If you are considering purchasing a new home
but are concerned about all the negative economic
news, you may be wondering if this is a good time to buy.
Here are a few interesting points to ponder:
Interest Rates: Interest rates are currently at
historical lows. Over the past two centuries, there
have only been 38 out of 203 years where
rates have been under 6.5%!
Buyer's Market or Seller's Market: The past
few years have been a “seller’s market” where
buyers often must compete in multiple offer
situations, homes sell for more than asking price, and
sellers aren’t typically willing to do property repairs
or contribute toward closing costs. Currently, this is a
“buyer’s market”…homes are on sale! Sellers are
much more willing to be flexible with offers and
provide concessions, resulting in greater purchasing
power for buyers.
King County Housing Market: According to
the Master Builder’s Association of King County, the
number of building permits issued over the past
three years has been significantly declining. Based
on the current number of building permits and
projected population growth, the Master Builder's are
projecting a shortage of 166,000 housing units by
2010. When demand for housing outweighs supply,
the end result is increasing home prices.
These factors represent a great window of
opportunity for buyers in today’s housing market!
Sunday, October 26, 2008
Friday, October 17, 2008
Five Reasons to Purchase This Year
1. Tax Credit for First Time Homebuyers - up to $7,500!!!
2. FHA Changes - minimum down payment goes from 3% to 3.5% in January, 2009.
3. Temporary Loan Limits - $567,500, but will expire at the end of the year.
4. Capital Gains - changes to calculations will take effect in January, 2009.
5. Interest rates - although volatile, rates remain competitive. Interest rates typically increase after a presidential election.
Don't delay! Stay in front of the wave, not behind it!
2. FHA Changes - minimum down payment goes from 3% to 3.5% in January, 2009.
3. Temporary Loan Limits - $567,500, but will expire at the end of the year.
4. Capital Gains - changes to calculations will take effect in January, 2009.
5. Interest rates - although volatile, rates remain competitive. Interest rates typically increase after a presidential election.
Don't delay! Stay in front of the wave, not behind it!
Tuesday, October 7, 2008
Snohomish County Statistics - September
Current Residential & Condo listings - 7,070 (up 1.46% from last year)
New listings taken this month - 1,660
Pending sales this month - 813 (down 6.77% from last year)
Percent of listings that sold this month - 11.50%
Median closed sales price - Sept. ‘07, $344,500
Median closed sales price - Sept. ‘08, $318,000
Rate of appreciation = -7.69%
~ Courtesy of NWMLS
New listings taken this month - 1,660
Pending sales this month - 813 (down 6.77% from last year)
Percent of listings that sold this month - 11.50%
Median closed sales price - Sept. ‘07, $344,500
Median closed sales price - Sept. ‘08, $318,000
Rate of appreciation = -7.69%
~ Courtesy of NWMLS
King County Statistics - September
Current Residential & Condo listings - 15,438 (up 6.20% from last year)
New listings taken this month - 4,377
Pending sales this month - 2,295 (up 4.18% from last year)
Percent of listings that sold this month - 14.87%
Median closed sales price - Sept. ‘07, $395,000
Median closed sales price - Sept. ‘08, $380,315
Rate of appreciation = -3.72%
~ Courtesy of NWMLS
New listings taken this month - 4,377
Pending sales this month - 2,295 (up 4.18% from last year)
Percent of listings that sold this month - 14.87%
Median closed sales price - Sept. ‘07, $395,000
Median closed sales price - Sept. ‘08, $380,315
Rate of appreciation = -3.72%
~ Courtesy of NWMLS
Eastside Statistics - September
Current Residential & Condo listings - 5,531 (up 19.00% from last year)
New listings taken this month - 1,363
Pending sales this month - 686 (up 4.73% from last year)
Percent of listings that sold this month - 12.40%
Median closed sales price - Sept. ‘07, $494,975
Median closed sales price - Sept. ‘08, $481,950
Rate of appreciation = -2.63%
~ Courtesy of NWMLS
New listings taken this month - 1,363
Pending sales this month - 686 (up 4.73% from last year)
Percent of listings that sold this month - 12.40%
Median closed sales price - Sept. ‘07, $494,975
Median closed sales price - Sept. ‘08, $481,950
Rate of appreciation = -2.63%
~ Courtesy of NWMLS
Housing market shows signs of stability - pending sales are up 4.1% from a year ago, total inventory unchanged
Home sales around Western Washington during September rose 4.1 percent from a year ago, reversing a 19-month pattern of declines. Members of Northwest Multiple Listing Service (NWMLS) reported 5,982 pending sales (offers made and accepted, but not yet closed), a gain of 234 transactions from a year ago. The totals cover 19 counties in the MLS service area.
