The Dish: Bizzarro Italian Cafe

A Seattle favorite since it opened in 1986, Bizzarro Italian Café is a buzzing and decidedly dressed-down trattoria with 5-star food. In this charming side street restaurant, tiny tables of couples and friends linger in mismatched vintage chairs with eclectic paintings on the deep crimson walls. Shabby chic chandeliers and furniture hanging from the ceiling, fresh flowers and huge garage doors that open to patio dining, contribute to the hip-yet-cozy interior that exudes casual warmth.

The menu is diverse without being huge and the house wine goes down easy like Sunday morning. If you are a seafood lover, do yourself a favor and get the clam linguini. It is so good you’ll want to lick the bowl!

Smith Tower: Seattle’s Original Skyscraper

After nearly two years of renovations the newly branded Smith Tower Observatory has reopened and now the view comes with cocktails.

Then and now: Smith Tower 1929 and 2016

On August 25 a new “speak-easy” will open at the top of the Smith Tower. Formerly known as the Chinese Room, the 35th floor observation deck has been renamed “the Smith Tower Observatory,” and within it is the Smith Tower Temperance cafe and bar.

The new 35th-floor bar is inspired by the Prohibition era as a nod to the origins of the building, which opened 102 years ago in Pioneer Square as Seattle’s first skyscraper and the fourth tallest building in the world. Light bites inspired by the Roaring Twenties and the tower’s Asian influence include banh mi sandwiches, Chinese dumplings, a raw oyster bar, and craft cocktails.

To get to the observation deck and bar, you have two options: Pay for a 40-minute, self-guided “Legends of Smith Tower” tour or simply pay for a “Straight Up” ticket for an elevator ride to the 35th floor.

It’s lovely to see such a grand Seattle landmark be restored and reinvented as a fun destination stop but make sure you get there early – the observatory and bar closes each day at 6pm.

Historically low inventory levels, how we got here, and what to expect in the coming year

The housing market is performing remarkably well, with the exception of incredibly low inventory levels in many areas throughout the country. Why is this happening? Windermere’s Chief Economist, Matthew Gardner, explains why and offers his predictions for what we can expect in the future.

Local Market Update – May 2016

The supply of homes for sale in April was up over March, indicating that more sellers are deciding to list their homes. But with less than a month of inventory available in the area, it’s still a seller’s market. While prices were up over last year, the increases aren’t as lofty as they were in the first quarter of this year. Buyers looking for affordable housing continue to push their search outside the more expensive urban cores.

King County

 

After breaking records for home prices in February and March, King County reached a new record-high in April. The median price of a single-family home was $540,000, a 12 percent increase over the same time last year. The more affordable areas in the south and north ends of the county saw the greatest increases, with home prices climbing almost 20 percent in these outlying areas.

Seattle

 

Seattle continues to have the tightest inventory of homes in King County. An influx of young, well-paid technology workers has fueled demand for homes close to the city. The median price of a single-family home increased 15 percent over a year ago to $637,250. But like the Eastside, that number was down slightly from February and March.

Eastside

 

At $730,000, the median price of a home on the Eastside was up 11 percent over last year. That figure was down slightly from February and March, suggesting that prices may be moderating. Competition for homes has not moderated. Brokers continue to report homes on the Eastside selling very quickly and often for over asking price.

Western Washington Gardner Report Q1 2016

ECONOMIC OVERVIEW

Washington State has seen very robust growth over the past 12 months with the addition of 102,600 new jobs, which is 224,000 more jobs than seen at the previous peak in 2008. With this robust growth, it is unsurprising to see the unemployment rate trend down to 5.8%—well below the long-term average of 6.4%. As pleasing as it is to see the unemployment rate drop, it is equally pleasing to see that the decrease comes in concert with growth in the civilian labor force, which continues to grow at a very solid pace. I continue to believe that there is no risk that we will see a statewide decline in the employment picture in 2016.

