As we approach the end of the year many fatigued buyers wonder whether we will continue to see a rise in real estate prices. According to Reuters and other news outlets prices are expected to rise into 2022, perhaps just at a little slower than the pace we have seen in 2021.
What has caused such a huge rise in prices? Since 2020 we have seen a decline in interest rates shattering historic records. Rates bottomed out at 2.88% in January of 2021. After that the market saw prices skyrocket. As the Spring market heated up rates rose slightly, but they recently dropped down again to 2.88% again in August. Chief economist at Windermere Matthew Gardner says, “For every 1% decrease in interest rates, buyers can afford to pay 10% for the cost of a home.” Buyers feel more confident making larger offers as rates drop, however this does not bode well for affordability.
Compounding the problem with price increases in our Greater Seattle area is chronic low inventory. There is just not enough housing for all the buyers and this is especially true for first time and millennial buyers. Some sellers are afraid to sell because they are priced out of their current neighborhoods/market. As a result, we are seeing more and more migration trends to areas with lower housing prices.
COVID trends are making remote work more common and so we see a flight to back to the suburbs and Island areas where houses have home offices and more space. Some buyers are going out of state to low-cost housing markets in Arizona, Utah and Florida. King County prices are flattening out, and adjacent county’s such as Pierce and Snohomish prices are rising fast.
Although this is a difficult year to buy a home, and many buyers are sitting it out for a bit, if you are in the market staying persistent pays off. Don’t compromise or get pushed to over pay. Eventually you will find the perfect home.
Home values are over 18% higher than pre-pandemic. If you are interested in learning more about the value of your home feel free to contact me at eva@infinitiRED.com.