Blog

Windermere Cup Returns for 36th Annual Regatta

The 36th annual Windermere Cup will be held Saturday May 7th, 2022, in Seattle, Washington. The rowing regatta hosted by Windermere Real Estate and the University of Washington brings together the best rowing crews in the world for a weekend of festivities and races along Seattle’s scenic Montlake Cut. After a cancellation in 2020 due to the COVID-19 pandemic and a limited event in 2021, the Windermere Cup returns in full force in 2022.

The University of Washington men’s and women’s crews will face off against top international talent in a battle for Windermere Cup supremacy. Held annually on the first Saturday in May, the Windermere Cup is both an international sporting event and a celebration of boating season open day. Following the races, the Seattle Yacht Club hosts their annual Opening Day Boat Parade.

Windermere Cup 2022

Two storied programs make their way to Seattle this year to compete against the University of Washington: the Netherlands Men’s National Team and the Great Britain Women’s National Team. Last year, the Dutch men’s rowing team finished fourth at the Tokyo Olympic Games. At the Under 23 level, the Dutch men’s eight has rowed in the grand final in each of the last four world championships, winning bronze in 2019 and gold in 2017. The British women’s crew won silver at the 2016 Olympic Games in Rio de Janeiro and were one of only seven nations to qualify for the 2020 Tokyo Olympics. Great Britain’s women’s eight also won silver in the World Rowing Under 23 Championships in 2019 and gold in the women’s four in 2021.

These crews face a University of Washington rowing program whose long tradition of winning on both national and global stages shows no signs of slowing. The UW women have won twelve national championships, including two of the last four; while the men’s team has won nineteen national titles, including eight of the last fourteen. In May of last year, the UW men’s team swept all four grand finals at the 2021 Intercollegiate Rowing Association Championship Regatta.

Windermere Party on the Cut: Boats, Bites, Brews, & Bands

The night before the regatta we’ll be hosting this year’s Party on the Cut! The event will take place Friday, May 6th, from 6 pm to 10pm. Come join us on the northeast corner of the Cut for an evening of fun, games, live music, food, and drinks. Tickets are $25 in advance or $35 at the door. This year features live performances from Nite Wave and the Queen tribute band Queen Mother. Tickets can be purchased through Brown Paper Tickets here: Party on the Cut 2022.

For more information and a schedule of events, visit windermerecup.com and follow Windermere Cup on Facebook and Twitter. You can also join in the fun on social media with the official hashtag of this year’s Windermere Cup: #WindermereCup2022

The post Windermere Cup Returns for 36th Annual Regatta appeared first on Windermere Real Estate.

Q1 2022 Central Washington Real Estate Market Update

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

 

Regional Economic Overview

Central Washington employment rose 6% year over year. However, with the significant revisions to 2021 employment levels the state made, total employment is down 3,778 jobs from the pre-pandemic peak. The jobs shortfalls are primarily in Kittitas and Yakima counties, with far smaller shortfalls in Okanogan and Chelan counties. Douglas County is the only market where employment levels are higher than the pre-pandemic peak. Unadjusted unemployment levels in Central Washington were 7.6%. When adjusted for seasonality, they were 5.9%. The county with the lowest unemployment rate was Chelan at 4.8%; the highest was Yakima, where 6.5% of the labor force was still without work. I expect that the region will be back to pre-pandemic employment levels by this summer.

Central Washington Home Sales

Sales in Central Washington rose 6.8% compared to a year ago, with a total of 1,022 homes sold. Sales fell 36.1% compared to the final quarter of 2021, but it is likely that seasonal factors impacted the number.

The drop in sales compared to fourth quarter of 2021 suggests that closings in second quarter of this year will remain tepid.

Compared to a year ago, sales rose in Okanogan, Yakima, and Kittitas counties, but fell in Chelan and Douglas counties. Sales fell across the board compared to the final quarter of last year.

Even though inventory levels rose 4% year over year, there were 33.5% fewer listings in the first quarter than in the prior quarter. This is creating frustrating conditions for buyers who have seen financing costs increase significantly in recent months. I hope more homes will come to market as spring gets underway, but the market is far from balanced.

Central Washington Home Prices

The average home price in Central Washington rose 17% year over year to $485,435 but was 0.8% lower than in the final quarter of 2021.

Lower quarter-over-quarter sale prices may be a function of rising mortgage rates, but it’s too soon to tell given that there’s usually a lag between rising financing costs and their impact on prices. Data from the second quarter of this year will give us a better indication.

Every county except Yakima saw double-digit increases in sale prices compared to the first quarter of 2021. Prices were lower in Chelan and Yakima counties than in the previous quarter, but the other three counties saw higher sale prices.

Median list prices have slowed their ascent in many of the markets contained in this report, which could also indicate some softening in the region. That said, the extent to which this is impacting secondhome markets—which are more susceptible to rising mortgage rates—remains uncertain.

A map showing the year-over-year real estate market percentage changes in various counties in Central Washington for Q1 2022.

A bar graph showing the annual change in home sale prices for various counties in Central Washington from Q1 2021 to Q1 2022.

Mortgage Rates

Average rates for a 30-year conforming mortgage were 3.11% at the end of 2021, but since then have jumped over 1.5%—the largest increase since 1987. The surge in rates is because the market is anticipating a seven- to eight-point increase from the Federal Reserve later this year.

Because the mortgage market has priced this into the rates they are offering today, my forecast suggests that we are getting close to a ceiling in rates, and it is my belief that they will rise modestly in the second quarter before stabilizing for the balance of the year.

A bar graph showing the average rates for a 30-year conforming mortgage, plus Matthew Gardner's mortgage rate forecasts for Q2 2022 through Q1 2023.

Central Washington Days on Market

The average time it took to sell a home in Central Washington in the first quarter of 2022 was 55 days.

