Looking back on recent lending history we are reminded of irresponsible lending and buyers getting in over there head. Now many banks are requiring high credit scores and more money down. Have no fear, a program that has been around for years can still put homebuyers in houses for next to nothing. Mortgages insured by the Federal Housing Administration allow borrowers to get approved with down payments as little as 3.5%, without high credit scores.

Some people still think you need to have 20% down to purchase a home! Did you know you can purchase a home with 3.5% down? A majority of buyers utilize the FHA 3.5% down loan. Also there are zero down programs that we will discuss in next week’s “buying zero down” blog.

Still, FHA-insured mortgages are far less risky than the subprime mortgages that lenders originated before the housing bust. FHA-insured mortgages require documentation and proof that the borrowers are capable of making the monthly payments. (Most subprime mortgages didn’t require such proof.)

I remember being at a seminar last year, where the real estate economist was talking about the different generations of home buyers. The economist noted that the younger generations have the monthly income for making a mortgage payment but often times don’t have enough saved up for the down payment. This makes sense as most of this buying pool is just getting out of college and are using their savings to pay off student loans. Not all debt is a bad thing.

The best part is you can be gifted the funds from a family member. The person providing the gift will have to provide a gift letter and their funds will have to be sourced. The provider will have to show where the money came from by supplying copies of withdrawal slips and bank statements.

Let’s use a simple example… say you are looking in the Renton market for a house. In September the average price of single family homes that sold was $351,000. With 3.5% down and a 4.25% interest rate, your payment would be $1995.34. (Includes taxes and insurance, taxes estimated as $3500 a year and insurance $438.75.) That’s a lot less than you expect right?

Interest rates are at record lows, MSN Money just posted an article that they should be increasing back toward the 5% mark in the near future. Home prices are also at a low, making now is a great time to purchase a home. Visit www.tylerfreed.com to start your home buying journey.

Seattle Real Estate Tyler Freed

Northwest MLS Brokers Report $17 Billion in Home Sales During 2009
KIRKLAND, Wash. (Jan. 26, 2010) – Members of Northwest Multiple Listing Service tallied more than 52,000 closed sales of single family homes and condominiums during 2009, about 3.7 percent fewer than the total for 2008. Last year’s completed transactions had a combined sales value of more than $17 billion.
In its annual statistical summary, Northwest MLS reported 45,222 sales of single family homes totaling more than $15.1 billion, plus 6,883 condo sales valued at nearly $1.9 billion. The report reflects activity of members in 19 counties encompassing nearly eighty percent of the state’s population. (NWMLS expanded services to two more counties, Ferry and Clallam, at year end.)
Although the number of sales nearly matched 2008 levels (down 3.7 percent), the dollar volume fell by double digits, dropping nearly 14.6 percent. Closed sales in 2008 totaled more than $19.9 billion, but fell to about $17.2 billion last year. Brokers attribute the drop to a combination of factors, including lower selling prices and higher volumes of distressed sales, such as short sales and foreclosures.
Among the 19 counties in the NWMLS recap report, San Juan claimed the highest median sales price for single family homes that sold there last year, at $443,500. King County followed with a median sales price of $380,000 for last year’s closed sales. System-wide, the median price (half sold for more, half for less) for single family homes that sold last year was $280,000.
For condos, the median selling price was $235,000 across the 19-county market area, down 7.3 percent from 2008 when the median price was $253,500. King County accounted for six of every 10 condo sales, and they sold for a median price of $254,000.
Among other highlights in the annual MLS summary:
• More than eight of every 10 transactions (83 percent) was a “co-op” sale, meaning it was listed by one office and sold by a different office.
• Single family homes accounted for nearly 87 percent of total sales area-wide, measured by units, and nearly 89 percent of total dollar volume.
• Member-brokers added 117,583 new listings of single family homes and condos to the inventory during 2009.
• Members represented an average of 39,212 home sellers (active listings) each month.
• Reported 802 sales of single family homes that fetched $1 million or more. The MLS map area for Bellevue/west of I-405 had the highest volume of million-dollar plus sales (120 closed sales). The highest priced home sale in the MLS system for 2009 was $15,560,000 for a home on Mercer Island.
• Reported 66 sales of condos that sold for $1 million or more; 392 condos sold for $500,000 or more. The highest priced condo sale last year was in downtown Seattle. It sold for $9,750,000.
-more-
page two (2000 Annual Highlights) Jan. 26, 2010
• Newly built homes sold by NWMLS members commanded a sales price about 12 percent higher than existing homes (resales): The median sales price of a pre-owned, 3-bedrooom home (built 2007 or earlier) ranged from $140,000 in Grays Harbor County to $512,000 in San Juan County. The median price of a 3-bedroom new home (built 2008 or 2009) ranged from $158,225 in Grant County to $655,000 in San Juan County.
• Comparing school districts, the most expensive single-family homes, based on last year’s closed sales, are located in the Mercer Island District, where the median sales price was $832,500. It was followed by the Bellevue School District, which had a median sales price of $569,000.
• In the four-county Puget Sound region (King, Snohomish, Pierce and Kitsap), about 15.3 percent of single family homes sold for under $200,000 – more than double the 7.3 percent from 2008.
• Another indicator of activity, pending sales, showed a 16 percent increase in 2009 compared to 2008. Members reported 75,345 pending sales during 2009 (offers accepted, but not yet closed), up from 64,872 pendings for the previous year.
• The pace of sales as measured by “months supply” (an estimate of how long it would take for all inventory of active listings to sell at the current pace assuming no new inventory is added) showed improvement in many areas. In the four-county Puget Sound region, there was a 5.36 months supply at year-end; at the end of 2008 the months supply was at 7.9 months. System-wide, at the end of 2009 there was a 6.25 months supply, which compares to 8.66 months supply at the end of 2008. (Economists consider a supply of 3-to-6 months to be a balanced market, meaning the market favors neither buyers nor sellers.)
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. Ferry and Clallam counties are now included in the monthly statistical reports.
###

