Real Estate Market Update - August 2024
Real Estate Market Update
The summer sales season began in June with the typical seasonality driven slowdown indicated by increasing inventory/supply with decreasing sales/demand for the greater Seattle-Bellevue metro area through most of July. However, the rapid decrease in the 10-year treasury yield and related decline in mortgage interest rates in late July through early August appear to have facilitated an increase in sales activity this month. Data is still coming in for August, but a spike in activity was already forecasted for this month based on seasonal trends. As reported last month on July 24th, a 30-year fixed rate mortgage was approximately 6.8% based on a minimum downpayment of 25% and a credit score of at least 765. Now, a 30-year fixed rate mortgage is approximately 6%.
30-year fixed rate mortgages are typically priced approximately 2.5% to 3% in excess of the 10-year treasury note. Mortgage experts who I interviewed in late July indicated the bond market has now, based on current economic data and related comments from various members of the Federal Reserve Board of Governors, priced in three federal funds rate cuts prior to the end of 2024 which produced a decrease in both the 10-year treasury yield and mortgage interest rates.
I anticipate that new listings/inventory and sales will decrease from September into January according to seasonal trends, however, lower interest rates may mitigate such seasonality.
Guidance for Buyers
The summer season and fall is a good time to buy, especially as mortgage interest rates have decreased, because of reduced competition and excess supply/options. However, we’re still in a Sellers’ Market. Be prepared for the need to pre-inspect properties in a short amount of time and negotiate competitive offers that escalate in value—I would be happy to guide you through the process.
I do not recommend trying to time the market based on anticipated interest rate decreases, assuming you intend to own the home five years or more. It’s about time in the markets, not timing the markets.
Guidance for Sellers
The market generally softens beginning in mid-June (referred to as the Summer Slump), but demand and pricing always depends on the property and location. Home prices and buyer activity usually increases in August and cools from September into January. Keep in mind you will likely require several weeks to schedule trusted contractors to prepare a property, if necessary, and stage it. Stagers may be booked-out 4-6 weeks and photographers 3-4 weeks. I understand that any related sales expenses (e.g. brokerage fees, listing preparation costs, staging fees, etc.) may be deducted from your taxable gain. Please consult with your Certified Public Accountant (CPA) to confirm. See this article, Sold Your Home This Year? Consider Writing Off Some Common Expenses.