During the first quarter, it took three fewer days to sell a home in Central Washington than it did a year ago.

All counties other than Chelan and Kittitas saw the length of time it took to sell a home drop compared to a year ago, with noticeable improvement in Okanogan County. Compared to the final quarter of 2021, days on market rose in all counties.

It took 17 more days to sell a home in the first quarter than it did in the fourth quarter of last year.

A bar graph showing the average days on market for homes in various counties in Central Washington during Q1 2022.

Conclusions

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

The market remains in a state of imbalance. On one hand, the number of homes for sale increased as we moved into the year, but there were fewer pending sales. This is a little counterintuitive given that rising mortgage rates should have been a stimulant for home buyers. Even so, I believe home sellers remain in the driver’s seat, but the year has not started in the way some may have hoped for. Second quarter data should give us some more clarity as to the direction the market will take in 2022, but it is likely that higher mortgage costs combined with lower affordability may act as a headwind.

A speedometer graph indicating a seller's market in Central Washington during Q1 2022.

As such, I am moving the needle a little more towards buyers but, for the time being, sellers still have the upper hand.

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

The post Q1 2022 Central Washington Real Estate Market Update appeared first on Windermere Real Estate.

Q1 2022 Eastern Washington Real Estate Market Update

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

 

Regional Economic Overview

Even though Washington State revised the 2021 total employment level downward, the Eastern Washington job market is still in positive territory after its recovery from the pandemic. The region has recovered all of the jobs that were lost and added 13,000 new jobs. The job count in Whitman and Grant counties remains marginally below their pre-COVID peaks, but I expect that to be resolved by this summer. Unadjusted for seasonality, the regional unemployment rate was 5.9%. However, when adjusted for seasonal shifts, the rate was 4.9%. The highest jobless rate was in Grant County at 6.8%; the lowest rate was in Walla Walla County at 3.9%.

Eastern Washington Home Sales

In the first quarter, 2,353 homes sold, which was down 5.7% from the same period in 2021 and 36.6% lower than in the final quarter of last year.

While these numbers don’t appear positive at face value, the drop was due to the lack of homes for sale. Although listing activity was 2.2% higher than the same period in 2021, it was 40% lower than in the final quarter of last year. Limited choice is certainly impacting the market.

Year over year, sales increased in Benton and Lincoln counties, but fell in the rest of the market areas. Sales fell across the board compared to the fourth quarter.

Pending sales were down 12.6% from the final quarter of last year, suggesting that unless we see a surge in the number of homes coming to market, second quarter numbers may disappoint as well.

Eastern Washington Home Prices

Year over year the average home price in Eastern Washington rose a very significant 21.4% to $434,921 and was 2.6% higher than the previous quarter.

When compared to the final quarter of last year, prices rose in all counties other than Lincoln and Walla Walla.

All counties contained in this report saw average sale prices rise; every county except Lincoln County had double-digit growth.

The market has yet to feel the impact of rising mortgage rates. Inventory issues persist, so it’s likely prices will continue to rise as buyers compete for what homes are available and seek to lock in a loan rate before they rise any further.

A map showing the year-over-year real estate market percentage changes in various counties in Eastern Washington for Q1 2022.

A bar graph showing the annual change in home sale prices for various counties in Eastern Washington from Q1 2021 to Q1 2022.

Mortgage Rates

Average rates for a 30-year conforming mortgage were 3.11% at the end of 2021, but since then have jumped over 1.5%—the largest increase since 1987. The surge in rates is because the market is anticipating a seven- to eight-point increase from the Federal Reserve later this year.

Because the mortgage market has priced this into the rates they are offering today, my forecast suggests that we are getting close to a ceiling in rates, and it is my belief that they will rise modestly in the second quarter before stabilizing for the balance of the year.

A bar graph showing the average rates for a 30-year conforming mortgage, plus Matthew Gardner's mortgage rate forecasts for Q2 2022 through Q1 2023.

Eastern Washington Days on Market

The average time it took to sell a home in Eastern Washington in the first quarter of 2022 was 25 days. This is 8 fewer days than in the first quarter of 2021.

Compared to the previous quarter, average days on market rose in every county other than Lincoln.

All counties other than Spokane and Franklin saw the average number of days-on-market drop compared to the same period in 2021. That said, the increased market time in Spokane and Franklin counties was modest.

During the first quarter it took an average of only one more day to sell a home than it did during the final quarter of last year.

A bar graph showing the average days on market for homes in various counties in Eastern Washington during Q1 2022.

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.

Employment levels continue to grow in Eastern Washington, but the housing market is still struggling to find its direction. A lack of homes for sale remains a major issue and the region appears to be headed toward a slower pace of sales. For now, though, price growth remains strong. The impact of rising mortgage rates on the housing market lags by about three months. It will be interesting to see how this affects the pace of price growth once the spring market is fully underway.

A speedometer graph indicating a seller's market in Eastern Washington during Q1 2022.

Given all the factors discussed here, I have chosen to leave the needle in the same position as the previous quarter. Sellers are still in the driver’s seat—as list prices continue to increase—but higher mortgage rates will further exacerbate affordability concerns in several markets, which may move the region toward a period of greater stability. We will have to wait and see.

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

The post Q1 2022 Eastern Washington Real Estate Market Update appeared first on Windermere Real Estate.

