We have seen two rate reductions in recent weeks by the Federal Reserve Bank. This is in response to a continuing weak world economy which has sparked fears of an economic slow down in the United States. These rate cuts have assured that United States mortgage rates will remain well under 4% for most mortgages through the rest of the year and probably into next spring. This is great news for buyers.
In our last monthly update we mentioned that lower interest rates could foreshadow an uptick in Seattle area prices which have gone flat for the past few months. That in effect has happened with the latest Case Shiller Index numbers showing a slight increase in Seattle area appreciation with a gain of ..5%. While the Case Shiller numbers were up slightly the Seattle and Eastside median prices for the latest period were flat with 0% changes over last year’s prices. While last month we believed that the pricing trend was heading into negative territory we now see, with the latest news, that prices should remain flat for the next few months or even head upwards.
Inventory in Seattle and Bellevue still continues to grow slowly but we still see only about a two-month supply of available housing in the area. Lower rates make this a great time to buy and the stagnant appreciation trend signals that sellers who are thinking of cashing in on the great equity gains of the last several years perhaps should be looking to sell now rather than waiting.