The coronavirus has wreaked havoc on many aspects of society in Washington and the US as a whole. But how has it impacted Washington’s real estate market? This article will explain.
COVID-10 pandemic has certainly been a trial for real estate markets across the nation. As Americans are being asked to practice physical distancing in an effort to curb the spread of the virus, many industries have been affected, putting many aspects of day-to-day life on hold. Real estate markets in many parts of the US have been significantly impacted, including local markets in Washington State.
Interestingly, Washington State was among the first in the country to be heavily impacted by COVID-19. In late January, the first case of infection was reported in the Evergreen State. Certain parts of the state were thought to be early “hot spots” in the US, but that didn’t necessarily pan out. Instead, other states in the country ended up becoming hotbeds of the virus.
But buyers and sellers who are looking to get into the Washington real estate market may be wondering what the current state of the market is, and what it will look like in the near future. The coronavirus has certainly made things more complicated.
Throughout the month of March, the Washington State real estate market remained rather healthy. But since then, many metrics of real estate market activity have been dropping, according to the Northwest Multiple Listing Service (NWMLS).
The data over the next few months will provide even more insight into the impact that COVID-19 is having on the housing market in centers across Washington. Using one particular month’s metrics as the possible trend is not a good idea, as the story will likely change from one month to the next, as it already has since the start of the year.
According to Redfin, “Home prices statewide were up 17.9% year-over-year in August. At the same time, the number of homes sold rose 4.8% and the number of homes for sale fell 35.7%.” More than 60% of homes sold went for more than the asking price. It’s a seller’s market currently.
There have been some changes in the market in response to the coronavirus. For instance, open houses were temporarily put on hold in many areas across the US. In an effort to uphold physical distancing practices and minimize the spread of the virus, many sellers are foregoing open houses and many buyers are choosing to visit homes virtually rather than in person.
Technology is being heavily relied upon as virtual tours are still being used to help keep buyers and sellers safe throughout the pandemic while still keeping the industry going. Other measures are also being taken to minimize the spread of the virus, such as thorough cleaning and disinfecting.
The coronavirus pandemic continues to change everyday, though there are finally some signs that we are reaching a peak and are flattening the curve. However, new infections and deaths continue to be reported everyday. And as such, precautions still need to be taken. Government officials continue to keep regulations in place to upkeep physical distancing practices, and the economy is only now starting to open up.
After years of homebuyers looking to move closer to big cities and experience and urban lifestyle, have we seen a shift due to the pandemic. We have seen an increase in homebuyers including millennials looking for more space.
Will this be a long-term trend with an uptick in buyers moving to the suburbs and further away from cities? With the expectation that many temporary remote working situations will become permanent, it will open up opportunities for individuals and families to move to areas where you can get a lot more bang for your buck.
Considering this, it’s nearly impossible to forecast exactly what will happen in the near future in terms of the real estate market in Washington and other states across the country. But with interest rates as low as they are right now, buyers may have plenty of incentive to get into the market today to take advantage of these lower rates.
According to Zillow, as of September 10, 2021, “The current average 30-year fixed mortgage rate in Washington increased 2 basis points from 2.69% to 2.71%. Washington mortgage rates today are 1 basis point higher than the national average rate of 2.70%.” that’s a fair amount down from May 2020, when the mortgage rate for a 30-year fixed-rate mortgage sat at 3.24%.
Considering how low the interest rates for home sales are right now, buyers stand to save a great deal of money on their mortgages. The opportunity to lock in at a very low rate may encourage buyers to get into the Washington State housing market today, despite the hurdles that the COVID-19 pandemic may be causing.
According to the Weekly Mortgage Applications Survey put out by Mortgage Bankers Association (MBA) “Mortgage applications decreased 1.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 3, 2021.
In addition, “Mortgage application volume fell last week to its lowest level since mid-July, as mortgage rates have stayed just above 3% for several weeks. Refinance volume has been moderating, while purchase volume continues to be lower than expected given the lack of homes on the market.” Home sales are still strong year over year, however, according to The National Association of REALTORS®.
The real estate market in Washington has been very hot up to now. According to Redfin, home prices have increased 17.9% over the past 12 months. Right now, the average home price in Washington State is about $550,500. This price growth for single-family homes is most marked in big cities like Seattle. New construction is also up, adding more new listings to the existing homes, but higher demand is still outstripping supply.
That said, it’s difficult to predict with great certainty and accuracy where the vast majority of home prices will be over the coming months given the fluidity of the COVID-19 pandemic. The National Association of REALTORS® expects higher price growth in Washington than in the U.S. in the next 12 months. Their price expectations are 1.4% also higher than a year ago. However, not everyone is as sure about how home prices in Washington will behave as the situation evolves.
Over the past month, we have seen a surge in demand from new homebuyers and a lack of homes on the market, down more than 35% from this time last year. This has resulted in house prices actually moving higher. The economic impact of COVID 19 is not equal across all industries and income levels, and home sales on the higher end of the spectrum are less affected than those near the middle, even at pre-pandemic levels.
So far the economic uncertainty caused by the earlier government shutdowns has generally hit lower-income people who typically rent harder than higher-income homebuyers. It remains to be seen what the longer-term economic impact of the pandemic will be on housing and financial markets, but for now, homebuyer demand has been surprisingly strong.
Hopefully, as the federal government continues to support the housing market, the economy continues to slowly open back up and the number of infections and deaths from the coronavirus decrease, the real estate market in Washington will remain strong and home sales will continue to move along at a clip.
At Sammamish Mortgage, our loan officers are committed to transparency during the loan application and approval process, meaning you’ll have a good idea of your closing costs from start to finish.
Sammamish Mortgage has been in business since 1992, and has assisted many homebuyers in the Pacific Northwest. If you are looking for mortgage financing in Washington State, we can help you get preapproved. Sammamish Mortgage offers mortgage programs in Colorado, Idaho, Oregon, and Washington.
Contact a loan officer if you have any mortgage-related questions or concerns. If you are ready to move forward, you can view rates, obtain a customized instant rate quote, or apply instantly directly from our website.
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