Puget Sound MultiFamily Real Estate Blog



Dec. 7, 2023

2023 Landlord Fairness Code Initiative - info

As a landlord within the city of Tacoma, here is what you need to know about the 2023 Landlord Fairness Code Initiative:


The 2023 Landlord Fairness Code Initiative, also known as Measure 1, is a ballot measure that passed in the City of Tacoma November 2023 general election. The 2023 Landlord Fairness Code Initiative introduces some new requirements and rules for landlords and tenants in the City of Tacoma.

These new requirements go into effect December 8, 2023. 


Q: What is in the Landlord Fairness Code Initiative? 

A: The Landlord Fairness Code Initiative (TMC 1.100) establishes requirements around notices to increase rent, move-in costs, pet fees, late fees, evictions, and economic displacement relocation assistance, health and safety requirements, and establishes enforcement and penalties. See below for details. 


Q: What is the City's Rental Housing Code? 

A: The Rental Housing Code, established in 2019, provides protections for tenants and provides specific guidance to landlords who own or operate residential rental property in the Tacoma city limits. In July 2023, the City updated its Rental Housing Code (RHC), strengthening requirements around notices to increase rent, shared housing standards, standards for fees and deposits, business license, health and safety requirements, rental regulations, and establishes standardized tenant screening criteria.


Q: Will the Landlord Fairness Code Initiative replace the Rental Housing Code? 

A: No, the Landlord Fairness Code Initiative does not replace the Rental Housing Code. Both codes will be in effect starting December 8, 2023. There are some conflicts between the Rental Housing Code and the Landlord Fairness Code which include: 

  • Late Fees – the Landlord Fairness Code caps late fees at $10 versus a cap of $75 in the Rental Housing Code. 
  • Rental Increase Notices – the Landlord Fairness Code requires two notices to increase rent starting at 210 days versus the Rental Housing Code’s one notice at 120 days. 


Q: How will the City handle the sections of the codes that conflict?

A: The Landlord Fairness Code Initiative and the Rental Housing Code have separate and distinct enforcement mechanisms:

  • The Landlord Fairness Code Initiative contains no authorization for administrative enforcement by the City, and its provisions are enforced exclusively by private rights of action.
  • The Rental Housing Code is enforced through City administrative processes. As a result, there is no fundamental conflict between the Initiative and the current Rental Housing Code. In other words, the City will enforce the Rental Housing Code related to its provision for late fees and notices to increase rent. A tenant can seek to enforce the Initiative’s provisions regarding late fees and notices of rent through legal actions taken against the landlord. 

As a result, there is no fundamental conflict between the Initiative and the current Rental Housing Code. In other words, the City will enforce the Rental Housing Code related to its provision for late fees and notices to increase rent. A tenant can seek to enforce the Initiative’s provisions regarding late fees and notices of rent through legal actions taken against the landlord.


Q: What specific rules and requirements are in the Landlord Fairness Code Initiative?

A: There are eight topics addressed in the Landlord Fairness Code Initiative:


1. Two separate notices are required before increasing rent

  • 1st notice to increase rent must be issued between 210 and 180 days before the rent increase takes effect.
  • 2nd notice to increase rent must be issued between 120 and 90 days before rent increase takes effect.


2. Late fees

  • The fee for late rent cannot exceed $10 per month.


3. Move-in costs

  • The total fee for all move-in costs cannot exceed one month’s rent.


4. Pet damage deposit

  • The deposit cannot exceed 25% of first months’ rent, and it must be refundable if no pet damage is done to the unit.


5. Certain evictions are prohibited

  • Landlords may not carry out an eviction during the student/school year if kids or educators are in the household.
  • Landlords may not carry out an eviction during cold weather—between November 1 and April 1.
  • Landlords cannot evict a tenant based on their status as a member of military, first responder, senior, family member, health care provider, or educator


6. Economic displacement relocation assistance

If the tenant’s rent is raised 5% or more and the tenant can no longer afford to occupy the unit, the landlord is required to pay relocation assistance in the following amounts:

  • If rent increases 5% to 7.5% — 2 times the monthly rent
  • If rent increases 7.5% to 10% — 2.5 times the monthly rent
  • If rent increases more than 10% — 3 times the monthly rent


7. Landlords are required to comply with health/safety laws

A landlord must have no violations under TMC 2.01.050 “Minimum Buildings and Structures Code,” or violations under RCW 59.18.060, which may make the unit uninhabitable.


8. Enforcement and penalties

  • Landlords who violate this chapter can be liable for penalties of not less than $500 and up to five times the monthly rent of the dwelling unit at issue, per violation.
  • A tenant can sue landlord for violations.
  • A tenant or organization can sue for injunctive relief.
  • A landlord can seek court order to be exempted from provisions, and allow eviction, if they can show they would experience “an undue and significant hardship” if the code were enforced.


Q: Does Landlord Fairness Code Initiative apply to me?

A: The Landlord Fairness Code Initiative applies to anyone who owns, operates or rents residential rental property within the City of Tacoma limits.



For more information about Renting in Tacoma, the City’s Landlord–Tenant Program, and resources for landlords and tenants, visit www.cityoftacoma.org/oehr




Posted in Market News
May 9, 2023

Is Seattle A Good Market For Real Estate Investing? Here’s The Latest Trends

By Melanie Kershaw

seattle skyline

Let’s face it, Seattle isn’t about to land itself on any hottest lists of affordable places to invest any time soon. But a lack of bargains doesn’t mean that there aren’t opportunities to be had. For those who own Seattle property or find a suitable investment in this area, homes attract high average rents and opportunities for consistent returns and appreciation. With single-family homes enjoying similar returns to the stock market without the same level of volatility, stable “Tier 1” markets like Seattle could be an attractive option for your portfolio. 

Late last year, Redfin reported that Seattle was the fastest-cooling market in the U.S. As an already expensive city to buy into, the extra heat in the market turned out to be unsustainable as interest rates and inflation began to bite on large mortgages. The good news is that more bargaining power was finally available to those that do have the capital to get into the Emerald City.

Only you know your financial situation and what you can take on, so this report is designed to support your research with an indication of average rents and the current state of the rental market in Seattle, including:

  • Are Seattle’s cooling real estate prices enough to lower the barriers to entry?
  • How does the median price of homes in Seattle compare to similar Tier 1 cities?
  • What kind of rental income can I expect from a property in Seattle?
  • When is the best time to list a Seattle rental to achieve the highest rate?
  • Will the tech downturn affect real estate in Seattle? What are the other macroeconomic factors to consider?

Are Seattle’s Cooling Real Estate Prices Enough to Lower the Barriers to Entry?

