All of us at the Cyrus Fiene Team want to wish you a happy Thanksgiving. We appreciate all of our clients and are thankful for your support and continued trust. We wish you a wonderful Thanksgiving. - Cyrus, Jen, Tarice, Nikki, Kurt
State of the Seattle Real Estate Market - November 2023
Incredible Autumn colors this year!
Market Recap
We hope you are enjoying this nice transitional weather to Winter. Nice to not have too much rain these last few weeks! King and Snohomish County inventory is currently 1.8 months (Condos/Single-Family Homes). While this is higher than the last few months, this is still relatively low. We expect the low inventory will continue to be the case through the end of the year due to the "lock-in" effect we discussed previously. Over the next 2 months, we expect inventory to trend downward as Sellers decide to wait to sell their home in the new year, current inventory sells, and Buyers decide to table their search until early Spring. Between King and Snohomish County, the median price for single-family homes is currently at $828,972, up from $765,000 in January. This month, interest rates have leveled out and will likely be floating around 7.5% until Springtime next year.
Major Change in Multi-Family Loan Requirements
BIG NEWS recently came out regarding the latest requirements for purchasing a multi-family property. These changes are officially in play now. So often, clients of ours are interested in buying a multi-family property and they have to pursue other options because of the loan requirements. That has changed now! Fannie Mae has recently made a significant policy change, allowing for 5% down payments on owner-occupied Duplex (2-unit), Triplex 3-unit), and Fourplex (4-unit) multi-family homes, effective as of November 20, 2023. This marks a departure from the previous requirement of 15-25% down payment for duplexes, triplexes, and fourplexes. The change is expected to be especially beneficial for those seeking to purchase a multi-family home, to live in, while collecting rent. Again, the key is that you will live in one of the units. This reduction in down payment levels is significant, particularly for properties that are more expensive than single-family homes. For instance, a $800,000 triplex that previously required a $200,000 down payment will now only need $40,000, resulting in a $160,000 difference. For a $1,000,000 fourplex, the old requirement was, in most cases, $200,000 down. Now it is $50,000 on a $1,000,000 asset. While this change opens up opportunities for multi-family homebuyers, it's essential to note that applicants must still have six months of the full payment in reserve after paying the down payment and closing costs (typically about 1.25% of the value). This "reserve" must be proven to be in an accessible account, like a savings account or investment account. Now, if your concern is that you cannot qualify based on your income, do not worry! The program FACTORS IN THE PROJECTED RENTS from the other units, at 75% of the projected rents. So, if you expect $4,000 in rental income, the lender will essentially account for a net income of $3,000 to account for vacancy and other various factors. That is an enormous boost to most borrowers' income. Fannie Mae has made this change to help support buyers and help them access more credit, as rates have increased this last year. This change could help homebuyers reduce their monthly cost of ownership by using rental income to offset payments. The maximum loan amounts for 2-4 unit properties in 2023 range from $929,850 to $1,396,800, depending on the number of units. These limits matter because the price for multi-family units in the Seattle Metropolitan area *start* around $650,000 and go up from there. This is a GAMECHANGER for those previously interested in multi-family properties and couldn't afford them due to the down payment requirement and price. Purchasing a multi-family property to live in, even for a handful of years, can drastically give you a financial upper hand in the future. If you or anyone you know is interested in having a deeper conversation with our team to learn more about the program and what being a landlord looks like, send us a message!