Home Financing • January 16, 2025

The Truth About Credit Scores and Buying a Home

by Drew Jones

Your credit score plays a big role in the homebuying process. It’s one of the key factors lenders look at to determine which loan options you qualify for and what your terms might be. But there’s a myth about credit scores that may be holding some buyers back.

The Myth: You Need To Have Perfect Credit

According to Fannie Mae, only 32% of potential homebuyers have a good idea of what credit score lenders actually require.

That means two-thirds of buyers don’t actually know what lenders are looking for – and most overestimate the minimum credit score needed.

The Reality: Perfect Isn’t Necessary

The truth is, you don’t need perfect credit to become a homeowner. To see the average score, by loan type, for recent homebuyers check out the graph below:

There is no set cut-off score across the board. As FICO explains:

“While many lenders use credit scores like FICO Scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable. There is no single “cutoff score” used by all lenders, and there are many additional factors that lenders may use . . .”

So, even if your credit score isn’t as high as you’d like, you may still be able to get a home loan. Just know that, even though you don’t need perfect credit to buy a home, your score can have an impact on your loan options and the terms you’re able to get.

Work with a trusted lender who can walk you through what you’d qualify for.

Simple Tips To Improve Your Credit Score

If you want to open up your options a bit more after talking to a lender, here are a few tips from Experian and Freddie Mac that can help give your score a boost:

1. Pay Your Bills on Time

This includes everything from credit cards to utilities and other monthly payments. A track record of on-time payments shows lenders you’re responsible and reliable.

2. Pay Down Outstanding Debt

Reducing your overall debt not only improves your credit utilization ratio (how much credit you’re using compared to your total limit) but also makes you a lower-risk borrower in the eyes of lenders. That makes them more likely to approve a loan with better terms.

3. Hold Off on Applying for New Credit

While opening new credit accounts might seem like a quick way to boost your score, too many applications in a short period can have the opposite effect. Focus on improving your existing accounts instead.

Your credit score doesn’t have to be perfect to qualify for a home loan. The best way to know where you stand? Work with a trusted lender to explore your options.

Buying a Home • January 16, 2025

One Homebuying Step You Don’t Want To Skip: Pre-Approval

by Drew Jones

One of the first, most essential, steps in the homebuying process is pre-approval. Here’s a rundown of what it is and why it’s so important.

What Is Pre-Approval?

Pre-approval is like getting a green light from a lender. It lets you know how much they’re willing to let you borrow for a home. To determine that number, a lender looks at your financial history. According to Realtor.com, these are some of the documents a lender may ask you for during this process:

W-2s from the last two years
Tax returns from the last two years
Pay stubs from the last 30 days
Bank statements from the last 60 days
Investment account statements (if applicable)
Two years of history of where you’ve lived

The result? You’ll get a pre-approval letter showing what you can borrow. Keep in mind that any changes in your finances can affect your pre-approval status. So, after you receive your letter, avoid switching jobs, applying for new credit cards or other loans, or taking out large sums of money from your savings.

How It Helps You Determine Your Borrowing Power

This year, home prices are expected to rise in most places and mortgage rates are still showing some volatility. Since affordability is still tight, it’s a good idea to talk to a lender about your home loan options and how today’s changing mortgage rates will impact your future monthly payment.

The pre-approval process is the perfect time for that. Because it determines the maximum amount you can borrow, pre-approval also helps you figure out your budget. You should use this information to tailor your home search to what you’re actually comfortable with as far as a monthly mortgage payment. That way, you don’t fall in love with a house that’s out of your comfort zone.

How It Helps You Stand Out

Once you find a home you want to put an offer on, pre-approval has another big perk. It not only makes your offer stronger, it shows sellers you’ve already undergone a credit and financial check.

When a seller sees you as a serious buyer, they may be more attracted to your offer because it seems more likely to go through. As Greg McBride, Chief Financial Analyst at Bankrate, says:

“Preapproval carries more weight because it means lenders have actually done more than a cursory review of your credit and your finances, but have instead reviewed your pay stubs, tax returns and bank statements. A preapproval means you’ve cleared the hurdles necessary to be approved for a mortgage up to a certain dollar amount.”

If you’re planning on buying a home, getting pre-approved for a mortgage should be one of the first things on your to-do list. Not only will it give you a better understanding of your borrowing power, it can put you in the best position possible to make a strong offer when you find a home you love.

Buying a Home • December 18, 2024

The Biggest Perks of Buying a Home This Winter

by Drew Jones

Waiting for perfect market conditions often means missing out. Because what you may not realize is, if you’re ready and able to buy, this time of year could actually give you an edge. Here’s why. As the weather cools down, the housing market can too – and that works in your favor.

