An Incoming Tide Raises All Ships: How the Growth in Homeowner Equity Continues to Stabilize the U.S. Housing Market

Every quarter, the U.S. Federal Reserve releases its report regarding the Financial Accounts of the United States. Although this is a very lengthy and detailed analysis, it does contain some interesting statistics on housing. The particular “nuggets” that I look for relate to the total value of residential real estate, mortgage debt and, rather importantly, details regarding homeowner equity.

The chart below shows all of these datasets going back to 2000, and the results are rather fascinating. In regards to total real estate values, you can clearly see the pre-bubble run-up and subsequent burst that followed. From its peak figure of $22.5 trillion at the end of 2006, home values lost an enormous $6.4 trillion in value by mid-2011.


Housing Value, Equity & Debt


However, what is even more interesting is that by the end of 2015, home values had regained almost all of the value they lost in previous years, and now stand at $22.03 trillion.

A price recovery is clearly in place.

But this is not the end of the story. As much as I like to see housing values grow, if this growth is simply led by leverage (borrowing), then it is a house of cards. However, I am happy to report that this is definitely not the case here.

While home values have grown quite quickly over the past four years, we have added very little to our debt load. As the chart above shows, mortgages peaked in 2008 at around $10.7 trillion, but have since tapered to $9.49 trillion, and remain well below their historic peak.

So what does all this mean?

It means that with home prices rising and consumers not taking on additional mortgage debt, equity levels have grown substantially. The country went through a very painful period of negative equity during the housing recession, but the growth started returning in 2012, and we moved back into a period of positive equity again by the summer of 2013. In 2015, equity levels increased by an impressive 10.2 percent to $1.17 trillion. Total owner equity now stands at $12.54 trillion and is closing in on the all-time high seen in 2006.

With the appreciable gain in home owner equity levels, we have seen a rapid drop in the number of “underwater” homes, as well as an increase in so-called “equity-rich” homes (those with a loan to value ratio of less than 50 percent).

Core Logic suggests that the percentage of underwater homes has dropped to 8.5 percent at the end of 2015 – down from 25.9% in early 2010 – and according to RealtyTrac, the percentage of “equity-rich” homes has now risen to 22.5 percent. This data should ease people’s concerns regarding the formation of a housing bubble – at least a national one. Growing equity levels will certainly act as a cushion against unforeseeable drops in home values.

If this data does show one potential issue, it is that we will likely start to see more “move-up buyers” enter the housing market as they tap into regained equity and look to upsize. On the down side, this could put more buyers into an already crowded marketplace, but it may also result in a new supply of homes for sale – something that is much-needed in markets all across the U.S.

New Home Construction Trends to Watch Out For

Earlier this week, at the Windermere Builder Solutions Breakfast, more than 100 Windermere brokers came together to listen to Windermere President OB Jacobi lead a panel discussion on new home construction trends in the greater Seattle area. The panelists included Mike Owen, General Manager: Macadam Floor & Design; Belinda Leppa, Sr. Designer: Macadam Floor & Design; Curtis Gelotte, Sr. Principal: Gelotte Hommas Architecture; and Eric Drivdahl, Principal: Gelotte Hommas Architecture.





Macadam Floor and Design is a new builder design center located in Kirkland and they always give us the down low on the latest trends. So, what’s in?

  • Bringing the outdoors inside. Do this with larger glass windows or folding glass doors.
  • Minerals as hardware.
  • Large geometric tiles on floors.
  • Mixing metals, such as brass and gold.

Interior paint color – Grey still has a heavy influence, but it is warming up a bit and getting softened with a stone color. Of course, the Pantone colors of the year are playing a big part with light blues and soft pinks.

Wallpaper – Always a great place to get a little crazy. Textural, geometric patterns are so in.

Carpet – 2016 is about modernizing the traditional themes. People are doing geometric shapes and soft grays. However, hardwood floors continue to be on trend. It’s not uncommon for someone to do hardwood floors throughout the whole home, others are even putting wood on the walls. Fun fact: When the economy is good, floor color tends to lighten up, and when economy is bad, floors tend to darken.

Tile– Geometry, 3D textures, and extra extra extra-large tiles. Marble counter tops are still big and concrete is becoming more common in custom homes.

Cabinets – Many are painting them white with muted tones or contrasting wood tones. Mix and match. Get venturesome, but not reckless.

Lighting – Gold has come back in (don’t worry, not the gold of the 80’s). These are different from the pendants of last year; they’re brass and gold statement pieces. Remember: lighting is the jewelry of the home.



