Expert: ‘We will never see interest rates of 3% or lower ever again’

Jun 7, 2023, 3:51 PM | Updated: Jun 8, 2023, 9:58 am

Seattle Home for Sale...

Seattle home for sale (Getty Images)

(Getty Images)

The glory days of 30-year mortgage rates hovering around 3% or less may be in the rearview mirror.

Windermere’s Chief Economist Matthew Gardner was on Seattle’s Morning News Wednesday and declared, ” ‘Are we ever going to get back to sub 3%?’ No, that was artificial. It was fake. It was government-induced. It should never have happened in the first place. But it did. So anyone waiting for that 2.95% 30-year fixed rate? They’ll be waiting a very long time.”

Gardner also made it clear that the western Washington housing market is “a mixed bag” with home prices going lower — for the most part — and mortgage rates becoming higher.

“I expected her to see a drop in values because we peaked in the region back last May. We certainly have seen a year-over-year drop,” Gardner said. “So far this year, we are still down  7 to 8%, roughly, depending on the part of the region where you are.”

The good news is that Gardner believes things will improve.

“Where prices are a leading indicator, King County, single family, these prices are of a match last month,” Gardner explained. “The all-time peak that we saw last May was $1.1 million.”

According to Zillow, King County home prices are averaging just over $800,000.

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Gardner said that area home sellers remain relatively confident.

“I think any expectation of a significant downside market correction is just not happening.”

The ability to sell a home at the price you want is geographically specific, Gardner explained.

“Some brokers are saying, yeah, it’s taking a bit longer. It’s a bit unusual,” Gardner said. “Others are saying no multiple offers within 48 hours. So it really depends on what you’re selling and where you’re selling it.”

Gardner, in part, blames the national debt ceiling debate for rising mortgage rates.

“Mortgage rates track the yields on 10-year treasuries. Now those yields went up because there was concern that the government isn’t able to pay their bills. So we actually got above 7.1% last week.”

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Gardner said rates will eventually come down, but when? And how much? Those are the key questions.

Listen to Seattle’s Morning News with Dave Ross and Colleen O’Brien weekday mornings from 5 – 9 a.m. on KIRO Newsradio, 97.3 FM. Subscribe to the podcast here.

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