There was a 30% rise in home sales across the Puget Sound region in November 2016 as many homebuyers quickly hurry to lock in their interest rates before the new year. We have enjoyed historically low-interest rates for the last several years, but rising mortgage rates have scared many potential homebuyers into buying before they are ready.
The Seattle housing market is one of the hottest in the nation right now, and since the election, that market has been whipped into a frenzy even though the winter is typically a slower time. Buyers are discovering that they can no longer afford the same house they were approved for just a few months ago. Other buyers that may have been stalling are now frantically trying to seal the deal fearing that interest rates will rise even higher in 2017.
According to the Northwest MLS, the number of homes sold across King County rose nearly 30% in November compared to a year ago. There were similar spikes and surrounding counties of Snohomish, Pierce, and Kitsap. It was one of our region’s busiest November in 11 years. King County saw a 10% increase in the median single-family home cost and even higher in places like Snohomish and Pierce County.
The drawback is that new home listings have not kept up with the sales meaning that there are fewer homes available on the market and making the competition even more fierce.
It’s not uncommon to see a surge in home sales when interest rates spike, but the recent rise has caught many buyers off guard and caused a sense of urgency to purchase sooner rather than later. Many consumers are trying to close as quickly as possible to keep their low locked in rate and buyers fear that their buying power will change if rates continue to increase.
Several transactions across the Puget Sound area are sweetening the deal by waiving inspections or offering more earnest money up front. Many buyers fear that the longer they wait, and the more they negotiate, the higher the rates could go and lower their chances of actually getting the house.
Now, we are not talking huge increases here, but just a half a percentage point could add an extra $45,000 to the cost of the house over 30 years. That added interest could hit homebuyers even harder.
Throughout the Seattle area, about three-fourths of the homes for sale are subject to bidding wars and couple that with the higher interest rates and you have some pretty panicky buyers. Homebuyers that have money earmarked for furniture or other personal items are now putting it towards earnest money deposit’s and buying down fees to get a better deal on their chosen house. There’s just not a lot of time for negotiations and playing the market.
This doesn’t just affect homebuyers either; the Seattle Metro area saw 56% rise in home refinances compared to last year. Even though the holidays tend to be the slowest time in the real estate market, for the Puget Sound area, buyers are jumping on rates and homes faster than the supply can keep up.
This is why having a dedicated and persevering real estate professional on your side is imperative to the success of your real estate purchase. Contact Mary Pong today to get started.