NWMLS data show the last system-wide uptick in pending sales was February 2007 when members reported a 4.8 percent gain from the previous year.
In other key indicators of housing activity, Northwest MLS reported tightening inventory with a double-digit drop in the number of new listings added during September compared to 12 months ago, and total inventory at month end that matched year-ago numbers. Figures also show area-wide softening of prices compared to a year ago.
The median price for last month's closed sales of single family homes and condominiums (combined) was $295,000, a drop of 8.3 percent from a year-ago when the median price was $321,600. King County prices fell about 3.7 percent from a year ago, from $395,000 to $380,315. For the four-county Puget Sound region (King, Snohomish, Pierce and Kitsap), the median price for last month's closed sales dropped from $349,950 to $324,000, a decline of 7.4 percent.
Brokers and lenders say the recent economic turmoil is taking a toll on activity, but also suggest negative news reports are keeping buyers on the fence and creating misunderstandings about the availability of home loans.
"Forget the news. Mortgage loans are readily available, at excellent rates and you can still get 97 percent loan to value," said Mike Welty of Liberty Financial Group in Bellevue. "There is a lot of flexibility in programs, qualification and opportunity," he emphasized, while acknowledging (with a chuckle), "Underwriting is tougher – you need a down payment and you need a job!"
REALTOR Dennis Brown, a residential and investment specialist at Windermere's Fauntleroy office, echoed Welty. "I'm loving FHA," he exclaimed, calling the largest mortgage insurer in the world "the answer to a lot of people's credit problems." Brown has used the program for first-home and move-up buyers, as well as with investors. "Investors use the program to buy everything from fixer-uppers to 4-unit buildings," he said. Among features Brown said his clients find to be most appealing about FHA loans are easy credit qualifications (typically one year of "clean credit"), low closing costs and low down payment requirements (as low as 3 percent of the purchase price).
In today's market the vast majority of buyers are first time buyers, move-up buyers, and investors, according to J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. "These three groups of buyers are moving forward with the opportunities that exist thanks to low interest rates, increased affordability, and a strong selection of homes to choose from."
Buyers still have plenty of choices, according to NWMLS data. Members added 10,889 new listings of single family homes and condominiums to inventory during September – about 1,500 fewer than a year ago for a 12 percent drop. When added to existing inventory, the number of active listings at month end totaled 48,665, slightly fewer than the year-ago number of 48,969 listings.
"We are definitely starting to see more buyers that have been waiting months to get off the fence," said NWMLS director Mike Skahen, owner/broker of Lake & Company Real Estate, Inc. in Seattle. As for the dip in prices, he attributes that in part to limited availability of jumbo loans for high-end homes, "Not surprisingly, with fewer high priced homes selling, the median price would be lower," he noted. "I'm convinced that as the national financial crisis subsides and with Seattle's good economy, buyers who have been waiting for the bottom will return and wish they had bought now." Commenting on the relatively low sales numbers over the past year, he remarked, "There must be substantial pent-up demand."
"The latest NWMLS numbers validate what our agents report from the field -- sellers that are truly motivated to move are dropping their prices, and many buyers are recognizing the opportunity this creates," said Ron Sparks, managing vice president at Coldwell Banker Bain in Bellevue. Increases in pending sales are a "good indication that our market is adjusting to current buyer attitude and demand."
Sparks acknowledged price declines aren't particularly good news for sellers, but said most sellers can be thankful the drops are really quite modest compared to other markets, where prices have recently dropped 30 percent or more. "It's apparent that home prices, both locally and nationally, are becoming irresistible in some instances," he remarked. As a result, he noted markets such as San Diego, Los Angeles and Las Vegas are seeing the same increased buyer activity as our local market.
Erik Hand, president of Response Mortgage Services (John L. Scott's in-house lender) expects some improvement in financing options, but cautioned consumers about the potential cost of procrastinating.
"With the passage of the bailout bill, I expect we will gradually see an improvement to the conditions in the Non-Conforming market in the form of a narrowing of the spreads between Conforming and Non-Conforming loan products, and in some cases, an easing of guidelines that will open up financing options to a larger pool of buyers," Hand stated.
