Grays Harbor and Whatcom Counties have a percentage change in the -6.5% to -3.6%+ range, Clallam, Jefferson, King, and Skagit counties are in the -3.5% to -0.6% change range, Snohomish and Pierce are in the -0.5% to 2.4% change range, Mason, Thurston, Island, and Lewis counties are in the 2.5% to 5.4% change range, and San Juan County is in the 5.5%+ change range.

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.

A bar graph showing the mortgage rates from Q4 2020 to the present, as well as Matthew Gardner's forecasted mortgage rates through Q4 2023. After the 6.79% figure in Q4 2022, he forecasts mortgage rates dipping to 6.27% in Q1 2023, 6.09% in Q2 2023, 5.76% in Q3 2023, and 5.42% in Q4 2023.

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).

A bar graph showing the average days on market for homes in various counties in Western Washington for Q4 2022. King County has the lowest DOM at 31, followed by Kitsap at 45, Island and Snohomish at 35, Whatcom, Thurston, and Skagit at 36, Pierce at 37, Clallam at 38, Jefferson at 40, Mason at 43, Grays Harbor at 46, Lewis at 49, and San Juan at 74.

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.

A speedometer graph indicating a balanced market, barely leaning toward a seller's market in Western Washington in Q4 2022.

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

Matthew Gardner - Chief Economist for Windermere Real Estate

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.

Design • February 1, 2023

What Makes a Home Modern? 6 Features of Modern Architecture

by Don Koonce

Sleek, sustainable design, open concept floor plans, minimalism, and eco-conscious thinking are defining characteristics of modern architecture. These concepts were formed in the early to mid-twentieth century as part of the modern art movement which encompassed art deco interior design and mid-century modern architecture among other styles. Here’s a breakdown of the features that define modern architecture.

6 Features of Modern Architecture

1. Clean Geometric Lines

At the heart of modernist values lies the simplification of form. Ornate decorations quickly became a thing of the past as designers became focused on taking a no-frills approach to home design. Modernist homes have a very linear feel with straight lines and exposed building materials, as opposed to more irregular shapes that were popular in the past.

2. Multifunctional Spaces

Multifunctional living spaces are a foundational element of modern homes. Built-in storage is commonly used to reflect this multi-purpose, space-saving feel. This gives added significance to the spaces in a home by upping each one’s utility. It creates an environment where everything has purpose.

3. Eco-Friendly

Modern homes are well suited for technological and eco-friendly home upgrades, as well as eco-friendly building materials and energy efficient practices, and flat roofs to accommodate solar power. A new trend is to decorate each room with plants for a calming, soothing effect. Large windows are abundant in modern architecture, allowing light to fill and expand the interior space, bringing the natural world indoors.

The interior of a modern home kitchen with granite countertops, hardwood floors, dark oak cabinets, and a stainless-steel range and dishwasher.

Image Source: Getty Images – Image Credit: irina88w

4. Post-and-Beam Structure

Exposed wood posts and ceiling beams are classic elements in modern architecture and modern offshoots like farmhouse interior design. Modern homes significantly emphasize the structure rather than hiding the bones behind drywall. In new modern homes the post-and-beam structure can be made of concrete, iron, or other materials. The visible horizontal and vertical beams reinforce the clean geometric lines of the space.

5. Open Concept

Modern design strives to “open” the space by eliminating enclosed rooms. A common design method is to open the kitchen and dining room into an open living space, allowing the spaces to flow into one another.

6. Minimalism

With open and connected modernist spaces, careful curation of furniture, décor, and household objects is paramount to incorporating the modernist aesthetic. Generally, modernist homes have art and furniture that reflects the clean geometric lines and the natural materials of the architecture, leaving less space for clutter. Minimalist philosophies encourage few household items that serve both form and function, which work well within this design and architectural style.

The interior of a modern home open-concept living room/dining room area with minimalist decorations and features: neutral-colored carpet, hardwood floors, beige couch and chairs, and a fireplace in the dining room.

Image Source: Getty Images – Image Credit: alvarez

Contemporary vs. Modern Architecture & Design

The terms “contemporary” and “modern” are thrown around interchangeably. They do possess a certain degree of overlapping qualities, but specifically in the design world, “modern” refers to styles influenced by the early to mid-twentieth century movement, while contemporary design is what is popular in the present. Whatever interior design trends are at the forefront can be said to be contemporary, while modern interior design is still influenced by a specific period in the past.

