Hi, I’m Doron Weisbarth with Weisbarth & Associates. Welcome to my September 2024 Market Update! Today we’re diving into how changes in mortgage interest rates can impact your home’s value. With the recent drop in the prime rate last week, it’s the perfect time to explore what this means for buyers and sellers alike.
When mortgage rates drop, the first thing that happens is that buyers get more purchasing power. For instance, if rates drop from 7% to 5%, obviously, buyers can afford more home for the same monthly payment. Makes sense? So, this might open the door to homes that might have been previously out of reach for these buyers.
Interestingly, we’re already seeing more buyers enter, or re-enter, the market because of the increased affordability, due to the recent drop in the mortgage interest rates.
With more buyers in the market, the next thing that happens is that demand goes up. If we have more buyers competing for the same number of homes, then guess what? Prices naturally start to rise. And in a market like Seattle, where inventory is often tight, this effect can be even more pronounced. On top of that, lower interest rates don’t just attract homebuyers—they also bring in real estate investors who are looking for favorable financing terms. The activity of these investors adds even more competition to the market, which, again, can contribute to prices going higher.
So, what does all of this mean for homeowners? For starters, if your current mortgage interest rate is higher than what is available after the recent interest rate drops, now could be the time to consider refinancing your mortgage. A lower rates might mean you can reduce your monthly payments and keep that extra cash in your pocket, or shorten the term of your loan. And, you could always do both.
Then there’s the benefit of home equity. As prices go up, homeowners build equity faster, which creates opportunities to use that equity for home improvements, investment properties, or other financial goals.
And, of course, if you’re thinking about selling, the current low-interest-rate environment is working in your favor. As I said before, more buyer demand means more competition, and that often leads to higher sale prices. Selling your home when interest rates are low can put you in a great position to maximize your return.
And, if you have to both sell your home and also buy a new home, these same low mortgage interest rates will make it easier for you to make that transition, at least on a financial level.
Looking ahead, while no one can predict exactly where rates or prices are going, one thing is clear: when mortgage interest rates drop, buyer activity tends to increase, and home prices generally follow. Now, in our area, even if mortgage interest rates start to rise again, Seattle is such a desirable market that the long-term value remains strong for homeowners.
So, if you or someone you know is thinking about buying and or selling, let’s talk. My team and I can help you understand how these changing market conditions—like last week’s prime rate drop—can be made to work to your advantage, beyond just the obvious stuff. Yes, there’s an art to all of this! Understanding not just the big picture, but also the nuances can help you maximize your results, whether you’re looking to buy, sell, or both. As I’ve told you in the past, my team and I offer a no-obligation consultation to anyone! Yes, we’ll talk to anyone, and put together a customized plan to help them achieve their home ownership goals.
And remember, your business and referrals help support the Akin community. So you get a good deed out of it too, yay!
For those people who need help with their real estate need, reach out to me and my team by email or send a message through my website at Weisbarth.com/refer. The best way, really, is to connect is by phone. Nothing beats a personal, one-on-one connection, nothing! Soif you’re referring someone, I don’t need any fancy introductions. Just have them call me directly at 206-779-9808, that’s 206-779-9808. That’s my mobile number and the best way to reach me. So call any time!
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I’m Doron Weisbarth with Weisbarth & Associates – see you next time!