Q1 2022 Southern California Real Estate Market Update

The following analysis of select counties of the Southern 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

The counties covered by this report have now recovered 1.89 million of the 2.17 million jobs that were lost due to the pandemic. With only 279,000 jobs needed for a full recovery, it is likely that the region will break above the pre-pandemic employment level by sometime this summer. Of note is that both Riverside and San Bernardino counties have already seen a full job recovery, and current employment levels are now more than 33,000 above the pre-pandemic peak. The region’s unemployment rate in February was 4.8%, down from 9.8% a year ago. The lowest rates were in Orange (3.7%) and San Diego (4%) counties. The highest rate was again in Los Angeles County, where it was 5.4%. In all, the Southern California economy continues to recover, with the Inland Empire performing very well. Of course, the region’s performance is influenced by Los Angeles County given its size, which is still acting as a bit of a drag to the overall job recovery. Although I hope the pace of job growth here will pick up, it will be held back by a labor force that has fewer persons in it today than it did at the start of 2020.

Southern California Home Sales

In the first quarter of the year, 42,069 homes sold, which is down 9.7% from a year ago. There were 9.6% fewer sales than in the fourth quarter of 2021.

Pending home sales—an indicator of future closings—rose more than 10% from the prior quarter, suggesting that sales activity in the spring may pick back up.

The most significant decreases in sales were in Orange and San Diego counties, but all markets fell. Significant supply-side issues persist as listing activity was down more than 25% compared to the same period in 2021. There were 8.9% fewer homes for sale than in the fourth quarter of 2021.

Buyers are looking, but choices are limited. Although listing activity has picked up in San Diego County, the other markets have not seen any growth. This will hopefully change as we move through the spring, but it’s not guaranteed, and buyers will likely remain frustrated.

Southern California Home Prices

Home prices in the first quarter rose 19.1% compared to a year ago and were 4.2% higher than in the fourth quarter of 2021.

It appears as if the spike in mortgage rates during the first quarter has not dampened the market and, with more buyers than sellers, the market is still extremely hot.

The region saw double-digit price growth across the board, with Orange County again leading the way. Of note is that home prices in Riverside County rose 10.7% compared to the prior quarter.

Rising mortgage rates and prices are certain to push affordability down even further, which is concerning. The question remains whether rising financing costs will start to slow the market. For the time being, this does not appear to be the case.

A map showing the year-over-year real estate market percentage changes in various counties in Southern California for Q1 2022.

A bar graph showing the annual change in home sale prices for various counties in Southern California from Q1 2021 to Q1 2022.

Mortgage Rates

Average rates for a 30-year conforming mortgage were 3.11% at the end of 2021, but since then have jumped over 1.5%—the largest increase since 1987. The surge in rates is because the market is anticipating a seven- to eight-point increase from the Federal Reserve later this year.

Because the mortgage market has priced this into the rates they are offering today, my forecast suggests that we are getting close to a ceiling in rates, and it is my belief that they will rise modestly in the second quarter before stabilizing for the balance of the year.

A bar graph showing the average rates for a 30-year conforming mortgage, plus Matthew Gardner's mortgage rate forecasts for Q2 2022 through Q1 2023.

Southern California Days on Market

In the first quarter of the year, the average time it took to sell a home in the region was 22 days, which was 6 fewer days than a year ago but 1 day longer than in the final quarter of 2021.

Homes in San Diego County continue to sell at a faster rate than other markets in the region. In the fourth quarter, it took an average of 16 days to sell a home there—two fewer days than it took a year ago.

The other four counties also saw the time it took to sell drop compared to a year ago, but market time rose very modestly in Riverside, Los Angeles, and San Bernardino counties compared to the fourth quarter of 2021.

Limited inventory combined with growing buyer demand is creating a very tight market. Any increases we see in the number of homes for sale in the coming months is not likely to be enough to satisfy buyers.

A bar graph showing the average days on market for homes in various counties in Southern California during Q1 2022.

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.

Despite low inventory levels and rising mortgage rates, the housing market continues to perform very well in Southern California. The spike in mortgage rates has yet to have a significant impact on price growth or demand; however, it will be interesting to check back in the second quarter because if there is an impact, that’s when we would likely see it.

A speedometer graph indicating a seller's market in Southern California during Q1 2022.

Sellers remain in the driver’s seat, but if higher financing costs start to affect the market, there may be a shift back towards more normal conditions. My instincts suggest that this will not be the case, but only time will tell. With all of this in mind, I have left the needle in the same position as last quarter.

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

The post Q1 2022 Southern California Real Estate Market Update appeared first on Windermere Real Estate.

Q1 2022 Colorado Real Estate Market Update

The following analysis of select counties of the Colorado 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 most recent jobs data showed that by February of this year Colorado had recouped all of the more than 375,000 jobs that were shed due to the pandemic and had added an additional 6,000 positions. The recovery in employment was faster than I had expected, which has led me to revise my 2022 forecast: I now predict that the Colorado job market will increase by 4% this year and will add more than 112,000 new jobs. The state unemployment rate in February was 4%, which is well below the pandemic peak of 11.8% but still above the 2.6% average in 2019. Regionally, unemployment rates ranged from a low of 3.1% in Boulder to a high of 4% in the Colorado Springs and Greeley metropolitan areas.

Colorado Home Sales

In the first quarter of the year, 8,178 homes sold, representing a drop of 6.3% compared to the same period a year ago and 30% lower than in the fourth quarter of 2021.

Sales increased in 4 of the 12 counties covered by this report but fell in the balance of the market areas.

Similar to last quarter, low inventory levels continue to constrict sales. Listing activity was 17.3% lower than the same period in 2021 and 29.5% lower than in the fourth quarter of 2021.

Pending sales, which are an indicator of future closings, also declined, though the drop of 4.3% is not that significant. That said, unless we see a surge in inventory levels in the spring, second quarter sales may also be light.

Colorado Home Prices

With limited inventory and rising mortgage rates, buyers were motivated, as demonstrated by the 14.9% increase in average prices compared to a year ago. Home prices in first quarter averaged $637,963, which is 4.5% higher than last quarter.

Boulder County continues to see average sale prices holding above $1 million. Although we have seen some softening in list prices, I expect this market to remain above the $1 million mark as we move through the year.

