Tag Archives: Home Ownership

Continuing Discussion: Our Local Housing Market and Low Inventory

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The housing market recovery, locally and nationally, and the low inventory in our region are both hot topics of interest. Windermere Blog featured posts on both subjects this week.

Windermere’s president, OB Jacobi, discusses the low inventory in our region in his post Time to Reality Check the Real Estate Market. From the post:

Here are the current inventory levels in key markets along the West Coast, all of which fall below six months of supply and report strong competition among buyers.

· Seattle: 1.4 months

· Portland: 4.2 months

· San Francisco: 1.8 months

· Las Vegas: 3.8 months

· Palm Springs: 2.5 months

Mr. Jacobi discusses what this means to buyer and sellers, along with discussing the impact of current interest rates and its effect on affordability.

Matthew Gardner, principal at Gardner Economics, compiled a report on how our region fared during the 4th Quarter of 2012. He provides analysis of Western Washington’s job market along with the housing market. He, too, touched on our region’s low inventory:

As stated previously, I do worry about the lack of homes for sale. If we do not see a fairly dramatic increase in inventory, I fear that the market will be forced to give some of its recent gains back— albeit temporarily. Because of this fact, and regardless of the solid price growth that we are witnessing, I am still unable to raise my grade above the “C” that I gave it last quarter.

With that being said, Gardner goes on to state in his conclusions:

From a real estate standpoint, it is clear that we are now well removed from the days when home prices were hemorrhaging. Home values have stabilized and a recovery in values is underway. The credit markets have thawed and getting a mortgage is easier now than it has been since the housing “bubble” exploded. Interest rates remain at historic lows, and although I believe that they will rise in 2013, the increase should be modest.

Please take time to read both blog posts. They are full of pertinent data for those interested in our current housing market. To quote OB Jacobi, “It goes without saying that nobody wants to sell at the bottom of the market, yet at the same time, everybody wants to buy at the bottom. Obviously these two scenarios can’t exist at the same time, but I hope the information in this blog shows there are definitely opportunities to be had by both buyers and sellers that are worth considering.”

Sellers – Why Waiting To Sell May Not Make Sense

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There’s been a lot of press across the nation regarding the low inventory levels in housing markets. Here’s a story from KING5 News about our own low inventory in the Greater Seattle/Eastside region. A by-product of a low inventory market are multiple offer situations. Our office has personally witnessed how much multiple offers are a market reality— we’re seeing it occur in about 50% of our office’s transactions. There’s also been much press about how buyers and their agents are approaching multiple offer transactions, like including seller “love letters” with their offer to create an emotional connection. Yet with all the press, and the conversations it’s generating, sellers are still hanging back.

I’m curious as to why sellers are waiting to sell. Is it a home’s lost equity? Is it the hope that prices will continue to rise? Prices will most likely continue to rise, however returning to the equity boom of the 2006 market will still take years. Take a moment to read this Keeping Current Matters blog post about home value. In the post, both Barclays’ U.S. residential credit strategy team and the analytics firm Fiserv are quoted. Their projections for the housing price rebound to reach 2006 levels is not until the early 2020s.

Is timing more of a concern for sellers? Spring time is often viewed as the best time to list a home. Again, the Keeping Current Matters blog put together a poignant post outlining why waiting to list may not make sense in our current market. Here’s the breakdown of the 5 reasons you should list now, per KCM Blog:

1.) Demand Is High
2.) Supply Is Low
3.) New Construction Is Coming Back
4.) Interest Rates Are Projected to Inch Up
5.) Timelines Will Be Shorter

The interest rate component is especially noteworthy, since most sellers will turn around and be buyers of a new home. Jennifer Burton, from Windermere Mortgage Services, sends out a weekly email with the current rates and articles pertaining to the real estate mortgage industry. In the week ending on 2/8/13, conventional mortgage rates were approximately the following: Conventional 30 year Fixed up to $417,000 3.5%-3.75%; Conventional 15 year Fixed 2.75%-2.875%; Conventional 30 year Fixed High Balance up to $506k 3.625%-4%; Jumbo and One Step Construction 30 year Fixed 4.25%-4.5%. All of those rates have shown slight increases in recent weeks. As mortgage rates start to inch up, the amount of home that can be purchased with the loan you qualify for goes down.

