Sellers: Your window is closing

According to CNBC, the average contract interest rate for a 30 year fixed rate mortgage and conforming loan balance ($647,200 or less) increased to 4.9% from 4.8% for loans with a 20% down payment. I am already hearing about 6% rates from my mortgage broker friends. As you would expect, this impacted mortgage applications, which have been falling for months and dropped another 10% week on week. According to the Mortgage Banker’s Association’s seasonally adjusted index, volume of mortgage applications was down 41% from the same week one year ago. So what does this mean for sellers?

It means that the window sell at the top of this superheated market is closing fast. You have weeks, not months to take advantage of remarkably high demand and low interest rates. Buyer’s purchasing power is reduced with higher interest rates and there will be a short window of buyers scrambling to lock in a house and a rate before they increase more. However, more homes are getting listed due to the spring seasonality of real estate in our region. With higher rates, some of those homes will remain on the market longer, increasing inventory and reducing competition for some homes.

If you are not quite ready to list, it’s not the end of the world. The housing industry has been under building vs demand for the last decade, leaving buyers to compete for fewer homes. I expect the lack of inventory to last for years, especially here in the Puget Sound.

The Federal Reserve is expecting to increase interest rates at least four more times during 2022. Today is the strongest housing market we will have for some time.

Contact me if I can help you think through selling your home.