For more information on home design, read about how to keep up with trends while decorating your home colorfully:

Colorful Modern Design Trends for Your Home

Featured Image Source: Getty Images – Image Credit: onurdongel

SOLD • January 31, 2023

SOLD: Modern cabin-esque retreat in South Seattle + Renton condo

by Don Koonce

7633 S 134th Street
Seattle, WA 98178
$768,000

MLS #2020833
Beds: 5
Baths: 2
3,000 sqft
Type:
Residential
Year Built: 1967
Lot Size Area: 11,391.00 sqft
Heating: Heat Pump
Cooling: Heat Pump, Central Air

Snuggly tucked into a private woodland setting, this light-filled modern cabin-esque retreat is just minutes from a full menu of urban amenities for easy living. Rich wood finishes, vaulted ceilings, skylites & big picture windws create warm relaxing living spaces with airy views of blue sky and lush greenery. Updated systems & designer touches inspire “show it off” and low maint. living. Swanky granite kitch w/ bar seating, dbl windws, wrap around deck, arboretum-like gardens & patios, 400amp electric service, copper plumbing, 2022 heat pump, A/C. Superb location, quick access to I-5, 405, 167, Renton, Georgetown, parks, forest trails, Lk WA & more. Relax. Unwind. Enjoy your very own nature preserve-let the birds do the entertaining.

14600 SE 176th Street #A5
Renton, WA 98058
$279,998

MLS #2027687
Beds: 2
Baths: 1
Days on Market: 1

Simply one of the best deals in the Renton Fairwood area! Large two bedroom one bath on one ground level condo. Corner unit with a large front yard, quiet, secluded with private access. Enjoin all the included amenities like a large swimming pool, athletes court, clubhouse, and more. Fully updated bath and kitchen, new engineering wood, ceramic tile flooring, newer water heater, insert heater, and all newer appliances. Low HOA fee, clean, and ready to move in.

Buyers • January 26, 2023

How to Reduce Your Interest Rate: Mortgage Buydowns

by Don Koonce

This blog post contains contributions from Penrith Home Loans.

When mortgage rates are up, prospective buyers can often feel like they’re at a disadvantage as they go about securing a home loan. Fortunately, there are ways to lower your interest rate to make your monthly mortgage payments more affordable.

What are mortgage buydowns?

A mortgage rate buydown is a form of financing that allows you to secure a lower interest rate on your mortgage by paying more money upfront in the form of discount points, also known as mortgage points, at closing. Each discount point is equal to one percent of your total loan amount. Especially attractive in times of high mortgage rates, buydowns are offered by sellers, builders, or lenders depending on the transaction. There are two main types of mortgage interest rate buydowns: permanent and temporary.

Permanent Mortgage Buydowns

With a permanent interest rate buydown, typically the borrower, seller, or builder will contribute to the cost of buying down the rate permanently. In this situation, the borrower qualifies at the bought-down rate for the life of the loan.

Temporary Mortgage Buydowns

A temporary interest rate buydown provides cash flow for the borrower during the temporary period, but they still qualify at the higher note rate. Typically, the seller or builder will contribute to the cost of buying the rate down temporarily.

Use our Home Monthly Payment Calculator to experiment with different down payments, principal amounts, interest rates, taxes, and more for any listing price.

How do temporary mortgage buydowns work?

Temporary mortgage interest rate buydowns have their own unique structure. Below are three common types:

1-0 Buydown Mortgage: The borrower gets a 1% discounted interest rate for the first year.
2-1 Buydown Mortgage: The borrower gets a discounted interest rate for the first two years of the loan. The first year, the interest rate is 2% lower, decreasing to 1% lower the second year.
3-2-1 Buydown Mortgage: The borrower gets a 3% discounted rate the first year, dropping to 2% in the second year and 1% in the third year.

Although they share certain characteristics with adjustable-rate mortgages (ARMs), temporary mortgage buydowns are slightly different. ARMs initially have a fixed interest rate period. Once the adjustable-rate period kicks in, both the interest rate and monthly payments are subject to change. With buydowns, the buyer’s interest rate doesn’t change; either the seller or lender covers part of the interest payments as outlined by the buydown’s structure.

A man and woman homeowner couple discuss the terms of a mortgage buydown program with their mortgage broker in a modern office setting.