Like most Tier 1 markets, investing in Seattle can be challenging due to high entry costs, especially for those needing a mortgage. This is why the market is cooling, with debt costing twice as much as in recent years. A price reduction in a hot area should be a cause for celebration for would-be investors, but not in this instance. Even a 5% drop in prices isn’t going to make the area more affordable if you need to take out a mortgage at a 6% – 7% interest rate. 

Additionally, demand exceeds supply, making Seattle a seller’s market with low inventory. Homeowners with good fixed interest rates are unlikely to sell unless necessary.

How Do Median Prices in Seattle Compare to Other Tier 1 Cities?

According to realtor.com, the Median Listing Home Price in Seattle is $780,000, with the Median Sale Price of $750,000. Most homes are selling for close to ask, indicating a seller’s market. 

If you look at other Tier 1 west coast cities like San Francisco, the Median Listing Home Price is $1.3M, some $520k higher than Seattle. 

Although Seattle may not offer a quick profit, it’s a viable option for investors who can’t afford other Tier 1 cities. With stable renter demand and long-term growth potential, owning a home in Seattle could be profitable, but less so for short-term cash flow.

What Kind of Rental Income Can I Expect in Seattle?

The ROI and cash flow of a Seattle property depends on mortgage expenses, appreciation, and tax benefits. Despite recent fluctuations due to the pandemic, Seattle properties have generally appreciated very well over time. 

According to NeighborhoodScout, Seattle real estate has appreciated by 137% over the past 10 years, with an average annual home appreciation rate of between 5.69% and 9.02%, placing Seattle in the 10% for appreciation in the U.S. 

With interest rates still climbing at the time of publication and some areas hotter than others in terms of demand, you will need to run a new cash flow analysis on any rental property or potential purchase to get an accurate view of your ROI. Below we have compiled some averages across the Seattle metro area to get an understanding of what you might expect to see. 

Belong, who partners with owners of single-family homes, apartments, and condos, has seen average rental rates between $2,476-$3,305/month for the Seattle market over the last 12 months. 

How does this compare to other Tier 1 markets? Looking at San Francisco again, single-family homes and condos on the Belong Bay Area network rent for an average of $3,754. When you consider that the average price of a home in S.F. is around $520,000 higher than in Seattle, it highlights the favorable cap rates and potential for a strong return on investment. In the Bay Area, you would be hard-pressed to find a neighborhood with SFHs that average for less than a million dollars, whereas Seattle still has cheaper entry points around the $500k – $600k mark.  

According to Belong partner, Zumper, median rents are up 6.2% YoY in March 2023, trending up from last month. The breakdown by housing type is:

  • Studio: $1,477 (+14% YoY)
  • 1-Bedroom: $2,021 (+7% YoY)
  • 2-Bedroom: $2,795 (+4% YoY)
  • 3-Bedroom: $3,330 (+0% YoY)
  • 4-Bedroom: $3,700 (+6% YoY)

According to the latest U.S. Census data for Q4 2022, rental vacancy rates in the Seattle/Tacoma/Bellevue area are sitting at 4.7%, down from 5.7% in Q1. This is consistent with neighboring cities of Portland/Vancouver/Hillsboro, with a vacancy rate of 4.8%, down from a high 6.1% in Q1. 

When is the Best Time to List a Seattle Rental?

Like most cities along the west coast, Seattle rental prices are seasonal. As the chaos of the pandemic cools off, we’re seeing a return to peaks and troughs of seasonal pricing that weren’t experienced during the up-and-up rent climbs. 

While Seattle is famous for its rain, it’s also famed for its incredible outdoor lifestyle and walkability, which sees a peak in demand across summer when there’s plenty of sunshine and blue skies. Seattle enjoys the same peak in rental pricing around August that we witness in other Tier 1 markets across California. In fact, August is the best time to attract top dollar for your property in Seattle, according to Belong data (pictured below), with the average rent peaking at $3305. Seattle is also home to many desirable school districts, so larger family rentals in these areas attract hot competition and rents in the lead-up to Semester 1 in September.  

Comparing Belong’s data to a wider data source such as Zillow (which includes multifamily and apartments in their numbers), their market trends show the same peak in Summer, with average rents peaking between $2,450-$2,461 in the August/September period.  

Average Rent Over Time in Seattle, Washington (Jan. 2022 - Mar. 2023) - Belong
Average Rent Price Change in Seattle, Washington (2022 – 2023) – Belong
Median Rent Price in Seattle, Washington (2022 - 2023) - Belong
Median Rent Price in Seattle, Washington (2022 – 2023) – Belong

That’s not to say that investors renting out a Seattle home in winter will take a huge hit. Even as the average rate dips seasonally, Belong homeowners still get an average monthly rate of $2,500-$3,000 during low months like December. 

March is also a strong month for rents, and if this trend continues, rents will remain stable before peaking in August. If you plan to enter the market, you have time to prepare and benefit from higher prices in a few months. 

What are the Other Macroeconomic Factors to Consider?

Interest rates aside, what other macro factors should be considered before investing in the Seattle metro area?

The Seattle metro is:

  • One of the top five cities for household income.
  • A city with a low unemployment rate but is experiencing anxiety around layoffs.
  • Being hit harder by inflation, with rates higher than the national average.
  • Still experiencing low rates of mortgage delinquency and foreclosures.
  • Investing in transportation to close gaps and improve accessibility.

Seattle is an affluent area, with residents earning a median household income of $105,391, according to the latest Census data. This ranks the city fourth among the 100 largest metro areas in the U.S.

This is largely fuelled by a lucrative job market. If you look at the Redmond area, median income jumps to $147,006—unsurprisingly, given it’s where Microsoft is headquartered. It’s hard to look at macro factors influencing the Seattle real estate market without discussing the current tech downturn. Could industry layoffs put pressure on homeowners or lead to distressed inventory on the market? 

Microsoft, Amazon, Meta, Salesforce, and Google have all made employment cuts affecting Washington-based workforces. In fact, Seattle is said to have some of the highest layoff anxiety. But while tech has driven much of Seattle’s growth in recent years, the local economy isn’t vulnerable to this industry alone. 

U.S. News recently examined the Seattle unemployment trends and found that the rate of unemployment in Seattle is lower than the national average and that the rate of foreclosures remains low. Only 1.5% of mortgages are reported to be delinquent in the metro area, and 0.1% have active foreclosure filings. 

The Economic and Revenue Forecast Council released their March 2023 results, stating that while the overall unemployment rate began to rise earlier than anticipated in 2022, employment also increased by 16,300 in November and December—3,800 more than forecasted. They also noted that consumer price inflation in the Seattle metro area continued to exceed the national average in the year ending in February 2023, adding to the cost of living pressure for residents.

For existing landlords, this high inflation, layoff anxiety, and uncertainty in the market may cause workers in the industry to postpone trying to buy a home and rent for longer. Seattle is already home to more renters than owner-occupiers, sitting at 55% renter-occupied in the last Census. For those looking for an in, these layoffs haven’t yet created a flood of distressed housing stock on the market. That may change if economic conditions worsen, but it’s worth noting that the tech industry typically employs skilled workers and gives generous exit packages, which softens the blow to the local economy. 

