Kevin Bohnert Real Estate

Turnkey vs. Fixer-Upper: Pros and Cons

The beauty of real estate is that different properties satisfy different needs. Although single-family homes are great for putting down roots, that may not be your motivation for purchasing your next home. If you’re looking to buy a property with the intent of renting it, both turnkey and fixer-upper listings will cross your path during your home search. The main difference between the two is the condition of the property when you buy it. The right one for you depends on your needs as a homeowner and your goals as a landlord.

What is a turnkey property?

Turnkey properties are move-in ready from day one, which means they’re ready for you to rent them out immediately. Whether it’s a new construction home or a recently remodeled listing, these properties are in tip-top shape when they hit the market. Companies that specialize in renovating and selling these properties may also offer property management services, which may appeal to you if you’re looking for a more hands-off approach to managing your investment property.

What does fixer-upper mean in real estate?

Compared to turnkey listings, fixer-uppers are on the opposite end of the investment property spectrum. Buying a fixer-upper means you’re purchasing a home that needs repairs, remodeling, and some major TLC before it’s ready to rent out. These properties are diamonds in the rough; you’re betting on your ability to make high ROI home upgrades that will attract future renters and put money in your pocket.

Image Source: Getty Images – Image Credit: StefaNikolic

Turnkey vs. Fixer-Upper: Pros and Cons

Turnkey Pros

Because they are move-in ready, turnkey listings have the potential to generate cash flow right away. Without any pending renovations in your way, you can open up the property to renters as soon as you take possession. They’re primed and ready to place in the hands of a property management company, which means you’ll get passive income without having to deal with day-to-day operational tasks. You can also ask the listing agent for permission to use their photos, which can help your rental stand out amongst the competition in your area.

Turnkey Cons

So, what’s the catch? These benefits all come at a cost; turnkey properties typically cost more than fixer-uppers. You’ll pay a premium for the pristine condition and the buttoned-up appearance of these properties, so it’s important to have a strategy to save money for your home purchase. Also, handing off property management duties to a third party means you’ll have less control over the renting process. For more information on whether hiring a property management company is right for you, read the following blog post:

Managing Your Investment Property: DIY vs. Hiring a Professional

Fixer-Upper Pros

Searching for homes in less-than-pristine condition can give you a leg up as a buyer. Fixer-upper homes tend to have less competition from buyers than turnkey properties, since not everyone is willing to take on a major remodeling project. Talk to your agent about how to make the best offer. Given their lessened condition, you can oftentimes get a great deal on these homes with the right strategy. And the best part is, your remodeling efforts will increase the home’s value over time. The more effort you put in, the more the property will be worth, which means higher ROI potential.

Fixer-Upper Cons

Here’s the downside with fixer-uppers: tapping into their potential requires pouring money into the property. Exactly how much you can expect to spend on a fixer-upper varies by location, the size of the home, and the scope of repairs and renovations needed. Tackling some remodeling projects DIY can save you money, but if certain projects require more skilled hands, it may be best to hire a professional. And for all your planning, it’s impossible to predict the future. Projects may go over budget, material costs may rise, and the market may look completely different when you’re ready to rent out your property than it did when you bought it. For more information on buying a fixer-upper and the special financing options available to you, read the following blog post:

Buying a Fixer-Upper

Your real estate agent is your greatest asset in helping you determine which property type is right for you. Connect with a local Windermere agent to see which turnkey and fixer-upper properties are available in your area:

Featured Image Source: Getty Images – Image Credit: hikesterson

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Would the FHFA Mortgage Fee Changes Have Favored Buyers with Low Credit Scores?

The Federal Housing Finance Authority recently put a hold on raising upfront mortgage fees given pushback that suggested home buyers with good credit were being penalized. Windermere Chief Economist Matthew Gardner looks at Loan Level Price Adjustments (LLPAs) to explain why some headlines were misleading.

This video on the proposed FHFA mortgage fee changes 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.

FHFA Mortgage Fee Changes

Hello there, I’m Windermere Real Estate’s Chief Economist Matthew Gardner, and welcome to this month’s episode of Monday with Matthew. As most of you are aware, the Federal Housing Finance Authority announced that they were going to raise the upfront fees for mortgages backed by Fannie Mae and Freddie Mac, and that led to significant backlash from some suggesting that borrowers with good credit would now be paying more than borrowers with bad credit.

