Tight inventory, record-low mortgage rates fueling Western Washington home sales

KIRKLAND, WA, June 4, 2012 – Low listing inventory and plunging mortgage rates are fueling buyer competition for homes close to job centers, according to brokers who commented on the latest market report from Northwest Multiple Listing Service. The figures for the 21 counties in the MLS market area show inventory is down sharply from a year ago (declining almost 28 percent), while pending sales (mutually accepted offers) rose almost 22 percent. The volume of closed sales increased more than 20 percent, topping the 6,000 mark for the first time since September 2007. The median price on last month’s completed transactions of single family homes and condominiums edged up slightly more than a percentage point compared to a year ago, rising from $239,999 to $242,500. For single family homes (excluding condos) prices area-wide increased 2.34 percent, while condo prices slipped more than 5 percent. Since January, median prices are up 12.8 percent system-wide, with nine counties reporting gains of 15 percent or higher (Clallam, Grays Harbor, Island, King, Kittitas, Kitsap, San Juan, Skagit, and Snohomish counties). Grays Harbor topped the list, reporting a 34.8 percent spike in prices since the first of the year. “The six month trend of low listing inventory continues to cause strong buyer competition for homes close to job centers,” noted Northwest MLS director Joe Spencer, area director for Keller Williams Northwest Region. He said he does not expect this trend to change direction “for quite some time due to what appears to be long-term economic and demographic influences.” MLS data suggest competition is strong in many areas. Pending sales surged more than 30 percent in nine counties last month compared to a year ago. Those areas included Clallam, Island, Jefferson, Kittitas, Kitsap, Okanogan, Pacific, San Juan, and Skagit counties. Spencer said low inventory levels, combined with “unbelievably low interest rates” will continue to lead to home values stabilizing in most areas, while in other areas “we are already experiencing modest appreciation.” Northwest MLS figures show 10 counties in its service area experienced year-over-year price gains on closed sales of single family homes. Several areas scattered around King County reported double-digit gains in both the volume of closed sales of single family homes and the corresponding median selling prices. Those areas included: MLS Map Area % change in closed sales, May 2011 vs May 2012 (Single Family homes) % change in prices, May 2011 vs May 2012 (Single Family homes) 110 – Dash Pt., Fed. Way 31.0% 11.8 300 – Enumclaw 116.7% 53.1 350 – Renton Highlands 39.2% 40.1 380 – Central Seattle, SE/Leschi, Mt. Baker 35.0% 15.1 700 – Queen Anne, Magnolia 47.1% 15.1 710 – North Seattle 23.3% 14.5 510 – Mercer Island 25.9% 19.1 530 – Bellevue, E. of I-405 48.7% 19.9 King County total (Single Family homes) 24.3% 4.93 J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, described activity as a “double quick action market.” He noted local home buyers are back purchasing homes, “igniting strong sales activity up the price points.” This, combined with the low supply, and in some areas, shortages of homes for sale, is creating what Scott said is “instant market activity from a backlog of home buyers” when market-ready homes are listed. Northwest MLS brokers added 9,861 new listings to inventory during May, down from the year-ago total of 10,293 new listings. At month end, there were 26,191 single family homes and condominiums for sale across 21 counties, a drop of almost 28 percent from the year-ago selection of 36,261 properties. Five counties have less than a four-month supply of homes available for sale, well below the figure of 5-to-6 months that many industry analysts use as a barometer of a balanced market. Using this gauge, Snohomish County reports the lowest supply at 1.51 months, followed by King (1.73), Pierce (2.52), Thurston (3.53) and Kitsap (3.75) counties. Three other counties have less than five months of supply: Clark (4.46 months), Whatcom (4.83) and Skagit (4.88). Record-low mortgage rates are driving homebuyer affordability, according to Frank Nothaft, vice president and chief economist at Freddie Mac. Rates as of May 31 were reported to be 3.75 for a 30-year fixed average, an all-time record low, and “an unprecedented” 2.97 percent for a 15-year fixed average. Nothaft said ongoing economic turmoil in Europe contributed to a decline in long-term Treasury bond yields to help bring fixed mortgage rates to new record lows. Compared to a year ago, he said rates on a 30-year fixed mortgage rate are almost 0.9 percentage points lower which translates into nearly $1,200 less in annual payments on a $200,000 loan. 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. -NWMLS