Another notable factor is transportation. The SoundTransit system expansion will see improved accessibility across Seattle, impacting the value of local real estate as it becomes easier for people to get into the city. Investing in real estate in these areas (such as Lynnwood, Shoreline, Everett, and Marysville, for example) before the transit system is completed could provide a lower entry point with an opportunity for higher rent and home appreciation over time as access to amenities improves.

Posted in Market News
April 12, 2023

Multi-Family Seller Solutions - Spring 2023

By Chelsea Shapiro, Sr. Broker

Seller Solutions: "I've sold my property... what now??"

We are frequently asked about post disposition investing and tax strategies, and the answers have become more complicated recently. Here's a few strategies that we've been diving into lately and have compiled resources for our seller clients: 

Exchange into a DST (Delaware Statutory Trust): These count as a 1031 Exchange and often offer better returns and a hands-off investing experience.  It is a ownership structure with multiple investors, but investors still maintain an undivided fractional interest in the holdings of the trust.  The benefits include tax benefits just like other real estate investments, passive income potential, access to larger deals and asset classes that usually are not accessible to the average solo investor.  We do not facilitate these deals inhouse at Sound Realty Group, but have relationships with several reputable companies who do.  We’re happy to share more info on DSTs and/or connect you with exchange strategists who can go over the details more in depth. 

Invest out-of-state: We've been tracking the best markets outside of WA to exchange into. Here’s our list of top 5 growth and recession-proof markets with cash flow opportunities: 

    • Ohio - Columbus and Cleveland 
    • Kansas City, Missouri 
    • Florida - Jacksonville, Tampa, Miami
    • Birmingham, Alabama
    • Myrtle Beach, South Carolina 

We have an extensive network of out-of-state agents and brokers and have developed relationships with agents in each of these markets.  We’d be happy to put you in touch with any of them and/or pass on details about deals they have shared with us in their markets.  Here’s a short list of articles and data that helped us pinpoint these specific markets. 




Seller Financing: a great way to spread out the cap gains tax and get an additional return on your equity.  We’ve structured several deals that had either all or partial seller financing and there are so many creative options in this space that range from short term scenarios to notes lasting for several years.  With higher interest rates it often creates a scenario where a buyer could enjoy a lower interest rate than what a bank will provide therefore enabling them to pay a bit more for the property.  For the seller it means they can spread out their gains over more than one year and typically seller carried interest rates will be higher than returns they would see in other assets.  


Posted in Market News
Jan. 31, 2023

2023 Q1 Market Analysis


State of the Market: 

We’re sifting through the data for 2022 and looking ahead at 2023 and wanted to bring you the stats, takeaways and predictions of the multifamily market in the Puget Sound Region.

Our Team: had a great 2022 with lots of highlights:

  • Ranked #1 in closed multifamily transactions in the tri-county area
  • Onboarded a Rockstar Operations Manager and welcomed 2 new associate brokers
  • Relocated the Seattle office to West Seattle and opened an expansion office in Woodinville
  • We’ve mapped out some great goals and strategies for 2023, so despite market conditions we are ready to help you with your next investment!

The General Market:

Real Estate in 2022 nationwide can be described as a tale of two markets with everything hinging on interest rates. January through June was very much a Bull market with buyers flocking to the market to take advantage of the last chance at low rates. Bidding wars, escalating prices and waived contingencies characterized the frenzied seller’s market.

  • In Jan 2022 the 10 year treasury was at 1.63% and interest rates for most buyers hovered in the mid to high 3% range.
  • June’s rate increase hearkened a much different market which has drastically changed the landscape and is indicative of a more Bearish market.
  • The 10 year treasury finished the year at 3.8% (after peaking at 4.25%) landing interest rates in the 6 and 7% range for multifamily purchases.

The Tri-County/Puget Sound Region:

The tale of two markets was apparent in the stats from King, Pierce and Snohomish Counties. (For reference, inventory is measured by months with 3-5 months deemed a “balanced market” and anything lower is a “seller’s market,” anything above that metric would be a “buyer’s market”).

  • Jan 2022 had just 1.1 months of inventory available
  • This ticked up sharply in June following interest rates and peaked in October with 4.9 months
  • Dec 2022 ended with 4.1 months of inventory, not quite enough to be a true buyer’s market, but a vast difference from the extreme seller’s market that characterized the first half of the year.

Similarly, the ratio of list price to sold price is a good indicator of market trends.

  • Jan 2022 saw multifamily listings selling for 112% of the list price
  • This dropped below 100% in June
  • Dec closed out the year with listings selling for 95% of the list price.

  • Creative solutions will become more prominent in 2023 such as seller financing, assumable mortgage and wraps. At SRG we’ve been boning up on these tactics in order to help our clients find innovative ways to make deals workable.
  • Office and retail do not have rosy outlooks according to industry experts, but the Industrial and Multifamily sectors are projected to weather this uncertainty much better. Considering the housing shortage and affordability crisis in the Puget Sound Region, fewer builder starts, and the fact that rent rates have held steady we would project the local multifamily market to hold its value well overall in the coming years despite the current downturn.
  • Considering inflation, possible recession, turmoil in crypto and the stock market we still believe MF real estate to be a good bet for all the usual reasons. With prices dropping, many sellers willing to sell for less and/or offer concessions, and some creative financing back in the game, we foresee 2023 as a promising year to find solid deals without the competition of yesteryear.


Posted in Market News
Dec. 8, 2022

Housing Market Predictions 2023: A Post-Pandemic Sales Slump Will Push Home Prices Down For the First Time in a Decade

By Taylor Marr


We expect home sales to sink to their lowest level in more than a decade in 2023 as high mortgage rates keep housing costs up and prevent people from moving. High homeowner equity and a resilient job market will stave off a wave of foreclosures.

Mortgage rates will take center stage in 2023, with high rates likely to make it the slowest housing-market year since 2011.  

Our forecasts for mortgage rates, home sales and home-sale prices account for a range of outcomes for inflation, employment and other macroeconomic factors. As such, our predictions for those key housing metrics lead with the most likely scenario, followed by other possible outcomes that could happen if, for instance, a better-than-expected inflation report results in an earlier- or bigger-than-expected mortgage-rate drop. 

Prediction #1: Home sales will fall to their lowest level since 2011, with a slow recovery in the second half of the year

We expect about 16% fewer existing home sales in 2023 than 2022, landing at 4.3 million, with would-be buyers pressing pause due mostly to affordability challenges including  high mortgage rates, still-high home prices, persistent inflation and a potential recession. People will only move if they need to. 

