Nothing in life lasts forever – and the same can be said for your home. From the roof to the furnace, every component of your home has a life span, so it’s a good idea to know approximately how many years of service you can expect from them. This information can help when buying or selling your home, budgeting for improvements, and deciding between repairing or replacing when problems arise.
According to a National Association of Home Builders (NAHB) study, the average life expectancy of some home components has decreased over the past few decades. (This might explain why you’re on your third washing machine while Grandma still has the same indestructible model you remember from childhood.) But the good news is the life span of many other items has actually increased in recent years.
Here’s a look at the average life spans of some common home components (courtesy of NAHB).
Appliances. Of all home components, appliances have the widest variation in life spans. These are averages for all brands and models, and may represent the point which replacing is more cost-effective than repairing. Among major appliances, gas ranges have the longest life expectancy, at about 15 years. Electric ranges, standard-size refrigerators, and clothes dryers last about 13 years, while garbage disposals grind away for about 10 years. Dishwashers, microwave ovens, and mini-refrigerators can all be expected to last about nine years. For furnaces, expect a life span of about 15 years for electric, 18 for gas, and 20 for oil-burning models. Central air-conditioning systems generally beat the heat for 10 to 15 years.
Kitchen & Bath. Countertops of wood, tile, and natural stone will last a lifetime, while cultured marble will last about 20 years. The life span of laminate countertops depends greatly on use and can be 20 years or longer. Kitchen faucets generally last about 15 years. An enamel-coated steel sink will last five to 10 years; stainless will last at least 30 years; and slate, granite, soapstone, and copper should endure 100 years or longer. Toilets, on average, can serve at least 50 years (parts such as the flush assembly and seat will likely need replacing), and bathroom faucets tend to last about 20 years.
Flooring. Natural flooring materials provide longevity as well as beauty: Wood, marble, slate, and granite should all last 100 years or longer, and tile, 74 to 100 years. Laminate products will survive 15 to 25 years, linoleum about 25 years, and vinyl should endure for about 50 years. Carpet will last eight to 10 years on average, depending on use and maintenance.
Siding, Roofing, Windows. Brick siding normally lasts 100 years or longer, aluminum siding about 80 years, and stucco about 25 years. The life span of wood siding varies dramatically – anywhere from 10 to 100 years – depending on the climate and level of maintenance. For roofs, slate or tile will last about 50 years, wood shingles can endure 25 to 30 years, metal will last about 25 years, and asphalts got you covered for about 20 years. Unclad wood windows will last 30 years or longer, aluminum will last 15 to 20 years, and vinyl windows should keep their seals for 15 to 20 years.
Of course, none of these averages matter if you have a roof that was improperly installed or a dishwasher that was a lemon right off the assembly line. In these cases, early replacement may be the best choice. Conversely, many household components will last longer than you need them to, as we often replace fully functional items for cosmetic reasons, out of a desire for more modern features, or as a part of a quest to be more energy efficient.
Are extended warranties warranted?
Extended warranties, also known as service contracts or service agreements, are sold for all types of household items, from appliances to electronics. They cover service calls and repairs for a specified time beyond the manufacturer’s standard warranty. Essentially, warranty providers (manufacturers, retailers, and outside companies) are betting that a product will be problem-free in the first years of operation, while the consumer who purchases a warranty is betting against reliability.
Warranty providers make a lot of money on extended warranties, and Consumers Union, which publishes Consumer Reports, advises against purchasing them. You will have to consider whether the cost is worth it to you; for some, it brings a much needed peace of mind when making such a large purchase. Also, consider if it the cost outweighs the value of the item; in some cases it may be less expensive to just replace a broken appliance than pay for insurance or a warranty.
Babies in need of diapers and formula. Families with critically ill children in need of housing. Kids with no shoes or school supplies. For the past 25 years, these are the types of needs the Windermere Foundation has helped fulfill, thanks to the incredible generosity of our agents. That’s because every time someone buys or sells a home using a Windermere agent, a portion of their commission goes to fund the Windermere Foundation, which to date has raised more than 26 million dollars.
