My New Blog

Seattle housing market

May 6th, 2023 12:01 PM by Salim (Sam) Kader MLO# 130505

May 2023 - As anticipated - the Federal Reserve has hiked Fed Funds rate again by 25 basis points citing still elevated Consumer Price Index currently at 5%.  The CPI rate at this level remains well above the Fed's target rate of 2%.  This rate-hiked is the Federal Reserve 3rd increase in 2023 and 10th increase since March 2022. The Federal Reserve next meeting is scheduled for June, July, September, October/November, and December of 2023.

April 2023 - Real estate buying season is officially here as our weather is getting warmer. Homebuyers are moving to Snohomish and Pierce county for affordable homes due to lack of inventory and fierce competition. Potential homebuyers should be patient and must be prepared to make decisions once ready. For the past 2 years - the housing market was miserably competitive with soaring prices and bidding wars wars and houses flew off the market. That came to a screeching halt last spring as mortgage rates doubled driving up the cost of buying a home and freezing buyers out of the market. But this spring, as the market begins to show signs of emerging from hibernation - home searches are up again and buyers have been hoping that maybe this year would be their moment. Instead, they are walking into an environment that is still pretty miserable. Sellers aren't getting their 2021 prices and buyers aren't getting a substantial savings on the price.

March 2023 - Concerns about banking sector in the US and Europe caused investors fled to quality this week and to invest in relatively safer assets including Mortgage Backed Securities (MBS) with rates improved for the week.  The Fed again increased Fed Funds rate by 0.25% on March 22 2023 - this is the ninth time the committee has increased rates in the last 12 months. The Fed has raised interest rates at the fastest pace since the 1980s to try to cool a hot economy but yet inflation has been surprisingly stubborn, and the job market remains strong. The Fed statement released after the meeting indicated economic signals including continuing inflation and the strong labor market warranted the rate hike while expressing confidence in the U.S. banking system. The Committee signaled that some additional rate increases may be appropriate before inflation is brough to the Fed's target range of 2.0%.  The latest projections from officials for the terminal (peak) rate remained near 5.1% in 2023 indicating that they anticipate one more 25 basis point hike  before the central bank ends its fight against runaway inflation. Fed Chair Jerome Powell suggested at his post-meeting news conference that "In assessing the need for further hikes, we will be focused on incoming data and the evolving outlook, an in particular on our assessment of the actual and expected effects of credit tightening."  Officials forecast that next year they would lower rates more slowly than they had anticipated so that rate linger at 4.3% by the end of 2024.  The Fed target range is between  5% to 5.25% (today's Fed Funds rate is 4.75% so there's room for more rate increases).

What impact could the rate hikes have? In this high interest rate environment, consumers are advised to continue paying down as much higher interest debt as they can, continuer paying bills on time and work to keep their personal financial and credit profiles as strong they can be.

How the failures of Silicon Valley Bank and Signature Bank have reverberated across Seattle's housing market. Most potential homeowners are hoping that bank instability would translate into lower mortgage rates. Experts are eyeing two possible scenarios  to the Seattle market. 

Scenario 1 - The Fed could slow down the rate hikes it has used to quell inflation that could ripple out to lower mortgage rates. The Fed has raised fed-fund rates nine times since 2022 from less than 1% to a target range of 5.0% to 5.25%. Rate-sensitive buyers have been locked out of searching for a home but a decline in mortgage rates could provide an opportunity for some would-be buyers to get off the sidelines. 

Scenario 2 - In tech-reliant cities like Seattle where home prices have already cooled fast, ongoing banking instability combined with tech-layoffs could spook some homebuyers and sellers even further. Worries home shoppers could pause their searches and sellers could decide not to list until the market settles down. 

Posted by Salim (Sam) Kader MLO# 130505 on May 6th, 2023 12:01 PM



My Favorite Blogs:

Sites That Link to This Blog:


Pacific Coast Financial LLC

Lic# MB 78982

2150 N. 107th Street Suite 170
Seattle, WA 98133