Seattle and Its First-Time Homebuyers

The S&P Case-Shiller Home Price Index was just released earlier this week ranking the major metropolitan areas across the U.S. by the fastest-rising home prices. While we have not muscled out Portland for the No. 1 spot on the list, we came in a close second having narrowed the gap significantly.

According to an analysis by The Seattle Times, Seattle-area home prices are now rising at their swiftest pace in 2.5 years. While we missed out on taking over Portland for the top spot on the Case-Shiller index, Seattle did increase its lead over third-place Denver where prices only rose 8.8 percent over last year.

Portland, having led the Case-Shiller index all year, had the fastest-rising home prices up 11.7 percent over a year ago. In Seattle, home prices were up 11.4 percent over 2015. Both Pacific Northwest cities saw home costs increase at more than twice the national rate of 5.3 percent. By this point, the “record-high home price” headlines are trite. So what makes this time so important?

Well, for starters, this is the eighth straight month of double-digit growth. That in itself is something fairly noteworthy. Additionally, as The Seattle Times states, homes across all price levels are getting more expensive, but “the biggest increase was in the cheapest set of homes” which were up 12.4 percent. The smallest jump was for luxury homes, up 10.9 percent.

Home prices have been soaring consistently for more than four years having jumped 59 percent since 2012. Starter homes have seen prices jump 75 percent in that time frame. Our local millennials are ready to take advantage of the low mortgage rates, but the starter home just is not what it used to be.

What does this mean for the Eastside?

We want to take a look at Windermere Real Estate’s latest housing market update where we reported the median home sale price at $750,000. That is a solid 10 percent increase over the home prices we saw last year. By comparison, the median sale price of a single-family home was $630,000 last month.

First-time buyers are faced with these skyrocketing home prices, and even though other housing market factors are playing in their favor, it can be an intimidating time to jump into the real estate world. Make sure you team up with me so I can help you navigate the real estate market and can turn your homeownership dreams into a reality.

Read more from our source, The Seattle Times.

Posted on October 31, 2016 at 4:27 pm
Mallory Hanley | Category: Home Buying, National Housing Market

Mortgage Rates Drop This Week

If you’ve been looking to buy a home in Seattle or the Eastside recently, you’ve probably been overwhelmed with news of bidding wars, rising costs, and inventory shortages. I'm here to share good news that will keep you optimistic about jumping into the housing market.

According to The Seattle Times, long-term U.S. mortgage rates fell this week after three straight weeks of increases. The average 30-year fixed-rate mortgage slipped to 3.6 percent from 3.66 percent last week, which is well below its level a year ago. As for short-term mortgages, the report states that it is unlikely that the Federal Reserve will increase short-term interest rates at its upcoming meetings this summer.

What does this mean for you?

It means now is a great time for you to invest in your new home. You know as well as I do that mortgage rates fluctuate often, so securing a home is all about seizing the day (and house) when conditions are right – like they are now.

What does this mean for me?

It means I am ready to work with you to help you find your new home, and soon. Contact me today so I can help put the power of Windermere to work for you.

Read the full article on The Seattle Times.

Posted on June 9, 2016 at 11:56 am
Mallory Hanley | Category: National Housing Market

How a Federal Interest Rate Hike Impacts Mortgage Rates

When the Federal Reserve announces a change in interest rates, it makes headlines. Many are speculating what this kind of change will mean for our mortgage rates, and some are preparing for the worst.

But does the federal interest rate directly impact your mortgage rate? See what Windermere’s Chief Economist, Matthew Gardner has to say by watching the video on the Windermere.com blog.

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Posted on June 2, 2016 at 5:26 pm
Mallory Hanley | Category: National Housing Market

Lowest Mortgage Rates in Three Years

According to data released last week by Freddie Mac, we’re seeing some of the lowest mortgage rates in three years.

In their report on April 14, the 30-year fixed-rate average dropped to 3.58 percent while the 15-year fixed-rate average fell to 2.86 percent. It was 2.88 percent the week before and 2.94 percent last year. The last time the 15-year fixed rate fell this far down was also in May 2013.

The five-year adjustable rate average slipped to 2.84 percent when it was 2.82 percent the week before and 2.88 percent a year ago.

Things have since changed with their latest data released on Thursday. The 30-year fixed-rate is up just slightly to 3.59 percent and not surprisingly, the 15-year fixed-rate dropped again to 2.85 percent.

The Washington Post had a great article last week about what these rates mean. As they stated, the mortgage rate drop was “pushed down by jitters over the global economy and oil prices.

