Snohomish County Commercial Real Estate Market Update – June 2025

The Snohomish County commercial real estate market is showing signs of stabilization and selective growth as we head into the second half of 2025. While national trends are still facing headwinds, Snohomish County remains resilient across several sectors.

Office Market

The office sector continues its gradual adjustment. As of the end of Q1 2025, the vacancy rate stood at 13.2%. While this reflects a modest increase from prior years, there has been steady leasing activity, particularly in suburban locations offering flexible layouts. Average asking rents have remained stable, though concessions and tenant improvement allowances are playing a larger role in negotiations.

Industrial Market

Snohomish County remains a bright spot in the regional industrial sector. The current vacancy rate is 7.2%, up slightly but still historically low for this market. New developments are underway, focusing primarily on logistics and distribution centers driven by sustained e-commerce demand. Investor interest remains strong, particularly for well-located assets with stable long-term leases.

Retail Market

Retail continues its slow transformation. Centers are focusing on blending traditional retail with food, services, and experiential offerings to attract foot traffic. Alderwood Mall remains the county’s flagship redevelopment story, as it evolves into a mixed-use, lifestyle destination. Retailers are heavily emphasizing omnichannel strategies to align with changing consumer behavior.

Multifamily Housing

The multifamily sector remains healthy with strong occupancy levels. Snohomish County continues to see demand for rental housing across price points, supported by consistent population growth. Several new apartment developments are in the pipeline, designed to meet both workforce and luxury rental demand. Investment activity remains steady, with investors seeking stable returns in this supply-constrained market.

Infrastructure and Transportation

The Lynnwood Link light rail extension, which opened in August 2024, has already started to reshape transit-oriented development opportunities throughout southern Snohomish County. Mixed-use projects near light rail stations are attracting new attention from both developers and investors, who are targeting the region’s long-term growth.

Summary

While the market is not without its challenges—particularly in office space—Snohomish County commercial real estate remains on solid footing across industrial, multifamily, and key retail locations. Investors, landlords, and tenants who are prepared to navigate this evolving environment can still find meaningful opportunities in the months ahead.

BOTTOM LINE TAKE: While anyone that reads this blog knows that I'm generally pessimistic about residential and a lot of commercial real estate, I think Snohomish has as strong as prospects as any. The zoning changes are a huge deal, and I believe Everett and Snohomish are ripe for a strong decade or two. I often say that a single strong Tech company making Everett a HQ or large satellite office will ignite the timbers of a historically under served and under-utilized area. With the airport, Everett Port and zoning that seems unfathomable given the current city scape, I think Snohomish County will withstand any headwinds we face better than most. 

For information on our Snohomish County Investment Fund, or Snohomish County Commercial Real Estate investing, you can reach me directly below. Email or text preferred and we can set a time to discuss your needs. 

Scott Weitz

Scott@WeitzCommercial.com

T: 206.306.4034. 

More office space being 'demo' than created.

CNBC Office Update: 

 

The basics: 

CNBC indicates that 23.3 is slated for demolition or conversion to other uses while only 12.7 M SF of office space is projected to be completed. 

Office vacancies currently at a record high of about 19%. 

Markets starting to recover with 'back to work orders'. 

Weitz - This is such a tough one. Classic example of how to turn bad news (offices are so worthless that they are being converted) into a 'good news' supply/ demand argument. At the end of the day, the best spaces will be taken and utilize. I love areas that are not within the large cities as those on the outskirts no long desire the commute to head into the big city. I think the B-C level office spaces (especially in big cities) face significant head winds. While the back to work orders are helpful, the reality is that we have changed the way we work and operate. Communal work spaces are now favored by many and part time office usage makes the 'footprint' businesses need shrink in terms of SF usage. Overall, I'm not sold that this supply/ demand shift will send the market soaring, but I do believe the shared work spaces will make a big comeback. Think a more reasonable 'WeWork' in the suburbs. 

If you are looking at investment opportunities in Snohomish County Commercial Real Estate, feel free to reach out anytime. 

Scott Weitz

Scott@WeitzCommercial.com

t: 206.306.4034. 

U.S. Housing Inventory Surges: New Listings Reach Highest Level in Nearly 3 Years

Here we go...

Recent article from Redfin on increased national residential  listings. See original article HERE.

The Summary. 

The housing market is experiencing a notable shift. According to a new Redfin report published on May 22, 2025, new listings of U.S. homes for sale have climbed 8.4% year over year for the four-week period ending May 18, 2025. This marks the highest number of new listings since mid-2022, signaling growing inventory levels across the country.

Despite the increase in listings, buyer demand remains soft. Pending sales have declined 2.2% year over year, making it the lowest level of pending sales for this time of year going back at least a decade. The mismatch between new supply and buyer activity is pushing total active inventory higher, with total homes for sale now up 14.3% year over year. This is the highest level of active listings in nearly five years.

The increase in listings appears to be driven by a combination of economic and personal factors. Some homeowners are opting to list now due to concerns that home prices may soften in the near future. Others are selling due to life events such as job relocations, downsizing, or changes in family circumstances.

Affordability challenges continue to weigh heavily on buyers. The median monthly mortgage payment has reached an all-time high of $2,882, a result of elevated home prices combined with high mortgage rates. This financial strain has sidelined many would-be buyers, contributing to slower sales activity even as inventory rises.

The market now faces an unusual dynamic: increasing inventory paired with tepid buyer demand. While more listings offer greater choices for buyers, the affordability crunch and economic uncertainty are keeping many on the sidelines for now.