This year, the Windermere Foundation proudly celebrates 25 years of giving back to those in our communities who need it most. Our mission is simple: support non-profit agencies dedicated to helping homeless and low-income families. And we keep the red tape to a minimum, using less than four percent of the money raised for administrative costs. That way, the vast majority of the funds can be used where they’re needed most. Last year alone, our agents donated more than 1.6 million dollars to support local organizations like Eastside Baby Corner, Low-Income Housing Institute, and Seattle Public Schools’ Family Support Program. Their generosity also enables us to continue to send kids to summer camp, ensure families have enough food to eat, and provide emergency assistance to those in need.
In honor of this milestone anniversary, we set a goal to raise 30 million dollars for the Windermere Foundation by the end of 2015.That’s four million dollars in two years – our most ambitious goal to date. Just imagine how many more families this will help. How many more kids will be able to eat school lunches. How many more families will have milk in the fridge and food on the table. And how many more people will have their most basic needs met – and the dignity that goes with it.
If at any point during the past 25 years you’ve bought or sold a home using a Windermere agent, you are a part of the Windermere Foundation too, and you’ve helped make a positive difference in the lives of your neighbors in need. And for that, we thank you on behalf of everyone at Windermere.
If you would like to learn more about the Windermere Foundation, please visit windermere.com/foundation.
Windermere Real Estate is proud to partner with Gardner Economics on this analysis of the Western Washington real estate market. This report is designed to offer insight into the realities of the housing market. Numbers alone do not always give an accurate picture of local economic conditions; therefore our goal is to provide an explanation of what the statistics mean and how they impact the Western Washington housing economy. We hope that this information may assist you with making an informed real estate decision. For further information about the real estate market in your area, please contact your Windermere agent.
Regional Economics
I think it is fair to say that 2013 was a pretty good year for those who were either looking to get back into the job market, or entering it for the first time.
The counties contained within this report added a total of 46,940 jobs in 2013, representing a very respectable 2.1 percent growth rate. This was marginally higher than the 45,420 jobs that were added in 2012. The fourth quarter saw the addition of 9,210 jobs, which equates to an increase of 0.4 percent.
As expected, a majority of the job growth in 2013 was seen in King, Pierce, and Snohomish Counties, which accounted for 42,800 new jobs, and the quarterly growth in this area exceeded that of the entire region by 190 jobs.
Looking at the data from a county level, King County (+2.9%) maintains its top position relative to the overall rate of employment growth. Similarly to the previous quarter, this was followed by Whatcom County (+2.4%) and Snohomish County (+2.1%).
Job losses were again fairly minimal with Jefferson County (-1.9%), Cowlitz County (-1.4%), Grays Harbor County (-0.2%), and Island County (-0.2%) seeing a contraction in employment. However, it is fair to say that this is not particularly concerning as the total job losses accounted for just 730 jobs.
Every county in the region showed annual improvements to their unemployment rates. Compared to December of 2012, the greatest improvements were seen in Snohomish, Lewis, and King Counties, where the rate fell by 1.3 percent. This was followed by Mason, Clallam, and Skagit Counties, where unemployment dropped by 11 percent. The smallest improvement was seen in Island and Kittitas Counties, where the rate improved by a more modest 0.6 percent.
The recovery in employment continues to gain strength. While many of us were very aware of the potential catastrophic effect of Boeing leaving the area, fortunately this did not happen. Our major employers continue to grow and the decision to build the 777X in our region—and the belief that Boeing will continue to play a big role in the region’s economic growth—was probably the biggest story for 2013.
Our region continues to add jobs and new businesses. Trade relations with Asia remain strong and major employers in the region continue to perform well. I would not be surprised to see 2014 add an additional 50,000 jobs to the region, representing a growth rate of 2.2 percent.
We are performing well, but not “outperforming.” I am, therefore, still maintaining the “B+” grade that I have given the employment situation for the past two quarters.
Regional Real Estate
2013 is now in the rear view mirror and it’s time to take stock of where we were, where we are, and where we are headed.
On the whole, when compared to 2012, the market continues to show quite reasonable improvement. Total home sales were up by 16.36 percent—or just over 8,800 units— and annual average prices across the region rose by 4.7 percent. At the end of the year, total listings were up by 7.2 percent over December of 2012. Due to the time of the year, this is not necessarily a good indicator, so we looked at new listing activity which, on an annualized basis, was up by 18 percent. I am still not happy with the overall lack of homes for sale in any of our markets, but at least those numbers are heading in the right direction.