Earlier [last] week, the International Monetary Fund became the latest organization toexpress concern about the global economy, joining the Federal Reserve and theEuropean Central Bank. These worries have led many observers to predict that home loan rates will remain low for the near term.”

Make sure you read the full article from The Washington Post and stay tuned to see where else our mortgage rates may be headed.

Posted on April 21, 2016 at 10:57 am
Mallory Hanley | Category: Home Buying, National Housing Market

Further Proof This Isn’t a Housing Bubble

Two weeks ago, Keeping Current Matters posted a blog which explained that current increases in home prices were the result of the well-known concept of supply & demand and should not lead to conversations of a new housing bubble. Today, we want to look at home prices as compared to current incomes.

Read the full original blog posted on the Keeping Current Matters blog for more information and a comparison graph showing those mortgage numbers!

Are You Ready?

If you're ready to take advantage of the strong housing market, contact me! I'm happy to help you with the sale or purchase of your home.

Posted on March 25, 2016 at 8:42 am
Mallory Hanley | Category: National Housing Market

Average US rate on 30-year mortgage ticks up to 3.64 percent

This article originally appeared on The Seattle Times.

Average long-term U.S. mortgage rates rose this week for the first time in two months as global economic anxiety and market turbulence eased.

Mortgage buyer Freddie Mac said Thursday the average rate on a 30-year, fixed-rate mortgage increased to 3.64 percent from 3.62 percent last week. The benchmark rate remains below the 3.75 percent level it marked a year ago.

The average rate on 15-year fixed-rate mortgages edged up to 2.94 percent from 2.93 percent last week

Economists saw some positive signs in new data. The U.S. stock market started recouping losses from a brutal start to the year and ended last Friday with a second straight weekly gain. That brought a break in the recent trend of U.S. government bond prices being catapulted higher as investors sought safety.

The decline in U.S. bond prices raised the yields on the bonds, which mortgage rates follow. Yields approached their highest levels in a month. The yield on the 10-year Treasury bond stood at 1.84 percent Wednesday, up sharply from 1.75 percent a week earlier. The yield ticked up to 1.85 percent Thursday morning.

Though markets have stabilized and some economic anxiety has eased, most experts don’t expect the Federal Reserve to raise the short-term interest rate it controls anytime soon, following its rate hike in December.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fees for a 30-year mortgage declined to 0.5 point from 0.6 point last week. The fee for a 15-year loan was unchanged at 0.5 point.

Rates on adjustable five-year mortgages averaged 2.84 percent this week, up from 2.79 percent last week. The fee remained at 0.5 point.

 

If you think you're ready to take advantage of these low mortgage rates, let me know! I'm happy to help you find and purchase your dream home!

Posted on March 4, 2016 at 9:49 am
Mallory Hanley | Category: National Housing Market

There’s No Need To Panic About Rising Interest Rates

 

This article originally appeared on Inman.com 

After seven years of some of the lowest interest rates in recorded history, the Federal Reserve has decided to raise the key Fed Funds Rate by 0.25 percent, which is causing some to be concerned that it will lead to a jump in mortgage rates and negatively impact the US housing market.

So, the question everyone wants to know is, do we need to worry about interest rates leaping?

While I expect there to be some volatility in rates for a while, I don’t believe the real estate market will implode in a rapidly rising interest rate environment. So, yes, interest rates are going to rise modestly, but no, I don’t think we need to be overly worried about it.

To qualify this statement, we need to understand that mortgage rates do not run in “lock-step” with the Fed Funds Rate. Although the Fed Funds Rate is a bellwether for the greater economic environment, there have been times when these two rates have moved in opposite directions, such as we saw in 2004/2005.

It’s also important to understand that while interest rates for revolving credit, such as credit cards and home equity loans, are tied to the Fed Funds Rate, non-revolving loans – like mortgages – are not. Mortgage rates are tied to bond yields – specifically the 10-year treasury.

So what do I think will happen?

I believe interest rates will rise above 4 percent, but we will not see a sharp spike in rates. The Fed has stated that any upward movement in the Fed Funds Rate will be slow and steady, and will reflect the greater economy. And I believe that mortgage rates will follow suit.  Additionally, mortgage rates have already moved higher in anticipation of an increase in the Fed Funds Rate.