Year over year, prices rose by double-digits across all markets covered by this report, with a huge jump in the small Gilpin market.

With little in the way of choice for buyers—as well as a “fear of missing out” given rising mortgage rates—it’s no surprise there was such solid price appreciation. That said, there is normally a lag between rising rates and any impact on home prices. The second quarter should indicate if the jump in rates has had a softening effect on price growth.

A map showing the year-over-year real estate market percentage changes in various counties in Colorado for Q1 2022.

A bar graph showing the annual change in home sale prices for various counties in Colorado from Q1 2021 to Q1 2022.

Mortgage Rates

Average rates for a 30-year conforming mortgage were 3.11% at the end of 2021, but since then have jumped over 1.5%—the largest increase since 1987. The surge in rates is because the market is anticipating a seven- to eight-point increase from the Federal Reserve later this year.

Because the mortgage market has priced this into the rates they are offering today, my forecast suggests that we are getting close to a ceiling in rates, and it is my belief that they will rise modestly in the second quarter before stabilizing for the balance of the year.

A bar graph showing the average rates for a 30-year conforming mortgage, plus Matthew Gardner's mortgage rate forecasts for Q2 2022 through Q1 2023.

Colorado Days on Market

The average number of days it took to sell a home in the markets contained in this report fell four days compared to the first quarter of 2021.

The length of time it took to sell a home dropped in every county other than Gilpin compared to the same quarter a year ago.

It took an average of only 21 days to sell a home in the region, matching the previous quarter.

Compared to the final quarter of 2021, average market time fell in Clear Creek, Adams, Denver, Jefferson, and Arapahoe counties, but rose in the balance of the markets contained in this report.

A bar graph showing the average days on market for homes in various counties in Colorado during Q1 2022.

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.

With Colorado on solid economic footing, I expect housing demand to remain strong even in the face of rising financing costs. Inventory levels remain very low, and new home construction has not expanded enough to meet demand, which continues to put upward price pressure on resale homes. The market appears to have shrugged off the jump in mortgage rates in the first quarter, but the full effects won’t be felt until later this spring. We’ll have to wait and see what impact, if any, there will be, but data on listing prices shows that home sellers remain bullish.

A speedometer graph indicating a seller's market in Colorado during Q1 2022.

Given all these factors, I am leaving the needle in the same position as last quarter. The market clearly still favors sellers, but we need a few more months of information to determine how rising mortgage rates may impact home sales and/ or prices.

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

The post Q1 2022 Colorado Real Estate Market Update appeared first on Windermere Real Estate.

Q1 2022 Oregon and Southwest Washington Real Estate Market Update

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

 

Regional Economic Overview

Oregon added 20,400 new jobs in the first quarter of 2022, leaving the state only 36,000 shy of its pre-pandemic peak. I predicted in the fourth quarter 2021 Gardner Report that a full job recovery would occur by this summer. If the current pace of job growth continues, that forecast will be accurate. The Southwest Washington economy— being far smaller—recovered all the jobs lost to COVID-19 last summer. Employment levels in Klickitat and Skamania counties are still modestly lower than before the pandemic, but solid growth in Clark and Cowlitz counties more than offset the shortfall elsewhere. Oregon’s unemployment rate was 3.8%, which is still lower than the pre-pandemic low of 3.4% but impressive all the same given the growing labor force. The jobless rate in Southwest Washington was 5.1%.

Oregon and Southwest Washington Home Sales

In the first quarter of 2022, 13,837 homes sold, which is an increase of 1.1% compared to the same period a year ago, but 22.5% lower than in the prior quarter.

Compared to a year ago, sales rose in more than half of the markets in this report. The areas where sales fell were mainly small markets that can fluctuate dramatically. That said, sales dropped in the more populous Clackamas and Lane counties, but I attribute this to low inventory levels.

Although the number of transactions dropped significantly from the final quarter of 2021, this was more a function of inventory constraints than slack demand.

Listing activity has not seen its spring bump yet, and it will be interesting to see if this happens sooner than usual given the spike in mortgage rates in the first quarter.

Oregon and Southwest Washington Home Prices

The pace of home-price growth is still tapering, yet prices rose by 13.2% year over year, which is well above the state’s long-term average.

Compared to the final quarter of 2021, average prices rose 2.5%, which is particularly impressive given rising financing costs.

All counties contained in this report except Hood River had higher sale prices than a year ago, with significant increases in Tillamook and Columbia counties. Almost three-quarters of the markets saw prices rise more than 10%.

The spike in mortgage rates has yet to have a significant impact on prices. However, it will be interesting to check back in the second quarter because if there is an impact, this is when we would likely see it.

A map showing the year-over-year real estate market percentage changes in various counties in Oregon and Southwest Washington for Q1 2022.

A bar graph showing the annual change in home sale prices for various counties in Oregon and Southwest Washington from Q1 2021 to Q1 2022.

Mortgage Rates

Average rates for a 30-year conforming mortgage were 3.11% at the end of 2021, but since then have jumped over 1.5%—the largest increase since 1987. The surge in rates is because the market is anticipating a seven- to eight-point increase from the Federal Reserve later this year.

Because the mortgage market has priced this into the rates they are offering today, my forecast suggests that we are getting close to a ceiling in rates, and it is my belief that they will rise modestly in the second quarter before stabilizing for the balance of the year.

A bar graph showing the average rates for a 30-year conforming mortgage, plus Matthew Gardner's mortgage rate forecasts for Q2 2022 through Q1 2023.

Oregon and Southwest Washington Days on Market

The average number of days it took to sell a home in the region dropped by six compared to a year ago, but it took ten more days for a home to go under contract compared to the fourth quarter of 2021.

