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Fed Rate Hike: Impact on Seattle’s Hot Housing Market

By
Vinod Sharma & Jo Dixit
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Fed Rate Increased

For the first time since 2018, the Federal Reserve raises interest rates by a quarter point percentage (0.25%). This took off effective March 17, 2022. Since the start of (and throughout) the pandemic, the federal fund interest rate was maintained at almost 0 percent.  

Here we answer some of the common issues surrounding federal fund interest rate hike and what it will mean for you as a real estate investor:

Federal Rates 2008 – 2022

What is the Federal Funds Interest Rate and Why Do They Matter?

In a nutshell, the federal funds interest rate (or simply fed rate) is the interest rate that banks charge each other for lending excess cash to them from their reserve balances on an overnight basis.

All financial institutions in the United States are required by law to maintain non-interest-bearing accounts at Federal Reserve Banks. Before March 2020, these accounts must have a reserve amount equal to a percentage of the bank’s total deposits. If a bank is unable to meet its required reserve, it borrows from other banks with excess cash from its reserve at the interest rate set by Federal Reserve. This interest rate is the federal funds’ interest rate. 

This interest rate is used as a baseline for prime rates. Prime rates (or prime lending rates) are the prevailing interest rates that banks charge their best customers. This means that when federal rates hike, chances are prime rates will also increase. This includes bank loan interest rates, credit card interest rates, and mortgage adjustable rates, among many others.

NOTE: When the COVID-19 pandemic hit the country, the Federal Reserve decided to reduce the reserve requirement ratio to zero. The goal was to encourage banks to lend out all of their funds as a way to jump-start the economy. By eliminating the required reserve, banks can use this money to lend out to individuals and businesses, thereby stimulating the economy.  

Why is the Federal Reserve Raising Interest Rates?

One word. Inflation. In February 2022, inflation reached 7.9% based on the most recent Consumer Price Index (CPI) report. 

Source: U.S. Bureau of Labor and Statistics

The Fed uses interest rates as either a gas pedal or a brake on the economy when needed.

Greg McBride, Chief Financial Analyst, Bankrate

It is the general responsibility of the Federal Reserve to maintain economic and financial stability. Thus, the Federal Reserve needs to get inflation under control. By under control, this means at an inflation rate of 2 percent. Too high of an inflation rate would be a burden to many American families. While too low could also weaken the economy and there would be no room left to cut interest rates to boost employment during an economic downturn. A 2 percent inflation rate would just be enough to maintain a well-functioning economy allowing households and businesses to save, borrow, and invest and thrive. 

One of the ways that the Federal Reserve can lower a rising inflation rate is to increase federal fund interest rates. As fed rates increase, consequently making borrowing more expensive, consumers are expected to spend less. Demand for goods and services fall and the economy slows down a bit, bringing inflation down. 

What Pushed Inflation to Go Haywire?

In 2021, we already felt a steady increase in inflation. Since the U.S. economy reopened in March 2021, we saw a spike in inflation by 1.6 percent in April which steadily increased by a few percentage points that lead to the 7.9 percent inflation rate in February 2022.


For starters, the Federal Reserve has been apprehensive in raising the interest rates, believing that inflation was still under control. For several months, the Federal Reserve has been pointing to the reopening of the economy, increasing demands, and low levels of supply to be the reasons for the inflation. In our observation, the Federal Reserve simply waited it out with the belief that in time, inflation rates would stabilize when supply chain disruptions and shortages would end. For the most part, the Federal Reserve has underestimated the depth and extensiveness of the rising inflation rates.

Unfortunately, while the Federal Reserve expected a breather this 2022, they encountered the opposite as supply chain challenges continue to haunt us. The Russian invasion not only magnified the increasing costs of commodities (e.g., gas, oil, wheat). But, it also caused the U.S. economic outlook to remain uncertain. 

Furthermore, the new COVID outbreak in China has led to the closures of ports and factories to contain the outbreak. This can worsen the already strained supply chains. 

Russia-Ukraine War: Impact on Seattle and U.S. Real Estate

Click HERE to read more

How High Will Federal Fund Interest Rates Go?

By the end of 2022, the fed rate is expected to be between 1.75 and 2 percent. This means there will be seven more interest rate hikes for the rest of the year. Meanwhile, 2023 is forecasted to have four more interest rate increases, with a target rate of 2.8 percent.

How Will the Rising Federal Fund Interest Rates Affect You?

As mentioned earlier, the fed rates provide the baseline for prime rates. This means that if the fed rates continue to increase, borrowing would eventually become more expensive for consumers and businesses due to higher loan rates.

What Does Federal Fund Interest Rate Hike Mean for the Housing Market?

