In February 2023, King County home prices tumbled 7% with the median home sold for $800,000. The biggest difference in 2023 is the increase in mortgage rates. Higher rates mean less purchasing power for potential homeowners and in turn creating less competition for homes. Some home sellers are waiting to see if rates would dip down again and markets would pick back up. Others want to make sure their jobs are safe before making a move.
The inventory was already tight before but now with homeowners with lower mortgage rates – they are staying put longer and not listing their homes. Others are becoming a landlord instead of selling especially if they have extremely low interest rates on their current property.
To attract potential buyers, sellers are taking on more home improvement projects such as painting, upgrading carpets or replacing light fixtures and faucets before listing their properties. Buyers are demanding more to compensate for higher mortgage rates.
Find an experienced local mortgage broker. If you find yourself in a bidding war, a local broker as opposed to a big bank can make all the difference.
Since March of 2020 and the COVID-19 Pandemic, "normal" has been difficult to describe and for those thinking of buying a home over the last few years, the market has been anything but what used to be though as "normal". Property appreciation ascended rapidly due to high demand and lack of inventory and mortgage rates jump significantly due to economic concerns.
To buy now or wait. Higher mortgage interest rates generally mean a larger monthly payment. Mortgage rates change daily and PLEASE do not expect rates will come back down to 2021 level again. There are options to lower your rate such as with temporary rate buy-down option or with an Adjustable Rate Mortgage (ARM).
Your goal is to have a monthly mortgage payment that is within your budget and not to overstretch yourself financially leaving nothing for repairs, living expenses and emergency savings. If you can comfortably afford the mortgage payment, then now is the time to buy. Else, waiting would be more prudent.
Timeline. If you are planning to stay put for only a year or two, in this current economic cycle, waiting would be more prudent.
Housing market. Buying a house in a more balanced or "normal" market when you are up against 1 or 2 other buyers rather than 20 and where you can actually inspect the house may be better fit your risk appetite than buying during the 2021 housing market.
The new year will bring Seattle a new housing market - one without the runaway prices and jaw-dropping bidding wars. Yet still difficult for anyone but the region's wealthiest shoppers. Here's what real-estate forecasters expect for in 2023.
After 2 years of home prices shoot up by double-digit percentages - prices are now on the decline driven by elevated mortgage rates and fear of rescission.
Seattle-are prices could fall faster than the national trend with as much as 10% according to Redfin in part because Seattle home prices are already high and combined with current rising mortgage rates environment - this could push mortgage payments even more out of reach of prospective buyers.
Could I afford to buy a house?
The median mortgage payment here in King County is about $4,300 (median means half of mortgage payment is more than $4,300 and half of mortgage payment is less than $4,300). Here's the current median prices in greater Puget Sound Area.
By another estimate, Seattle homebuyers must earn $169,000 a year to afford the median home with 20% down payment. With persistence inflation and stagflation in 2023 - elevated mortgage rates appear to be here to stay after super-low mortgage rates of between 2% and 4% during the pandemic years. Fannie Mae projects rates will hover around 6% throughout 2023. Check out our temporary rate buydown option to help you manage your rate for the first few years of your loan payment.
Many people buy a house and stay put for years so they can build-up some equity when they eventually sell. However, this may not be the case for people who bought in the past few years (between Jan. 2021 through Sept 2022) and to sell in 2023 due to extenuating circumstances.