That’s fewer home sales than any year since 2011, when the U.S. was reeling from the subprime mortgage crisis, and a 30% decline from 2021 during the pandemic homebuying boom. It would also lead to the lowest housing-turnover rate since the early 1980s, with just 32 out of every 1,000 households selling their home in 2023.  

Existing home sales will likely fall 31% year over year in the first quarter, followed by smaller annual declines in the second and third quarters. By the fourth quarter, existing home sales will be flat from the year before. Sales will slowly start recovering as rates fall from their peak, but they’ll still post year-over-year declines most of the year. We expect about 20% fewer sales of newly built homes, landing at about 500,000 nationwide. 

When buyers don’t want to buy, sellers don’t want to sell. Low demand, plus the “lock-in” effect of homeowners with ultra-low mortgage rates staying put, mean new listings will continue to decline year over year during the first half of 2023. 

Another possible existing sales scenario is that they’ll decline by only about 12% in 2023 from 2022, landing at just over 4.5 million. That could happen if inflation consistently slows faster than expected, allowing the Fed to slow its pace of rate hikes and leading to quick mortgage-rate drops. But if inflation persists, sales could drop by up to 27% year over year. 

Prediction #2: Mortgage rates will decline, ending the year below 6%

We expect 30-year fixed mortgage rates to gradually decline to around 5.8% by the end of the year, with the average 2023 homebuyer’s rate sitting at about 6.1%. 

Mortgage rates dipping from around 6.5% to 5.8% would save a homebuyer purchasing a $400,000 home about $150 on their monthly mortgage payment. To look at it another way, a homebuyer on a $2,500 monthly budget can afford a $383,750 home with a 6.5% rate; that same buyer could afford a $406,250 home with a 5.8% rate. Still, that’s much less affordable than a few years earlier. With a 3% rate, which was common in 2020 and 2021, that same buyer could afford a $517,000 home. 

The Fed’s series of interest-rate hikes should cause inflation to continue slowing, which is likely to bring mortgage rates down. How quickly inflation and rates come down depends on a number of factors, including the resilience of the job market. 

If inflation cools faster than expected and the job market moderates, rates may decline sooner and/or more, dropping to 6% in the beginning of the year, then settling around 5.8% for the rest of the year. But if inflation proves stubborn, rates are more likely to stay elevated for several months and decline slowly before ending the year just below 6%. 

House hunters may need a higher credit score or lower debt-to-income ratio to qualify for a mortgage as lenders tighten credit standards due to rising unemployment. That said, those who do qualify may pay less in closing costs as lenders offer fewer products–which allows them to lower fees–to attract customers during the slowdown.

Prediction #3: Home prices will post their first year-over-year decline in a decade, but the U.S. will avoid a wave of foreclosures

We expect the median U.S. home-sale price to drop by roughly 4%–the first annual drop since 2012–to $368,000 in 2023. That’s due to elevated rates and final sale prices starting to reflect homes that went under contract in late 2022. Prices would fall more if not for a lack of homes for sale: We expect new listings to continue declining through most of next year, keeping total inventory near historic lows and preventing prices from plummeting.

Prices will start their decline in the first quarter, falling by roughly 2% from a year earlier, marking the first year-over-year drop since the beginning of 2012. Home-sale prices will likely fall by about 5% year over year in the second and third quarters, then ease to about a 3% drop by the end of the year as lower rates bring buyers back to the market. 

Another possible albeit less likely scenario is that prices will stay mostly flat on a year-over-year basis in 2023. That could occur if mortgage rates and/or new listings fall faster than expected, which would prop prices up. But if inflation remains stubborn, rates stay higher than expected, and/or supply increases more than expected, prices could fall by double digits.

Even with prices falling 4% year over year, homes will be much less affordable in 2023 than they were before the pandemic homebuying boom, making it difficult for prospective first-time buyers to enter the market. Taking next year’s projected prices and mortgage rates into account, the typical homebuyer’s monthly payment will be about 63% higher in 2023 than it was in 2019, just before the pandemic began. Meanwhile, wages will have grown roughly 27% over that period. 

Prices remaining elevated above pre-pandemic levels also means a wave of foreclosures next year is highly unlikely. Very few homeowners are likely to see their mortgages fall underwater even with next year’s anticipated price declines. That’s because the homeowners who’ve had their home for at least a few years have fixed low mortgage payments and plentiful home equity after values skyrocketed during the pandemic. Even those who bought recently near the height of the market are likely to have made a sizable down payment and therefore have some equity to land on. Importantly, the jobs market remains resilient; even if there is a recession, economists expect a mild one with a small increase in unemployment, so it’s unlikely that many homeowners will fall behind on their mortgage payments.

Prediction #4: Midwest, Northeast will hold up best as overall market cools

Housing markets in relatively affordable Midwest and East Coast metros, especially in the Chicago area and parts of Connecticut and upstate New York, will hold up relatively well, even as the U.S. market cools. Those areas tend to be more stable than expensive coastal areas and they didn’t heat up as much during the pandemic homebuying frenzy. 

U.S. Housing Markets Likely to Hold Up Best in 2023
Rank U.S. metro area
1 Lake County, IL
2 Chicago, IL
3 Milwaukee, WI
4 Albany, NY
5 Baltimore, MD
6 Elgin, IL
7 Rochester, NY
8 Pittsburgh, PA
9 New Haven, CT
10 Hartford, CT
Rankings based on changes in year-over-year Redfin housing market stats from Feb. 2022 to Oct. 2022. Measures of homebuyer demand and competition in these metros are nearly as strong as they were in the beginning of 2022. 

On the other end of the spectrum, we expect prices to fall most in pandemic migration hotspots like AustinBoise and Phoenix, largely because the huge increases over the last two years leave a lot of room for prices to decline. Expensive West Coast cities are also likely to see outsized price declines because of stumbling tech stocks and the shift to remote work pushing so many people out of those markets.

Prediction #5: Rents will fall, and many Gen Zers and young millennials will continue renting indefinitely

We expect U.S. asking rents to post a small year-over-year decline by mid-2023, with drops coming much sooner in some metros. Some large landlords are likely to offer concessions, such as a free month’s rent or free parking, before dropping asking rents. 

The rental price declines will be partly due to increasing supply, which has already led to an uptick in vacant units in apartment buildings. Multifamily construction is at a 50-year high, which means hundreds of thousands of new rental units will be available next year. Another factor is reluctance to sell: Many homeowners will rent out their homes rather than sell because they don’t want to lose a low rate. There will be an influx of single-family homes for rent. 

Rents have already fallen from a year ago in 11 metros, with the biggest drops in MilwaukeeMinneapolis and Baltimore. We expect to see rents fall soon in places where apartment supply is growing rapidly, including BoisePhoenixCharlotte and Raleigh

Increasing rental supply and declining prices–along with high mortgage rates, limited inventory and other affordability barriers–mean few renters will become buyers next year. Many prospective first-time homebuyers may instead become move-up renters, upgrading from a small urban apartment to a larger apartment or a single-family rental to fit their growing families. Some Gen Zers and young millennials who have saved up some money to buy a home but are able to wait until prices and/or rates come down will focus on financial pursuits other than homeownership next year, like investing in stocks, while they continue renting indefinitely.  

