Market News • August 4, 2017

Central Washington Real Estate Market Update

by Windermere Economics

ECONOMIC OVERVIEW

Though Washington State’s economy has been expanding at a rapid pace, we are seeing a slowdown as the state gets closer to full employment. Given the strong economy, I expect income growth to move markedly higher in the second half of the year. I also expect the state to add around 70,000 jobs by the end of 2017.

Like much of the rest of the state, Central Washington continues to experience modest employment growth. An additional 1,300 jobs were created between May

2016 and May 2017, which drove the unemployment rate lower (from 6.3% to 5.4%). I believe we will see continued growth in employment, leading to further declines in the unemployment rate through the duration of 2017.

HOME SALES ACTIVITY

Home sales throughout Central Washington were mixed in the second quarter. Sales rose in three markets but dropped in one when compared to the second quarter of 2016. In total, there were 1,169 home sales in the quarter— an increase of 6.3% over the same period in 2016.
Sales rose at the fastest rate in Kittitas County, which had an impressive 28.3% increase over the second quarter of 2016. That said, the market is a small one, so sales activity can fluctuate quite dramatically.
The number of pending home sales— an indicator of future closings—was up across the board. As such, I expect to see regional home sales continue to rise as we move through the rest of the summer.
The number of homes for sale in the quarter was down 14.2% compared to the second quarter of last year. The market is clearly starved of inventory, which continues to push home prices higher.

HOME PRICES

Year-over-year, the average home price in the region rose by 9.1% to $275,979. Price growth remains robust as demand exceeds supply.
Yakima and Kittitas Counties saw relatively modest price increases. The other two counties in this market reported double-digit gains.
All counties in this report saw prices rise compared to the second quarter of 2016. Okanogan County led the way with an increase of 12.6%.
Home prices continue to grow at above average rates due to very limited supply, but I expect the rate of appreciation to start tapering later this year or in early 2018.

DAYS ON MARKET

Across this market, the average number of days it took to sell a home dropped by 25 days when compared to the second quarter of 2016.
The average time it took to sell a home in the region was 98 days.
All markets contained in this report saw the time it took to sell a home drop from the same quarter in 2016.
Homes sold the fastest in Kittitas County, where it took an average of 49 days, which is 32 fewer days than it took to sell a home in the second quarter of last year.

CONCLUSIONS

I anticipate that 2017 will continue favoring sellers and demand will continue to exceed supply.

Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has over 25 years of professional experience both in the U.S. and U.K.

If you are in the market to buy or sell, we can connect you with an experienced agent here.

Market News • August 2, 2017

Oregon and Southwest Washington Real Estate Market Update

by Windermere Economics

ECONOMIC OVERVIEW

Oregon has added 46,500 new jobs over the past 12 months with impressive gains seen in the professional and business services, leisure and hospitality, and trade sectors. Also of interest is that the construction sector continues to expand rapidly, potentially signifying greater interest in adding to the region’s housing supply. Year-over-year, employment in Oregon has risen by 2.5%. In May, the state unemployment rate fell slightly to 3.6%. Unemployment was 3.7% in April of this year and 5% in May of 2016. As unemployment edged down, the labor force hit a record high. In May, Oregon’s labor force rose above 2.1 million for the first time and grew by 40,000 in the first five months of this year.

HOME SALES ACTIVITY

Second quarter home sales fell by 5.6% compared to the same period last year. In total, 17,409 homes sold in the second quarter of this year.
Sales rose the fastest in Coos County, which saw a 29.6% increase over the second quarter of 2016. There were also noticeable sales increases in Lincoln, Crook, Wasco, and Tillamook Counties. Home sales fell the most in Skamania, Benton, Linn, Yamhill, and Polk Counties.
Year-over-year sales rose in nine counties, but 17 counties reported declines.
The low level of available inventory continues to affect the market, which is causing sales to slow. Sellers remain firmly in the driver’s seat.

HOME PRICES

The average home price in the region rose 7.8% year-over-year to $362,845. This is down from 9.4% in the first quarter of 2017.
Crook County led the market with the strongest annual price growth. Homes there sold for 41.2% more than a year ago.
All counties in this report experienced rising prices when compared to the second quarter of 2016, and several of these saw significant, double-digit increases.
The rise in interest rates in the first quarter likely activated many would-be buyers, which, in concert with limited homes for sale, likely pulled sales forward.