WEITZ - As I've been saying for some time in this blog (See March, 2025 post), INVENTORY will dictate this market. This isn't a huge surprise and I expect inventory to elevate as people start to see weakness in the market and will seek to lock in some long standing "profits". 

For information on Investing in Snohomish County Commercial Real Estate, feel free to reach out anytime.  

Scott Weitz

Weitz Commercial

Scott@Weitzcommercial.com

C: 206.306.4034

Washington House Bill 2049: What It Means for Schools and Local Communities

Washington House Bill 2049: What It Means for Schools and Local Communities

Washington House Bill 2049 (HB 2049), passed during the 2025 legislative session, brings major changes to K–12 education funding across the state. Here's what you need to know about this significant legislation and how it may affect your school district and property taxes.

Purpose of HB 2049

HB 2049 is designed to enhance public school funding while offering additional support to communities with lower property tax bases. It aims to address both equity and inflation in the state's school funding model.

Key Provisions of the Bill

1. Revised Enrichment Levy Limits
   School districts can now levy up to $2.50 per $1,000 of assessed property value for enrichment purposes.

2. Inflation Adjustments
   The bill includes a new “inflation enhancement,” starting with an additional $500 in 2026 and increasing adjustments through 2030.

3. Per-Pupil Funding Tiers
   Per-student funding caps will rise annually, reaching $5,035 per pupil by 2031, with tiers based on district size.

4. Updated Local Effort Assistance (LEA)
   LEA calculations have been modified to provide more support to districts with low property values and tax bases.

5. New K–12 Funding Equity Work Group
   A legislative work group will study funding formula changes and explore equity-based solutions, reporting annually through 2027.

Legislative Journey

• Introduced: March 24, 2025

• Passed House: April 22, 2025 (50–48 vote)

• Passed Senate: April 26, 2025 (28–20 vote)

• Delivered to Governor: April 27, 2025

What Was Removed

Earlier versions of HB 2049 included a property tax cap increase from 1% to 3% for local governments. However, this provision was dropped after facing political and public pushback.

Weitz Take: Enjoy your tax hikes. I think charter schools should be strongly explored. 

Moody's is a rag...public service announcement.

 Moody’s Just Downgraded the U.S. Credit Outlook.

But Let’s Not Forget...

Back in the mid-2000s, Moody’s and other major credit rating agencies gave AAA ratings to mortgage-backed securities that were anything but safe...that were the catalyst of the late 2000s market crash.

If you want to make the argument the US will lose our reserve currency status, that's a relevant conversation, but as of today, the US still has a Federal Reserve system that will 'fund' whatever US Treasuries or debt needed to fund government operations...bottom line, for better or worse, we have a fiat currency and have zero risk of default.

Just a little reminder as the world freaks out about this US Credit downgrade.... don't forget the messenger.

Commercial Real Estate Loan Maturities Create Growing Pressure on Borrowers and Lenders

 

2025 Commercial Real Estate Loan Maturities Create Growing Pressure on Borrowers and Lenders

The commercial real estate market is facing a critical juncture as a significant volume of loans come due in 2025, potentially triggering a wave of financial strain for borrowers holding distressed properties.

According to a February survey by the Mortgage Bankers Association, roughly 20% of the $4.8 trillion in outstanding commercial mortgages—about $957 billion—is scheduled to mature this year. This marks an increase from the $929 billion that matured in 2024. The rise in maturing debt is largely attributed to the numerous short-term extensions granted during the Covid-19 pandemic and the period of rapidly rising interest rates that followed.

Compounding the issue is the growing share of loans that are delinquent or at risk of delinquency. Moody's Ratings reports that its CMBS Conduit/Fusion Delinquency Tracker climbed to 7.87% in March, nearing the pandemic peak of 7.95% seen in June 2020. In March alone, $2.76 billion in loans became delinquent, with office properties representing nearly 29% of that figure, followed by retail at 26.7% and hotel loans at 9.6%.

Borrowers are facing tough negotiations, especially those with legacy loans carrying interest rates of around 3%, now confronting potential refinancing rates closer to 7%. This challenge is compounded by declining property values—particularly in the U.S. office market, where values have dropped by more than 20% in some segments.

Interest rates remain a key variable. Despite three rate cuts by the Federal Reserve in 2024, the Fed has so far held rates steady in 2025. Chairman Jerome Powell recently noted that the Fed is closely watching developments in tariff negotiations with key trading partners. The Mortgage Bankers Association highlighted that many commercial property owners hoping to benefit from lower rates after last year’s Fed cuts were disappointed, as longer-term rates simultaneously rose by an equivalent margin. This has resulted in further loan extensions into 2025. The association forecasts that long-term rates will stay rangebound for now, making the refinancing landscape even more challenging.

"I suspect that this time around, despite the looming maturity wall, lenders will continue to work with borrowers as best they can to slow play through this situation," Krawitz said. "Everyone benefits immensely by not unnecessarily forcing someone’s hand."

WEITZ- This has been an ongoing issue for the last few years and the market keeps 'kicking the can down the road'. None of this surprises us, but the depth and degree of the distress is staggering. As we have said for months (if not years), the intermediate term future of the market will certainly be interesting....especially if we start to see some bank failures/ distress....which frankly we expect. 

If you are interested in joining our newsletter, please email me at Scott@WeitzCommercial.com, or if you are looking to invest or divest in Snohomish County Commercial Real, contact me below. 

Weitz Commercial

Scott Weitz

Scott@WeitzCommercial.com

T: 206.306.4034 (text first please). 

Martin Selig Challenges Seattle

 

Martin Selig Real Estate Faces Unprecedented Financial Challenges in Seattle

Martin Selig Real Estate (MSRE), once a dominant and iconic player in Seattle's commercial property landscape, is currently facing its most significant financial crisis to date. The firm, long recognized for shaping the city's skyline, has defaulted on more than $800 million in loans tied to 18 office buildings.