HOME SALES ACTIVITY

• There were 13,841 home sales during the first quarter of 2016, up by 3.8% from the same period in 2015. Sales activity continues to slow as a function of inventory constraints. Any spring “bounce” in listings has, thus far, failed to materialize.
• The growth in sales was most pronounced in Grays Harbor County, which increased by 35% (but represented a real increase of just 63 units). Robust increases were also seen in Kittitas, Mason, Pierce, Snohomish and Island Counties. Sales declines were seen in San Juan, Jefferson, Cowlitz and King Counties.
• Overall listing activity was down by 30.1% compared to the first quarter of 2015, and this continues to put upward pressure on home prices (discussed below).
• Economic vitality in the region, combined with interest rates that continue to retest historic lows, is driving buyer demand that simply cannot be met. I hope that we will see more inventory come online as we move through the year, but believe that any reasonable growth in inventory will still be insufficient for the demand in the market.

HOME PRICES

• Given the demand factors mentioned above, I am not surprised that prices are up by an average of 10.1% year-over-year. This is up from the 9.3% average growth in prices that was reported in the fourth quarter 2015 report.
• When compared to the first quarter of 2015, price growth was most pronounced in Jefferson County, and all but three counties saw prices increase by double digits from the previous year.
• Interestingly, there were eight counties that actually saw a drop in average sale prices between the last quarter of 2015 and the first quarter of 2016. I believe this was caused by seasonal factors, but will keep an eye on it.
• Very straightforward supply and demand factors are pushing prices higher. While this certainly favors sellers, I believe that there are some buyers who are starting to suffer from “buyers’ fatigue”. Rampant growth in inventory would sort this out but it is unlikely to occur this year.

DAYS ON MARKET

• The average number of days it took to sell a home dropped by sixteen days when compared to the first quarter of 2015.
• As was seen in the Q4 2015 report, there were just two markets where the length of time it took to sell a home did rise, but again the increases were minimal. Skagit County saw an increase of three days while San Juan County rose by nine days.
• It took an average of 86 days to sell a home in the first quarter of this year—up from the 78 days it took to sell a home in the last quarter but this is simply due to seasonality.
• Sales activity remains most brisk in the Central Puget Sound counties. Given their proximity to the major job centers, this is not a surprise.

CONCLUSIONS

This speedometer reflects the state of the region’s housing market using housing inventory, price gains, sales velocities, interest rates, and larger economics factors. For the first quarter of 2016, I have moved the needle slightly more in favor of sellers. Inventory constraints persist and this is now starting to affect sales activity, with growth in pending as well as closed sales starting to trend down. However, price growth remains well above average and interest rates are still close to historic lows.

ABOUT MATTHEW

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 over 25 years of professional experience both in the U.S. and U.K.

Local Market Update January 2016

Record low inventory has placed the area in an extreme seller’s market. 70 percent of homes sell in the first 30 days. With 30 percent less inventory than a year ago, multiple offers are all but guaranteed. If you’re selling, you can name your terms. For those looking to buy, it’s critical to work with a broker to arrange for financing, and create a strategy for escalation clauses and back-up offers.

King County

Click image to view full report.

Strong population growth fueled by the area’s healthy job market continues to starve the region’s already limited inventory of homes. Depleted inventory resulted in sales that were down nearly 15 percent compared to last January. Not surprising, since inventory was down more than 31 percent. Limited supply pushed single family home prices up 11 percent over a year ago to $490,970. Those shopping for a relative bargain searched outside the city core. The median home price in Southwest King County was $304,103. The median price in Southeast King County was $350,000.

Seattle

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After hitting all-time highs in the past few months, home prices here reached a new peak. The median sale price of a single family home in Seattle rose to $618,450 in January, a whopping 20 percent increase over a year ago. Inventory is razor thin. The Ballard neighborhood has just 20 homes currently for sale. Sellers are solidly in the driver’s seat, and have the luxury of choosing from multiple offers and being able to drive terms to their advantage, whether it’s closing time, amount of earnest money, or other concessions.

Eastside

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The supply of homes on the Eastside has reached a critical point with just one month of available inventory. To put that in perspective, there are currently fewer than 100 single family homes on the market in the City of Bellevue. And 80 percent of those listings are priced above the Eastside median sale price of $697,500. With the median price of a single family home sold in January up 12 percent over a year ago, sellers can count on making excellent gains if they decide to list their home.

Posted January 11 2016, 1:01 PM PST by Matthew Gardner, Chief Economist, Windermere Real Estate

The National Economic Forecast

1.The U.S. will continue to expand with real GDP growth of 2.3% in 2016.

