This isn't 2008. Home prices haven't started falling. Looking at Western Washington: Area-wide prices for single family home sales (excluding condos) in King County also increased, climbing nearly 20% from a year ago, from $830,000 to $995,000.
And though the supply of newly built homes has increased, that's actually a small part of the overall market. Inventories of existing homes are still some of the lowest on record, as of April.
“We are starting to see signs of impact from the significant rise in mortgage rates earlier this year, such as an increase in active listings and months of inventory creeping higher, but the full impact will likely not be felt for a few months,” said Matthew Gardner, chief economist at Windermere Real Estate.
With mortgage interest rates drifting upward in anticipation of the Federal Reserve’s hikes in its baseline interest rate, some brokers recommend quick action by prospective home buyers.
“We will not likely see interest rates back to 3%. Never before has it been more important to get preapproved and get serious about finding a home as now,” stressed Leach.
Commenting on growing inventory of single-family homes (up 27% from a year earlier), Young suggested higher priced homes requiring a mortgage “are feeling some heat from recent interest rates.”
The NWMLS report shows there was about three weeks (.78 months) of inventory of single-family homes and condos combined at the end of April. By this metric, that is the highest level in nearly 18 months. MLS data show there was .80 months of supply in October 2020.
Sell Now! Rates of 7 to 8.5% WILL affect home prices!
Best case scenario? The best-case scenario is that the home prices we have now will be the same prices we have next march. That means waiting 11 months will gain no value and we’ll basically have a flat market.
Likely scenario? If we get rates of 7%+, coupled with inflations and we now have economist warning of a possible recession we could see a 10% drop in prices. (I would say this scenario is slightly more likely than us being flat. 55/45 range.)
That being said: I spoke with some people this week. Their home is worth 2 million right now if they were to list. The exact same home model in their same neighborhood sold last April for $1,650,000… So:
• Their home has increased by $350,000 in a year.
• There are not going to be bidding wars going $Hundreds of thousands over.
• If they wait a year, they could very easily lose $200,000 in equity.
• It’s unlikely the home gains any value.
The Fed has unequivocally said they are raising rates: Many source are saying 7 to 7.5% is likely with some suggesting rates go past 8%.
- Wage-Price Spiral Could Send Rates Above 8%
- Analysis-U.S. trucking downturn foreshadows possible economic gloom
- Existing-home sales fall as soaring interest rates scare off homebuyers
The National Association of Realtors now expects existing-home sales to decline 10% over the course of the year
- U.S. mortgage interest rates reach a 12 year high, demand falters
The average interest rate on the most popular U.S. home loan climbed to a 12 year high last week and fewer homebuyers sought properties in a sign that the Federal Reserve's aim of cooling the housing market may be beginning to have an impact, data from the Mortgage Bankers...
The bottom line: Though the frenzy is over, "there's still a lot of pent-up demand from people who've been shopping for a year. NOW is most like the very best time to both Buy and Sell when factoring in rising interest rates which could hit 8% by January and decreasing values which may drop 10% come January 2023.