Rising mortgage rates and high home prices mean prospective buyers in Seattle should brace for a financial one-two punch if they plan to purchase a home this spring, but a surge in inventory should keep the city’s housing market humming through the summer.
These findings were laid out in the latest monthly report from Zillow, which said the value of a typical Seattle home has risen nearly 25% since last year. The average price for a home in the city is now $771,631, the report said. If that shocks you, just wait until you hear how much mortgage rates have grown during the same time.
“Higher mortgage rates were anticipated this year, but the speed of their rise has been breathtaking,” said Jeff Tucker, a senior economist at Zillow, in a news release.
In Seattle, homeowners are paying 42.8% more on their monthly mortgages than they were a year ago. The current average mortgage price — $3,009 per month, based on a 30-year mortgage with a 20% down payment — is 21.1% higher than it was at the start of 2022.
By applying these figures to the real world, we see that — in a typical scenario — a Seattle homebuyer could spend $154,326 on a down payment and have their first $3,009 mortgage payment due roughly 30 days later. Conventional wisdom says these steep upfront costs would likely push would-be buyers out of the market, but another factor highlighted in the Zillow report explains why that might not happen.
Inventory, which has been dreadfully low through most of the coronavirus pandemic, is on the rise. While the number of available homes in Seattle is still 17.7% lower than it was a year ago, that figure has grown 37.5% since February.
More inventory means less competition, which keeps already staggering costs lower than they would be if there were fewer houses available. The Zillow report shows that, despite high base prices for homes and mortgages, people in Seattle are still willing to purchase a house — newly pending sales are up nearly 34% since February.
“March was the biggest test yet of whether enough buyers can meet the new asking prices to keep home values growing at a record pace, and the answer was ‘So far, yes,’” Tucker said. “There will be a point when the cost of buying a home deters enough buyers to bring price growth back down to Earth, but for now, there is plenty of fuel in the tank as home shopping season kicks into gear.”
Seattle isn’t alone in the trends detailed in the Zillow report. A typical home in the U.S. is worth 20.6% more than it was at this time last year, and average monthly mortgage payments are 38% higher. Inventory is 22.5% lower than it was last year, but that figure has grown 11.6% since February.
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