Interest Rates vs. Property Values
Interest Rates vs. Property Values This has certainly been the biggest issue in real estate for the last year, or more.. The interest rates went from around 2.5% to around 7.5% on 30 year fixed mortgages, in just over a year. Only the Government could do something so stupid! Of course, this stalled the market. Nationwide, in 2023 approximately one third fewer homes were sold than in 2022. That’s huge! In Washington State, we saw prices decline as a result of the sharp increase in interest rates. Buyers couldn’t afford as much for a house and the overwhelming sentiment was that it was a “Buyer’s Market”. Statistically, this wasn’t true. We had a shortage of homes, which should have caused it to be a “Seller’s Market” with price increases. But that just didn’t happen. Overall, house prices dropped approximately 9% in 2023. As we enter 2024, the big question becomes…. “What’s next?” Every article I read seems to have the same, or at least similar, predictions for 2024….. The interest rates will come down, probably to as low as 6% on a 30 year fixed mortgage in 2024. This trend has already begun. We have seen rates come down for the last several weeks, by the tiniest amounts per week. Yay! What does this mean for you? As interest rates come down, there will be a surge in Home Buyers entering the market. This has already begun in Washington State. We are currently seeing new sales out-pacing new listings by nearly 2 to 1. – For every new listing coming on the market, two houses are selling. This ratio can’t last long because there aren’t very many houses left on the market. So, what’s next is very likely to be increasing prices and the return of bidding wars. The smart money says Buy Now! Even though the rates aren’t great… Buying before the surge in prices locks in the amount you pay for the house. Afterward, as rates come down, you could refinance.