When compared to the end of 2012, the greatest growth in listings was again seen in Snohomish County which saw a 48 percent increase in homes for sale. This was followed by Pierce County where total listings were 11 percent higher than a year ago. Eight other counties saw single-digit increases in listings, while five counties, including Skagit (-9%), Cowlitz (-8%), Mason (-4%), Island (-3%), and Whatcom and Clallam (both -1%), saw listing activity at the end of 2013 below that seen a year ago.
As far as new listings are concerned, all counties other than Jefferson (-1%), saw a better market in 2013 than in the previous year. The greatest increase was in Clallam County where total new listings were up by 28 percent, followed by Snohomish (+26%) and Thurston (+22%) Counties.
There were just four counties where home sales rose in the single digits. These were San Juan (+3%), Kittitas (+8%), and Grays Harbor and Mason Counties, which both came in at nine percent higher than seen in 2012.
When you compare third and fourth quarters, it’s not surprising to see a decline in the number of homes for sale. As mentioned previously, this is a function of the time of year and no cause for concern.
Turning our attention to sales activity, the regions contained within this report had 63,173 home sales in 2013, up from 54,338 seen in 2012. It was a little disappointing to see sales drop by 22 percent from third to fourth quarter, but again, I think we can attribute this to seasonal fluctuations. As mentioned in last quarter’s report, the strong growth in home sales in third quarter may have been a function of rising interest rates, possibly “pulling” some sales forward that might otherwise have happened in fourth quarter. It appears as if my theory may have been correct.
The average home price in Western Washington in fourth quarter was $334,368, up by 4.5 percent over the end of 2012, but down by five percent over the end of the third quarter. As shown in the chart to the right, three counties saw the average sales prices at levels above that seen in the third quarter, eight counties had prices that were higher than a year ago, and all but three saw higher prices at the end of 2013 than at the end of 2012. Interestingly, we are now starting to see some counties achieving sale prices higher than in the early stages of the market crash in 2008!
It is also worthwhile to consider price movements for the whole of 2013, versus the previous year, to get a more complete picture as to the direction of the market. As will be noted, we added this column to the table on the following page.
In 2013, average home prices in the region rose by 8.9 percent to $329,776. When we break out the counties individually, of those that saw appreciation, the most pronounced gains were actually seen in Snohomish County where prices rose by 14.4 percent. There were also significant gains seen in Cowlitz County (+13.7%) and King County (+11.2%). Of the balance, all but three saw price increases in the single digits. Declines were minimal, as seen in Lewis County (-1.1%), with Kitsap and Clallam Counties dropping by less than one percent.
There are two conflicting factors at work right now: inventory and interest rates. One remains low, and the other is on the rise. What is clear is that average home prices dropped in the last quarter, but this is mainly a function of declines in average list prices. Many buyers are driven by the belief that interest rates are not going to drop, but they are also not prepared to overpay for homes. Although demand clearly outpaces supply, home prices have leveled off due to reduced buying power (caused by higher interest rates), as well as buyers deciding not to jump at the first home that they see.
As I have stated before on several occasions, I do not like markets where prices rise dramatically. While it’s great to see price growth, the rate of change has been irrational. Prices have risen quickly from very low levels, but that rate of growth is slowing thanks to increasing interest rates and less frenzy on the part of buyers. This is actually a positive and one that will allow for continued reasonable growth in home prices.
Even with the slowdown in the quarter, I am maintaining the “B-” grade that I gave the market at the end of the third quarter. We need more inventory, and I believe that we will see that in 2014, but interest rates will continue to calm any over-exuberance in the market.
Conclusions
2012 and 2013 saw the housing market pull itself out of the doldrums and prices recover much of the losses that were seen during the recession. As we move forward, I anticipate that the market will continue to improve with listing activity starting to increase, but still remaining below the level that can be considered healthy. I anticipate that price growth in the overall market will average around four to five percent in 2014 with the more urban markets modestly outperforming the region as a whole.
Interest rates are on the rise and this will likely continue. Do not be surprised to see the average 30-year fixed rate rising above five percent as the federal government continues to gently apply the brakes to their purchase of treasuries and mortgage backed securities. That said, it is also quite possible that rates will not jump dramatically. If we see a selloff in risk-related assets (such as stocks and currencies), bond markets are often considered a safe haven, and a strong bond market means lower mortgage rates.
From an economic perspective, our region—specifically the major job centers— is doing well, and this will lead to greater interest in the surrounding housing markets, suggesting that these markets will outperform the region as a whole.
