Lower mortgage rates may not lower Seattle-area home prices
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Lower mortgage rates could push up home prices in Seattle and nationwide if demand surges and inventory remains tight.
Why it matters: Steep borrowing costs are just one piece of the housing affordability crisis.
- Even with rates at historically high levels, home prices are still rising — partly because there aren't a lot of houses out there to buy.
State of play: Many homeowners aren't selling because they don't want to lose their low mortgage rates.
- U.S. rates for 30-year mortgages are down from 20-year highs, but still remain around 7%.
- Experts don't expect the Fed to cut interest rates until May or June, Axios' Emily Peck reports.
By the numbers: In the Seattle area, home prices jumped when mortgage rates dropped below 3% in early 2021.
- As rate hikes locked current homeowners in place, however, prices have remained high.
The fine print: Seattle's median home price has stabilized somewhat, but is still higher than it was pre-pandemic.
- The Seattle-area median price was around $750,000 in December 2023, compared to $568,500 in December 2019, per Redfin.
The bottom line: If rates come down, then supply would rise, as more existing homeowners sell and buy something new, says Daryl Fairweather, Redfin's chief economist.
- But with supply and demand both shooting up in equal amounts, "prices would remain high," Fairweather says.