You Likely Won’t Feel as Rushed

Homes tend to take a little longer to sell during this time of year. Data from the National Association of Realtors (NAR) shows the average time a house sits on the market jumps up during the winter months (see the green bars in the graph below):

This is partly because fewer buyers are active at this time of year – and that decrease in buyer competition means the houses that are on the market aren’t going to be snatched up as quickly. So, if you decide to buy a home in the next couple of months, you’ll likely have more time to consider your options and negotiate a deal without feeling as pressured.

Sellers May Be More Willing To Negotiate

And since homes generally take longer to sell during the winter, sellers are often more motivated to close a deal. That can work in your favor, too. According to NAR:

“Less competition can lead to better deals. While homes are not selling as fast as during the summer, sellers may be more willing to negotiate.”

Whether it’s compromising on price, covering closing costs or repairs, or including extras like appliances, you have more room to ask for what you need.

Homes Are Less Expensive in the Winter

With less competition from other buyers and sellers who are more willing to negotiate, you may see slightly lower prices too. In fact, according to NAR, homes are typically about 5% less expensive now compared to when prices normally peak in the summer.

So, on a $900,000 home, it could mean savings of $45,000 on the purchase price.

You can see this expected seasonal shift in home prices taking place this year. Take a look at the graph below showing the median sales price of existing homes in King County over the past 5 months. You can see that prices were lower in the winter months last year, and a similar trend will probably happen this year, although maybe not quite as exaggerated.

So, if you’re buying a home during the winter, you can enjoy less competition, motivated sellers, and potentially lower prices. Let’s work together to find the right one at the right price for you.

Real Estate News • December 17, 2024

5 Predictions for the 2025 Seattle Housing Market

by Drew Jones

Local Market Update • Uncategorized • December 16, 2024

Local Market Update: Nov/Dec 2024

by Drew Jones

In today’s economy, understanding the latest numbers can give us valuable insights into where things are headed. Windermere’s Principal Economist, Jeff Tucker, keeps us updated on the local market with short, helpful videos.

Below is a breakdown of Jeff’s video transcript, or you can watch his latest 4-min video here.

After a blockbuster October report, this was another very strong month for the Washington housing market, particularly for single-family home sales. That’s the data I’ll be digging into today.

Here are the four key metrics I watch to track supply and demand in the market: closed and pending sales, which indicate demand, and new and active listings, which reflect supply.

Closed sales of single-family homes climbed 25% year-over-year, from about 3,800 to over 4,700. Pending sales, which will mostly close in December, climbed 18% year-over-year. Both of these are impressive gains and highlight significantly more housing market activity—especially on the buying side—this November compared to last year.

On the supply side, I think of listings as the reservoir of options for buyers to choose from. New listings, which represent the flow of new supply into that reservoir, were up only 2% in November, while overall inventory in the reservoir was 18% higher than a year ago. These are more modest increases than we saw in October, which is a reassuring sign that the market isn’t headed for a glut.

The final key metric is the median price of closed single-family home sales, which climbed 6% year-over-year, from $625,000 to $665,000 across the entire Northwest MLS. That’s a slightly lower median price than last month, which is normal for this time of year. The pace of price growth also slowed slightly, a positive sign that the market isn’t experiencing runaway price increases. This is critical because affordability remains a key concern for the sustainability of Washington’s housing market.

Putting it all together, the strength of closed sales, combined with sustained growth in pending sales, suggests that September and October weren’t just a flash in the pan due to the Fed’s interest rate cuts. Instead, I think we’re seeing home sales normalize after being extremely depressed for much of the past two years.

Now, let’s dig into the three counties that make up the Seattle Metropolitan Area, where similar trends emerged.

In King County (including Seattle and Bellevue), residential closed sales jumped 27% year-over-year.
In Pierce County (including Tacoma), sales surged a whopping 35%.
In Snohomish County (including Everett), sales rose 30%.

Altogether, the three-county metro area saw a 30% gain in closed sales volume compared to the same month last year.

The median price of closed sales in these counties showed slower growth than last month’s 10% annual gain:

King County: up 4% to $925,000
Pierce County: up 5% to $565,000
Snohomish County: up 8% to $785,000

Looking ahead, pending sales grew solidly but slightly slower than closed sales:

King County: up 15%
Pierce County: up 33%
Snohomish County: up 16%

Even after these sales, there’s been a healthy increase in active inventory across the metro area:

King County: up 14% year-over-year
Pierce County: up 18%
Snohomish County: up 12%

That’s an overall metro-wide increase of 15%, which is substantially less than October’s 26% annual increase in active listings.

All in all, this was another encouraging report, showing a much more active housing market than at this time last year across Washington, including the Seattle metro area. It’s solid evidence that buyers haven’t rushed back into hibernation—even with mortgage rates rebounding a bit last month.

