Life has been incredibly uncertain over the past 12 months; from the pandemic to politics, jobs to housing prices, there’s been a huge amount of speculation about what we can expect from 2021 and beyond.
In the housing market, some people speculate that we’ll see crashes, others forbearance. It’s hard to know what to expect, and clients are reaching out to me all the time to find out what I think will happen in our local market.
This article will provide all the information you need if you’re considering buying and/or selling your home here in beautiful Western Washington. We will look at the 2021 outlook for Kitsap County and surrounding areas, as well as what to expect as a prospective buyer.
Is the housing market due to crash in 2021?
People are speculating that forbearance issues are going to crash the market. While it’s unlikely to cause a huge foreclosure boom in the Kitsap County market and the Western Washington market holistically, there is a side effect that will impact us.
That side effect was a brief but drastic drop in building inventory caused by low interest rates. Simultaneously, people were relocating, Amazon built their new warehouse here, and we got the new fast ferry system. So, investors saw the opportunity and began to flood the local market and drive up prices. And to top all that off, in December (which is generally the slow time of year), Kitsap County saw a 15% year-on-year increase in prices. Pierce County saw a price increase of almost 14%, which is massive in housing terms.
So if you’re anticipating 2021 to be the year everything crashes and you can get a good deal in 2021, you might be pretty far off. I believe we’ll see forbearance, which will increase inventory in the Western Washington housing market, but I don’t believe it will be enough to not see house prices continue to increase.
House Affordability in Western Washington in 2021
The $350,000 and under price range is a feeding frenzy for investors – it’s their sweet spot, and it’s also the market many first-time buyers are looking at. That’s why we’re seeing homes getting 5, 10, 15+ offers, which is unheard of.
This shift in house prices is forcing people to look outside of Kitsap County. I’ve seen an increase in the number of questions about Gig Harbor, Belfair, Lakebay, and other nearby areas.
In short, affordability will likely be a major issue in Kitsap County and the surrounding area throughout 2021. And, unfortunately, house prices are not the only issue with housing affordability. There are also property taxes to contend with. With the home values increasing so dramatically, the property taxes are increasing as well, pushing the affordability of the area down.
Forbearance in Western Washington in 2021
This is a huge part of the picture no one is talking about. Many people escrow their taxes, and some mortgage companies don’t give the option to continue to pay your property taxes while in forbearance. They just tell the homeowner they don’t have to pay anything while they’re in forbearance.
And now, with the new provisions under the care act, they’re pushing that forbearance out another 12 months. That’s why people thought there was going to be a foreclosure boom in 2021: because it looked like forbearance was going to end and that people would start going into foreclosure, but that won’t happen because forbearance is being extended for another year.
Mortgage holders aren’t collecting taxes. $500 billion was set aside for tax districts that needed help under the Cares Act. But such tax relief wasn’t available to homeowners. This year will likely see homeowners going into foreclosure or have to sell their home quickly due to tax delinquencies. This is a terrible situation, but it could free up some inventory.
Regardless, it’s unlikely that the current situation will change much in 2021. Even with foreclosures, the market will stay hot.
Is it worth waiting another year to find a house for sale in Western Washington?
I hate to scare people – but with interest rates so low and Kitsap County and Western Washington remaining such a popular place to live, it doesn’t look like we’ll see the situation change in the near future.
Many new buyers may be considering waiting another year to purchase. 2022 might be a great year to buy a home. However, here’s the caveat: if prices do increase 10-15% this year, you’re going to be paying over $52,000 more next year to buy a $350,000 home. If prices do come down, it’s unlikely to come down enough to offset the value increase over the last few years. The Western Washington housing market has been strong for a long time and will be for the foreseeable future.
The reality is that in 2022, you’ll likely still be paying more for that $350,000 home than you would have if you bought it this year, and you’ll likely have to settle for a smaller home that’s further out. Are we going to see a major crash in 2021? Probably not. Are we going to see a major crash in 2022? Probably not.
If you want to move here and take advantage of the low-interest rates and do it before the prices increase yet again, I’m here to help. I’ve helped dozens of families move to Kitsap County and other beautiful areas of Western Washington, and I’d love to help you. I have my process dialed-in, and so I can help you with every step of your transition. If you have any questions at all, no matter how early in the moving process you are, don’t hesitate to reach out to me. You can find all my contact details here.