 This crisis has been driven largely by the steep downturn in the office market, which continues to suffer from persistently high vacancy rates and a post-pandemic shift in office demand.

In April 2025, MSRE made the difficult decision to relinquish ownership of two major properties—400 Westlake, a recently completed, eco-friendly office building, and the historic Federal Reserve Building. Both buildings were handed over to the lender, Acore Capital, following defaults on a $240 million loan. These properties were particularly hard hit, with reported vacancy rates of 94 percent and 82 percent, respectively.

The financial strain has also led to court-ordered receiverships involving seven additional properties, which together account for approximately 1.1 million square feet of office space in Seattle. In conjunction with these developments, the company initiated significant workforce reductions, laying off 86 employees as it attempts to stabilize its operations.

Further compounding its financial woes, MSRE also defaulted on another $135 million in debt secured by a cluster of buildings located near the iconic Space Needle. These latest defaults further underscore the depth of the firm's financial distress as the Seattle office market continues to deteriorate.

These developments are emblematic of the broader struggles facing Seattle's commercial real estate sector. The city’s central business district has seen vacancy rates soar to unprecedented levels, reaching an estimated 30 percent as of early 2025. The ripple effects of this market disruption have placed immense pressure on even the most established landlords.

While Martin Selig Real Estate has weathered past downturns, including the Great Recession, the scale and severity of the current crisis raise serious questions about the company’s future. The firm’s challenges reflect both the seismic shifts in the office leasing market and the broader uncertainty surrounding urban commercial real estate in a post-pandemic world.

Weitz Take: 

If you read this blog, this is no surprise at all. I expect more of this type of pain. Unwinding of real estate debt is simply never a slow process. Sincere thanks to Mr. Selig for all he has done for the Seattle market. It's a sham to see it ending in such a fashion.  Despite what you may know, debt isn't always the best way to grow. 

For more information on Puget Sound Commercial Real Estate, shoot me a call or text today. Info below. 

Weitz Commercial

Scott Weitz, Attorney and President

Scott@Weitzcommercial.com

Washington enacts statewide rent cap on residential rentals

 

Washington Enacts Statewide Rent Cap on Residential Rentals

Washington state has officially implemented a statewide rent control law with the passage of House Bill 1217, signed by Governor Bob Ferguson on May 7, 2025. This landmark legislation introduces rent stabilization measures aimed at providing stronger housing security for tenants across the state.

Below is a summary of the laws. Frankly, while there is a lot of talk on this, I don't think the caps are absurd. 

Under the new law, annual rent increases for most residential properties are capped at the lesser of 7 percent plus inflation or a hard cap of 10 percent. 

Manufactured and mobile home rents are subject to a lower annual cap of 5 percent, with this provision having no expiration date. The statewide rent cap takes effect immediately and is scheduled to remain in place for 15 years.

Additionally, the law prohibits landlords from raising rents during the first 12 months of a new tenancy. 

EXEMPTIONS: 

Certain property types are exempt from the new law, including 

a. newly constructed properties for the first 12 years after completion, 

b. owner-occupied duplexes, triplexes, and fourplexes, as well as 

c. public housing authorities and designated low-income housing developments.

and more importantly, COMMERCIAL REAL ESTATE. 

NEW NOTICE REQUIREMENTS

The law also tightens notice requirements, mandating landlords provide at least 90 days' written notice before any rent increase, an increase from the prior 60-day rule.

TENANT RIGHTS UPON DEFAULT

If a landlord imposes an unlawful rent increase beyond the allowed cap and the property does not qualify for an exemption, tenants have the right to provide notice of the violation. 

They may also terminate the lease with 20 days' written notice without penalty and may pursue legal action, including damages of up to $7,500 per violation recoverable by the Attorney General.

Supporters of the legislation argue that these measures are necessary to prevent excessive rent hikes and protect tenants from housing instability, especially amid ongoing affordability challenges. Critics, however, contend that the rent cap could discourage new housing development and may reduce investment in property maintenance.

Washington now joins Oregon and California as one of only three U.S. states with statewide rent control measures, signaling a growing legislative trend to address housing affordability concerns.

BOTTOM LINE: This will be interesting to see if it effects development. I don't think a 10% max increase is that absurd (especially with all these ADUs coming into play that will increase inventory). 

I'd say there will be some sort term hit on overall demand for multi-family, but in the long term, I don't see this as that big of an issue. If you told LLs now that they could buy a place and increase rents 10% a year, most would be thrilled. 

For more information on Washington Commercial Real Estate Investing, considering contacting a Snohomish County Commercial Real Estate Broker or contact me at information below. 

Scott Weitz

Weitz Commercial

Scott@weitzcommercial.com

Text: 206-306-4034

April 2025 National Commercial Real Estate Market Update

As of April 2025, the U.S. commercial real estate (CRE) market continues to show a mixed performance across property sectors, with some areas stabilizing while others remain under pressure. Our comments within. 

Office Sector: Challenges Continue

The national office vacancy rate climbed to 19.9% in March 2025, up 170 basis points from the previous year. Tech-heavy markets such as San Francisco (28.6%), Seattle (27.5%), and Austin (28.5%) are experiencing heightened vacancies due to sustained remote and hybrid work trends. Distressed sales continue to play a role, with 10.8% of 2024 office transactions involving distressed assets. However, demand for premium office space remains in select cases, such as Deloitte’s recent 800,000-square-foot lease at 70 Hudson Yards in Manhattan.

