Summary: 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.
The 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.
The Effect of COVID-19 on the Washington Real Estate Market
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 weeks 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 spring.
That said, buying activity seems to have ticked up over the second half of April. However, new listings and pending sales are still far below where they were the same time last year.
More specifically, new listings are down by 35% from the same month in 2019 and are 25% down from the month before in the 23 Western Washington counties that are served by the NWMLS. Meanwhile, pending sales dropped 12.3% from the same time last year and are 17.5% down from the previous month.
COVID-19 Has Resulted in Changes in the Market
There have been some changes in the market in response to the coronavirus. For instance, open houses have been temporarily put on hold until the pandemic dies down in 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 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.
Low Mortgage Interest Rates May Incentivize Buyers
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.
As of the middle of May 2020, the mortgage rate for a 30-year fixed-rate mortgage currently sits at 3.24%. That’s very close to the all-time low we recently saw just last month. Considering how low rates 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 real estate market today, despite the hurdles that the COVID-19 pandemic may be causing.
Home Purchase Applications Up From Last Week, But Down From Last Year
According to the Weekly Mortgage Applications Survey put out by Mortgage Bankers Association (MBA) for the week of May 8, 2020, the number of purchase applications in Washington increased 6.9% from the week before. For the week ending May 1, 2020, the number of purchase applications increased 2.9% from the week before.
That said, purchase applications are still down from the same time last year. According to the same MBA survey, home purchase applications decreased 35% over the week of May 8 from the same week in 2019. That’s quite a drop, and perhaps an expected one given the current health situation that the nation is battling.
Home Prices in Washington Expected to Stagnate But Will They?
The real estate market in Washington has been very hot up to now. According to Zillow, home prices have increased 6.6% over the past 12 months. Right now, the average home price in Washington State is about $428,900. But Zillow predicts that prices won’t go anywhere from here over the next 12 months into May 2021.
That said, it’s difficult to predict with great certainty and accuracy where home prices will be over the coming months given the fluidity of the COVID-19 pandemic. Industry experts may be apprehensive about making concrete forecasts 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. This has resulted in home prices actually moving higher. The economic impact of COVID 19 is not equal across all industries and income levels. So far the economic impact of the government shutdowns has generally hit lower income who typically rent harder than higher income homebuyers. It remains to be seen what the longer-term economic impact of the pandemic will be but for now, homebuyer demand has been surprisingly strong.
Hopefully, as 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.
Need a Mortgage in Washington?
If you need a home loan to buy a home, Sammamish Mortgage can help. We are a local mortgage company serving the Pacific Northwest region including Washington, Idaho, Colorado, and Oregon. We have been providing several mortgage programs with flexible qualification criteria to borrowers since 1992. Please contact us if you have any questions or are ready to apply for a mortgage.