DAYS ON MARKET

The average number of days it took to sell a home in the region dropped by 10 days when compared to the second quarter of 2016, and is down by 23 days when compared to the first quarter of this year.
The average time it took to sell a home in the region last quarter was 75 days.
In five counties, the length of time it took to sell a home rose when compared to a year ago, but this isn’t a concern right now.
Homes sold the fastest in Washington and Multnomah Counties, where it took an average of just 20 and 23 days, respectively, for homes to sell.

CONCLUSIONS

The speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors. Housing markets throughout Oregon continue to benefit greatly from the robust regional economy. Even as home sales have slowed in some counties, the market is remarkably tight and will likely remain that way for the balance of the year. As such, I have moved the needle slightly more toward sellers for the second quarter.

If you are in the market to buy or sell, we can connect you with an experienced agent here.

Market News • August 1, 2017

Eastern Washington Real Estate Market Update

by Windermere Economics

ECONOMIC OVERVIEW

Washington State’s economy has been expanding at a rapid pace, but we are seeing a slowdown as the state grows closer to full employment. Given the solid growth, I expect income growth to move markedly higher, though this has yet to materialize. I anticipate that we will see faster income growth in the second half of the year and still believe that the state will add around 70,000 jobs in 2017. Like much of the rest of the state, Eastern Washington continues to experience modest employment growth, which is driving the unemployment rate lower. I also expect to see continued growth in employment as we move through the balance of the year.

HOME SALES ACTIVITY

Home sales throughout Eastern Washington were a mixed bag in the second quarter. Four markets saw home sales rise and three decreased compared to the second quarter of 2016. In total, there were 3,832 home sales in the quarter—an increase of 5.4%.
Sales rose at the fastest rate in Douglas County, which had a remarkable 24.7% increase over the second quarter of 2016. That said, the market is a small one and sales can fluctuate quite dramatically.
Interestingly, the number of pending home sales—an indicator of future closings—was up across the board. This is a turnaround from the slowdown in first quarter. As such, I expect to see regional home sales rise as we move through the rest of the summer.
The supply of homes for sale remains an issue. With the number of homes for sale down by 19.7%, the market is clearly starved of inventory, which continues to push up home prices.

HOME PRICES

Year-over-year, the average home price in the region rose by 6.2% to $242,059. Price growth has been tapering across the region, but several counties are still seeing appreciation well above the average rate.
Walla Walla County was the only market where prices were lower when compared to the second quarter of 2016. However, the drop was very modest and, given the fact that it is a relatively small market, I am not concerned.
All but one of the counties in this report saw prices rise when compared to the first quarter of 2016, with Douglas County leading the way with an increase of 12.7%.
The takeaway here is that home-price growth continues at above-average rates due to very limited supply, but the rate of appreciation has started to taper somewhat.

DAYS ON MARKET

The average number of days it took to sell a home dropped by six days when compared to the second quarter of 2016.
The average time it took to sell a home in the region was 57 days.
All but one of the areas contained in this report saw the time it took to sell a home drop from the same quarter in 2016.
Similarly to the past two quarters, Franklin and Benton Counties saw homes sell the fastest.

CONCLUSIONS

This speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors. For the second quarter of 2017, I left the needle at the same level. Though prices in several markets are still trending above average, the rate of growth has slowed a little. I still believe that 2017 will continue favoring sellers and, even with a slowdown in price appreciation, demand will continue to exceed supply.

If you are in the market to buy or sell, we can connect you with an experienced agent here.

More • July 31, 2017

Why You Should Stay Put and Improve the Home You Have

by Guest Author

Here's an architecture book for our times, when some homeowners are under water on mortgages, and the cycle of trading up has either stopped or slowed way, way down. In "Staying Put," architect and writer Duo Dickinson has assembled a terrific and practical guide to help us make real improvements to our homes. Dickinson, an advocate of well-designed and affordable homes for all, has specialized in residential design for more than three decades.

This is not your typical architect's book about design. There's no obscure language nor design-for-design's-sake ideas. It is a practical, down-to-earth guide that walks anyone through the rational process of how to remodel your house to get the home you want, from how to think about your house and overcoming hurdles to a list of "Duo's Do's and Don'ts" for the homeowner. Along the way, there's plenty of nice before-and-after photos to help explain the points. Do read the book. You'll be glad you did.

