Why the Decline?
A large part of the reason home prices are going up is because the number of homes for sale continues to decline. This is the major reason the number of existing homes sold in January 2018 is 3.2% less than the number sold in 2017 according to BloomberMarkets. See story here: https://www.bloomberg.com/ .
Inventory of existing home sales fell by 9.5% year over year to 1999 inventory levels. At the same time median sales price has increase by 5.8%. While this is happening mortgage rates are starting a significant increase see chart below to show how interest rates have climbed over past 3 months.
Predictions:
Forbes housing predictions for 2018 are that sales will slow early part of the year, inventory will continue to drag, price increases will slow down or stop, rent vs buy equation will tilt toward renting in costly markets (like Seattle), mortgage rates that are already above 4% will continue to increase and Millennial demand for housing will climb. Full article here https://www.bloomberg.com/.
How Will This Affect Western Washington?
If you put all of this together here is what this means for home owners in Pierce, South King County and Thurston County:
1. Many home owners with low mortgage rates are more in love with their low rates than their homes and will continue to put off moving or remodel rather than sell.
2. Home sellers should have their home on market sooner because as the cost of buying a home goes up fewer buyers will qualify or even want to buy.
3. As interest rates continue to rise homes in suburban and rural locations will see values stop increasing.