Brooks & Heinze Seattle Real Estate Team – February 2019 Newsletter

February 8, 2019


Seattle Market Update

There is a clear lack of consumer confidence evident in the real estate market. January is always a little slow but we saw slower activity in the market than usual last month.

Seattle Area home prices are still dropping but for most Seattleites that still means homes are out of reach. The median income of homebuyers in the Seattle metro area has reached $114,000 or about 40% higher than the region’s actual median household income of $82,000.

The 30-year fixed mortgage averaged 4.46 percent for the week ending Jan. 31, up from 4.45 percent the previous week. A year ago, mortgage rates stood at 4.22 percent.

There is hope that the softening of house price appreciation along with increasing inventory of homes on the market, as well as historically low mortgage rates will give a boost to the spring homebuying season. However, signs of a slowdown in the global economy and lack of affordability for locals might dampen these hopes.

Seattle Rental Market

Seattle has added lots of new, modern and expensive apartment buildings to address the influx of newcomers to the Emerald City. Perhaps too many units were added. Currently, 1 in 10 units across the city are sitting empty. Landlords have responded by lowering rents slightly and offering more perks to get tenants in the door. For more detailed information click here. Unfortunately, affordable apartments are still hard to find.

The rental market is cooling the most in the priciest parts of the region. On the Eastside, rents dipped 2.5 percent, in the last quarter, while rents remained virtually unchanged in South King County and Snohomish County. Rents dropped at least 3 percent in the past quarter in Belltown, South Lake Union, Fremont/Wallingford, Kirkland, Redmond, Sammamish/Issaquah and Edmonds.

Did you know?

A recent report by AARP found that 90 percent of retirees want to stay in their homes as they age. Aging in place — rather than packing up and moving to a specialized retirement community — is the newest housing trend for older Americans.

We’d love to hear from you

Any questions, comments, or feedback? Contact us any time.

Thank you,



Brooks & Heinze Team
at Skyline Properties, Inc.
Kerstin Brooks: 206.276.5827
Krisanne Heinze: 206.920.2541

Mortgage Interest Rate Myths

June 28, 2010

The following blog entry is a guest contribution by Virginia Lawson of Cobalt Mortgage in Kirkland, WA.

This may come as a shock to many borrowers, but it’s absolutely true. Mortgage interest rates are not set by the Federal Reserve and, contrary to popular belief, mortgage rates are not directly tied to the yields of US Treasury bills, bonds, or notes – including the 10-year Treasury Note. That’s right. Despite what you might hear in the media, mortgage interest rates are actually set by lending institutions, and are based solely on the performance of mortgage-backed securities.

For years now, the media and inexperienced loan officers everywhere have suggested that the 10-year Treasury Note, a government-backed security, is directly tied to mortgage interest rates, that the two are separated by a specific interval – which is simply not true. The graph on this page, which shows interest rates for 30-year fixed-rate mortgages and the yield for the 10-year Treasury Note for 13 months, clearly demonstrates this fact.

At a quick glance, yes, it’s easy to see why the mistake is made. As you can see, for 11 out of the 13 months recorded in the graph, the yield of the 10-year Treasury Note and interest rates for 30-year fixed-rate mortgages did follow a somewhat similar long-term path, despite obvious short-term divergences. However, take a closer look at the drastic change that occurs from January through March 2008. What’s interesting about this graph is that, during this period, the Federal Reserve had cut interest rates six times, from September 2007, to March 2008, and yet mortgage rates were actually higher in March 2008 than they were a year before. Not only does this demonstrate that the yield of the 10-year Treasury Note is not pegged to mortgage interest rates, it also reveals that mortgage interest rates are not set by the Fed either.

Stop being misled. If you or someone you know is thinking about buying or refinancing a home, give us a call. We’ll give the facts you need to make a truly informed decision.

Virginia Lawson, Senior Mortgage Advisor
Cobalt Mortgage
Phone: (425) 605-3129
License: 510-LO-51808

Smart Homebuyers are focusing on taking advantage of favorable rates along with the Tax Credit

January 11, 2010

Smart home buyers are focusing on taking advantage of the present, very favorable rate situation along with the still available tax credit.

Rates are likely to go up:

Please note that the main reason interest rates are so low is because the government is buying mortgage backed securities, or you may have heard the term “toxic assets”, which are basically sub-prime loans or loans that required no proof of income, allowed low credit scores and were generally 0% down.

After you get a loan through your bank or mortgage broker, the loans are sold to Fannie Mae and Freddie Mac and then those 2 entities package them up to sell them to investors. After the sub-prime meltdown no investors wanted them and so to keep Freddie Mac and Fannie Mae afloat, we, as taxpayers, bought them for essentially the “list price” even though they were not worth anything.