Staying Put 1: The Taunton Press Inc, original photo on Houzz

The cover says it all. The ubiquitous photo of a gorgeous, award-winning home that's beyond most of us is replaced with images of a saw, cup of morning joe and a to-do list.

Are you staying put yourself? Read on for 8 of Dickinson's suggestions.

Staying Put 2: Mick Hales, original photo on Houzz

Consider the compass points. The tips and illustrated examples are wonderfully straightforward. For example, we see a house that gets overheated, the siding degrades and the front door bakes in the sun because it all faces south.

Dickinson's common-sense advice: Rework the front of the house with a new wide porch that shades the front door and some smaller, yet well-sized windows to create a lot more curb appeal while reducing maintenance and energy consumption. It's a triple win: more beauty and comfort with less cost.

Avoid gutters. Statements such as "gutters and leaders are devoutly to be avoided" may sound like heresy to many, but certainly are the truth. Proving his point, Dickinson illustrates how a properly-built roof overhang can shed all the water it must without the complications, such as ice dams, caused by gutters.

Embrace small moves. Dickinson provides a wealth of simple solutions illustrated with before-and-after photos. He shows how to use small moves for big dividends, such as taking out a wall between a kitchen and a hallway to make room for more kitchen storage.

Staying Put 3: Mick Hales, original photo on Houzz

Enhance curb appeal. The book offers solutions to common problems with a particular style, such as how to improve and enhance an entrance into a split-level home.

Open up to the outside. Dickinson provides some excellent examples of how we can use modern windows and doors to strengthen the connection between inside and outside. Our homes, says Dickinson, no longer need be "later-day caves."

Find your home. Learning more about the style of the house you have will help you avoid obstacles in remodeling and recognize the best opportunities for improving your particular home.

Staying Put 4: Mick Hales, original photo on Houzz

Open up the inside. Snippets of advice sprinkled throughout the book are like refreshing raindrops that clear the cobwebs away. One such snippet: "If you walk through a room to get to a room, something is wrong." You know — it's when that new great room gets added onto a modest house, and the result is some kind of dyslexic creature that's really two houses rather than one.

So rather than even building an addition, Dickinson suggests you make the most of what you already have. In this example, widening the opening between rooms strengthens this room's connection with the rest of the home, increasing its utility and spaciousness.

Staying Put 5: The Taunton Press Inc, original photo on Houzz

Work with what you've got (before): Keeping the kitchen size the same while vaulting the ceiling dramatically increases the overall spaciousness of the room, as you'll see in the next photo.

Staying Put 6: Mick Hales, original photo on Houzz

Work with what you've got (after): Walls, doors, appliances and even the skylight and kitchen sink were all left where they were. This all avoided costly plumbing, electrical and mechanical work and rework.

Staying Put 7: The Taunton Press Inc, original photo on Houzz

Working with what you've got (plans): Dickinson has included before-and-after floor plans for many of the examples. These plans help provide that much more context, allowing the reader to better understand what they may be able to do with the home they already have.

By Bud Dietrich AIA, Houzz

Market News • July 31, 2017

Colorado Real Estate Market Update

by Windermere Economics

ECONOMIC OVERVIEW

Colorado added 62,000 new jobs over the past 12 months, an increase of 2.4% over this time last year. All of the metropolitan markets included in this report saw annual employment growth, with substantial growth in Boulder (4.7%) and Fort Collins (+4.1%), and more modest growth in Grand Junction (0.3%). In May, the unemployment rate in the state was 2.3%, matching the prior month and down 3.4% from a year ago. The lowest unemployment rate was in Fort Collins at just 2.0%. The highest rate was in Grand Junction, though it was still a relatively low 3.3%. It is reasonable to expect these markets will see above-average wage growth given the tight labor market.

HOME SALES ACTIVITY

There were 17,581 home sales during the first quarter of 2017, a solid annual increase of 3.9% over the first quarter of 2016.
Jefferson County saw sales grow at the fastest rate over the past 12 months, with a 9.4% increase. There was also an impressive increase in Douglas County (+6.3%). More modest sales growth was seen in Denver and Weld Counties.
Even with the rise in sales, listing activity is still running at well below historic averages, with the total number of homes for sale in the second quarter 7.6% below a year ago.
Sales growth continues to trend higher, but inventory levels remain well below where they need to be to satisfy demand.