Weitz - Not surprising at all. I don't see this changing soon. We still have leases turning over that were set before COVID and the 

Industrial Sector: Slowing Momentum

The industrial sector has cooled after a pandemic-driven boom. Net absorption dropped 42% year-over-year to 114 million square feet. Rising supply has driven vacancy rates to 7.0%, while rent growth slowed to 2.0%. Logistics facilities remain the top performer in absorption, but flex spaces are now seeing more vacancies than gains.

Weitz - this is a curious one as every assumed industrial would be the "Belle of the Ball", but I'm not shocked. I see most sectors struggling in the coming years. 

Retail Sector: Stability Holds

Retail remains the most stable commercial property type. General retail vacancy rates remain low at 2.6%, despite a 77% drop in net absorption year-over-year. Rents continue to rise modestly, with a 1.9% increase, while vacancy rates inched up by just 0.1 percentage points.

Weitz- People still need goods and services; this doesn't shock me. 

Multifamily Sector: Signs of Recovery

The multifamily sector showed strong performance, with net absorption rising 46% to nearly 551,000 units. Vacancy rates held steady at 8%, and rent growth was modest at 1.1%, indicating a balanced environment between supply and demand.

Weitz - Love multi-family especially in the outskirts. People need homes, can't afford to buy in many instances, and can work further from work typically. 

Investment Trends: Capital Eyes Distress

Investor interest in distressed assets continues to grow. Brookfield Asset Management raised nearly $6 billion in Q1 2025 to invest in undervalued commercial properties. Meanwhile, the Green Street Commercial Property Price Index dipped slightly by 0.5% in April but is up 4.3% over the past 12 months, showing long-term optimism.

Weitz - Not surprised at all. We are doing the same (on a much smaller scale albeit). 

Conclusion

Overall, April 2025 paints a cautiously optimistic picture. While office markets continue to lag, other sectors—particularly multifamily and retail—show signs of resilience. Investors are increasingly positioning themselves to capitalize on distress, suggesting potential opportunities in the months ahead.

For more help with Snohomish Commercial Real Estate, please feel free to reach out to me below. We can help with purchasing, leasing and/or investment. 

Sincerely, 

Scott Weitz

Scott@WeitzCommercial.com

The Benefits of Investing in an Opportunity Zone – Everett, Washington

The Benefits of Investing in an Opportunity Zone – Everett, Washington

Investing in Opportunity Zones (OZs) offers a compelling path for investors seeking both tax advantages and the ability to contribute to the economic revitalization of underserved communities. In Everett, Washington, designated OZs provide unique opportunities for strategic real estate and business investments.

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What Are Opportunity Zones?

Opportunity Zones are low-income census tracts nominated by state governors and certified by the U.S. Department of the Treasury. Created under the 2017 Tax Cuts and Jobs Act, the program encourages long-term private investments in economically distressed areas by offering federal tax incentives.

Where are they in Everett? Glad you asked...see link below!

Everett Opportunity Zones

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Everett's Opportunity Zones: A Strategic Location

Several areas in Everett have been designated as Opportunity Zones, including parts of Downtown Everett and neighborhoods near Paine Field. These locations are well-suited for:

• Urban revitalization projects

• Workforce and affordable housing

• Mixed-use and commercial real estate

• Startup and small business growth

Everett’s focus on infrastructure investment, economic development, and population growth makes it a strong candidate for OZ investment.

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Top Tax Benefits for Investors

1. Capital Gains Deferral
   Reinvest capital gains into a Qualified Opportunity Fund (QOF) and defer federal taxes until the earlier of:

   • The date you sell the QOF investment

   • December 31, 2026

2. Basis Step-Up for Long-Term Holding

   • Hold for 5 years: receive a 10% exclusion of the deferred gain

   • Hold for 7 years: receive an additional 5% exclusion (15% total)
     (Note: Due to the timing, the 7-year benefit expired after 2019, but the 5-year benefit may still apply.)

3. Tax-Free Gains on QOF Investment

   • If the QOF is held for 10+ years, investors can exclude any additional gains from the QOF from taxation altogether.

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What Types of Projects Work Well in Everett?

• Multi-Family Housing: Take advantage of rising demand and local rezoning efforts.

• Retail & Industrial Redevelopment: Revitalize underused commercial corridors.

• Office to Residential Conversions: Tap into zoning changes and adaptive reuse incentives.

• Local Business Expansion: Partner with or invest in businesses that create local jobs and qualify under OZ guidelines.

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Tips for Investing in Everett’s Opportunity Zones

• Work with a Local Broker: A commercial real estate professional with Everett experience can help identify viable properties and off-market deals.

• Join or Create a Qualified Opportunity Fund (QOF): This is the legal entity through which OZ investments must be made to access tax benefits.

• Consult a Tax Professional: OZ investments have specific rules—proper legal and tax advice is critical.

• Review City Incentives: Everett and Snohomish County may offer additional local grants, permitting fast-tracks, or tax abatements.

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Final Thoughts

Everett’s Opportunity Zones represent a chance to grow your wealth tax-efficiently while making a positive impact on the community. Whether you're looking to build, redevelop, or invest in a business, the combination of strong fundamentals and OZ tax incentives makes Everett a compelling place to invest. I WILL POST A LARGE PICTURE IN MY NEXT POST OF AVAILABLE OPPORTUNITY ZONE LOCATIONS. 

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Disclaimer: This article is for informational purposes only and does not constitute legal, financial, or investment advice. Consult with your CPA, attorney, or investment advisor before acting on any investment opportunity.

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For more information Snohomish County Commercial Real Estate, reach out anytime. 

