The Fed Rate Cut Won’t Affect Mortgage Rates

Mortgage rates have risen rather abruptly from their long term lows 2 weeks ago and are now at the highest levels in more than a month. Fortunately, the average lender is still easily able to quote rates in the high 3% range, which is still a significant savings for anyone who bought or refi’d in 2018 and even the first part of 2019.

I’m often asked if the Fed rate cut/hike will have an effect on mortgage rates. I’m also often asked to reiterate the correct answer to that question which is almost always “NO!” The Fed only meets to potentially change rates 8 times a year. The bond market that underlies mortgage rates, however, can change 8 times in less than a second. Markets have LONG since priced in the Fed’s likely course of action (which is currently a high probability for a rate cut). If the Fed surprises markets and doesn’t cut rates, it will definitely cause some movement in financial markets, but there’s no telling where mortgage rates would be at the end of the day.

Part of the reason for that is the market’s bigger focus on the Fed’s guidance and updated forecasts. In other words, the (probable) rate cut is old news and has already been accounted for in today’s mortgage rate landscape. But if the Fed’s forecasts show deceleration in the pace of expected rate cuts versus the June forecasts, rates could rise.

A lot has happened since June, however, so it’s possible the forecasts will call for even lower rates over the next 3 years. Even if that happens, there’s still no telling what the reaction would be in longer-term rates like mortgages. After all, more rate cuts in 2019/2020 could act to keep the economic expansion going, and that’s bad for rates, all other things being equal.

The bottom line is that the Fed announcement is a multifaceted event that can move markets in different ways for different reasons, expected or otherwise. Investors burn the midnight oil trying to get ahead of the market reaction and surprises are still the rule. The safest bet is to be prepared for a reaction in either direction as opposed to crossing fingers for rates to move lower.

~Matthew Graham, Mortgage News Daily

Puget Sound real estate tightened by supply squeeze

According to the latest report from the Northwest Multiple Listing Service, experts are finding many potential home-buyers are expanding their search beyond the major job centers in King County as a result of the crunch on supply in the month of August.

System-wide the 23 counties serviced by the MLS have less than two months of supply — a number that drops to 1.6 months in the four-county Puget Sound region. Year-over-year, that looks like a 13% drop in supply system-wide, and an 18.5% drop in King County.

Within King County the median sales price has held steady at $760,000 for single-family homes, and areas outside King are becoming a draw for more affordable prices.

“Areas immediately outside the Puget Sound region and along the I-5 corridor continue to see double-digit house price growth,” noted James Young, director of the Washington Center for Real Estate Research at UW. “[It’s] due to first-time homebuyers who struggle to afford housing in King and Snohomish counties as well as from existing homeowners cashing out of Seattle and King County.”

That’s backed up by a recent report from SmartAsset, which ranked the top 10 most affordable places in Washington state, taking into account costs, real estate taxes, homeowners insurance and mortgage rates. The closest one to Seattle is Duvall — ninth on the list. The only other Puget Sound-area locale is tenth, Prairie Ridge.

“While August is always a slower time for listings and sales, what is really surprising this year is the decrease in new listings taken, while pending sales increased,” observed Mike Grady, president and COO of Coldwell Banker Bain.

Although June and July are usually seen as “peak” for real estate, Grady noted that June and July were relatively lackluster this year, when usually they are active (especially coming off spring).

“The pending sales numbers indicate that buyers are indeed out there and willing to purchase, but there are simply not enough homes,” he added. “Everything that is listed is getting sold and fairly quickly.”

Which means that while the median sale price in King County is holding steady, it’s still not the easiest market to break into.

~Zosha Millman, Seattle PI

The Most Affordable Cities in Washington–and They’re Charming Too

When you think of Washington, the first things that come to mind are usually apples, natural beauty and mild weather.

Yet, those who live in this Pacific Northwest state also know it offers great deals on housing, health care, groceries and utilities.

Using our tried-and-true methodology, Livability.com has come up with a list of the five most affordable cities in Washington. But this isn’t just a tally of cheap cities. Instead, quality of life was considered along with data from other cities to find the best bang for your residential buck.

Here’s a list of the most affordable cities in Washington state:

1.Olympia, Wash.

2.Richland, Wash.

3.Bothell, Wash.

4.Auburn, Wash.

5.Redmond, Wash.

1. Olympia
The state capital, Olympia has boating and fishing opportunities in Puget Sound, to-die-for seafood restaurants along the waterfront, and a growing arts community. On a clear day, you can even see Mount Rainier, which is a little more than an hour drive from the city.

Here the median household income is $52,834 with the median home price coming in at $240,800, which is lower than the state average.

2. Richland
A part of the Tri-Cities area, which includes Pasco and Kennewick, Richland’s history is wrapped up in the Manhattan Project facility at the Hanford nuclear site.

The city is still known as a technology hub. The median household income is an impressive $69,372, while the median home price is $200,800. Residents enjoy outdoor activities such as hiking and biking on an extensive trail system, golfing and water sports on the Columbia and Yakima rivers.

The area has some of the most fertile agricultural land in the state, which is good for growing crops such as wine grapes and potatoes.

Richland is home to a renaissance fair, a classic car and street rod event and music and arts festivals.

3. Bothell
Those who want to live close to Seattle but don’t want to pay its expensive cost of living prices often chose Bothell as a more affordable alternative.The median home price is $344,600 – not too bad for this area. The median household income is $75,643.

While logging is mostly in the past, Bothell residents celebrate their own culture such as walks in urban/rural parks, a 1880s Pioneer Cemetery and a lavish Fourth of July event known as the Freedom Festival.

4. Auburn
A little east of Tacoma and south of Seattle, Auburn provides a gateway to both major metropolitan areas. And that’s a good thing, as the city is a transportation hub with major roadways and the Transit Center, a station that provides bus, light rail and Sounder train service to the Puget Sound area. Those who live here can expect a median home price of $231,200, with a median household income of $57,635.

Thoroughbred horse racing at Emerald Downs, golf and performing arts are just some of the attractions that entertain residents.

5. Redmond
A high-tech city, Redmond is the home headquarters to computer software king Microsoft and videogaming systems company Nintendo of America. The city has also been recognized as a Best Place to Live and Top 99 Beer City.

In addition to the tech industry, Redmond is also known as the “Bicycle Capital of the Northwest.” The Redmond Bike Derby, which is held during the summer’s Derby Days, is the longest running bicycle race in North America. With an extensive network of off- and on-street bike lanes and trails, Redmond also boasts a large share of bicycling commuters, so residents save on automobile purchases, car insurance prices and gas.

The median home price is a robust $462,200. However, residents here also command higher salaries, with a median household income of $99,586. In fact, Redmond is so great that it landed a spot on the 2018 Top 100 Best Places to Live list.

 

~Bonnie Burch, Market Watch