Image Source: Getty Images – Image Credit: kate_sept2004

Should I permanently buy down my mortgage?

Though buying down your mortgage interest rate permanently can make the payments more affordable, if you are contributing to this cost, make sure you can withstand the heavier financial load before proceeding. It also depends on how long you plan to live in the home. For example, if you plan to move shortly after buying, the short-term savings on your mortgage may not yet break even on your upfront costs by the time you’re ready to purchase again.

Pros of Mortgage Buydowns

Savings on monthly mortgage payments
A lower rate means you could qualify for a higher loan
Discount points = prepaid mortgage interest, which is often tax-deductible

Cons of Mortgage Buydowns

Higher upfront costs of buying a home
If payments increase, higher risk of foreclosure
Less cash available for remodeling, home improvements, etc.

A home office desk is filled with materials for a full day’s work; a full coffee cup, a smartphone, paperwork, and a laptop with a mortgage loan application form on the screen.

Image Source: Getty Images – Image Credit: cnythzl

How much can I save with a mortgage buydown?

Here’s an example of the savings you could see with a 3-2-1 temporary mortgage buydown. Let’s say you qualify for a 30-year mortgage with a $400,000 loan amount at an interest rate of 7%. With a 3-2-1 buydown, you’d pay a 4% interest rate the first year, 5% the second year, and 6% the third year. From year four on, you’d pay 7%.

Purchase Price	Down Payment	Loan Amount	Interest Rate	APR	Loan Term
$500,000	$100,000	$400,000	7%	7.125%	30 years

3-2-1 Temporary Mortgage Interest Rate Buydown

	Year 1	Year 2	Year 3	Years 4-30
Interest Rate	4%	5%	6%	7%
Number of Payments	12	12	12	336
Monthly P&I Payment	$1,909.66	$2,147.29	$2,398.20	$2,661.21
Total PITI Payment	$1,909.66	$2,147.29	$2,398.20	$2,661.21
Monthly Reduction	$751.55	$513.92	$263.01	–

Calculations provided by Penrith Home Loans
Temporary buydown cost as % of purchase price 3.67%

With this structure, you’d save $9,018.60 the first year, $6,167.04 the second, and $3,156.12 the third, for a total three-year savings of $18,341.76.

Thinking about buying a home? Connect with a local, experienced Windermere agent to begin your home buying journey:

Featured Image Source: Getty Images – Image Credit: kate_sept2004

Real Estate News & Information • January 23, 2023

2023 Real Estate Forecast: Why This Market Won’t Be Like 2008

by Don Koonce

This video is the latest in our Monday with Matthew series with Windermere Chief Economist Matthew Gardner. Each month, he analyzes the most up-to-date U.S. housing data to keep you well-informed about what’s going on in the real estate market.

Hello there, I’m Windermere’s Real Estate’s Chief Economist Matthew Gardner and welcome to the first episode of “Monday with Matthew” for 2023. As has become tradition, this first episode of the year will be dedicated to my real estate forecast for the U.S. housing market, so let’s get straight to it.

2023 Real Estate Forecast

Existing Home Sales & Forecast

Image Source: Matthew Gardner

U.S. home sales trended lower through all of 2022 and, although I believe that sales will still have held above five million, this certainly won’t be the case in 2023. Affordability and higher financing costs will continue to act as headwinds when it comes to sales, but I think that the bigger issue will be that listing activity will not rise significantly as we move through the year.

As I have been saying for several months now, I don’t see why many households who don’t have to move will move and lose the historically low interest rate that they currently benefit from. That said, sales will still occur this year but at just 4.8 million, sales will be lower than we have seen since 2014.

Annual Change in Median Sale Prices

Image Source: Matthew Gardner

Much has been said about the future of home prices, with some forecasters even suggesting that housing prices will collapse in a similar fashion to that seen following the bursting of the housing bubble back in 2008. Now, although price growth through the pandemic period was clearly excessive, fundamentally speaking, the two periods cannot be considered to be similar at all.

It’s my opinion that sale prices in 2023 will be very modestly lower than last year and I certainly don’t expect to see a collapse in home values.

But not all markets are created equal. The pandemic created what has become known as “Zoom-Towns.” These were cheap markets that affluent buyers flocked to because of their newly found ability to work from home and this led sale prices there to soar. It’s these locations that will likely see prices fall more significantly. Ultimately, expect to see prices fall through the first half of this year before starting to recover in the second half.

