Our Real Estate Gugu, Scott, has just returned from his adventures in Scotland! Without skipping a beat he’s back, bringing you news of the Puget Sound real estate market.
Housing prices have almost doubled since the Great Recession here in Puget Sound. That’s caused a number of headaches for most everyone. Here are things to consider when housing prices in Puget Sound appreciate at record-breaking pace (we set the Case Shiller record for longest number 1 appreciating market in the nation at 19 straight months between 2016 and 2018)
1) Land becomes more valuable, and developers buy affordable housing projects for redevelopment. This means people are displaced, and local homelessness or displacement increases.
2) Property taxes shoot through the roof, adding pressure to retired Seattle residents living on fixed incomes (Social Security, Pension, etc.)
3) First-time homebuyers have a tougher time buying that first home. This ultimately leads to huge wealth inequality. (Per Seattle Times, the median net worth for a household that owns its home in the Seattle area is nearly $900,000. That’s about 25 times higher than the median net worth for renter households ($36,000))
Is An Appreciating Market All Good?
For as much perceived “good” as an appreciating market can have, there are also some very big negatives to a market that appreciates that fast, that quickly. The number one reason our market did what it did throughout the 2010s was because of growth in the tech sector. This brought many new well-paid residents to the area, who bought up housing prices and decreased inventory to never below seen record lows (in January of 2018, the NWMLS reported just .51 months of inventory in King County…Which means that if no new listings had come on board, there would be NO HOUSES FOR SALE IN ALL OF KING COUNTY in just half a month).
But things are changing on the affordability landscape. Overall housing inventory is FINALLY catching up to our region’s needs. Apartments are being built at a record pace. This is helping to keep a lid on apartment rent prices and is, therefore, reducing the number of apartment dwellers who are feeling the need to buy a home. However, things in the condo market are also heating up. High rise condo units are starting to hit the market once again. And with the passage of a new law that prohibits HOAs from suing developers over possible defects, allowing lawsuits only for observed actual damage, it’s much less risky for developers to build condo projects. Long story short, reducing the risk to condo developers encourages them to build more condos, which adds supply to Puget Sound’s Housing Market. This ultimately creates more affordable options for first-time homebuyers seeking their first home. Read more about this in the PSBJ here.
Slowly but surely things are changing in the Puget Sound. Prices aren’t appreciating like they used to because FINALLY there’s relief in the form of increased housing-unit supply. Apartment construction is exploding, and now with the passage of this new law, Senate Bill 5334, expect condo development to increase as well…an important step on the ladder of homeownership and life-long wealth building.
Interest Rate Check In
Per Bankrate.com, the 30 Year Mortgage interest rate fell to 4.30%, with .31 in discount and origination points. Rates are near 14-month lows
Mortgage rates this week
Homebuyers in the market for a new place this spring are in luck. Mortgage rates are backtracking after recent increases and home-price growth continues to cool, giving potential homeowners a window of affordability.
The benchmark 30-year fixed-rate mortgage fell this week to 4.30 percent from 4.36 percent, according to Bankrate’s weekly survey of large lenders. A year ago, it was 4.71 percent. Four weeks ago, the rate was 4.29 percent. The 30-year fixed-rate average for this week is 0.80 percentage points below the 52-week high of 5.10 percent and is 0.13 percentage points above the 52-week low of 4.17 percent.
The 30-year fixed mortgages in this week’s survey had an average total of 0.31 discount and origination points.
Over the past 52 weeks, the 30-year fixed has averaged 4.70 percent. This week’s rate is 0.40 percentage points lower than the 52-week average.
- The 15-year fixed-rate mortgage fell to 3.68 percent from 3.72 percent.
- The 5/1 adjustable-rate mortgage fell to 3.98 percent from 4.01 percent.
- The 30-year fixed-rate jumbo mortgage fell to 4.27 percent from 4.33 percent.
- At the current 30-year fixed rate, you’ll pay $494.87 each month for every $100,000 you borrow, down from $498.40 last week.
- At the current 15-year fixed rate, you’ll pay $723.75 each month for every $100,000 you borrow, down from $725.74 last week.
- At the current 5/1 ARM rate, you’ll pay $476.26 each month for every $100,000 you borrow, down from $477.99 last week.
Results of Bankrate.com’s weekly national survey of large lenders conducted May 1, 2019 and the effect on monthly payments for a $165,000 loan:
The “Bankrate.com National Average,” or “national survey of large lenders,” is conducted weekly. The results of this survey are quoted in our weekly articles and national media outlets. To conduct the National Average survey, Bankrate obtains rate information from the 10 largest banks and thrifts in 10 large U.S. markets. In the Bankrate.com national survey, our Market Analysis team gathers rates and/or yields on banking deposits, loans and mortgages. We’ve conducted this survey in the same manner for more than 30 years, and because it’s consistently done the way it is, it gives an accurate national apples-to-apples comparison. https://www.bankrate.com/mortgages/analysis/
City of Seattle for Single Family Residents – updated 4.30.19
These charts are Seattle Specific, but the Puget Sound Real Estate Market mirrors the Seattle market.
Scott Sheridan is a Loan Officer with Primary Residential Mortgage, Inc. Being in the mortgage industry for three years, Scott brings a fresh millennial flair to the industry. He is well-versed in the most modern, efficient, and convenient ways to get things done. Scott combines these skills with a genuine love of his work and recent experience in what is it like to be a first and second-time home buyer. You can follow Scott’s weekly market updates on his PRMI Facebook Page.