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>> Music >> Too many buyers, too few homes, that could only mean one thing -- home prices are soaring.

To make matters worse, builders can't hire, and lumber has tripled in price.

What is a home buyer supposed to do?

That part of the discussion next on Northwest Now.

[ Music ] >> Had you told me that a global pandemic, a wave of unemployment, and troubles of Boeing would result in a real estate boom, I would have said you were nuts.

Well, things are nuts all right, but in very counter intuitive way as what's being called The Great Reshuffling pushes people to the suburbs -- or even out of state to boom towns like Spokane, Coeur d'Alene, or even Boise.

Or, as Northwest now contributor Linda Byron tells us here in Western Washington -- Pierce County.

>> Ah, the kitchen's pretty.

>> Thank you, yeah.

>> Jay Davis and Tiffany Hastings are about to pull the trigger on a dream to sell their Lakewood home and move to Hilo, Hawaii.

Jay, a retired marine biologist, and Tiffany, a traveling home health nurse -- say it would be foolish to wait when houses in their area are selling for 10 to 15% above asking price.

I mean, this is one of the craziest times for the real estate -- and we don't want to take a chance that next summer might not be as good.

>> They plan to list at $449,000 -- and expect to sell -- for between 475 and 515.

I think we're going to look at the best package offer.

Certainly -- cash talks -- pretty heavily, but we're not only looking for a cash offer, if somebody, you know, can secure financing, and -- >> You don't see many houses for sale in this quiet Lakewood neighborhood.

Their 1590 square foot home on 1/3 of an anchor corner lot, is expected to sell within a week -- as buyers compete for a shortage of mid-range homes.

One of those perspective buyers -- is 22 year old Sebastian Tudor, who's shopping for his first home.

>> I found a house recently that I'd thought I -- -- was my dream house.

I want it to be on a lake or have a little -- water in -- the back, and then just a nice open backyard so I can grill, and maybe a garage so I can work on my stuff, but -- that kind of slipped through my fingers.

>> Slipped through his fingers.

Even though Sebastian offered 75,000 over the listing price of 400,000.

>> I was shocked -- shocked.

>> As people are priced out of Seattle, many are looking south driving up prices.

>> They're asking for a lot -- compared to what we're getting, you know?

There's a lot of money for not a lot of house.

>> Sebastian's trying to buy in one of the hottest housing markets nationwide -- Pierce County.

According to Zillow, Tacoma was the fastest selling housing market in the country in January.

With prices rising 17.5% over the previous year, Spanaway was up almost 17% -- and Parkland -- more than 19.

>> Lori Baldwin is the managing broker at Nexus Realty.

Her office is in Kirkland, but most of her sales are in Pierce County with multiple offers being the norm.

>>Anywhere from as low as five, as high as, I think the highest that we've seen as Nexus was like 37.

>> On one house?

>> Yes.

>> Wow.

>> And it's taking no time to seal the deal.

>> And usually what you do is you list it on a Wednesday or a Thursday, you keep it active through the weekend, and you have an offer review date Monday or Tuesday.

So, when you see, you know -- >> Buying or selling -- it's an emotional process -- intensified by a housing frenzy not seen in decades.

>> Retired early -- and Tiffany will continue to work a little bit over there, but it's time to downsizing -- go to some warmer climate and start a new -- type of chapter in our life.

>> For Northwest Now, I'm Linda Byron.

>> The fast-forwarding of the advent of remote work is revolutionizing the real estate market as well.

For knowledge workers, where you live is no longer as important as -- whether you have a high speed internet connection.

Compared to a year ago, look what has happened to the median prices, that's the point at which half the prices are higher, and half the prices are lower.

King County is up 15% with the median prices of the homes sold in February above a million bucks.

Snohomish, up 19%, Pierce up 16% -- Thurston, 21%, and Kitsap 17%.

Here now are some statewide standouts.

Median prices were up an average of 20% across most of the state, but Walla Walla is up 114% -- Fairy County, 121%, and remote Okanogan County, 47%.

So, it's into this environment that we have our annual discussion about real estate.

Joining our now are Zillow Senior Economist Jeff Tucker, King County's Realtor's President Lynn Sanborn, Tacoma Pierce Realtor's President Michael Robinson -- and our longtime mortgage guru, Robert Lipston with Opes Advisors.