And as these voices grew louder, Congress stepped in with House Financial Services Committee Chair Patrick McHenry and Housing and Insurance subcommittee Chair Warren Davidson announcing a plan to repeal these fee increases if they were introduced. Well, this did not go unnoticed, and the FHFA announced on May 10^th that they were putting a hold on a new fee structure in order to engage industry stakeholders and better understand their concerns.

So, for now nothing has changed, but I still think it’s a subject worth discussing because we will see another proposal from the FHFA at some point in the future. So, what’s going on?

Well, periodically the FHFA raises the upfront fees that the Agencies charge borrowers for the purchase and refinance of mortgages that they guarantee, and these fees are called Loan Level Price Adjustments, or LLPAs.

In April of 2022, these fees went up for several types of loans including ones in expensive markets that have a higher conforming loan limit than seen nationally, and they also raised fees on second home mortgages. But to support affordable housing, the lower rates for certain programs including HomeReady, Home Possible, and HFA Advantage weren’t increased. And they didn’t raise fees for loans to first-time home buyers in high-cost areas if they earned at or below the area median income.

And the new round of fee increases that was scheduled to start in May of this year has many believing that it was just another subsidy given to households with lower credit that’s being paid for by households with better credit. But is that really an accurate statement? I don’t necessarily think so.

First off, the FHFA had to increase fees this year simply because they needed the money to cover higher capital requirements that went into effect last year, but that’s a topic for another day. For now, let’s take a look at the changes that would have been made.

Changes to LLPAs

The matrix you see here shows you the difference between the fee that was in place and the one that was proposed. Remember, this is not the actual fee itself, but the spread between the old and new pricing. And, as you can see, on face value it really does look to benefit borrowers with lower credit scores and penalize households with better credit. For example…

Changes to LLPAs: Credit Score 640 – 659

A household with a credit score of between 640 and 659 would see savings across all loan-to-value ranges versus the following:

Changes to LLPAs: Credit Score 740 – 759

A household with a credit rating of 740 to 759 who would be paying the same or more in all bar two scenarios with fees increasing between 0.125% and three quarters of a percent.

But is this really something to be worried about?

There are two things that stand out to me. The first is that a household putting down less than 20% has to buy private mortgage insurance. So, in reality, these households are actually less of a risk to the agencies than those who don’t, so isn’t it right that they should pay less in fees? Secondly, although I can’t disagree with anyone who states that families with lower credit will see fees go down and, generally speaking, they will go up for those with better credit, but people are confusing the CHANGE in the fee with the ACTUAL fee itself.

What I am saying is that low credit borrowers aren’t paying less than high credit borrowers. It’s just the spread in the rates between households with lower credit and those with higher credit has simply gotten smaller.

There is absolutely no scenario where someone with lower credit gets a lower fee. Let me show you.

Loan Level Pricing as of March 1, 2023

This was the new pricing schedule had it actually come into effect. Now let’s say there are two households wanting to buy houses for $500,000 and both looking to borrow 80% of the purchase price.

One buyer has a credit score of 640, so their LLPA would be 2.25% of the loan amount, or $9,000. The other buyer had a credit score of 740 so their fee would be 0.875%. That means the household with higher credit would be paying $5,500 less than the household with lower credit on a $400k loan.

No one is arguing that households with lower credit scores would have paid less in upfront fees, but I actually don’t see a problem with that. Remember, Fannie and Freddie’s mission is, in part, to facilitate access to affordable housing. Moreover, these fees don’t even apply to non-conforming or jumbo loans and they don’t impact FHA or VA loans either.

Although I certainly don’t know where the FHFA will end up regarding fee changes, they will have to do something at some point. I just hope that any modified plan is presented in a way that fully describes the situation and isn’t one that’s able to be interpreted in a manner which allows for headlines that don’t describe the full picture.

As always, I’d love to hear your thoughts on this subject but, in the meantime, stay safe out there and I’ll see you all next month. Bye now.

To see the latest housing data for your area, visit our quarterly Market Updates page.

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.

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Windermere Foundation Funds Shelter for Low-Income and Homeless Families

When the Windermere Foundation was started, the original mission was to provide housing for community members facing homelessness. The mission has expanded since then, but Windermere offices across the Western U.S. continue the cause, donating to organizations that make a difference for homeless and low-income families in our communities. From supporting homeownership to providing shelter and beyond, here are some recent stories of how the Windermere Foundation is helping our neighbors in need.

