Categorieseconomy, financing, home values, info for buyers, info for home owners, job market, quarterly report, Seattle, Seattle neigborhoods, Uncategorized, Washington real estate

Metropolist Magazine Volume 1 | Issue 1

Get Your Guide to the Hottest Real Estate Market in the Nation

Seattle’s real estate market, both residential and commercial, has been cooking for a few years, making it tough for people who want to enter the market, or even move within it. That’s where the 1st-ever Metropolist Magazine jumps in to inform.

Our 1st magazine is a 12-page guide packed with 2 main types of content, based on the last 6 months of market activity:

  1. Stories
  2. Data

Designed to easily inform and inspire you, this guide shares high-level data and professional insights about single-home, condominium and commercial sectors.

By neighborhood

Also, we’ve broken the data out by neighborhood provided by NWMLS data and Trendgraphix. So, if you’re living in Ballard or University District, head over to page 9.

Curious about what’s been going on in West Seattle or Belltown? Those are on page 10, along with loads of other neighborhoods and districts. Fremont? Queen Anne? Madison Park? Yes, yes & yes….and more.

The color coded legend at the top of page 9 will make it a snap for you to understand at a glance.

Our aim?

Keep it simple, but provide great information around a large investment that directly affects the most important things in your life… your home, your family and your future.

Making the most of it

For best strategies and results, we suggest you ask your trusted broker to walk through this guide for more personal insights based on your own home and investment goals.

Whether you’re buying, selling or just checking in on the market, it’s time to download your 12-page Metropolist Magazine now.

Categoriesfinancing

0% Down financing a thing of the past you say?

It’s all well and good for buyers that rates are still crazy low and prices have not yet started to climb.  But what if you don’t have any money for a down payment?  Everyone knows there aren’t any zero down mortgage programs anymore.  And the low down payment mortgages have super expensive mortgage insurance tacked on to the monthly payment right?

Well I came across two programs this week from two major (and seemingly stable) banks that might just offer a great boost to qualified buyers who would love to own a home but don’t have a lot of cash.

One program is offered by Wells Fargo (many of you know one of my favorite clients is a loan officer at Wells Fargo).  So I asked Ryan Carroll to send over some information.  Check out his flyer here: Removed at request of Wells Fargo. He also sent me an interesting loan comparison chart that you can access here: Removed at request of a Wells Fargo.

Merrick H. Tam with Key Bank brought another program to my attention this week.  I’ve never worked with Merrick so I can’t vouch for him, but he did take the time to call me and let me know about what seems like a great option for buyers.  View his flyer here: Key Bank Flyer.

Please don’t hesitate to give me a call if you are curious about the process of buying and would like to find out if it’s an option for you.

Categoriesfinancing, info for buyers

Rates vs Price

Many buyers are considering whether to buy a home NOW or wait to see if prices come down a bit more.  We wanted to clarify for our clients the most important variable in this equation: interest rates.  The majority of buyers need financing to purchase their home.  Interest rates are what buyers should be focused on, not prices.

Here is an example that illustrates the point clearly, based on our listing at 3236 41st Ave SW offered at $440,000:
With 20% down and a credit score over 700 buyers currently qualify for a 30-year fixed rate loan with a rate of 4.375%.  The monthly Principal and Interest (PI) payment on a loan of $352,000 at 4.375% would be $1,760.17.

If we adjust for interest rates rising while keeping the payment at $1,760.17/month and 20% down you can see how higher rates will affect your purchase power:

January 2008: 30-year fixed rate 5.5%. At that rate a payment of $1,760.17/month qualifies a buyer for a purchase price of $387,024.57.  $52,975.43 less than today.
August 2008: 6.5% = purchase price of $347,740.75.  $92,259.25 less than today.
May 2000: 8.5% = purchase price of $285,949.18.  $154,050.82 less than today.

It is entirely possible that interest rates will climb to 8.5% within the next few years.  While this is still a decent rate, historically speaking, you can see it makes a huge impact on a buyers buying power.  It would take a 35% reduction in home values to make up for the $154,000 difference an 8.5% rate would make to buyers.

Today’s incredibly low interest rates have created an amazing opportunity for home-buyers, and we just wanted our clients to know.