Plumbing – Plumbing is functional art. Brass, soft gold, and black (faucet) statement pieces are where it’s at.

We also learned that home owners are going bonkers for statement dining rooms. They love having a bold, fun place to entertain their guests. These are tying into a theme, which is: Nature luxe. Like we said earlier, it’s all about bringing the outside in. Yes, we’re seeing a lot of brave ideas and statement pieces going on, but it’s important to be subtle and do it in a tasteful way.



Gelotte Hommas Architecture kept the trend going with outdoor living. Seattleites think our climate is not the greatest for outdoor spaces, but according to Gelotte, with our mild winters and not-too-hot summers, we actually have the ideal climate for outdoor living… who knew! The most important thing to know about outdoor living is that it needs to flow from the inside to the outside. The space doesn’t need to be huge; a good rule of thumb is having your outdoor space roughly the size of your kitchen.

What’s being built? Modern, contemporary homes are still very much in demand. However, contextualizing a home into a neighborhood is really important so it doesn’t stand out too much. It’s about appropriate scale and size.

Multi-gen living is on the rise. Homes are being built to accommodate extended family which usually involves having an in-law suite. Also, bonus rooms are being made into living spaces.

When it comes to thinking green, most custom home clients are concerned with energy consumption, so they opt to get solar panels or geothermal heating.

That’s a wrap for the latest trends! How are you going to incorporate them in your home?


This article originally appeared on  


Western Washington Real Estate Market Update



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.



  • 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.



  • 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.



  • 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.



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. 


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. 

Windermere Foundation Quarterly Report


Dear friends of the Foundation,

Thanks to you and the wonderful support that the Windermere Foundation has received so far this year, we have disbursed nearly $470,000 to non-profit organizations dedicated to providing services to low-income and homeless families throughout the Western U.S. Our amazing agents, brokers, staff and owners, along with public supporters, continue to contribute generously to the Foundation, making disbursements possible to organizations like Friends of the Children - Portland.

Friends of the Children provide Portland’s most vulnerable children with intensive and long-term mentors. Mentors are full-time, paid professionals that take a preventive, early intervention approach that breaks the cycle of poverty and abuse by helping children in need overcome the many obstacles in their lives. This year, Friends of the Children received a $100,000 grant from the Windermere Foundation, allowing their mentors to help many more children—children like Monty*.

Monty’s caseworker was concerned that his needs weren’t getting fully met at his current foster care home. She told his mentor, Carter*, that she would most likely be moving him to a new place before the end of the summer. For the last two years, Monty had been living with his grandmother who tends to be overprotective and had been reluctant to let him do after school and extracurricular activities. This limited his positive social development. Monty is very introverted, awkward and anxious, misses social cues, and intentionally avoids interacting with other youth. These are all things that Carter noticed right away while observing him in his kindergarten classroom during the foster care selection process.

Monty’s grandmother shared early on with Carter that Monty loved McDonalds and to go on the play structures. Carter used this as a place to build his relationship with Monty and help him grow socially. So a deal was struck—every time Monty came back with a kid’s name, he would get more time to play. After a number of these visits, Monty was learning more about the kids he had met, like the school they attended, how many siblings they had, and their favorite sport. 

They were making progress. So when Carter heard of the caseworker’s plan, he was troubled. He’d already established a rapport with Monty’s grandmother and felt that this was where his mentorship could really make an impact. He knew that it was imperative to get Monty involved in youth activities during the summer in order to keep him in a more permanent place.

After further discussions with Monty’s grandmother, she granted permission for him to attend the Tyron Creek Camp. The caseworker couldn’t believe it and remarked, “She said yes to that?” She had tried before to get Monty’s grandmother to enroll him in a camp for the summer, but had been unsuccessful. 

Monty attended camp, had a great time, and did really well. It was a period of growth for both Monty and his grandmother. Carter is now working with her to sign Monty up for the SUN after-school program and other extracurricular activities, like the Children’s Gym. Best of all, the caseworker no longer has plans to move Monty; he continues to stay at his home with his grandmother.

It is stories like this that make us thankful for your continued support of the Windermere Foundation. It’s also why we capped off the first quarter with a Windermere Week of Gratitude to celebrate Windermere owners, agents, and Foundation Representatives, who together helped make all this giving possible. The highlight of the week was the debut of the new Windermere Foundation video, which illustrates how donations from Windermere owners and agents are making a difference in the lives of low-income and homeless children and their families.



Thank you to everyone who supports the Windermere Foundation. Because of you, kids like Monty have the care they need to thrive. If you’d like to help support programs in your community, please click on the Donate button.

