Mar 18, 2024 - News

Lower mortgage rates may not lower Seattle-area home prices

Median home sales price in the Seattle metro area
Data: Redfin; Chart: Alice Feng and Jared Whalen/Visuals

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.

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.
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