Are we headed for a real estate market crash?

Are we headed for a real estate market crash?

Not in my opinion. While we may be seeing a much-welcomed boost to real estate inventory, we're still far from a balanced market. 

A balanced, or "neutral" market has between 6-7 months of inventory. Snohomish County currently has 1.4 months of inventory. And the Everett/Mukilteo area has even less -- 1.2 months. When inventory is less than 6 months, we are in a "seller's market" and we can expect home prices to continue to appreciate, demand to stay strong, and buyers will likely need to compete for available inventory. 

This fact is backed up by the relatively fast-paced environment we currently find. Average days on market in Everett/Mukilteo and Snohomish County was just 8 days, and the entire MLS (most of Washington State) was only slightly more at 11 days. 

When there are more buyers than sellers and market times are near all-time lows, it would stand to reason that home prices will continue to rise. As the graph below shows, Everett/Mukilteo and Snohomish County have both been on a steady upward trajectory, with the median sales price in Everett/Mukilteo at $415,000 and Snohomish County at $429,950 -- both with 13+% gains year-over-year. 

And while the seasonal "summer vacation slow down" has begun, I don't think we'll see a huge impact given the low amount of inventory still present. 

Per on 6/24/2018. Subject to change. 

So, what about interest rates? Won't they slow things down? In short, a little, but probably not. Here's why. In the not-so-distant past, most people had adjustable rate mortgages (ARMs). Then, rates fell of a cliff due to the recession. Now everyone has a 30-year fixed mortgage. But, as that product inches upward, ARMs will begin to make a resurgence, keeping payments affordable for buyers entering the market. 

In recap:

+ Inventory still remains near records lows, creating a great opportunity for sellers in the marketplace.

+ The seasonal beginning of summer break coupled with a small influx of inventory has also created some great opportunities for buyers.

+ While interest rates may have a dampening effect on buyer motivation, rates still remain historically low. Alternate mortgage products, like adjustable rate programs, may also make a comeback if the traditional 30-year fixed becomes too expensive for some borrowers.

+ Working with a knowledgeable broker is more important than ever –- as accurately pricing homes for the changing market conditions becomes more crucial than ever. On the buying side, savvy negotiations could create some uncommon opportunities for buyers.

Questions about your home’s current market value? Interested in exploring some unique opportunities to purchase a home or investment property? We would be honored to speak with you. Give me a call at 425.501.1370 or send me an email at

2018 1st Quarter Western WA Real Estate Market Update

2018 1st Quarter Western WA Real Estate Market Update

Windermere Real Estate's Chief Economist, Matthew Gardner, shares his 1st Quarter Real Estate Market Update below (click image to download 1.7MB PDF report). Contact us if you have specific questions. 

Download the original report by clicking here.

If you are in the market to buy or sell, please contact us for a complimentary home value report or buyer consultation.

2018 Mid-Year Momentum Continues

2018 Mid-Year Momentum Continues

The real estate market continues to be on 🔥🔥🔥in 2018. Spring has proven to be an opportune time for our clients to consider selling, but we've also had success in finding some great opportunities for our buyers, too.  You can browse a snapshot of some of the homes we helped our clients buy and sell so far in 2018. Interested in reading some of our success stories? Click here. 

Interested in making a move in 2018? We would be honored to have the opportunity to work with you. Contact us today for a no-obligation home value review or buyer consultation. We look forward to hearing from you!

Western Washington Market Update

Western Washington Market Update

What will the market hold for us in 2018? Windermere Real Estate's Chief Economist, Matthew Gardner, shares his forecast below. Contact us if you have specific questions. 


The Washington State economy added 104,600 new jobs over the past 12 months. This impressive growth rate of 3.1% is well above the national rate of 1.4%. Interestingly, the slowdown we saw through most of the second half of the year reversed in the fall, and we actually saw more robust employment growth.

Growth continues to be broad-based, with expansion in all major job sectors other than aerospace due to a slowdown at Boeing.

With job creation, the state unemployment rate stands at 4.5%, essentially indicating that the state is close to full employment. Additionally, all counties contained within this report show unemployment rates below where they were a year ago.

I expect continued economic expansion in Washington State in 2018; however, we are likely to see a modest slowdown, which is to be expected at this stage in the business cycle.


  • There were 22,325 home sales during the final quarter of 2017. This is an increase of 3.7% over the same period in 2016.
  • Jefferson County saw sales rise the fastest relative to fourth quarter of 2016, with an impressive increase of 22.8%. Six other counties saw double-digit gains in sales. A lack of listings impacted King and Skagit Counties, where sales fell.
  • Housing inventory was down by 16.2% when compared to the fourth quarter of 2016, and down by 17.3% from last quarter. This isn’t terribly surprising since we typically see a slowdown as we enter the winter months. Pending home sales rose by 4.1% over the third quarter of 2017, suggesting that closings in the first quarter of 2018 should be robust.
  • The takeaway from this data is that listings remain at very low levels and, unfortunately, I don’t expect to see substantial increases in 2018. The region is likely to remain somewhat starved for inventory for the foreseeable future.