Flyer- Rate and Buying PowerTake a look at this rate and buying power chart, also provided by Jennifer Burton. The chart illustrates how much more of a house a buyer can afford at lower interest rates. For example, if a buyer qualifies for an $800,000 loan at a 4% interest rate, at 5% that same buyer qualifies for $711,409. At 6%, that same buyer is now down to a $636,977 loan. It’s amazing how small changes in the interest rate impact how much of a home buyers can qualify for. Those who go to market now will be attractive to a larger pool of buyers, due to the favorable interest rates. Couple that with today’s low inventory levels, and the prospect of selling quickly could definitely be a reality. Sellers who will turn around and make a purchase then may have a better opportunity to achieve their own housing goals at a more affordable price.

Now it’s your turn sellers — what are you waiting for? Use the comment section below to share why you are choosing to wait to list your home.

NWMLS Press Release (1/7/13): Local Real Estate Markets Brisk For A December, Even With Seasonal Slowing

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The Northwest Multiple Listing Service sent out their monthly press release on Jan. 7th 2013. Below are details from the release, including the 4-County Puget Sound Region Pending Sales Table. To read the press release in its entirely, click here.

Home buyers around western Washington made offers on 5,314 residences during December, outnumbering the 3,857 owners who listed their homes for sale. The imbalance helped push up prices and further thin already depleted inventory.

While the expected seasonal slowdown occurred last month, determined buyers were undaunted by sparse inventory and record-breaking rainy days, according to December statistics from Northwest Multiple Listing Service.

MLS members reported 5,314 pending sales of single family homes and condominiums last month for a modest year-over-year increase of 1.5 percent. That volume of mutually accepted offers fell from November’s total of 6,522, but far exceeded the number of new listings, 3,857, that members added to the MLS system during December. It also marked an unprecedented fourth straight month when pending sales outnumbered new listings.

MLS members tallied 5,267 closed sales during December, outgaining the same month a year ago by 526 transactions for an increase of about 11.1 percent. The 2012 total of 64,624 closed sales was 14.8 percent higher than the volume reported for 2011.

Brokers expect the housing market rebound to continue, while cautioning sellers to refrain from becoming too greedy and expressing hope for “controlled natural growth” to sustain the recovery. They also believe distressed properties, rising rents and re-engaged investors will have an impact on activity for the foreseeable future.

Even with distressed properties (and the lower prices they usually fetch) being part of the mix of sales, median sales prices are edging up. Last month’s buyers paid more for their home than purchasers of a year ago, and the number of properties that sold for a million dollars or more jumped nearly 56 percent, rising from 68 in December 2011 to 106 last month.

The median price area-wide was $255,000, up 13.3 percent from twelve months ago when the price was $225,000. Prices rose by double digits in ten of the 21 counties in the Northwest MLS service area. Homes and condos that sold in King County commanded the highest prices at $342,000, reflecting a gain of more than 17.5 percent.

For single family homes (excluding condos), the median selling price rose $30,000 system-wide (about 12.8 percent) climbing from $235,000 a year ago to $265,000.

In King County, the median sales price of a single family home jumped nearly 18.8 percent, from $320,000 to $380,046. Within the county, the biggest increases on single family homes that sold were reported in Skyway/Bryn Mawr area (up 89.8 percent), Central Seattle (up 50.2 percent), Vashon (up 35.6 percent), Bellevue west of I-405 (up 28.6 percent) and Burien-Normandy Park (up 26.9 percent).

Prices and the number of multiple offers may be rising in part because of shrinking inventory. At the end of December, there were only 17,718 properties for sale, which compares to 26,639 active listings for the same time a year ago (down 33.5 percent). Months of supply declined to 3.3 months, down from about 5 months of supply for the same period a year ago.

Looking ahead, many brokers expect a strong market in 2013, with some expressing concern about “frenzied bubble growth.”

Another positive indicator brokers noted is improving builder confidence. It recently rose to its highest level in more than six years, according to a National Association of Home Builders (NAHB)/Wells Fargo survey released last month. Although newly built homes account for only a small portion of the housing market, they are considered to be a leading revenue and job creator. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to NAHB research.

Northwest Multiple Listing Service, owned by its member real estate firms, is the largest full-service MLS in the Northwest. Its membership includes more than 21,000 real estate brokers. The organization, based in Kirkland, Wash., currently serves 21 counties in Washington state.

The NWMLS plans to release its annual summary report for 2012 mid-January.  Stay tuned for details.

