Summary: With mortgage rates being extremely low right now and prices on the rise, is now the best time to buy a house in Washington State? In this article, we’ll provide some insight on the real estate market in Washington State to help you decide if now is the right time for you to buy a home.
When it comes to purchasing real estate, buyers want to make sure they get the most bank for their buck. And that means buying when prices are relatively affordable, taking advantage of a hot market where prices are expected to rise quite a bit, and locking in at a very low interest rate to make your mortgage more affordable and to increase your purchasing power.
Based on all that, it seems as though Washington State fits the bill, as all three apply. Mortgage rates continue on their downtrend while home prices are expected to continue to rise in Washington State. Is now the right time for you to get into the real estate market?
Is It the Best Time to Buy a House in Washington?
If you live in Washington and have been considering the purchase of a home, you probably already know that house values are on the rise. That’s been the big news story of the recent past. Home prices across Washington State have risen steadily, with double-digit gains in some cities during over recent years.
And the trend is expected to continue. In fact, the housing market in Washington State is hot right now, and prices are still on an uptrend.
But mortgage rates recently dropped to their lowest point ever recently, which will likely attract more buyers into the real estate market. When you combine this with the prospect of rising house prices, an argument could be made that now is the best time to buy a house in Washington.
Washington’s Housing Market is Very Hot Right Now
According to the real estate research firm Zillow, Washington State’s housing market is very hot right now. The average home price has risen 5.7% over the past 12 months and is expected to climb another 4.9% over the next year into March 2021. That means buyers who get into the market now can take advantage of rapid price appreciation and property value, thereby increasing their home equity in a relatively short period of time.
Home Prices Still Rising Due to Scant Inventory
Many markets across Washington State have very tight housing inventory. Centers like Seattle have barely a 1-month supply of available housing, and other metros across the state are recording similar numbers. A balanced market is one that has at least 5- to 6-months’ worth of inventory, so 1 month of supply is nowhere near a balanced market.
Such an inventory scenario is driving prices up and feeding demand, which is why companies like Zillow predict a hefty increase in prices over the next year.
This is the result of high demand and limited inventory, and these conditions will probably continue to put upward pressure on home prices through 2020 and into 2021.
So, for those would-be home buyers who are on the fence about making a purchase, now might be the best time to buy a house in Washington. Delaying your purchase plans could reduce your buying power, as prices continue to climb.
Mortgage Rates Recently Hit an All-Time Low
The prospect of continued home-price appreciation, in and of itself, is a pretty good reason to buy sooner rather than later. And recent mortgage rate trends give buyers yet another reason to move forward.
Mortgage rates have been on a steady decline over the past year and a half. After peaking in late 2018 at 4.94% over the past few years, rates have recently hit their valley. On the first week of March 2020, rates for a 30-year fixed home loan dropped to 3.29%, an all-time low. And the news was good for home buyers shopping for a mortgage loan.
The current rates are as follows:
- 30-year fixed-rate mortgage rate: 3.5%
- 15-year fixed-rate mortgage rate: 2.92%
- 5/1-year adjustable-rate mortgage rate: 3.34%
Mortgages May Be More Affordable Than Rent
Rent prices across Washington State have risen steadily, putting the squeeze on renters and stretching their budgets. Right now, the average rent price in Washington State is $1,995, which is nearly $100 more than the rent price the same time last year. These year-over-year increases in rent prices are taking place among cities nationwide. But this trend is visible across the entire state.
While home prices in Washington have also risen, there are some clear advantages to buying a house versus renting.
For one thing, you have more control over your monthly housing costs. A home buyer in Washington can choose a fixed-rate mortgage that will carry the same interest rate for the entire repayment term (in most cases). Rents, on the other hand, tend to rise steadily over time.
Let’s illustrate how mortgages may be lower than rent in Washington State. Using today’s average price in Washington of $422,400, a 10% down payment, and today’s 30-year fixed-rate mortgage rate of 3.5%, we arrive at a monthly mortgage payment of $1,701. That’s nearly $200 lower per month than the average rent in the state.
Of course, this is a simplified calculation that does not take into consideration closing costs when buying, but it shows that renting – which is paying someone else’s mortgage – is not necessarily cheaper every month than owning.
So, is now the best time to buy a house in Washington?
This is a question you must answer for yourself, through a combination of budgeting and soul-searching. But from a cost perspective, now could be a good time to buy. Mortgage rates are at their lowest point of the year, but we don’t know how long they will stay at that level. And there is a very good chance that home prices in the state will continue to rise.
Need a Mortgage Loan in Washington State?
Are you convinced that now is a great time to buy in Washington? Need a home loan to finance your purchase? We can help. Sammamish Mortgage is a local, family-owned company based in Bellevue, Washington and serves the entire state, as well as the broader Pacific Northwest region that includes Idaho, Colorado, and Oregon. We offer a wide variety of mortgage programs and products with flexible qualification criteria. Please contact us if you have mortgage-related questions.