The average time it took to sell a home in the first quarter of 2022 was 43 days.

Sixteen of the 26 counties covered in this report saw days on market drop from the first quarter of 2021, but only 5 counties saw average market time drop compared to the fourth quarter of last year. This is likely a function of seasonality, and I expect this to correct itself as we enter the spring buying season.

Homes sold the fastest in Washington County, where it took an average of only 15 days for a home to sell. An additional seven counties saw an average market time of less than a month.

A bar graph showing the average days on market for homes in various counties in Oregon and Southwest Washington during Q1 2022.

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.

Despite higher rates and rising prices, buyers continue to be very motivated. As such, I don’t foresee any significant downturn in demand. However, home price growth could start to taper in the coming months, which is not a bad thing.

A speedometer graph indicating a seller's market in Oregon and Southwest Washington during Q1 2022.

Given remarkably low inventory levels and solid demand, home sellers still have the upper hand, though we will have to wait and see how prices will be impacted by higher mortgage rates. As such, I am leaving the needle in the same position it was last quarter.

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

The post Q1 2022 Oregon and Southwest Washington Real Estate Market Update appeared first on Windermere Real Estate.

Q1 2022 Western Washington Real Estate Market Update

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

 

Regional Economic Overview

The post-COVID job recovery continues. Though data showed the number of jobs dropped in January, February saw gains that almost offset the jobs lost the prior month. As of February (March data is not yet available), the region had recovered all but 47,000 of the more than 300,000 jobs lost due to the pandemic. Of note is that employment levels in Grays Harbor, Thurston, San Juan, and Clallam counties are now above their pre-pandemic levels. In February, the regional unemployment rate rose to 4.1% from 3.7% in December. Although this may be disconcerting, an improving economy has led more unemployed persons to start looking for a job, which has pushed the jobless rate higher. I expect the regional economy to continue expanding as we move into the spring and summer, with a full job recovery not far away.

Western Washington Home Sales

In the first quarter of 2022, 15,134 homes sold, representing a drop of 5.8% from the same period a year ago, and down 31.7% from the fourth quarter.

Yet again, supply-side constraints limited sales. Every county except Snohomish showed lower inventory levels than a year ago.

Sales grew in five counties across the region but were lower across the balance of the counties contained in this report. Compared to the fourth quarter, sales were lower across all market areas.

The ratio of pending sales (demand) to active listings (supply) showed pending sales outpacing listings by a factor of 6.7. Clearly, the significant jump in mortgage rates in the first quarter has not yet impacted demand. Rather it appears to have stimulated buyers partly due to FOMO (Fear of Missing Out)!

Western Washington Home Prices

Although financing costs have jumped, this has yet to prove to be an obstacle to buyers, as prices rose 16.4% year-over-year to an average of $738,152. Naturally, there is a lag between rates rising and any impact on market prices. It will be interesting to see what, if any, effect this has in the next quarter’s report.

Compared to the same period a year ago, price growth was again strongest in San Juan County, but all markets saw prices rising more than 10% from a year ago.

Relative to the final quarter of 2021, all but Kitsap (-2.7%), Mason (-1.5%), Skagit (-1.8%), Jefferson (-6.3%), and Clallam (-0.1%) counties saw home prices rise.

The market remains supply starved. While increases in “new” listings suggest that more choice is coming to market, it remains insufficient to meet demand.

A map showing the year-over-year real estate market percentage changes in various counties in Western Washington for Q1 2022.

A bar graph showing the annual change in home sale prices for various counties in Western Washington from Q1 2021 to Q1 2022.

Mortgage Rates

Average rates for a 30-year conforming mortgage were 3.11% at the end of 2021, but since then have jumped over 1.5%—the largest increase since 1987. The surge in rates is because the market is anticipating a seven- to eight-point increase from the Federal Reserve later this year.

Because the mortgage market has priced this into the rates they are offering today, my forecast suggests that we are getting close to a ceiling in rates, and it is my belief that they will rise modestly in the second quarter before stabilizing for the balance of the year.

A map showing the real estate market percentage changes in various counties in Utah during the third quarter of 2021.

Western Washington Days on Market

It took an average of 25 days for a home to go pending in the first quarter of 2022. This was 4 fewer days than in the same quarter of 2020, but 2 days more than in the fourth quarter of 2021.

Snohomish, King, and Pierce counties were the tightest markets in Western Washington, with homes taking an average of 11 to 15 days to sell. The greatest drop in market time compared to a year ago was in San Juan County, where it took 23 fewer days for homes to sell.

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

Quarter over quarter, market time dropped in Snohomish, King, and Pierce counties. Jefferson and Clallam counties also saw modest improvement. In the balance of the region the length of time a home was on the market rose, but seasonality undoubtedly played a part.

A bar graph showing the average days on market for homes in various counties in Utah during the third quarter of 2021.

Conclusions

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

The numbers have yet to indicate that demand is waning amid rising interest rates, but this is sure to become a greater factor as we move into the spring. A leading indicator I pay attention to is changes to list prices and, in most counties, these continue to increase. This suggests that sellers remain confident they will be able to find a buyer even in the face of higher borrowing costs. If this pace of increase starts to soften, it may be an indication of an inflection point, but it does not appear to be that way yet.

A speedometer graph indicating a seller's market in Western Washington during Q1 2022.

Given all the factors discussed above, I have decided to leave the needle in the same position as the last quarter. The market still heavily favors sellers, but if rates rise much further, headwinds will likely increase.

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

The post Q1 2022 Western Washington Real Estate Market Update appeared first on Windermere Real Estate.

The Current State of the U.S. Housing Market


This video is the latest in our Monday with Matthew series with Windermere Chief Economist Matthew Gardner. Each month, he analyzes the most up-to-date U.S. housing data to keep you well-informed about what’s going on in the real estate market. 


