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Falling Rates, and Strong Housing

At the beginning of every month, the NWMLS releases their data for the month prior.  After crunching some numbers, things are looking pretty darn strong!


Housing prices have rebounded quite nicely this Spring.  It’s no secret that the housing market took a breather in the second half of 2018 (after setting all-time record highs for prices and low inventory in the first half of 2018).  But take a look at some expanded data points, and I’d have to say I feel quite comfortable labeling our Puget Sound market as a very strong market on the price side of things even after accounting for seven months of deterioration in 2018.

King County:
Down 3.62% from our record high set last Spring 2018
Up 14.75% since January 2019
Up 11.4% since January 2017

Snohomish County:
Down $50 since May 2018
Up 9.88% since January 2019
Up 11.1% since January 2017

Kitsap County:
Up 4% since May 2018
Up 11.92% since January 2019
Up 28.33% since January 2017

Pierce County:
Up 2.78% since May 2018
Up 12.13% since January 2019
Up 18.24% since January 2017

Investment Rate of Return

These appreciation rates are pretty good.  But if we break it down to homebuyer’s actual rate of return?  That’s where it gets exciting!  For example:  Let’s say someone in January put 10% down on a median-priced home in Pierce County (median purchase price of $330,000, so $33,000 down).  That home has since appreciated 12% to $370,000.  So what’s the buyer’s real rate of return?  The buyer put $33,000 down to earn $40,000 in appreciation; so their actual return on investment is closer to $40,000/$33,000 = 121% in 6 months!!!  Now that $40,000 isn’t liquid, and there are other adjustments to take into consideration, but the point remains.

Tacoma and Kitsap
As King County prices have risen (and Snohomish isn’t too far behind King), homebuyers have migrated south and west to Pierce and Kitsap.

Regarding Kitsap, not only are prices a bit lower but with the launch of their fast foot ferries from multiple locations last year, commuting to downtown Seattle is much more realistic.  Thus the flow of homebuyers expanding their search to the other side of the water, now driving prices higher.

For Pierce County, well, you can still buy a HOUSE for $300,000.  It may not be super nice and/or in the most desirable neighborhood, but what’s simply nonexistent in King and South Snohomish Counties still exists in Pierce.  Thus the flow of homebuyers looking south, and driving prices higher down there as well.

Total Activity

Take this one for what you will, but I actually find it fascinating that May 2019 was statistically almost exactly as busy as May 2018.  There were 6,601 total sales in May 2018; and there were 6,686 total sales in May 2019 across King, Snohomish, Pierce, and Kitsap Counties.  Balancing that out was 8,597 pendings in May 2019, and 8,742 pendings in May 2018.  This makes the total activity in May 2018 compared to May 2019 was statistically equal:  15,343 transactions in 2018, compared to 15,283 transactions in 2019.  That is only a difference of 60 transactions, or .39% variability year over year.

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Puget Sound as a whole is not far removed from their all-time record-breaking May 2018.  You could even argue that May 2019 region-wide is a stronger market than May 2018.  Either way, the Puget Sound Housing Market is strong despite slightly lower prices in the Bellevue and Seattle city-centers.

Moving out of State?
If you’re moving out of state you may not know where to start.  Here are some resources to get your started!

Interest Rates

Per Bankrate.com, the 30 Year Mortgage interest rate fell to 4.06%, with .32 in discount and origination points.  Rates are at 17-month lows

Mortgage rates this week

The benchmark 30-year fixed mortgage rate fell to 4.06% this week from 4.20 a week ago, according to Bankrate’s latest survey of the nation’s largest mortgage lenders. That’s the lowest rates have been in 17 months, when the 30-year fixed rate fell to 4.04% on Nov. 29, 2017, according to Bankrate’s historical data.

So what’s driving rates down?  “The sharp decline in bond yields reflects investor fear about the slowing U.S. and global economies,” says Mark Hamrick, Bankrate’s senior economic analyst. “This has been exacerbated by the rising tide of trade disputes on a variety of fronts, including the out-of-the-blue tariffs threatened against Mexico.”

Mortgage rates plummeted across the board for other loan products, too. The 15-year fixed mortgage rate also dropped 14 basis points to 3.41% and the 5/1 adjustable mortgage rate fell 13 basis points to 3.74%.

The benchmark 30-year fixed-rate mortgage fell this week to 4.06% from 4.20%, according to Bankrate’s weekly survey of large lenders. A year ago, it was 4.70%. Four weeks ago, the rate was 4.29%. The 30-year fixed-rate average for this week is 1.04 percentage points below the 52-week high of 5.10%, and is identical to the 52-week low of 4.06%.

The 30-year fixed mortgages in this week’s survey had an average total of 0.32 discount and origination points.

Over the past 52 weeks, the 30-year fixed has averaged 4.65 percent. This week’s rate is 0.59 percentage points lower than the 52-week average.

  • The 15-year fixed-rate mortgage fell to 3.41% from 3.55%.
  • The 5/1 adjustable-rate mortgage fell to 3.74% from 3.87%.
  • The 30-year fixed-rate jumbo mortgage fell to 4.10% from 4.17%.
  • At the current 30-year fixed rate, you’ll pay $480.88 each month for every $100,000 you borrow, down from $489.02 last week.
  • At the current 15-year fixed rate, you’ll pay $710.47 each month for every $100,000 you borrow, down from $717.34 last week.
  • At the current 5/1 ARM rate, you’ll pay $462.55 each month for every $100,000 you borrow, down from $469.95 last week.

Results of Bankrate.com’s weekly national survey of large lenders conducted June 5, 2019 and the effect on monthly payments for a $165,000 loan:

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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/


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