Scott Weitz

Weitz Commercial

T: 206-306-4034 (please text on initial communication). 

Scott@Weitzcommercial.com 

Snohomish County Q1 Market Update

 

Snohomish County Commercial Real Estate Market Update – Q1 2025

Published by Weitz Commercial | May 2025

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📈 Market Overview

Snohomish County’s commercial real estate (CRE) market continued to navigate a shifting landscape in Q1 2025. Despite challenges like high interest rates and cautious lending, both the multi-family and office sectors remained active, especially in high-demand suburban areas such as Everett, Lynnwood, and Bothell.

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🏘️ Multi-Family Snapshot

• Vacancy Rate: ~4.8%

• Rent Growth: +1.2% quarter-over-quarter

• New Starts: 312 units (↓40% vs. Q1 2024)

• Investor Focus: Value-add Class B/C deals near transit lines

💡 Everett’s waterfront and walkable urban core are drawing increasing institutional interest.

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🏢 Office Sector Update

• Vacancy: 18.6%

• Leasing Activity: Modest rebound, led by medical and professional services

• Conversions: Aging suburban offices are being eyed for residential or mixed-use redevelopment

📍 Bothell and Lynnwood are gaining traction from smaller tenants needing flexibility outside of Seattle.

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💼 Investment & Sales Trends

• Transaction Volume: Low, with selective private and 1031 exchange buyers dominating

• Cap Rates: ~6.1% (multi-family), ~7.3% (office)

• Buyer Sentiment: Conservative but opportunistic, especially near transit expansion areas

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🏗️ Development Drivers

• Lynnwood Link Extension (Sound Transit) is boosting TOD interest

• Zoning changes in Lake Stevens and Everett are enabling denser multi-family development

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🔑 Notable Q1 Transactions

Property	Submarket	Type	Price	Buyer
The Willows Apartments	Everett	Multi-Family	$18.2M	Private Equity
Pacific Office Plaza	Lynnwood	Office	$12.5M	1031 Buyer
Lakeview Medical Complex	Bothell	Medical Office	$7.1M	Owner-User

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📣 Broker Insight – Weitz Commercial

“Snohomish County is increasingly attractive to yield-focused investors. We're seeing strong interest in properties with stable tenancy and redevelopment potential near transit.”

🔮 What’s Ahead in Q2 2025

• Potential Fed rate shift and lending impacts

• More lease restructuring in older office parks

• Watch for state-level rent control discussions

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📞 Let’s Talk

Looking to buy, sell, or reposition a commercial asset in Snohomish County?

Scott@Weitzcommercial.com

T: 206-306-4034

China threats to Housing Market with MBS holdings

 Happy Spring!

With Spring Break and busy workload, I've neglected posting for a while, but nice to be back on a normal schedule and having time to write a bit. 

Every once in a while, I learn things that absolutely blow my mind (for better or worse). A recent article on CNBC certainly got my attention to that end. 

Below is a link to the Article related to Chinese owned mortgage-backed securities and the potential risks they pose to the US Mortgage and housing markets. 

CNBC Article

As usual, I'm provide what I see as the important highlights and give my overall take at the conclusion: 

1) At the end of January, Foreign Countries owned 15% of all Mortgage-Backed Securities in the US according to Ginnie Mae;

2) If China were to sell, it would likely spook the market and send mortgage rates higher; 

3) The Fed Reserve is currently letting the MBS foll off of its portfolio in an effort to shrink its balance sheet. 

Weitz - Call me ignorant, but I had no idea foreign countries owned such a large share of our MBS market. Furthermore, I can't fathom why the fed would be reducing its portfolio with obvious weakness in the market at the moment. This is just more fuel to the fire that i) rates will likely remain high for the indefinite future; 2) this coupled with increasing inventory poses trouble for many areas of the country. 

It sure feels like a house of cards to me at the moment. Time will certainly tell. 

For information related to Snohomish County Commercial Real Estate or Snohomish County Real Estate Investments, feel free to reach out any time. 

Scott Weitz

Scott@WeitzCommercial.com

T: 206-306-4034

108 Union St

Snohomish, WA 98258

FHA delinquencies rise dramatically and inventory increasing across the nation

 

Recent CNBC updates on national housing statistics and delinquency levels. 

First off, we have big news on FHA delinquencies which rose to 11.3% of ALL LOAN ARE IN DEFAULT. To be fair, the total mortgage delinquency rate is 3.98%. That said, the FHA rate in my eyes is clearly a leading indicator and will obviously be a higher number as the down payment requirement is only 3.5%. If/ when  those properties go into foreclosure, that will lead to more distressed sales....more price cuts and the negative cycle continues from there. 

Another video on pending home sales which fell to the LOWEST LEVEL EVER (since they starting tracking the stats at least in 2001.  

That said, inventory levels up 27.38% YOY from last year. It doesn't take a Ivy League economist to see that supply/ demand 101 would indicate that we have some troubles ahead. As I've been saying for months, this market simply doesn't pencil with interest rates at current levels especially if you look at the layoffs we are seeing in various industries. 

NWMLS February Market Stats

 

Below are the recent stats of the NWMLS for February 2025 ...

Active Listings

• The number of homes for sale increased 39.4% year-over-year throughout the NWMLS service area. There were 10,448 active listings on the market at the end of February 2025, with 24 out of 26 counties seeing a double-digit increase compared to February 2024. When compared to the previous month, active inventory increased by 207 listings (+2%), up from 10,241 in January 2025.
• The six counties with the highest increases in active inventory were Kittitas (+76.7%), Snohomish (+65.3%), Grant (+54.2%), King (+52%), Whatcom (+48.2%) and Chelan (+42.7%).

