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WHIDBEY ISLAND GROWN COOPERATIVE

 

“Whidbey Island Grown Cooperative is a group of farmers, small businesses, and community members working to build a strong, resilient local food system on Whidbey Island.”

Did you know you can find locally sourced, fresh products for purchase directly from farms and other producers here on the Island and other local farms?

Whidbey Island Grown Cooperative (WIGC) is an online marketplace for the sale of available farm fresh products to the community.

This innovative system (Food Hub) combines Whidbey’s agricultural richness with easy online shopping and pick-up experience while supporting locally owned and operated businesses, for the common good.

 

Customers can purchase fresh, local, seasonal products online and pick them up at one of four locations in Langley, Coupeville, and Oak Harbor.

 

How to Buy fresh food from local farmers and producers!

 

Friday to Tuesday: Log in to https://whidbeyislandgrown.com/ to purchase fresh, local food and other specialty and holiday items from Whidbey Island producers through WIGC’s online marketplace. Ordering closes on Tuesday at 9 pm.

 

Wednesday-Friday: Farmers and producers prepare their products and drop them at the packing site.

 

Friday: Volunteers pack the orders and distribute them to four stands on the island:

 

3-5 PM in Langley - Whidbey Island Center for the Arts (565 Camano Ave).

 

4-6 PM in Coupeville – Scenic View (formerly Sherman Pioneer Farm - 46 S. Ebey Rd),

 

4-6 PM in Freeland - Mutiny Bay Blues Farmstand (5486 Cameron Rd)

 

4:30-6:30 PM in Oak Harbor - Elks Lodge (155 N Ernst St, next to Flyer's Restaurant)

 

Also, on Friday: Put in your order for next week!

 

Support local farms and eat great food, all while practicing safe social distancing.

 

 

Supporting Local Means Eating Seasonal

 

Most of us are accustomed to the grocery store, where every type of fruit and vegetable is stocked year-round. Locally, those products are only available in season, and the rest of the year they are shipped in from somewhere else in the world.

 

In spring and fall, available crops are varieties that like shorter hours of light, cooler temperatures, and even frost. In summer, crops are harvested that prefer long, hot days. Don’t see a vegetable you’re looking for? It may not be in season.

 

Join the Hub today and start sourcing your good food locally!

 

Whidbey Island Grown Cooperative

info@whidbeyislandgrown.com
PO Box 472
Coupeville, WA 98239

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Should I wait for mortgage rates to go down?

Contributed by Si Fisher

Homebuyers, are you ready to take the next step but feeling unsure with rising interest rates?  Mortgage rates have indeed increased significantly over this past year. But don’t worry because Windermere Whidbey is here for all your needs! We've compiled a wealth of information that can help you make an informed decision when it comes to buying a home in 2022 and beyond - just keep reading below:

 

First, let’s look at some historic mortgage rate data to put things in perspective. During the Covid pandemic, mortgage interest rates reached all-time lows in 2020 and 2021. Mortgage rates were pushed below 3% and were kept there thanks to emergency measures taken by the Federal Reserve. However, if you look at the chart below you will see that throughout 2022 we have seen interest rates gradually rise.


While this may appear scary, I want to provide one additional piece of information that will give you even more perspective.  Examine the chart below:

 

 

The graph above certainly tells a different story.  Despite recent increases, 30-year mortgage rates now are still below the historical norm.  With that being said, a 3% rate does seem a lot more appealing than a 6% or higher rate.  Especially when you look at how this will affect your purchasing power.

Contact a local expert about financing your next home

How Will Rising Mortgage Rates Impact a Home Buyer’s Purchasing Power?

Let's say you want to purchase a property for $400,000, and you want to keep your monthly payment at or below $2600. Here is how your spending power may alter if mortgage rates rise, see the chart below.

Buyer Purchasing Power

Are Mortgage Interest Rates Going to Continue to Rise or Go Back Down?

The short answer is that the direction interest rates will go is nearly impossible to predict.  According to most experts on the subject, rates may continue to rise for a while as the FED attempts to get inflation under control.  However, if we see the rising interest rates start to cause a recession, they might lower.  Again, nothing is certain on this front and the rates are dependent on too many frequently changing factors to have a guaranteed prediction.

 

Conclusion:  Should you wait for mortgage rates to go back down before purchasing a home?

 

If you are a renter who is currently trying to decide if you want to purchase a home or wait on changing rates, I just want to share one image with you:

In essence, it is accurate to say that the cost of purchasing a property has increased since last year.  The distinction is that homeownership also involves building equity over time, which will increase your net worth.

 

It makes little sense for a borrower to attempt to time their purchase based solely on interest rates in this market. Regardless of current interest rates, our best recommendation is to wait to purchase until you are financially prepared and able to afford the property you desire.

 

Keep in mind that your mortgage rate won't be fixed in stone. Homeowners can always refinance later if rates drop sufficiently to reduce costs.

 

Final Thoughts:

 

Situations vary from person to person. Working with a real estate adviser to weigh your options is what can help you make the best choice possible, and it just so happens we have an office full of highly trained real estate professionals.  Don’t hesitate to reach out if you have any questions about the buying or selling process.

Article contributed by:

Autumn is here and it is a wonderful time to be on Whidbey Island.  One major reason is because all the local farms are sharing their Fall offerings.  Today we will answer the question, “Where to buy Pumpkins on Whidbey”.  If you are on the search for Pumpkin Patches, Corn Mazes, or Apple Picking locations to visit, then read on!

 

Pumpkin Banner - windermerewhidbey.com


The Farm Stand at K & R Farms

Fall is the perfect time to visit The Farm Stand at K&R Farms. Not only can you enjoy picking your own pumpkins or getting lost in the corn maze, but you can also take in the beauty of the sunflower field. And if that isn’t enough to get you in the autumn spirit, then maybe the ice cream will do the trick. In addition to all of these seasonal favorites, you can also purchase fresh produce, local honey, and shaved ice. So whether you’re looking for a fun day out or some delicious food, The Farm Stand at K&R Farms has something for everyone.