Windermere Fort Collins Helps Families into Homeownership

Time and time again, the folks at Windermere Fort Collins find a way to make a meaningful and lasting impact in their community. This time around, they directed their giving efforts toward Neighbor to Neighbor, a local organization helping local families in need regain stability through homeownership, providing various support services and education. After collaborating with the organization’s philanthropy coordinator and Executive Director, the Fort Collins office was able to make a $20,000 donation and present a check at a recent industry event (pictured above). This impactful donation will go directly to Larimer County residents who need housing assistance.

Pictured: Paul Hunter, Natalie Parsons, Jennifer Nethery & Julius Luciano (Stepping Stones of Windsor), Windermere Northern Colorado agents & staff – Photo Credit: Blue Sage Photography

Windermere Northern Colorado Steps in to Prevent Eviction

Staying in Colorado, Windermere Northern Colorado started their year of giving off on the right foot by partnering with Stepping Stones of Windsor. Stepping Stones targets a critical stage of the homelessness cycle by providing funds directly to landlords after eviction or utility shutoff notices. The Northern Colorado Windermere team rallied for their neighbors in need, raising $15,000 to help them stay in their homes and keep the lights on. The team was able to present the check in person on February 1 at the Marriott Fort Collins.

A group of agents and staff from Windermere RE/South Inc. volunteering to build a house with the organization Sound Foundations NW.

Pictured: Julie Phelps, Ayumi Doll, Janel Stoneback, Philip Heier, Caprice Davis, Bruce Bright, Linda Conn, Rich Menti, Kim Steward, Candy Wagner, Kerry Dean, Chantel Akres

Windermere Real Estate/South, Inc. Builds Transitional Housing

Transitional tiny homes help move the needle in the fight to end homelessness by providing shelter for those who need it. Sound Foundations NW is committed to being part of the solution. Their low-cost structures are getting people off the streets left and right, improving the lives they touch. Windermere Real Estate South/Inc. in Burien, WA was deeply inspired by Sound Foundation’s work and got a crew together to build a tiny home for their community members in need. The structure will provide a safe, warm, and dry home for years to come.

To learn more about the Windermere Foundation, visit windermerefoundation.com. To help support programs in your community, click the donate button below.

Featured Image Source: Blue Sage Photography

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Selling Your Home: 5 Common Myths

Selling your home is a crash course in real estate education. You’ll learn how to work with your real estate agent to find a buyer and sell at the right price. As you prepare to sell, it’s important to remember that that not everything you’ve heard is true. There are several common myths that can lead to costly mistakes in the selling process. Knowing the truth behind them will clarify your selling journey and help you align your expectations.

Selling Your Home: 5 Common Myths

1. Home Value Calculators Are 100% Accurate

Online Automated Valuation Models (AVMs) are a great starting point for understanding how much your home could be worth. However, they are merely a first step in determining home value; to say they are 100% accurate is a myth. When it comes to pricing your home, you need to rely on your real estate agent’s Comparative Market Analysis (CMA), which uses vast amounts of historical and current data on real estate listings to arrive at an accurate and competitive figure.

To get an estimate of how much your home is worth, try our Home Worth Calculator here:

2. Selling FSBO Will Save You Money

Selling a home requires an intimate knowledge of the housing industry and how to solve the complex situations that arise throughout a real estate transaction. Despite this, some sellers will go it alone and attempt to sell their property without being represented by an agent.

Selling For Sale by Owner (FSBO) is a risky proposition. It requires the seller to bear added liability, fills their schedule with various marketing and promotional responsibilities, and can leave money on the table by inaccurately pricing the property, causing it to sit on the market for too long. The potential costs of selling a home on your own far outweigh the commission real estate agents earn on a home sale.

3. You Must Remodel to Sell Your Home

The question you’ll face when preparing to sell your home is whether to sell as is or remodel. The answer usually lies somewhere in between, but it depends on your situation and what kinds of home upgrades are driving buyer interest locally. When making improvements to your home, lean toward high ROI remodeling projects to get the best bang for your buck, and avoid trendy projects that can delay listing your home. If you’re considering major upscale renovations, talk to your agent about which projects buyers in your area are looking for.

A Caucasian heterosexual couple are discussing a home remodeling project with a Latin American contractor as they prepare to sell their home. They look over paperwork on a wooden dining room table.