To learn more about the Windermere Foundation, visit


*Names have been changed for this story.

#YourStoryIsOurStory: How Windermere Cup Changed Jenni Hogan’s Life

Since 1987, Windermere Real Estate has partnered with the University of Washington to put on a one-of-a-kind rowing event called the Windermere Cup. For the last thirty years, Windermere and UW have brought some of the best rowers from around the world to Seattle to compete in this premier sporting event, and in the process, changed the course of some of the athlete’s lives. 

Australian native, Jenni Hogan, is one of those athletes. 

In 1997, Jenni was eighteen and selected to row for Australia’s Olympic Crew Team. She was competing in pairs at the time, but at the start of the Australian National Championship, her partner’s knee gave out, dashing her hopes of a chance at the Olympics. 

But tragedy turned into opportunity when Jenni was asked to row with the Australian National Team at the 1997 Windermere Cup. She came to the University of Washington prepared to row, but the course of her life was changed forever. 

During her visit, Jenni was offered – and accepted – a scholarship to the University of Washington, and went on to row in four more Windermere Cups as a UW Husky. But her story doesn’t end there. Jenni’s choice to stay in Seattle led to her meeting her husband, a successful media career, and eventually a growing family. 

Jenni credits the Windermere Cup with changing the entire trajectory of her life. It also taught her that when one door closes, another one opens, and it could be even better than you planned. 

“That one phone call to come to the Windermere Cup changed my life. What I thought was the worst moment of my life turned into something that has made my life so great.” –Jenni Hogan 


Throughout the year we will be posting some of our favorite #YourStoryIsOurStory videos, photos, and blog posts. Please take a minute to share your experiences, and follow #YourStoryIsOurStory on our blogFacebookTwitterInstagramYouTube, and Pinterest pages.


What’s the Deal with Condos?

A question that I am being asked regularly these days is, “Why isn’t anyone building condominiums anymore?

Given the egregious lack of homes for sale – and considering that single family home builders have not done their part to satisfy substantial pent-up demand – one would expect to see developers raising condominium towers at a frenetic pace, but that is simply not happening.

Firstly, a bit of background on this: the Seattle real estate market saw a rapid rise in the development of condominiums starting in the late 1990’s and continuing through to the housing bubble burst of 2008. When the post-recession dust finally settled, what condominiums were left were either converted into apartments or returned to the lenders, who subsequently disposed of them via auction or at very favorable prices.

As the housing market recovered, shell-shocked developers remained wary of condominiums. However, even if there were any developers who had an appetite to build more towers, they were essentially blocked by banks who still perceived condo developments as an extremely risky land use.

Given this situation, it wasn’t surprising to see developers rapidly turn their attention to the apartment market. They were aware that demand had taken off and that banks were willing to lend on that product type. Paralleling the substantial demand from the rental market, the institutional investment community had started to snap up a large number of projects, but their appetite was not being satisfied.

So, with this veritable alignment of planets, many traditional condominium developers turned their attention to the development of rental projects. There was financing available, substantial demand, limited risk, and the potential for an earlier payout (if the developer sold to an institution).

This then became the path that many developers chose.

But these are not the only reasons why many developers stopped building condominiums; there were, and still are, additional hurdles that continue to hold them back.

Firstly, costs across the board continue to increase. Land values in downtown Seattle re-broke the $1,000 per-square-foot mark – a number not seen since well before the recession started.

Additionally, almost all of the area’s contractors are busy building apartments (or office space), which has put additional upward pressure on labor costs. On top of this, material costs continue to escalate due to high demand from other development types.

Because of these factors, the prices for new condominiums have to be at a substantial premium, and developers were/are uncertain if the market can support these high price points.

There is also one last hurdle that is stopping developers in their tracks – the remarkably onerous construction defect laws that exist in our state. Current laws allow homeowners' associations to file large group lawsuits for construction problems associated with new condominiums. Because of this factor alone, a vast majority of developers are not building condominiums for fear of exposure to litigation.

The law in Washington states that a new owner, or association, can sue a developer within four years after the sale of the first unit if the defect relates to a common element, or four years after the sale of the unit if an individual unit is the subject of a suit.

Essentially, this means that the developer may be on the hook for a period greater than four years and it could stretch out as far as seven years.

There are very robust consumer protection provisions included in the WCA that would support the Association’s ability to bring and prevail on construction defect claims and, because of this, several states including Washington, are looking to make changes to the current construction defect laws but, until that happens, the insurance premiums that developers must pay, combined with the almost certainty that they will be sued regardless of the quality of their construction, is further stifling the development of many condominium projects.