Welcome everybody to Northwest Now, great to have our annual conversation about real estate here in Western Washington.

We're going to start with the Lightning Round, a quick answer, and I'm just going to go right down the line as you appear in my Zoom screen, starting with you Lynn, are we in a bubble?

>> Are we in a bubble?

I don't -- you know, I've done real estate for 30 years, and I want to think we're in a bubble, but -- with the National Housing Shortage, I'm not so sure we are.

I don't think there's anything showing any signs of slowing down, and -- yeah, so, I would say no.

>> All right, Robert, Lightning Round next to you, are we in a bubble?

>> Well, in every market that I work in in the Northwest, all I hear is about lack of inventory.

And in some market places, the lowest inventory -- rates that I've seen ever.

So, I would say, no, no bubble-like activity that I see right now.

>> Jeff, you spend all day, every day in the numbers there at Zillow, are we in a bubble?

>> I don't think we're in a bubble.

I think people are buying homes that they can afford, they qualify for them, underwriting standards are strict.

This is just what people are willing and able to pay for homes right now.

>> Michael, I don't want to put any peer pressure on you, but are you going to make it unanimous, are we in a bubble?

>> It is unanimous.

There isn't enough supply -- the lending -- standards are responsible -- the high credit scores.

These are people buying houses and they want to live in them, it's not a bunch of speculative buying.

There are investors -- in the mix -- but they don't dominate, and there's no -- there's not a lot of speculation.

>> Jeff, I want to go -- start this next question with you for kind of a big picture look.

We have two kind of competing narratives that I real all of the time in the media.

And one narrative says that people are fleeing Seattle, and -- urban Washington due to the riots and the homelessness crisis, and drug -- crime and the police situation.

And -- another narrative says, no, people are coming to Seattle like crazy, and trying to get to the city and get around jobs.

Which of those are true, or are they both true?

>> I think the first story is certainly overblown.

I think there is a lot of scaremongering and a lot of -- easy headlines -- to make out of, you know, the protests and some of the aftermath.

I think the downtown Seattle market and the proximity to the downtown Seattle is certainly softer right now, you know -- the demand to be there is softer while everyone is working from home.

You know, Zillow, we're based in Russel Investments Center right downtown.

I still haven't been back to the office in 14 months.

So -- I think the biggest -- question is, how much is, how much will demand bounce back once people -- get invited back to those offices downtown?

So, in the big scheme of things, you know, Seattle is a strong employment hub, has tremendous employment growth, especially in high paying industries like tech.

That is going to continue pulling employees into the region.

>> Lin and Michael, I'll ask you second, but I want to ask both of you -- that same question about -- what that narrative is, and Lin, we'll start with you in King County.

you know, obviously, you don't have the big look at all the data like -- Jeff does, necessarily, but what are people telling you?

Are they wanting to come to Seattle, or are you dealing with more people who are kind of trying to get out of King County and go to Thruston or -- Kitsap, or somewhere else?

>> No, I mean, I think you have those people that are exiting, trying to go to other areas because of the cost of living -- because we don't have -- we're not building -- anything in the middle price range.

So, if someone's got a large home and they want to retire, you know, step down into something smaller, we don't have it.

Obviously, there's concerns about Seattle for a lot of reasons.

You know, head tax and a bunch of things that we're dealing with there -- have made people feel like this -- maybe it's not as friendly as it used to be, but I think that's all going to recover.

I mean, you hear about all these companies that are -- taking, starting to take commercial space again -- and move a lot of people in.

So, I -- yeah, I think -- that it's going to be fine.

We were worried about the commercial part of it, but I'm starting to hear some recovery there, so I think -- that Seattle's going to be fine, but it might take a while to recover.

>> Michael, you're on the receiving end of those people who are coming to the South Sound.

Do you feel like it's a wave of people, or the occasional buyer that says the want to come to get out of King County?

What's your experience?

>> Right.

But, you can go back to data from 2015, Tom -- and 48% of our nonmilitary workforce had a job outside of Pierce County.

So, we were already -- experiencing a lot of Seattle buyers -- and a lot of it was just a result of the delta between the median price -- in -- King County, Seattle -- and our median price.

