Higher inflation and economic concerns in the U.S. are clearly demonstrated in the real estate market. Mortgage rates had more than doubled from a year ago in September, and along with the impending recession fears, it caused the market to continue to slow down.
Here’s some data on mortgages and see how rates have increased over the past 12 months. The 30-year average rate increased from 3.22% in January to 6.02% in mid-September and, as of September 29, 2022, 6.70%. (Source: Freddie Mac)
From April 1971 to September 2022, 30-year fixed-rate mortgages averaged 7.76 percent. Even with the 30-year fixed-rate mortgage hovering around 6%, today's rates are still historically low, according to Freddie Mac.
In August 2022, home sales in the Seattle, WA metro area were down 31% from the previous August. Last month, approximately 33% of Redfin customers waived either a financing or inspection contingency. On average, homes sell for 1% less than their asking price. They were also off the market for 15 days, which was 9 days longer than this time last year. (Source: Redfin Data Center)
Home prices in King County were lower at the start of the pandemic around the beginning of 2020 and continued to rise but with the current interest rates, they have since slowed down.
Homes were selling quickly in a hot market during the past few years, and even though the market has since calmed down, there still isn't enough inventory to keep it balanced.
Due to the continuous hit in buyers’ mortgage affordability, demand has decreased, and sellers are now more than ever willing to lower prices, take more risks, and accept contingencies in their urgency to sell their homes.
Following two years of full-throttle price growth, bidding wars, and all-cash offers, recent months have definitely seen a dramatic shift. With economists’ predictions saying interest rates will continue to remain high (if not, continue to rise) for the next few months, as someone wanting to invest in real estate or simply start a life in a home of their own, would you think it’s the right time to buy?
One thing to keep in mind is that buying now means avoiding future mortgage rate increases and locking in an interest rate sooner rather than later may be wise. The key is to look closely at the area where you want to settle and to work with a reputable real estate agent.
Not only does Redfin have the best app and website for finding your dream home, but we also have the most real-time data on real estate trends than any other brokerage. When negotiating on the other side of the table, I take a data-driven approach, so having these tools to quickly and effectively run comps is invaluable. I offer free consultations and would love to work with you!