Image Source: Getty Images – Image Credit: andresr

4. Never Accept the First Offer

You’ve likely heard tell that the first buyer’s offer is nothing more than a springboard to up your asking price and to never accept it. In this case, “never” should be approached with caution. In reality, the best offer for your home is one that you and your agent have discussed that aligns with your goals. If a matching offer happens to be the first one that comes your way, so be it. The market can shift at any time, so you never know what may happen if you leave an offer on the table. And if the buyer backs out of the deal, you and your agent will find a path forward.

Common Real Estate Contingencies

5. Home Staging Doesn’t Make a Big Difference

Staging your home is so much more than a cosmetic touchup; it has been proven to help sell homes faster and at a higher price than non-staged homes.¹Staging ensures that your home has universal appeal, which attracts the widest possible pool of potential buyers. When buyers are able to easily imagine living in your home, they become more connected to the property. You should stage your home regardless of your local market conditions, but it can be especially helpful in competitive markets with limited inventory where even the slightest edge can make all the difference for sellers.

Now that you know some of the most common myths in the selling process, get to know its truths. Connect with a local Windermere agent to get the process started:

1: National Association of REALTORS® – Why Home Staging Inspires the Best Prices in Any Housing Market

Featured Image Source: Getty Images – Image Credit: Renata Angerami

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How Much Paint Do I Need? Indoor Paint Calculator

Whether you’ve just bought a house or you’ve lived in your home sweet home for years, at some point its walls and surfaces will be due for a fresh coat of paint. Repainting can breathe new life into an interior and help you personalize the space, whether you’re working within the latest interior design trends or blazing your own trail. But there’s one fundamental question facing every homeowner as they begin their painting project: How much paint do I need?

How much paint do I need?

Every project has a budget, and with the right planning you can execute the project to its full potential without going over budget. Painting is the ultimate DIY project and can be quite therapeutic, but still requires some calculation to determine how much you should expect to spend. With the right amount of paint, you’ll avoid overspending and getting saddled with the sunk cost of unused paint after you’ve completed your project.

The amount of paint required varies by project, but as a general rule of thumb, one gallon of paint covers about 400 square feet. So, it only takes a few simple measurements to calculate the amount of paint you’ll need for your walls.

How to Calculate How Much Paint You Need:

Start by measuring the length of each wall
Multiply the wall length by the wall height
Total length x total height = total square footage
Total square footage ÷ 400 = number of gallons
Subtract windows and doors square footage

Following this formula will give you the number of gallons you need to purchase for one coat of paint. Depending on your color scheme and the texture of your walls, your painting project may require multiple coats to have it looking just right.

If the walls you’re painting have windows and/or doors, simply perform the same basic calculation to determine their square footage and subtract that number from the total square footage value before calculating how many gallons you’ll need. When painting your ceilings, remember to account for the square footage of any skylights you may have in your home.

Colorful Modern Design Trends for Your Home

Image Source: Getty Images – Image Credit: aydinmutlu

Primer and Trim

It’s often the case that a paint job is only as good as its base coat. A solid layer of primer can really make your painting project shine. But the same query with your topcoat applies to your primer: how much do you need? A gallon of primer will cover up to 300 square feet, so you’ll need more primer than topcoat for your project. Perform the same calculations as above and divide your paintable square footage by 300 to determine how many gallons of primer you’ll need to pick up.

How to Calculate How Much Primer You Need:

Start by measuring the length of each wall
Multiply the wall length by the wall height
Total length x total height = total square footage
Total square footage ÷ 300 = number of gallons
Subtract windows and doors square footage

Calculating square footage for trim isn’t as straightforward as it is for a square or rectangular wall. When preparing to paint your baseboards and crown molding throughout your home, think in quarts rather than gallons. Trim paint may go on smoother depending on the wood finish, and you’ll be using a brush rather than a roller. If you end up with extra trim paint at the completion of your project, it never hurts to keep it around for future touchups.

For more information on DIY projects, home design and more, visit the Design page of our blog:

Windermere Blog – Design

Featured Image Source: Getty Images – Image Credit: svetikd

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How to Pay for a House

Buying a home is, for many people, the largest financial undertaking of their lives. So, how do the numbers work? How is the price of a property converted into a transaction? Let’s take a look at how to pay for a house by focusing on some of the major components in a real estate purchase, namely the down payment, earnest money, and the mortgage payments required to successfully buy a home.

