(Center Square) — Spring typically brings increased buyer and seller activity when it comes to homes.
But in Washington state, “the sellers are on strike,” says Jeff Smart, president of the Washington Association of Realtors.
“Listings are moving,” he told The Center Square, “which means homes are coming on and selling every day, so real estate transactions are continuing but in fewer numbers. We need more homes to sell.”
Still, he remains optimistic about the market.
“I’m a second-generation real estate agent, and I grew up with a father who was a real estate agent in the ’80s when interest rates were 17-18 percent and homes were still selling,” he explained.
Smart said a surge in mortgage refinancing during the COVID-19 pandemic has left many homeowners who want to move stuck.
A survey conducted last summer by Realtor.com found that 82% of home sellers feel “locked in” by current low mortgage rates.
“We have a lot of people who have returned home with very low infection rates, what we call COVID rates,” Smart said.
This means people can’t buy comparable homes elsewhere at higher interest rates than they can now.
“The chief economist for the National Association of Realtors said recently that divorce rates appear to be going down, and he thinks it’s because people are deciding to stay in their homes rather than give up those favorable interest rates,” Smart explained. “People are holding on because they got these favorable rates once and they’re not going to get them again.”
Mike Wilkerson teaches real estate classes at Portland State University and is director of analysis for ECOnorthwest, a Portland-based economic consulting firm.
“Housing has traditionally been more affordable — the price of a home was in proportion to someone’s income,” he said, “and today there are more extenuating circumstances, like not being able to save up for a down payment because rents are so much higher than incomes and interest rates are so high.”
Even making a lateral move is problematic unless you have debt, he says.
“It’s really hard,” Wilkerson noted.
“Recent studies have shown that for every additional point of interest that is a differentiator when buying a new home, you are 18 to 20 percent less likely to purchase a new home,” he continued. “If you look at the current market, it’s probably 3 percent, and if you go up to 7 percent, that means you have an 80 percent chance of not being able to sell your home.”
Wilkerson said research shows the fastest growing property segment year over year is mortgage-free, meaning people who own their homes with a payment on them.
“Of the top 50 markets, Seattle has the lowest percentage of people without a mortgage, so that’s compounding the market constraints,” he said.
He said the proportion of people without a mortgage was falling, which led to fewer properties being available.
“Right now, homes have a three-month deadline to sell,” Wilkerson says. “Historically, if you don’t have a six-month supply or more, prices drop and it becomes a buyer’s market, but within those three months, it’s definitely a seller’s market.”
Both experts suggest there are other factors to consider, such as whether you’re a first-time home buyer or planning to sell your home.