4-county Puget Sound Region Pending Sales (Single Family Homes + Condo combined)

(totals include King, Snohomish, Pierce & Kitsap counties)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2000 3706 4778 5903 5116 5490 5079 4928 5432 4569 4675 4126 3166
2001 4334 5056 5722 5399 5631 5568 5434 5544 4040 4387 4155 3430
2002 4293 4735 5569 5436 6131 5212 5525 6215 5394 5777 4966 4153
2003 4746 5290 6889 6837 7148 7202 7673 7135 6698 6552 4904 4454
2004 4521 6284 8073 7910 7888 8186 7583 7464 6984 6761 6228 5195
2005 5426 6833 8801 8420 8610 8896 8207 8784 7561 7157 6188 4837
2006 5275 6032 8174 7651 8411 8094 7121 7692 6216 6403 5292 4346
2007 4869 6239 7192 6974 7311 6876 6371 5580 4153 4447 3896 2975
2008 3291 4167 4520 4624 4526 4765 4580 4584 4445 3346 2841 2432
2009 3250 3407 4262 5372 5498 5963 5551 5764 5825 5702 3829 3440
2010 4381 5211 6821 7368 4058 4239 4306 4520 4350 4376 3938 3474
2011 4272 4767 6049 5732 5963 5868 5657 5944 5299 5384 4814 4197
2012 4921 6069 7386 7015 7295 6733 6489 6341 5871 6453 5188 4181

Before You Waive the Inspection Contingency, Consider the Risks

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In marketplaces where multiple offers are more common place, there may be a temptation to forgo an inspection to woo the sellers. However, it would behoove a buyer to take some time to learn the risks that can accompany forgoing the inspection contingency when purchasing a home.

The American Society of Home Inspectors (ASHI) website has an informative FAQ section which addresses commonly asked questions about inspections. Their Facebook Page contains photo examples of what ASHI inspectors find out in the field. While many are humorous looking, the reality is dealing with unexpected problems after purchasing a home is no laughing matter.

Check out this Huffington Post article about a woman who paid $1,000,000 for a home, waived the inspection contingency, and after the transaction closed discovered an enormous mouse infestation. According to the article and accompanying video, the home needs to be torn down to the studs. While this is an extreme example, it illustrates clearly why conducting an inspection prior to purchasing a home is usually in a buyer’s best interest.

If the local real estate market you want to buy in suffers from low inventory, like it is here in the greater Seattle area and Eastside, multiple offers are a reality buyers grapple with. For buyers who are finding that an unwillingness to waive the inspection contingency can be a deterrent to sellers receiving multiple offers, a pre-inspection may be a good option to consider.

What exactly is a pre-inspection? This is an inspection service available to buyers that is conducted before making an offer on a house. It’s not as long, or as detailed, as a regular inspection. During a pre-inspection, which generally lasts an hour to 90 minutes, the inspector examines all the main structural elements and systems. Roof, attic, crawl spaces, foundation, heating and cooling systems, electrical, plumbing… the large components of a home, like these, will be inspected for damage, moisture problems, breakdown and infestations.

In neighborhoods that have more buyers than available inventory, it’s become increasingly popular to invest in a pre-inspection first. While it’s not as thorough, conducting one may give a buyer more confidence to move forward without a full inspection if that waiver would make their offer stronger. “Certainly no one wants the added expense of paying for an inspection on a house where your offer may not be accepted,” Raj Hayden, of Cardinal Home Inspection, shared. However when you consider the risks of forgoing any type of inspection, Hayden said for her it’s always preferable to have as much information going in to the decision making process as is readily available, to minimizing the shock and/or regret later.

Furthermore, during a pre-inspection, while their agent is present, buyers can do the detail leg-work a home inspector usually completes during a full-length inspection. Check out doors and windows. How do they fit into their frames? Do they open and close easily? Check out the appliances that will be staying. How do they work? How noisy are they? Do closet doors ride easily on their rails? Have walls been patched? What is the condition of the cabinetry? Does the carpet in any of the rooms have spots pulling away from under the molding? These details can be easily checked by the buyer while the inspector examines the core of the home.

Now it’s your turn. What has your experience been in a multiple offer situation? Have you invested in a pre-inspection before making an offer on a home?

The Continuing Discussion of Rent vs Buy

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Trulia released a report today which takes another look at the Rent vs Buy conversation. Trulia analyzed the last 3 months of rental and home purchase data for the 100 largest US metro areas. Trulia concluded that with the current home price averages, low fixed interest rate and how much rent prices have increased in the past year, it’s cheaper to buy than rent is all 100 metros— under certain conditions. In 96 of the 100 areas examined, it’s still cheaper to buy even with the least desirable scenario Trulia used for their calculations.

