Despite high mortgage rates, Snohomish County home market still competitive

EVERETT — At the start of the year, real estate agents and homebuyers were looking forward to lower mortgage rates.

“We were told by the Federal Reserve Board and Fannie Mae and Freddie Mac there would be three rate cuts this year,” said George Montemor, a real estate agent with John L. Scott in Lynnwood.

Those rate cuts never happened, not one.

Now, analysts are cautiously predicting the Fed could cut the interest rate in September, bringing down mortgage rates.

“We’re getting closer to the point at which it’ll be appropriate to reduce our policy rate,” Federal Reserve Chair Jerome Powell said July 31, “but we’re not quite at that point.”

In July, interest rates on a 30-year-fixed-rate mortgage averaged 6.8%, down from about 7% a year ago, according to Freddie Mac.

What’s a prospective homebuyer to do?

If your job is stable, your credit score strong and you’ve saved enough for a healthy down payment, it might be a smart time to buy, according to a report by BankRate, a consumer financial services company.

Home ownership is still a goal for many, and once the keys are in hand, you’ll start building equity, the report said.

And it bears repeating — if you buy now, you can always refinance later when mortgage rates drop.

Sweet spot

Despite higher mortgage rates, it’s still a competitive real estate market, local real estate agents say.

Locally, homes priced in the $550,000 to $850,000, are turning heads, Montemor said. “That’s kind of the hot spot, where they get multiple offers.”

In that range, “I haven’t seen a listing yet that goes below asking,” Montemor said. “Sellers hit their asking price or they’ve gone higher.”

In June, the median sales price for Snohomish County homes and condos (half sell for less, half sell for more) was $789,497 compared to $749,950 a year ago, up 5.3%, according to the Northwest Multiple Listing Service.

Today, the average number of days a home remains on the market is about 8 to 15 days, Montemor said.

That’s a huge shift from the heady days when mortgage rates hovered around 3%. Three years ago, homes were flying off the shelves and going under contract in a matter of days, often over the course of a weekend.

At the end of June, there were 1,350 active listings in Snohomish County compared to 923 at the same time in 2023.

That’s an improvement over last year, but still relatively low.

Homeowners who would otherwise be putting out a ‘For Sale’ sign are staying put.

The reasons vary, but many homeowners have a low mortgage rate they can’t bear to part with or don’t want a huge hike in payments.

“When we talk to clients about selling their homes, they don’t want to take on such high interest rates that come with buying a new home,” Montemor said.

According to real estate company Redfin, more than three-quarters of current homeowners have a mortgage rate below 5%.

With mortgage rates at 7%, the monthly mortgage payment for a median-priced home has more than doubled since early 2020, according to a recent Cato Institute housing affordability survey.

Price it right

Homes that don’t go under contract within a week or two are often sitting, said Dafna Shalev, real estate agent with HomeSmart Real Estate Associates in Bothell.

“If a house doesn’t go pending within that first 8 to 16 days it will often take 45 days for it to go pending,” Shalev said.

“The price may be too high or it’s priced incorrectly or the house needs a lot of work. It’s a case-by-case thing,” she explained. “If it needs a lot of work, that’s often more than a first-time buyer is willing to take on.”

Locally, homes priced at around $700,000 are collecting multiple offers and selling quickly, if the price is right, Shalev said.

With that in mind, sellers may be tempted to bump up the price.

Don’t do it.

Multiple bids are more likely to materialize when a home is priced right from the get-go, she said.

Sellers need to adjust their expectations and price their homes accordingly.

“You cannot price your home too high these days,” Shalev said.

“I say it a million times to sellers, ‘I know you want to get more money, I want to get more money, but if you price it too high, it’s going to sit there.’” she said. “Buyers are savvy, everyone is doing their own checking. “

You can drop the price later, “but then the listing looks stale,” Shalev said. Better to price it right from day one.

In the market for a home, here’s what local real estate agents advise:

• Get pre-approved for a mortgage.

• Choose a team of lenders and real estate agents, and let them know what you’re looking for.

• Make sure they’re Johnny-on-the-spot. “It’s a quick market and you may only have a couple of days to see and decide on a home,” Montemor said.

• Interview several real estate agents. It doesn’t cost you anything and you’ll probably get a free cup of coffee out of it.

Janice Podsada: 425-339-3097; jpodsada@heraldnet.com; Twitter: @JanicePods.