Closed Sales

• There were 4,268 closed sales of residential homes and condominium units in February 2025, an increase of 1.9% when compared to February 2024 (4,189). When compared to the previous month, the number of closed sales increased by 14.5%, up from 3,727 sales in January 2025.
• The total dollar value of closed sales in February 2025 for residential homes was $2,856,599,410 and $463,877,754 for condominiums ($3,320,477,164 in total), an increase of 5% when compared to February 2024.

Median Sales Price

• Overall, the median price for residential homes and condominiums sold in February 2025 was $630,000, an increase of 3.6% when compared to February 2024 ($608,111).
• The three counties with the highest median sale prices were San Juan ($880,000), King ($820,000) and Snohomish ($734,975), and the three counties with the lowest median sale prices were Columbia ($224,000), Pacific $292,500) and Okanogan ($322,500).

New Construction

• NWMLS brokers reported 745 closed sales of new construction units in February 2025. This was a year-over-year decrease of 12.1% when compared to February 2024 (848 units).
• The median sales price for new construction units sold in February 2025 was $773,420, an increase of 5.9% from the February 2024 price of $730,000.

Weitz Take: 

YOY price increase of 3.6% would seemingly be good thing (and unto itself it is), but the real takeaway here for me are the massive inventory hikes..... Supply and Demand 101 would say that we will likely start to see some price drops in the near future. Interest rates are falling but will that be enough to buoy the market?...I question it. As I've said for a long time, INVENTORY is the key as to where we predict the market to go. 

For more information, consider contacting a Snohomish County Commercial Real Estate Broker. 

Scott Weitz

t: 206-306-4034

Scott@weitzcommercial.com

FHA Delinquency Report

Below numbers from FHA.... this is direct cut and paste from the report I read. As I've been saying for months.... buckle up. 

FHA Report on Delinquencies

The FHA’s latest report showed that 30-day mortgage delinquencies rose to 6.0% in November 2024, which is up 2.1% from the beginning of 2022.

Serious delinquencies, or those 90+ days delinquent, have also begun to rise. Within the report consumers shared the reason for not being able to make mortgage payments.

Consumers saying that they cannot make a payment due to being unemployed has risen significantly. The share reporting this back in Q4 2020 was 1.8%, which then rose to 7.7% in Q4 2023, and more recently rose to 12.1% in Q4 2024! That is a huge increase, potentially showing that the labor market may not be as strong as the published figures are showing.

Additionally, those not able to pay because of excessive obligations, or too much debt, has risen from 2.71% in Q4 2020 to 20.1% in Q4 2024.

Another sign that consumers are stretched and overloaded with debt.

Wells Fargo CFO take on CRE

 

A recent article in the Puget Sound Business Journal highlighted the CFO of Wells Fargo. 

Since the article is behind a pay wall, I will outline the highlights/ lowlights and give my take as usual. 

CFO Mike Santomassimo had the following takes on the state of the CRE market: 

"Commercial Real Estate Office fundamentals have not changed and remain weak". 

"We expect CRE office losses to be "lumpy" as we continue to actively work with our clients. We are 18 months into seeing the losses materialize...we have 'quarters' to go. 

Weitz - I'm laughing as I expected this article to be so much more (more terrific journalism these days), but since we've gone this far, I won't waste the quotes as as the premise is still material for our purposes. 

When Bank CFOs are telling listeners on a earnings call where they typically will paint as rosy picture as possible to maintain or boost stock prices, its worth listening. Obviously, all CRE is local and some markets will fair better than others, but this general opinion matches my thoughts in that both owners and lenders and 'kicking the can' and praying for miracle to save them. At some point, they will have to take losses barring a dramatic shift. That could be very, very....very.....ugly. 

As our new President takes office, I commend his pro-business mentality, but I don't see him have the power to turn the ship around for better or worse. 

For more information on Snohomish Commercial Real Estate, follow this blog or shoot me an email. 

Have a great weekend, 

Scott Weitz

Weitz Commercial

www.weitzcommercial.com

t: 206.306.4034

NWMLS Release - 2024 December Stats

 

NWMLS December Release

December 2024 Key Takeaways

Active Listings

• The number of homes for sale increased 25% year-over-year throughout the NWMLS coverage area, with 21 out of 26 counties seeing a double-digit increase compared to December 2023.
• The five counties with the highest increases in active inventory for sale were Snohomish (+46.1%), Douglas (+43.3%), Cowlitz (40.8%), Grant (+39.9%) and Skagit (+38.2%).

Closed Sales

• There were 4,812 closed sales of residential homes and condominium units, an increase of 19.8% when compared to December 2023 (4,018).
• The total dollar value of closed sales in December 2024 for residential homes was $3,284,574,394 and $409,740,278 for condominiums ($3,694,314,671 in total), an increase of 24.8% when compared to December 2023.

 Median Sales Price

• The median price for residential homes and condominiums increased by 4.3% year-over-year from $597,975 in December 2023 to $623,500 in December 2024. Prices decreased month-over-month by 3.33% when compared to November 2024 ($645,000).
• The three counties with the highest median sale prices were San Juan ($849,500), King ($800,000), and Snohomish ($744,995), and the three counties with the lowest median sale prices were Ferry ($125,000), Adams ($292,300) and Pacific ($320,000).

WEITZ - I just posted the national stats and not surprising to see Washington numbers worse. These are NOT good for the market. I'm shocked I'm the only one talking about this right now, but you can't escape reality indefinitely. I will double down on my take that we reached the top of the Washington housing market for the indefinite future, and I predict this unwinding will take years. Stay tuned. 