Seattle Real Estate Tyler Freed

Market Update January 2010

Last month showed more signs of a bright future for months to come. Of the seven cities in Washington reviewed all showed tremendous year over year growth.

Auburn, WA has had a 5.1% increase in sold properties in the last twelve months, including an 86% increase of homes in escrow. The inventory has decreased by 25.5% in the last year and the average price of a sold home in Auburn is $261,000.

Renton, WA has seen more significant gains. Sales have skyrocketed 72.3% and homes in escrow have increased by 84.1%. The average price of homes in Renton, WA is $346,000. Inventory has also dropped 24%.

Bellevue, WA has seen the largest increases in sales and homes in escrow the last month. There are 214.8% more homes in escrow and 180% more homes closed in December 2009 then there was in December 2008. Inventory has decreased 22.7% in Bellevue. The average sold home is $622,000.

Seattle, WA has also seen an increase in sales, approximately 28.8% from December 2008 to December 2009 stats. The pending homes have increased 88.8% and inventory has decreased 21.9%. The average sale price in Seattle, WA for the month of December 2009 was $480,000.

Puyallup, WA has a current sales average of $228,000. Inventory has dipped 19.4%. Sales have showed steady growth of 11.5%, and pending are also above the 80% at 85.9%.

Lastly Tacoma, WA is revealing the lowest average closed price of $189,000 for a single family home. Inventory has decreased 20.2%, sales have jumped 63.1% and homes in escrow have increased by 60.8%.

The statistics show that a lot more homes are selling. The reason for the gigantic increases in pending, or homes in escrow, is due to the flooding of short sale inventory in Washington. These homes are listed below market, get offers signed by sellers, then sit in escrow until the bank approves or counters the contract price. Hence, the large amount of homes in escrow. These short sale systems used by banks are heavily regulated and should improve through out the first part of 2010.

Starbucks Trivia Question:

What is the scientific name for Alabama’s State insect? Good luck!

Seattle Real Estate Tyler Freed

Tax credit fuels home-sales bounce, but will it be just a blip?
The first-time homebuyers’ tax credit helped resuscitate the Seattle real-estate market in 2009. The market remains fragile, most insiders say, and the outlook for late 2010, after the credits are scheduled to expire, is especially murky.

By Eric Pryne

Seattle Times business reporter

In residential real-estate annals, 2009 probably will be recorded as the Year of the Credit.

In February, Congress approved an $8,000 tax credit for first-time homebuyers in hopes of kick-starting moribund home sales.