 

The Pumpkin patch, corn maze, and sunflower field are open daily from 11 AM – 6 PM

 

Get directions: 36699 SR 20 Oak Harbor, Washington

 

Visit them on Facebook

Whidbey Farm and Market

Ready for some serious fall fun? Look no further than Whidbey Farm and Market! Their pumpkin patch and hay pyramid are open from Sunday to Thursday 11 AM to 6 PM, and Friday and Saturday 11 AM to 10 PM. You can get lost in their corn maze daily from 11 AM to 6 PM; it’s only $5 to enter. Feeling adventurous? Check out their night corn maze on weekends; it’s open from dark until 10 PM. And if you get hungry, don’t worry – they have coffee and ice cream available for purchase, as well as many other items at the market. Plus, there’s live music on Saturdays and Sundays. So come on down and enjoy all that Whidbey Farm and Market has to offer!

 

Check their website for updates HERE

 

Get Directions: 1422 Monroe Landing Rd, Oak Harbor

 

Visit them on Facebook


Case Farm

With Fall in the air, it can only mean one thing- it’s time to head on down to Case Farm! This historic farm has been around since 1898 and is currently run by the fifth generation of Cases. When you visit, you’ll be able to experience all the best that autumn has to offer, from picking out a pumpkin in their patch to getting lost in their corn maze. And of course, you can’t forget about the farm animals! They have cows, turkeys, ducks, chickens, cats, and dogs that are all waiting to meet you. So come on down and enjoy all the fun that Case Farm has to offer this fall!  PLUS there is even a kid friendly bale stack maze for the little ones to enjoy.  SO MUCH FUN!

 

Check their website for updates HERE

 

Get Directions: Case Farm, 98 Case Rd, Oak Harbor, WA 98277

 

Visit them on Facebook

 

Scenic Isle Farm

Formerly known as “Sherman’s Pioneer Farm”

Scenic Isle Farm is a must-visit destination for anyone looking to get into the Fall spirit. Established in 1852, the farm is located in the historic town of Coupeville.  Take your visit to the next level with a fun trolley ride to the sprawling pumpkin patch.  The perfect place to pick out the perfect pumpkin for carving or baking.  In addition to pumpkins, the farm also sells edible squash and gourds, making it a one-stop shop for all your Fall decorating needs.  So whether you’re looking for a fun day trip or a unique photo opportunity, Scenic Isle Farm is sure not to disappoint.

 

Check their website for updates HERE

 

Get Directions: 46 S Ebey Rd, Coupeville, WA 98239

 

Visit them on Facebook

Rock’n Apple Ranch

Fall is the time of year for fresh apple cider, and there’s no better place to get it than Rock’n Apple Ranch. Not only do they offer delicious cider by the half gallon ($7) or gallon ($12), but they also have U-pick apples for just $1 per pound. So if you’re looking for some fall fun, they’ve got you covered. Open from 10 to 3 pm daily.  Whether you’re looking for fresh cider or a fun-filled day out picking apples, Rock’n Apple Ranch is the perfect destination.

 

Get Directions: 3064 Hunt Rd, Oak Harbor, WA 98277

 

Visit them on Facebook

Written by:

Si Fisher Team Whidbey Fall Banner | sifisher.com

What Is an Adjustable-Rate Mortgage (ARM)?

Contributed by Si Fisher

It’s no secret that interest rates have continued to rise, and are now substantially higher than even just 3 months ago.  For this reason, different loan products are coming back into “fashion”. As a buyer it is important to understand the options available to you when financing your home.  That’s where we come in!   In this edition of “Home Buyer Education” we are going to answer the question “What Is an Adjustable-Rate Mortgage (ARM)?”

What Is an Adjustable-Rate Mortgage (ARM)?

An adjustable-rate mortgage, or ARM, is a type of home loan that starts with a fixed interest rate for a specified period of time, typically five years. After that initial period ends, the interest rate will adjust annually based on current market conditions. Because the interest rate can change over time, your monthly payment may go up or down.

 

An ARM can be a good option if you plan to own your home for only a few years, since it typically offers lower interest rates than a fixed-rate mortgage. It can also be a good choice if you expect your income to increase in the coming years, which will help you afford any potential increases in your monthly payment. However, if market conditions cause interest rates to rise sharply after the initial fixed-rate period ends, you could end up paying more than you would with a fixed-rate mortgage.

 

Be sure to ask your lender about how often and by how much the interest rate on an ARM can change. You should also make sure you understand how the payments will change if rates rise or fall. That way, you can be sure an ARM is the right choice for you before you apply for a loan.

Contact a local expert about financing your next home

Different Types of Adjustable-Rate Mortgages (ARMs)

Payment-Option ARM: 

 

With a payment-option ARM, you will have the freedom to select your monthly payments, including interest-only payments and minimum payments that don't cover interest. When interest rates rise, these loan options can potentially land homebuyers in trouble.

 

Interest-Only ARM:

 

In an interest-only ARM, you only make interest payments only for a certain amount of time before beginning to make principle payments as well. When the delayed principal payments are added in, your payments will increase.  Also the longer the introductory period is, the more this increase will be.

 

Hybrid ARM:

 

A hybrid ARM begins with a fixed-rate introduction phase and then transitions to an adjustable-rate period, as previously mentioned. A hybrid ARM's fixed-rate phase typically lasts three to ten years, and during the adjustable-rate period, rates vary at a predetermined frequency, such as once every six months or once a year.

Pros and Cons of an Adjustable-Rate Mortgage (ARM)

  • Pros

    • You can budget and save money thanks to the low introductory rate before the adjustable-rate term begins.

    • If you intend to sell the property in the near future, you can use the sale profits to settle your mortgage before the fixed-rate period expires.

    • Your interest rate and monthly payments can go down if the index declines over time.

  • Cons

    • A fixed-rate mortgage can be a preferable choice if you want to reside in the house for an extended period of time.

    • Your monthly payments can become unmanageable if you don't know how interest rates will change.

    • An ARM makes financial planning more challenging since you can never predict what your monthly payments will be from one year to the next.