I am not seeing anything of concern relative to employment (now that the Boeing issue has been resolved), so I expect the region to add to its employment base at a rate that will exceed the U.S. as a whole.
Our noses are now well above the water line and, assuming that we see a sufficient rise in inventory, I expect that 2014 will be another positive one for the housing market in our region.
About Matthew Gardner
Mr. Gardner is a land use economist and principal with Gardner Economics and is considered by many to be one of the foremost real estate analysts in the Pacific Northwest.
In addition to managing his consulting practice, Mr. Gardner chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; sits on the Urban Land Institutes Technical Assistance Panel; is an Advisory Board Member for the Runstad Center for Real Estate Studies at the University of Washington; and is the Editor of the Washington State University’s Central Puget Sound Real Estate Research Report.
He is also the retained economist for the Master Builders Association of King & Snohomish Counties. He has twenty-five years of professional experience in the U.K. and U.S.
He has appeared on CNN, NBC and NPR news services to discuss real estate issues, and is regularly cited in the Wall Street Journal and all local media.
When it comes to advertising, real estate companies have historically stuck to one message, which is usually something about why they’re the best. It’s important to be good at what we do, but does that really tell you WHY you should work with our company? I would argue no.
That’s why when Windermere started planning its 2014 advertising campaign, we decided to center it on the question “Why Windermere?” Our inspiration for this came from a book entitled, Start With Why, by Simon Sinek. This book really forced us to step back and look at things differently. It allowed us to reflect on the inspiration behind Windermere’s founding 42 years ago and what has enabled the company to grow into what it is today.
It all really goes back to our founder, John Jacobi, a young banker who wanted to help change an industry that wasn’t known for its professionalism. His focus was to put relationships before sales quotas, with an emphasis on service to our clients and our community. He surrounded himself with like-minded professionals, and with their help, grew Windermere into one of the largest regional real estate companies in the nation.
Jump forward 42 years, and it is this same philosophy of focusing on relationships that still defines Windermere today. We worked hard to capture this message in our new ad campaign, which combines TV, radio, print, web, social media, and marketing collateral materials. We launched our TV ads in Western Washington during the NFC West Playoffs and plan to run them during other high profile events, such as the Academy Awards. If you ever fly with Alaska Airlines, you might see one of our ads in their magazine, and a number of our offices are also running them on local and regional channels throughout the Western U.S.
We’re really proud of our new ad campaign and hope our message is clear: Relationships are more important than sales quotas. Relationships that last not just for a transaction, but for a lifetime. To view Windermere’s 2014 advertising campaign, please visit: http://www.windermere.com/company/why_windermere.
Noelle Bortfeld is the Chief Marketing Officer for Windermere Real Estate where she is responsible for all consumer marketing activities. She oversees branding, advertising, interactive and direct marketing, social media, public relations and event marketing.
It should come as no surprise that online and mobile tools have become very valuable to people while they are in the process of buying and selling homes. According to a 2012 study by Google and the National Association of REALTORS® , 90% of home buyers used online search tools while looking for a home. In many ways, technology has improved the home buying process and provided sellers with more exposure to listings, while helping to decrease the overall sales cycle. Here’s a look at some helpful online tools that you can use during your next home purchase or sale.
Online home search:
With access to more data, real estate companies like Windermere can provide you with many ways to find your dream home. Beyond price, square footage, bedrooms, and zip code, you can now refine your search even further. For example, you can search for a home listing based on specific criteria, such as your commute time, access to good schools, neighborhood walkability, and more.
myWindermere tools & social share:
Windermere offers a tool called myWindermere, which lets you create an account in which you can save favorite searches and homes, communicate with your real estate agent, and more. You can also share any of our online listings with your social networks, including Facebook, Pinterest, twitter and google+.
Mobile & Apps:
Studies suggest that more and more people are using mobile to search for homes with as many as 68 percent of buyers using mobile applications at some point in their search. As a result, many real estate companies have optimized their websites for mobile usage. In fact, 36 percent of people using mobile for home search are simultaneously multitasking, such as while watching television.
Real-time search: If you are using a tablet for real-time searching while driving around, Zillow and Trulia both have comparable location based searches that might be helpful. But remember, Zillow and Trulia do not have access to the complete inventory of homes for sale, so you should also consult your favorite real estate company’s website along the way.