New Home Starts & Forecast (Single Family)

From Matthew Gardner's 2023 real estate forecast, a bar graph of the single-family new home starts. The y-axis shows numbers in thousands from 0 to 1,200 and the x-axis shows the years 2015 through 2023. The numbers are as follows: 715 in 2015, 782 in 2016, 849 in 2017, 876 in 2018, 888 in 2019, 991 in 2020, 1,127 in 2021, 1,009 (forecasted) in 2022, and 837 (forecasted) in 2023.

Image Source: Matthew Gardner

Looking now at the new construction market, housing starts fell last year as construction costs remained high and mortgage rates rose which lowered demand. And I’m afraid that I do not see 2023 as being one where builders will deliver more inventory, with starts pulling back to a level the country hasn’t seen since 2016. That said, I am expecting a recovery in 2024 when new home starts will break back above the 1,000,000 level.

New Home Sales Forecast

Image Source: Matthew Gardner

New home sales in 2023 will fall further coming in below 600,000 but there is some light at the end of the tunnel with sales picking up fairly significantly again in 2024. We all understand that the country has a significant undersupply of ownership housing, but the costs associated with building new homes is still making it remarkably hard for builders even though they understand that demand will be significant for at least the next decade and a half given current demographics.

But the problem they will continue to face is that demand will primarily come from entry level buyers and, simply put, the cost to build a home precludes many developers from being able to meet this demand.

Average 30-Year Mortgage Rate & Forecast

Image Source: Matthew Gardner

And finally, my forecast for mortgage rates in 2023. Although this might not look good at all, as they say, “the devil is in the details.” Rates skyrocketed last year as the Fed stopped buying treasuries and mortgage-backed securities and, although they are off the highs we saw toward the end of last year, they are still significantly higher today than the market has become used to seeing.

As you can see here, I’m anticipating the average 30-year conventional rate to average 6.1% in 2023, but my forecast is actually a bit better than this shows.

Average 30-Year Mortgage Rate Forecast 2023

Image Source: Matthew Gardner

You see, my quarterly forecast suggests that rates have actually already peaked, and that they will trend lower as we move through this year and break below 6% by the fourth quarter. I would add that if anything my forecast may be a little pessimistic, and rates may end 2023 a little lower than I am showing here.

But that will depend on the Fed, and how long they will continue raising rates, and how long it will take before they start to lower them if the US enters a recession this year, which many forecasters including myself believe will be the case.

So, there you have it, my 2023 U.S. housing forecast. I will leave you with this one last thought. 2023 will be a transition year when the housing market will come off the “high” we saw during the pandemic and borrowing costs were artificially low.

I don’t see any reason for buyers or sellers to panic though. By the end of 2023, most markets will have corrected themselves and I believe we will see prices and demand start to pick up again toward the end of this year, but at a far more normalized pace.

As always, I look forward to your comments on my forecasts and I’ll see you all again next month. Take care now.

About Matthew Gardner

Design • January 19, 2023

What is a Rambler House? 5 Features of Ranch-Style Architecture

by Don Koonce

The distinct rambler architectural style is known by several names: rambler, ranch house, California ranch, and more. Whatever you call it, it has played an important role in the evolution of the American home. From its spacious interior to its welcoming layout, these homes are tailor-made for a comfortable home life.

History of the Rambler House

It wasn’t until the 1950s and 1960s that the rambler became a staple of domestic American life as the suburban boom reached new heights. The intention behind the architecture was simple: design the perfect post-war American home. The term “rambler” was a reference to the way the single-story design sprawled—or rambled—across the landscape. This home design mirrored the landscape of the American West and allowed for expansive views of surrounding land on a level plain.

Over time, the rambler style began to take on elements of modern design and eventually evolved into split-level homes, creating variants such as “raised ranch style,” “suburban ranch style,” and “storybook rambler.” To this day, these homes are found in great numbers across the country.

Image Source: Getty Images – Image Credit: pbk-pg

5 Features of Ranch-Style Rambler Homes

1. Low-Pitched Roof and Eaves

Similar to the Craftsman style home, it’s common for ranch-style homes to have low-pitched roofs and overhanging eaves. These architectural features help to give ranch-style homes their distinct sprawling look.

