Rising mortgage rates and high house prices mean potential buyers in Seattle should prepare for an economical one-to-punch if they plan to buy a home for the spring, but an increase in inventory should keep the city’s housing market humming through the summer.
These findings were presented in the latest monthly report by Zillow, who said the value of a typical Seattle home has risen nearly 25% since last year. The average price for a home in the city is now $ 771,631, the report said. If that shocks you, just wait until you hear how much mortgage rates have grown at the same time.
“Higher mortgage rates were expected this year, but the rate of their rise has been breathtaking,” Jeff Tucker, senior economist at Zillow, said in a press release.
In Seattle, homeowners pay 42.8% more on their monthly mortgages than they did a year ago. The current average home loan price – $ 3,009 per. month, based on a 30-year mortgage with a 20% payout – is 21.1% higher than it was at the beginning of 2022.
Applying these numbers to the real world, we see that – in a typical scenario – a Seattle homebuyer can spend $ 154,326 on a down payment and have their first $ 3,009 mortgage payment due about 30 days later. Conventional wisdom says that these high upfront costs would likely push potential buyers out of the market, but another factor highlighted in the Zillow report explains why this might not happen.
The stock, which has been terribly low through most of the coronavirus pandemic, is rising. While the number of vacant homes in Seattle is still 17.7% lower than a year ago, that number has grown by 37.5% since February.
More furniture means less competition, which already keeps dizzying costs lower than they would be if there were fewer houses available. The Zillow report shows that despite high base prices for homes and mortgages, people in Seattle are still willing to buy a home – recent pending sales have risen nearly 34% since February.
“March was the biggest test so far of whether enough buyers can meet the new offer prices to keep home values growing at a record pace, and the answer was ‘So far, yes,'” Tucker said. “There will be a time when the cost of buying a home deters enough buyers to bring price growth back to Earth, but so far there is plenty of fuel in the tank while the home buying season begins.”
Seattle is not alone in the trends outlined in the Zillow report. A typical home in the United States is worth 20.6% more than it was at this point last year, and the average monthly mortgage repayments are 38% higher. Inventories are 22.5% lower than last year, but that figure has grown 11.6% since February.