One thing is for sure. Mortgage rates will increase due to increasing fed rates. Even before the Federal Reserve announced its rate hikes, mortgage interest rates have been creeping up since December 2021. As of March 17, 2022, the 30-year-fixed mortgage rate has reached 4.16 percent, representing the highest level for mortgage rates since April 2019. 

The higher mortgage rate can ultimately affect your purchasing power as a homebuyer as it will be more expensive to buy a house.

Will the Federal Fund Interest Rate Hike Finally Stabilize the Hot Housing Market in Seattle?

True enough, Seattle Housing Market has already been crazy the past two years, with skyrocketing home prices and bidding wars here and there. 

The fed rate hike might be able to slow the demand a bit as homebuyers may become hesitant in buying now due to the rising mortgage rates. However, the low inventory of homes remains to be a big issue in Seattle. Thus, while we will probably see fewer bidding wars, the housing market in Seattle will remain competitive and continue to thrive.

That being said, we don’t see any indications of home prices going down due to the fed rate hike. 

The Verdict: To Buy or Not to Buy?

Definitely, BUY, and the sooner, the better. 

With the looming fed rate hikes in the next two years, it’s only a matter of time before mortgage rates would follow suit. 

Home prices are also expected to rise primarily due to low inventory. The good news is that home price increases may not accelerate that fast due to the fed rate increase. 

If you have been thinking about buying, whether for your first home or an investment, now is still a good time to buy. This is despite the skyrocketing home prices and the increasing mortgage rates. Real estate continues to be the safest investment out there today. For one thing, it will be cheaper to buy now than it will be in the next two to three years.  

“The American economy is very strong and well-positioned to handle tighter monetary policy.”

Jerome Powell, Federal Reserve Chair

Looking for the ideal real estate property to help you build wealth and achieve financial freedom? BricksFolios has got the right property just for you! Contact us NOW!

Russia-Ukraine War: Impact on Seattle and U.S. Real Estate

By
Vinod Sharma & Jo Dixit
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0

The Russia-Ukraine crisis brings along several risks for a world economy that has yet to fully recover from the economic effects brought by the pandemic. While our hearts and minds are with the people who are in the middle of the war, the founders of BricksFolios provide some insights on how this crisis could impact the Real Estate market in the Seattle region and the United States.

Russia-Ukraine War: Impact on Mortgage Rates

As the stock markets plummet, stock investors seek some semblance of “certainty”. Because nobody really knows the outcome of any kind of war, investors want the surest bet. Most stock investors would move their money to bonds to avoid losing money. When investors demand more bonds (i.e., mortgage-backed securities), the price of these bonds would typically go up, while interest rates (i.e., yields) would fall. 

After a steady increase of mortgage rates since January this year, homebuyers are now seeing some relief as markets react to the Russian invasion of Ukraine. As of Thursday, 3rd March 2022, the average rate for the 30-year fixed-rate mortgage was 3.76%, down 13 basis points from the previous week, according to Freddie Mac FMCC. One basis point is equal to one-hundredth of a percentage point. Just a few weeks ago, the average 30-year loan rate jumped to almost 4%, the highest level since May 2019.

Unfortunately, the dip in mortgage rates may not last long. With inflation hitting its highest in 40 years, the Russia-Ukraine crisis may only provide some temporary relief for homebuyers.  During the Financial Services Committee hearing on 2nd March 2022, the Federal Reserve Chair Pro Tempore Jerome Powell said he would “support a 25 basis point rate hike.” 

Do note that mortgage rates are not directly correlated with the Fed Rate but they tend to track the yield on the 10-year Treasury note. 

If you are in the market to buy your investment properties or your dream home, you may want to lock the interest rate.  

If you are in the market to buy your investment properties or your dream home, you may want to lock the interest rate.  

Jo Dixit, Chief Wealth Officer, BricksFolios.com

Russia-Ukraine War: Impact on House Prices

Head of petroleum analysis for Gas Buddy, Patrick de Haan, believes that what happens in Russia could have a profound impact on our country in terms of energy availability and price. 

This being said, a likely increase in gas prices will play out in the coming few days. 

When this happens, the cost of transportation will increase as well. This increase would cascade throughout the entire supply chain. This means that the price of everything else would likely go up. 

In real estate, this will push the prices of raw materials further thereby increasing the cost of construction. 

As you may have noticed, we have already seen skyrocketing home prices since 2020. In Washington alone, in 2021, we saw a 20.4% system-wide increase in single-family homes, not including condominiums. 

Will the U.S. Housing Crash in 2022? Click HERE to read more.

With the Russia-Ukraine crisis, new home constructions would significantly be more expensive than ever before. Real estate developers would also hike the prices up to cover the expense and make a profit.

