How do increased inventory and interest rates impact buyers and sellers in the year ahead?
The Northwest Multiple Listing Service (MLS) published a report in October 2018 that stated, “there will double-digit increases in inventory.” MLS has property listings in 23 counties; they cover the whole Seattle metro area and Piece and Snohomish counties.
What this means for homebuyers is that there will be more property choices available in the market moving forward. Since the increase in supply will more or less meet the expected demand (when factoring in affordability constraints), the rise in median prices won’t be as pronounced as we’ve seen in the past four years.
According to Inman.com, in 2019 interest rates will continue trending higher, but we may see periods of modest decrease or leveling. We will probably end the year with the 30-year fixed-rate at around 5.7% - current rates are hovering at about 4.8%, which means that 6% interest rates are on the horizon for the 2020 predictions.
Keep in mind for every .5% (one-half) percent increase in interest rate your purchasing power may be decreased by 4 to 5 percent (the percentage is smaller for lower loan amounts). For every 1 percent interest rate increase, your purchasing power may be decreased by 9 to 11 percent (the percentage is smaller for lower loan amounts). The prediction of increased rates will undoubtedly motivate some, payment-dependent, buyers to buy in 2019.
Final Thoughts on 2019
Every indication points toward a continued upward trend in housing prices in Seattle and the Eastside. Trends in population and income growth, charged by the tech sector growth in the Seattle region, support the idea that our city will continue to have high housing prices and remain competitive. Housing prices shouldn’t rise nearly as high as in recent years, but overall Seattle remains a stable, non-bubble, market.
With the rise in inventory, buyers will have more options and opportunities to secure a home in Seattle this year, but buyers will need to act quickly to get the best deals and keep an eye on interest rate fluctuations. For Sellers, expect a longer time on the market and an emphasis on home preparation to ensure you make the most of your investment. For some properties, multiple offers are a thing of the past. Patience and proper pricing are the key to many sellers' success this year.
As always, I am here to discuss your real estate needs and provide more concrete recommendations based on your personal needs to make the most of your real estate assets.