Warm Regards,
Domenica
Windermere Real Estate

Categorieseconomy, financing, info for buyers, info for home owners

Rent vs. Buy

In the market today, we see opportunity for buyers – BIG TIME.  There are so many great homes on the market for buyers to choose from and interest rates continue to hover around 4.25%.  At the same time, we try to temper our enthusiasm about the current market (for buyers) and look at the big picture so we can help our clients make sound choices for their own personal situations.  In researching the topic “Rent vs. Buy” we found sound points in favor of both choices and would like to share with you some of the highlights:

  1. The info-graphic The True Cost of Home-ownership  offers a sobering look at how much it can cost to own a home.  It also outlines the comparison of renting to buying over a 5 year period, showing that at year five the benefits outweigh the costs of owning your own home.
  2. Matthew Gardner, a local Land Use economist, offers his insight into the future of home-ownership by looking at the past, in this recent blog post.  His conclusions are optimistic for our region and he feels there is reason to believe that Seattle will not “over-correct” when it comes to home-ownership.
  3.  This New York Times article offers a framework for analyzing the benefits of rent vs. buy using a concept of “rent ratio: the purchase price of a house divided by the annual cost of renting a similar one”.
  4. Finally, we recommend the calculator tools on freddiemac.com to compare your own situation.  This rent vs. buy calculator is one of the best we’ve found and is an interesting exercise to help you look at your individual situation.

As always, we’d love to participate in your explorations of whether now is the time to buy and we hope you will forward this to your friends who currently rent and are considering their options.
 
 
 
Warm Regards,

Domenica
Windermere Real Estate

Categoriesfinancing, info for buyers

2009 Year In Review

A recap of the top stories in 2009:

2009-The year of the first-time home buyer
Supported by the tax credit and low interest rates, first-time buyers had an unprecedented showing in 2009 and helped to boost the struggling economy with their aggressive approach to the market.  In the Seattle Metro area, 5950 homes sold in 2009 with an average DOM (days on market) of 59 days.  72% of those homes sold for less than $500,000, 52% sold for less than $400,000 (data from Northwest Multiple Listing Service).

Short sales and Foreclosures
Foreclosures, and the problems created by them, were among the most important stories of 2009.  Coined “toxic assets” these homes were either sitting vacant or creating a flurry of paperwork as first-time buyers and investors competed to find the deal of a lifetime.  Due to defaulting loans, foreclosures in 2009 helped cause the financial collapse, but by year’s end they were appealing to a growing segment of buyers.  Overall, the foreclosure rate in Seattle has remained low compared to the National average.

Low interest rates
The rush to buy was due to a miraculous combination of factors.  Interest rates continued to stay low, setting records as they fell against speculation.  Low priced foreclosures and short sales, and the high inventory of homes on market brought prices down to affordable levels.  Even the luxury market saw deep declines as sellers began driving prices way down.  In 2009, interest rates stayed below 5.5% and in the 4% range for much of the year.

$8000 tax credit and the extended/expanded tax credit
Home sales continued to drop until the Fed stepped in and passed the $8000 tax credit for first-time home buyers.  It took a few months to sink in and then sales shot up around mid-year to their highest levels in more than two and a half years.  Slated to end on November 30, the tax credit was extended & expanded through April 30, 2010 to include homeowners buying their next home, if they’ve lived in their current home at least 5 years. The tax credit is one of the most important stories of 2009.

Below is a graph showing the sales activity for the past 12 months.  The number of homes sold in 2009 is comparable to 2004, as well as median and average price.  The average DOM for the homes sold last year was approx. 78 days, which is skewed high due to the increased length of time to sell short sales.

Warm Regards,

Domenica
Windermere Real Estate

Categoriesfinancing

Changes of “interest” in 2010

As a kick off to the new year we thought we would check in with our favorite mortgage broker and friend, Rob McAllister at West Seattle Mortgage.  For a primer on mortgages and how rates effect payment start out by taking a look at this short 3 minute video.

Here is what Rob has to say about how we got where we are and what we can expect in the coming year:

Forecasting rates for 2010 will be much easier than in past years.   Although I don’t have a crystal ball, I do have very solid reasons to feel certain we will see interest rates go up throughout 2010.  Mortgage interest rates are tied to the bond market and in 2009 the Federal Reserve (Fed) was purchasing mortgage bonds as a means to keep rates low.  The Fed allocated 1.25 trillion dollars toward purchasing mortgage bonds and did a very effective job of keeping rates down to stabilize the housing market.  However, the well is coming dry very soon and the Fed announced last fall that they didn’t plan to allocate any more money toward the bond purchase plan beyond the end of March, 2010. When the Fed departs as a buyer it will leave only the private investors, decreasing the demand for bonds and dramatically bringing prices down.  In the bond world when prices fall, rates go up.

So the big question for me isn’t whether rates will go up or down.  The question becomes when will the end for lower than 5% rates come, and how high will rates go in 2010?   For that I think the answer has already presented itself.  Mortgage bonds fell below a key level of support (200-day moving average) back on December 21st and haven’t been able to push back above this tough ceiling since. I think we will see rates in the 4.75% – 5.25% range for a conventional 30 year fixed loan for another month.  Then sometime in February we will see rates begin their inevitable climb to the mid-5’s and perhaps the high 5’s by late March.   Things could certainly get worse given the concern about inflation and the amount of Treasury Bonds that are being issued to fund the Federal Budget deficits.  If the Fed begins to talk about concern over inflation this could push rates up over 6% very easily by the middle or end of the 2nd quarter.  I do think the Fed will keep their Federal Funds rate at its current .25% through most, if not all of 2010, but the Feds comments about inflation may still have an impact on longer term bond performance; including mortgage bonds. 

