Thursday, May 11, 2006

It's no surprise but a boost in rates won't hurt Seattle real estate

Coming back to Seattle from Minneaplois yesterday, I was evaluating my decision to move to Seattle versus staying in the Twin Cities of Minneaplois St. Paul. While I was in the Twin Cities, especially St.Paul, I over heard people talking about the Minneaplois Real Estate market, and how things were slowing there. I can't imagine that, I found that the prices there have appreciated nicely, and the market there is as hot as any where.

The federal reserve raised rates yesterday, yet once again. The new leader had mentioned last month, that the rates will not continue to increase. How can they not increase with a hot economy. We have to slow things down, and slow inflation, that is the consensus with top economists. The Fed rates, they do have to stop some where, don't they? Well, yes they do, but where exactly will they stop? I think your guess is as good as mine. But if they don't, we will continue to see a sluggish home loan market, and slowing of real estate sales. I think the first time home buyers in markets such as Seattle and Minneapolis St. Paul will be hurt the most. Why? Well, the real estate prices for first time homes are simply moving higher than income levels. And, as borrowing gets more expensive with higher interest rates, home owners will have to pay more in monthly payments to be able to afford that same Seattle house.

So will the interest rate increases effect the real estate slow down in markets such Seattle and Twin Cities? In my opinion yes, it will slow them down a little. But as said before, these two markets will continue to grow because both have very strong job outlooks. Seattle has a few other things going for it than just Jobs, over Minneaplois St.Paul. First Seattle is on the west coast, so it has the California effect. Meaning California home sellers are likely to move to Seattle, and creating extra demand for the Seattle house and condo markets. Seattle also has a milder weather, and therefore a better climate for senior citizens. There is a large percentage of the population that continues to believe that Minneaplois and St. Paul are just too cold for people to live. They happen to be wrong, as the population there is growing nicely, but perception is reality. So Seattle real estate, Seattle Condo Seattle house demand will continue to be higher than the twin cities in my opinion. For how long, Forever is my guess, no matter what the interest rates.

I am biased ofcourse, I moved to Seattle from the Twin Cities.

Sent from my BlackBerry wireless handheld.

2 Comments:

Blogger Joe Kennedy said...

You are probably right that Seattle real estate values will continue to outpace those of the Twin Cities (probably until the west coast falls into the ocean), but I find it hard to believe that most realtors and agents who choose not to buy the title Realtor are continually talking about how strong the market is and will be here.

Look at the signs - the currently over-inflated prices, local layoffs, percentage of people who are under employed and most of all - the number of people who have purchased properties using loans with variable interest rates.

My advice to anyone looking for a home to buy is to wait until the market corrects itself (I believe this will happen over the next 2 to 5 years), unless your personal situation calls for a purchase sooner.

If you are considering selling your property in the next 5 years, do so as soon as possible - I believe waiting could cost you quite a bit of money and all-precious time.

Joe Kennedy
AAA Properties
Kennedy@AAAProperties.net

10:23 PM  
Blogger Joe Kennedy said...

PS - do you really post by typing into your blackberry?

10:25 PM  

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