How Interest Rates Affect Buying Power

Whether you are thinking about buying or selling a home, interest rate trends are an important factor to consider. Mortgage interest rates have been rising and experts, including Windermere Chief Economist Matthew Gardner, predict that they will continue to increase in 2019.

Interest Rates and Buying Power

The chart below shows the impact rising interest rates would have if you planned to purchase a $675,000 home while keeping your principal and interest payments at $3,500 a month.

Every time interest rates increase by a quarter of a percent, your buying power decreases by about 3 percent.

Whether you are thinking about buying or selling a home, interest rate trends are an important factor to consider. Mortgage interest rates have been rising and experts, including Windermere Chief Economist Matthew Gardner, predict that they will continue to increase in 2019.

Interest Rates and Buying Power

The chart below shows the impact rising interest rates would have if you planned to purchase a $675,000 home while keeping your principal and interest payments at $3,500 a month.

Every time interest rates increase by a quarter of a percent, your buying power decreases by about 3 percent.

What this means for buyers:

With prices moderating and interest rates slated to rise again, now is a good time to buy. If you’re betting on prices falling, you need to consider the strong possibility that an increase in interest rates would offset any potential price savings.

What this means for sellers:

Listing your home now means you will attract a larger buyer pool before interest rates rise.

Whether you’re thinking of buying or selling I can provide you market data that will help you make the best decision for your circumstances. Let me know how I can help.

Posted on October 26, 2018 at 5:15 pm
Stephanie Kristen | Category: economy, interest rates, real estate

Seattle / Eastside Market Report – February 2018

With competition for homes growing and inventory shrinking, the real estate market in January was as hot as ever.  Home prices were up by double digits as buyers chased severely limited inventory. The number of homes for sale hit a record low for the month of January, which should strongly favor sellers as we move into the prime spring selling season.  The average home seller in our area now makes a 64 percent profit, the fourth-highest rate of any region in the country, according to ATTOM Data Solutions.

Eastside

>Click image to view full report.

Home prices on the Eastside continue to climb. The median price of a single-family home was up 18 percent over last January to $938,000 —­ virtually unchanged from the record high set a month ago. West Bellevue, King County’s most expensive area,  saw the median home price surge to a record high of $2.72 million. With less than a month of available inventory, prices aren’t expected to cool any time soon.

King County

>Click image to view full report.

Single-family home prices in King County soared 20 percent over a year ago to $628,388, with double-digit increases recorded in every area of the county.  Lack of inventory continues to fuel the market.  There were 21 percent fewer homes for sale here as compared to a year ago, with inventory hitting a record low for the month of January. The region has now been the hottest housing market in the country for 15 months in a row.

Seattle

>Click image to view full report.

An ongoing shortage of inventory combined with an economy that continues to add jobs has kept the Seattle housing market very competitive and increasingly expensive. Seattle’s median price hit a new record in January jumping 19 percent to $757,000.  Despite the increase in prices, brokers are reporting open house traffic that can number in the hundreds of interested buyers.

Snohomish County

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Home price increases in Snohomish County were more moderate than those in King County. The median price of a single-family home grew 10 percent over a year ago to $450,000. That number is down from the high of last year, and reflects a more common seasonal slowdown.

Posted on February 8, 2018 at 8:18 am
Stephanie Kristen | Category: economy, interest rates, market trends, statistics

Matthew Gardner’s 2018 Housing Forecast

Windermere is fortunate to have Chief Economist Matthew Gardner on staff to provide valuable analysis of the economy and housing market. Matthew recently completed his national forecast which details his predictions for the 2018 housing market.

 

Posted on January 22, 2018 at 1:28 pm
Stephanie Kristen | Category: economy, interest rates, market trends, statistics

The Gardner Report – Second Quarter 2017

Economic Overview

The Washington State economy has been expanding at a rapid pace but we are seeing a slowdown as the state grows closer to full employment. Given the solid growth, I would expect to see income growth move markedly higher, though this has yet to materialize. I anticipate that we will see faster income growth in the second half of the year. I still believe that the state will add around 70,000 jobs in 2017.

