National Real Estate News

Well, it had to happen. After a four-month winning streak, Existing Home Sales dropped in August by 2.7% to an annual sales pace of 5.10 million. This offsets the big sales increase we had in July but the overall trend is still up by 3.4% over a year ago and the supply of existing homes is now down to 8.5 months.

Good news came from the Federal Housing Finance Agency, which monitors prices of homes financed with conforming mortgages. They reported prices UP 0.3% in July, their third straight monthly rise. The week ended with single-family New Home Sales for August UP 0.7%. This was slightly less than expected, but 30% above their January low. Best of all, the supply of unsold new homes, down five months in a row, is now at just 7.3 months!

Mortgage applications for purchase loans were up 5.6% from the week before. Applications for government-backed purchase loans were at their highest level ever. It seems many first-time homebuyers are making sure they get that $8,000 tax credit before it expires on November 30! All this was happening as the average interest rate for prime borrowers went below 5% on 30-year fixed-rate mortgages for the first time since May. Average points inched up to 1.12 (including the origination fee) for 80% loan-to-value ratio loans.

~ Courtesy of Chuck Chrobak, Golf Savings Bank, 425.330.9657, CChrobak@GolfSavingsBank.com

What Are Points and When Should You Pay Them?

Points are upfront fees paid to obtain a better interest rate on a loan. One point equals one percent of the loan amount. While a lower interest rate may result in a lower monthly payment, it is important to consider how long you intend have the loan and to compare current interest rates to historical trends. This will help you determine whether paying points is a worthwhile investment.

It’s also important to remember that interest rates run in cycles. When rates are at historical lows, it makes more sense to pay points if you plan to live in the home for an extended period of time. If it’s unlikely rates will go down in the near future, then there will be no need to refinance. When interest rates are high, however, there is a strong likelihood they will come down again before too long. Therefore, this is not a good time to pay points.

Tax deductibility is another thing to consider when choosing whether or not to pay points. Points paid on a purchase transaction are tax deductible upfront in the year of the purchase. The tax deduction for points paid on a refinance must be spread out over the term of the loan (unless the entire loan is paid off early), making points more costly in comparison to a purchase transaction.

Ultimately, there is much to bear in mind when considering points. At LoanCentral, we will work with you to determine the best course of action based upon your specific situation and needs.

~ Courtesy of Wendy Charles, LoanCentral LLC, 425.468.9321, WendyC@LoanCentral.com

Fence Sitter Alert: Don't expect mortgage rates to stay this low forever!

Are you, or someone you know, sitting on the fence about buying a home or refinancing the one you're in, waiting to see if mortgage rates drop even further?

Well, here's why smart home buyers and homeowners looking to refinance are taking advantage of today's attractive mortgage rates right now.

First off, rates are already at historically low levels. The reason they got there is the Federal Reserve, our country's central bank, has been purchasing huge amounts of Mortgage Backed Securities. This keeps their prices up... and mortgage rates DOWN! In fact, ever since the Fed's buying program began in January, mortgage rates have stayed in the historically low range everyone's excited about.

The Fed is doing this to help the housing market recover by making mortgages more affordable. But they committed to buying over $1 trillion worth of Mortgage Backed Securities only through the end of this year. So please note: the Fed has already spent over $700 billion of that money and the end of the year is only four months away!

One more thing. The Fed is also buying Treasuries to keep their prices up and yields (rates) down. This keeps mortgage rates low because Treasury rates need to stay below mortgages. But the Fed will stop buying Treasuries at the end of October! After that, the yields (rates) on Treasuries could go up, which could send mortgage rates up the last two months of the year.

Bottom line? There is now an unprecedented opportunity to buy or refinance a home at exceptionally low mortgage rates. But these rates are not likely to go lower... AND, because of the Fed's publicly stated policies, the rates we're seeing now may hold just a few more months!

Please let me know if I can be of help.... and have a great day!

~ Courtesy of Tim Lucas, Golf Savings Bank, TLucas@GolfSavingsBank.com, 425.681.3859

National Real Estate News

Housing starts for new single-family homes and apartments continued their steady rise, up 1.5% for August, their strongest pace in nine months. This puts housing starts at a seasonally adjusted annual rate of 598,000, their highest level since November of last year. This sign of steady improvement in home building made economists even more confident Q3 growth will be positive, signaling the recession is over.

Mortgage rates continue to remain at three-month lows. Freddie Mac's weekly Primary Mortgage Market Survey showed average long-term mortgage rates down for the third week in a row! The 30-year fixed rate mortgage is just above 5% with an average 0.7 point (including the origination fee). The average rate for 15-year fixed rate mortgages hit a new record low in the Survey. These rates are for prime borrowers with an 80% or lower loan-to-value ratio on loans eligible for purchase by Freddie Mac.

Finally, please remember the $8,000 tax credit for first-time homebuyers is set to expire in just over two months. Those eligible need to close by November 30!

Credit Myths, Mistakes & Misconceptions

If you have good credit, the following tips will help you keep it that way. If you are looking to improve your credit, now is the time to get started!

