I recently had a listing for which I had to drive by the “Entering Seattle” sign on I-5 several times. I had a brief, admittedly somewhat twisted fantasy that I worked in the building about 100 feet from the sign, just off the freeway. I imagined myself printing up a couple hundred banners to tack below the sign that said “Please Don’t Move Here,” and every time it was taken down, I would sneak out after work and put a new one up.
But hey, that’s not cool. I passed that very sign in my loaded U-haul back in 2000, and started taking up space in Seattle too. I get it. It’s a nice place to live, and I hope we all work together to keep it that way. It’s a bubble I’m happy to be in. But is it a real estate bubble? No one truly knows, unless they have a time-machine. But you can at least arm yourself with information, and some recent statistics on our market offer interesting perspective.
In addition to being the fastest growing city in the nation, and having more construction cranes currently up than any other city in the nation, we also just experienced the highest annual home price appreciation in the nation, at 12.9% (state-wide). The above map makes it clear that folks are moving out West. Utah and Idaho (my home state) came in 2nd and 3rd, but as you can see, every single state west of the Rockies is in the “dark blue” category, save for Montana.
Another map of the U.S. shows “Average Equity Gained Year-Over-Year,” And there’s Washington right at the top again, at 40K. The national average is 13K. So while homes are admittedly looking expensive (and they are in fact, more expensive than they’ve ever been), if you purchased an “average priced” home in Washington a year ago, you’re up 40K already. Not too shabby. And while I always think it’s important for buyers to be diligent and make sure they end up in a home they love, in this current, frenzied market, buyers should keep in mind that every week that goes by, homes basically get more expensive. Luckily, this is offset by our ongoing historically low interest rates. The mortgage interest tax deduction helps too.
And speaking of mortgages, one more map, and a suggestion for you homeowners out there. According to the latest data, 91.6% of homes in Washington that have mortgages have “significant equity,” meaning, 20% or more. So, if you bought a home say, 3 years ago, with 10% down, absolutely pick up the phone, call your mortgage person, and ask them about re-fi possibilities. If your new appraisal shows you’ve crossed the 20% threshold, your new mortgage won’t have mortgage insurance, and MI is a complete (but sometimes necessary) waste of money. You may even get a lower rate today. Or (for example), if you know you won’t be in your current home more than 5 more years, ask if a 5/1 ARM might be a good fit, then your rate will be yet even lower! While you will incur the cost of a re-finance, you’ll likely be amazed how quickly it will pay for itself. And calling your mortgage person and picking their brain about it for 5 minutes is 100% FREE. Let me know if you need a recommendation.