 


Hello there, I’m Windermere’s Chief Economist Matthew Gardner, and welcome to this month’s episode of Monday with Matthew. With home prices continuing to defy gravity, mortgage rates spiking, the Fed raising interest rates significantly, a yield curve that is just keeping its nose above water, and some becoming vocal about the possibility that we are going to enter a recession sooner rather than later, it’s not at all surprising that many of you have been asking me whether the housing market is going to pull back significantly, and a few of you have asked whether we aren’t in some sort of “bubble” again.

Because this topic appears to be giving many of you heartburn, I decided that it’s a good time to reflect on where the housing market is today and give you my thoughts on the impact of rising mortgage rates on what has been an historically hot market.

The Current State of the U.S. Housing Market

Home Sale Prices

 

As usual, a little perspective. Between 1990 and the pre-bubble peak in 2006, home prices rose by 142%, which was a pretty impressive annual increase of 5.6% over a 16 1/2-year period. When the market crashed, prices dropped by 33%, but from the 2012 low to today, prices have risen by 131%, or at an even faster annual rate of 8.6% over a shorter period of time—10 years.

You may think that prices rising at an annual rate that exceeds the pace seen before the market crash is what has some brokers and home buyers concerned, but that really isn’t what has many people scared. It’s this.

Mortgage Rates in 2022

A slide titled "Mortgage Rates in 2022" showing the increase in 30-year fixed conforming mortgage rates between December 30, 2021 (3.11%) and April 14, 2022 (5%).

 

At the start of 2022, the average 30-year fixed mortgage rate was just a little above 3%. But, over a brief 15-week period, they have skyrocketed to 5%. This has led some to worry that the market is about to implode. Of course, nobody can say that the run-up in home prices hasn’t been phenomenal over the past few years, and it’s certainly human nature to think that “what goes up, must come down,” but is there really any reason to panic? I think not, and to explain my reasoning, let’s look back in time to periods when rates rose significantly and see how increasing mortgage rates impacted the marketplace.

Housing and Mortgage Markets During Times of Rising Rates

A slide titled "Housing & Mortgage Markets During Times of Rising Rates." Two extreme statistics are as follow: Between June 2005 and July 2006 there was a negative 32.3% change in housing starts and between October 1993 and December 1994 there was a negative 12.7% change in home sales.

 

This table shows seven periods over the past 30 years when mortgage rates rose significantly. On average, rates trended higher for just over a year before pulling back, and the average increase was 1.4%. But now look at how it impacted home prices: it really didn’t. On average, during these periods of rising financing costs, home prices still rose by just over 5%.  Clearly, not what some might have expected. But there were some negatives from mortgage rates trending higher, and these came in the form of lower sales in all but one period and new housing starts also pulled back.

So, if history is any indicator, the impact of the current jump in mortgage rates is likely to be seen in the form of lower transactions rather than lower prices. And this makes sense. Although rising financing costs puts additional pressure on housing affordability, what people don’t appear to think about is that mortgage rates actually tend to rise during periods of economic prosperity. And what does a flourishing economy bring? That’s right. Rising wages. Increasing incomes can certainly offset at least some of the impacts of rising mortgage rates.

Static Equilibrium Analysis – 1/3

A slide titled "Static Equilibrium Analysis" showing that the P&I payment would be $1,365 for a $357,300 home with a 4% mortgage rate, using the February 2022 U.S. median sale price. This assumes the buyer has put down 20% on the home.

 

To try and explain this, I’m using the median US sale price in February of this year, assuming a 20% down payment and the mortgage rate of 4%. And you can see that the monthly P&I payment would be $1,365. But as mortgage rates rise, and if buyers wanted to keep the same monthly payment, then they would have to buy a cheaper home. Using a rate of 5%, a buyer could afford a home that was 9% cheaper if they wanted to keep the payment the same as it would have been if rates were still at 4%.

But, as I mentioned earlier, an expanding economy brings higher wages, and this is being felt today more than usual, given the worker shortage that exists and businesses having to raise compensation. Average weekly wages have risen by over five-and-a-half percent over the past year—well above the pre-pandemic average of two-and-a-half percent. Although increasing incomes would not totally offset rising mortgage rates, it does have an impact.

Static Equilibrium Analysis – 2/3

A slide titled "Static Equilibrium Analysis" showing what home buyers would be able to afford at different mortgage rates, using the U.S. average household income of $70,611, assuming they've put 20% of their gross income down for the down payment. At 4%, they could afford a home just under $360,000 and at 5%, they could afford a home at $321,038.

 

To demonstrate this, let’s use the U.S. average household income of $70,611.  Assuming that they’ve put aside 20% of their gross income for a down payment, they could afford a home priced just under $360,000 if mortgage rates were at 4%. As rates rise—and assuming that their income doesn’t—their buying power is reduced by over 10%, or just over $38,000.

Static Equilibrium Analysis – 3/3

A follow up to the "Static Equilibrium Analysis" slide showing that if the average income were raised to $74,848, the buyer would be able to afford a home of $340,302 at a 5% mortgage rate.

 

But if we believe that incomes will rise, then the picture looks very different. Assuming wages rise by 6%, their buying power drops by just 5% if rates rose from 4% to 5%, or a bit less than $19,000.

Although rates have risen dramatically in a short period, because they started from an historic low, the overall impacts are not yet very significant. If history is any indicator, mortgage rates increasing are likely to have a more significant impact on sales, but a far smaller impact on prices.

But there are other factors that come into play, too. Here I’m talking about demand. The only time since 1968 that home prices have dropped on an annualized basis was in 2007 through 2009 and in 2011, and this was due to a massive increase in the supply of homes for sale. When supply exceeds demand, prices drop.

