The Cascade Team Blog

Mortgage rates keep surging, but would it be wise to buy?

The market has made it challenging for home buyers, who have to balance little inventory and a lot of competition.

According to a (past report in March 2021) from Zillow, it might make sense for buyers to act now — even in a competitive market. It could save people hundreds on their monthly mortgage payments if they move quickly, the report found, as experts predict home values and interest rates will rise.

“The best time to buy a home should always be when it’s the right time for you and/or your family. However, home shoppers would be wise to gather as much information as possible and use it to make smart decisions that maximize their buying power,” Zillow Home Trends Expert Amanda Pendleton said in a news release.

“For someone ready to buy, jumping in sooner rather than later could mean a savings of hundreds of dollars a month. Or, more likely, it could mean having to make fewer tradeoffs to stay within budget.”

But has this changed since March 2021? 

Mortgage rates climb even higher

Back in March 2021, The report found the typical monthly mortgage payment for people in Seattle with an average mortgage rate of 2.68% and typical home value of $586,162 was about $1,897 a month. The report looks at monthly payments based on a 30-year fixed mortgage and 20% down payment.

Now, Average mortgage rates are higher for all loan types today with the 30-year mortgage rate crossing above 5%.

• The latest rate on a 30-year fixed-rate mortgage is 5.17%. ⇑
• The latest rate on a 15-year fixed-rate mortgage is 4.197%. ⇑
• The latest rate on a 5/1 ARM is 3.974%. ⇑
• The latest rate on a 7/1 ARM is 4.135%. ⇑
• The latest rate on a 10/1 ARM is 4.245%. 

In Western Washington home buyers should try to keep recent interest rate hikes in perspective. Locally, job growth will be crucial to maintaining a robust housing market, something he expects to continue.

While home mortgage interest rates have increased to the high 4% range, this would be considered fantastic on a historical basis, but it is an adjustment from the recent low rates that we are absorbing. With this change, the main focus for the future strength of housing will be job growth, which is the No. 1 indicator to a strong housing market. The Central Puget Sound region is currently seeing extremely strong job growth, which is likely to continue in the years ahead.

Invest in real estate? Or Keep it in the bank? 

Even though the real estate market is showing signs of it cooling down, it is still a seller's market right now. Buyers often consider keeping their money in the bank, preferring to hold cash, but is that the wise thing to do?  I get it, it's a tough market right now, it may be nerve-wracking to deal with putting an offer on that home you have dreamt about and very likely deal with buyers fatigue. However, Investing in real estate may be more beneficial than you know in the long run.

In a previous blog, back in early February of 2021, I mentioned how Yahoo Finance made a good point about how you need to look at money as a tool and use money to build wealth.

To that end, money you put into a bank does not build you any wealth. An average interest-earning bank account will pay between 0.01% and 0.50% interest, which is less than the current rate of inflation, which was 6% in 2021, he said.

Real estate appreciation over time 

According to Investopedia homeownership is an investment and,

The benefits of investing in a home include appreciation, home equity, tax deductions, and deductible expenses.

Another big benefit of owning a home is appreciation over time; according to Investopedia, appreciation is:

in general terms, is an increase in the value of an asset over time. The increase can occur for a number of reasons, including increased demand or weakening supply, or as a result of changes in inflation or interest rates. 

House hunting is fraught with frustration and challenges. Wildly competitive open houses, sky-high prices, and ever-escalating offers: there is a terrible lot to contend with when finding a new place to live.

But there’s also no other process that deserves your time and attention, like discovering a new place to call your own.

Are you ready to buy a place to call home?

Ultimately, it is entirely up to you if you want to buy real estate right now.

As a home buyer in today’s market, you’re no doubt at your wit’s end trying to find your dream home. And when you find a home you love,  you’re competing with all-cash offers and bidding wars, driving the sales price above what it’s listed for, and many times, even above what the home is actually worth! While there is nothing you can do to create more homes for sale, you can certainly arm yourself by understanding the trends and patterns in the areas you’re trying to buy in. While it’s not quite rocket science, there is definitely a significant competitive advantage to those who understand the real estate market trends. Sometimes, being competitive means not looking in the most competitive price ranges in the most competitive markets.

Monroe. small city, big town feel!

Consider Monroe, where its small city, big town feel has attracted more people and continuously grows each year. No better time than now to consider moving further out! In a blog I wrote in October 2021, Snohomish County Continues to Grow, I expressed how I felt regarding more and more people choosing to move further out of town to get not only more land but more house for their money. Also, it is less competitive, with fewer home buyers competing than in the cities. More home buyers most certainly drive up the house prices. So why stay in the city? The pandemic affording many people to work at home has permitted this migration to the suburbs. 

With the market starting to show some change, the cities are still highly competitive. So, thinking of selling in today's real estate market? Wondering where you should go next? Consider Monroe. In a real estate market like this, it may be wiser to consider moving further out of the city. The market maybe starting to slow down, but it may still be a nightmare trying to buy in most of the bigger cities in Washington. Further, it is less competitive in the suburbs, with fewer buyers competing than in the cities. More home buyers most certainly drive up the house prices, tag on high-interest rates, and you may likely not be able to afford the house you want any longer. So why stay in the city? The silver lining during the pandemic has allowed many people to work at home, which in return has allowed more people to move to the suburbs. We see signs from many tech companies allowing remote work (at least in part), which will be here to stay.  By not having to drive into the city as often, residents have more freedom to buy more house, more land and enjoy the space that municipalities farther out in the county offer. There is no better time than now to consider moving further out! Some of the benefits of suburban living vs. crowded cityscapes: open spaces, parks, trails, larger homes on larger lots, and general population sparsity. 

Check out my link, Buy A Home The Cascade Team Way 

Here, you will find info on touring homes on your schedule to first time home buyers 

If you’re in the market to buy a home in this crazy market, contact me anytime to discuss what resources are available to help you understand the competitive nature of your local real estate market.