This is the second in a two-part series that examines the pros and cons of buying a home in Seattle in 2016 versus 2017. You can read part one here.
In part one of this article, we talked about the fact that home prices in the Seattle metro area are expected to continue rising through the end of this year and into next. That’s one important consideration for local home buyers. Here are three more points to consider.
3. Mortgage rates are expected to rise gradually through 2017.
Mortgage rates are another important consideration, at least for most home buyers. We talked about rising house values already. Mortgage rates are also expected to rise between now and next year, though not by much.
On August 11, 2016, Freddie Mac reported that the average rate for a 30-year fixed-rate home loan rose slightly to 3.45%. It has been hovering below 4% all year. But rates could rise over the coming months, due to a variety of factors.
As we reported last week, Freddie Mac’s economists expect mortgage rates to rise gradually between now and this time next year, perhaps reaching 4.4% by the end of 2017.
This is one more data point to consider, when weighing the advantages of buying a Seattle home in 2016 versus 2017.
4. There might be more homes available next year.
Over the last couple of years, there has been a serious shortage of homes for sale in Seattle (relative to demand). This is partly why home prices have been rising so dramatically. There just haven’t been enough homes on the market to satisfy buyer demand.
But that might be starting to change. According to several sources, there is more inventory coming onto the market lately, a trend that could continue through 2016 and into 2017.
In a press release published by the Northwest Multiple Listing Service earlier this month, Coldwell Banker Bain’s COO Mike Grady was quoted as saying:
“Our brokers in Seattle proper, and now more broadly in King County, say sales are slowing down. With the increase in [property] inventory, there may finally be some relief for home buyers.”
If this trend continues, it could lead to a healthier balance between housing supply and demand, which paves the way for point #4 below…
5. Competition among buyers could ease a bit over the coming months.
Anyone who has bought a home in Seattle in 2016 can attest to the competition that’s out there. Over the last couple of years, buyers in the area have competed, often fiercely, over the limited inventory we spoke of earlier. Bidding wars and offers above the asking price have been common features within the Seattle real estate market.
In June 2016, for example, The Seattle Times reported:
“…about 75 percent of home sellers have received multiple offers so far this year. That’s pushed the majority of homes to sell above their list price, and has left many buyers frustrated and shellshocked by a process that’s often swift and secretive.”
During the same month, The Times did a story about Seattle home buyers camping out (literally) for the chance to reserve new condos coming onto the market. You’d think it was the latest iPhone, the way people were lining up.
These are harsh conditions for home buyers. But they might be easing somewhat. As mentioned earlier, there have been reports of more inventory coming onto the market. While the Seattle real estate market will probably continue to favor sellers in 2017, as it has this year, the competition among buyers could wane a bit.
The pros and cons of buying a home in Seattle in 2016 versus 2017 could be summed up as follows.
Home buyers who are in the market to make a purchase should consider doing it sooner rather than later. The general consensus among housing analysts is that home prices across the Seattle metro area will continue rising through the end of this year and into next.
The market might cool a bit next year, and hopefully we’ll see a healthier balance of supply and demand. But home prices will probably continue moving north for the foreseeable future. This is arguably the most important consideration when deciding whether to buy in 2016 or 2017.
Disclaimer: This article contains forecasts and projections relating to the Seattle housing market and broader economy. Such statements were provided by third parties not associated with our company. We have simply compiled and analyzed them here as a service to our readers.