Article contributed by:

Are We in a Housing Recession?

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 Chief Economist Matthew Gardner and welcome to this month’s episode of Monday with Matthew. A little while ago, a housing analyst was being interviewed about the current state of the residential market and they suggested that the country is in a “housing recession.” Well, needless to say, this got a lot of attention from the media and the public at large—for obvious reasons.

Any time the word “recession” is mentioned we almost subliminally cast our minds back to 2007. And when the word “recession” is combined with the word “housing,” then panic starts to set in with flashbacks of headlines about burgeoning housing supply, plummeting home prices, and surging foreclosures.

As this is a topic being discussed by many across the country right now, I wanted to share with you my opinion as to whether the phrase “housing recession” is an appropriate one when describing today’s market.

So, what is a recession? To answer this, I will turn to my trusted Oxford English Dictionary, and this is how they describe that word.

Definition of a Recession

A slide showing two definitions of the word "recession" from the Oxford English Dictionary. The first definition is for both countable and uncountable contexts, which defines a recession as quote a difficult time for the economy of a country, when there is less trade and industrial activity than usual and more people are unemployed end quote. The second definition is the more formal of the two, applicable in uncountable contexts. The definition reads quote the movement backward of something from a previous position end quote.

Image Source: Matthew Gardner

 

Recession:

  • a difficult time for the economy of a country, when there is less trade and industrial activity than usual, and more people are unemployed
  • the movement backward of something from a previous position

Well, how do we use these definitions when it comes to the ownership housing market?

I guess that “less trade” could mean lower sales and we have certainly seen sales pull back. “Movement backward” could be how someone might describe the fact that sale prices have been pulling back in many markets across the country.

But although some may say that we really are in a housing recession given the definition of the word, is it really accurate? Are we are inextricably headed down a road that leads to the bursting of some sort of bubble as we all remember from 2007? I don’t believe we are. To explain my thinking let’s start out by looking at housing supply.

Inventory of Homes for Sale

A line graph titled "Inventory of Homes for Sale," showing the months January 2021 through July 2022 on the x-axis and numbers in millions on the y-axis ranging from 0.8 to 1.3. The graph shows that listing activity has risen from an all-time low of 900,000 during February 2022 to over 1.2 million units in July 2022—a 35.6% increase. Between January 2021 and October 2021, inventory ranged between 1.1 and 1.2 million before plummeting steadily toward the all-time low of 900,000 in February. Since then, inventory has rebounded to over 1.2 million again almost as quickly as it dropped.

Image Source: Matthew Gardner

 

Yes, listing activity is up—can’t argue with that—with the number of resale homes for sale jumping by more than a third from the start of this year. But there’s more to it than that. You see, we have to look a little further back to better understand what’s really going on.

And to do this, let’s check out the number of homes for sale during the first seven months of this year and compare those numbers to the same periods in 2018 through 2021.

Active Listings By Month

A multi-line graph titled "Active Listings by Month" showing the number of active listings for the years 2018, 2019, 2020, 2021, and 2022. The x-axis contains the months January through July, and the y-axis shows the number of listings ranging from 600,000 to two million. Overall, the graph indicates that listings remain well below the long-term average, and that the number of homes for sale in July 2022 exactly matches that of July 2021. 2022's January value is the lowest of the selected years, followed in order by 2021, 2020, 2018, and 2019. 2019 began the year with around 1.6 million active listings. In short, the July numbers show that there were hundreds of thousands more active listings in 2018 and 2019 than 2020 through 2022.

Image Source: Matthew Gardner

 

I don’t know about you, but this doesn’t look like a chart showing a massively oversupplied market! The number of homes for sale in July of this year was almost exactly the same as we saw last July and is still well below the levels seen in 2018, 2019, or 2020.

Sure, listings are up. But are we at levels that will cause prices to tumble? Remember that it was a massive increase in the number of homes for sale that led to the housing bubble bursting back in 2007. Listings peaked at almost 3.9 million units in 2006; but today there are 2.6 million fewer units on the market than we saw back then. Now that we’ve seen that supply isn’t at concerning levels, let’s look at demand.

Existing Home Sales

A line graph titled "Existing Home Sales." The x-axis shows every other month from January 2020 to July 2022, and the y-axis shows numbers in millions ranging from 0 to 7.0. Overall, the graph shows that, although they remain higher than the levels we saw at the beginning of the COVID-19 pandemic, home sales have been falling since January 2022. Home sales dipped sharply in March 2020 due to the onset of the pandemic, going from above 5 million to 4 million. By September 2020, existing home sales rose above 6 million, and hovered around that mark until January 2022. In July 2022, existing home sales dipped below 5 million again.

Image Source: Matthew Gardner

 

This chart doesn’t look too good. On an annualized basis, sales have been pulling back since the start of the year but that’s not the full story. Let’s look at this in a slightly different way.

Year-to-Date Sales

A multi-bar chart titled "Year-to-Date Sales" showing non-seasonally adjusted and seasonally adjusted sales for the past five years. The years 2018 through 2022 are represented on the x-axis, while the y-axis shows numbers in millions ranging from 0 to 4.0. 2022 year-to-date sales are lower than they were last year, but unadjusted for seasonality, year-to-date sales are higher than 2019 or 2020. And when adjusted for seasonal shifts, 2022's year-to-date sales are higher than 2018, 2019, and 2020. 2021 has the highest year-to-date sales totals, with both non- and seasonally adjusted sales figures right around 3.5 million.

Image Source: Matthew Gardner

 

The bars here show year-to-date sales through July—both adjusted and unadjusted for seasonality—and although unadjusted sales so far this year are lower than we saw during the first seven months of 2021, they are at about the same level as we saw in 2018 and are higher than in 2019 or 2020.

But when we adjust the monthly sales data for seasonality, year-to-date sales in 2022 were higher than all years shown here other than 2021.

So, although sales have fallen, it appears to me that we are heading back to a more realistic market rather than one that is hemorrhaging. Yet another indicator we need to consider when examining the market for evidence of some sort of recession are months of inventory , which shows how long it would take to sell every home for sale using the current monthly sales pace.