Russia-Ukraine War: Impact on Homebuyers’ Capacity to Make Down Payments

As mentioned earlier, stock investors dislike uncertainties, in the same way, that global markets dislike conflict. This leaves financial markets volatile and weakened. 

Homebuyers who rely on their stocks or their 401(k) for a down payment on a new house will be severely affected.

Likewise, volatility in the financial markets may wear down consumer confidence.

Russia-Ukraine War: Impact on Demand for Homes

In the near term, this war could further boost our real estate. Wealthy Russians and Ukrainians have different reasons for moving their money overseas, and investing in more-stable Western markets is nothing new for them. The anecdotal evidence indicates they are trying harder than usual to get their money out of Ukraine and Russia as quickly as possible and into the United States. And overwhelmingly, that money is flowing into American real estate in markets like Seattle, WA, and California.

If this war spills out of Ukraine and leads to NATO getting involved to protect its members, further economic repercussions in the U.S. could begin to manifest (e.g., stifling job growth, limiting pay increases). With the increasing home prices and mortgage rates, demand for new homes in the U.S. may potentially decline.  This would lead to more demand for rentals, and thus an increase in rents. Savvy investors would then add more rentals to their portfolio.

What Does the Future Hold for Homebuyers and Real Estate Investors?

What we do know is that inflation expectations remain anchored before the Russia-Ukraine war. However, the Russia-Ukraine conflict will undoubtedly stir the already troubled waters. 

Despite homebuyers having more purchase power due to the dipping mortgage rates at the moment, homebuyers and real estate investors might find themselves purchasing more expensive homes later on due to inflation. For others, they may not even be able to afford a new home anymore.

The United States real estate market in general, and booming housing markets like Seattle with a strong local economy, continues to be a safe haven for your money in the midst of a war between Russia and Ukraine.

“The U.S. is an island of growth. [It] is one of the only major economies in the world that has this cushion of $6 trillion in stimulus.”

Joseph Zilde, Chief Investment Strategist, Blackstone

The fact remains. In Seattle and the U.S. real estate, we have too few homes for sale and the demand is very high. The chart below summarizes the severe imbalance between supply and demand.

As for now, we will continue to watch the Russia-Ukraine war and how it impacts Seattle and the U.S. real estate market.

Despite all the uncertainties, you can still build wealth through Seattle and U.S. real estate with the right partners. Don’t just buy a home. Buy a true wealth-building home. BricksFolios powered by InBestments, can help you do that and more!

Will the U.S. Housing Market Crash in 2022?

By
Vinod Sharma & Jo Dixit
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0

In 2021, the U.S. housing stock gained $6.9 trillion, easily the most in one year.  Over the past decade, the value of the housing market in the U.S. has more than doubled since the post-recession lows and the corresponding building slump.

In Washington, Northwest MLS reports a 20.4 percent system-wide increase in prices for single-family homes (excluding condominiums). From only $490,000 in 2020, prices increased to $590,000 in 2021. Meanwhile, condominium prices also rose 11.8 percent, from only $380,000 in 2020 to $425,000 in 2021. 

Mortgage rates are also escalating to pre-pandemic levels. Just this week, we saw an increase once again in mortgage rates. From an annual average of 2.96 percent in 2021 and 3.11 percent in 2020, 30-year fixed-rate mortgage is now 3.69 percent according to Freddie Mac. 

U.S. Mortgage Rates 2022, U.S. Housing Market

Is the U.S. housing market going to crash in 2022 following this unprecedented growth in 2021?

Before you spell doom, let us give you a brief background of the U.S. housing market and what’s driving its growth.

#1 Law of Supply and Demand

The rising home prices are attributed to the fact that there is just a high demand for houses at this point while the inventory of houses up for sale is low. It is simply a matter of the law of supply and demand. What we are seeing right now is rather a very dynamic housing market with more buyers than sellers (i.e., sellers’ market). As more home buyers enter into bidding wars, sellers have the opportunity to price their homes more than the actual market value. 

For a housing market to be balanced, it needs about 4 months’ worth of inventory. Last year, the U.S. housing market inventory was so low that each month, it had no more than a month of supply. 

Nevertheless, even before the pandemic, there was already a low volume of available houses for sale. The last time the U.S. housing market had at least four months of inventory was in February 2014. 

In Washington, there were 0.75 months of inventory at the start of 2021, but by the end of the year, it had dropped to 0.40 months (about 12 days). Yes, homes are selling like hotcakes.


#2 The US is not building enough homes

According to a report from Realtor.com, the United States is short 5.24 million homes, an increase of 1.4 million from the 2019 gap of 3.84 million. Census data shows that 12.3 million new American households were formed between January 2012 and June 2021, but only 7 million single-family homes were constructed during that period.