That said, it is worth noting that any weakness in the global economy can actually have a downward effect on interest rates. This is referred to a “flight to quality”. In essence, investors seek safe haven during times of economic uncertainty. If markets outside the U.S. continue to underperform, there will likely be increasing demand for bonds which will drive up their price and drive down interest rates. Between China, the Eurozone, war in the Middle East, and a massive drop in oil prices, it's certainly possible that the price of mortgage backed securities could rise, leading U.S. mortgage rates lower.

Interest rates could not realistically stay at their current levels forever. But an increase should not be a great cause for concern. Yes, an increase makes mortgages more expensive, but not to a point where they will have a negative effect on home values. That said, the rate of home price growth will undoubtedly slow in the coming year, but that isn’t necessarily a bad thing.

A little perspective might help: the average rate for a 30-year loan in the 1970’s was nine percent. It was 13 percent in the 1980’s and eight percent in the 1990’s. And yet people still managed to buy and sell homes throughout those years. With that in mind, the rate increases we’re likely to see in 2016 are nothing to fret over.

The increase in the Fed Funds Rate should be taken as a sign that our economy is expanding and is a preemptive move to limit anticipated inflation. While interest rates have risen from their all-time low, they are still remarkably favorable. And will remain so through 2016.

 

Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has over 25 years of professional experience both in the U.S. and U.K. 

Posted on December 17, 2015 at 1:25 pm
Mallory Hanley | Category: National Housing Market

No national bubble in sight, but there are some frothy markets

 

This article originally appeared on Inman.com 

Earlier this year, I wrote an article called “No housing bubble in sight — for now” in which I shared my belief that the nation, as a whole, is not currently at risk of seeing another housing bubble.

However, I did qualify that statement by saying that I was noticing some “frothy” markets around the country that might be getting a little too hot.

In this article, I plan to divulge those markets that are likely to see slowing price growth in 2016 and possibly a downward correction.

The primary data sources that I used for my analysis were the Case-Shiller Index and the Federal Housing Finance Agency (FHFA).

I chose these two providers as they both prepare indices on home values using the repeat sales method. That is to say, they use data on properties that have sold at least twice to capture the true appreciated value of each home.

What the data shows

As I studied these data sets, it became apparent to me that there are some markets that we need to watch. From a very simplistic standpoint, both Case-Shiller and the FHFA indicated a few cities that have already surpassed their peak index levels.

Using the Case-Shiller numbers, these were Dallas, Denver, Portland and Boston. The FHFA data showed Dallas, Atlanta, Charlotte, Portland, San Francisco and Seattle as having surpassed their previous peaks.

While this can certainly be an indicator that a market is getting overheated, it’s not the be-all and end-all because external influences, such as mortgage rates and recessions, can all affect index levels.

Because of this, I thought it was important to take a closer look and focus on those markets that might be tracking above their natural trend.

That’s to say, I looked at pre-bubble growth rates, forecasted that rate forward in time and then compared that number to the present index levels.

After having completed this analysis, San Francisco, Denver and Dallas appear to be appreciating at a faster rate than their historic averages.

Even two indicators that point toward a potential problem don’t guarantee an outcome. Because of this, I decided to round off my analysis by looking at the ratio of home prices to incomes in the market areas that were of interest.

This is another important indicator when determining the health of a housing market as it speaks to affordability.

For the past few years, home values have been rising at rates well above that of incomes, but thanks to low-interest rates, this hasn’t yet created a significant barrier for buyers.

However, mortgage rates are set to rise, and this could leave some markets with homes that are too expensive for buyers earning that area’s median income.

When we look at the world through this lens, the cities where I see a cause for concern are San Francisco, San Diego and San Jose.

So what does this all mean?

Well, for one thing, San Francisco stands out — and not necessarily in a good way. Additionally, several markets have recovered from the housing collapse, and they are getting a little ahead of the rest of the country; specifically Denver and Dallas.

I will be watching these markets closely and anticipate that we might see a relatively steep slowdown in home price growth in these three cities.

The U.S. housing market has spent the past three years in recovery mode with robust demand, tight supply and favorable interest rates, which created a perfect environment for prices to rise — and rise they did.

However, I believe that a select few markets, such as San Francisco, Denver and Dallas, are getting a little out of sync and should start to prepare for an almost certain slowdown in price growth.

Now, if there is any consolation, it’s that the slowdown is supply-driven. If we do not see a significant increase in inventory in these markets, any slowdown in home prices might be offset by persistently high demand. Only time will tell.

 

Matthew Gardner is the chief economist for Windermere Real Estate. Follow him on Twitter @windermere
 
Posted on December 4, 2015 at 9:38 am
Mallory Hanley | Category: National Housing Market