Months of Inventory

A line graph titled "Months of Inventory," which reflects how long it would take every home on the market to sell given the current housing market conditions. The x-axis displays the months January 2021 through July 2022, and the y-axis shows the number of months ranging from 0 to 3.5. The chart shows a figure of 3.3 months of inventory for July, indicating a seller's market. A balanced market is 4 to 6 months of inventory. From January 2021 to August 2021, months of inventory rose from below 2.0 to above 2.5, then dipped to just above 1.5 in January 2022. Since then, months of inventory has steadily risen to the 3.3-month figure in July 2022.

Image Source: Matthew Gardner

 

This graph shows that it would take three months to sell every home on the market given the sales we saw in July. That is quite a jump from the January pace but, again, perspective is everything.

Months of Inventory: Seller’s Market

A line graph titled "Months of Inventory," which presents an expanded view of inventory dating back to the year 2000. The x-axis shows the years 2000 through 2022, and the y-axis shows the months of inventory ranging from 0 to 13. The graph shows that as of 2022, we are still in a seller's market, even though listings have risen and sales have slowed. A balanced market—marked by 4-6 months inventory—is still not present. From 2000 to early 2006, the housing market stayed below 6, then leapt up to roughly 10 months by 2008. The highest months of inventory displayed is 13 between 2010 and 2011. Since then, the overall direction of the chart has trended downwards, with the lowest figure—below 2 months of inventory—appearing in late 2021/early 2022.

Image Source: Matthew Gardner

 

At three months, it is still a seller’s market. It’s generally accepted that the definition of a seller’s market is any number below four months; a balanced market is four to six months of inventory, and a buyer’s market is when the month of inventory is above six.

And a simple bit of math shows us that, for the market to shift from favoring sellers to favoring buyers, the number of homes for sale must break above two million—which we haven’t seen since 2015—and monthly sales would have to drop to below 300,000. We’ve only seen that happen three times in history: November 2008, and again in July and August of 2010.

Yes, listings are up, and sales are down. There’s no denying it. But, again, does the data justify the term recession? My answer would be no. But, if you’re still not convinced, let’s turn our attention to sale prices. I think that might help make things even clearer.

Median U.S. Existing Home Price

A line graph titled "Median U.S. Existing Home Price." It shows home sale price figures (displayed on the y-axis from $100,000 to $450,000) for the months January and July from 2012 through 2022 (displayed on the x-axis). a solid line tracks the median home price, showing a gradual increase over time from roughly $150,000 in January 2012 to over $400,000 in July 2022. A dotted line runs through the middle of the undulations in the solid line, following the same upward trend from 2012 through the end of 2020. But during early 2021, the solid line breaks away from the trend line, which reflects the historically low levels of mortgage rates at that time. Sale prices are starting to pull back, given the affordability constraints and high financing costs in the housing market status quo. Windermere Chief Economist Matthew Gardner expects this pull-back of prices to continue.

Image Source: Matthew Gardner

 

The solid line represents the median sale prices of homes over time and the dotted line shows the trend. You can clearly see that we started breaking away from the trend line in early 2021 and that’s not at all surprising as it started the month after mortgage rates hit their historic all-time low.

But today’s financing costs are significantly higher, and prices have started to slide. Although I certainly expect that we will see sale prices fall further, it appears to me as if they are simply moving back to the long-term trend, and not collapsing.

Mortgage Rate Forecasts

A multi-bar chart titled "Mortgage Rate Forecasts" showing how several institutions foresee mortgage rates in 2023. The chart shows Fannie Mae's 2023 prediction of 4.5%, followed by Freddie Mac's 5.1%, Mortgage Bankers Association's (MBA) 4.9%, 6.0% for the National Association of REALTORS® (NAR), 5.3% for Wells Fargo, and Matthew's forecast of 5.3%. Overall, rates remain higher than buyers are used to, but will not get close to the long-term average of 7.5%. It is generally accepted that mortgage rates are likely to start pulling back modestly in 2023.

Image Source: Matthew Gardner

 

With mortgage rates doubling from their 2021 lows, downward pressure on sale price was to be expected. But will they—as some think—rise to a level that will cause home prices to plummet? To answer that, here are the forecasts of several associations. You’ll see that all, bar the National Association of Realtors and Freddie Mac, see rates pulling back—albeit modestly—in 2023.

Of course, all these are annual averages and today’s rates are higher with the latest Freddie Mac data showing the average 30-year fixed rate above 6%—a level we haven’t seen since 2008.

However, economists including myself find it unlikely that rates will continue rising significantly from where they are today. The mortgage market is certainly in a bit of disarray right now with the yield curve inverting, but that should correct itself by early next year and that’s why we generally expect rates to start pulling back from their current levels by the start of 2023.

But if rising rates are triggering memories of 2008, you wouldn’t be alone. There are some expecting that the spike in rates will trigger a surge in foreclosures and that will doom the market. But as you see here, although foreclosure filings have certainly risen, they are still remarkably low compared to historic standards.

U.S. Foreclosure Filings

A bar graph titled "U.S. Foreclosure Filings" showing the number of home foreclosures (displayed on the y-axis from 0 to 250,000) in the U.S. from Q1 2017 to Q2 2022 (displayed on the y-axis). From Q1 2017 to Q2 2019, U.S. foreclosures remained above 150,000. Between Q1 and Q2 2020, foreclosures dropped from just below 150,000 to well below 50,000. This figure dropped further in Q3 2020 but has increased every quarter since. Windermere Chief Economist Matthew Gardner opines that this increasing trend of foreclosures is not concerning, since it does not yet represent a level of foreclosures sufficient to create an oversupply in the market.