“It worked,” Lennox Scott, chairman and CEO of John L. Scott Real Estate, said at a recent industry forum. “That’s what completely activated the market.”

It sprang to life in the spring. After nearly two years of declining sales, buyers bought 20 percent more houses in King County between June and November than during the same six months in 2008.

Was that a blip, or the start of a trend? That’s what real-estate insiders are asking as they gear up for 2010.

Last month, Congress extended the credit, which was due to expire Nov. 30, for seven months, and adopted a new, $6,500 credit for many repeat buyers. Partly because of those incentives, many observers anticipate more houses will be sold during at least the first part of 2010 than in the same months of 2009.

But that’s not necessarily saying much: sales volumes last winter were dismal. The market remains fragile, most insiders say, and the outlook for late 2010, after the credits are scheduled to expire, is especially murky.

“We still have a bit of a ways to go to figure out how to get out of the pickle we’re in,” said George Rolfe, director of the University of Washington’s Runstad Center for Real Estate Studies.

Here’s a look back and ahead:

Home prices

After plummeting 20 percent in 18 months from its summer 2007 peak, the median price of a single-family home sold in King County slipped only slightly more in 2009.

It was $382,500 in January and dropped to $370,000 in November, according to the broker-owned Northwest Multiple Listing Service.

And next year? “They’re not going to go up,” Jill Wood, Windermere Real Estate president, said of home prices. “They’ve probably leveled off for now.”

Even that assessment may be optimistic, others say. Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University, said it’s more likely that prices will continue to decline through midyear.

The asking prices for some more expensive homes will start to drop, he said, as owners hit hard by the recession anticipate resets of their option adjustable-rate mortgages and inch closer to delinquency.

But houses above $400,000 such in close-in, desirable neighborhoods as Ballard and Green Lake should fare well because there’s little available inventory on the market there, said Steve Tolliver of Yucon Appraisal Service

Tim Ellis, editor of the Seattle Bubble real-estate blog, said median prices in Seattle could slip another 3 to 8 percent next year. But all bets are off if the federal government steps in again, he added.

“More and more, it’s becoming evident that the government is really interested in keeping home prices from falling farther,” Ellis said.

And 2010 is an election year. “Who knows what they may try to pull out of the hat,” he said.

Home sales

The first-time buyers’ credit wasn’t the only reason sales surged in 2009. Even without it, lower prices and record low interest rates probably would have led to an increase, Ellis said.

But the credit clearly was a catalyst. Crellin said his center’s research suggests it was responsible for nearly one-third of all the sales in the state in July, August and September.

The question now is, how many prospective buyers remain? “Were we stealing future demand?” Seattle land-use economist Matthew Gardner asked at a recent forum.

Crellin doesn’t expect the surge the credit induced to continue unabated. Before the tax break was extended and expanded at the last minute, the real-estate industry did an effective job before then of persuading prospective buyers they had to close by the end of November to claim it, he said.

So most first-timers who intended to buy probably already have, Crellin said. And the chain reaction you’d normally expect from the surge, with sellers of entry-level homes looking to move up, could be weaker than usual, he added.

Some sellers were banks: Nearly 16 percent of all the homes sold in the King, Snohomish and Pierce counties in October were foreclosure resales, according to Seattle-based Zillow.com.

And, thanks to the downturn in prices since 2007, many sellers had little or no equity to use for anything new, Crellin said. Some are renters now.

But he still expects home sales will exceed last year’s numbers at least through March.

Windermere’s Wood anticipates strong sales through midyear — in part because of the tax credits that expire June 30, in part due to “the sense of confidence people have now.” The typical December slowdown hasn’t materialized this year, she said.

As for the second half of 2010, “I have absolutely no clue,” Wood said. Much depends on interest rates and the stock market’s performance, she said.

“It’s all going to come down to jobs, jobs, jobs,” said James Stroupe, a Windermere condo specialist. “There are a lot of buyers out there that are still scared.”

Foreclosures

They aren’t as commonplace here as in Florida or Las Vegas or Phoenix, and it’s highly unlikely they ever will be. Still, the number of foreclosures in the Seattle area could rise in 2010, sending ripples through the market.

About 2.2 percent of all loans in Washington were in foreclosure in the third quarter, according to a Mortgage Bankers Association survey. That’s about half the national rate.