Note-taking: Keeping track of the details on multiple houses can get difficult. We recommend using a tool like Homing In to capture photos and notes of the places you have visited.
Interior design apps: If you are trying to visualize what a space would look like with you living in it, here’s a great app to use.
Mortgage Calculator: Get a realistic estimate of how much your monthly mortgage payments would be while searching for homes.
Sex offender tracker: Check the proximity of sex offenders to your potential home with this app.
Communities & Social Networks:
Community blogs: Before choosing a community, seek out more information through local blogs. Many neighborhoods now feature online news sources and local bloggers to talk about regional events, civic news, crime information, local shops, restaurants, and more.
Social Networks: Once you have chosen a community, join a private social network like nextdoor.com to connect with neighbors, keep updated on your neighborhood news, and share and receive recommendations for local shops and restaurants.
Meet-up: Make new friends and try new things in real-time by using tools like meetup.com to get together with likeminded folks.
Comparative Market Analysis:
If you are selling your home, make sure your agent performs a comparative market analysis which compares your home to others that have sold in your area.
Online signature tools:
Once you have found your dream home, technology can make closing easier. Tools likeDocusignallow you to sign your final contracts easily online or with mobile.
Insurance & moving:
Many insurance providers offer online and mobile tools that make taking your home inventory, scanning bar codes, uploading photos, and other important documentation easier. Taking inventory of your home will also help you pack for your move, plan where your possessions should go in your future home, and insure your items throughout the move process.
The Mortgage Forgiveness Debt Relief Act expired December 31, 2013. The Act prevented homeowners who go through a short sale or foreclosure from being taxed on the amount of their mortgage debt that has been forgiven. (Normally, debt that has been forgiven by a lender counts as taxable income.) A short sale transaction would have had to close before Dec. 31, 2013 in order to take advantage of the Act’s tax exemption. The good news is there is still a way to avoid paying income tax on forgiven debt.
IRS “Insolvency Clause” Offers Tax-Saving Alternative
Homeowners that are panicking about potentially hefty tax bills are probably not aware that they may still qualify for tax relief via the IRS “insolvency clause”. The clause states that a seller is exempt from paying tax on any forgiven debt to the extent that they are insolvent. In other words, if the seller’s debts and liabilities exceed their assets by more than the amount of debt forgiven, they do not have to pay taxes on the forgiven debt.
Here’s an example:
A seller has a home valued at $300,000, but the mortgage debt is $400,000. We short sell the property for $300K and the bank elects to forgive the debt on the $100,000 shortfall amount. Since debt that has been forgiven counts as taxable income, the IRS would treat the $100,000 of forgiven debt as income.
MORTGAGE DEBT SALE PRICE FORGIVEN DEBT
(Taxable income)
$400,000 – $300,000 = $100,000
This is where the insolvency clause formula comes in. Begin by adding up all of your debts/liabilities in one column and all of your assets in another. For this formula, the IRS wants you to include the mortgage debt as a liability, and the fair market value of your house as an asset. Let’s say you have $600,000 in assets and $700,000 in debts/liabilities. You are insolvent by $100,000.
ASSETS LIABILITIES INSOLVENCY
$600,000 – $700,0000 = [ $100,000 ]
Since your insolvency amount of $100,000 equals the forgiven debt amount of $100,000, it’s a wash and you will not have to pay taxes on that forgiven debt. You are shielded dollar-for-dollar on the amount of forgiven debt up to your insolvency number. Let’s say you were only insolvent by $80,000. In that case, you would still have to pay income tax on the remaining $20,000 of forgiven debt.
INSOLVENCY FORIVEN DEBT TAXABLE INCOME
[ $100,000 ] – $100,000 = -0-
Richard Eastern is a Windermere broker in Bellevue, WA and co-founder of Washington Property Solutions, a short sales negotiating company. Since 2003 he has helped more than 1000 homeowners sell their homes. The company offers free attorney and CPA consultations as part of their service. A Bellevue native and a University of Washington grad, Richard is an avid sports fan and a devoted Little League and basketball coach. You can learn more about Richard hereor atwww.washortsales.com.
Some of the best gifts received are the ones least expected. Across the country we’re seeing stories about generous individuals giving anonymously to help brighten the holidays for those in need – like paying off the balances of layaway bills or paying for a family’s extended stay at a motel so that they won’t end up in the streets. These acts of kindness and giving are truly inspiring.