Although a positive number, the forecasted rate of growth suggests that we will be modestly underperforming in 2016.  On a positive note, oil prices are likely to remain well below long-term averages, which puts more money into consumers’ pockets in terms of disposable incomes.  However, I believe that consumers are likely to continue to save rather than spend which will constrain growth.  That said, there is certainly no recession on the horizon – at least not yet – and a strong dollar will act as a bit of an anchor.

2.Employment will continue to expand but the rate of growth will slow. Look for an increase of 1.6% in 2016.

We are rapidly approaching full employment (generally considered to be when the unemployment rate drops below 5 percent).  As such, growth in employment has to be driven more by population growth rather than a return to employment. 2015 saw an average of around 210,000 jobs created per month and I believe that this is likely to slow to an average monthly gain of 190,000 new jobs.

3.The U.S. unemployment rate will continue to drop and end 2016 at 4.8%.

As mentioned above, we are heading toward full employment and, as such, the national unemployment rate cannot trend much lower.  That said, the less acknowledged U-6 rate (which includes those working part-time and those marginally attached to the workforce) will remain elevated at around 8%, signifying that there is still some slack in the economy and room for the rate to drop a little further.

4.Inflation will remain in check with the Consumer Price Index at 1.9%.

The Federal Reserve has begun the long-awaited tightening of monetary policy and we will likely see the Fed Funds Rate continue to move higher over the next two years. Inflation has yet to respond to the low unemployment rate, but it will.   

The core rate of inflation should remain in check and the overall rate could stay below long-term averages as a function of stubbornly low energy costs. Should we see a shift in OPEC’s position relative to oil supply, the overall rate of inflation could rise more rapidly.  Oil prices, therefore, will remain in focus during 2016.

The National Housing Market Forecast

5.Mortgage rates will rise, but we will still end 2016 with the average 30-year fixed rate below 5%.

I am taking the Fed at its word when it says that monetary tightening in 2016 will be gradual and heavily data dependent. Accordingly, I expect only a modest uptick in long-term rates in 2016. Furthermore, as long as the Federal Reserve continues to reinvest the dividends that it is receiving from their bond holdings – which is highly likely – the yield on the key 10-year treasury will remain low and hold mortgage rates in check. This is only likely to change after the general election, therefore suggesting that rates will remain very attractive relative to their long-term averages.

6.Credit Quality – which had been remarkably stringent – will relax a little.

Access to credit, specifically mortgage instruments, has not been easy for many would-be homebuyers but that is set to change.  I believe that we will see some improvement, specifically for borrowers with “near-prime” credit. This will be of some assistance to first-time buyers; however, credit quality will still be higher than it needs to be.

7.Existing home sales will rise modestly to an annual rate of 5.53 million units with existing home prices up by 4.7%.

I anticipate that we will see some improvement in overall transactional velocities in 2016, but unfortunately, demand will still exceed supply. Prices will continue to rise, but at a more constrained pace than seen over the past few years. This will be a function of modestly rising interest rates as well as slightly improving levels of inventory. I anticipate that we will see more listings come online as more households return to positions of positive equity in their homes.

8.New home sales will jump and be one of the biggest stories for 2016.  Look for a 23% increase in sales and prices rising by 3.4%.

I believe that builders will start to build to the entry-level buyer, filling a huge void.  Additionally, I see the total number of new home starts increase quite dramatically in 2016 as banks start to ease lending and builders start to believe that the downward trend in homeownership has come to an end.  This will help to absorb some of the pent-up demand currently in the market.

9.Foreclosures will continue to trend down to “pre-bubble” averages.

Any story regarding foreclosures will be a non-story as the rate will continue to trend down toward historic averages. However, we will see the occasional uptick as banks work their way through their existing inventory of foreclosed homes. Move along.  There’s nothing to see here.

10.The Millennials will start to enter the market.

There are several substantial reasons to expect an increase in Millennial buyers. Firstly, early Millennials are getting older and starting to settle down, and even with modestly higher mortgage rates, rents are likely to continue to trend upward, and this will pull many into homeownership.

Secondly, more favorable mortgage insurance premiums, additional supply from downsizing boomers, and growing confidence in the housing market will lead to palpable growth in demand from this important – and substantial – demographic.

To conclude, it appears to me that 2016 will be a year of few surprises – at least until the general election! Because it is an election year, I do not expect to see any significant governmental moves that would have major impacts on the U.S. economy or the housing market.

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 over 25 years of professional experience both in the U.S. and U.K.