Image Source: Matthew Gardner

 

In the second quarter, newly delinquent mortgages represented just 1.9% of all mortgages outstanding1 and that’s the lowest share the market has seen since 2006. Although I do expect the number of homes being foreclosed on will rise as we move into 2023, I just don’t see it getting to the levels necessary to materially impact the market. And a big part of the reasoning behind my thinking is this:

Equity Rich Households (Q2 2022)

A slide titled "Equity Rich Households (Q2 2022)" showing a map of the United States where each state's equity rich household percentage is displayed. "Equity rich" in this context signifies people with a mortgage that are sitting on more than 50% equity. The highest equity-rich state in the country is Vermont at 71.4%, followed by Idaho at 69.5%, and Arizona at 64.8%. The least equity rich state in the country is Louisiana at 23.4%, followed by Illinois at 25.4%, and Alaska at 26.7%.

Image Source: Matthew Gardner

 

In the second quarter of 2022, over 48% of homeowners with a mortgage were sitting on more than 50% equity.

Simply put, for enough homeowners to be put in a negative equity situation that would lead them to enter foreclosure and materially damage the market, home prices across the country would have to fall by a percentage greater than we saw during the market crash. And I just don’t see this happening.

The word “recession” has many connotations, and when it’s used to describe the housing market, it can engender a significant level of panic. So, I will ask you all. Given the data I have showed you today, do you think that we are in a housing recession?

Yes, supply levels have risen. But they are still relatively low when compared to historic averages and with builders slowing construction activity to a crawl, it’s unlikely that housing supply will grow much organically. Over the longer term, I believe that the supply of resale homes for sale will remain below historic averages. I say this for one simple reason: mortgage rates.

In 2020, a record number of households refinanced their homes to take advantage of the mortgage rates that had been plummeting. And in 2021, over six million home buyers got mortgages with rates averaging below 3%.

I would suggest to you that we will not see the number of homes for sale even get back to normalized levels in the mid-term, as many potential sellers will decide not to sell, because if they did, they would lose the never seen before and likely never to be seen again mortgage rate that they currently have.

Of course, there will be sellers who have to move because of factors such as job relocation, death, or divorce, but I would contend that listing activity may well be tight for a long time. And if supply remains below the level of demand, the market is further protected.

And as far as demand goes, let’s not forget that the age makeup of the country suggests that we will see a lot more potential buyers as Millennials and Generation Z mature, with current numbers suggesting significant buyer demand for the next two decades.

As for sale prices, I still believe (as do almost all economists) that the median home price next year will be higher than we will see this year, but a very significant drop in the pace of sales growth is likely as we trend down to historic averages.

Of course, all real estate is local and there are markets across the country that will see prices drop in absolute terms. But even in the most highly susceptible markets, it will be a temporary phenomenon. By 2024, homeowners in these markets will see the value of their homes start to rise again.

I’m going to leave you with my quote to describe today’s market today and it’s that we are in a “housing reversion,” NOT a housing recession.

As always, I’d love to hear your comments on my thoughts so feel free to reach out. In the meantime, stay safe out there and I’ll see you all again next month.

 

1: New York Fed Quarterly Report on Household Debt and Credit


About Matthew Gardner

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.

Best place to get a drink on Whidbey Island

(Locally crafted spirits, wine and beer on Whidbey)

Great spirits have always encountered violent opposition

from mediocre minds.

~Albert Einstein

Click image to see properties for sale on South Whidbey Island

Contributed by Jim Tomisser

Einstein probably wasn’t referring to alcohol, but we are! From Cultus Bay Distillery to Whidbey’s several esteemed wineries to the Bunker’s unique collection of rich locally made liqueurs and beyond, Whidbey Island is the place to be.

No good story starts with a salad--in fact, a great story begins at Cultus Bay Distillery, an eclectic brand of in-house hard liquors. This small business is a local, island-bred company that even locals arrive at by word of mouth. Don’t let that fool you though--business is booming here. By the end of this, I hope to welcome you to the elite clientele of Whidbey Islands best-kept spirits.

Cultus Bay Distillery Spirits | windermerewhidbey.com
Kathy Parks | windermerewhidbey.com

My wife and I lovingly dubbed her Moonshine Kathy, but a lot of people will know her as Kathy Parks. At her distillery, you’ll find the strongest taste of the island in a little, home distillery run by the most seasoned and charming local.

 

Kathy’s story is a rare and unique one that resonates with all who hear it. In 1987 the Washington native lost her firefighter husband, Gary, while he was on the job. For about thirty years the mystery of who set the fire that killed him remained unsolved while Kathy and her two daughters mourned the heavy loss and navigated deep-seated grief.

While his family honors his memory via stories relayed to anyone who meets them, Kathy immortalizes him through her business. She thoroughly enjoys giving visitors a tour of the cozy distillery, how she makes the spirits, and the reason behind some of the names given to the various alcohols. One, in particular, stood out to me as I’m sure it does to everyone who stops by.

Kathy with Barrel | windermerewhidbey.com
Kathy with Spirit | windermerewhidbey.com

Kathy’s EFD 81 Whiskey is not only distinctive in name and taste, but it is also a special one in memory of Gary and his honorable work.

Another significant characteristic of Kathy’s distillery is how the spirits are made. They use traditional equipment of their own making to ensure authentic distillery processes. Kathy and her partners’ decades-long experience in the field certainly make Cultus Bay Distillery a business you want to keep on your radar as her customer base increases.

Be sure to carve out extra time for your visit to listen to Moonshine Kathy’s engaging stories and revel in her business experiences straight from the source. You’ll want to bring your wallet too, because if you try to leave with just one of her excellent alcohols you’ll end up leaving with one of everything.

Group Pic 01 | windermerewhidbey.com
Group Pic 02 | windermerewhidbey.com

Want to start your own story on Whidbey Island? -->

Click image to view property listings near Spoiled Dog Winery

Home is where the wine is--so just call Whidbey Island home. Spoiled Dog Winery hits the ball out of the park when it comes to places to sip on the island. Follow the path through a short stretch of woods that opens to a sprawling countryside of vineyards, fields, and blue sky! This winery is a great place to sit and visit for hours on end.

They offer snacks and treats of your choice to pair with their wine. Get a taste of all their offerings with a mixed, red, or white flight… or one of each! I personally like the mixed flight because you get a tasting of a white, rosé, and two reds.