HOME PRICES

Due to solid demand, home prices continue to rise with average prices up by 8.5% year-over-year to an average across the region of $438,980.
Boulder County saw slower appreciation in home values, but the trend is still positive.
Appreciation was strongest in Denver and Weld Counties, where prices rose by 12.4% and 10.6% respectively.
Economic growth is driving job growth, which is driving housing demand. Given the relative shortage of homes for sale, expect to see home prices continue to appreciate at above-average rates at least through the rest of the year.

DAYS ON MARKET

The average number of days it took to sell a home dropped by three days when compared to the second quarter of 2016.
Homes in all counties contained in this report took less than a month to sell. Adams County stood out as it took an average of only 11 days to sell a home.
During the second quarter, it took an average of just 17 days to sell a home. This is down by a substantial 13 days compared to the first quarter of this year.
The takeaway here is that demand remains robust as evidenced by the remarkably short amount of time that it is taking to sell a home.

CONCLUSIONS

This speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors.

After the second quarter of 2017, I have moved the needle even farther in favor of sellers. Mortgage rates remain very competitive and, with the specter of lending standards easing a little, demand will remain robust, which will be reflected in rising home values.

If you are in the market to buy or sell, we can connect you with an experienced agent here.

Market News • July 28, 2017

Southern California Real Estate Market Update

by Windermere Economics

ECONOMIC OVERVIEW

The markets covered by this report—Los Angeles, San Diego, San Bernardino, Orange, and Riverside—added 131,900 new jobs between May 2016 and May 2017. As a result, the unemployment rate dropped from 4.7% to 3.9%. Growth in the Southern California market has started to taper, but this is unsurprising given our place in the current economic expansion.

HOME SALES ACTIVITY

There were 54,516 home sales in the second quarter of this year. This was only 1.8% higher than the same period in 2016, but 34.4% above the level seen in the first quarter of this year.
The average number of homes for sale remains well below what we saw a year ago (-15%), essentially matching the decline in listings in the first quarter.
Home sales were up in most markets, with solid growth in both Riverside and San Bernardino Counties. There were very modest gains in Los Angeles County and Orange County and a fairly substantial decrease in San Diego County. This continues a trend from last quarter, which again can be attributed to woefully low levels of inventory.
There was an average of 33,850 active listings in the second quarter, 8% higher than in early spring, but still well below the levels needed to get us to a balanced market. Although we did see a modest increase in listings in late spring, housing shortages remain constant across the entire region.

HOME PRICES

When compared to the second quarter of 2016, average prices in the region rose by 7.3% and are 6% higher than in the first quarter of this year.
Home prices in San Diego, Los Angeles and Orange Counties continue to approach their pre-recession peaks but I am not overly concerned—at least not yet. At some point, we have to see price appreciation taper, but this is unlikely for the time being.
Orange County had the greatest annual appreciation in home values (+9.8%) and price increases were roughly the same across the rest of the region.
Pending home sales continue to slow given pervasively low inventory levels. Demand is likely to remain strong and sales prices should keep rising since buyers continue to outnumber sellers.

DAYS ON MARKET

The average time it took to sell a home in the region was 41 days. This is a drop of 16 days compared to the second quarter of 2016, and 15 days shorter compared to the first quarter of 2017.
The biggest drop in the number of days it took to sell a home was in Orange County, where it took 25 fewer days to sell a home when compared to the same period last year.
Homes in San Diego County continue to sell at a faster rate than other markets in the region. In the second quarter, it took an average of just 25 days to sell a home, which is four fewer days than a year ago.
All five counties saw a drop in the amount of time it took to sell a home between the second quarter of 2016 and the second quarter of 2017.

CONCLUSIONS

The speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors.

Southern California continues to add new households and job formation is still robust, which is adding to the already high demand for housing.

Mortgage rates remain relatively modest and the low level of inventory continues to drive prices higher as demand exceeds supply. The modest spring “bump” in listings that I was hoping for did occur though it was not enough to create a balanced market. With the market continuing to strongly favor sellers, I have moved the needle a little more in their direction.

If you are in the market to buy or sell, we can connect you with an experienced agent here.

Market News • July 27, 2017

Nevada Real Estate Market Update

by Windermere Economics

ECONOMIC OVERVIEW

Employment growth in the Las Vegas metropolitan area slowed down—albeit very modestly—as the market entered the summer, with an annual employment growth of 2.9%. That said, the market has added 27,300 new jobs over the past 12 months. With this growth in employment, the unemployment rate remained at 4.8%, which is marginally above the statewide level of 4.7%. Las Vegas continues to approach full employment but the market, like many others across the country, has yet to see robust wage growth. However, I do believe wages will start to rise as the labor market continues to tighten through the rest of the year.