Washington State, as well as the markets that make up Western Washington, continue to see unemployment fall. The latest state-wide report now shows a rate of 4.5%—the lowest rate since data started to be collected in 1976.

I believe that growth in the state will continue to outperform the U.S. as a whole and, with such robust expansion, I would not be surprised to see more people relocate here as they see Washington as a market that offers substantial opportunity.

Home Sales Activity

  • There were 23,349 home sales during the second quarter of 2017. This is an increase of 1.1% from the same period in 2016.
  • Clallam County maintains its position as number one for sales growth over the past 12 months. Double-digit gains in sales were seen in just three other counties, which is a sharp drop from prior reports. I attribute this to inventory constraints rather than any tangible drop in demand. The only modest decline in sales last quarter was seen in Grays Harbor County.
  • The number of homes for sale, unfortunately, showed no improvement, with an average of just 9,279 listings in the quarter, a decline of 20.4% from the second quarter of 2016. Pending sales rose by 3.6% relative to the same quarter a year ago.
  • The key takeaway from this data is that it is unlikely we will see a significant increase in the number of homes for sale for the rest of 2017. Continue reading
Posted on August 6, 2017 at 3:57 pm
Stephanie Kristen | Category: bellevue, economy, interest rates, market trends, real estate, statistics

Seattle / Eastside Market Report – May 2017

The local real estate market—already the hottest in the country—set yet another price record in April. The number of homes for sale dropped 27 percent compared to a year ago, the lowest amount of inventory ever recorded for a spring month. The historically low supply of homes is making competition among buyers fierce. Sellers are in the enviable position of being able to structure sales agreements to include concessions such as rent-backs and longer closing time so they can take the time to find their next home.
Continue reading

Posted on May 9, 2017 at 10:34 pm
Stephanie Kristen | Category: bellevue, economy, interest rates, market trends, real estate, seattle, statistics

Seattle / Eastside Market Update – March 2017

Home prices are growing faster in our region than anywhere else in the country. After a brief slowdown last month, home prices in February jumped to new record highs. The reason? The lowest number of homes for sale on record. The surge in prices came well ahead of the normal seasonal spring uptick, adding even greater urgency among buyers competing for already severely limited inventory. It remains to be seen if the predicted hike in interest rates will help moderate the market. For now, sellers are calling the shots.
Continue reading

Posted on March 21, 2017 at 3:42 pm
Stephanie Kristen | Category: bellevue, economy, interest rates, real estate, seattle, statistics

The Trump Effect – How will it impact the US economy and housing?

trumppresidency

The American people have spoken and they have elected Donald J. Trump as the 45th president of the United States. Change was clearly demanded, and change is what we will have.

The election was a shock for many, especially on the West Coast where we have not been overly affected by the long-term loss in US manufacturing or stagnant wage growth of the past decade. But the votes are in and a new era is ahead of us. So, what does this mean for the housing market?

First and foremost I would say that we should all take a deep breath. In a similar fashion to the UK’s “Brexit”, there will be a “whiplash” effect, as was seen in overnight trading across the globe. However, at least in the US, equity markets have calmed as they start to take a closer look at what a Trump presidency will mean.

On a macro level, I would start by stating that political rhetoric and hyperbole do not necessarily translate into policy. That is the most important message that I want to get across. I consider it highly unlikely that many of the statements regarding trade protectionism will actually go into effect. It will be very important for President Trump to tone down his platform on renegotiating trade agreements and imposing tariffs on China. I also deem it highly unlikely that a 1,000-mile wall will actually get built.

It is crucial that some of the more inflammatory statements that President-Elect Trump has made be toned down or markets will react negatively. However, what is of greater concern to me is that neither candidate really approached questions regarding housing with any granularity. There was little-to-no-discussion regarding housing finance reform, so I will be watching this topic very closely over the coming months.

