The Election’s Impact on the Seattle Housing Market

The recent election’s impact on the Seattle housing market is still in the early stages, but it’s going to be interesting to see what happens as the new administration is sworn in on January 20^th. The Biden administration’s housing policies will likely have some big effects on the housing market, so let’s dive into what that may look like. Here’s what we know so far.

There Will Likely Be a Push to Make Housing More Affordable

With Seattle’s massive, rapid appreciation in home prices, affordability remains a barrier to growth and accessibility for the folks who make our city so special. Housing access remains a key to keeping Seattle a magnet for artists, musicians, entrepreneurs, and small businesses.

Biden has pledged to introduce a down payment tax credit for first-time homebuyers up to $15,000 to be used at the time of purchase. With soaring home prices, this could be a huge benefit for buyers. One of the biggest barriers for first-time buyers entering the housing market is the down payment hurdle, so this would really help some buyers feel like they are able to afford a home.

Other Biden pushes could include increasing home supply, lowering the cost of housing overall, and improving housing quality and energy efficiency. Of course, all of these things would have an impact on housing affordability.

Making Housing More Accessible

An important part of making housing more accessible for everyone is ending redlining (which is refusing a loan or insurance because you think an applicant is a credit risk) and other discriminatory and unfair practices in the housing market. Seattle has struggled with its own history of redlining and the impact that has had on neighborhoods like the Central District. Generations later, the makeup of our city has been shaped by those practices. We champion any policies that will make housing more accessible for everyone.

Here are a couple of things that could help make housing accessible to more people.

1.     Creating a public credit agency that would help raise the scores of minority homebuyers by considering things like rental payment histories and utility bills that are paid on time. This could help more buyers qualify for mortgages with lower fees and rates.

2.     Biden has proposed creating a national standard for appraising homes to make sure properties in communities of color wouldn't be assessed for less than similar homes in comparable white neighborhoods. This could help stem some of the biggest problems that are plaguing neighborhoods where there are more people of color.

3.     As anyone who’s spent any time in Seattle knows, homelessness is a massive problem that’s only been exacerbated by the pandemic. That’s true in other large cities throughout the country. Any comprehensive approach to ending homelessness would have to include making housing more accessible to those most in need.

The Future of Interest Rates

There is strong agreement among housing and mortgage observers who predict that interest rates will continue to hover near historic lows for the next several years and purchase and refinance volume will remain high, largely due to simple economic realities: there simply isn’t enough inventory, and the economy is too fragile for rates to increase.

This creates a favorable market for both buyers and sellers for the foreseeable future, especially in higher cost-of-living areas like Seattle, where lower interest rates help buyers get more bang for their buck.

The Future of Fannie Mae and Freddie Mac

With a new president-elect, one of the topics many in the industry are talking about is the future of Fannie Mae and Freddie Mac. Under the Trump administration, there was a plan for Fannie and Freddie to be released from government conservatorship. Since they are two of the world’s largest mortgage financiers, this raised concerns over increased fees and rates for homeowners.

Under the Biden administration, there are a few things that may take place. First, it's HIGHLY likely that the two entities would stay under conservatorship while the administration deals with the most pressing matters of COVID-19.

Then, the option would be to put the two entities into a utility model to help control fees and rates and/or allow them to be nationalized, which would open the door for more investors to come into the market. With Biden’s push for affordable housing, a utility model would be most likely, but as of now, we're not yet sure what will happen.

If you have any questions about the election’s impact on the Seattle housing market or anything else related to real estate (or not—we’re not picky!), give us a call at (206) 353-7625 or head to our website at sweetlivingrealty.com.