But another 3.2 percent of Washington loans were 90 days or more past due. They could be foreclosures-in-waiting unless government loan-modification programs reach more homeowners, observers say.

And if those homes are foreclosed and later put up for sale at bargain-basement prices, they could push the entire market lower, Ellis said.

There’s already a substantial “shadow inventory” of homes that lenders have repossessed, but haven’t yet listed, said mortgage banker Jeff Bell of Cobalt Mortgage in Kirkland. Their disposition could affect the broader market as well, he said.

But Wood said she’s more concerned about the impact on prices of “short sales” — sales for less than the owner owes the lender.

Mortgages

Interest rates dropped below 5 percent at times in 2009, and observers don’t see how they can fall any farther. Some expect them to remain where they are; others forecast modest increases.

Bell expects rates will remain relatively flat for at least the first half of 2010, and probably the entire year. The Federal Reserve has given no hint of increases anytime soon, he said, and “we don’t see economic conditions changing to the point where it would warrant higher interest rates.”

Crellin expects rates will rise. But that could be good for sales, he said, because it would spur some prospective buyers to act while they still can.

Renting

It’s a good time to be a tenant, said Tom Cain of Apartment Insights Washington, a research firm.

Vacancies rose and rents slipped in 2009. Expect more of the same in 2010, he said.

On top of the economic downturn and high unemployment, which depress demand, 3,300 new apartments in complexes of 50 units or more are under construction and likely to be completed next year.

That’s in addition to 5,600 units delivered through the end of November this year. “That’s a huge supply relative to what we’ve seen in the past,” Cain said.

Next year would be shaping up as a downer for landlords even without all the new product, he added. While some former homeowners are becoming renters, he said, many renters are buying condos and houses, enticed by lower prices, low interest rates and the new federal tax credits.

But most buyers have learned to approach real estate differently now than they did before the crash, said the UW’s Rolfe.

Before the collapse a “lottery-ticket mentality” prevailed, he said: “Most home buying for five, maybe 10 years was motivated by the anticipation that you were going to get rich.

“That seems to have been wrung out of the market now.”

Eric Pryne: 206-464-2231 or epryne@seattletimes.com

Seattle Real Estate Tyler Freed

Interesting article on HomeStreet Bank from the Seattle PI.

While the economy languishes, HomeStreet looks to expand
Being privately owned may be company’s saving grace
By BILL VIRGIN
P-I REPORTER

HomeStreet Bank’s assets and branch count are mere fractions of fellow Seattle-based home lender Washington Mutual.

On the other hand, HomeStreet made a lot more money last year — a profit of $20.5 million, compared with a loss of $67 million at WaMu.

Even more striking is the contrast between HomeStreet and much of the banking and home-lending industry. HomeStreet’s single-family loan volume rose last year (nationally it was down), and so far this year that line of business is off to one of the best starts in company history. And while much of the industry is hunkering down in hopes problems don’t get worse, HomeStreet is talking about ways to grow.

HomeStreet, which changed its name from Continental in 2000, has some competitive advantages. For one, it’s privately owned — various generations of the Williams family hold 64 percent of the stock, with 20 percent more in an employee stock plan.

“That doesn’t mean we don’t have to perform, but the time horizon is different,” said Bruce Williams, HomeStreet’s chairman and chief executive. “It’s much more patient capital.”

Being insulated from Wall Street pressures to chase profits provided another competitive advantage for HomeStreet; it didn’t go chasing the subprime business that provided short-term gains and long-term headaches for many others.

“We didn’t have that problem, and we don’t have that problem,” Williams said.

It’s not all sunshine for HomeStreet. Net income in 2007 was down from $21.3 million in 2006, in part because HomeStreet raised its provision for loan-loss reserves as a precautionary measure.

“When we were looking back at the second half of 2007, there was a pattern of people being unpleasantly surprised by things,” Williams said.

HomeStreet also moved a large block of loans to delinquent status. Nonperforming loans as a percentage of total assets jumped from 0.16 percent at the end of 2006 to 1.3 percent at the end of 2007.

“It’s certainly a lot for us, much more than we’ve had in the past,” he said.

Most of that is concentrated in residential development and construction, mainly with smaller builders feeling the pinch of lower demand. But Williams notes that HomeStreet didn’t have any net loan losses in 2007, and doesn’t expect a lot in 2008.