Motivated buyers returning to the housing market

KIRKLAND, WA, February 28, 2011. Dramatic increases in open house activity and shrinking inventory are fueling optimism among members of the Northwest Multiple Listing Service. Commenting on the just-released MLS report on January's housing activity, one director stated, "There is a strong belief in the industry that the worst is behind us and we can look forward with confidence."
Darin Stenvers, managing broker at John L. Scott in Bellingham, who made that comment, also noted consumers are gaining confidence and buyers may be seeing what they believe is the bottoming of the market. "I'm very optimistic about the housing market for 2011 and the buyers and sellers should be as well," he exclaimed.
Year-over-year pending sales were down somewhat, the volume of new listings declined more than 23 percent, sales prices continued to slip, but the number of closed sales increased slightly across the 21 counties in the Northwest MLS service area.
Last month's pending sales lagged totals for the same month a year ago, but only by 186 units system- wide, a decline of about 3.3 percent. Northwest MLS director Matt Deasy, the broker at Windermere Real Estate/East in Bellevue, said he considered anything within 5 percent of a year ago when tax incentives were boosting sales a "home run."
Members reported 5,393 pending sales (mutually accepted offers) of single family homes and condominiums during January. That compares to 5,579 pending sales for the same period a year ago, and marked a big gain from both January 2009 (4,353 pending sales) and January 2008 (4,499 pending sales).
"I expect sales to be soft through April when compared to last year since first quarter sales volume was artificially inflated by the rush to take advantage of the tax credit that expired on April 30," said OB Jacobi, president of Windermere Real Estate Company. "A more apples-to-apples assessment of sales will be to compare first quarter this year with first quarter 2009," he suggested.
Closed sales rose a modest 2.1 percent from a year ago, increasing from 3,142 transactions to 3,207 sales. Prices on those completed sales were down about 6.3 percent. The overall median price for last month's closed sales of single family homes and condominiums was $243,500, which compares to the year-ago selling price of $259,903. For single family homes (excluding condominiums) the median selling price was $250,000, down about 5 percent from a year ago; for condos, last month's sales had a median price of $200,000, down 16.7 percent from twelve months ago.
Only four counties (Clallam, Cowlitz, Kitsap, and Okanogan) reported year-over-year price gains.
In King County, the median sales price on last month's sales was $333,500, a drop of 4.7 percent from twelve months ago when it was $350,000.
Brokers attribute part of the price drop to sales of distressed homes (in general, meaning homes under foreclosure or impending foreclosure).
"Distressed properties are making up an increasingly greater share of sales than a year ago, and that trend is expected to continue," observed Jacobi. Noting the sales price for distressed properties could be 20-to-30 percent less than for normal sales, he said "it's no surprise that a greater percentage of low-priced distressed properties is pulling down the median price."
Whether considering a property classified as distressed or a conventional listing, house-hunters can choose from 32,647 active listings in the Northwest MLS system at the end of January. That selection is 4.7 percent smaller than a year ago when there were 34,256 properties listed with member-brokers.
Not nearly as many newly listed homes were offered for sale last month compared to twelve months ago. MLS members recorded 8,556 new listings, which included 7,167 single family homes and 1,389 condominiums. The combined total is down nearly 24 percent from the same month a year ago when members added 11,206 new listings to inventory.
MLS director Bobbie Petrone Chipman said overall, January was a positive month around Pierce County, where her office is located. Noting that area experienced a 27 percent reduction of new listings, a 2.4 percent increase in pending sales and a 10.8 percent jump in closed sales, Petrone Chipman, co-managing principal broker at Coldwell Banker Bain Tacoma/Puyallup, said the month reflected "a bit more balance as we dip our toe into the new year."
Deasy also expects more balance, with sales more evenly distributed during the year, unlike 2010 when sixty percent of their sales occurred in the first half of the year. He also predicts closed sales will increase year over year, while at the same time pending sales might decrease year over year. This is the result of a higher percentage of pending sales actually closing, he explained, citing various factors. "Banks are better at short sales, brokers are better at short sales, appraisal issues are less frequent, and lending standards are becoming more stable."
Based on anecdotal reports of open house traffic, brokers are hopeful of upticks in sales.
"The buyer activity at open houses in the close in Seattle neighborhoods has increased dramatically in the past month, said Northwest MLS director Mike Skahen. "If there were more good new listings coming on the market there would be more sales," he suggested.
