Property taxes going up 17%
Basic economics is keeping prices high as there is no inventory. However we have a couple external factors that may have a cooling effect on outlying areas, but we don’t think there will be any impact on core areas. First, property taxes are about to jump around 17% in King County and some areas as high as 31%, WOW! This is the largest property-tax increase ever in King County. The reason for this hike is to comply with a state Supreme Court ruling known as the McCleary decision which has had the state paying fines of $100,000 per DAY since August 2015 because we haven’t been adequately funding our schools. The tax increases will be $1.01 per $1,000 of assessed valuation, plus any additional local levies. Speaking of schools, Seattle Public Schools just published their final, not final boundary changes for high schools. Just hit reply if you need help navigating these changes.
Mortgage rates climbing
We’re also seeing mortgage rates continue an upward trend. We’re hearing of mortgage interest rates being over 0.5% higher than just a couple of months ago.
Typically that means prices will decline, but not here, not now
Normally when expenses like taxes and interest go up, buyers purchasing power is reduced and they need to find a less expensive home. Except in Seattle/Bellevue core markets where many buyers are coming to the table with large down payments which makes them almost price insensitive. Until we see inventory flood the market, these external factors won’t have any impact in core areas, but will likely start to impact outlying areas by driving prices down and/or sending buyers across the county line to Snohomish or Pierce.