Residential Unit Completions in the US From 2001 50 2020

A severe labor shortage plagued single-family home construction long before the pandemic hit, but the pandemic made it worse. Although new household formation is actually slower than it was before the pandemic, homebuilders would have to double their new home production pace to close the gap in five to six years. This is highly unlikely to happen.

Washington’s shortage was the 8th-highest in the U.S., according to Up for Growth’s Housing Underproduction in the U.S. report. This underproduction is severe in counties in central Puget Sound – King, Pierce, Snohomish and Kitsap, which have the most high-paying tech jobs. These counties need a total of 810,000 new housing units to accommodate the region’s population growth by the year 2050, according to Puget Sound Regional Council.



#3 Demographics

Millenials dominated the U.S. housing market in the previous year with 51 percent home-purchase loan applications in 2021. There was an upward trend of home buying as more millennials are entering into their first-time home-buying age of 30. 

#4 COVID-19 Pandemic

Covid-19 transformed not just our homes but their purpose. This further fuelled the home buying spree everywhere. The lockdowns and nature of work (i.e., remote work) have geographically shifted many workers. Those living in the cities and large urban centers who were severely affected by the pandemic fled for safety in areas that are more expansive like in the suburbs, exurbs, and smaller cities. Accustomed to the price points in big cities, these city-dwellers trying to find new homes in less busy areas saw affordable homes despite the increased house prices. For many of them, it seemed like a bargain compared with house prices in the city. 

#5 Low-Interest Rates

Many of those who bought in the last two years also enjoyed super-low interest rates, which made the market generally attractive to many homebuyers.  

Current Growth Is Not Sustainable, But a U.S. Housing Market Crash is Unlikely

While we are seeing an overvalued housing market, it doesn’t necessarily mean it is a bubble. At this point, there is no hyper-expansion in the real estate market (i.e., when home building exceeds demand). Hyper-expansion in real estate usually happens when the market turns speculative with investors (e.g., home flippers dominating the market). While such investors have picked up in recent months, it’s not enough to cause a bubble. 

Even with plenty of lands for developers to build, NYT columnist and Nobel Laureate Paul Krugman point out that, this all boils down to the supply chain. You may not agree with Krugman for his other predictions and assessments, but the indisputable fact is since the pandemic, the price of construction materials has risen steeply. This made homebuilding even more expensive and complicated as the COVID-19 pandemic disrupted the global supply chain. 

(Source: Krugman)

Another thing to look out for in a bubble is the homebuyers’ capacity to pay. The good news is that it seems we have learned from our past mistakes and safety measures are now put in place to prevent another housing collapse. Today, mortgage credit availability is a lot tighter than it previously was in the mid-2000s.

What Should We Expect In The U.S. Housing Market This 2022?

#1. For starters, the U.S. housing market in 2022 will probably cool off a bit. Home prices will stabilize in some areas, specifically in hyped-up parts of the housing market. However, there will be some areas where home prices will continue to rise given the low inventory, but probably not as high as last year, but still substantial.  

#2. Meanwhile, inventory will remain low. As new variants of COVID emerge after every few months, even with the vaccine, likely, the global supply chain will not return to normal this year. Labor shortages also continue to be a problem across the country. 

#3. Lastly, mortgage rates are also likely to continue to rise as we are seeing an increase in the inflation rate, which is one of the key drivers of rising mortgage rates. In the latest data released by the Bureau of Labor and Statistics, we are seeing inflation at its peak in 40 years. Nevertheless, mortgage rates are still historically low, which experts believe to be favorable. So, if you’re looking into refinancing, experts suggest refinancing only if you can get a new mortgage rate that’s close to 0.75% lower than your current rate.  

What Do These Market Trends Mean For Buyers/ Real Estate Investors?

If you’re planning to purchase a house this 2022, we know you’re probably feeling a lot of emotions right now. There’s exhilaration and excitement at the thought of finding and moving into your dream home or buying an investment property. At the same time, there’s also an overwhelming feeling of navigating into the wild real estate market and a bit of panic and worry if you’re doing the right thing.  

However, investing in real estate does not have to be stressful. There are companies that can help you. BricksFolios and InBestments, for example, can assist you, not just in navigating into the housing market, but to start building your wealth through smart real estate. 

Yes, some things are out of your control like skyrocketing home prices and increasing mortgage rates. While this may ultimately affect your buying power, you shouldn’t necessarily worry about trying to time the market. Because you will never know when you can make the best deal unless it’s done. Whether you like it or not, we predict that home prices will continue to appreciate. Further delay will only cost you more by paying higher prices and higher mortgage interest rates. 

