Why Waiting to Buy Might Be a Scary Option

Trick or treat. This time of year, even the real estate market begs this question as if it can't decide between something rich and chocolaty or a fistful of sour patch kids. Our real estate market is experiencing its seasonal, freaky, unpredictable, and depending on your experience, scary behavior. Some listings are flying off the shelf like rabid bats taking a flight, Others more slowly like a zombie waking from its slumber. Still, whether you are a buyer or seller, the fundamentals remain, just like the predictability in every horror movie ever. Pro tip, never go down into the basement.

Sellers, you must prepare your home to show in its best light. Do the needed repairs, depersonalize and declutter clean and stage your home. And most importantly, price it appropriately.

Buyers, get clear on your budget and obtain a pre-approval from a reputable and preferably local lender. Understand your risk tolerance so you know what you may or may not be willing to do in an offer situation, such as waiving major contingencies. And work with your agent to craft a search and offer strategy accordingly. But here's what I think is really scary. Waiting for mortgage rates to drop before entering the market. There's mixed sentiment on when rates will drop, though the general consensus is they'll eventually trend down. Still, we are currently navigating very volatile dynamics.

An election year, key market indicators including inflation and unemployment, such that we are actually seeing a slight uptick in rates even in the wake of the recent 50 basis points drop. The reason it's scary to wait for rates to drop is that just like zombies rise from the dead. The real estate market is resilient and home values rise over time. These graphs show the price growth over time for both the Eastside and Seattle markets.

The Eastside experienced a 5% increase year over year and a whopping 131% increase since 2015. We know much of this was spurred by the COVID buying frenzy. And while Seattle's market trendline is a little flatter, it's still increased 8% year over year and 69% since 2015. I'm expecting actually to see an uptick in Seattle values as major employers reinstate their return to work policies. So while you wait for rates to drop, the home price at $850,000 today might be at $950,000 three months from now. And since every 1% change in interest rate, impacts your purchasing power by 10% that home may no longer be within reach. Let's look at an example of mortgage rates impact on purchasing power. This first slide assumes an $850,000 dollar purchase price with 20% down. So a loan amount of $680,000. At 6.5% interest, that would bring the principal and interest payment to $4,298 dollars.

Now let's assume that several months from now, rates go down, but the home's value has increased to $900,000 dollars. In this scenario, your loan amount has gone up, but your payment on paper would remain practically the same. I say on paper because this assumes no other buyers are competing for the same home. Creating a bidding war that drives the final price up even further. And along with it, your mortgage payment. A drop in rates will spur demand and in a market whose housing supply is woefully unable to keep up with the demand, that will most likely result in increased competition and a final sales price landing well above its initial asking price. We saw this during the height of the pandemic and super low interest rates. And if the past is a prognosticator of what we can expect in the future, well, we don't need a crystal ball to predict what will happen.

A recent article in Go Banking Rates cites the Seattle area as one prime for price increases based on the sustained demand, combined with high salaries, limited inventory, and eventual rate drops. But don't let any of this spook you. I believe everyone should feel confident and informed when buying and selling a home. So if you have questions about our current market and how to navigate it with confidence, I'm here as your resource to reach out anytime.

𝙄𝙛 𝙮𝙤𝙪’𝙙 𝙡𝙞𝙠𝙚 𝙩𝙤 𝙡𝙚𝙖𝙧𝙣 𝙢𝙤𝙧𝙚 𝙖𝙗𝙤𝙪𝙩 𝙩𝙝𝙞𝙨 𝙤𝙧 𝙤𝙩𝙝𝙚𝙧 𝙬𝙖𝙮𝙨 𝙩𝙤 𝙗𝙚 𝙨𝙪𝙘𝙘𝙚𝙨𝙨𝙛𝙪𝙡 𝙞𝙣 𝙤𝙪𝙧 𝙨𝙝𝙞𝙛𝙩𝙞𝙣𝙜 𝙢𝙖𝙧𝙠𝙚𝙩, 𝙥𝙡𝙚𝙖𝙨𝙚 𝙧𝙚𝙖𝙘𝙝 𝙤𝙪𝙩 𝙖𝙣𝙮𝙩𝙞𝙢𝙚. 𝙄’𝙢 𝙝𝙚𝙧𝙚 𝙩𝙤 𝙝𝙚𝙡𝙥! 425-495-0926

Questions about buying or selling? Reach out today, I'm here to help.

Call/text 425-495-0926 - or email me anytime! ginam@windermere.com.

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Gina Madeya

Whether you're thinking of buying or selling your home, being successful in this market takes an experienced, trusted advisor with proven results. Gina has enabled over 200 clients to achieve their real estate goals and looks forward to helping you navigate the current market with clarity and confidence. As a 25 year veteran of corporate America (JPMorgan Chase and Microsoft), Gina puts her vast experience in both people and program management positions to work for you, nimbly balancing both the human and process side of real estate transactions to ensure your success in either buying or selling your home.

Lauded by clients and other agents alike for her impeccable work ethic and integrity, client advocacy, and proactive communication, you can count on Gina to guide you through every step of this complex and very active market with hands on support to deliver an experience and results you deserve. Backed by the most trusted brokerage in the Pacific Northwest, Windermere, Gina considers it a privilege to represent you and pledges her focus, responsiveness, honesty, patience, and never-ending support - she won't be satisfied until you are!

https://www.ginamadeya.com
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Don’t Wait To Buy Real Estate – Buy Real Estate And Wait!

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