After a frenzied pace of the market over the last two years, things have finally started to cool off a little. Buyers who were sidelined over the past several months, first by intense bidding wars and then by higher interest rates, now find themselves asking themselves an important question. Can they take advantage of the recent drop in mortgage rates — mild as it may be — in order to benefit from today’s much larger selection of homes and reduced competition from other buyers?
The number of houses and condos for sale across Western Washington is up, pending sales are down, and price increases are slowing or stalling (in July, King County median prices were up only 2.7% year-over-year, much lower than the previous months). With this in mind, many buyers may decide now is the time to make the leap into the market.
In July, inventory across the 26-county NWMLS service area exceeded two months for the first time in three-and-a-half years. While this is certainly an improvement, inventory of less than three months still favors sellers, and many sellers in the area are receiving offers on their listings in under two weeks. Though the average days on market may increase as inventory grows, buyers will still need to act fairly quickly to secure a home.
It’s never easy to time a home purchase perfectly to mortgage rates, so buyers need to stay focused on the monthly payment they can afford and on how today’s combination of rates and home prices impact what type of home they should buy. That said, experts agree that we’re unlikely to see any major rate hikes for the remainder of the year because the mortgage market has already priced in additional rate hikes for the rest of 2022.
With this in mind, some buyers are beginning to feel secure in re-entering the market, knowing that rates are unlikely to spike on them mid-process, the way they did a few months ago. More buyers jumping back in may give some sellers — who also were sidelined by market dynamics over the past few months— greater confidence in their ability to sell their property. And, if those sellers are also looking to be buyers, they may have the ability to negotiate a home sale contingency into their purchase, an option they wouldn’t have had during the first half of this year.
Data cited in this post was sourced from the Northwest Multiple Listing Service.