The Housing Market Is At 'Rock Bottom As High Rates And Prices Take Their Toll
With inflation and recession looking large, the housing market in Seattle is facing an uphill task. With mortgage rates soaring high, just like in 2008; people are holding onto their properties not making way for people coming from the lower earning category. United Seattle’s CEO has termed this situation to be a rock bottom one with mortgage rates hitting 7%, where there is no more space to fall any further.
The sales volume has never been at such a low in Seattle's history with only the must-move people moving out of their current homes. The root cause for this is termed to be the 7% mortgage rate which is the highest in US history. Furthermore, the consistent escalation of property prices has also played a big part in this current no-sell trend.
In the previous year, the attainability of housing faced a substantial setback, as evidenced by the surge in the average 30-year mortgage rate to 6.96%, as indicated by data from Freddie Mac. This pronounced upward trend in mortgage rates has notably amplified the borrowing expenses for potential homebuyers, establishing a considerable discouragement. Simultaneously, the appeal of putting properties up for sale has waned, given that sellers are hesitant to let go of their relatively more budget-friendly mortgages.
Experts now believe that immediate and drastic steps are required to arrest this situation before it forms into a full-blown catastrophe. The sole reason might not be the prices but also a tilt in the supply-demand ratio. As per data collected by experts at United Restoration, the percentage of homes in a particular Seattle area that are worth over $1 million has surged like never before. Moreover, the median home price has surged by approximately 44% compared to pre-pandemic levels.
A significant outcome of this turbulence in the housing market is its influence on the ability of young Americans to move freely. Both apartments and houses come with hefty price tags, which leads me to believe that the establishment of new households will be limited. As the expenses associated with entering the housing market persistently rise, the capacity of young individuals and families to shift from renting to owning homes faces progressively greater constraints. Therefore, renting is now being preferred more than ever with many individuals and families not even planning to purchase property.
Therefore, the current housing market in Seattle does not paint a rosy picture owing to high inflation, expensive property costs, and tilt of the supply-demand scale. This is now more of an affordability crisis rather than a housing crisis. These challenges are not only affecting the buyer community but also the sellers making the indifference to the market value vs. the will of someone to pay for it. While the market maneuvers through these challenging circumstances, the industry and policymakers must join forces in crafting approaches that reestablish balance and enhance accessibility within the housing market.
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