How to Pay for a House

If you have enough money available, it is possible to make an all-cash offer on a house. Most home buyers, however, save enough money to make a down payment that works for them and finance the remainder of a home purchase with a mortgage. Saving money to buy a house requires significant planning, but by being proactive, you’ll eventually put yourself in a position of higher buying power. Reducing debt, increasing savings contributions, and finding additional streams of income are all helpful ways of generating some extra cash to pay for a house.

How to Save Money to Buy a House

Making a Down Payment on a Home

The down payment is a lump sum paid upfront by the buyer. The actual down payment amount varies by transaction, but it’s usually somewhere between 3% and 20% of the home’s purchase price. It’s one of the most important home buying costs, given how much planning goes into it. There’s a snowball effect with the down payment; once you figure out how much of a down payment you can afford, that will determine your home loan’s principal amount. The higher the down payment, the less risk for the mortgage lender. When buyers aren’t able to make a down payment of 20% of the purchase price, lenders will require they purchase additional mortgage insurance to protect the investment.

Making a Down Payment on a Home

To get an idea of how different down payment amounts affect the financial structure of a home purchase, use our Home Monthly Payment Calculator by clicking the button below. With current rates based on national averages and customizable mortgage terms, you can experiment with different values to get an estimate of your monthly payment for any listing price.

A closeup of two men’s hands doing paperwork at an office desk as they figure out how to pay for a house. One man points to a calculator while the other takes notes.

Image Source: Getty Images – Image Credit: Perawit Boonchu

Earnest Money and Escrow

A real estate transaction is not your typical purchase. With so much money being moved around, it requires a little extra protection. This is where escrow comes in. Escrow ensures that your earnest money or “good faith deposit” gets properly disbursed according to plan during the home buying process, and holds property tax and homeowners insurance funds during the life of your home loan.

A Guide to Understanding Escrow

Making Mortgage Payments

Searching for a home loan is similar to searching for a home: there are many options, but based on what’s affordable and what works for your situation, you’ll eventually find the right one. When looking at the different types of home loans, you’ll compare the loans’ terms, interest rates, and conditions for repayment. For example, 15-year and 30-year mortgages are two of the most common home loan products. You’ll have lower monthly payments with a 30-year loan, but you’ll pay more interest over the life of the loan. With a 15-year mortgage, you’ll have higher monthly payments but pay less in total interest. Work with your mortgage broker to find the best home loan for you.

The Difference Between a Real Estate Agent and a Mortgage Broker

For more information on the home buying process, connect with a local Windermere agent:

Featured Image Source: Getty Images – Image Credit: Hispanolistic

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What Goes Into Owning a Waterfront Home?

A waterfront home offers surroundings unlike any other. Their prime locale and stunning views virtually guarantee a lifetime of relaxation, waterfront get-togethers, and summer nights under the stars. Waterfront homes have great potential as investment properties as well. But for all the perks waterfront homeownership offers, it comes with its own set of responsibilities, too.

Should I buy a waterfront home?

Beyond the lifestyle benefits, owning a waterfront home also has a significant financial upside. Because waterfront properties are more scarce than landlocked homes and their location is highly desirable, the buyer demand is generally high. As a homeowner of these special properties, you can rest assured that a well-maintained waterfront home will generate significant buyer interest when you’re ready to sell. A property with any combination of water views, boat slips, docks, and water access is a recipe for appreciation over time.

A waterfront property is a popular choice for homeowners who are in the market for a second home, or even as a primary residence for those looking to eventually move into their vacation home when the time is right. They’re also primed for converting into a short-term rental. Due to their location, they have a competitive advantage over many other short-term rentals. Depending on the local laws and any relevant Homeowners Association rules, waterfront homes can be rented out year-round or seasonally. For example, if you decide to rent out your home during the summer, you’re able to capitalize on seasonal demand.

Designing Your Rental to Feel Like Home

Image Source: Getty Images – Image Credit: bradwieland

Owning a waterfront property also comes with extra risks you’ll need to keep in mind. Weather conditions can be extra harsh on these homes, given the fact that they’re situated face to face with nature in a way most homes aren’t. Make sure you have proper coverage through your homeowners insurance policy and inquire about the need to purchase additional wind, flood, or hazard coverage. Local climate dictates what a comprehensive coverage plan will look like for your home, but what’s important is that you’re fully covered.

Something else to keep in mind is that beyond the typical tasks associated with owning a home, waterfront structures like retaining walls, boat lifts, and docks require a certain amount of ongoing maintenance. As the seasons change, so will your responsibilities as a homeowner. Properly winterizing a waterfront property requires a few additional steps beyond the typical routine, depending on how low temperatures dip during winter in your area.