That said, before you take the plunge, it’s always very helpful to be prepared. Don’t just buy homes. Buy true wealth-building homes. Let BricksFolios help you achieve financial freedom through real estate. Contact us NOW to get started!

Seattle Rental Market Update: February 2022

By
Vinod Sharma & Jo Dixit
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0
To show the growth of rentals in Seattle compared to Washington State and US

Although Seattle rent prices have seen four straight months of slight decreases the year-over-year trend is staggering. Compared to this same time last year, Seattle rent prices have increased by a whopping 22.9%. Although rent prices are rising across the country, Seattle’s rent growth has outpaced both the Washington state average (19.8%), as well as the national average (17.8%). 

After this year of rent growth, median rents for Seattle apartments currently stand at $1,653 for a one-bedroom apartment and $2,062 for a two-bedroom. For reference, the national average median rent is $1,312.

Although renters are flocking to Seattle in bunches, the areas surrounding Emerald City are following the trend of rising prices. In fact, Bellevue has the most expensive rents in the metro, surpassing Seattle proper. On the other hand, Lakeview has the most affordable rents in the metro.

Here’s a look at the year-over-year rent increases and median rent prices across the entire Seattle metro. 

The influx of remote workers could be a factor in the rising prices. The flexibility of working from home may be one reason why Seattle is seeing a large share of renters moving into the area from out of town. Renters coming from California appear to be a large source of new Seattle renters.

The top three sources of out-of-metro renters looking to make moves to Seattle are coming from San Francisco, Los Angeles, and Portland. In fact, 36.5% of apartment searches in Seattle are coming from renters who are currently living outside of the area. On the other hand, Seattle renters looking to move out of the city are targeting Spokane as their primary destination, with Portland and Los Angeles shortly behind. 

This is a guest post from www.apartmentlist.com

BricksFolios Reveals How Real Estate Agents and Brokers Can Elevate, Differentiate, and Change The Game

By
Vinod Sharma & Jo Dixit
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2

SEATTLE, Oct. 23, 2021 – BricksFolios Real Estate Solutions, a trailblazing wealth-focused brokerage, continues its growth spree by sponsoring Inman Connect at #ICLV, the largest event for the residential real estate community in North America.

Jo Dixit, the Co-Founder/Chief Wealth Officer/Designated Broker at BricksFolios, says, “We’re excited to meet fellow agents and brokers and demonstrate how they can Elevate, Differentiate, and Change The Game in their favor.”

“The traditional residential real estate process is cumbersome, time-consuming, and, quite frankly, broken, making it extremely difficult for Real Estate Agents and their clients to build wealth with real estate. We have fixed this with our proprietary technology and unique end-to-end white-glove, hassle-free service that removes the guesswork from building enduring wealth and enables you to build the life you want.

Figure 1 – BricksFolios Unique White-glove end-to-end services.

We elevate Real Estate Agents to the role of a premium, trusted Real Estate wealth advisor for life, for their clients, and enable them to close multiple deals per client. With us, agents provide truly differentiated services that clients cannot find anywhere else. Period.”

Jo Dixit, Co-Founder/Chief Wealth Officer/Designated Broker at BricksFolios

American homeowners aren’t retiring on their 401Ks/IRAs/other assets. Instead, they’re retiring with the wealth they’ve built up through their homes. At retirement, over 80% of their personal net worth comes from the home(s) they own. This presents a huge opportunity since traditional financial planners and wealth managers aren’t incentivized to recommend real estate investments. 

In reality, most agents lack the training, tools, and support that they need to become premium Real Estate Wealth Advisors, so they can enable their clients to build a smart real estate portfolio that can assist with needs like planning for their kids’ college education, retirement, diversifying their larger portfolio, passive income, etc.

“At BricksFolios, we’ve solved these problems for our real estate wealth advisors and their clients with our proprietary technology that enables them to buy true wealth-building homes. For homeowners, we provide a wealth dashboard of their home that provides hyper-personalized insights for saving more money and building faster wealth with the largest asset they own, their homes”, says Vinod Sharma, Co-founder, and CTO at BricksFolios and CEO of InBestments. 

Sharma went on to explain that, “Our Real Estate Wealth Advisors are able to create and capture new ‘demand’ and make competition irrelevant with our white-glove experience, and technology.

Figure 2 – BricksFolios: Attract, not compete.

HNIs (High Net Worth Individuals) are attracted to them, who see the tremendous benefits of our solution. They not only buy multiple properties but also become our referral machine.” 