And that -- delta used to be about 48%, it's not to, moved down to about 38, six or 37%.

But -- for a long time, I think that the -- we've been experiencing, you know, Seattle buyers coming our way to -- to get more -- bang for their buck.

But I think in the pandemic and the change in work requirements accelerated that.

>> Robert, you -- do mortgage origination, so -- you tend to see on the loan documents where we're going from and where we're going to.

What are you observing there as these documents come across your desk?

>> Well, I think a couple things.

It, for a long time it was about driving to affordability.

And now what's happened is as people have learned to work remote, and need more space, and live out of their home and work out of their home, and their families are at home more, they want bigger households, they want bigger space.

And so, they're -- going to places where they're able to sprawl and be able to have a little more space and have a different lifestyle.

And I think that COVID has taught the average human being how to live differently.

And I think that's why you see the Montanas and the Idahos and the Spokanes, et cetera, blowing up right now, because the inventory is still an issue, but you can get more for the bang.

And we are seeing people everywhere, and -- people are moving out of state and going to different climates, et cetera.

But -- the market's still awesome here, and if we're [phonetic] -- interest rates are awesome.

So -- >> Yeah, and I'm going to circle back to you on that interest rate piece in this next series of questions that I hit, want to hit each one of you -- with, starting with you Lin.

The -- in the media and the anecdotal storytelling you hear is always very much focused on buyers.

Buyers being priced out; buyers can't make cash offers and get them accepted.

Affordability, you know, it's really been a strain and a struggle on buyers.

So -- I want to ask each one of you, starting with Lin, Lin, what is your best advice today to buyers.

If you're talking to buyers, what is the big thing you're trying to lay on them?

>> Have a bottle of tequila handy.

[ Laughing ] Honestly, if had all the advice on how to get people into houses easier right now, I would be making a fortune.

I'm in one of the highest volume offices in the state, and we just had an office meeting today, when -- you know -- it, there is a housing shortage, you have to be so aggressive.

You have to plan on going in with no contingencies, hopefully that seller has done a pre-inspection -- because the chance that you're even going to get an inspection and stuff, you can't go in with your -- with financing, so you're going to pray that it appraises.

So, I wish I had some magic answer to give on that, but I hear -- it's all over Facebook, all the real estate pages, in my office being on the realtor board, all we hear is -- buyer after buyer, after buyer -- you know, offer after offer, after offer being rejected.

I had a call just the other day and she goes, "Oh, my God, I just finally got my buyers in, 20th offer they rolled [inaudible].

You know, so, and this is -- constant, so they're honestly, the only thing I can say is you have to position yourself -- to be prepared to go in with no contingencies at all and escalate the price.

And I've said to my buyers, if you love it, just buy it, if you know you're going to be there -- because buyers are worried they're overpaying -- you know?

And I said, if you know you're going to be in the house and this is your home, then just step up and you're going to have to do it, because -- -- You know, I just got off the phone this money with City of Redmond talking about -- Morgan City, we need to build condos.

And you know, they're -- like, they have to buy 20,000 properties is what they're tasked with to try to catch up.

And so, it's -- the strain is everywhere on everybody, and it's -- -- in a way I'm happy if they're exiting, so we can haves more houses here, but -- there is no magic answer, just be prepared to have a crazy offer to write.

>> Yeah, people talk about condos and say, "Let's get some affordable housing."

What they don't realize is those condos are going to be a million bucks a piece, so it's really not the answer, it used to be.

Robert, what is your situation, because you're kind of in a tough pickle in this one?

You want to originate financing, but a lot of these are cash deals and if you don't have cash -- you're in trouble.

So, are you trying to somehow work with people to get that cash?

What's your strategy?

What are you doing?

>> Well, it's interesting, I just did a realtor panel -- and we asked everybody -- on the seller side, would they rather accept the cash offer?

And almost everybody said they wanted the best offer, but they needed to know that the offer that was coming in was financeable.

And I can just tell you, there is a trend, and I don't know if anybody else on the panel has seen this, but we've started to see where sellers are countering -- that the buyer has to pay the selling agent's commission.

So, in order to accept the offer, they want the actual commission paid by the buyer of the home, to move the -- pendulum, which now they want us to finance.

But to answer your question, we do have to get creative sometimes.