Prediction #6: Builders will focus on multifamily rentals

Builders will continue to pull back on constructing new homes next year, with year-over-year declines of roughly 25% in building permits and housing starts continuing into 2023. 

Builders will back off most from building new single-family homes. Construction of single-family homes surged during the pandemic, which means builders need to offload the homes they have on hand without adding more supply to limit their financial losses. They’ll pull back dramatically in some markets like Phoenix and Dallas, where they built too many homes in anticipation of demand that’s failing to materialize.

Constructing rental units, including apartment buildings and multifamily houses, will make more financial sense for builders next year, as rental demand won’t fall off as much. Rental building activity is likely to fall slightly in 2023, but not as much as construction of single-family homes. Some construction spending will shift to remodels, as many Americans who were hoping to move will instead opt to renovate in the face of high mortgage rates.  

Prediction #7: Investor activity will bottom out in the spring, then rebound

Real estate investors will purchase about 25% fewer homes than a year earlier, with purchases likely to bottom out in the spring. Investors’ business model is to buy low and sell–or rent–high, and the cash they borrow to buy homes outright is no longer cheap. Fewer iBuyers in the market–Redfin recently announced plans to shutter its iBuying business–is also a factor in slowing activity. Some investors, especially newer and smaller ones, will bow out of the housing market entirely and others will slow their activity. But if inflation slows and the Fed eases up on rate hikes as expected, investors will likely start buying more homes in the second half of the year, taking advantage of slightly lower home prices.  

Listing activity from investors is likely to be lower than the year before, but it won’t decline as much as new listings in the overall market. That’s because while many investors will choose to rent out homes rather than sell while the market is down, some need to offload inventory after buying sprees over the last two years. 

Prediction #8: Gen Zers will seek jobs and apartments in relatively affordable mid-tier cities

Gen Zers are entering into a workforce with more remote-work opportunities than ever before, which means they’ll have more flexibility in where they’ll choose to start their careers than older generations. They can prioritize things like affordability, lifestyle, weather and proximity to family.

Nearly one-third of adult Gen Zers live with relatives, partly because inflation and high housing costs make it hard to afford living alone. That will allow some Gen Zers to save money in the long run and eventually use it to move where they want to. They can choose low-cost-of-living places –or even places that have paid remote workers to move in, like Tucson, AZ or Savannah, GA. Mid-sized, moderately priced places like that will be popular when more Gen Zers age into homeownership–though it will remain difficult for young first-timers to buy homes because prices and rates make it more expensive than it used to be. 

Some Gen Zers will still prioritize job hubs like New York and Boston because their employers call them to the office, or because they prefer working alongside experienced colleagues and/or prefer big-city amenities. That could help hold up rental prices in those parts of the country. 

Prediction #9: Migration from one part of the country to another will ease from the pandemic boom

We expect the share of Americans relocating from one metro to another will slow to about 20% in 2023, down from 24% this year. That’s still above pre-pandemic levels of around 18%. 

In 2023’s slow market, there won’t be a next Austin. Even Austin isn’t Austin anymore: The wave of homebuyers moving into Austin has slowed to a trickle, as many people are now priced out and many remote workers who wanted to relocate have already done so. Plus, some workers, especially 20-somethings starting their careers, will choose to remain near their office as some employers start expecting in-person work, at least part of the time.

But some people will relocate next year, including retirees and remote workers who are still seeking out more affordable areas. For the Americans moving for affordability, places with no state income taxes, like Florida, Texas and Tennessee, will be attractive. 

Prediction #10: Rising disaster-insurance costs will make extremely climate-risky homes even more expensive

Some Americans will be priced out of climate-risky areas like beachfront Florida and the hills of California because of ballooning insurance costs. We expect disaster-insurance rates to continue rising next year (and beyond), rendering housing in some areas more expensive.

The increasing frequency and intensity of natural disasters has prompted some insurers to stop providing coverage in risky areas altogether, and others to raise rates for flood and fire insurance. Florida property insurance premiums increased 33% year over year in 2022, and they’re expected to rise more after Hurricane Ian wreaked havoc on parts of coastal Florida in September. Americans with FEMA flood insurance–especially those in Florida, Mississippi and Texas–are also starting to see their flood insurance premiums increase after the government agency overhauled its pricing. In California, many private insurers have stopped covering high-fire-risk homes, which means many homeowners and buyers must use a last-resort plan and spend two to three times more on premiums. 

Disaster insurance is now a prerequisite for a mortgage in many risky areas. As it becomes harder to come by, those areas are likely to become more concentrated with affluent, all-cash buyers. 

Prediction #11: More cities will follow Minneapolis’ YIMBY example to curb housing expenses

More U.S. cities will look to Minneapolis, which in 2019 became the first major city to eliminate single-family-only zoning, for inspiration in keeping rental and home prices under control. Earlier this year, Minneapolis became the first metro area to see rents decline

Some places have already followed Minneapolis’ example. Portland, OR and California are  altering rules to allow for denser housing. Other places, including Alexandria, VACambridge, MA and Gainesville, FL, are also changing policies to allow more affordable housing. Those places are showing that the YIMBY (yes in my backyard) movement is working. 

Next year, we expect more local and state governments will eliminate single-family-only zoning, allowing more multifamily buildings, townhouses and ADUs. That helps ease expenses because denser housing is typically less expensive.

Prediction #12: Buyers’ agent commissions will rise slightly as fewer agents broker fewer deals at lower prices

Next year’s slow housing market is likely to reverse or at least halt the downward trend in buyers’ agent commissions.

The hot pandemic-era housing market pushed the typical U.S. buyers’ agent commission down to 2.63% of the home’s sale price in 2022, its lowest level since at least 2012. But declines in home prices and sales will prop up buyers’ agent commissions next year. Sellers will also play a part, with some offering to pay higher commission for buyers’ agents to attract bidders. 

The number of agents is another factor. There were more real estate agents than homes for sale in the U.S. during the pandemic boom, but the ratio of agents to homes for sale has already begun to fall, and we expect tens of thousands of agents to leave the industry next year. This could push commissions up because the agents who remain will likely be able to charge higher percentages. 

“The decline in agent commissions is likely to resume once the market heats up again,” said Joe Rath, Redfin’s director of industry relations. “That’s because the real estate industry is finding new ways to educate consumers on how agents are paid, including a requirement that commissions are publicly displayed. Additionally, the industry is under scrutiny as the Department of Justice looks into how agents are paid and considers whether the commission structure causes limited competition. That probe could result in buyers becoming responsible for paying their own agents, which would likely lead to a drop in commissions.” 