Skahen, the owner/broker at Lake & Co. Real Estate in Seattle, believes the shortage of new listings is causing an increase in multiple offers. As an example, he said a small Green Lake townhouse project that had been on the market for more than four months with no offers finally had one unit sell a few weeks ago. Last weekend four offers came in on another unit. "I have not seen buyers this motivated in three years," he remarked, adding, "Sellers should not wait for spring flowers to bloom to put their homes on the market as they usually do because there is much less competition now than there will be soon."
Industry leaders have recommendations to benefit both sellers and buyers.
Accurate pricing is paramount. "Sellers are learning there is a small window of opportunity to have consumers sees their home before ruling it out and moving on," suggested Stenvers.
"My advice to buyers in today's market is to get pre-approved prior to starting their home search in order to avoid any delays that might result from the new lending standards process," said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate." This way," he explained, "buyers are ready to act quickly when they do find a home on which to make an offer."
As for sellers, Scott said pricing and presentation have never been more important. "Pricing must be comparable with the other properties that have recently sold in their local area and the home must be in pristine show condition from day one."
MLS director Pat Grimm, owner/broker at Windermere Real Estate/Capitol Hill, detected some hesitancy to list properties now. Distressed properties sell for less, but buyers face uncertainty and a long timeframe, he explained, noting the large percentage of distressed properties on the market has resulted in an interesting side effect: sellers of non-distressed properties are having an advantage.
"On one hand, I'm seeing sellers that are hesitant to bring their listings onto the market and compete with the price of short sale properties," Grimm commented. On the other hand, he said buyers are looking at all the inventory and, because of the complications of purchasing distressed properties, are favoring properties that are not short sales or bank owned.
In Seattle, Grimm said the sweet spot is homes priced $400,000-500,000, in good shape that are not distressed. "They appeal to both first-time buyers and downsizers," he reported, citing two examples:
A Capitol Hill home went on the market at $450,000, received seven offers and sold in a week for significantly more than asking price. In the second example, a View Ridge listing priced at $499,000 had 25 groups through an open house in a two-hour span. It has a view and a great location above the Burke-Gilman trail. "Both homes were in the $400-$500,000 price range, well maintained, and not distressed."
Several other NWMLS directors commented on the impact of distressed properties:
 "We still have the better part of the next five years to work through short sales and bank owned property but this is a start," commented Frank Wilson, branch managing broker at John L. Scott Real Estate in Poulsbo. He described January 2010 as an anomaly due to the tax credit, and said even though last month was down in many respects compared to last year, it better reflects the true market. "It is good to start a new year off without any government incentives and is hopefully the start of returning to normal."
 Some owners are opting to rent their homes as the market recovers. As demand increases and rents rise, investors are returning, said Stenvers. Also emerging is a new group of renters – past owners who lost their home to foreclosure or short sale, he noted, adding, "These renters are willing to sign long-term contracts so they can get their credit rating repaired." For example, Stenvers said his office recently listed a rental. The renters were a professional couple in the midst of a short sale in Florida. "They are looking at a very long term commitment to renting to help them save money and recover from their loss."
 "Buyers are reluctant to look at distressed properties not because of the characteristics of the property, but because of the process," said Grimm. He called the long delays with lenders regarding the sale of distressed properties "a major choke point." Grimm acknowledged there has been significant progress with the banks trying to figure out the situation, but stated, "We're still a long way from making it buyer-friendly."
Figures from the National Association of Realtors® show distressed homes rose to 36 percent of sales of existing homes in December, up from 33 percent in November and 32 percent a year ago. Such homes are typically discounted by 10 to 15 percent, according to NAR research.
Commenting on the volume of distressed homes on the market, Windermere's Jacobi said, "Hopefully new regulations requiring banks to speed up the sales process for distressed homes will help move that inventory more quickly."
Northwest Multiple Listing Service, owned by its member brokers, is the largest full-service MLS in the Northwest. Its membership includes more than 24,000 brokers and agents. The organization, based in Kirkland, currently serves 21 counties in Western and Central Washington.