Spoiled Dog Wines | windermerewhidbey.com
Spoiled Dog Winery | windermerewhidbey.com

Their staff is also very friendly and knowledgeable, and if you’re not a connoisseur, they are very eager to help you decide what you want. Patrick and Jake were excellent advisors and conversationalists on my last visit.

 

 

Looking to build your dream home near Spoiled Dog Winery?

The prize for a distinctive destination you’ll never forget, however, goes to Comforts of Whidbey in Langley. The views of sparkling water and surrounding mountains alone are spectacular. Just follow the little dirt road up and over the hill until you happen upon an expansive view of the valley and water below.

Comforts View | windermerewhidbey.com

Here, they offer tastings from 11 am to 5 pm and full pours after. They offer wine tours throughout the year, and they provide live music on Sundays in the afternoons.

The owners, Rita and Carl Comfort, are the most sociable and engaging owners you’ll meet! While Rita poured during our tastings, I got to hear her story. Her husband is originally from the island, but they met on the other side of the country and lived in Australia for over a decade where they developed a taste for bold reds.

Comforts Table | windermerewhidbey.com
Comforts Reds | windermerewhidbey.com

My favorite of their own reds, whose grapes are sourced from locations all over Washington, was the 2018 CMS. This Cab/Malbec/Syrah blend is being served for the first time this year, and according to Rita, may not have been created without the pandemic halting time and limiting resources. It is a miracle COVID baby to be sure!

Their B&B sets Comforts apart from the rest. Each room has a view of Puget Sound, and there is a complimentary flight of wine at check-in. The Comforts make it their mission to help visitors recharge their souls, whether you’re visiting for the day or staying overnight.

This is a popular destination for those looking to tour and buy homes. While the tasting room is only open Thursday through Sunday, Rita is always sure to leave wine and cheese out upstairs for overnight guests on off days. Sign me up!

Now, how about a splash of liqueur? The world-renowned Whidbey Island Distillery--or the Bunker as we islanders call it--is home to some of the top-rated liqueurs in the world. Their boysenberry liqueur, in fact, takes the gold as the top-rated alcohol in the world!

Depending on the season, this distillery also releases exclusive limited edition flavors. Summer’s raspberry liqueur with orange peel, my personal favorite, is to die for and sells out fast. Of course, all their liqueurs go great with their Bunker Rye Whiskey or any mixed cocktail you make at home. Visit the island and try it for yourself with a complimentary tasting!

Are you ready to make your real estate goals a reality?

And if that’s not (in) your cup of tea, Penn Cove Brewing Company is the place to be. They have locations in Coupeville, Freeland, and Oak Harbor--no matter which side you’re coming from, their taprooms are always accessible.

They have a wide selection of brews from Lagers to IPAs to Ciders. Be sure to come back, again and again, to try their seasonal ciders as they change all year round! This season’s was a surprising, unique peach cider that goes down easy and feels like the bittersweet last leg of summer.

Penn Cove Brewery Freeland | windermerewhidbey.com
Penn Cove Brewery Freeland | windermerewhidbey.com

In the outside seating area permanently sits the Braeburn food truck whose menu pairs perfectly with the brewery’s drink choices. Chicken waffles, fried chicken sandwiches, and so much more! From appetizers and snacks to full meals, you’ll have plenty to fill your stomach at this cool, casual brewery.

Whether you’re into wine, brews, or something harder, you can’t go wrong here. In a place like Whidbey Island, the good times are endless, and you’re never short of a deeply meaningful, unforgettable story.

Photos and blog entry contributed by:

🚨 Here it is folks! The SEPTEMBER 2022 Whidbey Island Real Estate Market Update (rolling 12-month report). CLICK HERE TO GET THE PRINTABLE PDF!

 

🗺️ Stats are separated by area: South, Central, & North Whidbey, and incorporate data from the 12 months prior to our current month.

 

🏡All stats represent only the residential & condo sales, except for the ones specifically for vacant land. May not represent all market activity.

 

If you want help interpreting this data and what it means for you. Feel free to message us and setup a free buyers or sellers consultation.

 

📱 360 331 6006

✉️ whidbeyinfo@windermere.com

🤗 Enjoy!

 

#wearewhidbey #windermereEconomics

Created by Si Fisher

.

.

.

Data supplied by the NWMLS. Neither the

Board or its MLS guarantees its accuracy. May

not reflect all real estate activity in the market.

The Continued Decline of the Housing Market Index

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 Chief Economist Matthew Gardner and welcome to this month’s episode of Monday with Matthew. Today we are going to take a look at the new home market where headwinds are certainly growing. And the reason this particular subject piqued my interest was that the National Association of Home Builders just released their Housing Market Index for August, and the numbers were certainly eye-opening.

Now, for those of you who may not be particularly familiar with this index, it is based on a survey of home builders which asks them to give their opinions on the single-family home market and asks them to rate current market conditions for the sale of homes today as well as in six months’ time. It also asks their opinion regarding foot traffic of prospective buyers to their new home communities.

NAHB Housing Market Index

A line graph titled "NAHB Housing Market Index." It shows the falling confidence of U.S. home builder in the Housing Market Index, which measures their perspective of current market conditions for the sale of new homes. The x-axis spans from January 2020 to August 2022. August's figure of 49 represents the eight consecutive drop in the index, and is the first time we've seen a number below 50 since May of 2020.

 

And as you can see, the headline index level fell six points to 49. The drop in August marked the eighth consecutive monthly decline for the Housing Market Index. It was also notable because it was the first time since May of 2020 that the index has dropped below the key 50 breakeven level. This is significant, as it tells us that today more home builders currently rate sales conditions as poor than good.

Now, while the August number was certainly lower than some economists had forecast, I was actually not too surprised as builders have been reporting a spike in cancelled contracts recently. In fact, a report I just read that was put out by John Burns Consulting suggested that the cancellations have more than doubled since April with 17.6% of buyers pulling out of their purchases in July. That compares to 8% in April and 7 ½% a year ago.