My Contact: 

Scott Weitz

Scott@dcseattle.com

t: 206.306.4034

CNBC: "Worrying supply trend" in housing market

CNBC recently posted an article on a "worrying supply trend" in the housing market. We will explore in more detailed below. 

 Click for CNBC Article Here

Key takeaways

The Housing Market is heading into 2025 with a worrying supply trend:

Active Listings in November were 12.1% higher than they were in November 2023 and hit the highest level since 2020.

More than half of those homes stayed on the market for at least 60 days without going under contract.

The latest report from S&P Case Shiller showed prices up nationally 3.6% compared to October 2023.

Weitz Take: For those that follow this blog, this is not a surprise whatsoever. We expect to see more distressed sales, increasing inventory and eventually more price drops. This will be especially interesting when the new ADU laws (I'll be posting an overview in the coming days/ week) are put in place in cities around the State (Washington State).

As I’ve mentioned in previous blogs, I believe we have seen the highest of pricing in general and expect more pressure on prices as we move deeper into 2025. The only thing that would change that would be a fairly steep reduction in interest rates (or inventory goes down dramatically again) but for now, that doesn’t seem to be in the works.

For more information on Snohomish Commercial Real Estate, consider contacting a Snohomish Real Estate Investment Broker. 

My Contact

Scott Weitz

Scott@WeitzCommercial.com

T: 206.306.4034. 

www.weitzcommercial.com

Want a State / Federal funding commercial loan....here's your chance....

A new state administered program is offering low interest loans to small businesses so they can purchase or develop commercial real estate.

Washington’s Department of Commerce will issue $26M to businesses across the State over the next 7 years, targeting those owned by socially and economically disadvantaged individuals. The funding is available via the State Small Business Credit Initiative (‘SSBCI’).

More information can be found on the Puget Sound Business Journal or on the US Department of Treasury site. 

Heritage Bank was selected to operate the program in Washington. The program offers a standard companion loan under market interest rates as well as a loan for up to 9% of the purchase cost with a 1% interest rate forgivable after 10 years.

To qualify, Heritage requires businesses to have fewer than 750 employees, reside in WA and have a loan size up to $20 Million.

Weitz: This one is for all my local business owner followers. I'm not going to endorse taking out a loan given my clear prospects for the general market and the current rate environment, but I really see this as a great tool if you want to develop already owned land and/or need that extra little push to buy your commercial space if you can't afford the typical commercial down payment. If interested, you can reach out to Heritage Bank directly. 

For more on Snohomish County Commercial Real Estate, reach out to Snohomish County Commercial Broker or email me at Scott@WeitzCommercial.com 

Regards, 

Scott Weitz

Weitz Commercial 

105 Union St

Snohomish, WA 

CNBC - What a Trump Presidency could mean for the housing market

 

CNBC article on what a Trump presidency could affect Housing Affordability.

CNBC Article on Trump could do for Real Estate market

The Highlights: 

“We’re going to open up the tracks of federal land for housing construction said in a Aug 15^th news conference. We desperately need housing for people who can’t afford what’s going on”.

As of mid -2023, there has been a shortage of 4 million homes in the US according to the National Association of Realtors (NAR).

There’s been a small increase in new homes built this year, but its still not enough to meet the high demand for housing…experts say.

Here’s how Trumps policies could affect the housing market:

1) Deregulation to increase affordability.

At the end of his first Presidency, Trump signed an executive order “Eliminating regulator barriers to affordable housing: Federal, State, Local, and Tribal opportunities”.

[Weitz – the author references this, but then provides no details on what this entails. I intend to look up this order and provide a post on it in the coming days..... the report can be found here: HUD Report].

We will eliminate regulations that drive up housing costs with the goal of cutting the cost of a new home in half, Trump said in speech at the Economic Club of New York on Sept 5^th.

About 24% of the cost of the single-family home and 41% of the cost of a multifamily homes are directly attributable to regulator costs at local, state and federal level.

2) Impacts on construction workforce

Trump blames rising home prices on a surge of illegal immigration.

“Proposals like mass deportation and tighter border control could impact housing affordability”.

“It's been difficult to recruit native born workers in the construction industry”.

Weitz – this is a shame in my opinion. I’d highly recommend kids getting into the trade industry…. the money can be great especially if you learn the industry and start your own company.

3) Tariffs could hike building costs

Trump proposed a 10% to 20% tariff on all imports…. [which] could push housing costs higher as well as materials for home renovations.

Trump mentioned plans to release federal lands for housing, but federal lands tend to concentrate in rural areas. That does do anything for these densely populated blue areas that really need the most help, Daryl Fairweather, Chief economist at Redfin says.

Weitz – Mr. Fairweather, can the Federal Government dictate the permitting process of city/ local governments? No. These cities are digging their own ‘prospective’ graves. If they make it too burdensome to build in their areas, why would a private developer risk their time/ capital in those areas? These cities need to create their own streamline processing to make it worthwhile for such builds.

WEITZ TAKE

I love the idea of a streamlined version of permitting for every jurisdiction. It’s become so expensive and burdensome in many areas that developers focus the higher value options to maximize their time/ investment return. If the government worked to allow more multi-family options easier, I could see a major shift in where resources and capital are allocated to more projects like that.

That said, as I’ve said many times, we are at a bit of crossroad - I don’t see a magic bullet to ‘cure affordability’, but not lower housing prices in general which will lead to pain for homeowners, developers, investors, and consequently banks, insurance companies, etc. It’s a bit of damned if you do, damned if you don’t situation.

For more information on Snohomish County Commercial Real Estate, feel free to email me at Scott@Weitzcommercial.com or even text me at 206.306.4034. 