There was certain criteria Trulia included in their analysis:

1) Trulia looked at both rentals and homes for sale listed on their site for June, July and August 2012. They then calculated how much the rental homes would probably sell for, and conversely they estimated how much homes for sale would rent for. The goal of calculating this data was for Trulia to be able to create a “direct apples-to-apples comparison.”

2) Trulia calculated the total cost of both renting a home and owning a home over a 7 year period, including the consideration of tying up your money in a down payment.

3) Trulia then analyzed different scenarios regarding the costs of renting versus buying. They changed up the mortgage rate, the income tax bracket for tax deductions, and time period of renting/owning the home.

In all 100 metros, it was cheaper to rent than buy under the best case scenario Trulia used in their calculations (20% down payment, 30-year fixed mortgage rate at 3.5%, buyer at 25% federal tax bracket and owning the home for at least 7 years). The report discusses how influential each of these elements were in determining the cost percentage between renting versus buying. For example, when Trulia compared the data of locking in at a 4.5% fixed mortgage, not itemizing your tax return and only staying in the home for 5 years, buying was actually more expensive than renting in 4 of the metro areas!

So, if buying a home is a much better deal for all these areas– why aren’t more people purchasing homes? The down payment is the largest hurdle for home buyers, according to the Trulia report. If buying a home is a goal of yours, speaking with a real estate broker will give you a better idea of how to deal with the down payment hurdle. The real estate broker can help answer the questions you have on how to make your dream of owning a home a reality.

You can read the full Trulia report here. The report is accompanied by an interactive infographic based on the data Trulia calculated for each of the largest US metro areas.

Interest Rates Climb For Third Consecutive Week– Compare Mortgage Payments

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The Thursday, August 16th, press release from Freddie Mac revealed the 3rd straight week of rate increases for both 15 and 30 year mortgages. The 15 year, fixed rate mortgage ended the week at 2.88%; the 30 year, fixed rate mortgage finished the week at 3.62%.

If you are contemplating a home purchase, taking advantage of today’s lower interest rates can save you quite a bit of money over the life of the loan. Also, the monthly mortgage payment is so much more affordable.

Jennifer Burton, of Windermere Mortgage Services, put together payment comparison charts to compare the monthly payments for homes between $200,000 and $900,000 at 3.5%, 4.5% and 5.5% interest rates. It’s pretty amazing to take a look at the jump in the monthly mortgage payment as the interest rate climbs! If you would like to print the payment comparison charts to look at them closer, click here for homes priced between $200,000 and $600,000; for homes priced between $600,000 and $900,000, click here.

The economy is showing signs of modest growth, which in turn has caused the interest rates for fixed-rate mortgages to rise a little. The following quote is attributed to Frank Nothaft, vice president and chief economist, Freddie Mac,

“The latest economic indicators point toward low inflation but gradually stronger economic activity which placed further upward pressure on long-term Treasury yields and, in turn, fixed mortgage rates. For example, inflation remains in check with 12-month growth in the core consumer price index falling for a second month to 2.1 percent in July. At the same time, industrial production rose 0.6 percent in July compared to a 0.1 percent increase in June and retail sales jumped 0.8 percent in July from a 0.7 percent decline in June.”

According to local economist, Matthew Gardner, the housing market in Western Washington is seeing some home price stability, however the inventory of homes available is still very low. It’s noteworthy, however, to read how the greater Seattle area has been witnessing continued job growth, and how Gardner also notes that increased consumer confidence is evident with the modest economic growth in the retail sector. If listing your home for sale has been on your mind, maybe now is the time to speak with a real estate broker, to discuss how the small inventory has effected the selling process in King County. Request from real estate broker your broker a market analysis of your home. This document will help the two of you discuss what options you have as a seller, and if it makes sense to list your home now.

Now it’s your turn. What are your thoughts about the recent increases in fixed mortgage rates? Has it changed any plans you had to buy or sell a home?

Open Houses: Sunday, June 17th, 2012

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Hello and Happy Saturday! Lots of exciting fun things to do this weekend. Seattle Flight Museum is having all Dad’s free Sunday June 17th from 10-5pm lots of fun activities going on. Or if you like horses and races try Emerald Downs, its Free Cap Day and they have free family activities in the park, pony rides, face painting and more 12-5pm.

This weekend there will be open houses to visit, as well!

Two Windermere R.E. / Mercer Island listings will be held open on Sunday, June 17th. One is brand new to the market this is the first open, its a NW beauty-extensive remodel -traditional sensibility.  The other one is a peaceful, private rambler located in Shoreline’s Innis Arden neighborhood.

