ARE WE IN A BUBBLE?
The short answer is no, or at least not yet. While Seattle prices have been escalating at breathtaking rates, demand remains strong, employment growth stable and climbing, and mortgage credit is still very strict.
The average FICO score required to obtain the best conventional financing is 750, while the lowest scores qualifying for standard conventional financing are around 701 and require substantially more down.
Today’s purchasers are very well-qualified and typically put 10-20% down on a home purchase. This is vastly different from the years before the loan crisis when nearly anyone (working or not) could obtain a mortgage loan with little or no down payment.
In fact, today’s homeowners have a have a higher equity position-an average of 40% home equity-than anytime in recent history.
What could cause a bubble in our region? Substantial easing of FICO scores and other qualifying loan criteria, significant increases in unemployment, or a sudden lack of buyer demand caused by rapidly rising interest rates.
Next week we’ll explore how to best protect yourself when buyer in a peak market. In the meantime, here are a few great articles we found interesting.
© Copyright 2018, Windermere Real Estate/Mercer Island | (206) 232-0446 firstname.lastname@example.org | 2737 77th Ave SE, Mercer Island, WA 98040. Information and statistics derived from Northwest Multiple Listing Service.