Yep jj, low interest rates are fooling people into taking on way too much debt, once interest rates change direction there are going to be an awful lot of uncomfortable folks out there.
Area housing market is white hot
Rock-bottom interest rates ignite home sales, up 30% in September in
King County
By TODD BISHOP
SEATTLE POST-INTELLIGENCER REPORTER
Elizabeth Oreck intended to pay no more than $270,000 when she began looking for a home last
spring.
This past week, however, Oreck was in the process of closing on a house in West Seattle at a price
of $290,000. She was able to afford more thanks to a decline of half a percentage point on a 30-year
mortgage between the time she started searching and the point she locked in a rate.
"When the interest rates dropped, it made a significant difference,"
said Oreck, a sales manager for an online training company.
She's not alone in her experience. Rock-bottom mortgage rates
continue to fuel the regional housing market -- turning renters into
buyers, luring existing homeowners into pricier houses, and
attracting investors who would ordinarily put their money into
stocks and bonds.
"Usually the interest rates are just a kicker, but when they come
down this low, it creates an economic stimulus," said J. Lennox
Scott, chairman and CEO of John L. Scott Real Estate.
Numbers released yesterday by the Northwest Multiple Listing
Service demonstrated the market's continued strength. Pending
sales of single-family homes and condominiums increased more
than 30 percent in King County in September, compared with the
same month last year.
The percentage increase was skewed sharply upward as a result of
the depressed state of the real estate market following the Sept. 11,
2001, terrorist attacks. But last month's pending sales in King
County were also more than 6 percent higher than in September
2000, according to the multiple listing service.
Pending sales last month also increased substantially in other parts
of the region, compared with each of the past two Septembers.
Compared with the results two years ago, pending sales were up
27 percent in Snohomish County, 33 percent in Pierce County, and 45 percent in Kitsap County,
according to the statistics from the multiple listing service.
Despite the jump in pending sales, it is taking more time to sell a home, on average. In King County,
single-family homes sold in September were on the market for an average of 49 days, up from 42
days last September. The average also climbed in Snohomish County, from 52 days to 53 days, and
in Pierce County, from 59 days to 63 days.
Even so, prices continued to rise throughout the region. The median price for single-family homes
sold last month in King County was $279,950, up from $265,000 last September. The median price
rose from $210,000 to $217,800 in Snohomish County, and from $157,950 to $174,600 in Pierce.
Real estate experts attribute the market's ongoing resilience primarily to declining mortgage rates.
Nationally, the average rate on a 30-year fixed-rate mortgage was 6.01 percent this past week, up
from the previous week but still near its historic low, according to mortgage company Freddie Mac.
"Interest rates have kept the housing market strong in our area," said Donn Costa, executive vice
president of mortgage banking with Mountlake Terrace-based Golf Savings Bank. Any future
increase in rates could reduce home prices in the short run, although they would continue to rise over
the long term, he said.
"There's every incentive for somebody who is comfortable with their personal economic situation to
make the leap to home ownership or refinance their home to take advantage of these lower rates,"
said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State
University.
People hoping to make that leap to home ownership include Parks and Jennifer Dempsey, a married
couple currently renting an apartment near Alki Beach in West Seattle. They are searching for a
house to buy, spurred in part by mortgage rates.
"I don't think it was the major motivation for us, but it certainly was one of the things we took under
consideration," said Parks Dempsey, an magnetic resonance imaging technologist at Harborview
Medical Center. Jennifer Dempsey is a medical researcher at Swedish Hospital. The tax advantages
of home ownership also were a factor in their decision to stop renting.
The Dempseys aren't alone. The drop in rates is creating "a surge in first-time homebuyers," said
their agent, Sekou Wiggs, an associate broker with John L. Scott.
Lower rates are "bringing out some buyers that wouldn't have been there before," agreed John
Guthrie, an agent in Windermere Real Estate's West Seattle office.
The trend toward home ownership is one of the factors contributing to rising vacancies in the
region's apartment buildings. "We're seeing the rental market suffer," said Denny Bullock, vice
president of sales at Prudential MacPherson's Real Estate.
In the Mill Creek area, Brent and Dulcy Hixson bought a home for about $260,000 two years ago,
assuming that they would be there for years to come. But when mortgage rates kept dropping, they
realized they had a unique opportunity.
They have found a buyer for their existing home at a price of about $320,000, and they are looking
for a new home in the mid-$400,000s, said Brent Hixson, a senior buyer for a medical equipment
company. Dulcy Hixson owns her own business, working as a representative for wireless
companies.
Lower mortgage rates will allow them to "get a lot more home for a little more money" in mortgage
payments, Brent Hixson said.
In other cases, agents say, people who normally would renovate their existing homes are deciding
instead to buy better, larger homes -- a decision that, in the past, would have been much more
expensive than remodeling.
"It's almost a new phenomenon," said Jill Jacobi Wood, co-owner and president of Windermere
Real Estate. |