HOME SALES ACTIVITY

A total of 11,256 homes sold in the second quarter, which was an increase of 8.9% over the same period a year ago. Sales were a substantial 30.5% higher than last quarter.
Home sales were not as strong in the Centennial and Southeast Las Vegas sub-markets, but this is due to low inventory levels rather than a decrease in demand.
There were substantial increases in home sales in a majority of the submarkets within this report, but the fastest rate was in the South Summerlin/ Lakes area, which saw an annual increase of 19.7%.
Inventory levels remain remarkably low with 35.1% fewer homes for sale than the same period in 2016 and 11.5% below the level seen in the first quarter. Unfortunately, we failed to see any rise in listings in the spring.

HOME PRICES

Home prices in the area have risen by 10.4% year-over-year, to an average of $260,535, and are 6.3% higher than first quarter.
The relatively affordable downtown sub-market saw a substantial price increase of 13.4% to $164,000. Double-digit gains were also seen in the Sunrise, North Las Vegas, Spring Valley, Southwest Las Vegas, and Summerlin neighborhoods.
Prices rose in all sub-markets when compared to the second quarter of 2016, with the strongest growth seen in the South Summerlin/Lakes and Southeast Las Vegas sub-markets, which saw prices up by 18.8% and 15.5% respectively.
I anticipate that we will continue to see above-average price growth in the greater Las Vegas market, as job growth continues and inventory levels remain constrained.

DAYS ON MARKET

The average time it took to sell a home in the region dropped by 18 days when compared to the second quarter of 2016.
It took an average of just 35 days to sell a home in the second quarter—a substantial 12 fewer days than in the first quarter.
The length of time it took to sell a home dropped in all the Las Vegas sub-markets when compared to a year ago.
The greatest drop in days-on-market was in the downtown sub-market, which dropped by 27 days when compared to the same quarter in 2016.

CONCLUSIONS

The speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors.

Employment growth in Clark County, although slightly less robust than seen in the first quarter, is still gaining ground. This, in concert with low inventory levels and still-competitive mortgage rates, will lead to continued above-average price growth.

Given these factors, I have moved the speedometer a little farther in favor of sellers.

If you are in the market to buy or sell, we can connect you with an experienced agent here.

Market News • July 26, 2017

Western Washington Real Estate Market Update

by Windermere Economics

ECONOMIC OVERVIEW

The Washington State economy has been expanding at a rapid pace but we are seeing a slowdown as the state grows closer to full employment. Given the solid growth, I would expect to see income growth move markedly higher, though this has yet to materialize. I anticipate that we will see faster income growth in the second half of the year. I still believe that the state will add around 70,000 jobs in 2017.

Washington State, as well as the markets that make up Western Washington, continue to see unemployment fall. The latest state-wide report now shows a rate of 4.5%—the lowest rate since data started to be collected in 1976.

I believe that growth in the state will continue to outperform the U.S. as a whole and, with such robust expansion, I would not be surprised to see more people relocate here as they see Washington as a market that offers substantial opportunity.

HOME SALES ACTIVITY

There were 23,349 home sales during the second quarter of 2017. This is an increase of 1.1% from the same period in 2016.
Clallam County maintains its position as number one for sales growth over the past 12 months. Double-digit gains in sales were seen in just three other counties, which is a sharp drop from prior reports. I attribute this to inventory constraints rather than any tangible drop in demand. The only modest decline in sales last quarter was seen in Grays Harbor County.
The number of homes for sale, unfortunately, showed no improvement, with an average of just 9,279 listings in the quarter, a decline of 20.4% from the second quarter of 2016. Pending sales rose by 3.6% relative to the same quarter a year ago.
The key takeaway from this data is that it is unlikely we will see a significant increase in the number of homes for sale for the rest of 2017.

HOME PRICES

Along with the expanding economy, home prices continue to rise at very robust rates. Year-over-year, average prices rose 14.9%. The region’s average sales price is now $470,187.
Price growth in Western Washington continues to impress as competition for the limited number of homes for sale remains very strong. With little easing in supply, we anticipate that prices will continue to rise at above long-term averages.
When compared to the same period a year ago, price growth was most pronounced in San Juan County where sale prices were 29.2% higher than second quarter of 2016. Eight additional counties experienced double-digit price growth.
The specter of rising interest rates failed to materialize last quarter, but this actually functioned to get more would-be buyers off the fence and into the market. This led to even more demand which translated into rising home prices.