Selling Your House • December 13, 2024

Should You Sell Your House As-Is or Make Repairs?

by Drew Jones

A recent study from the National Association of Realtors (NAR) shows most sellers (61%) completed at least minor repairs when selling their house. But sometimes life gets in the way and that’s just not possible. Maybe that’s why, 39% of sellers chose to sell as-is instead (see chart below):

If you’re feeling stressed because you don’t have the time, budget, or resources to tackle any repairs or updates, you may be tempted to sell your house as-is, too. But before you decide to go this route, here’s what you need to know.

What Does Selling As-Is Really Mean?

Selling as-is means you won’t make any repairs before the sale, and you won’t negotiate fixes after a buyer’s inspection. And this sends a signal to potential buyers that what they see is what they get.

If you’re eager to sell but money or time is tight, this can be a relief because it’s that much less you’ll have to worry about. But there are a few trade-offs you’ll have to be willing to make. This visual breaks down some of the pros and cons:

Typically, a home that’s updated sells for more because buyers are often willing to pay a premium for something that’s move-in ready. That’s why you may find not as many buyers will look at your house if you sell it in its current condition. And less interest from buyers could mean fewer offers, taking longer to sell, and ultimately, a lower price. Basically, while it’s easier for you, the final sale price might be less than you’d get if you invested in repairs and upgrades.

That doesn’t mean your house won’t sell – it just means it may not sell for as much as it would in top condition.

Here’s the good news though. In today’s market, as many as 56% of buyers surveyed would be willing to buy a home that needs some work. That’s because affordability is still a challenge, and while there are more homes for sale right now, inventory is lower than the norm. So, you might find there are more buyers willing to take on the work themselves.

How an Agent Can Help

So, how do you make sure you’re making the right decision for your move? The key is working with a pro.

A good agent will help you weigh your options by showing you what comparable homes in your area have sold for, what updates your neighbors are making, and guide you in setting a fair price no matter what you decide. That helps you anticipate what your house may sell for either way – and that can be a key factor in your final decision.

Once you’ve picked which route you’re going to go and the asking price is set, your agent will market your house to maximize its appeal. And if you decide to sell as-is, they’ll call attention to the best features, like the location, size, and more, so it’s easy for buyers to see the potential, not just projects.

So, selling a home without making any repairs is possible in today’s market, but it does have some trade-offs.

Selling Your House • December 13, 2024

Sell Now or Wait Till Spring? 2 Smart Reasons to List Your Home This Winter

by Drew Jones

A lot of people assume spring is the ideal time to sell a house. And sure, buyer demand usually picks up at that time of year. But here’s the catch: so does your competition because a lot of people put their homes on the market at the same time.

So, what’s the real advantage of selling your house before spring?

It’ll stand out.

Historically, the number of homes for sale tends to drop during the cooler months – and that means buyers have fewer options to choose from.

You can see how that trend played out over the past few years in this data from the National Association of Realtors (NAR). Each time, the supply of homes for sale dipped during these cooler months. And then, after each winter lull, inventory started to climb as more sellers jumped into the market closer to spring (see graph below):

Here’s why knowing how this trend works gives you an edge. While inventory is higher this year than it‘s been in the last few winters, if you work with an agent (me, of course) to list now, it’ll still be in this year’s sweet spot. So, while other sellers are taking their homes off the market, you can sell before the spring wave of new listings hits, and your house will have a better chance of standing out.

So, why wait until spring when you can get ahead of the curve now?

2. Fewer Listings Also Means More Eyes on Your Home

Another big perk of selling in the winter? The buyers who are looking right now are serious about making a move.

During this season, the window-shopper crowd tends to stay busy with other things, like holiday celebrations, and avoids looking for homes when the weather’s cooler. So, the buyers out looking aren’t casually browsing—they’re motivated, whether it’s because of a job relocation, a lease ending, or some other time-sensitive reason. And those are the types of buyers you want to work with. Investopedia explains:

“. . . if your house is up for sale in the winter and someone is looking at it, chances are that person is serious and ready to buy.”

So, with less competition and serious buyers on the hunt, you’ll be in a great position to sell your house this winter. Let’s connect if you’re ready to get the process started.

Mortgage Rates • December 12, 2024

When Will Mortgage Rates Come Down?

by Drew Jones

One of the biggest questions on everyone’s minds right now is: when will mortgage rates come down? After several years of rising rates and a lot of bouncing around in 2024, we’re all eager for some relief.

While no one can project where rates will go with complete accuracy or the exact timing, experts offer some insight into what we might see going into next year. Here’s what the latest forecasts show.

