Today's real estate market feels frantic.
My team wrote more pre-approval letters in June than we’ve ever written in any one month. And we're positioned to close more loans in July than we've ever closed in any one month.
People are going nuts buying houses. There was a house in Port Townsend that was listed for $250,000. There were at least five offers within 24 hours. Four of the offers were from my customers that I had personally pre-approved. The house sold for $266,000.
I have another transaction with an accepted offer that is 12.5% above the list price. I had two customers competing for that house. It was under contract within days of being listed.
It feels like people are desperate to get into homes. What's driving this behavior?
At the beginning of 2019, most experts believed we'd see interest rates pushing 5% this year. Instead, the opposite has happened. The average 30-year fixed Interest rate dipped below 4% at the end of May (the first time we've seen rates under 4% since January, 2018) and have largely stayed there.
And home buyers are reaping the benefits. Potential buyers who couldn't find a home in their price range last year are able to increase their budget now. For instance, someone who was pre-approved to purchase a $400,000 home with 20% down at 5% interest, can afford a $440,00 home with an interest rate of 4% for about the same monthly payment.
Buyers want to strike while the iron's hot.
In 2016 and 2017, Jefferson County, WA saw an average sales price that increased more than 10% each year. But economists and real estate professionals believed homes would appreciate at a slower pace this year. That hasn't happened.
The median home price in Jefferson County, WA in 2018 was $360,000. Current median price: $396,170.
Kitsap County is hot! With fast ferries from Bremerton and Kingston directly to downtown Seattle and additional Seattle-bound ferries on the horizon, Kitsap is rapidly becoming the place to escape ludicrous Seattle/King County home prices.
Although Jefferson County isn't nearly as convenient for a Seattle commute, we could see some of the increased attention that Kitsap is getting. Kitsap County's median price increased 10.57% year over year ($350K in 6/2018 vs $387K in 06/2019), even though the number of transactions closed fell 5.37% (484 closed 06/2018 vs 458 closed in 06/2019).
Will prices continue to climb? Will interest rates continue to fall? Only time will tell! (Also, who wants to play hooky one day to check out the Kingston fast ferry and play tourist in Seattle?)