BricksFolios is driving unprecedented innovation in unconventional ways, pretty much how Tesla is reshaping the automotive industry. Its senior leadership comes from companies including Microsoft, GE, Accenture, EY, Apple, Visa, SAP, etc. According to Dixit, “Our clients call us the “Morgan Stanley of Real Estate”, and that motivates us to work even harder to democratize wealth-building through real estate.”

Inman Connect attendees can visit BricksFolios at booth #214 to meet our founders and real estate wealth advisors, see a demo of our platform – built by and for agents, ask questions, and start working on their plan to Elevate, Differentiate and Change The Game!

The BricksFolios team will be especially interested in talking to agents and brokers who want to bring BricksFolios into new markets.

For more information, visit www.BricksFolios.com 
For any questions, please email wealth@BrickFolios.com

MEDIA CONTACT:
Vinod Sharma,
Media@BricksFolios.com 
844-9-BRICKS / 844-927-4257
Download multimedia from here.

The Concoction of Vaccines, March Madness, $1.9T Stimulus, and Seattle Real Estate

By
Vinod Sharma & Jo Dixit
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2
The Concoction of Vaccines Stimuls and Seattle Real Estate Blog Cover

One of the top producing agents who are a client of InBestments and a good friend of ours asked us, “Now that the vaccine is being rolled out quickly, we are slipping into March Madness, and Congress has just passed a massive $1.9 Trillion Covid-19 economic stimulus plan, what does it mean for Seattle’s housing market?”

Hmmm…how would we describe this unprecedented concoction?

THINK OF THE HOUSING MARKET AS A
GAME OF MUSICAL CHAIRS.

DURING A BUYER’S MARKET YOU’VE GOT
10 CHAIRS AND 8 PEOPLE PLAYING.

DURING A SELLER’S MARKET YOU’VE GOT
8 CHAIRS AND 10 PEOPLE PLAYING.

DURING TODAY’S MARKET YOU’VE GOT
ABOUT 4 CHAIRS, 43 PEOPLE PLAYING, BUT  
NOW THE CHAIRS ARE ON FIRE,
THE FLOOR IS ON FIRE, AND
YOU’RE BEING CHASED AROUND THE ROOM
BY AN AXE WIELDING PSYCHOPATH.
THAT’S PUGET SOUND HOUSING MARKET NOW.

This may sound hilarious but unfortunately, this is how our market has been since Covid-19 hit us a year ago and upended our world. All the housing-crash bros have been proven wrong and the housing market continued to be the cornerstone of our economy. COVID-19 taught people the importance of home and home life, and they raced to gobble up larger properties in the suburbs, with room for remote school and home offices.

Let’s look at the latest market activity report from NWMLS and compare it with what was happening at the same last year.

Exactly a year ago, the Closed Sales were at 5,265 homes vs. 5,812 last month, an increase of over 10%. However, the Supply for the same period reduced by almost half. With Supply at 0.74 months, the available inventory of homes will be exhausted in less than 3 weeks. If we exclude condos, the shortage is more acute with supply at mere 0.67 months. Yes, buyers are snatching up homes as soon as they are listed.

Active Listings are down by 43% on a Year-on-Year basis.
There is a silver lining in the New Listings which saw an 8% increase on a Month-to-Month basis. This increase is in line with the seasonal uptick we see with the onset of the Spring. The opening of the economy with all the counties in Washington moving to Phase 2 last month and are scheduled to move to Phase 3 on March 22 may see more new listings hitting the market.

Pending vs. New Listings Ratio

However, this increase in new listings in the next few months will not be enough considering the pent-up demand. So, brisk sales are expected to continue. One indicator of the sales brisk activity is the ratio of pending sales to new listings. This ratio continues to be skewed in favor of Pending Sales at 7,724 vs. 7,418 New Listings.

Relentless price increase

With the severe imbalance between supply and demand, buyers are forced to bid up significantly and thus home prices continue the relentless increase. The median prices in Western Washington have climbed up by a whopping 15% on a year-on-year basis, and by 6% on a month-on-month basis.

Home prices are rising at the fastest pace since the Great Recession

Puget Sound is not alone in this rapid rise in home prices. As per the latest S&P CoreLogic Case-Shiller Home Price Indices, “the market’s strength continues to be broadly-based across the USA.”

Why is the mortgage interest rate soaring?

“Let’s first remember the predominant rule of interest rates and mortgage rates. Bad economy = low rates to encourage more economic growth. Good economy = higher rates to curb inflation.”, says Vinod Sharma, CEO of InBestments.com.

Rates are going up because the interest on Treasury bonds is skyrocketing. Mortgage rates tend to track the yield on the 10-year Treasury note. The soaring bond yields are a sign investors are worried that the combination of vaccinations and stimulus checks will soon have the economy booming — and will fire up inflation.