The Greater-Seattle region continues to grow its population base but not its land base. As such, density needs to be embraced. Condominiums play an important part of the equation, but until this segment of the market regains its footing, there will be further pressure on housing of all types to accommodate the region’s growth, and this will continue to put upward pressure on prices.


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.

8 DIY Fire Pits to Get Your Yard Ready for Summer

This article originally appeared on

Written by Jacqui Adams 


It might not be exactly tropical in your neighborhood yet. But for many of us, it’s finally warm enough to start daydreaming about summer. And that means thinking about getting the yard ready for cookouts, ball games, and gatherings under the stars.

If you’re thinking about the changing seasons, think about making your own fire pit. This popular backyard feature is surprisingly easy to construct, and will bring your outdoor living to the next level. Make a quick trip to the hardware store, grab the kids to help out, and you can have one of these gorgeous backyard features by this weekend!

1. Stone-Topped Fire Pit

DIY Network - firepit

DIY Network


2. Upcycled Lantern Fire Pit

House & Fig - diy fire pit

House & Fig

3. Concrete Bowl Fire Pit

ManMade DIY - fire pits

ManMade DIY

4. In-Ground Organic Fire Pit

Laura Catherine - firepit

Laura Catherine

5. Glass and Metal Mini Fire Pit

The Art of Doing Stuff - DIY mini fire pit

The Art of Doing Stuff

6. Raised Brick Paver Fire Pit

Bridgman - firepit


7. Mini No-Wood Fire Bowl

ehow - firepit


8. Fire Pit Patio (With Bench!)

Instructables - firepit and bench


Are you thinking of adding a fire pit to your yard this year? Is it warm enough in your town yet to even think about spending the evening making s’mores? is the free home network that connects homeowners and renters with the right home service professionals.

How to Find the Right Real Estate Agent for You!

If you are buying or selling your home, you will want to find a real estate agent that you like and trust. Windermere agents, Marguerite Giguere and Anne Jones have some great tips on how to find a real estate agent, make sure they will fit your needs and set expectations.


Perspectives: 2016 Forecast

This is an election year. Economists tell us that nothing out of the ordinary typically happens to the U.S. economy in an election year – even in one as crazy as this one is turning out to be. That being said, it doesn’t mean the economy will stop growing or that the housing market will come to a standstill. In fact, according to Windermere’s Chief Economist, Matthew Gardner, employment is anticipated to grow by 1.6 percent in 2016 and unemployment should remain below five percent. This is what is referred to as “full employment”, which means that most people who want a job have one. That’s good news.

Things are also looking good for the housing market in the year ahead. Barring any unforeseeable events, U.S. home sales will continue to rise modestly in 2016. A number of West Coast cities have very strong economies that are poised to just keep growing, so home sales should grow right alongside them. The same is true for U.S. home prices, which will continue to appreciate in 2016, although not at the same pace that we saw in 2015. We’re predicting a more modest 5.5 percent increase, down from 6.8 last year.

Supply and demand continue to be way out of balance in cities throughout the western U.S. We’re optimistic that an increase in homeowner equity and downsizing baby boomers will lead to a modest rise in inventory; this should help address the substantial demand, although not as much as we might hope – or need.

Last, but not least, interest rates. Again, we look to our Chief Economist for insights and he tells us we should see rates gradually rise to about 4.3 percent by the end of the year. So, yes, it’s an increase, but not enough to have a significant impact on home sales.

So there you have it – our forecast for the 2016 housing market and economy. We’re both optimistic and excited to see where the year takes us. 

Celebrating the Windermere Foundation with a Week of Gratitude!

We’re pretty excited at Windermere. Why, you ask? Because our agents recently helped us reach a major milestone. Thanks to their generosity we’ve raised more than $30 million for the Windermere Foundation which supports low-income and homeless families. These donations fund critical services and basic needs, such as foodbanks, homeless shelters, and youth programs.

This is all possible because every time one of our agents helps a client buy or sell a home, a portion of their commission goes to the Windermere Foundation. Starting today, we are celebrating their generosity with the “Windermere Week of Gratitude”. Over the next five days we will share stories about the Windermere Foundation and the types of services we support. You can follow these stories on Facebook, Twitter & Instagram. Kicking it all off is this video which highlights how the Windermere Foundation is helping to make a positive difference in the lives of our neighbors in need.

If you’ve ever worked with a Windermere agent, then you too are a part of the Windermere Foundation, and you too helped us reach this milestone. So on behalf of everyone at Windermere, thank you!