"As for interest rates, they are expected to remain low, but like every other aspect of the economy they're subject to the volatility of the market," Hand commented, adding, "It's important for homebuyers to understand that interest rates are currently at historic lows and there's no guarantee they'll fall further with the passage of the bailout bill."
"While things in the real estate world may not be perfect right now, things are, and will continue to get better and better. The medicine tastes terrible but the cure will be worth it," NWMLS director Dick Beeson believes. Beeson, the broker/owner of Windermere/Commencement Associates in Tacoma saw a 21.8 percent surge of pending sales in Pierce County last month compared to a year ago and a notable shrinkage in inventory (down 11.2 percent from twelve months ago).
"We're moving toward a market place with fewer properties for sale -- and fewer and fewer choices for buyers. What a time to buy, low rates, low prices, low costs, and decreasing inventory -- all ready for those smart buyers who act now," he noted.
NWMLS director Kathy Estey, managing broker at the Bellevue Downtown office of John L. Scott said "September felt like we were gathering steam and back on track," but as economic news worsened during the month buyer confidence tumbled. "The news made it sound as if buyers need 20 percent down to get a loan -- and fear become our worst enemy again," she remarked.
On a more optimistic note she added, "The Puget Sound remains a great place to own property and there are opportunities to buy low and ride the rising prices that are around the corner in a year or two."
~ Courtesy of NWMLS
NWMLS data show the last system-wide uptick in pending sales was February 2007 when members reported a 4.8 percent gain from the previous year.
In other key indicators of housing activity, Northwest MLS reported tightening inventory with a double-digit drop in the number of new listings added during September compared to 12 months ago, and total inventory at month end that matched year-ago numbers. Figures also show area-wide softening of prices compared to a year ago.
The median price for last month's closed sales of single family homes and condominiums (combined) was $295,000, a drop of 8.3 percent from a year-ago when the median price was $321,600. King County prices fell about 3.7 percent from a year ago, from $395,000 to $380,315. For the four-county Puget Sound region (King, Snohomish, Pierce and Kitsap), the median price for last month's closed sales dropped from $349,950 to $324,000, a decline of 7.4 percent.
Brokers and lenders say the recent economic turmoil is taking a toll on activity, but also suggest negative news reports are keeping buyers on the fence and creating misunderstandings about the availability of home loans.
"Forget the news. Mortgage loans are readily available, at excellent rates and you can still get 97 percent loan to value," said Mike Welty of Liberty Financial Group in Bellevue. "There is a lot of flexibility in programs, qualification and opportunity," he emphasized, while acknowledging (with a chuckle), "Underwriting is tougher – you need a down payment and you need a job!"
REALTOR Dennis Brown, a residential and investment specialist at Windermere's Fauntleroy office, echoed Welty. "I'm loving FHA," he exclaimed, calling the largest mortgage insurer in the world "the answer to a lot of people's credit problems." Brown has used the program for first-home and move-up buyers, as well as with investors. "Investors use the program to buy everything from fixer-uppers to 4-unit buildings," he said. Among features Brown said his clients find to be most appealing about FHA loans are easy credit qualifications (typically one year of "clean credit"), low closing costs and low down payment requirements (as low as 3 percent of the purchase price).
In today's market the vast majority of buyers are first time buyers, move-up buyers, and investors, according to J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. "These three groups of buyers are moving forward with the opportunities that exist thanks to low interest rates, increased affordability, and a strong selection of homes to choose from."
Buyers still have plenty of choices, according to NWMLS data. Members added 10,889 new listings of single family homes and condominiums to inventory during September – about 1,500 fewer than a year ago for a 12 percent drop. When added to existing inventory, the number of active listings at month end totaled 48,665, slightly fewer than the year-ago number of 48,969 listings.
"We are definitely starting to see more buyers that have been waiting months to get off the fence," said NWMLS director Mike Skahen, owner/broker of Lake & Company Real Estate, Inc. in Seattle. As for the dip in prices, he attributes that in part to limited availability of jumbo loans for high-end homes, "Not surprisingly, with fewer high priced homes selling, the median price would be lower," he noted. "I'm convinced that as the national financial crisis subsides and with Seattle's good economy, buyers who have been waiting for the bottom will return and wish they had bought now." Commenting on the relatively low sales numbers over the past year, he remarked, "There must be substantial pent-up demand."