Posted in Market News
Oct. 20, 2022

Q3 2022 State of the Market and Data


By Chelsea Shapiro, Senior Broker


We live in a 24/7 real time, instantaneous kind of world, but in the real estate industry most things operate on a 90 day cadence.  Why?  That’s often the timeframe it takes to get a property ready for market, under contract and closed.  It’s also deemed a market cycle and when data from consecutive months becomes meaningful.  All Summer, we have been noting the shifting forces in the market (primarily driven by interest rates increases and the responses they trigger). We've been feeling buyer and seller trends dramatically change, and now seeing the data that backs up and codifies a different real estate market than 90 days ago.  



In the tri-county area, the average "Days On Market" has increased, the number of sales have dropped, and the months of inventory has gone up dramatically (see data below).  Depending on the County we are in a “Balanced Market” and trending in the direction of a “Buyer’s Market.” 


Interest rate increases have been the driving force behind this shift, and the Federal Reserve has promised more rate hikes this year and into next.  To illustrate how that impacts pricing, we’ll dissect a 4plex deal we sold last Spring.  See below for the difference between then and now.  



It’s a challenging and shifting market for sure, so Why Buy?  Many successful real estate investors made their money by picking up properties during the last downturn (2008-2013).  After years of fierce competition and bidding wars, buyers now have leverage to find and/or create a good deal.  We think the next few years will be a great time for acquisitions.  It might take some ingenuity to compensate for the expensive financing, but that’s where creative lending solutions become optimal, and most lenders are predicting rates to drop after 2023 so refinancing is always an option.  The one caveat is hold time - a flip or quick value add play is tough to pull off in a receding market, but as long as buyers are prepared to hold long term buying now is great idea! 


If we’re in a down market Why Sell?  If you don’t have to sell and are primed to achieve cash flow and hold for many more years, then our recommendation is to hold.  However, if you’re needing to sell in the near future now is your last chance to capture some of the massive appreciation our region has experienced in recent years.  For context; this market downturn should not be anywhere near as bad as 2008-2012, but using that timeframe as an example, it took almost 10 years for Pierce County multifamily property values to get back up to the values they were at during the previous peak of 2007 (see graph below). That said, it could take several years for values to get back up to where they are today. “Waiting for the market to turn round” may not be the best option for anyone planning on selling in the next couple of years. We are still very close to the top of the market! Multifamily values in Puget Sound Region more than doubled over the last 5 years. If you purchased your property more than 3 years ago, selling today would still be a huge win!


Whether buying or selling, make sure you employ an experienced and knowledgeable broker!  This is a tricky market to navigate and having a seasoned broker who can suggest creative and solid strategies on your team might make all the difference in your ROI.  

Posted in Market News
Sept. 30, 2022

The Fed Basically Admitted It. They Want a Housing Correction

By: Dave Meyer

This week, the Federal Reserve hiked the federal funds interest rate 75 basis points, which was widely expected. But there is more to Fed meetings than the headline rate hikes, and this particular meeting provided us with new data and insights that show the clearest picture yet of the Fed’s intended course.

We now have a much clearer picture of what lies ahead for interest rates, the economy, and the housing market. Below, I’ll examine everything we learned from the Fed meeting and the crucial news information every real estate investor needs to pay attention to. 

What We Learned About Interest Rates

Big Takeaway: Interest rates are up and will likely stay up for a year or more. 

The most notable announcement of every Fed meeting is what happens to the federal funds rate, a short-term interest rate that banks use to lend to one another. This is the only interest rate the Fed actually controls, but it has big implications for other interest rates like those on mortgages and bonds. 

The Fed raised rates by 75 basis points (a basis point = .01%, so a 75 basis point hike is 0.75%,) and the federal funds rate, which is a range, is now between 3%-3.25%. 

In addition to this immediate hike, we now know that rates will likely climb higher in the coming months and into next year. How do we know this? The Fed tells us! Not many people look at this, but the Fed actually releases a Summary of Economic Projections after every meeting, which tells you where they’re heading. It’s important to read, but I know most people don’t want to pour through this data, so I’ll do it for you. 

The most important chart, in my opinion, is known as ‘the dot plot’ because it shows where each Fed official thinks interest rates should be over the coming years. The dot plot itself can be a little confusing to look at, so here is a summary of it that shows the median expectations of Fed officials for the coming years: 

FOMC Summary of Economic Projections for the Federal Funds Rate
FOMC Summary of Economic Projections for the Federal Funds Rate (2022-2025) – St. Louis Federal Reserve

The Fed expects the federal funds rate to be 4.4% by the end of 2022. Then it will rise to 4.6% in 2023 before falling in 2024 and 2025. Of course, these are just projections, and the Fed will be looking at tons of economic data in the coming months to set monetary policy, but it’s important to understand that the Fed is intentionally signaling to the world that they are going to keep rates high. 

Higher rates have huge implications for the housing market, but it’s important to note that when I say “high rates,” I mean in terms of a recent context. In a historical context, rates are very low. 

historical interest rates
Federal Funds Effective Rate (1955-2022) – St. Louis Federal Reserve

But recent context matters. We’ve been in a low-interest rate environment for a very long time. These higher rates coming so quickly are a big shock to the economy. 

What We Learned About Mortgage Rates

Big Takeaway: Mortgage rates will likely rise from this news, but the pace of growth will likely slow.

If you’re expecting mortgage rates to shoot much higher than they are currently (between 6%- 6.50%), that might not necessarily happen. Rates will likely rise in the coming months, but at a slower pace than they have thus far in 2023. Some analysts even believe rates will come down in 2023. Here’s the thinking: 

First, mortgage lenders are forward-looking. They don’t wait for the Fed to raise rates to increase mortgage rates. They set mortgages to the rates they think are coming over the coming years. Even though the rate hike was announced in late September 2022, mortgage providers have been expecting this for months and have been setting rates for borrowers based on what they expect the Fed to do in the future. So rates will likely rise from this new data but will not likely rise linearly as the Fed raises rates. 

Secondly, mortgage rates are not dictated by the federal funds rate and are actually more closely tied to the yield on the 10-year Treasury bond. Just look at the red and green lines on the chart below. They move in lockstep (for my fellow nerds out there, the correlation is nearly .99!)

Federal Funds Effective Rate compared with Market Yield on U.S. Treasury Securities and 30-Year Fixed-rate Mortgage Averages (1955-2022)
Federal Funds Effective Rate compared with Market Yield on U.S. Treasury Securities and 30-Year Fixed-rate Mortgage Averages (1955-2022) – St. Louis Federal Reserve

The spread between yields and mortgage rates averages 170 basis points (1.7%) and exists due to the relative risks of mortgages. If you’re a bank and can earn 4% lending to the government (that’s what a bond is, and it’s largely considered the safest investment in the world), then you need to earn more if you’re going to lend to a homeowner to compensate for the increased risk. You may pay your bills, but homeowners, in general, are less creditworthy than the U.S. government, and banks will charge you for that.