  • Because of low inventory in the fall of 2017, price growth was well above long-term averages across Western Washington. Year-over-year, average prices rose 12% to $466,726.
  • Economic vitality in the region is leading to a demand for housing that far exceeds supply. Given the relative lack of newly constructed homes—something that is unlikely to change any time soon—there will continue to be pressure on the resale market. This means home prices will rise at above-average rates in 2018.
  • Compared to the same period a year ago, price growth was most pronounced in Lewis County, where home prices were 18.8% higher than a year ago. Eleven additional counties experienced double-digit price growth as well.
  • Mortgage rates in the fourth quarter rose very modestly, but remained below the four percent barrier. Although I anticipate rates will rise in 2018, the pace will be modest. My current forecast predicts an average 30-year rate of 4.4% in 2018—still remarkably low when compared to historic averages.


  • The average number of days it took to sell a home in the fourth quarter dropped by eight days, compared to the same quarter of 2016.
  • King County continues to be the tightest market in Western Washington, with homes taking an average of 21 days to sell. Every county in the region saw the length of time it took to sell a home either drop or remain static relative to the same period a year ago.
  •  Last quarter, it took an average of 50 days to sell a home. This is down from 58 days in the fourth quarter of 2016, but up by 7 days from the third quarter of 2017.
  • As mentioned earlier in this report, I expect inventory levels to rise modestly, which should lead to an increase in the average time it takes to sell a house. That said, with homes selling in less than two months on average, the market is nowhere near balanced.



This speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors. For the fourth quarter of 2017, I have left the needle at the same point as third quarter. Price growth remains robust even as sales activity slowed. 2018 is setting itself up to be another very good year for housing.


Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has more than 30 years of professional experience both in the U.S. and U.K.

If you are in the market to buy or sell, please contact us for a complimentary home value report or buyer consultation. 

How will US Tax Law Impact Property Owners?

How will US Tax Law Impact Property Owners?

With tax season just around the corner, we've had a number of clients call to ask how recent US Tax Law changes will impact them. The following article provides a good overview. We also highly recommend talking to a tax professional. Need a recommendation? We work with several top-notch CPA's and tax lawyers. Contact us for a referral. 

How the New U.S. Tax Law Impacts Property Owners

Real estate investors and developers see a win, while individual homeowners face a loss of deductions


Even before U.S. President Donald Trump signed new tax codes into law in December, many Americans had already been flocking to experts to help them navigate the sweeping changes. This, as many of those experts are still trying to fully understand it themselves.

“The biggest question is, ‘what does this mean for me?’” said Suzanne Shier, the chief tax strategist and tax counsel for wealth management at Northern Trust, a Chicago-based financial services company. “And then we have to ask, ‘well, who are you?’”

Which is to say, every client has different needs and goals, not to mention a different tax situation.

A conversation with an advisor should start with exploring what will be the same and what will be different under the new code starting in 2018, she said. Additionally, tax payers should look at short-, middle- and long-term goals, keeping in mind that many of the changes expire in 2025.

Ms. Shier is emphasising “flexibility in plans.” People should certainly be looking for ways to be tax efficient, but shouldn’t completely alter their plans and activities because of a change in the tax law.

Wins for real estate investors and landlords

Clients have “a ton of questions” about deductions for pass-through businesses, Ms. Shier said. Those are businesses where the entity itself does not pay taxes, but the tax is instead passed through to the owner. Sole proprietorships, partnerships, and S-corporations are examples of this kind of business, as are limited liability corporations.

LLCs are commonly used by real estate investors and landlords, making the new code very beneficial to them. It’s also a popular option to provide privacy and an additional level of asset protections, experts say. It’s also an option when buying a second home or vacation residence that will provide rental income.

Under the new law, there is now a deduction of 20% for qualified business income for pass-through businesses.

“Generally speaking, this special deduction is allowed against business profits, and does not apply to wages earned by the business owner,” according to a January report by Jay Messing and Chris Pegg of Wells Fargo Private Bank, which advises customers in wealth planning.

Owners get to deduct 20% of pass-through income, meaning only 80% is taxed. “They will be taxed 29.6% on income that would otherwise be taxed at 37%,” Mr. Pegg said on the call. The 6% difference could add up to some serious savings for real estate investors who buy under LLCs.

These changes, among others, are big wins for the real estate industry, said tax and estate attorney Bradford Cohen of Jeffer Mangels Butler & Mitchell in Los Angeles.