DAYS ON MARKET

The average number of days it took to sell a home in the quarter dropped by 18 days when compared to the same quarter of 2016.
King County remains the tightest market; homes, on average, sold in a remarkable 15 days. Every county in this report saw the length of time it took to sell a home drop from the same period a year ago.
Last quarter, it took an average of 48 days to sell a home. This is down from the 66 days it took in the second quarter of 2016.
Given the marked lack of inventory, I would not be surprised to see the length of time it takes to sell a home drop further before the end of the year.

CONCLUSIONS

This speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors. For the second quarter of 2017, I moved the needle a little more in favor of sellers. To define the Western Washington market as “tight” is somewhat of an understatement.

Inventory is short and buyers are plentiful.

Something must give, but unless we see builders delivering substantially more units than they have been, it will remain staunchly a sellers’ market for the balance of the year.

Furthermore, increasing mortgage rates have failed to materialize and, with employment and income growth on the rise, the regional housing market will continue to be very robust.

If you are in the market to buy or sell, we can connect you with an experienced agent here.

Buying • July 25, 2017

Why Owning a Home is Such a Smart Investment

by Windermere Staff

After succumbing to the “Great Recession” ten years ago, the stock market has made a comeback. So, does that mean you should forget about buying a new house and invest in stocks instead? The answer to that question, say experts, depends on your investing savvy, your financial discipline, your age, and your current financial situation.

The first question you need to ask yourself is, “Am I disciplined enough to invest in stocks?” According to two professors who recently studied 30 years of personal-finance performance, you need to be someone with exceptional financial discipline if you want to earn real money in the stock market. Or, you could simply buy a house.

When you buy real estate, the down payment and monthly mortgage payments force you to set aside a significant amount of your earnings on a regular basis. It’s automatic. But if you can’t summon the same discipline to invest that same amount of money in the stock market on an equally regular basis, then stocks are probably going to be a losing proposition, according to the professors’ study.

“We find that if people don't invest all the money, actually about 90% of the time, you're better off buying real estate," says Professor Eli Beracha, co-author of the study.

Other issues that make stock investing risky

Investing guru James Altucher wrote a column in The Wall St. Journal titled, “8 Reasons You Stink at Trading Stocks.” In it, he argues that most non-professionals don’t have the investing savvy required to be successful in the stock market. Here are a few telling excerpts:

“Nine out of 10 people think they are above-average drivers. Nine out of 10 people think they are above-average investors. Both are mathematically impossible.”
“Most people sell at the bottom and buy at the top—the opposite of what you want to do as an investor—because they let emotions get in the way of patience and strategy.”
“It’s really hard to own stocks. It’s not just picking a stock and watching it go up 1,000%. It’s buying it and sometimes watching it go down 80% before it ends up rising 20% above your purchase price. It’s waiting. It’s patience. Psychology is at least 80% of the game. And knowing when to sell? Even harder.”

Age matters

When you’re young, many financial advisors encourage investing in things like individual stocks. With a long career ahead, you have time to wait for any bad investments to turn around before you may really need the money. But once you’re a little older, with a family, and starting to focus on your financial future, that’s when advisers recommend you buy things like real estate—a conservative investment with a long history of stable, predictable earnings.

The type of loan you choose also makes a difference

If you want to both own a home and invest in stocks, consider a 30-year home loan, which will significantly reduce your monthly payments and leave you with extra money for playing the market. (Just remember the tradeoff: You’ll end up paying thousands of dollars more in interest over the life of the loan.)

If you don’t have a burning desire to play the stock market, choose a 15-year home loan. You’ll pay less interest over the life of the loan, you’ll build equity faster, and, obviously, you’ll be mortgage-free 15 years sooner.

The tax advantages of owning real estate

As a homeowner, you’re entitled to a bevy of tax benefits you don’t get as a stock investor. You can deduct your mortgage interest and property taxes from your annual tax return. Plus, depending on your circumstances, you could also get a deduction or credit for any home-office expenses, moving expenses, capital gains, any “points” used to lower your interest rate, and more.