As I said, the spread has averaged 170 basis points, but I did an analysis, and the current spread is actually much higher than that average, at 232 basis points. 

spread between treasury yields
Spread Between Treasury Yields and Mortgage Rates (1971-2021)

This increase in the spread is likely due to uncertainty and increased risk in the economy. But if the Fed stays course and inflation starts to come down, I expect this spread to revert to the historical average, which could help moderate mortgage rate increases, or potentially even bring them down modestly in 2023. Mark Zandi, one of the most prominent economists and housing market forecasters in the world, expects the average rate for a 30-year fixed-rate mortgage to be 5.5% in 2023. 

Mortgage rates are staying relatively high compared to where they’ve been since the great recession and will likely go a bit higher. I wouldn’t be surprised to see rates surpass 7% for a 30-year fixed-rate mortgage, at least for a time. But, I don’t expect the rate to continue upward much beyond the low sevens unless inflation takes a turn for the worse. Of course, I was really wrong about mortgage rates so far in 2022, so take this analysis with a grain of salt. 

The Fed’s Focus

Big Takeaway: The Fed cares almost entirely about inflation and is willing to risk job losses, recession, and the housing market to bring it back down. 

With this new data, and an analysis of Fed chairman Jerome Powell’s press conference this week, the Fed’s stance is pretty clear. Inflation reduction is their number one goal, and they are willing to accept economic pain to achieve it. 

During the press conference, Washington Post reported Rachel Siegel pointed out to Powell that the Fed’s own Summary of Economic projections predicts unemployment to rise to 4.4%—a rate which typically brings about a recession. Here’s how the chairman responded: 

“We have always understood that restoring price stability while achieving a relatively modest decline, or rather increase, in unemployment and a soft landing would be very challenging, and we don’t know, no one knows whether this process will lead to a recession or if so, how significant that recession would be.”

That’s the chairman basically saying that reducing inflation will very likely increase job losses and a recession and that the feasibility of a “soft landing” is very questionable. He admits he doesn’t know what will happen. To me, the intent of this response and admission is clear: the Fed is going to attack inflation even if we go into recession or see job losses. 

When asked about housing and the need for the housing market to cool, Powell stated, “what we need is supply and demand to get better aligned so that housing prices go up at a reasonable level, at a reasonable pace, and that people can afford houses again, and I think we, so we probably in the housing market have to go through a correction to get back to that place.” 

Again, pretty clear. The Fed is willing to risk a recession, a housing market correction, and job losses in order to bring down inflation. In fact, if you read the full transcript, it seems Powell isn’t just okay with a housing correction. He wants one. Of course, the Fed could change course, but to me, this press conference and announcement was the clearest sign yet that the Fed is going to hold the line. They are not going to change course to help the housing market or avoid a recession.

What This All Means

Over the course of 2022, many investors have been hoping for a Fed “pivot.” Basically, there was a theory that the Fed would raise rates but wouldn’t risk a recession or job losses and would keep rates around 2.5%-3%. To me, this press conference puts that theory to bed once and for all. The Fed is very careful and deliberate about what it says and the data it shares with the world. Everything the Fed is saying right now is they are going to stay aggressive in the fight against inflation, even if it causes economic pain elsewhere in the economy. 

The most notable implication of this is housing prices. We all know by now that as rates have risen over the last several months, demand in the housing market is dropping, and prices are facing downward pressure. However, the housing market has held up surprisingly well to that downward pressure. Prices have come down off their June highs but are still up year-over-year in almost every major metro. 

Knowing now that mortgage rates will stay high for the foreseeable future will be a major test for the housing market. I was confident the housing market could hold up to rising rates for a few months, but for a few years is another story. 2023 is starting to look like a flat year at best and more likely a down year for housing prices (on a national level). Of course, every market is different, and some markets will probably keep growing! 

Affordability in the housing market is just too low. And if rates are not going to come down to make homes more affordable, then housing prices are going to have to come down to make homes more affordable. 

Even given all this news, I still don’t think we’re heading for a crash (declines of more than 20%). Credit quality is still very good, and inventory is starting to level off. 

The second implication is that rent growth could slow down if there is a major recession and job loss. Job losses combined with inflation could cause some household contraction (people move in with friends or family), which lessens demand. Rent is pretty stable and doesn’t really fall much, even in recessions, but I think rent growth will likely slow. 

Third, we could see increased foreclosures and evictions, but we’re still a good way off from that. The data shows that delinquencies are very low. That could change, but it doesn’t seem likely to happen in the next couple of months at least. 

So, should you invest in this housing market? I am! These types of markets tend to present good opportunities to find value. Stay tuned in the coming weeks, where I will share my 11 recommendations to profit in this type of market. Be sure to also check out my book, Real Estate by the Numbers, where J Scott and I go over what it takes to invest successfully with deal analysis and more!

Posted in Market News
Aug. 29, 2022

Housing Recession Deepens

Source: https://www.nahb.org/blog/2022/08/housing-recession-deepens

In the bi-weekly newsletter Eye on the Economy, NAHB Chief Economist Robert Dietz provided the following overview of the nation’s economy and its impact on the housing market.

Rising mortgage rates, high inflation, low existing inventory and elevated home prices caused housing affordability to fall to its lowest point since the Great Recession in the second quarter of 2022. According to the NAHB/Wells Fargo Housing Opportunity Index, just 42.8% of new and existing homes sold were affordable to a typical family. As more households are priced out of the for-sale market, a number of key housing metrics — including existing home sales, new home sales, single-family permits and single-family starts — have experienced significant year-over-year declines, characterizing the ongoing housing recession. Some markets are now seeing price declines as well.

The volume of new home sales in July fell to the lowest level since January 2016. Sales of newly built, single-family homes came in at a 511,000 seasonally adjusted annual pace, which is a 12.6% decline from the June rate and 29.6% below the estimate from a year ago. Sales-adjusted inventory levels are at an elevated 10.9-month supply in July. However, only 45,000 of the new home inventory is completed and ready to occupy. This count has been rising in recent months and is up 40.6% compared to a year ago. New home sales are likely to continue to show weakness in the months ahead.

Total existing home sales, as estimated by the National Association of Realtors, fell 5.9% to a seasonally adjusted annual rate of 4.81 million in July, the lowest level since May 2020. On a year-over-year basis, sales were 20.2% lower than a year ago. The July median sales price of all existing homes was $403,800, up 10.8% from a year ago, representing the 125th consecutive month of year-over-year increases — the longest-running streak on record. However, price growth is cooling quickly in most markets according to other reporting.

