Brian’s Forecast
Q4’24 Avg 7% (fluctuating 6.75-7.25); Q1’25 6.75% (fluctuating 6.5-7); Q4’25 6.25% (fluctuating 6-6.5).
Reminder: mortgage rates are not affected by fed decisions but 10-yr bond - 10 yr bond rates affected by inflation and investor’s willingness to invest in bonds vs stocks.
Brian’s Client Tip: 1% decrease in interest CAN roughly equal to 10% more borrowing power but even a 0.5% fluctuation changes buyer demand (and thus competition) the week or two after the fluctuation hits headlines.
https://money.usnews.com/loans/mortgages/mortgage-rate-forecastBrian’s Client Q&A: If fed rates don’t affect mortgage rates, what does? 10Y Treasury bond, CPI/Jobs Reports
https://home.treasury.gov/policy-issues/financing-the-government/interest-rate-statistics
https://www.epi.org/indicators/unemployment/
https://www.bls.gov/cpi/
Increase buyer competition in Q1/Q2’25
Widespread use of escalation clauses with promises to pay additional down in case of low appraisals or even waived financing in all of 2025 from the vast number of sidelined buyers, our growing population, Amazon and half dozen major companies returning to full return to office (1/1/25), and those “typical” new buyers each spring/summer.
Improved condo market from increased DT workers. Also increased metro traffic will increase desired urban living or at least pied-à-terres.
Bully offers will increase in the Eastside in Q1 and Seattle + Seattle metro will see frequent bully offers by Q2.
Increased absorption rate and decreased monthly supply due to World class events like 2025 FIFA Club World Cup in June ‘25 will increase buyer activity before Seattle’s hosting of FIFA’s ‘26 World Cup but won’t encourage sellers to sell
Continued low inventory at least into next decade
Minor bump in inventory in 2025 as more sellers will be more comfortable becoming buyers themselves with the lower interest rates and increased consumer confidence.
All economists agree of not enough housing at least through the decade nationwide but especially in Seattle metro where for decades it has been normal to only have 3-4 month inventory opposed to a “balanced” 6 months