So buyers and folks looking to refinance or buy a new home should take a hard look at their plans if they want to lock in the low interest rates that we’ll likely not see again in our lifetime.  Keep in mind that just 20 years ago (1990) the average interest rate was 10.13% with 2 points origination (national average).  Though I don’t see rates rising to 10%, I do think we can expect interest rates to go from the low 5’s early this year to the mid-6’s by the end of the year.  It’s going to be a volatile year for mortgage bonds, and thus interest rates, so you will see days that swing higher and days that swing lower.  Overall we will see them trending higher, so don’t wait to act if you plan to buy a house in 2010… after the 1st time & move-up buyer tax credits expire in April things may look a lot different. 
 
 
Warm Regards,

Domenica
Windermere Real Estate

Categoriesfinancing, info for buyers, Windermere

Windermere’s New Bridge Loan

Opportunities for “move up” buyers are plentiful in the current market. Unfortunately, many homeowners aren’t able to capitalize because it has become harder to access home equity for down payments. Windermere is attempting to address this issue by offering its own stimulus package~short-term, no interest loans to existing homeowners looking to purchase a new home. Windermere clients have access to an interest free “bridge loan” that allows them to borrow a portion of their equity in their current home as a down payment on the purchase of a new home for up to six months. The result: buyers can make a non-contingent offer without dipping into their own cash reserves.

To create this interest-free program, Windermere partnered with Vintage Loans, LLC and is underwriting the costs of this program. “The federal tax credit has helped thousands of first-time buyers purchase a home,” said Jill Wood, President of Windermere Real Estate. “We want to offer a helping hand so second, third and fourth time homebuyers can buy homes as well.”

The Buy Now * Sell Later Loan is open to property owners in Western Washington to use as a down payment on the purchase of a primary residence. The maximum loan amount is $100,000 for six months or $200,000 for 3 months. There is no origination charge, no interest on the loan and no monthly payment required. The loan is due in full when the borrower’s home sells, or when the loan term ends, whichever comes first. Here is a recent article from the Seattle Times regarding the program.

The limitations of this program lie in that the total of all debt secured by the collateral property, including the bridge loan, may not exceed 65% of the collateral property’s current fair market value. The home buyers able to utilize this program must have a good chunk of equity in their current home, and therefore many of our clients may not qualify.

If you have any questions about this new Windermere loan, or if you’d like to discuss the prospect of “moving up” in home in the future, please just give us a call 🙂

Warm regards,
Domenica
Windermere Real Estate

Categoriesfinancing, info for buyers

Low Interest Rates Make A BIG Difference

Right now interest rates for purchases (and refinances) are very low. Though the $8K tax credit is a big contributor to the improved market conditions we are experiencing, the low interest rates actually do more for affordability and buying power. Yesterday, with a client, we looked closer at why interest rates are low right now, and why they will go up in 2010.

This case study based on a 400k purchase with 20% down and 1% loan fee (Loan amount $320K). All third party and other costs will be constant for illustration purposes.

In terms of buying power, an increase in interest rate from 4.75% (current levels) up to 6.25% (late 2008 levels) will cost about $62k in purchase price for the same monthly payment in this scenario. The same payment = $400K versus $338K purchase price.

Rob McAllister (West Seattle Mortgage) explains the recent history of interest rates:

*In December of 2008 the FED announced they would begin purchasing mortgage bonds to help push rates lower and allow people to purchase homes at artificially low rates as part of their efforts to stimulate the housing sector of the economy.

*The mortgage bond purchase program was initially set to expire in July of 2009 after $700B of government funds were exhausted. Rates in June began to move from the mid-4’s (on a 30 year fixed mortgage) to the mid-5’s in a week’s time based on the anticipation of the FED’s program expiring.

*The FED then announced they were going to allot an additional $500B toward the mortgage bond purchase program to extend their efforts until the end of 2009. The FED has been actively purchasing mortgage bonds in 2009 which has kept rates around 5% for much of the year.

*Just last week the FED announced that they would extend the time they plan to continue their purchase plan until the end of the first quarter of 2010, although they did not allot any additional dollars to the plan. This indicates that they plan to phase out the program over a longer period of time to ‘soften’ the inevitable rise in interest rates as they exit the market. Though it should be a more gradual climb, rates will begin to go up based on normal market conditions (no government involvement).

Conclusion: Interest rates are as important as price (or more important) to factor into the home buying equation. We are here to answer any additional questions you have about this topic and hope you will call us as you consider your options.

Warm regards,
Domenica
Windermere Real Estate