Low inventory! That seems to be the number that buyers are focused on these days. It's understandable. After all, the real estate pros have been talking about low inventory for years now. But, if you want to take advantage of opportunity in the current market, whether you are buying or selling, there is another number you should be looking at. That number is the 30 year mortgage interest rate.
The reason the 30 year mortgage interest rate is something you should be focusing on boils down to one word: affordability. We all know that affordability is a concern in the greater Seattle market. Since land isn't appearing out of nowhere and builders can't keep up with demand, there is not much anybody can do about the affordability issue in the short term. But you can offset the affordability problem by focusing on the mortgage interest rate. What do you see when you look at this chart? The 30 year mortgage rate is down by over a half point since May 2 of last year (blue line, see the box, 30y rate of 4.14% week ending May 2 2019).
(chart from http://www.freddiemac.com/pmms/)
The six tenths of a percent reduction in interest rate means that a house purchased at the median price of about $600,000 in King County this year using a 30 year mortgage will cost the buyer about 7% less based on monthly payments than a $600,000 house would have cost a year ago! A smart buyer who acts now beats pricing back by 7%!
So what is one thing that you can do about affordability? Take advantage of historic low 30 year mortgage rates. This is good for sellers as well because low interest rates increases demand for homes resulting in a fast sale at a good price.
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