For more advice on home maintenance, repairs, remodeling and more, visit the Living section of our blog:

Windermere Blog – Living

Featured Image Source: Getty Images – Image Credit: Markanja

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Q1 2023 Northern California Real Estate Market Update

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

Regional Economic Overview

Total employment in the counties covered by this report continues to slow, as demonstrated by the addition of only 45,300 jobs over the past 12 months. Although the numbers are adjusted for seasonality every January, this is highly unlikely to be totally responsible for the poor pace of growth of only 1.5%. On a more positive note, the regional unemployment rate fell from 3.8% to 3.6% from the same period in 2022. The lowest jobless rate was in Santa Clara County (3.1%) and the highest rate was in Shasta County at 5.8%.

Northern California Home Sales

❱ In the first quarter of the year, 5,106 homes sold, a significant drop from the more than 8,100 homes that sold in the first quarter of 2022. Closed sales were 21.6% lower than in the final quarter of 2022.

❱ Year over year, sales fell across the board. The largest drop was in Santa Clara County, but the decline in sales activity was pronounced across the region.

❱ Listing inventory in the first quarter was down 32.4% from the prior quarter, which certainly contributed to the poor sales numbers.

❱ Pending home sales were up 9% compared to the fourth quarter of 2022, so it is possible that closed sales may pick up in the second quarter.

Northern California Home Prices

❱ Higher financing costs continue to impact prices, with the average price of a home sold in the region dropping 12.7% from the first quarter of 2022. Sale prices were 5.8% lower than in the final quarter of last year.

❱ Median list prices in the region managed to rise just a little (+1.9%) compared to the previous quarter. Across the counties contained in this report, prices rose in Placer, Napa, San Luis Obispo, and Contra Costa counties but fell in the rest of the markets.

❱ Prices fell across the board compared to the first quarter of 2022, with double-digit drops in Santa Clara, Alameda, and Contra Costa counties. Compared to the fourth quarter of 2022, prices were higher in Placer County, but fell in the rest of the market areas.

❱ The numbers may look dire, but I believe that the worst of the price drops is behind us. While home prices likely have a little further to fall, I still predict that stability will return as we move into this summer.

A map showing the real estate home prices percentage changes for various counties in Northern California. Different colors correspond to different tiers of percentage change. Contra Costa has a percentage change in the -16% to -13.6% range, Alameda is in the -13.5% to -11.1% change range, Santa Clara is in the -11% to -8.6% change range, Shasta and Napa are in the -8.5% to -6.1% change range, and Placer, Solano, and San Luis Obispo are in the -6%+ change range.

Mortgage Rates

Rates in the first quarter of 2023 were far less volatile than last year, even with the brief but significant impact of early March’s banking crisis. It appears that buyers are jumping in when rates dip, which was the case in mid-January and again in early February.

Even with the March Consumer Price Index report showing inflation slowing, I still expect the Federal Reserve to raise short-term rates one more time following their May meeting before pausing rate increases. This should be the catalyst that allows mortgage rates to start trending lower at a more consistent pace than we have seen so far this year. My current forecast is that rates will continue to move lower with occasional spikes, and that they will hold below 6% in the second half of this year.

A bar graph showing the mortgage rates from Q1 2021 to the present, as well as Matthew Gardner's forecasted mortgage rates through Q1 2024. After the 6.79% figure in Q4 2022 and 6.37% in Q1 2023, he forecasts mortgage rates dipping to 6.26% in Q2 2023, 5.78% in Q3 2023, 5.43% in Q4 2023, and 5.28% in Q1 2024.

Northern California Days on Market

❱ The average time it took to sell a home in the Northern California counties in this report rose 17 days compared to the first quarter of 2022.

❱ Compared to the first quarter of 2022, the length of time it took to sell a home rose across the region. Compared to the fourth quarter of 2022, market time rose across all counties except Alameda County, where it remained static, and Santa Clara County, where it fell by three days.

❱ It took an average of 49 days to sell a home in the first quarter of 2023, which was 6 more days than in the fourth quarter of last year.

❱ Even faced with fewer homes on the market, buyers are being wary. I expect they will continue to feel this way until either they believe that a floor in prices has been found, or mortgage rates drop to a point where it becomes compelling to make a buying decision again.

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.