As far as the housing market is concerned, it is really too early to make any definitive comment. That said, Trump ran on a platform of deregulation and this could actually bode well for real estate. It might allow banks the freedom to lend more, which in turn, could further energize the market as more buyers may qualify for home loans.

Concerns over rising interest rates may also be overstated. As history tells us, during times of uncertainty we tend to put more money into bonds. If this holds true, then we may see a longer-than-expected period of below-average rates. Today’s uptick in bond yields is likely just temporary.
Continue reading

Posted on November 10, 2016 at 4:31 pm
Stephanie Kristen | Category: economy, interest rates, market trends

Seattle/Eastside Market Update – August 2016

Home prices are still on the rise compared to a year ago, but there is some indication that prices are moderating. Combine that with an increase in inventory and we may be seeing some relief for buyers. Time will tell whether this is a momentary breather, or if we’re slowly moving to a more balanced market.

Eastside

 

Click image for full report.
Click image for full report.

Home to the highest concentration of luxury homes in the state, the Eastside continues to be the highest priced region of King County. Median home prices here were up 10 percent over last July to $750,400. That is down from the May peak of $760,000, and virtually unchanged from June. Buyers looking in this desirable market may be seeing the start of easing home prices.

 

King County

 

Click image for full report.
Click image for full report.

After five months in a row of record-setting prices, King County saw the median price of a single-family home drop slightly from the high of $570,500 in June to $555,000 in July. However, July’s median price was up 14 percent over a year ago. An increase in inventory, accompanied by a slight slowdown in sales, may indicate that the market is settling down from the frenzied pace we’ve experienced so far this year.

 

Seattle

 

Click image for full report.
Click image for full report.

Seattle also saw a small decrease in home prices, with the median price of a single-family home dropping from its record $666,500 in June to $650,000 in July. The July number still represents a hefty 13 percent increase year-over-year. Some buyers are looking to the areas of North King County that include Shoreline, Lake Forest Park and Kenmore for a more affordable alternative. Prices there soared 18 percent over last year, but the median price of $505,000 is significantly less than Seattle.

 

Snohomish County

 

Click image for full report.
Click image for full report.

The median home price in Snohomish County topped $400,000 for the first time, setting a record for the third straight month. Prices were up nearly 12 percent over the same time a year ago to $405,000. With prices here about 25 percent less than King County, buyers looking for lower housing costs continue to fuel an environment where multiple offers are common.

Posted on August 11, 2016 at 10:58 am
Stephanie Kristen | Category: economy, interest rates, market trends, statistics

Housing Economics 101 – Q1 2016

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. 

Posted on May 23, 2016 at 12:35 pm
Stephanie Kristen | Category: economy, interest rates, market trends, real estate, statistics

4 Reasons to Sell Your House Now

Blank Real Estate Sign & New Home

 

1) Sale prices are at all-time highs.

Home prices in King County hit new highs last month. The median price of a single family home sold in King County in February was $514,975, a whopping 20% increase over a year ago. The median price in Seattle was up 24% to $644,950. The Eastside’s median price was up 20% to $739,975. You may be surprised at how much your home is worth today.

home-prices-high

2) Competition among buyers is driving prices even higher.

Despite increasing prices, there is intense competition among buyers because inventory is at all-time lows. That means multiple offer and bidding wars, increasing the likelihood that your home will sell above your asking price.

3) Homes are selling fast.

With such limited inventory, homes in King County are selling rapidly – sometimes in days. If you list your house now, chances are you’ll get a buyer quickly.

4) You can make the sale work to your needs.

With competition for homes so fierce, you have the freedom to make the deal that works best for you. Many buyers are paying cash. They’ll also make concessions. Do you want stay in the home a few months after the sale? Want a large earnest money payment? You’re in the driver’s seat, and many buyers are willing to do what it takes to get the home they want.

It’s a seller’s market.
Are you ready to take advantage of it?

Posted on April 12, 2016 at 11:27 am
Stephanie Kristen | Category: economy, interest rates, market trends, real estate, statistics