We are fortunate to be part of a network of individuals who are committed to helping those in need in their communities, and who have such a tremendous capacity for giving. We are grateful for all the Windermere agents that make the Windermere Foundation possible. Through their contributions and donations from the community, the Foundation is able to provide support to local social service agencies that help low-income and homeless families.
Many of our Windermere offices throughout our network adopted families this holiday season, providing them with toys, clothes, gift cards and other items for Christmas. Here is just a sample of this season’s efforts…
Pioneer Services of Lynnwood
Twenty-one boys, living in group homes run by Pioneer Services of Lynnwood, were adopted by agents at the Windermere Lynnwood office and received Christmas presents. In addition, families receiving family preservation services also received $2,500 worth of gift cards for Top Foods. Thanks to the agents of Windermere Lynnwood for making this possible!
Navos
Families adopted through Navos received gift certificates to purchase shoes at Target and shop for groceries at Fred Meyer. And the kids received everything on their Christmas wish lists thanks to the Windermere Relocation and Referral Services office in Seattle.
Port Orchard Rotary Group
Five families received Christmas gifts thanks to the Windermere Port Orchard office. A list of three needs and three wants were fulfilled and were delivered to the Rotary group for wrapping. The adopted families picked up their gifts, along with their Christmas dinners at the local fire station.
Salvation Army
A family of seven and a family of four received gifts through the Salvation Army thanks to the Windermere Ballard office. This is the 18th year in a row that the office has adopted two families for the holidays.
YWCA
A family selected by the YWCA was adopted by the Windermere Property Management/Lori Gill & Associates office this year. Agents shopped and delivered to the families at the YWCA Family Village.
Windermere Annual Coat & Blanket Drive
From November through the month of December, Windermere offices throughout Oregon and Southwest Washington collected warm coats and blankets for homeless and low-income families to be distributed during the holidays by local social service organizations. Thank you to the 33 Windermere offices that made this possible!
Mercer Island Youth and Family Services
Through the MIYFS, the Windermere Mercer Island offices adopted three families, with a total of eight kids for the holidays. Each child received three presents and a $50 QFC card. Each family also received an additional $50 QFC card.
Everett Boys & Girls Club
For the agents at the Windermere Alderwood office, one of their favorite things to do this time of year is to volunteer at Christmas House. This year they got to be there on opening day to help shoppers select items and bring their bundles to their cars.
Eastside Baby Corner
Windermere Bellevue West office worked with Eastside Baby Corner, gathering donations for their “Socks of Love” drive, benefitting children from birth to 12 years of age. Thanks to the donations collected by the office, they were able to provide 550 pairs of socks and 78 pairs of shoes!
Coeur d’Alene Christmas Event
It’s been a holiday tradition for the past 22 years for agents and staff at the Windermere offices in Coeur d’Alene, Idaho to plan, shop, wrap, and prepare for their annual Christmas event for those in need in the Coeur d’Alene area. Recipients this year received a wide range of gifts: food, toys, furniture, new mattresses, clothing, and much more.
Arlington Food Bank
Windermere Arlington office sponsored three families for Christmas through the Arlington Food Bank, courtesy of Arlington High School's DECA program.
Bellevue Boys & Girls Club
Each year, the Windermere Bellevue Commons office adopts families in need for the holidays through the Bellevue Boys & Girls Club. This year they shopped and wrapped gifts for 13 families.
Kingston Community
Windermere Kingston office adopted 11 families in the local community for the holidays. Agents shopped for and wrapped gifts for to distribute to the families, which included 33 children.
Thank you for supporting the Windermere Foundation! Have a wonderful holiday!
The holidays are in full throttle and the year is quickly coming to an end. You have a few days left to get some last minute gifts/improvements for your home and reap the rewards of the tax benefits in your 2013 taxes. Some credits will be expiring at the end of the year, so you may not get the benefit if you wait. Here is a list of some of the home-related deductions and credits you may be able to take advantage of (be sure to check with your accountant if you have questions about eligibility for deductions and credits).
Home improvements:
Residential Energy Property Credit:
The US government will reward certain home improvements that increase energy efficiency. If you are willing to make major improvements to your primary residence, you can get credit for 10-30 percent on some improvements. Improvements include energy-efficient windows, roofs and doors, heating, ventilation and air conditioning systems, and adding insulation, geothermal heat pumps, solar energy systems, small residential wind turbines, and residential fuel cells.