Growth in the job market continues to slow, which is likely a contributing factor to the slowing real estate market, especially in areas that may be shedding a significant number of tech jobs. That said, buyers are still out there but they are looking for deals and are clearly prepared to wait it out. Moving forward, I believe that the worst of the price drops may be over in some of the Northern California markets covered by this report, but the region as a whole has yet to find a firm foundation in respect to home values upon which it can build.

A speedometer graph indicating a balanced market in Northern California in Q1 2023, leaning toward a buyer's market.

That said, I expect the market to find its footing later this spring, at which point home prices will stabilize and then start to increase, though at a significantly slower pace than during the pandemic period. Given all that has been discussed here, I am moving the needle further in favor of buyers and into what can best be described as a neutral position.

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

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Q1 2023 Nevada Real Estate Market Update

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

Regional Economic Overview

The Las Vegas area continues to add jobs and the pace of growth remains impressive. There are currently 1.118 million people working in the metro area, which is 58,000 more than during the same period in 2022 and represents an annual growth rate of 5.5%. Although the job market remains remarkably robust, the unemployment rate continues to tick modestly higher. Though this may seem unusual, it really isn’t. The number of jobs being added is substantial, which has led the labor force to grow significantly. When people start looking for work, they are counted as “unemployed,” which can raise the jobless rate. The non-seasonally adjusted unemployment rate in February was 6%, which was up from 5.3% in the first quarter of 2022. The seasonally adjusted rate was 6.2%, which was up from 5.5% during the same period in 2022.

Nevada Home Sales

❱ A total of 5,537 homes sold in the first quarter of the year, which was a drop of 39.4% compared to the same period in 2022. Sales were up 12% from the fourth quarter of last year.

❱ Year over year, sales fell significantly in every neighborhood covered by this report. Compared to the fourth quarter of 2022, sales rose in every neighborhood except Green Valley, where there was a very modest decline.

❱ Particularly impressive was the fact that sales rose while the average number of homes for sale fell more than 32%. This can happen given the higher inventory levels we saw in the fourth quarter, but it is impressive all the same.

❱ Pending sales, which are an indicator of future closings, rose 45.4% compared to the fourth quarter, suggesting that the market may see further growth in sales in the second quarter.

Nevada Home Prices

❱ If the level of sales activity was a surprise, prices decreasing by 7.2% from the first quarter of 2022 and 3.9% from the fourth quarter should make things clear: buyers were making deals.

❱ Listing prices, which are a leading indicator of the market, fell 3.9% from the final quarter of 2022. The market is clearly responding to higher financing costs. However, not all markets are the same. In Southwest Las Vegas, Summerlin, Anthem, Henderson, and The Lakes/Section 10, median listing prices rose quite significantly from the fourth quarter of 2022.

❱ Year over year, prices fell across the board. Compared to the fourth quarter of 2022, six neighborhoods saw higher prices. These were Centennial, Green Valley, The Lakes/Section 10, Southeast Las Vegas, Spring Valley, and Whitney.

❱ Nobody should be surprised to see prices fall given the rapid pace of appreciation through the pandemic period. It’s a necessary adjustment that will end later this year, at which point I expect prices to start rising again, though at a significantly slower pace.

A chart showing the sub-market areas and their corresponding zip codes in the Greater Las Vegas, Nevada area.

Mortgage Rates

Nevada Days on Market

❱ The average time it took to sell a home in the region rose 32 days compared to the first quarter of 2022.

❱ It took an average of 55 days to sell a home in the quarter, which was 12 days longer than it took in the final quarter of 2022.

❱ Days on market rose in all neighborhoods compared to both the same period in 2022 and the fourth quarter.

❱ Even with prices pulling back in many markets, buyers were still taking their time and, possibly, waiting to take advantage of the dips in mortgage rates that occurred in the quarter.

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.

In last quarter’s Gardner Report, I suggested that a price ceiling had been reached in the Las Vegas market. That forecast appears to have been correct. Compared to the fourth quarter of 2022, lower sale prices, longer days on market, and lower listing prices have benefitted home buyers, and it appears they have been taking advantage of the situation. That said, they’re not having it all their own way. Lower inventory levels, higher pending and closed sales, and higher absorption rates of homes that are on the market indicate that home sellers are not completely defeated.

A speedometer graph indicating a balanced market in Nevada in Q1 2023, leaning toward a buyer's market.