Homebuyers who are on the fence, and homeowners who still haven’t refinanced, will be filled with regret if rates go higher still — which is how the signs appear to be pointing.

Investors still making money

One would think that in our piping hot market, investors are probably quiet. Not true. Savvy investors are active and are making money.

“Growing up one of the lessons I learned was that you can make money in any market. Translating this lesson to real estate, you can find deals and make money in any market, including the present crazy hot market. You just need the right platform and a smart Agent partner.”
Jo Dixit
Designated Broker & CEO, BricksFolios RE Solutions

In Conclusion

Our housing market is clearly running strong, with housing starts, permits and existing home sales all notching decade-plus highs in recent months.
As the broader economy improves (thankfully), continued vaccination roll-out, additional stimulus spending, and a “strong” fourth-quarter earnings season, mortgage interest rates increased recently. But they are still at historic lows and even as rates rise modestly, the housing market remains buoyant on the cusp of spring homebuying season. Homebuyer demand is strong and, for homeowners who have not refinanced but are looking to do so, they have not yet lost the opportunity though their potential interest savings has decreased.

Insatiable buyer demand sustain strong home sales even in Winter

By
Vinod Sharma & Jo Dixit
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0
Seattle Real Estate Update Jan 2021

Home sales aren’t expected to slow much, if at all, even amid a record coronavirus outbreak. Super-low rates and the growing prospects of the economy gradually returning to normal are likely to keep demand high.

That’s good news for sellers but bad news for prospective home buyers, who are unlikely to get much of a price break in 2021.

What a COVID-19 vaccine would mean for the Seattle housing market?

By
Vinod Sharma & Jo Dixit
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0
What a COVID-19 vaccine would mean for the Seattle housing market

Tears, relief, gratitude, and an end to a long, hard road in sight.

On 15th December 2020, Seattle hit a historic milestone as around a dozen health care workers and first responders were vaccinated against Covid-19 in what was the first run of vaccinations.

With a total of 205,069 cases, 12,649 hospitalizations, and 2,953 deaths in Washington state as of 15th Dec 2020, what does the vaccine rollout could mean for the Seattle housing market?

Before we delve into that, let’s see how the housing market fared last month.

Supply down, sales and prices are up

The saga of acute low inventory continued with available inventory dropping by 53.8% compared to the same time last year. On the other hand, brisk sales continue unabated with Closed Sales up by almost 23% on a year on year basis. The lack of inventory is making potential sellers think twice, knowing their search for a new home could be tough.

One indicator of the sales brisk activity is the ratio of pending sales to new listings. November’s 8,584 pending sales outgained the month’s new listings at 6,425 area-wide. This pattern was interrupted this year only in the months of March and April when the stay-at-home orders were in vogue.

Even in our white-hot housing market, savvy High Networth Individuals (HNIs) and investors are lapping up the Cash flow rentals, while taking advantage of the historic low-interest rates.

Jo Dixit, Designated broker & CEO Bricksfolios.com, a wealth-focused brokerage.

Interest rates at record lows

Mortgage interest rates have set record lows more than a dozen times this year, and last week there was yet another. Rates on a 30-year fixed-rate mortgage fell to their lowest level, at 2.71%, for the 14th time this year.

HNI and Millennial Clients driving demand for Real Estate Agents and Loan Officers
“Our team has never been so busy with the tremendous demand from the real estate agents and loan officers whose Millennial clients are buying their first home, while their HNIs (High Networth Individual) clients are looking to diversify their portfolio by adding income-producing properties. Of course, the HNIS are looking for a stable asset class vis-à-vis the volatile stocks based investments”, said Vinod Sharma, who is the CEO of www.inBestments.com, USA’s first residential real estate wealth platform that enables the buyers and the homeowners to look at the homes from the prism of wealth, and helps them #BuildWealth with hyper-personalized insights.

COVID-19 vaccine and the Seattle housing market?

COVID-19 has dramatically changed the landscape of the housing market. With low mortgage rates locked-in and a desire for more space amid the pandemic, buyers flooded the housing market in search of bigger homes, away from the crowded urban areas. Now, with vaccine on the horizon, many people are wondering what could it mean for Seattle’s housing market. When “normalcy” begins, whether it’s six months from now, or a year or more from now, what happens to mortgage rates and housing when it returns? No one can be certain but most experts agree there are a few things we can count on.

WFH Trend will continue.

COVID-19 taught us the importance of home and home life. Working from home (WFH) eliminated long commutes and gave us some of our time. Despite all the complications of WFH, buyers are looking for homes with a big backyard and space for a home office. The big tech companies in the Seattle area have already announced plans which allows their employees to continue to work from home in a hybrid model.