One caveat: investing in real estate takes time

No matter what some of those reality TV programs show, buying a home should not be viewed as a get-rich-quick scheme. But if you think you’re ready to put down roots for as long as seven years, chances are very good that any home you purchase will appreciate significantly during that time (even if the economy runs into some bumps along the way).

The non-financial benefits

Of course, not all of the benefits of owning a home are financial. For most Americans, their home is a source of tremendous pride, comfort, security and freedom. Most of us also use our homes to showcase our personality, through paint colors, furnishings, landscaping, yard signs, holiday decorations and so much more.

Yes, the stock market is on an upswing currently (depending on the week), but if you want an investment with a long-term track record of consistent returns—plus tax breaks and a variety of personal perks—you may want to buy a home instead.

If you have questions about the buying or selling process, or are looking for an experienced agent in your area, connect with us here.

More • July 20, 2017

Why aren’t homebuilders building more homes?

by Windermere Economics

This article originally appeared on Inman.com

Housing markets all across the U.S. are suffering from serious shortages of homes for sale, and this isn’t expected to change in the foreseeable future.

When I think about inventory levels and the fact that demand is clearly outstripping supply, it makes me question why homebuilders aren’t stepping up to the plate to meet all this pent-up demand.

Interestingly enough, there are several obstacles holding builders back that I think are worthy of further discussion.

According to my calculations, since 2008, builders have started construction of new single-family homes at an average annual rate of about 594,000 units per year. For context, the average annual rate of new-home starts between 1963 and 2007 was over 1.1 million, so we have been behind the ball for some time now.

Although new-home starts have now risen to 835,000 units from the historic low of 353,000 units that we saw in 2009, we are still well below the level that meets demand given new household formations.

Since 2009, new housing supply has consistently fallen short of new housing demand. The shortfall was the largest in 2011 at 465,000 housing units, and cumulatively through 2015, the total shortfall was 2.2 million housing units.

Currently, I estimate that the amount of housing supply necessary to just keep pace with demand is probably around 1.1 million housing units a year; however, housing completions as of May were running at an annual rate of just 817,000 — far below what is needed.

So why is this? The simple answer is that it is very expensive to build a new home.

The expense of building a new home can be essentially broken down into three components: land, labor and materials.

Land

Let’s start with land, which is expensive, and it is very expensive in markets where land availability is scarce (either because of unique topography or political limitations — or both).

This is further exacerbated in markets where the economy is growing rapidly and attracting more new residents.

Another hindrance is the cost of obtaining a building permit, which is remarkably high, thanks to government regulations, and can account for almost 25 percent of the final price of a new single-family home.

Labor

The second thing to consider is labor. As the housing market was entering the Great Recession, many construction workers were laid off and have not subsequently returned.

In fact, my calculations indicate there are currently over 200,000 job openings in the construction industry, and this lack of supply combined with high demand for labor, has led to rising labor costs.

Material costs

Finally, material costs. The cost of homebuilding materials have risen by almost 5 percent due to high demand and low supply. Everything from the copper used in wiring to the lumber used for framing, continues to escalate at fairly rapid rates.

All of this combined makes it very expensive to build homes — especially affordable homes.

In fact, the National Association of Homebuilders stated back in 2015 that it is difficult to build a home anywhere in America for less than $300,000. Then take into account that only 4 percent of all new homes sold in 2016 were priced below $150,000, and in the Western U.S., just 6 percent were priced below $200,000.

Conditions are particularly tight at the more affordable end of the market, clearly reflecting the fact that fewer entry-level homes are being built.

Between 2004 and 2016, completions of smaller single-family homes (under 1,800 square feet) fell from nearly 500,000 units to only 136,000. Similarly, the number of townhouses built in 2016 (98,000) was less than half the number started in 2005.

It is clear that we need more housing solutions to address the shortages out there, but it won’t be easy.

From a builder’s perspective, they cannot change material costs, nor can they force workers into the construction industry.

However, what they can do, and what needs to be done, is try and shift government policy to better address permit fees, hookup fees, impact fees and the like. If these costs could be lowered, I believe that many builders would have the ability to ramp-up activity in a fairly dramatic fashion.

Given how important increasing the supply of new homes is to the long-term health of the market, I hope that the efforts being undertaken at the national level by the NAHB, and the local level by various homebuilder associations, start to see positive results in the near future.

For the sake of our housing market, we need to make it easier for builders to do what they do best: build homes.