The price correction the market is experiencing was necessary to return to some sense of balance. I expect home prices will pull back a bit further before they start to stabilize this summer. At that point, prices should trend higher again, but at a far more modest pace than during the pandemic period. Given all these factors, I am leaving the needle in neutral territory but leaning a bit toward buyers, who still have a modestly better hand.

About Matthew Gardner

The post Q1 2023 Nevada Real Estate Market Update appeared first on Windermere Real Estate.

Q1 2023 Utah Real Estate Market Update

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

Regional Economic Overview

Continuing the trend that started last summer, employment growth in Utah continues to taper. Over the past 12 months, the state added 52,600 jobs. At an annual rate of 3.2%, this was the slowest percentage growth since Utah started recovering jobs post-COVID. Although this is an improvement over the rate in the last quarter, annual adjustments to the data gave early 2023 data a boost. The counties covered by this report added more than 38,600 new jobs over the past year, representing a growth rate of 2.8%. The fastest growing county was Summit, with a 4.8% increase in employment. The slowest was Morgan County, where the job level rose .7%. Utah’s unemployment rate in February was 2.4%, matching the level at the end of 2022. The labor force continues to grow but, so far, it has not caused the jobless rate to rise, which is very impressive.

Utah Home Sales

❱ In the first quarter of the year, 5,251 homes sold. This was down 21% compared to the first quarter of 2022. Sales were .2% higher than in the fourth quarter of last year.

❱ Year over year, sales fell across the board. Compared to the fourth quarter, sales rose in Utah and Weber counties but fell in the rest of the market areas covered by this report.

❱ The number of homes for sale plummeted by one third when compared to the fourth quarter of 2022, making any increase in sales rather impressive.

❱ Pending sales jumped 38.3% from the fourth quarter, suggesting that closings in the second quarter of this year may rise further.

Utah Home Prices

❱ The average sale price in the first quarter of the year fell 5.3% compared to the first quarter of 2022 to $603,340. Prices were also .1% lower than in the fourth quarter of 2022.

❱ Median listing prices in the first quarter were 3.7% higher than at the end of last year, suggesting that home sellers remain confident about the spring market. Of the counties covered by this report, only Wasatch and Morgan counties saw listing prices fall compared to the prior quarter.

❱ Year over year, prices rose in Wasatch County but fell in the other markets. Compared to the fourth quarter of 2022, prices rose in Morgan, Summit, and Wasatch counties.

❱ The market is correcting. Although this may not be something sellers want to see, it is important to return to some sense of normalcy following the frantic, low-mortgage-rate-induced market of the pandemic period. There will be a relatively modest decline in prices in the coming months, but I expect home values to rise again in the second half of this year.

A map showing the real estate home prices percentage changes for various counties in Utah. Different colors correspond to different tiers of percentage change. Morgan and Davis counties have a percentage change in the -7% to -4.9% range, Weber, Salt Lake, Summit, and Utah are in the -4.8% to -2.7% change range, and Wasatch is in the 1.8%+ change range.

Mortgage Rates

Utah Days on Market

❱ The average time it took to sell a home in the counties covered by this report rose 42 days compared to the same period in 2022.

❱ Homes again sold fastest in Salt Lake County and slowest in Summit County. All areas saw average market time rise compared to the prior quarter as well as the same quarter in 2022.

❱ During the quarter, it took an average of 67 days to sell a home, which was an increase of 9 days compared to the final quarter of 2022.

❱ Although average market time rose compared to the fourth quarter of last year, the increase was not significant. Lower inventory levels may lead to market time pulling back again as we get into the spring months, or at least levelling out.

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.

Higher financing costs and lower affordability rates are acting as headwinds in the housing market, which is offsetting the benefit that housing normally sees from a growing economy. I have stated previously that home prices in Utah would continue to moderate but that a major downward correction was unlikely. That prediction appears to have been accurate. I believe that the market is very close to bottoming out given low inventory levels, rising pending and closed sales, and higher listing prices—all of which benefit home sellers. That said, lower home prices and longer days on market tend to favor home buyers.

A speedometer graph indicating a balanced market in Utah in Q1 2023, leaning toward a seller's market.

Ultimately, I would describe the market as balanced, but I am tilting the needle just a little in favor of sellers. I expect that mortgage rates will start to stabilize as we move through the spring and then start to drop a little. If this occurs and inventory levels do not rise significantly, then we will certainly be back in a position that more firmly favors home sellers.

About Matthew Gardner

The post Q1 2023 Utah Real Estate Market Update appeared first on Windermere Real Estate.