Would-be homebuyers have more buying power, but also more competition for meager inventory
Here are the bullet points from the newest press release from the Northwest Multiple Listing Service, which provides housing market data for most of Western Washington.
- all-time low interest rates mean home buyers have more buying power, but the lack of inventory and increasing home prices in many parts of Washington are leaving many buyers unable to take advantage of these attractive rates
- some things buyers are doing to win offers:
- waiving inspections and other protections
- paying more than a home is worth
- agreeing to pay the difference in cash between a low appraised value and the sales price
- there is rising demand for lower density housing in outer suburbs, probably due to more people being able to work remotely
- pending sales are outpacing new listings, causing months of inventory to shrink to less than a month in 9 counties
- prices are appreciating at double-digit rates in most counties in the NWMLS
- for last month’s closed sales, prices increased nearly 14% system-wide compared with a year ago
- COVID conditions have had little or no effect on buyers and sellers closing transactions.
To read the full press release, click here.
Interest rates for mortgages are now around the low 4% range for a 30-year fixed loan.
There’s a general rule of thumb for interest rates that goes like this: for every 1% change in interest rates, you gain or lose 10% buying power. So if you were pre-approved to buy a $500,000 house a few months ago when rates were around 4.5%, you might now be able to afford a $525,000 house (5% more buying power).
It’s also a good time to refinance into a lower rate, which could save you tens of thousands of dollars in the long term.
Talk to your mortgage consultant today, and if you don’t have one already, I’m happy to provide references to a few that I know and trust.