Housing Market Index Components

A multi-line graph titled "HMI Components." This chart shows the components behind home builder's falling confidence in the current market, displayed in the Housing Market Index. The three components displayed here are present single-family home sales, expectations (future sales), and traffic. All three are at their lowest levels since May 2020. Of the chart, Matthew Gardner says, "the present sales index fell seven points to 57 but is still above the breakeven point. The future sales series fell two points to 47, while prospective buyer traffic fell five points to 32 which, if we exclude the pandemic, represents the lowest index level since April of 2014."

 

This chart shows a breakdown of three components of the Housing Market Index which are all at their lowest levels since May of 2020, which was just before housing activity rebounded following the lockdown due to COVID-19.

  • The present sales index fell seven points to 57 but is still above the breakeven point
  • The future sales series fell two points to 47
  • Prospective buyer traffic fell five points to 32 which, if we exclude the pandemic, represents the lowest index level since April of 2014

I find this index has a very strong correlation with new home sales, but I also use it as a pretty reliable leading indicator when it comes to single-family housing starts. I’ll get to that shortly. The survey also stated that one in five builders had reduced prices in August. That might help to explain the 10-point spread between builders’ perception of current versus future sales. But there are limits on home builders’ ability to keep cutting prices in order to support sales. This has become a significant issue because many of them are currently holding a large stock of inventory.

New Homes for Sale

A bar graph titled "New Homes for Sale." It shows inventory levels for the period January 2020 through June 2022. Listings have risen 32.1% year over year, and are up 16% since the start of the year. Of the homes currently for sale, 67% are under construction, 24% have yet to break ground, and 95 are ready to occupy. The y-axis displays the number of new homes for sale in the thousands. June 2022 has the highest value on the chart, with an inventory level just above 450,000.

 

Here is what current inventory levels look like. Although you might think that it’s not that bad given that only 9% of available homes are finished are ready to move into, I would tell you that builders incur costs every day that a home is not sold, even if that home has yet to be built. And with inventory at a level not seen since 2008, I’m sure there are a lot of builders not sleeping too well right now.

I would add that by the time the above video is released, the July new home sales report will have been published. I can almost guarantee that the number of homes for sale will have grown further.

New Home Sales

A bar graph titled "New Home Sales." When taken in context of the "New Homes for Sale" chart mentioned earlier in this month's episode, Matthew Gardner is showing a decline in the pace of sales activity. Sales fell by over 8% month over month in June 2022, and are 17.4% lower than a year ago. On an adjusted basis, monthly sales were the lowest seen since before the pandemic.

 

Higher inventory levels are due to slower sales activity, which is continuing to decline. Sales are 17% lower than a year ago. With more homes for sale and lower transactions, it would now take more than nine months to absorb all available homes using the current sales pace. I would also tell you that the last time months of supply broke above nine was all the way back in 2010.

  • It’s my forecast that sales in July will have dropped from the annualized rate of 590,000 shown in the chart above to somewhere between 570,000 and 580,000.

U.S. Single-Family Housing Starts

A chart titled "U.S. Single Family Housing Starts." It shows the number of new home starts from January 2019 to July 2022. The most recent figures show starts have fallen 18.5% year over year. As Matthew Gardner explains, "With fewer buyers and rising inventory levels, builders have pulled back significantly. The number of building permits issues is 11.7% lower than a year ago."

 

With high supply levels and lower sales, it’s not at all surprising to see builders hitting the brakes, with new home starts falling by 10.1% between June and July of this year. Starts are down by 18 ½% from a year ago. Starts have dropped on a sequential basis for five consecutive months now, and I am afraid that they will drop further before finding a bottom.

So, what’s the bottom line here? Well, there are several issues I see, the first of which is affordability. Home prices have been spiraling upward since the start of the pandemic not only because mortgage rates dropped, but construction costs started jumping and builders had to charge more for a home.

Builders saw prices rise by almost 18% last year. This had already taken a significant toll on affordability even before the mortgage rates spike we saw earlier this year. The upshot, as I see it, is that tighter monetary policy from the Fed, in concert with construction costs that remain well above normal levels, has hit builders and hit them hard. Of course, they are doing their best to address the situation by slowing construction activity significantly, but I think that they are going to have a pretty rough time for the next several months.

Ultimately, I see little option for home builders other than lowering prices further, especially now that they are competing with rising inventories in the resale market. I also believe that there are buyers out there waiting patiently on the sidelines for prices to drop in the coming months as they know that builders at some point have to solve the current supply demand imbalance and lowering prices is the easiest way of doing this. Last month the average price drop was 5%, but this is very likely to increase as we move toward the fall.

Will builders get through the situation they find themselves in? I believe that they will. And there are some glimmers of light out there with inflation appearing to be peaking, interest rates are, if not dropping, then certainly stabilizing, and this will help.

Builders also understand that the country has a significant housing shortage. In fact, a recent report published by “Up For Growth” suggested that we have a housing shortage today of around 3.8 million homes. Although this includes rental and ownership housing, some basic math tells me that there is a need today for around 2.5 million new owner-occupied homes. So, light is definitely at the end of the tunnel, but there is a way to go before they get out of it.

And there you have it. I hope that you’ve found my thoughts on this topic of interest. As always, if you have any questions or comments about the current new home environment, please do reach out to me. In the meantime, stay safe out there and I look forward to visiting with you all again next month.

Bye now.


About Matthew Gardner

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.

🚨 Here it is folks! The AUGUST 2022 Whidbey Island Real Estate Market Update (rolling 12-month report). CLICK HERE TO GET THE PRINTABLE PDF!

 

🗺️ Stats are separated by area: South, Central, & North Whidbey, and incorporate data from the 12 months prior to our current month.

 

🏡All stats represent only the residential & condo sales, except for the ones specifically for vacant land. May not represent all market activity.

 

If you want help interpreting this data and what it means for you. Feel free to message us and setup a free buyers or sellers consultation.

 

📱 360 331 6006

✉️ whidbeyinfo@windermere.com

🤗 Enjoy!

 

#wearewhidbey #windermereEconomics

Created by Si Fisher

.