Scott Weitz

Weitz Commercial 

Harvard Business Review - U.S. Commercial Real Estate Is Headed Toward a Crisis

 

Interesting article from the Havard Business Review

I’ll include some excerpts from the article as it’s rather lengthy. The original link can be found here.

Harvard Business Review CRE Article

“Over the next two years, more $1 Trillion in CRE loans will come due”.

The damage could metastasize into a full blown financial cris if small and midsize banks fail simultaneously.

As the Federal Reserve keeps interest rates elevated and CRE risk worsen with falling property values, businesses will continue to experience restrictive financial conditions. Executives can nonetheless take steps to potentially mitigate the fallout – including examining banking relationships, extending debt maturities, and securing adequate working capital.

HOW DID WE GET HERE?

The risks of US Commercial banks being overexposed to CRE have intensive as the global pandemic upended long held economic assumptions: perpetually subdued inflation, low interest rates and in office work.

Exacerbating the situation are CRE management costs – including insurance premiums, labor, and energy prices.

THERE’S TROUBLE BREWING

Hundreds of banks hold an outsized amount of CRE loans on their books relative to capital. Small banks and midsize banks have CRE loan values far exceeding risk based capital levels at 158% and 228%, respectively. According to the Conference Board calculations using FDIC Institutional Financial Reports data. This is compared to 142% for large banks and 56% for the largest banks.

[I’ve cut and pasted the following provisions as the depth of data is frankly more than I want to try and summarize]

As CRE property values fall and the debt service on associated loans accumulates, borrowers are becoming delinquent or defaulting. The portion of these loans that are nonperforming more than doubled — from 0.54% to 1.25% — over the six quarters from the Q3 2022 cycle low, according to data compiled from BankRegData.com and the FDIC. Compare this with the just 0.87% rate six quarters after the cycle low, in the second quarter of 2006, which preceded the 2008–09 Great Recession. However, only the largest banks are reporting increases in nonperforming loans and charge-offs (i.e., losses). Reported CRE loan delinquencies exceeding 90 days have surged from under 1% in mid-2022 to 3% in early 2024 for the largest banks, while delinquency reports for all other banks remain near 1%, according to The Conference Board calculations using FDIC Institutional Financial Reports data. (By comparison, delinquency rates reached 5% in 2010 in the wake of the 2008–09 Great Recession.)

Meanwhile, CRE loan losses for the largest banks spiked to 0.6% in early 2024, while other banks are reporting virtually zero losses. By comparison, such losses topped 1.4% in 2010.

The reason for the different behaviors is that the biggest banks face greater regulatory scrutiny and are required to maintain larger capital cushions, prompting swifter realization and write-offs of souring loans. Smaller and midsize financial institutions — many of them regional and community banks — are evidently not marking down CRE loan losses but may be managing stresses differently.

These institutions are likely engaging in “extend and pretend” behaviors that lengthen loan maturities with the hope that property valuations will recover in the future. They also may be seeking to widen capital buffers through M&As with similarly sized or larger financial institutions.

WHAT COULD TRIGGER A CRE CRISIS

Multiple troubled banks simultaneously raising equity capital would prove challenging and potentially destabilizing for the U.S. banking system. Any hint of doing so could cause massive depositor flight (i.e., bank runs), creating a redux of the March 2023 panic across global financial markets when only three U.S. banks came under pressure. Digital banking has accelerated the speed at which these runs might occur.

The clock is ticking for banks delaying recognition of CRE loan losses, and the timing of the financial market fallout — potentially starting later this year — could be during a vulnerable period for the economy. The Conference Board expects that U.S. real GDP growth may be weaker, the unemployment rate slightly higher, and interest rates still near multi-decade peaks, when a cascade of banks begin reporting losses.

Other CRE crisis triggers could include a U.S. recession; interest rates that stay higher longer than expected; and/or financial market upheaval from a fiscal crisis (e.g., the looming January 2025 debt ceiling) prompting investors to demand greater credit risk compensation in the form of higher yields.

THE POTENTIAL FALLOUT

As these loan losses begin to mount, an increasing number of banks — mostly regional and community banks — risk having insufficient capital cushions. A 10% loss on CRE loans would leave more than 100 mostly small and midsize banks, representing nearly $700 billion in assets, undercapitalized. A 20% loss would render over 900 banks undercapitalized, including some larger banks.

 THE DEPTH BREADETH AND DURATION OF A CRISIS

Pandemic accelerated troubles in CRE markets may take more than a decade to resolve. The sharp rise in interest rates has caused commercial subtypes to lose value. Commercial properties prices have already fallen 21% from their mid-2022 peak according to Green Street.

HARDENING COMPANIES FOR A CRE STORM

Corporations should prepare for an extended period of tight lending, elevated borrowing costs, and possible market liquidity shortages. Prudent corporate managers should extend their debt maturities and add a cash liquidity buffer – now.

Corporate managers should know of any provisions allowing their financial institutions to transfer depositors’ assets to third parties for management. In such cases, executives should be aware of the safeguards their banks have I place should third party asset managers come under duress.

WEITZ TAKE: 

It's so refreshing to find an article like this.... I can't confirm their data is correct, but the context is right on. It's hard to say how long the 'can will be kicked down the road', but I struggle to see a cure for this without significant bank losses and upending of many parts of the commercial market. 

For more information on Snohomish County Commercial Real Estate, continue to follow this blog and/or reach out to me anytime. 

Weitz Commercial

Scott@WeitzCommercial.com

T: 206.306.4034 (feel free to text me)

108 Union Ave

Snohomish, WA 98290