So, how is it different this time around? Well, we know that the supply glut that we saw starting to build in mid-2006 was mainly not just because households were getting mortgages that, quite frankly, they should never have gotten in the first place, but a very large share held adjustable rate mortgages which, when the fixed interest rate floated, they found themselves faced with payments that they could not afford. Many homeowners either listed their homes for sale or simply walked away.

Although it’s true that over the past two or so months more buyers have started taking ARMs as rates rose, it’s not only a far smaller share than we saw before the bubble burst, but down payments and credit quality remained far higher than we saw back then.

So, if we aren’t faced with a surge of inventory, I simply don’t see any reason why the market will see prices pull back significantly. But even if we do see listing activity increase, I still anticipate that there will be more than enough demand from would-be buyers. I say this for several reasons, the first of which is inflation.

What a lot of people aren’t talking about is the proven fact that owning real estate is a significant hedge against rising inflation. You see, most buyers have a mortgage, and a vast majority use fixed-rate financing. This is the hedge because even as consumer prices are rising, a homeowner’s monthly payments aren’t.  They remain static and, more than that, their monthly payments actually become lower over time as the value of the dollar diminishes. Simply put, the value of a dollar in—let’s say 2025—will be lower than the value of a dollar today.

But this isn’t the only reason that inflation can actually stimulate the housing market. Home prices historically have grown at a faster pace than inflation.

Hedge Against Inflation

A slide titled "Hedge Against Inflation" showing a line graph of the average annual inflation and change in median home price from 1969 to 2021. While the average annual inflation fluctuates between 1% and 5% for most of the chart except for the mid-70s and early-80s, the change in median home price fluctuates between 25% in the late-70s to roughly negative 12% in 2009.

 

This chart looks at the annual change in total CPI going back to 1969. Now let’s overlay the annual change in median U.S. home prices over the same time period. Other than when home prices crashed with the bursting of the housing bubble, for more than fifty years home price growth has outpaced inflation. And this means we are offsetting high consumer prices because home values are increasing at an even faster rate.

But inflation has additional impacts on buyers. Now I’m talking about savings. As we all know, the interest paid on savings today is pretty abysmal. In fact, the best money market accounts I could find were offering interest rates between 0.5% and 0.7%. And given that this is significantly below the rate of inflation, it means that dollars saved continue to be worth less and less over time while inflation remains hot.

Now, rather than watching their money drop in value because of rising prices, it’s natural that households would look to put their cash to work by investing in assets where the return is above the rate of inflation—meaning that their money is no longer losing value—and where better place to put it than into a home.

Housing as a Hedge Against Inflation

A slide titled "Housing as a Hedge Against Inflation" showing that most home buyers finance their purchase at a fixed-rate of interest, which is not susceptible to inflation. Mortgage payments are fixed, therefore as incomes rise, the payments actually become cheaper.

 

So, the bottom line here is that inflation supports demand from home buyers because:

  1. Most are borrowing at a fixed rate that will not be impacted by rising inflation
  2. Monthly payments are fixed, and these payments going forward become lower as incomes rise, unlike renters out there who continue to see their monthly housing costs increase
  3. With inflation at a level not seen since the early 1980s, borrowers facing 5% mortgage rates are still getting an amazing deal. In fact, by my calculations, mortgage rates would have to break above 7% to significantly slow demand, which I find highly unlikely, and
  4. If history holds true, home price appreciation will continue to outpace inflation

Demand appears to still be robust, and supply remains anemic. Although off the all-time low inventory levels we saw in January, the number of homes for sale in March was the lowest of any March since record keeping began in the early 1980’s.

But even though I’m not worried about the impact of rates rising on the market in general, I do worry about first-time buyers. These are households who have never seen mortgage rates above 5% and they just don’t know how to deal with it! Remember that the last time the 30-year fixed averaged more than 5% for a month was back in March of 2010!

And given the fact that these young would-be home buyers have not benefited from rising home prices as existing homeowners have, as well as the fact that they are faced with soaring rents, making it harder for them to save up for a down payment on their first home, many are in a rather tight spot and it’s likely that rising rates will lower their share of the market.

So, the bottom line as far as I am concerned is that mortgage rates normalizing should not lead you to feel any sort of panic, and that current rates are highly unlikely to be the cause of a market correction.

And I will leave you with this one thought. If you agree with me that a systemic drop in home prices has to be caused by a significant increase in supply, and that buyers who are currently taking out adjustable-rate mortgages are more qualified, and therefore able to manage to refinance their homes when rates do revert at some point in the future, then what will cause listings to rise to a point that can negatively impact prices?

It’s true that a significant increase in new home development might cause this, but that is unlikely. And as far as existing owners are concerned, I worry far more about a prolonged lack of inventory. I say this for one very simple reason and that is because a vast majority off homeowners either purchased when mortgage rates were at or near their historic lows, or they refinanced their current homes when rates dropped.

And this could be the biggest problem for the market. Even if rates don’t rise at all from current levels, I question how many owners would think about selling if they were to lose the historically low mortgage rates that they have locked into. It is quite possible that for this one reason, we may experience a tight housing market for several more years.

As always, if you have any questions or comments about this particular topic, please do reach out to me but, in the meantime, stay safe out there and I look forward to visiting with you all again next month.

Bye now.

The post The Current State of the U.S. Housing Market appeared first on Windermere Real Estate.

Springtime Gardening Tips by Region

This time of year, there is much to be done in the garden. Whether you tend to a few veggie plants, have a sprawling urban farm, or tend to a flourishing, flowering sanctuary, spring is a critical time of the year to focus on the health of your garden to keep it fertile heading into summer. Geography and climate play a large role in what a garden needs at different times throughout the year. The following information will help you build out your springtime gardening to-do list depending on where you live. But first, here are a few tips that apply to gardeners of all regions and climates.