Even now, because interest rates are so low, private investors are not interested in mortgage backed securities (even though most of the loans now have a stringent qualification process) and so we, as taxpayers, are still buying them (and probably over-paying the banks).

In December (on the 24th, while most of the country was spending time at home with their family for the holidays) the Treasury announced there was to be no limit on what the government spent to bail out Freddie Mac and Fannie Mae. The prior limit was 400 Billion. This is a good article to explain what that means (besides we are all getting ripped off and our children, children’s children and so on will suffer). .

So, when the government decides to start stepping out of the big business welfare role, interest rates will go up and I presume that will happen in 2010 sometime. So, what happens when interest rates increase? Buyer’s qualify for less money and it impacts the housing market because buyers can afford less.

Tax Credit for First-time Buyers and Move-up Buyers scheduled to expire April 30, 2010.

In order to qualify for the credit, all home purchase contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

More about these tax credits can be learned in one of our prior posts from November 8, 2009 entitled “First Time Homebuyer Tax Credit Extended” and “A New Tax Credit for Certain Existing Home Owners”.

A great way to learn more about the above topics or decide if becoming a homeowner is right for you, please contact us or attend one of our home buyer workshops:


Date: Thursday, January 28, 2010
Time: 6:30pm – 7:30pm
Location: Northgate (Seattle) – 9709 3rd Ave NE #450, Seattle, WA 98115

Topics covered:
Loan Application Process, First-time Homebuyer Tax Credit, Market Conditions, Own vs. Rent Illustration, Home Buying Process, For Sale by Owner (FSBO), bank-owned, short-sale properties, Q & A. RSVP to Kerstin at 206.276.5827 or

Krisanne Heinze & Kerstin G. Brooks

Brooks & Heinze Team

Know how interest rates affect your buying power and payments

October 23, 2008

Know how interest rates affect your payment. The interest rate on a loan is used to calculate your monthly payment. The higher the interest rate, the higher your monthly payment. The lower the interest rate, the lower your monthly payment. Simple? Yes, but abstract until you see it applied to your loan.

When interest rates rise, it lessens the buying power of potential buyers because it increases monthly payments which are used to decide how much money the lender will let the buyer borrow.

Following is an example to illustrate how your buying power is reduced or how your monthly payments are affected as rates change: At a 6% fixed rate, with 30 years of payments, one would have to pay approximately $600.00/month for every $100,000 borrowed. At a 7% rate, one would have to pay about $665.00/month on every $100,000 borrowed. So, in this example, for a $350,000 home your monthly payment would increase by $227.50)/month (from $2100/month to $2327.50) if the interest rate rose 1%.

Home Price Interest Rate Monthly Payment
$300,000.00 6% $2,100.00
$300,000.00 7% $2327.50

Let’s do a second example. At a 6% fixed rate, with 30 years of payments, your monthly payments for a $500,000 would be $3000/month and at a rate of 7% would be $3325 (a $325/month increase in payments).

Home Price Interest Rate Monthly Payments
$500,000.00 6% $3,000.00
$500,000.00 7% $3,325.00

Obviously, an increase in rates can have several negative affects on the market. With less buying power, buyers may find that they can no longer afford now what they could have afforded a couple of months ago. This can decrease the number of financially qualified buyers. Less buyers in the market equals less demand for homes, causing a downward pressure on prices in some of our local Seattle communities. You may wonder than if you should wait until prices drop before you buy – the answer is no (see example below).

Let’s look at it from a slightly different perspective why waiting for prices to drop is the wrong approach. Example: You decide to wait to buy your home until prices drop 10% percent. The risk in waiting could be higher interest rates and higher mortgage payments as seen in the example above. So if the price of a home happens to drop ten percent from $500,000 to $450,000, but interest rates rise 1% point from 6% to 7%, your payments are still about $3000 a month. Only a $7.50 change in monthly payments.

Home Price Interest Rate Monthly Payments
$500,000.00 6% $3,000.00
$450,000.00 7% $2,992.50 (-$7.50)

One more tidbit of caution. When rates rise, they usually rise fast (much faster than the change of appreciation).

Disclaimer: The above rates I used are not actual rates here in Seattle — they’re just used as an example to show the effect of rate changes on monthly payments. Rates do vary depending on your credit score, how much you are borrowing, and market conditions. Please consult a mortgage professional to get a better idea of what your monthly payments would be and to see what you can afford. We would be happy to refer you to our team lender for further information.

If you have more questions, about this topic, please feel free to contact us at 206.276.5827 or at

For the folks who prefer this information in a visual/audio format, please watch a brief video summary about this on YouTube.

Kerstin G. Brooks, ABR, Realtor
Brooks & Heinze Team at RE/MAX NW Realtors
Phone: 206.276.5827

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