"The latest NWMLS numbers validate what our agents report from the field -- sellers that are truly motivated to move are dropping their prices, and many buyers are recognizing the opportunity this creates," said Ron Sparks, managing vice president at Coldwell Banker Bain in Bellevue. Increases in pending sales are a "good indication that our market is adjusting to current buyer attitude and demand."
Sparks acknowledged price declines aren't particularly good news for sellers, but said most sellers can be thankful the drops are really quite modest compared to other markets, where prices have recently dropped 30 percent or more. "It's apparent that home prices, both locally and nationally, are becoming irresistible in some instances," he remarked. As a result, he noted markets such as San Diego, Los Angeles and Las Vegas are seeing the same increased buyer activity as our local market.
Erik Hand, president of Response Mortgage Services (John L. Scott's in-house lender) expects some improvement in financing options, but cautioned consumers about the potential cost of procrastinating.
"With the passage of the bailout bill, I expect we will gradually see an improvement to the conditions in the Non-Conforming market in the form of a narrowing of the spreads between Conforming and Non-Conforming loan products, and in some cases, an easing of guidelines that will open up financing options to a larger pool of buyers," Hand stated.
"As for interest rates, they are expected to remain low, but like every other aspect of the economy they're subject to the volatility of the market," Hand commented, adding, "It's important for homebuyers to understand that interest rates are currently at historic lows and there's no guarantee they'll fall further with the passage of the bailout bill."
"While things in the real estate world may not be perfect right now, things are, and will continue to get better and better. The medicine tastes terrible but the cure will be worth it," NWMLS director Dick Beeson believes. Beeson, the broker/owner of Windermere/Commencement Associates in Tacoma saw a 21.8 percent surge of pending sales in Pierce County last month compared to a year ago and a notable shrinkage in inventory (down 11.2 percent from twelve months ago).
"We're moving toward a market place with fewer properties for sale -- and fewer and fewer choices for buyers. What a time to buy, low rates, low prices, low costs, and decreasing inventory -- all ready for those smart buyers who act now," he noted.
NWMLS director Kathy Estey, managing broker at the Bellevue Downtown office of John L. Scott said "September felt like we were gathering steam and back on track," but as economic news worsened during the month buyer confidence tumbled. "The news made it sound as if buyers need 20 percent down to get a loan -- and fear become our worst enemy again," she remarked.
On a more optimistic note she added, "The Puget Sound remains a great place to own property and there are opportunities to buy low and ride the rising prices that are around the corner in a year or two."
~ Courtesy of NWMLS
Monday, October 6, 2008
Seattle-Tacoma region No. 4 in total job gains in the past year
According to the Bureau of Labor Statistics of the U.S. Department of Labor, the Seattle-Tacoma-Bellevue area netted 43,800 new jobs in August compared with a year earlier, which is the fourth-largest over-the-year increase reported in the nation.
This should help us weather the storm clouds that have gathered around our industry and work to provide an influx of new buyers into our region.
This should help us weather the storm clouds that have gathered around our industry and work to provide an influx of new buyers into our region.
Thursday, October 2, 2008
Educating Buyers on Today's Market
Food for thought by Paul C. Bishop, Ph.D., Managing Director of Real Estate Research at the National Association of REALTORS...
Dispelling Buyers' Misconceptions
There's plenty of negative economic news now, and a lot of it is specifically tied to the housing market. Still, it's also true that a lot of misleading information is floating around. The national media tends to focus on the markets that have been hit the hardest, and ignore those where housing has remained relatively strong. It's unfortunate, because misleading information scares people. And when people are scared, it only makes matters worse. Consumer confidence falls, buyers hold back, inventories grow, and downward pressure builds on prices. Lower prices, in turn, raise foreclosure rates - and generate even more negative headlines.
Broader concerns about the state of the economy have also played a role in eroding home buyer confidence. Just like the housing market, economic conditions vary greatly from one geographic area to another. Jobs in some industries are much more secure than others. Buyers should be encouraged to look at their own situation. If they live in an area with good economic vitality and believe their job is relatively secure, buying a home - or trading up - is probably no riskier now than five years ago. In hindsight, this may turn out to have been the perfect time to jump off the fence.