Give yourself the gift of dedicated workspace! Homeowners and renters can deduct $3 per square foot, up to 500 square-feet of your home office. You must be able to prove that you use your office regularly and consistently and that it is your primary place of business. For more information about simplified and regular deductions go here.
Transportation:
Plug-in Electric Drive Vehicle Credit:
Some new plug-in electric vehicles qualify for a credit of $2,500 to $7,500 depending on the battery capacity.
Transit parity tax break:
If you commute, you may be able to put aside $245 per month tax-free for public transportation fees or parking. This tax break will be adjusted in 2014.
Property Donations:
If you donate a portion of your property or an easement to a conservation agency you can receive an enhanced tax break. This break primarily benefits modest-income landowners and farmers, helping to ease rural development. More information is available here.
For more information about 2013 taxes, deductions, breaks and credits and view forms go to www.IRS.gov, or consult with your trusted CPA.
Windermere Real Estate is proud to partner with Gardner Economics on this analysis of the Oregon and Southwest Washington real estate market. This report is designed to offer insight into the realities of the housing market.
Numbers alone do not always give an accurate picture of local economic conditions; therefore our goal is to provide an explanation of what the statistics mean and how they impact the Oregon and Southwest Washington housing economy. We hope that this information may assist you with making an informed real estate decision. For further information about the real estate market in your area, please contact your Windermere agent.
Regional Economics:
This report is a little late as, along with many others, we were at the mercy of the Federal government shutdown in early October. This shutdown did not just delay our employment data, but September figures were not deemed important for the time being and, therefore, there was no count at all.
As such, we were forced to use August’s figures which, although certainly not perfect, still provide us with some indications as to the direction of our regional economy.
On an annualized basis (August 2012 vs. August 2013), the market added 23,196 jobs, representing a growth rate of 1.36 percent. This was a little shy of both the state growth rate of 1.7 percent and the U.S. rate of 1.65 percent.
When compared to August of 2012, employment growth was most pronounced in the Bend area (+2.5%). This was followed by Clark (+2.4%),
Washington (+2.2%), and Multnomah and Jackson Counties, both of which saw an increase of 2.1 percent. On an absolute basis, Multnomah County maintains its position as the driving force behind job growth with the addition of 9,200 positions over the past 12 months. This was again followed by Washington County (5,500) and Clark County where employment grew by 3,100 positions.
On the negative side, job losses totaled 1,994 spread across seven counties.
Losses were again most pronounced in Cowlitz County, with employment contracting by 1,000 jobs. The other county which shed a substantial number of jobs was Marion, where employment contracted by 682 positions. Losses in other counties were fairly modest and they came in more rural areas.
With regards to improving employment, we continue to see the divide between the growth of urban and rural counties. Larger, more metropolitan counties continue to recover, but less populous areas are lagging.
The unemployment rate continues to drop in every county that was analyzed, which is a trend that started over a year ago. This is positive and I was also pleased that the number of counties whose unemployment rate was above 10 percent has now shrunk from seven to three.
Of the counties that saw shrinking unemployment rates, the greatest improvement was seen in Clark County, where the unemployment rate dropped by 2.8 percent to 8.3 percent. This was followed by Klickitat (-2.4%) and Skamania (-1.9%) Counties.
To date, most counties considered in this report have seen a growth in employment, but the numbers suggest that growth going forward will be focused on denser, more populated markets.
I am maintaining the “C-” grade that I gave last quarter. I want to see more broad-based growth which is clearly not present at the moment.
Regional Real Estate
Regular readers of the Gardner Report will note that the third quarter report excludes three counties—Clatsop, Klamath and Tillamook—which are usually included. Data issues precluded us from gathering information on these counties, but we hope to resume inclusion of these markets in our next report. We would add that the absence of these counties does not fundamentally change our analysis.
In the third quarter of 2013, the region reported 11,064 home sales—a modest decline of six percent over the second quarter of the year, but still a 17 percent increase over the same period in 2012. Year to date, there have been over 30,000 home sales, an increase of close to 5,000 units when compared to the same period a year ago.
The greatest growth in home sales was again seen in Hood River County (+54%), and this was followed by Cowlitz (+47%), Klickitat (+44%), and Wasco (+41%) Counties. Of the counties that saw home sales increase, only one—Linn—did not see double-digit growth (+6%).
