The housing market in Washington has undergone many changes over the last couple of years, many of which affect homeowners. Here’s a roundup of some of the real estate and mortgage industry trends that are relevant to homeowners in Washington State, particularly those who are thinking about refinancing their homes.
1. Equity levels for Washington homeowners have risen – a lot.
According to a report published earlier this summer by the Washington Center for Real Estate Research, the median home selling price in Washington State rose to $337,700 during the second quarter of 2017. That’s a year-over-year increase of about 6.6%. It’s also an all-time high for house values across the state.
As a result of this trend, most homeowners in Washington now have more equity in their homes than they did when they first purchased their properties. This is good news for those who are considering a mortgage refinance, because positive equity is typically one of the key requirements for refinancing.
2. Mortgage rates are still below 4%, on average.
During the first week of September, the average rate for a 30-year mortgage loan sank to its lowest point of 2017 (to date). And rates are still hovering below 4%.
According to the weekly industry survey from Freddie Mac, the average rate for a 30-year fixed home loan was 3.78% during the week of September 14.
This brings even more good news for Washington State homeowners who are thinking about refinancing. While there are several reasons to refinance a home, most homeowners do it to secure a lower rate and thereby save money over the long term. And right now might be a great time to do that, as we enter the fall of 2017.
3. Rates are predicted to rise gradually over the coming months.
Washington homeowners should also know that the Mortgage Bankers Association (MBA) and Freddie Mac both expect mortgage rates to rise gradually through the end of 2017 and into 2018. The MBA recently updated its finance forecast for the U.S. economy, predicting that the average rate for a 30-year home loan would rise to 4.2% by the fourth quarter of 2017.
If these forecasts prove to be accurate, it means that the refinancing window could start closing for some Washington homeowners. So, depending on your current rate and equity situation, now might be a good time to refinance your existing mortgage.
4. Higher deb- to-income ratios are allowed for some borrowers.
Over the summer, Fannie Mae (one of the two government-sponsored enterprises that buy mortgage loans from lenders) announced it would allow higher debt-to-income limits for borrowers seeking a home loan.
Fannie Mae raised its debt-to-income ratio limit from o45% to 50%. This change could affect Washington State homeowners and home buyers alike, particularly those who have relatively high debt levels from student loans, credit cards, and other sources.
5. Washington will probably remain a seller’s market for a while.
The four points listed above are for Washington homeowners who are thinking of refinancing their homes. Here’s a final point for those who are thinking about selling.
Due to strong demand and limited inventory, local housing markets across Washington State will likely continue to favor sellers over buyers. This has been the case for the last couple of years, and it seems as though the trend will continue into 2018.
As with most real estate trends, this one is driven by supply and demand. Major cities across the state of Washington are experiencing very low inventory levels right now, below a two-month supply in some cases. (A “balanced” real estate market has five to six months of supply, according to experts.)
As a result, homeowners across the state are generally able to sell quickly and for full market value — if not more.
Bottom line: A lot has changed in the Washington real estate market, and there have been several key developments within the mortgage industry as well. Many of these trends bode well for Washington homeowners, particularly those who are thinking about a refinance.