Signs of Improvement
Even though prices have declined sharply in numerous markets, the latest quarterly survey from the National Association of REALTORS, released in August, shows that buyers are starting to respond to discounted home prices. Nearly a quarter of metropolitan areas showed rising home prices in the second quarter from a year ago, with greatly mixed conditions continuing around the country. But it was encouraging to see the biggest home-sales gains since the first quarter of the year were in some of the markets that experienced the steepest and fastest price drops. For example, compared to the first quarter of 2008, existing home sales in the second quarter increased nearly 26% in California, 25% in Nevada, and over 10% in Florida.
Rising Construction Costs Add to Price Pressures
In separate but related news, rising construction costs are having a significant impact on the price of new homes. A recent research report from the National Bureau of Economic Research found that 2007 construction costs were higher than median home prices in 33 out of 79 metropolitan areas studied. Once the excess inventory created by foreclosures is drawn down, price pressures will likely return, if for no other reason than the rising costs of new construction. Buyers entering the market now should be in an excellent position to build wealth over time.
Buying for the Wrong Reasons
One negative remnant of the housing boom was the mindset it cultivated, in terms of the reason to buy a home. Fueled by get-rich-quick books and television shows, too many buyers came to believe that houses were meant to be purchased, lightly rehabbed, then sold again six months later - or perhaps just six weeks later - at a handsome profit.
Perhaps more than anything, potential home buyers may need to be reminded that homes are better viewed as they traditionally have been - as long-term investments. Long-term growth can still be achieved in as little as three to five years, but not six months.
Homes are established investments that yield more than dollars. A home is a source of stability in life and, for many, a place to raise a family. When buyers look upon a home from this perspective, the dream of home ownership should appear increasingly viable once again.
Dispelling Buyers' Misconceptions
There's plenty of negative economic news now, and a lot of it is specifically tied to the housing market. Still, it's also true that a lot of misleading information is floating around. The national media tends to focus on the markets that have been hit the hardest, and ignore those where housing has remained relatively strong. It's unfortunate, because misleading information scares people. And when people are scared, it only makes matters worse. Consumer confidence falls, buyers hold back, inventories grow, and downward pressure builds on prices. Lower prices, in turn, raise foreclosure rates - and generate even more negative headlines.
Broader concerns about the state of the economy have also played a role in eroding home buyer confidence. Just like the housing market, economic conditions vary greatly from one geographic area to another. Jobs in some industries are much more secure than others. Buyers should be encouraged to look at their own situation. If they live in an area with good economic vitality and believe their job is relatively secure, buying a home - or trading up - is probably no riskier now than five years ago. In hindsight, this may turn out to have been the perfect time to jump off the fence.
Signs of Improvement
Even though prices have declined sharply in numerous markets, the latest quarterly survey from the National Association of REALTORS, released in August, shows that buyers are starting to respond to discounted home prices. Nearly a quarter of metropolitan areas showed rising home prices in the second quarter from a year ago, with greatly mixed conditions continuing around the country. But it was encouraging to see the biggest home-sales gains since the first quarter of the year were in some of the markets that experienced the steepest and fastest price drops. For example, compared to the first quarter of 2008, existing home sales in the second quarter increased nearly 26% in California, 25% in Nevada, and over 10% in Florida.
Rising Construction Costs Add to Price Pressures
In separate but related news, rising construction costs are having a significant impact on the price of new homes. A recent research report from the National Bureau of Economic Research found that 2007 construction costs were higher than median home prices in 33 out of 79 metropolitan areas studied. Once the excess inventory created by foreclosures is drawn down, price pressures will likely return, if for no other reason than the rising costs of new construction. Buyers entering the market now should be in an excellent position to build wealth over time.
Buying for the Wrong Reasons
One negative remnant of the housing boom was the mindset it cultivated, in terms of the reason to buy a home. Fueled by get-rich-quick books and television shows, too many buyers came to believe that houses were meant to be purchased, lightly rehabbed, then sold again six months later - or perhaps just six weeks later - at a handsome profit.
Perhaps more than anything, potential home buyers may need to be reminded that homes are better viewed as they traditionally have been - as long-term investments. Long-term growth can still be achieved in as little as three to five years, but not six months.
Homes are established investments that yield more than dollars. A home is a source of stability in life and, for many, a place to raise a family. When buyers look upon a home from this perspective, the dream of home ownership should appear increasingly viable once again.
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