The softening of housing demand has led to ongoing declines for home builder sentiment, per the NAHB/Wells Fargo Housing Market Index (HMI). Builder confidence fell for the eighth straight month in August, falling six points to 49 and marking the first time since May 2020 the index fell below the key break-even measure of 50. The August buyer traffic number in the builder survey was 32, the lowest level since April 2014, excluding the spring of 2020 when the pandemic first hit. Roughly one-in-five (19%) home builders in the HMI survey reported reducing prices in the past month to increase sales or limit cancellations. The median price reduction was 5% for those reporting using such incentives.

The decline in the HMI is consistent with declines for single-family construction. Single-family starts decreased 10.1% to a 916,000 seasonally adjusted annual rate and are down 2.1% on a year-to-date basis. This is the lowest reading for single-family home building since June 2020. More declines lie ahead, as single-family permits decreased 4.3% to a 928,000 annual rate, and are down 5.9% on a year-to-date basis. NAHB is forecasting 2022 will be the first year since 2011 to record an annual decline in single-family home building.

The multifamily sector, which includes apartment buildings and condos, decreased 8.6% to an annualized 530,000 pace. Multifamily construction remains very strong given solid demand for rental housing. The number of multifamily 5+ units currently under construction is up 24.8% year-over-year. Multifamily development is being supported by a substitution effect, with frustrated or priced-out prospective home buyers seeking rental housing. Similarly, demand for single-family rental properties is rising, leading to gains for single-family built-for-rent construction. There were approximately 21,000 single-family built-for-rent starts during the second quarter of 2022. This is a 91% gain over the second quarter 2021 total.

The outlook for the housing market is now dependent on incoming inflation data and the Federal Reserve’s monetary policy. It appears, for example, that the core Personal Consumption Expenditures price index measure of inflation has peaked. And some economists are forecasting the Fed will decelerate its rate hikes, with perhaps a 50 basis-point hike in September, following the 75 basis-point hikes in both June and July. Nonetheless, the Fed will continue hiking, with the bond market pricing in the 10-year Treasury above 3.1% for the first time since late June.

Posted in Market News
June 29, 2022

7 Reasons Why Home Values Won't Collapse


Half-full glasses and optimism are hard to come by lately and so often cynicism rules the day when it comes to economic forecasts for our country. Despite all that, I am choosing a set of rose-colored glasses for our outlook on the housing industry, and believe there is ample data to back an optimistic perspective. My brokerage has been closely tracking interest rates and economic activity all year, but two weeks ago when the biggest single day interest rate in decades took place, we dialed in. Our team signed up for every webinar and financing class possible, researched dozens of economists' opinions and sifted through all sorts of data. Here are 7 reasons backing our optimism, and why I believe home values won’t collapse and that this is a different rodeo than the 2008 crisis.

1. Supply outweighs almost every other point to be made.  We are still in a housing supply crisis and short by millions of units.  We have not built enough to keep up with the population and demand for all types of housing in almost all markets across the country.  Even if builders ramped up production now, the delay in those hypothetical units being delivered to market does not service the demand now and in the immediate future.  This was not the case in 2008 as new construction was over-built.


2. Millennials - in 2008 I was a 22 year old college student racking up a tab of student loans and looking at a dismal job market upon graduation.  Home buying was not an option or even a desire at that point in time.  Fast forward to now and there are 18% more people between the age of 25-34 since 2006, over 46 million strong- this is a huge crowd.  These millennials now want to, and are ready to buy homes.  Many of them need to as they get married, have kids and rent rates are becoming burdensome.  Millennials create the demand that was lacking in 2008.  


3. Home Equity - the last few years have created the greatest surge in home equity in history.  9.9 Trillion dollars or an average of $185k per household is the amount of equity Americans have in their homes.  Even if prices level out or dip slightly most homeowners have an ample cushion of equity.  Being “underwater” or “upside down” in their home was a common trend after 2008 where the margins for equity were very narrow (in part due to loose lending practices) and the housing bubble was the trigger for the recession not vice versa.  What we have now is much different. 


4. 4 Trillion Dollars is the amount of money that is sitting in consumer bank accounts.  Chalk it up to government handouts, wage increases, lifestyle shifts with less travel, home budget awareness etc… There is a lot of money out there.  We are a consumer driven economy which begs the assumption that that 4 Trillion will be spent on something, perhaps not in 2022, but in the near future it’s a safe bet that much of that money will find its way into the housing market.  


5. Migration has been a demographic trend since before Covid, but has persisted and strengthened as many folks migrate from the top 25 metro areas to the South and Middle regions of the Country.  In the Pacific Northwest this has also included an influx of California residents relocating up the coast.  Movement is good for the real estate market. 


6. Remote Work is a driving force impacting demand for larger square footage.  Covid ultimately showed us the value of home and shifted lifestyle trends in favor of staying home, working from home, and needing bigger or better square footage.  The ongoing risk of another potential shutdown keeps home top of mind for many Americans.  Many homeowners have taken the last few years to execute remodel and home improvement projects.  This feeds into the lifestyle shifts of emphasizing home, working from home, and ultimately adds to home values across the board.  


7. The Dodd Frank Act is also a game changer in the then vs now comparison.  Today’s homeowners are more qualified and at way less risk of default than two decades ago.  Lending underwriting requirements, 30 year fixed interest rates, mortgage payments that include interest and principle are just a handful of things that protect homeowners which in turn is a bulwark in housing values and the overall housing market. 


King County Apartment Values


My colleagues and I speak with investors everyday who are wishing and hoping for a housing market crash that would open the floodgates to mythical deals with excessive cash-on-cash and a guaranteed “buy low, sell incredibly high someday strategy.”  Our optimism in the housing market holding its value is often not welcomed by these folks, but that doesn’t phase us at Sound Realty Group.  There are always going to be good real estate deals out there; it just might take some ingenuity and a creative perspective to source them, and put them together - good thing we specialize in just that.  


By: Chelsea Shapiro, Sr. Broker at Sound Realty Group, Inc.

Sources - Guild Mortgage, BKCO Mortgage

Posted in Market News
June 23, 2022

Burien Fourplex :: Just Listed :: 13244 12th Ave SW, Burien

Solid, turn-key fourplex with plenty of room to add value. 5.6% Cap Rate, 6.4% Market Cap Rate. Or, possible condo conversion? All units are 2bed/1bath with private patio/balcony, upper units have Puget Sound views. New owner can add coin-op machines to the shared laundry room for additional income. Rents are currently below market rates and all tenants are month-to-month. Unit interiors have been updated within the last 8 years, newer windows, and newer roof. High-demand rental close to shops and restaurants, 15-minute drive to SeaTac Airport/20-minute drive to DT Seattle.


$1,100,000 |  13244 12th Ave SW, Burien


View On SoundMultiFamily.com 

Posted in Exclusive Listings