T
he recent half-point interest rate cut by the Federal Reserve might have been expected to boost homebuyers who had been waiting on the sidelines, but it's unlikely to make a significant dent in affordability for many potential buyers in Washington state. Despite lower mortgage rates increasing purchasing power, a 6% rate is still out of reach for those struggling to afford homes.

    Seattle real estate broker Juliet Beard notes that the real estate industry anticipated the rate cuts, so they were already factored into mortgage rates. However, the cut has had a positive impact by making people more aware of current rates. Seattle saw a significant spike in home prices in August, with prices remaining near record highs due to a shortage of available homes.

    Beard points out that the median income in Seattle is $120k, but not everyone earns this amount. The median home price in Seattle has been increasing, ranging from $795,000 to $835,000 in August 2024. Those hoping for lower rates to refinance should temper their expectations of a significant drop in mortgage rates.

    Mortgage rates are influenced by various factors, including the presidential election and global events like the war in Israel. For many buyers to afford a home, mortgage rates would need to return to near rock-bottom lows seen three years ago or home prices would need to fall significantly. Economists expect mortgage rates to stay near current levels for at least this year.

    Experts warn that waiting for rates to possibly ease next year could leave buyers facing heightened competition and potential sellers staying put. Meanwhile, 76% of people with a mortgage have a rate below 5%, which may exacerbate the supply-demand imbalance in the short term.