Details about each open house are below, by city.

Mercer Island

$950,000 l 6215 86th Ave NE l 368876 l Cynthia Schoonmaker l Sunday, 6/17, 1-4PM

Shoreline
$493,000 l 17061 10th Ave NW l 350859 l Ina Bahner l Sunday, 6/17, 11-2PM

“The Mercer Island Open House List is ready to conveniently print from this blog post!  5 home are available to preview Saturday, June 16th, and 10 will be open Sunday, June 17th. The list prices range from $650,000 to $2,799,000. The prominent features of the homes being held open over the weekend new to the market, outdoor entertaining spaces and walk-in pantries.”

From HUD: Upcoming Increases to Mortgage Insurance Premiums

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Today the HUD announced changes to the premium structure for FHA-insured single family residential mortgages.  According to the press release, “FHA will increase its annual mortgage insurance premium (MIP) by 0.10 percent for loans under $625,500 and by 0.35 percent for loans above that amount.  Upfront premiums (UFMIP) will also increase by 0.75 percent.”

The premium increases will be rolled out in the next few months.  Starting April 1st 9th, 2012, all FHA-insured loans will see the 0.10% increase in MIP.  Loans over $625,000 will be assessed an extra 0.25% increase in MIP starting June 1st 11th, 2012, to reach the total 0.35% increase.

The increase in UFMIP will bring this charge from 1% of the base loan amount to 1.75% starting April 1st 9th, 2012.  This change will amount to approximately $5 a month increase to borrowers, on average. The FHA will still allow borrowers to roll this charge in with their mortgages.

The HUD press release about these upcoming premium increases can be read here. What are your thoughts about these increases? Do you think the increases will achieve the goal the FHA has set out for these monies– to contribute to the ongoing stability of its Mutual Mortgage Insurance (MMI) Fund?

EDIT: On March 6th HUD released Mortgagee Letter 12-4 which contains the exact roll out dates of the MIP and UFMIP for new FHA borrowers. The press release sited in this blog post used the language “on or after …” when indicating the projected roll out dates. I’ve updated the text above to reflect the actual roll out dates contained within Mortagee Letter 12-4.

2012 Mercer Island Tour of Homes– First Tour of the Year!

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Our first 2012 Mercer Island Tour of Homes is this Sunday, February 26th, from 1-4 pm. Six homes are scheduled for this tour— three of which are brand new to the market within the last 7 days. The island tour will be the first public open house for two homes! Also, if you are a fan of one level living, this is definitely the tour for you. The rambler is the predominate building style of the homes available to preview on Sunday.

For more details about each listing please follow the links below.

  1. $300,000 | 2500 81st Avenue SE, Unit 346 | #324326 | Allen Hovsepian
  2. $565,000 | 7265 87th Avenue SE | #323105 | Kelly Weisfield
  3. $599,950 | 4005 89th Avenue SE | #318017 | Hosted by Nancy LaVallee
  4. $699,000 | 2755 73rd Avenue SE | #317192 | Hosted by Michael Lee
  5. $889,000 | 4104 94th Avenue SE | #322781 | Cynthia Schoonmaker
  6. $920,000 | 7415 80th Place SE | #322237 | Hosted by Doug McKiernan
  7. $2,199,000 | 6857 SE 33rd Street | #268980 | Bonnie Sanborn

On Sunday, February 26th, please stop by our office any time after 10 am for a cup of coffee and a tour map! We’d love to see you.

Feds Are Keeping Interest Rates Down Through 2014– Is a Home Purchase In Your Near Future?

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With the news yesterday that the Feds plan on keeping interest rates low through 2014, along with current house prices, are you contemplating a home purchase in the near future?

If you are thinking about buying a home, an important first step is to examine your finances. If you have not checked your credit reports in the past year, take the time now to check them. You are eligible to receive a free credit report annually from Experian, Equifax and Trans Union. If you notice any errors on your credit reports, or they contain negative information, you can work on cleaning up your credit reports before you start looking for a home.

One of the things that heavily effect your FICO score, which lenders look at to determine if they want to approve you for a home mortgage, is how much debt you currently carry. In fact, your outstanding balances category is the second most important one of the five categories used to calculate your FICO score. When you reduce your credit card debt, along with paying bills on time and cleaning up delinquent debts, your credit score will become stronger as time goes along. Below is an infographic which outlines a terrific, simple strategy to decreasing your credit card debt.


 

What are your thoughts about the feds’ decision to keep the interest rates low through 2014? Are you taking a look at your finances to see how to strengthen them?