.

.

Data supplied by the NWMLS. Neither the

Board or its MLS guarantees its accuracy. May

not reflect all real estate activity in the market.

2022 Western Washington Real Estate Market Update | Q2

 

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.

Click here to get the Printable PDF version of the report!

Regional Economic Overview

The most recent employment data (from May) showed that all but 2,800 of the jobs lost during the pandemic have been recovered. More than eight of the counties contained in this report show employment levels higher than they were before COVID-19 hit. The regional unemployment rate fell to 4.5% from 5.2% in March, with total unemployment back to pre-pandemic levels. For the time being, the local economy appears to be in pretty good shape. Though some are suggesting we are about to enter a recession, I am not seeing it in the numbers given rising employment and solid income growth.

Western Washington Home Sales

❱ In the second quarter of 2022, 23,005 homes sold, representing a drop of 11% from the same period a year ago, but up by a significant 52% from the first quarter of this year.

❱ Sales rose in Grays Harbor County compared to a year ago but fell across the balance of the region. The spring market, however, was very robust, likely due to growing inventory levels and buyers trying to get ahead of rising mortgage rates.

❱ Second quarter growth in listing activity was palpable: 175% more homes were listed than during the first quarter and 61.98% more than a year ago.

❱ Pending sales outpaced listings by a factor of 3:1. This is down from the prior year but only because of the additional supply that came to market.

A bar graph showing the annual change in home sales for various counties in Western Washington from Q2 2021 to Q2 2022. The only county with a positive percentage year-over-year change is Gray Harbor County at 4.9%. All other counties show a negative year-over-year change Here are the totals: Skagit -0.6%, Lewis -1.1%, Kitsap -1.3%, Cowlitz -5.4%, Clallam -5.8%, Jefferson -6.6%, Whatcom -6.7%, Thurston -7.3%, Snohomish -8.4%, Pierce -10.2%, Island -11.3%, Mason -11.7%, King -15.8%, and San Juan -38.2%.

Western Washington Home Prices

❱ Even in the face of rising mortgage rates, home prices continue to rise at a well-above-average pace, with average prices up 13.3% year over year to $830,941.

❱ I have been watching list prices as they are a leading indicator of the health of the housing market. Thus far, despite rising mortgage rates and inventory levels, sellers remain confident. This is reflected in rising median list prices in all but three counties compared to the previous quarter. They were lower in San Juan, Island, and Jefferson counties.

❱ Prices rose by double digits in all but four counties. Snohomish, Grays Harbor, Mason, and Thurston counties saw significant growth.

❱ List prices and supply are both trending higher, but this has yet to slow price growth significantly. I believe we will see the pace of appreciation start to slow, but not yet.

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. San Juan County is the only county with a percentage change in the 5% to 7.9% range, Skagit, Lewis, and Cowlitz counties are in the 8% to 10.9% change range, Clallam, Jefferson, Kitsap, and Pierce are in the 11% to 13.9 % change range, King and Whatcom counties are in the 14% to 16.9% change range, and Grays Harbor, Mason, Thurston, and Snohomish counties are in the 17% + range.

A bar graph showing the annual change in home sale prices for various counties in Western Washington from Q2 2021 to Q2 2022. Snohomish county tops the list at 20.6%, followed by Grays Harbor at 18.9%, Mason at 18.4%, Thurston at 17.4%, Whatcom at 16.3%, King at 14.3%, Kitsap at 13.8%, Jefferson at 13.6%, Pierce at 13%, Clallam at 12.7%, Skagit at 10.8%, Lewis at 9.1%, Cowlitz at 8.9%, Island at 8.6%, and finally San Juan at 5.6%.

Mortgage Rates

Although mortgage rates did drop in June, the quarterly trend was still moving higher. Inflation—the bane of bonds and, therefore, mortgage rates—has yet to slow, which is putting upward pressure on financing costs.

That said, there are some signs that inflation is starting to soften and if this starts to show in upcoming Consumer Price Index numbers then rates will likely find a ceiling. I am hopeful this will be the case at some point in the third quarter, which is reflected in my forecast.

A bar graph showing the mortgage rates from 2020 to the present, as well as Matthew Gardner's forecasted mortgage rates through Q2 2023. He forecasts mortgage rates continuing to climb to 5.9% in Q4 2022, then tapering off to 5.58% in Q1 2023 and 5.53% in Q2 2023.

Western Washington Days on Market

❱ It took an average of 16 days for a home to go pending in the second quarter of the year. This was 2 fewer days than in the same quarter of 2021, and 9 fewer days than in the first quarter.

❱ Snohomish, King, and Pierce counties were, again, the tightest markets in Western Washington, with homes taking an average of between 8 and 10 days to sell. Compared to a year ago, average market time dropped the most in San Juan County, where it took 26 fewer days for a seller to find a buyer.

❱ All but six counties saw average time on market drop from the same period a year ago. The markets where it took longer to sell a home saw the length of time increase only marginally.

❱ Compared to the first quarter of this year, average market time fell across the board. Demand remains very strong.

A bar graph showing the average days on market for homes in various counties in Western Washington for Q2 2022. Snohomish and King counties have the lowest DOM at 8, followed by Thurston and Kitsap at 9, Pierce at 10, Island and Skagit at 12, Whatcom at 14, Mason at 16, Cowlitz at 17, Lewis at 20, Jefferson at 21, Clallam at 24, Grays Harbor at 25, and San Juan at 35.

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 economy remains buoyant, which is an important factor when it comes to the regional housing market, particularly as it affects buyers. Even though the number of homes that came to market has jumped significantly, which should favor those looking for a new home, demand is still robust, and the market remains competitive.

A speedometer graph indicating a strong seller's market in Western Washington for Q2 2022.

Much to the disappointment of buyers, rising listing prices suggest that sellers are clearly still confident even as financing costs continue to increase. While the pace of price growth is slowing, sellers are still generally in control. As such, I have moved the needle a little more in the direction of sellers. Until we see list-price growth and home sales slow significantly, we will not reach a balanced market.

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.