The change from paying 37% to 29.6% is “basically a huge incentive to organize your business that way,” he said. He thinks taxpayers will “absolutely” try to establish pass-through businesses to take advantage of the deductions, but that most real estate investors “are already there.” If they’ve been getting good advice, that is.

Taxpayers can also deduct 20% of income received as qualified Real Estate Investment Trust dividends, Mr. Cohen noted, so they may see savings there as well. And like-kind exchanges of property, also known as 1031 exchanges, will still be allowed. So if an investor sells a property and buys another qualifying property—be it “skyscraper or a piece of dirt,” Mr. Cohen said—he or she can defer paying tax on gains from the original property.  

Worry over the housing market

Many taxpayers are lamenting the loss of deductions, including the lower mortgage deduction and the new cap on state and local tax write- offs. Although the standard deduction is doubled, many taxpayers who have had significant itemized deductions will see those drop.

Going forward, “the deduction for mortgage interest is limited to underlying indebtedness of up to $750,000, or $375,000 for married taxpayers filing separately,” explained Cindy Hockenberry, the director of tax research and government relations at the National Association of Tax Professionals. Previously, the upper limit had been $1 million.

Plus taxpayers can no longer deduct interest on home equity loans, unless the money was used for renovations or other home improvements.

Additionally, “the overall deduction limit on any state and local tax, a combination of income tax, real estate tax or sales tax, is capped at $10,000,” she said. Previously, there was no cap, and highly taxed residents of states like California, New York and Connecticut will be the most affected by this change.

Many Americans made a mad dash to prepay these taxes at the end of 2017, but found that they couldn’t.

“Many municipalities assess the tax at the end of the year and the tax payment is then due the following year,” Ms. Hockenberry said. “You can’t pay 2017’s taxes and 2018 taxes, not assessed yet, and get a larger deduction. You can, however, pay down debt to maximize your interest deduction. Some folks are allowed to make interest-only payments. That could be a viable strategy for some.”

Some economists think these tax changes will make home buyers skittish, and bring home prices down. Analysts at Goldman Sachs said Wednesday the changes could create a “headwind” for housing prices, according to MarketWatch.

They “should induce many homeowners to switch away from itemization,” analysts wrote. “Collectively, the changes are likely to reduce the utilization of the itemized mortgage interest and property tax deductions, and in turn reduce the value of owner-occupied housing as a tax shield.”

Without the deductions as incentives, potential buyers may decide to rent instead. New York-based real estate agent Donna Olshan thinks there will be an uptick in the rental market.

“If there’s no real benefit to the buyer, why not stay in a rental?” she said, adding that certain buyers, those with high mortgages, are losing “the benefit of ownership.”

Estate planning to think about

One area people should be reevaluating is estate planning. Up to $11.2 million per person ($22.4 million for a couple) of an estate can now be transferred without tax penalty, which is double the amount allowed in the previous code.

That means those with significant property holdings might want to gift some of the titles of that property to their beneficiaries now, rather than waiting, according to Ms. Shier. This, like many of the individual changes to the code, is set to expire in 2025.

Experts agree that revisiting all estate planning provisions is crucial under the new tax code.

“Estate plans created before 2013 should definitely be reviewed, and even recently created plans may need to be reconsidered in light of dramatically increased exclusions,” according to the Wells Fargo report.

And although taxpayers should be looking for new ways to save, it’s important to remember many of these changes are temporary, Ms. Shier said. Having an exit strategy is key.

“If you make changes now, what is it going to take to unwind those changes?” she said. “You need to take the immediate savings into account, but also the potential cost and inconvenience associated with unwinding any changes you’ve made.”

2018 WA Real Estate Market Update

2018 WA Real Estate Market Update

What will the market hold for us in 2018? Windermere Real Estate's Chief Economist, Matthew Gardner, shares his forecast below. Contact us if you have specific questions. 

If you are in the market to buy or sell, please contact us for a complimentary home value report or buyer consultation. 

Interested in the current state of the Western Washington Real Estate market? Click here to read Matthew Gardner's recent market update. 

Thank you for a spectacular 2017!

Thank you for a spectacular 2017!

2017 was a banner year from the Gunderson, Reinecke, and Straub partners. We owe our success to the amazing clients we have the opportunity to work with! You can browse a snapshot of some of the homes we helped our clients buy and sell in 2017. Interested in making a move in 2018? We would be honored to have the opportunity to work with you. Contact us today for a no-obligation home value review or buyer consultation. We look forward to hearing from you!

Interested in reading some of our success stories? Click here. 



Greetings! We're launching our blog to help bring helpful information and great ideas to our clients, associates, and friends. If there is a specific topic you would like us to cover, please let us know! We look forward to hearing from you!