Mortgage Rates Are Expected To Ease and Stabilize in 2025

After a lot of volatility and uncertainty, the most updated forecasts suggest rates will start to stabilize over the next year, and should ease a bit compared to where they are right now (see graph below):

As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:

“While mortgage rates remain elevated, they are expected to stabilize.”

Key Factors That’ll Impact the Future of Mortgage Rates

It’s important to note that the timing and the pace of what happens with mortgage rates is one of the most challenging forecasts to make in the housing market. That’s because these forecasts hinge on a few key factors all lining up. So, while rates are expected to come down slightly, expect them to be a moving target. And the ups and downs of ongoing economic drivers will likely stick around. Here’s a look at just a few of the things that’ll influence where they go from here:

Inflation: If inflation cools, rates could dip a bit more. On the flip side, if inflation rises or remains stubbornly high, rates may stay elevated longer.
Unemployment Rate: The unemployment rate also plays a significant role in upcoming decisions by the Federal Reserve (the Fed). And while the Fed doesn’t set mortgage rates, their actions do reflect what’s happening in the greater economy, which can have an impact.
Government Policies: With the next administration set to take office in January, fiscal and monetary policies could also affect how financial markets respond and where rates go from here.

Remember, these forecasts are based on the best information available right now. As new economic data comes out, experts will revise their projections accordingly. So, don’t try to time the market based on these forecasts alone.

Instead, the best thing you can do is focus on what you can control right now. Work on improving your credit score, put away any extra cash for your down payment, and automate your savings. All of these things will help you reach your homeownership goals even faster.

Homeownership • December 12, 2024

Why Owning a Home Is Worth It in the Long Run

by Drew Jones

Today’s mortgage rates and home prices may have you second-guessing whether it’s still a good idea to buy a home right now. While market factors are definitely important, there’s also a bigger picture to consider: the long-term benefits of homeownership.

Think of it this way. If you know people who bought a home 5, 10, or even 30 years ago, you’re probably going to have a hard time finding someone who regrets their decision. That’s because over time, home values usually grow – and that means a homeowner’s net worth does too. Here’s a look at how that can really add up over the years.

Home Price Growth over Time

The map below uses data from the Federal Housing Finance Agency (FHFA) to show how much prices have grown over the last five years. Since home prices vary by area, the map is broken out regionally to really showcase larger market trends:

You can see that nationally, home prices increased by over 57% in just five years.

Some regions are slightly above or below that average, but overall, home prices saw a big uptick in a short time. And if you zoom out even more, the benefit of homeownership — and the drastic gains homeowners made over the years — become even more clear (see map below):

The second map shows that, over a roughly 30-year span, home prices appreciated by an average of more than 320% nationally.

So the typical homeowner who bought a house about 30 years ago saw their home triple in value during that time. And that’s a major reason so many homeowners who bought their homes years ago are still happy with their decision today.

There’s no denying today’s market is complex. But if you’re ready and able to buy right now, let’s connect to talk about how we can still make your move happen. That way you can take advantage of the long-term advantages that come with homeownership, like your ability to build wealth as your home value rises.

Home Prices • December 12, 2024

What Will It Take for Prices To Come Down?

by Drew Jones

Are you wondering if home prices will ever come down? Unfortunately, it’s unlikely to happen anytime soon. There are currently more people who want to buy a home than there are homes available to purchase. That’s what drives prices up.

For a quick breakdown:

Prices Depend on Supply and Demand

The housing market works like any other market – when demand is high and supply is low, prices rise.

According to the latest estimates, the U.S. is facing a housing shortfall of several million homes. That means there are far more people looking to buy (demand) than there are homes for sale (supply). That mismatch is the key reason why prices won’t fall at the national level. As David Childers, President of Keeping Current Matters (KCM), puts it:

“The main driving force on pricing is the limited amount of inventory in most markets across the country. That issue is not going to be solved overnight or in the next twelve months.”

How Did We Get Here?

For over 15 years, homebuilders haven’t been building enough homes to keep up with buyer demand. After the 2008 housing crisis, homebuilding slowed significantly, and it’s only recently started to recover (see graph below):

Even with new construction on the rise over the past few years, builders are playing catch-up. And according to AmericanProgress.org, they’re still not even keeping up with today’s demand, let alone making up for years of underbuilding.

And as long as there’s a housing shortage, home prices will remain steady or increase in most areas.

What About Next Year?

The majority of experts agree prices will keep rising next year, but at a much slower, healthier pace (see graph below):

So, if you’re wondering what it’ll take for prices to come down, it all goes back to supply and demand. With inventory still limited in most markets, including ours, prices are likely to remain steady or rise. Of course prices and trends will vary by area, so when you’re ready to look, we’ll assess the current market in our local area.