It is a great time to buy for many would-be homeowners

The market offers historically low interest rates, as well as affordable home prices. Here are 10 steps that buyers can take to make home dreams a reality!

1. Savings. You may already know how much monthly payment you can support (experts recommend no more than 1/3 your monthly income), but the buying process will also include upfront costs, such as a down payment and closing costs.

2. Down payment options. Do you qualify for down payment assistance programs? Will you be able to get an FHA loan and pay 3.5 percent down? Do you have a relative that would like to make a down payment gift? Many financial experts recommend a down payment of 20 percent, so be sure to explore your options!

3. Check Credit Report. Your credit report says a lot about you. Lenders use it to evaluate your risk potential and to inform themselves on how responsible of a borrower you are. They use this report and subsequent score to figure your interest rate. The more stellar your report, the better your score and thus lower your rate. Be sure to check your report for accuracy, and report any errors to the credit reporting agencies.

4. Get Preapproved. It's time to talk to a lender! Pre-approval will give you a ballpark figure of how much the bank would be willing to lend you. Are you looking for a $100,000 house or a $1,000,000?

5. Get Prequalified. This is the official letter from the lender that says they will be willing to lend you money. Many sellers look for buyers who are prequalified.

6. Affordability. The bank may tell you that you can afford a home worth $300,000. This does not mean you want to borrow to your max. A more modest home may fit better in your financial plans.

7. Housing Criteria. You have a budget, now develop a list of what you need and want. This can include anything from "must have 3 bedrooms" to "hardwoods" or "granite".

8. Neighborhood choice. Location strongly affects prices. A 3,000 square foot home in rural Kansas costs a fraction of one in New York City. Decide what neighborhoods and areas are the best fit for you. This will help narrow your home search.

9. Hire an agent. An agent can help you navigate the entire process from searching, putting in offers, to where to hire an inspector or general contractors.

10. Start the search! The MLS is a wonderful place to begin your search. Eighty-four percent of buyers now start their search online, so you'll be in good company. Try www.wix.com/dr_broker_shull/site and search for free.

“10 Reasons To Buy A Home, Now.”

1. You can get a good deal. This is a buyers’ market. Prices on average have come down about 30% from their peak according to the Case-Shiller Index.

2. Mortgages are cheap. You can get a 30-year loan for around 4.3%. As recently as two years ago, they were about 6.3%. That drops your monthly payment by 25% or more. When inflation picks up, and it will, you won’t see these mortgage rates again in your lifetime.

3. You’ll save on taxes. You can deduct the mortgage interest rate from your income taxes and you’ll get a tax break on capital gains when you sell.

4. The home will be yours. You can have the kitchen and bathrooms as you want. You can move the walls, build an extension or paint everything bright orange. These types of changes are impossible for renters.

5. You’ll get a better home. In many parts of the country it is really hard to find a good rental. Many of the best places have been sold as condos. Generally speaking, if you want the best home, in the best neighborhood, you’re better off buying.

6. It offers some inflation protection. Studies by the Case-Shiller Index suggest that, over the long term, housing has beaten inflation by a couple of percentage points a year.

7. It is risk capital. No, your home isn’t the stock market and you shouldn’t view it as the way to get rich. Sooner or later the economy is going to grow and real estate prices will head up again, too.

8. It is a forced savings. Part of a mortgage payment goes towards the principle repayment. You are just paying yourself by building equity. As a forced monthly savings, it is a good discipline.

9. There is a lot to choose from. Builders are sitting with inventory. They have also introduced new model homes that are more energy efficient, and in many cases more affordable to own. That means great choices, as well as great prices.

10. Sooner or later, the market will clear. Demand and supply will meet. As hard as it may be to believe, demand will exceed supply, the price of labor and materials will increase leading to higher prices.

Now is the perfect time to buy if you qualify for a mortgage, especially if you don’t have a home to sell.

John L. Scott Real Estate Company

Most Homebuyers Have No Regrets

The Great Recession may have drained the equity from millions of homes, but when it comes to making what's often the greatest purchase of all, the vast majority of homeowners are resting easy.

An overwhelming 90 percent of homeowners say they don't regret buying their current home, according to a new study by Bankrate, Inc.

That's even in the face of stagnant - or sliding - home prices they've suffered and rock-bottom mortgage rates they may have missed out on.

Only 9 percent of respondents expressed second thoughts about taking the plunge. Why? Most often because they couldn't sell their home and move on, or because they were unable to afford the monthly mortgage payment.

"It's surprising and reassuring to hear 90 percent of homeowners say they don't regret the purchase of their current homes," says Greg McBride, CFA, senior financial analyst for Bankrate.com.

"And all the nasty headlines in the past two years have really moved the needle in terms of mortgage awareness, with a significant drop in the percentage of borrowers who don't know what type of mortgage they have," McBride said.

Only 8 percent of Americans don't know what type of mortgage loan they have. That's a lot lower than the 26 percent of respondents in a Bankrate study done two years ago who said they were in the dark about their mortgage type.

Being bullish on homeownership isn't necessarily new. A recent Fannie Mae report revealed 70 percent of consumers see a home as one of the safest investments to make and 64 percent think now is a good time to buy.

"The key to any real estate survey conducted in today’s market would be to factor in the state where the survey's respondents reside. In many parts of the country, particularly in the Central states, they did not experience a real estate boom like the West and East coasts and therefore are not faced with the fall out of a dramatic real estate bust today," said Nancy Osborne, chief operating officer of Erate.com, a Santa Clara, CA-based financial information publisher and interest rate tracker.