Don’t Fall Behind on Existing Accounts

One 30-day late can cost you anywhere from 30 to 80 points or more on your credit score.

Don’t Pay Off Old Collections or Charge-Offs During the Loan Process

Paying collections will decrease your credit score immediately due to the “date of last activity” becoming recent. Consult your mortgage advisor for recommendations on paying these accounts off.

Don’t Close Credit Card Accounts

Closing accounts can affect many factors of your score, such as the length of your credit history.

Don’t Max Out or Overcharge Credit Accounts

This is the fastest way to bring an immediate drop of 50-100 points in your credit score. Try to keep credit card balances below 30% of the credit limit.

Don’t Consolidate Your Debt Onto 1 or 2 Credit Cards

It seems like the smart thing to do, however, when you consolidate all debt onto one card, it appears you are maxed out on that card and the system will penalize you as mentioned above.

At LoanCentral we work together with you to get your credit in the best shape possible for your upcoming mortgage. Give us a call to review your credit and find out exactly where you stand.

~ Courtesy of Wendy Charles, LoanCentral LLC, 425.468.9321, WendyC@LoanCentral.com

Economic Update

The University of Michigan posted their Index of Consumer Sentiment late this morning, announcing a reading of 70.2. This was a sizable increase from the August final reading and higher than what analysts had expected. This means that consumers are more optimistic about their own financial situations than many had thought. That can be considered bad news for mortgage rates because it hints that consumers are more apt to make large purchases in the near future. However, it appears the data is of no concern to traders at this time.

The drop in mortgage rates today can partly be attributed to a good Treasury Auction yesterday. The willingness of global investors to purchase huge amounts of US debt speaks to the lack of alternatives available in the current low interest rate environment around the globe. If interest rates around the world begin to move higher it may offer investors a more attractive place to put their money, which would force the US to offer higher rates on our Treasuries to compete. When this happens it will cause long term mortgage rates to rise as a result.

This week brings us the release of several important reports including two key inflation readings and an extremely important measurement of consumer spending.

Rates are approaching historical lows once again making this an amazing time to purchase or refinance a home!

~ Courtesy of Wendy Charles, LoanCentral LLC, 425.468.9321, WendyC@LoanCentral.com

National Real Estate News

We had more good news for housing last week with Pending Home Sales UP 3.2% for July, gaining ground for the sixth month in a row! This positive number should point to yet another hike when August Existing Homes Sales numbers come out. There was also encouraging construction data, as July single-family home building was UP 7% – the largest monthly increase since 1983, when housing boomed coming out of the 1981–1982 downturn. The combination of affordability, low mortgage rates and the $8,000 tax credit for first-time homebuyers is having a terrific effect on the housing market. Unfortunately, that tax credit will expire November 30 unless Congress elects to extend it. Let's hope they do.

Speaking of mortgage rates, these dropped nicely last week, according to Freddie Mac's Primary Mortgage Market Survey. Nationally, the 30-year fixed rate mortgage averaged 5.08% with an average of 0.7 point. That was down from 6.35% a year ago! These rates are for prime borrowers who can put 20% down and who qualify for loans eligible to be purchased or guaranteed by Freddie Mac or Fannie Mae.

~ Courtesy of Chuck Chrobak, Golf Savings Bank, 425.330.9657, CChrobak@GolfSavingsBank.com

Eastside Statistics - August, 2009

Current Residential & Condo listings - 4,920 (down 13.62% from last year)
New listings taken this month - 1,178
Pending sales this month - 948 (up 35.82% from last year)
Percent of listings that sold this month - 19.27%
Median closed sales price - Aug. ‘08, $519,495
Median closed sales price - Aug. ‘09, $459,002
Rate of appreciation = -11.64%

~ Courtesy of NWMLS

King County Statistics - August, 2009

Current Residential & Condo listings - 13,145 (down 17.20% from last year)
New listings taken this month - 3,791
Pending sales this month - 2,893 (up 25.08% from last year)
Percent of listings that sold this month - 22.01%
Median closed sales price - Aug. ‘08, $388,350
Median closed sales price - Aug. ‘09, $349,995
Rate of appreciation = -9.88%

~ Courtesy of NWMLS

Snohomish County Statistics - August, 2009

Current Residential & Condo listings - 5,559 (down 24.47% from last year)
New listings taken this month - 1,587
Pending sales this month - 1,189 (up 27.99% from last year)
Percent of listings that sold this month - 21.39%
Median closed sales price - Aug. ‘08, $320,000
Median closed sales price - Aug. ‘09, $285,000
Rate of appreciation = -10.94%

~ Courtesy of NWMLS

Northwest MLS brokers report brisk activity, multiple offers, "irrational delays" by lenders

Pending sales around Western Washington during August jumped nearly 21 percent from a year ago and inventory dropped more than 18 percent, according to new figures from Northwest Multiple Listing Service. MLS member-brokers say those indicators, along with signs of stabilizing prices, set the stage for brisk activity in the next few months as first-time buyers try to take advantage of the Nov. 30 deadline for tax credits.