Gardening During Spring

Weeding

No matter where you live, weeds can be an issue for your garden. By carving out some time to weed your flower beds and garden in spring, you’ll be ahead of the curve when summer comes around. Use this time to check for any infestations or fungi growing on your plants and flowers.

Watering

Water is the lifeblood of a healthy garden. Keeping your plants and flowers irrigated is paramount, especially so in the spring, since proper watering now will have your garden in top shape as the months get warmer and drier. For plants that require significant watering, place saucers under their pots to catch the excess.

Mulching

Spring is a great time of year to mulch your garden. Mulch helps to keep your soil moisturized when temperatures rise, keeps weeds at bay, and enriches your soil with organic matter.

Clean Your Water Features

Throughout the warmer months of the year, ponds, bird baths, and other water features become a magnet for rapid algae growth. Clean your water filters and remove decaying leaves to keep them clean and algae-free.

 

Image Source: Getty Images – Image Credit: Jurgute

 

Springtime Gardening Tips by Region

Pacific Northwest

Pacific Northwesterners can expect to continue to divide perennials while it is still wet out. Once the sun becomes more consistent in late spring, it’s time to transfer any plants you seeded indoors to the outdoors. This time of year brings more sun breaks, which, combined with steady rain, creates rich gardening conditions. Deadhead your rose bushes of any old blooms and begin seeding your annuals.

Northern California

By April, gardeners in Northern California can begin to plant warm-season plants and fertilize perennials. With sunny and dry days dominating the weather pattern, temperatures will begin to rise. Accordingly, it’s important to check your sprinkler and irrigation systems and make repairs/replacements as needed before it gets hot. Check for signs of fungal diseases or evidence of insects throughout the garden before their damage spreads.

Southern California

As the days get hotter in Southern California, gardeners can plant tropical plants and perennials outdoors. This is a great time of year to check whether you have substantial mulch around the base of your plants and trees and add as necessary. If you plan to grow tomato plants, potatoes, or bell peppers, they should be planted by mid-spring.

Southwest

Southwesterners should fertilize their perennials and plant warm-season plants in early spring. When adding mulch, be mindful of your garden’s mulching limit. Adding too much can make it difficult for plants to push up through the ground. Given the fact that this climate typically experiences very few rainy days in mid-Spring and beyond, it’s the right time to plant palm trees and cacti. It’s also the right time of year to give your sprinklers and irrigation system a complete checkup.

Mountain West

There is a bit of waiting game with springtime gardening in the Mountain West, but once the snow has melted, the green thumbs have the green light to get out in the garden. Plant fruit trees and strawberries once it has begun to warm up in April and spread compost around the garden to help reduce weeds and enrich the soil. Once frost is a thing of the past, turn on your irrigation system and check for any leaks. Early May is usually a good time of year to begin planting your vegetable garden.

 

For more tips on working out in the garden, read our guide to sustainable gardening:

10 Tips for Sustainable Gardening

The post Springtime Gardening Tips by Region appeared first on Windermere Real Estate.

Selling Your Home: Capital Gains Tax

When you sell your home, you stand to receive an influx of cash. Though there are several costs associated with a home sale, you can likely still bank on the fact that you’ll be depositing a lump sum in the near future. But before you start planning how you’ll use the money or start looking for a new home, you’ll want to understand whether you fall under the criteria of the capital gains tax. If so, the profit from your home sale could end up being smaller than you expected.

What is a capital gains tax?

A capital gains tax is a fee on the profits gained from the sale of an asset. This tax appears in transactions involving various assets—bonds, stocks, boats, cars, and real estate. In real estate, it’s common for homes to appreciate, often leading to a situation where the seller sells the property for more than they originally purchased it. The capital gains tax on the sale of a home is assessed on the difference between those two prices.

Avoiding Capital Gains Tax on a Home Sale

  • The 2-in-5 rule: If you have owned the home and it has been your primary residence for two of the five years leading up to the sale, you can exclude up to $250,000 of gains if you’re single, or $500,000 if you’re married and file a joint return. If the profit exceeds these amounts, then the excess is reported as a capital gain. The two years of living in the home don’t have to be consecutive, nor do they need to be the final two years leading up to the sale.
  • Two-year window: You can claim the $250k or $500k exclusion as long as you haven’t already claimed it on the sale of another home in the past two years.
  • Cost of repairs/improvements: In the context of the capital gains tax, the “cost basis” of your home includes the purchase price, certain legal fees, improvement costs, and more. Including the expenses incurred making repairs and improvements to the home will increase the home’s cost basis, thereby reducing the capital gains.

 

Image Source: Getty Images – Image Credit: bymuratdeniz

 

Paying Capital Gains Tax on a Home Sale

Sometimes, avoiding the capital gains tax may not be possible. If these criteria fit your situation, the gains from the sale of your home may be fully taxable:

  • The home you sold is not your primary residence
  • You owned the home or lived in it for less than two years in the five years leading up to the sale
  • You purchased the property through an investment exchange (known as a 1031 exchange)
  • You are subject to expatriate taxes
  • You sold another home within the previous two years and used the capital gains exclusion on that sale

Capital Gains Tax Rates

Capital gains tax rates break down into two basic categories: short- and long-term. Short-term capital gains tax rates apply if you owned the home for less than a year. The rate is usually the same as your ordinary income. For example; if you purchase a home, home values in your area go through the roof within the first few months, and you decide to sell right away to take advantage of the competitive market, you’ll be required to pay capital gains tax on the sale. Long-term capital gains tax rates apply if you own the home for longer than a year, and are taxed at 0%, 15%, and 20% thresholds.

 

For more information on the financial characteristics of a home sale, read A Guide to Understanding Escrow

The post Selling Your Home: Capital Gains Tax appeared first on Windermere Real Estate.