There was just one county that saw home sales drop when compared to 2012, and this was in the Medford market which contracted by six percent. Home sales in Lincoln County matched sales from a year ago.
When we look at home prices, 18 of the markets analyzed registered year-over-year price increases with three showing declines in values from a year ago. In aggregate, home sales appreciated by 13.2 percent over the same period in 2012. It’s worth noting that this is a very healthy rate of appreciation.
The greatest price growth was seen in Columbia County where prices jumped by 40.3 percent over the same period in 2012. Frenetic price movements are typical for smaller counties and this is certainly the case here. There were several other counties where price growth exceeded the total market. These were Yamhill (+33.2%), Klickitat (+28.4%), Skamania (+25%), and Hood River (+22%). There were just four counties that saw price increases below 10 percent.
There were three counties where prices saw declines. Coos County saw the greatest drop (-8.1%), but we again put this down to the fact that it is a fairly small market. The other markets where prices dropped were Wasco (-3.6%) and Benton (-0.7%) Counties, which are also fairly small markets.
In general, the market continues to recover relative to price, but it is becoming apparent that the rate of appreciation is starting to slow. The spread between list and sale prices in many counties became somewhat disconnected between the fall of 2012 and this summer. The market has reacted to this and, in many cases, we are starting to see the average list price contract as buyers become more selective. This is not a surprise as there is now greater choice in the market with higher levels of available inventory.
This phenomenon will lead to slowing price growth which, in and unto itself, is not a bad thing. The market is recovering and, as is seen in the price escalation chart, many counties are getting close to, or even exceeding, the prices that were achieved in 2008.
The rapid, albeit brief, jump in mortgage rates that was seen in third quarter may well have pulled some sales forward. It will be interesting to see what effect this may have on transactions in the fourth quarter of the year.
I am not yet ready to raise the grade for the real estate markets from the “C+” that I have given it for the past two quarters. Inventory levels are improving but the market appears to remain somewhat cautious.
Conclusions
Much like the rest of the nation, Oregon’s economy continues to improve with each passing month. Recent job growth in Oregon’s private sector has been faster than national private sector job growth, but the state rate of total growth matches that of the U.S., which is hardly aggressive.
In the markets covered by this report, employment growth has also not outperformed with a year-over-year growth rate of 1.4 percent. This can, in part, be attributed to contraction or lack of substantive growth in several more rural counties.
I still anticipate that the Oregon housing market will see modestly rising employment and that, by year’s end, we will see a growth rate of around 1.9 percent – essentially matching the country in percentage terms.
A positive for the employment picture is the ongoing recovery in the housing market. However, this is somewhat offset by continued reduction in government employment. I anticipate that the larger job centers within Multnomah, Washington, and Clackamas Counties will continue to take a disproportionate percentage of total growth while smaller counties continue to lag.
The housing market continues to improve; however, I would not be surprised to see the pace of improvement start to taper as we head into the winter months. I stated in my last report that I expected to see price growth moderate. And while annual appreciation in many counties remains substantial, I still anticipate this to be the case.
This should not be seen as a bad sign, but I will be keeping a close eye on how the market adapts to higher levels of inventory, as well as the specter of increasing interest rates that are sure to come in 2014.
About Matthew Gardner
Mr. Gardner is a land use economist and principal with Gardner Economics and is considered by many to be one of the foremost real estate analysts in the Pacific Northwest.
In addition to managing his consulting practice, Mr. Gardner chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; sits on the Urban Land Institutes Technical Assistance Panel; is an Advisory Board Member for the Runstad Center for Real Estate Studies at the University of Washington; and is the Editor of the Washington State University’s Central Puget Sound Real Estate Research Report.
He is also the retained economist for the Master Builders Association of King & Snohomish Counties. He has twenty-five years of professional experience in the U.K. and U.S.
He has appeared on CNN, NBC and NPR news services to discuss real estate issues, and is regularly cited in the Wall Street Journal and all local media.
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Mr. Gardner is a land use economist and principal with Gardner Economics and is considered by many to be one of the foremost real estate analysts in the Pacific Northwest.
Richard Eastern is a Windermere broker in Bellevue, WA and co-founder of 
Navos
Mr. Gardner is a land use economist and principal with Gardner Economics and is considered by many to be one of the foremost real estate analysts in the Pacific Northwest.
