If you want to purchase a home in Seattle, sooner might be better! I’m going to tell you why.
Welcome to the Seattle Real Estate Breakdown with Tyler Davis Jones.
All right boy and girls, dust off your college text books, we’re taking it back to Economics 101. We're all affected by it... Supply and Demand!
According to NWMLS data, in February of this year Seattle metro had less than 0.6 months worth of inventory. This means if no other homes were brought to the market, we would run out in less than a month. With only 470 active homes listed February saw one of the scarcest months of inventory in Seattle history. In 2008 there were 3,650 active listings on the market. This means we’re all competing for the same inventory.
According to the U.S. Census Bureau, over 1000 people are moving to the Seattle metro area every week. As Seattle’s tech market continues to soar more transplants are moving in to fill all the tech jobs available, bringing their downpayment and hopes of owning a home with them.
Looking back at the above NWMLS data the median home value in Seattle for Feb 2017 was $610,000 in comparison to $554,225 in Feb of 2016. Giving a median increase of 10% in home value gain in just one year.
Now that we’re refreshed in Economics 101, you can see this extremely low supply and increasingly high demand has created much higher prices!
Interest Rate Hike:
On Wednesday March 15th the Federal Reserve raised its benchmark short-term rate by a quarter percentage point to a range of 0.75% to 1% and stuck to its forecast of two more such increases this year and three in 2018.
The move is expected to filter through the economy, pushing up rates slightly for everything from mortgages and car loans to credit card debt and bank savings accounts.
Federal Reserve Chair Janet Yellen said at a news conference "The simple message is -- the economy is doing well.". "The unemployment rate has moved way down and many more people are feeling more optimistic about their labor prospects."
The Fed’s rate hike Wednesday is likely to have the biggest effect on short-term interest rates for auto loans and credit cards, with a lesser impact on longer-term loans such a 30-year mortgages. But if the Fed sticks to their continued rate hike, your buying power in Seattle will progressively be affected.
So what does this mean exactly?
With the median home value for Seattle at $610,000. To put down 20% ($122,000) and get a loan of $488,000.
- 4.25%, 30-year, $488,000 mortgage = $2,300/month ($145 more from 2016 low of 3.59%)
- 5.25%, 30-year, $488,000 mortgage = $2,536/month ($236 more per month)
- 6.25%, 30-year, $488,000 mortgage = $2,784/month ($248 more per month)
Current: 4.25% (Going up 2 more times in 2017 and 3 more in 2018)
This is best case scenario in putting down 20%. If you can’t put 20% down your monthly will be much more expensive.
All that to be said, (in my biased opinion) the longer you wait the more expensive it’s going to get.
Want to own a home in Seattle or surrounding areas one day? Head over to tylerdavisjones.com and schedule a meeting with me today. Together we can create a plan to ensure you secure your spot in Seattle.
Tyler Davis Jones
Seattle Real Estate Broker
Windermere Real Estate Midtown
206.707.1701 | firstname.lastname@example.org
10 Things to Know Before You Buy
Be the smartest Seattle home buyer out there! Get our free Guide to Buying a Home.