We're handling a purchase right now -- where the -- it was up against about five cash offers -- the actual seller said they wanted a cash offer, so our buyer is buying the home with cash, and we're doing what's called a delayed finance transaction.

And we'll give them back the actual purchase as a cash out refinance and close it.

So, we have to do a two-step loan, there is companies that will actually finance a buyer on a quick close, but to answer that, we just work with our business partners.

And we try to at the time of offer, try to engage everybody in the transaction, and let them know that we have a qualified preapproved underwritten loan file that's ready to close.

Now -- sometimes they have to waive their appraisal, sometimes they have to wave the, a financing -- contingency, sometimes they have to waive the inspection.

But as a partner with our agents, we want to get on the phone and try and make sure they know we have a closeable loan.

>> Yeah, and making sure that house appraises, and that's there's cash there -- to cover the difference.

If you're doing a financing job, that's always an issue in an escalating market too.

Jeff, same question to you, what is your best advice?

When a buyer comes -- cries on your shoulders at a dinner party, what's your best advice -- to buyers?

I think Lin and Robert have -- really hit the important points here.

you need to be prepared with all your ducks in a row ahead of time and be prepared when you're shopping to maybe look outside your comfort zone and consider different neighborhoods.

Have an open mind and think about -- what's really most important to you even if it's not a particular few city blocks that maybe you were originally looking at, but willing to -- expand your search and maybe consider older homes?

Maybe consider homes a little further out, but certainly being prepared -- with -- being pre-underwritten, preapproved, working with your lender to show that, even if you are borrowing money to buy this house you're still a safe bet for that seller.

> Michael, you -- are in Pierce Count once again, down here where the TV station is, and I would assume your advice to buyers is hey, have some confidence.

Come down here and look at everything you're going to get for the -- dollar.

What's your -- best advice to buyers in the South Sound who are frustrated with now cash offers in rolling -- offers on homes.

>> My fellow panelists here really did a good job of getting the key points.

You know -- I might add that some Kevlar underwear would be helpful, and -- because it's just a really tough, tough battle.

You know, in Pierce County right now, if you're shopping between 400 and 600,000 for example -- there are 1,118 pendings and only 218 active properties.

So, that's a 467% chance of selling -- if you're a seller.

Being super prepared, fully underwritten, and then, the only thing that wasn't mentioned that I might add is, shopping a little bit below your price limit.

If your comfort zone is at x, shop at y, a little lower, because very rarely do you see a house selling for -- you know, list price.

And perhaps -- maybe toss on one more idea, most houses are selling in -- five, six days.

Maybe there's a few on the market that have been on the market for -- a couple weeks -- maybe shop those properties, and see if there's an opportunity to have a little quieter transaction without quite so much -- people jabbing each other with elbows.

>> Yeah, I think coming in a little low on your top dollar's a good idea that gives you some head room.

And I'm glad you brought that up in my note here, King's six days on the market, Pierce, five days on the market.

I mean, my God, I mean, that's hardly time to get in your car and go look at places, but -- you've got to be ready to pull the trigger, which is a -- tough environment.

I want to talk a little bit about trends, Jeff, with you.

I thought all the young people were going to live in the urban core.

They were going to walk to dinner, walk to lunch, not have a car and all live in these -- cool, hip, urban enclaves and not move to the suburbs and raise kids.

What happened to that?

>> There's not a whole lot of homes that, especially that are affordable that provide that kind of a lifestyle.

And, I mean, the other thing is in the big picture, millennials -- as we get older into the -- mid to late 30s, we're looking a lot more like previous generations did at those same ages.

It's really easy to mix up the traits of a cohort with just what are the traits of a 25 year old.

So, once they're not 25 anymore, they behave a little differently.

So -- we are absolutely seeing -- -- and -- going back to the first question, we are -- absolutely seeing red hot price growth in the suburbs, you know, Tacoma prices are growing more than twice as fast as Seattle itself.

This move outward, and -- the demand that we're seeing in, especially in Pierce and -- even Thurston Counties is very real.

And that's reflecting the fact that millennials are now hitting that age -- of wanting to have kids and wanting to have space for those kids -- which maybe they weren't really thinking about at the time that -- it was a bigger priority to be able to walk to dinner, walk to the bar or restaurant.