People should return to urban areas

Some of the pandemic-driven housing trends with people seeking out larger homes in less dense areas could slow down. People, especially Millenials, will likely return to the urban areas. As the pandemic comes to an end, condos and apartments will see increased activity, sales, and appreciation.

Inventory will increase

Potential sellers who hunkered down to ride out the pandemic could be more willing to host open houses and make a move themselves. This will help alleviate some of our inventory woes.

Foreign buyers return

Before the pandemic hit, there was a significant presence of foreign buyers in our market. A vaccine could also lead to non-US buyers returning to the market, which would increase the buyer demand.

Mortage rates will likely go up

As life gets back to the new normal, people will start spending more, traveling more, eating out more, and doing everything else that stimulates the economy. A stronger economy likely means interest rates may start to rise from our present historic lows.  

Next Normal

A safe, effective and widely accessible vaccine would obviously be welcome, but without a crystal ball, it’s hard to know what will happen. Record price appreciation, migration to Zoom towns, and brisk sales certainly weren’t predicted to be an outcome of a pandemic. It will take time for the economy to level out and for people to get back to work, but one thing is certain, we are not going back to the old normal but would rather adjust to the Next normal. 


New conforming loan limits increased for 2021, reflecting the hot housing market

By
Vinod Sharma & Jo Dixit
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New conforming loan limits increased for 2021.

The Federal Housing Finance Agency announced new conforming loan limits for Fannie Mae and Freddie Mac for 2021. The new limit for single-family residential properties is $548,250, which is up nearly 7.5% from 2020’s limit of $510,400 and marks the fifth consecutive year of increases.

All counties in Washington states have increased to the new limit. However, only King, Pierce, and Snohomish counties in Washington are considered “high-cost counties” and have a higher limit of $776,250.
High-cost areas have 115% of the local median home value that exceeds the baseline conforming loan limit.
Click here to see a map of the new conforming loan limits across the U.S.

In 2016, the FHFA increased the Fannie and Freddie conforming loan limits for the first time in 10 years, and since then, the baseline loan limit has gone up by $131,250.

What does this mean for homebuyers?

Loan limit increases are significant for homebuyers! The increase keeps homebuyers in step with a more expensive housing market like Seattle, by allowing them to borrow more to the limit of what is called a “Conforming Loan”. With conforming loans, buyers can purchase homes with lower down payments and more competitive rates.

Looking to buy true wealth-building homes?

Visit www.inBestments.com, USA’s first residential real estate wealth platform that enables you to buy true wealth-building homes whether you are buying your first home to live in or 60th investment property for cash flow/equity growth.

Home buyers and homeowners — the true winners of this election.

By
Vinod Sharma & Jo Dixit
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The volatility surrounding the 2020 presidential election helped push mortgage rates to their 13th record low this year, giving both homeowners and buyers a boost.

“The average 30-year mortgage interest rate fell to 2.72%, an all-time record low. Some 19.4 million homeowners are now in a position to save an average of $309 per month by refinancing, for an aggregate $5.98 billion in potential monthly savings – also the most in history”, said Jo Dixit, who has a unique vantage point being a licensed loan originator and a RE Designated Broker.

http://www.freddiemac.com/pmms/#

With rates now close to a full percentage point lower than they were a year ago, buyers in the 4 county Puget Sound region of King, Pierce, Snohomish, and Kitsap, are snapping homes up almost as fast as they’re listed.

So, last month saw more of the same – unprecedented low inventory, anxious buyers, bidding, and another surge in home prices.

Seattle housing market continued to defy seasonality as new records were broken by both buyers and sellers.

Sellers continued to have little competition as escalation clauses, appraisal gap waivers, and “as-is” offers were used by the buyers fighting hard, to secure a place they could call home.

October 2020 saw a 53.76% drop in active listings compared to the same month a year ago, an increase of 6.2%% in pending sales (mutually accepted offers). On a month-on-month (MoM) basis, the housing supply decreased by 10%.

Sellers are trying to take advantage of the soaring prices as evidenced by the 24.2% increase in New Listings. However, the tremendous pent-up demand aided by the buyer’s desire for a larger home and historic low-interest rates is leading to listings being stripped from the market at a stunning pace.

“Homeowners are saving big by refinancing and are taking advantage of low-interest rates to buy investment properties and second homes. Even in this white-hot, multiple-bid market, there are plenty of cash flowing rental properties available that pay for themselves.

“Smart homeowners are tapping their home equity to grab these income-producing properties”, said Jo Dixit, Designated Broker of BricksFolios Real Estate Solutions, a niche wealth-focused brokerage that enables home buyers to build wealth with smart real estate portfolio.

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