2. Open Floorplan

Ramblers are known for their open interiors that allow for easy movement throughout the home’s horizontal spaces. The spacious layout is often anchored by a central area which creates a feeling a continuity between rooms, a concept that was influenced by modern architecture.

3. One-Story Buildings

Though their wide layouts make for large footprints, the majority of rambler homes are one-story structures. The terms “rambler” and “ranch house” are used interchangeably. However, raised ranch houses and split-level ranch houses will often have a basement, whereas the classic rambler home is a one-story building with a ground-level entry.

4. Attached Garage

This was one of the first architectural styles to incorporate an attached garage into the home design. This evolution in home design perfectly suited the needs of the modern American family in the 1950s and 1960s.

5. Connection to the Outdoors

In another nod to modernist homes, ramblers often prioritized outdoor spaces for entertaining and gathering. This connection to the outdoors is reinforced by large windows and easy access to back patios to create a connection between nature and the home itself.

For more information on different home designs, check out our Architectural Styles page.

Featured Image Source: Getty Images – Image Credit: JohnnyGreig

Buyers • January 17, 2023

8 Costs of Renting a Home

by Don Koonce

If you’re not quite ready to buy a house, it may be better to rent for the time being. Though renting can be the more affordable option, being a tenant in someone else’s home still comes with its own unique set of costs. Here are eight common costs you should be aware of before signing a lease.

Should I rent or buy a house?

8 Costs of Renting

1. Renting Application Fee

One of the first costs you’ll run into is the application fee. Landlords want to make sure you’re a good candidate for signing onto their lease, so they’ll go through a process to verify the information listed on your application including your employment, financial history, credit score, past tenancy, etc. The application fee covers the clerical work required to verify this info.

2. Security Deposit

Similar to making a down payment on a house, a security deposit is a large upfront expense that solidifies your application. Security deposits vary based on the terms of the agreement. They can be a flat fee but are more often equal to one month’s rent, and sometimes more. Fortunately, they are usually refundable when you move out, as long as you have taken good care of the property and have adhered to the terms of your lease. You must account for the security deposit when renting, since you’re essentially paying double a normal month’s rent to move in.

3. Pet Deposit and Pet Fee

Finding a place that allows pets will be your first challenge as a renter. Some landlords forbid pets altogether, while others typically require that you pay a pet deposit and/or an additional monthly pet fee on top of your rent. These fees vary based on the number, type, and size of your pet(s). Keep in mind that renting with pets will most likely cost you extra.

4. Rent

The renting equivalent of a monthly mortgage payment, your rent will be the largest slice in your pie chart of monthly renting expenses. The general rule of thumb is that your rent should not exceed 30% of your monthly income. If it’s higher, you’ll have less money to cover other important living expenses. And if your rent increases—which is beyond your control—things can get unaffordable in a hurry.

A man and a woman walk through a house for rent with the landlord. The landlord shows paperwork while they explore the living room. It is a new construction home with white walls and hardwood flooring.

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5. Parking

Your parking arrangement will vary depending on your living situation. If you live in a condo or apartment building, you may be able to pay an additional fee in exchange for your own parking spot on-site. For those who live in densely populated areas or places where the endeavor of trying to find available parking is a daily nightmare, the value of having your own parking space often outweighs the extra cost.

6. Homeowners Association (HOA) Dues

Landlords will typically include Homeowners Association (HOA) fees in your rent if applicable. HOA fees go toward maintaining the community’s properties and help pay for shared amenities. If you plan to live in an HOA community as a renter, the dues you’re paying will help to ensure the property stays well maintained.

7. Utilities

Utilities are another significant chunk of your recurring expenses as a renter. Your utilities costs will vary depending on how much energy you use at home. For example, your heating costs will likely be higher during the winter. If your bills are too high, audit your energy consumption to find more affordable ways of using it. 7 Tips for Sustainable Living at Home

8. Renters Insurance

Not only is obtaining renters insurance vital to protecting yourself as a renter, but it’s also usually required by landlords and property management companies. Renters insurance protects you against unexpected events that may occur at home. Fortunately for you, renters insurance policies are very affordable, usually around $15 to $20 a month.

Learn more about the pros and cons of renting vs. buying a house:

Renting vs. Buying: Which is Better for You?

Featured Image Source: Getty Images – Image Credit: StefaNikolic