Monthly Archives: May 2012

March Case-Schiller Index: Seattle up 1.7% for the month

The feel of the rising tide of real estate just didn’t seem real until validated by the Standards & Poors / Case-Shiller Index.

This morning’s release shows that home values were up 1.7% over February, stopping a seven-month slide and coming within 1.3% of last March’s 132.97. With the strong demand in the market recently, it’s possible that next month’s C-SI will show a year-over-year gain for the first time since December 2007.

Locally, inventory is still low. A “balanced” market is considered to have an inventory level equal to the number of solds and pendings for the previous six months; currently, Seattle has a third of that inventory.

Nationwide, the index slid ever-so-slightly, from 134.14 to 134.10.

Seven of the twenty cities have shown year-over-year gains. Nationwide, the index is down 1.9%.

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Homes today: more affordable than at any time since when?

Home values in King, Snohomish, and Pierce counties, as measured by the Case-Shiller Index, are down 30% from the peak in July 2007. This is hardly an all-time low; they’re at about the same level they were at in 2004, which was a time of then-record price highs.

Mortgage rates are at their lowest level since the Truman administration, and that’s having a profound effect on affordability.

Put record-low mortgage rates together with today’s home prices, and you’ve got monthly payments that are their lowest since the 1990s!

At the peak of the market, a niceSeattlehome might cost $500,000. With a 6.5% interest rate, a minimum-down buyer would have $3050 mortgage payment.

Today, that home might cost $400,000, and with interest rates under 4%, the monthly payment goes down to $1815 a month:

2012 2007 2004 1999 1998
House Price $400,000 $500,000 $400,000 $293,000 $269,000
Loan Amount $386,000 $482,500 $386,000 $282,745 $259,585
Interest Rate 3.9% 6.5% 6.0% 7.6% 7.0%
Monthly Payment $1,815 $3,050 $2,314 $1,996 $1,727

You could look at this from a point of view that today’s buyers are spending 40% less on their mortgages than just five years ago; you can also look at it that today’s buyers have a third more purchasing power than in the past:

2012 2007 2004 1999 1998
Purchasing Power $400,000 $297,586 $313,726 $266,395 $282,721
Loan Amount $386,000 $287,171 $302,746 $257,071 $272,826
Interest Rate 3.9% 6.5% 6.0% 7.6% 7.0%
Monthly Payment $1,815 $1,815 $1,815 $1,815 $1,815

Either way – the combination of record-low interest rates and bottom-of-the-market prices are making homes much more affordable than at any time in the last dozen years.

We are actively looking to help first-time homebuyers – and move-up homebuyers – take advantage of this market. If you know of someone thinking of buying, we can help them make sound and wise choices in today’s marketplace.

Move-up homebuyers who may be discouraged by the currently low values – take heart; you’ll more than make up for it on the buying end!