The Concoction of Vaccines Stimuls and Seattle Real Estate Blog Cover

One of the top producing agents who are a client of InBestments and a good friend of ours asked us, “Now that the vaccine is being rolled out quickly, we are slipping into March Madness, and Congress has just passed a massive $1.9 Trillion Covid-19 economic stimulus plan, what does it mean for Seattle’s housing market?”

Hmmm…how would we describe this unprecedented concoction?

THINK OF THE HOUSING MARKET AS A
GAME OF MUSICAL CHAIRS.

DURING A BUYER’S MARKET YOU’VE GOT
10 CHAIRS AND 8 PEOPLE PLAYING.

DURING A SELLER’S MARKET YOU’VE GOT
8 CHAIRS AND 10 PEOPLE PLAYING.

DURING TODAY’S MARKET YOU’VE GOT
ABOUT 4 CHAIRS, 43 PEOPLE PLAYING, BUT  
NOW THE CHAIRS ARE ON FIRE,
THE FLOOR IS ON FIRE, AND
YOU’RE BEING CHASED AROUND THE ROOM
BY AN AXE WIELDING PSYCHOPATH.
THAT’S PUGET SOUND HOUSING MARKET NOW.

This may sound hilarious but unfortunately, this is how our market has been since Covid-19 hit us a year ago and upended our world. All the housing-crash bros have been proven wrong and the housing market continued to be the cornerstone of our economy. COVID-19 taught people the importance of home and home life, and they raced to gobble up larger properties in the suburbs, with room for remote school and home offices.

Let’s look at the latest market activity report from NWMLS and compare it with what was happening at the same last year.

Exactly a year ago, the Closed Sales were at 5,265 homes vs. 5,812 last month, an increase of over 10%. However, the Supply for the same period reduced by almost half. With Supply at 0.74 months, the available inventory of homes will be exhausted in less than 3 weeks. If we exclude condos, the shortage is more acute with supply at mere 0.67 months. Yes, buyers are snatching up homes as soon as they are listed.

Active Listings are down by 43% on a Year-on-Year basis.
There is a silver lining in the New Listings which saw an 8% increase on a Month-to-Month basis. This increase is in line with the seasonal uptick we see with the onset of the Spring. The opening of the economy with all the counties in Washington moving to Phase 2 last month and are scheduled to move to Phase 3 on March 22 may see more new listings hitting the market.

Pending vs. New Listings Ratio

However, this increase in new listings in the next few months will not be enough considering the pent-up demand. So, brisk sales are expected to continue. One indicator of the sales brisk activity is the ratio of pending sales to new listings. This ratio continues to be skewed in favor of Pending Sales at 7,724 vs. 7,418 New Listings.

Relentless price increase

With the severe imbalance between supply and demand, buyers are forced to bid up significantly and thus home prices continue the relentless increase. The median prices in Western Washington have climbed up by a whopping 15% on a year-on-year basis, and by 6% on a month-on-month basis.

Home prices are rising at the fastest pace since the Great Recession

Puget Sound is not alone in this rapid rise in home prices. As per the latest S&P CoreLogic Case-Shiller Home Price Indices, “the market’s strength continues to be broadly-based across the USA.”

Why is the mortgage interest rate soaring?

“Let’s first remember the predominant rule of interest rates and mortgage rates. Bad economy = low rates to encourage more economic growth. Good economy = higher rates to curb inflation.”, says Vinod Sharma, CEO of InBestments.com.

Rates are going up because the interest on Treasury bonds is skyrocketing. Mortgage rates tend to track the yield on the 10-year Treasury note. The soaring bond yields are a sign investors are worried that the combination of vaccinations and stimulus checks will soon have the economy booming — and will fire up inflation.

Homebuyers who are on the fence, and homeowners who still haven’t refinanced, will be filled with regret if rates go higher still — which is how the signs appear to be pointing.

Investors still making money

One would think that in our piping hot market, investors are probably quiet. Not true. Savvy investors are active and are making money.

“Growing up one of the lessons I learned was that you can make money in any market. Translating this lesson to real estate, you can find deals and make money in any market, including the present crazy hot market. You just need the right platform and a smart Agent partner.”
Jo Dixit
Designated Broker & CEO, BricksFolios RE Solutions

In Conclusion

Our housing market is clearly running strong, with housing starts, permits and existing home sales all notching decade-plus highs in recent months.
As the broader economy improves (thankfully), continued vaccination roll-out, additional stimulus spending, and a “strong” fourth-quarter earnings season, mortgage interest rates increased recently. But they are still at historic lows and even as rates rise modestly, the housing market remains buoyant on the cusp of spring homebuying season. Homebuyer demand is strong and, for homeowners who have not refinanced but are looking to do so, they have not yet lost the opportunity though their potential interest savings has decreased.

Previous articleInsatiable buyer demand sustain strong home sales even in Winter
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Vinod and Jo are the founders of InBestments.com, a pioneer residential real estate wealth platform that removes the guesswork from real estate, whether you are buying your first home to live in or your 20th investment property to hold as a rental or to flip. InBestments is an ecosystem of lenders, agents, RE investors, home buyers, and homeowners, all working together with a singular goal – to build wealth with smart real estate. InBestments elevates Loan Officers and Agents to the role of Real Estate wealth adviser for life and enables you to provide superior service that your clients can't find anywhere else. Don’t be just another single-transaction loan officer or agent for your client. Build lifetime clients and close multiple deals per client. Never be forgotten. Period. Jo Dixit, is also the owner and Designated Broker of BricksFolios Real Estate Solutions, an investment focused brokerage that provides an unique end-to-end service encompassing Portfolio Planning, Funding Strategy, Asset Selection, Asset Management and Asset Disposal/1031 Exchange. Vinod and Jo's goal is to enable 100,000 families to achieve financial freedom with goals driven, smart real estate investments.

2 COMMENTS

  1. Brilliant and on-point analysis of the Real Estate and Mortgage. Thank you for sharing such data-driven insights.

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