Are new mortgage rates moving the needle when it comes to Seattle real estate?
Sep 23, 2024, 2:20 PM | Updated: Sep 24, 2024, 2:36 pm
Redfin says Seattle ranks 6th among metro areas being abandoned by homebuyers. (Photo: Stephen Brashear, Getty Images for Redfin)
(Photo: Stephen Brashear, Getty Images for Redfin)
When the Federal Reserve cut interest rates by a half-point, you might have thought potential homebuyers sitting on the sidelines would be moved to action. While lower mortgage rates increase purchasing power for homebuyers, a rate around 6% is still too high for many in Washington struggling to afford a home.
“Because the real estate industry saw the rate cuts coming, the cuts to mortgage rates were already factored in,” Seattle real estate broker Juliet Beard of told MyNorthwest. “But yes, it has had a positive impact. It makes people more aware of rates.”
Seattle saw the nation’s third-largest spike in home prices in August. Home prices remain near record highs, supported by a shortage of available homes.
“As far as Seattle is concerned, fall and winter is a natural slowdown period,” Beard said. “But Seattle continues to do well. It is so expensive in Seattle. Everything is expensive. The median income is $120k. But, not everyone makes $120k.”
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The median home price in Seattle has been increasing in recent months, with the median price in August 2024 ranging from $795,000 to $835,000, depending on the source.
Beard said those hoping for lower rates to refinance should temper their expectations of a big drop in mortgage rates from here.
“As far as mortgage rates are concerned, we’re in the 6s,” Beard explained. “We are not into the 5s yet. There has to be some kind of catastrophe to get below 5.”
Beard pointed out mortgage rates have to do with a multitude of factors.
“The presidential election will have an impact, but so will the war in Israel,” Beard explained. “The more money that goes to supporting Israel and the military efforts in Ukraine will play a role.”
For many buyers to afford a home, mortgage rates would need to drop back to the near rock-bottom lows seen three years ago, or home prices would need to fall significantly. Neither of these scenarios is expected to happen soon.
Economists and mortgage industry executives anticipate that mortgage rates will stay near their current levels for at least this year.
鈥淯ltimately, the pace of mortgage and Fed rate declines will be dictated by economic data,鈥� Rob Cook, vice president at Discover Home Loans, said. 鈥淚f future data shows that the economy is slowing more than expected, it would increase pressure on the fed to take more aggressive action with rate cuts, which would likely translate into lower mortgage rates for consumers.鈥�
Experts said waiting for rates to possibly ease next year could leave buyers facing heightened competition for the home they want. Meanwhile, potential sellers may still stay put.
鈥淜eep in mind that 76% of people with a mortgage have a rate below 5%,鈥� Leo Pareja, CEO of eXp Realty, said. 鈥淪o, we may see the supply-demand imbalance actually get a little worse in the near term.鈥�
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Beard said that one thing that hasn’t changed is the need for people to employ a broker.
“There’s a dimishing trust in the loss of transparency in transactions,” Beard said. “It was always the seller who pays everything, but now the situation is much more complex. Buyer-broker contracts are mandatory.”
Contributing: The Associated Press
Bill Kaczaraba is a content editor at MyNorthwest. You can read his stories here. Follow Bill on X, formerly known as Twitter, and email him here.听