She added, "Feelings about homeownership should have changed very little in those states where home prices and equity have remained relatively stable."

Other results in the Bankrate poll of 1,001 randomly selected adults, conducted last month by Princeton Survey Research Associates International, include:

• Fixed-rate mortgages are gaining in popularity. Seventy-nine percent of respondents said they had this type of mortgage on their home.

• Wealthier Americans -- those making more than $75,000 -- overwhelmingly preferred fixed-rate mortgages. Almost 90 percent of those who were asked, said they used a fixed-rate mortgage.

Mortgages and Interest Rates Revised

NORMAL APPRECIATION

NORMAL APPRECIATION
What we can learn from the past to set realistic expectations



As we look back at the real estate boom, it’s clear that many of us got used to the idea of quick home price appreciation. Real estate speculation became a game not just for investors, but for anyone with some equity and the desire to move. As we become accustomed to the post-boom market, our expectations for home price appreciation need to evolve as well.
From 1980 through 2010 (including six months forecasted for this year), home values appreciated on average 25% every five years. This average appreciation rate incorporates the post recession boom of the late 80s, the housing downturn of the early 90s, and the more recent boom and financial crisis of the past decade. The years since 2000 have been anything but normal. As a nation, we experienced extremely high real estate appreciation rates between 2002 and 2007, which were followed by historic price declines over the past three years. Though these appreciation and depreciation rates vary depending on area and price range, what seems to be true for all price points and regions is that homes are once again places of shelter—not get-rich-quick investments.
From this point forward, most homeowners will want to stay in their homes for three to five years to build up enough equity to make selling and moving a sound financial decision. This is because most major real estate economists anticipate that we will not see moderate appreciation in home value appreciation until 2011 and very gradual year-over-year improvement into the next decade.
The multi-year recoup period is historically normal: annual appreciation rates averaged 4.6 percent (compounded) per year since 1980, despite the many ups and downs over the past 30 years.
Since they will most likely want to stay in their next home for at least three to five years, today’s buyers need to consider their near- and long-term plans as they shop. Growing families, retirement, children going off to college, or any other factor that could affect their budget or the amount of space they’ll need over the next several years should be taken into account.
Many homeowners and would-be buyers are wondering if it is a good time to sell or buy. We have seen valuations stabilizing in many areas and price points, and since current historically low interest rates equal greater purchasing power, sellers and buyers need to consider their individual situations carefully.
As normal appreciation rates return and become more familiar, we must realize that while real estate is still a good long-term investment, a home is about far more than money—it’s there to provide shelter, comfort, and a safe place for families to gather.

Homebuyer Tax Credit Closing Deadline Finally Extended

Late Wednesday night the Senate followed the lead of the House of Representatives and voted to extend the closing deadline for the popular homebuyer tax credit that was scheduled to expire yesterday at midnight. Once President Obama signs the Homebuyer Assistance and Improvement Act of 2010, which he is expected to do next week, homebuyers will have until September 30 to close on their home purchase and still qualify for the tax credit (as long as they signed their sales contract by April 30, 2010).
The federal tax credit was part of the American Recovery and Reinvestment Act signed into law in February 2009. The $8,000 credit was available to first time buyers who purchased a house after January 1, 2009 and was originally scheduled to expire on November 30, 2009. The credit was seen to have stimulated home sales, especially in the lower price ranges, and in November Congress extended it through April 30 and added a $6,500 tax credit for non-first-time buyers.

Puyallup

The City of Puyallup is situated at the foot of scenic Mount Rainier in the beautiful Puget Sound region, 10 miles east of Tacoma and approximately 35 miles south of Seattle. Puyallup is known for its antiques stores, many of which are located next to each other on the main north-south street of Meridian. Puyallup is one of many cities and towns in Washington that contains an "old-fashioned" downtown shopping area. There are also lots of shopping opportunities on Puyallup's South Hill. The city boasts cinemas, restaurants, a two-year community college, parks and recreation, good K-12 schools, nice residential districts, and a lot more.

In its early years, Puyallup was an agricultural community. Farmers grew hops, berries, and flowers and the city continues to pay homage to its agricultural roots. Citizens are able to grow lush vegetable gardens in soil which has been nourished by eons of volcanic and glacial geologic activity.

The valley in which Puyallup was originally settled is the heart of the town. Its fertile soil is optimal for the acres of daffodils that are grown for distribution world-wide and are featured in the town's annual spring parade.