>> Yeah, it's funny, because -- that's been my answer for the past 10 years, everybody talked about how it's going to be, and nobody's going to come buy these houses in the suburbs.

I said, listen, just slow your roll here, they're a little late because of college debt, but they are coming, okay?

Let's not -- lose our minds here.

Lin, I wanted to ask you, you gestured at this a little bit in your previous answer.

How is, what I would call "the system" of real estate the -- grease and the gears that keep things going, appraisers, underwriting, origination -- all the bits and pieces doing when you're coming to do a deal?

For a while during COVID, it was stuck, you couldn't get the system and the gears to turn to get a -- deal done.

Are you finding that now?

Are things flying through, or what's -- deal making like in this environment?

>> Yeah, I mean, I think -- I -- have not, or we talk about this all the time at our office meetings, I think things have been pretty smooth.

I mean, we were having some delays with escrows and some deals that weren't getting recorded, but they were -- you know insuring those and -- still closing it that day, even though it might actually might not record the next day.

So, you know, I think the biggest issue we're probably seeing out there is -- homes not appraising -- because they're escalating in our market.

When just, some just said their -- property escalated 700,000 over the ask.

So, your point, Michael, about you'd better not be coming in looking at properties at your top, because it'll never happen -- in this market.

>> Yeah.

You know, I've told all my clients, you need to be 100 to 2,000, hundred lower than what you're looking.

So, I think it's been pretty smooth, and one thing I was going to say, Tom, when you were talking about -- King County market time five days, there's a reason it's five days -- because people are putting an offer review date, otherwise it would be zero or one day gone.

So -- >> Michael, how's the system working down in South Sound in Pierce County with those other players that have to be involved in a deal?

I feel like it's working pretty well, and that all of the -- >> -- machine that supports the process has -- responded very well.

There's a lot of -- -- for example, most -- escrow companies you can do a mobile deposit now, you don't have to go in, it's a no touch deal there.

And -- title companies, escrow companies -- appraisals -- once in a while you hear about something that's slow or late -- maybe on a government loan, but -- I think it's responded well, and things are flowing smoothly.

>> Mm-hmm.

>> Rober, I'm -- going to ask you to put your swami hat out, and, on, and get your crystal ball out.

Where do you think we are with -- interest rates?

Right now -- everything's hunky-dory -- we're putting a lot of stimulus into the industry, we've got -- SPACs out there, and non-fungible tokens.

I see some toppy, kind of bubbly, bubbilicious things going on with inflation, which could get the Fed active, but the Fed says, "Nope, we're good to go for a while."

So, what is your take on that?

What do -- what are the people in your industry saying?

>> So, let me first of all say -- this, like you said earlier, this is either my seventh or eighth show, so eight years in a row.

In the eight years in a row, in this state we've talked the same thing -- lack of inventory, great interest rates, and appreciation.

So, I feel very blessed -- to be in this industry and be in this state regardless of COVID -- anything, our market rallies -- and that is awesome.

With that said -- what is different this year?

Well -- if I looked at interest rates this morning, 2.875% on a 30 year fix, on a conventional loan, around 3 on a jumbo loan -- is insane.

Thirty years in my -- thirty years plus in my -- life span in the mortgage industry, that gives affordability to most home buyers.

Now, what is the future?

That's always the big question.

If you look at Fannie Mae, Freddie Mac, and the MBA it's showing trickling upwards -- but the fed, I think is going to stick by that consumer.

[ Music ] >> Listen, these kinds of price increases just can't continue forever.

But we are on our way to becoming the next San Francisco Bay Area -- especially as people with means flee California.

The bottom line -- there are still affordable options in the suburbs -- and there's nothing wrong with that.

There's no law that states everybody gets to live in a region's urban core -- and it's that fact that will help spark upzoning, which in turn is necessary for mass transit, and finally for the development of urban job sectors -- all things Western Washington has been behind on for decades.

I hope this program got you thinking and talking, as always, to watch this program again or to share it with others, Northwest Now can be found on the web at kbtc.org and be sure to follow us on Twitter @NorthwestNow.

Thanks for taking a closer look on this edition of Northwest Now, until next time, I'm Tom Layson, thanks for watching.

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