"The typical August cool down in the market did not happen this year," observed NWMLS director Kathy Estey, managing broker at John L. Scott's office in downtown Bellevue. She said agents are busy with both first-time and move-up buyers and they're reporting multiple offers on homes priced up to $700,000.

Brokers reported 7,539 pending sales (offers made and accepted but not yet closed) for August, up 20.7 percent from a year ago. That volume outgained July's total by 260 transactions. In the four-county Puget Sound region, pending sales of single family homes and condominiums (combined) surged 25.7 percent from a year ago.

Within King County, pending sales activity improved 25.1 percent from a year ago, and was especially robust in the North King County area (up 38.7 percent) and on the Eastside (up nearly 36 percent). Excluding condos, two sub-areas of King County notched gains of more than 40 percent for pending sales of single family homes – Southeast King County (up 40.4 percent) and the Eastside (up 42.5 percent).

On the downside, Estey said many transactions are missing their closing date "for seemingly irrational reasons." Last minute demands from lenders are common and final underwriting reviews are causing delays, she noted, adding, "Inexperienced appraisers are gumming up the works as well." She urges first-time buyers who want to capture the $8,000 tax credit to plan ahead and allow for delays.

Another MLS director, Dick Beeson, the broker/owner of Windermere Commencement Associates in Tacoma, said stabilizing prices "bode well for the near term."

For the 19 counties in the Northwest MLS service area, the median price for single family homes and condominiums that sold and closed last month was $$275,945, down about 8.8 percent from the year ago sales price of $302,500. Since January, however, prices area-wide have edged up about 1.1 percent, with seven of the 19 counties notching increases.

Prices for single family homes (excluding condos) that sold throughout the NWMLS area are up about 3.3 percent since January, although down about 9.2 percent from twelve months ago. In the four-county Puget Sound region, the median sales price for single family homes that closed last month was $310,000, down about 11.4 percent from twelve months ago, but back up to match January's figure of $310,000.

Condo prices remain depressed. For last month's completed transactions, the median sales price was $235,000, off 5 percent from the year ago figure of $247,500. Compared to January's sales, condo prices have dropped about 6 percent

J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, expects strong activity in the coming months. "It's exciting to see that home sales continue to be brisk in the more affordable and mid price ranges," he remarked. "I anticipate that September will see a surge of sales activity because of the tax credit's impending deadline which, when combined with historically low interest rates and increased affordability, provides a rare opportunity for first time homebuyers," Scott stated.

Current house-hunters have fewer listings to consider than a year ago: 41,528 active listings at the end of August compared to 50,772 for same month a year ago, a decline of 18.2 percent. Prices on current offerings, which include single family homes and condominiums, range from $13,000 to $32 million.

Northwest MLS members added 10,132 new listings to inventory during August, nearly 1,300 fewer than twelve months ago. Inventory shrunk in 16 of the 19 NWMLS counties, with twelve counties reporting double-digit drops.

Lower listing inventory is one of the building blocks of a housing recovery, according to Ron Sparks, managing vice president of Coldwell Banker Bain. "With fewer homes for sale, better affordability and buyer incentives like the $8,000 first-time buyer tax credit, we are seeing supply and demand become much more balanced in many areas, and this will help support more stable prices," he explained.

Sparks also commented on the momentum reflected in last month's activity. "It's very good to see that the number of pending sales is still rising in most areas, especially when we might typically expect a seasonal slowdown in demand." He called the nearly 21 percent overall improvement in last month's pending sales "particularly impressive."

Open house traffic has been steady with high interest among first-time buyers being the driver, reports NWMLS director Beeson. Despite high interest, he said many potential buyers are still confused about how the tax credit program works.

On a cautionary note, Beeson expects a new round of bank owned properties to come on the market later this year and into next year. "This inventory will have to be absorbed over time and no one knows for sure just how this will influence prices," he acknowledged, adding, "The best guess is it will be negative, although we have experienced many foreclosures already on the market. . .with no appreciable drop in prices since the beginning of the year."

Summing up last month's activity, Sparks of CBB, said, "A healthy, balanced market is in everyone's best interest, and the August report tells us we're definitely getting closer."

~ Courtesy of NWMLS

The Last Great Zero Down Program!

When the sub-prime meltdown hit, so-called “exotic” loan programs became extinct. Included in these were zero down programs which helped many first time homebuyers jump into the market. Today, there remains one great zero down program that few people realize can benefit them.

The government sponsored USDA Rural Housing Program offers the ability for a homebuyer to purchase with no down payment and NO PMI! The program is limited to properties defined as “rural” by the program.

These “rural” areas typically lie just outside of the greater metropolitan areas. East King County such as parts of Maple Valley, Enumclaw, Duvall, Carnation, Fall City, Snoqualmie & North Bend have properties that fall under this program. North of King County, South of King County, much of Pierce, Jefferson and Kitsap County all have many areas that qualify. The program also contains restrictions on household income as well.

While not limited to first time homebuyers, this program is currently helping thousands of first time homebuyers across the country enter the housing market. Combined with the first time
homebuyer tax credit, this is a great program to help boost our home sales!

~ Courtesy of Wendy Charles, LoanCentral LLC, 425.468.9321, WendyC@LoanCentral.com