In the meantime, single-family lending continues to grow, in part because falling interest rates have prompted another refinancing wave. Business and commercial real estate lines are also doing well.

“Clearly, we are focused on managing risks in the construction portfolio, but we see a lot of opportunity for growth,” Williams said.

HomeStreet, with $2.8 billion in assets and 590 employees, operates 20 branches in Washington, Oregon and Hawaii, and 10 lending offices in those states plus Idaho. It will open its 21st branch, in Hawaii, this year. Because it is getting calls from loan officers beyond those four states who want to join the company, HomeStreet is considering adding lending offices there.

It’s also considering increasing its advertising spending to drum up business.

While Williams believes that the nation as a whole is facing a recession, “I’m enough of an optimist to believe we will avoid it in the Puget Sound area. … It isn’t boom times, but it’s pretty good. It’s a heck of a lot better than other places.”

P-I reporter Bill Virgin can be reached at 206-448-8319 or billvirgin@seattlepi.com.

Seattle Real Estate Tyler Freed

I came across this article awhile back and wanted to include this on the webpage.
C.R. ROBERTS; The News Tribune
More home sales closed in Pierce County in July than in any month since August 2007.
Nearly 21 percent more sales – of single-family homes and condominiums – were pending than were pending a year ago.

“I’m a happy camper at the moment,” said Windermere Real Estate broker and Northwest Multiple Listing Service director Dick Beeson on Wednesday.

“It’s good news on a lot of levels,” he said.

Northwest Multiple Listing Service on Wednesday released its monthly data snapshot of residential real estate activity in the state.

In Pierce County in July, 903 sales were closed – compared with 747 in June and 796 in July 2008. Not since August 2007, when 1,120 deals were closed, have so many transactions been completed.

MLS also reported that 1,251 sales were pending in Pierce County in July, compared with 1,036 a year before.

The median sales price for closed sales was $228,500, compared with $255,000 in July 2008. Median means half of the homes sold were priced above and half were priced below.

In Thurston County in July, 284 sales closed, compared with 322 in July 2008. Statewide, 5,527 sales closed in July – against 5,271 a year before.

“It tells me, number one, that buyers are getting smarter, they’re taking action, they’re getting off the fence,” Beeson said. “Number two, the median price has stabilized. We’ve literally stayed the same. With buyer demand going up, and inventory going down, we’re getting back to a near-normal market.”

The median home price in Pierce County in June was $230,000.

Theresa Bastian, a Tacoma Realtor and principal at Keller Williams, said Wednesday, “I’m cautiously optimistic. I think we’re seeing several things going on in the market right now.”

Bastian noted that her office is seeing bank-owned properties “being aggressively priced. People are falling in love with a good deal. Yes, it’s a wonderful time to be a first-time buyer, but this isn’t helping the move-up buyers. It’s not helping people sell their homes and move up.”

A major part of the apparent rebound comes from activity in the lower tier of homes for sale, Beeson said.

“What’s being sold is mainly $250,000 or less,” he said. “It’s a strong market. I’d say that the higher end, $450,000 and up, and the midrange, $300,000 to $400,000, are still twelve months away. There will be sales made, but I think it’s still soft.”

He noted that there are 489 homes for sale in Pierce County priced at $750,000 and above.

“We still see a lot of activity in the lower end,” said Bastian. “Which is wonderful – it’s better than no activity.”

She said she had seen other data – which calculate active listings in relation to pending sales – that indicate a property’s likelihood of selling. These data show a home in the Gig Harbor area, placed on the market, had a 13.2 percent chance of selling earlier this summer. A home in the southeast of Tacoma had a 37.8 percent chance, and in Spanaway a 32.1 percent chance.

The number of closed sales of condominiums in Pierce County in July stood at 65, according to MLS, compared with 116 a year before. The median price of a condominium, $196,990, was down 9 percent from $216,475 in July 2008.

C.R. Roberts: 253-597-8535

c.r.roberts@thenewstribune.com

We are seeing the same thing happen in Bonney Lake and Lake Tapps. The lower end homes are moving a lot quicker then the higher end. Definitely due to financing regulations and lack of equity in upper end homes.

Seattle Real Estate Tyler Freed