The COVID-19 outbreak has brought unexpected changes to many people’s lives in Seattle and across the country. Despite its far-reaching effects, people are still buying and selling homes as the Seattle housing market continues to remain strong. Record low home inventory levels and mortgage rates are leading to a highly competitive real estate market, helping buyers and sellers to remain confident during these uncertain times.
In this article, we’ll examine the effects of the COVID-19 pandemic on the Seattle housing market and how buyers and sellers are adapting to the new home buying process.
The Current State of the Housing Market
The housing market was tight going into the pandemic as the nation as a whole is suffering from housing shortages. In Seattle, available homes for sale dropped a massive 27.6% year-over-year in January.
The housing market isn’t much better off in other cities as supply is at near record low levels nationwide while demand is near an all-time high. This combination has led to home prices being at an all-time high in most cities as many potential buyers are bidding on a limited supply of homes.
At the end of 2019, the number of houses for sale dropped drastically low for many west coast areas. Compared to the prior year, some cities saw a double-digit percentage decrease in the number of homes for sale, with Seattle’s 27.6% drop being the largest.
For housing demand, key indicators suggested there would be many buyers before the pandemic. Solid wage growth, low unemployment, and low mortgage rates all usually signal such high demand. The pandemic has severely impacted some of these metrics as unemployment has risen, companies are enacting pay cuts, and web traffic to real estate sites has dropped considerably.
While these changes are cause for concern, they don’t necessarily indicate that the housing market as a whole will sour. In the 2008 financial crisis, the housing market fell in tandem with the stock market, however, this is not typical as the housing market isn’t usually tied to swings in the stock market. This is because people don’t buy houses purely as an investment. Housing is a basic need, and the decision to purchase a home is usually prompted by a change in life circumstances.
For example: A newly married couple is moving in together and wants to buy a house, a couple is having a child and needs more space so they buy a bigger house, or empty nesters have more space than they need once their kids move out on their own so they downgrade to a smaller house.
A recession won’t change these circumstances for people. Even in the most serious of economic recessions, the housing market almost always remains consistent. In some cases, home prices actually increase.
Seattle’s housing market, for instance, is still valued highly. Median prices for the city’s homes rose year-over-year this April from $707,000 to $751,503 (a 6.3% increase). Single-family home prices rose even higher at a rate of 8.1% with Beacon Hill and Southeast Seattle experiencing the biggest jumps at 18% and 20%. If you were expecting the pandemic to create a discount market, think again.
COVID-19 Has Lowered Mortgage Rates
Since the Coronavirus outbreak, the Federal Reserve has implemented two emergency interest rate cuts, bringing the yield on treasury bonds to almost 0%. Moreover, the shakiness of the stock market can have an effect on interest rates as well.
When investors start thinking the stock market is too risky they sell their stocks and buy bonds. The increase in demand pushes bond prices higher. The higher the price of bonds, the lower the yield (or interest payment) is relative to the price. When bond yields are lower, mortgage rates are also lower.
Buying and Selling a Home During a Pandemic
With safety regulations in place, home buyers and sellers must adjust how they conduct the home-buying process. Real estate agents are turning to technology to be able to showcase their listings to potential buyers. This means virtual tours and remote meetings are becoming the norm for both buyers and sellers.
Here are some ways to make your listings stand out with more of the home buying journey moving online:
- Use virtual staging to fill an empty house. This way you don’t have to rely on a real stager putting actual furniture in and having to move it out.
- Use 3D scans to create an open house experience. With an entire floor plan, buyers can walk through a home and get a better understanding of the layout.
- Check-in and discuss offers virtually on a video conferencing platform like Zoom where you can share and review documents in real-time.
- Host a virtual broker’s open house with a self-shot video tour. You can use a chat platform like Facetime to have both the seller and buyer agents do a virtual walkthrough of the home.
- Use e-signing, and mobile notary services to sign and finalize any paperwork.
Whether you are buying or selling a home, now is an opportune time to enter the Seattle real estate market. Sellers benefit from record-high prices while buyers can take advantage of record-low mortgage rates. If you’re in need of a Seattle realtor, contact Vicinage Real Estate Group. As your Seattle neighborhood expert, we will help you have a smooth buying or selling experience, and get the next chapter in your life started right