Seattle ninth-best U.S. market for home sellers: Report

Seattle is the ninth-best market in the country for homeowners selling their home, according to a new report.

This is great news if you are thinking if selling your home anytime soon, and another reason to jump in if you’re buying!

According to Zillow Inc. reports that only home sellers in eight other U.S. cities have more leverage than Seattle home sellers. Zillow describes a seller’s market as one where homes are on the market for a shorter time, price cuts occur less frequently and homes are sold at prices very close to (or greater than) their last listing price.

In markets like Seattle, “sellers … are squarely in the driver’s seat with their homes selling within days of listing, often after bidding wars that increase the sale price above the asking price,” said Stan Humphries, Zillow chief economist, in a statement.

If you’d like to know what’s going on in your neighborhood, on your block for similar homes just like yours, call me for a no-obligation consultation.

Just Ask For Forgiveness

Something very important is happening on December 31st of this year – something that might impact your life, or the lives of your friends, family or co-workers.

What am I talking about?

The expiration of the Mortgage Forgiveness Debt Relief Act.  The expiration of the Mortgage Forgiveness Debt Relief Act.  As your real estate expert, I talked about the Act in a previous Coffee Break Newsletter.

Oddly enough, many homeowners (including those affected by the Act) are unaware of its existence, or of its ticking clock.

The Mortgage Forgiveness Debt Relief Act applies to debt relief “forgiven” between January 1, 2007 and December 31, 2012. At this point in time, it does not appear the Act will be extended.

What’s really at stake? Money!

Let’s take a step backwards to put this in perspective.

Debt “relief” comes about when a lender “forgives” debt owed by a borrower, as can happen with a short sale, foreclosure, or other type of loan “workout”. Ordinarily, that forgiven amount is taxable. However, under the Act, the borrower’s need to pay taxes on the amount of the forgiven debt is eliminated.

Of course, there are caveats that come along with this tax relief. For example, the debt must be related to a principal residence. In addition, the total amount of the debt can’t exceed the borrower’s original mortgage loan … plus the cost of improvements made to the home.

The implications of this tax relief are huge in dollars and cents! Take a look at an example.

In 2006, Mary Jones bought a home for $375,000 and took out a mortgage of $265,000. This month Mary is relocated across the country for work and must sell her home. Her current mortgage balance is $237,000. Luckily for Mary, her lender is a bank that is willing to work with her on a short sale … and she is lucky enough to find a buyer.
Mary and her buyer agree to a sales price of $218,000. However, that amount falls short of what Mary needs to pay off her mortgage, and pay closing costs – all of which is estimated to come to $227,620. Since Mary does not have enough money to bring to the closing table, Mary’s lender agrees to the short sale, forgiving debt in the amount of $9,260.

Prior to the Act, Mary would have been required to declare the $9,260 as income, and pay taxes on it. Under the current provisions of the Act, taxes on Mary’s $9,260 in relief are forgiven. For individuals in a 20% tax bracket, that’s almost $2,500 in tax savings!

And owners of high-end homes – defaults of which are on the rise — could be looking at very substantial tax breaks, depending on the amount of debt forgiven.

Which leads to several questions my clients have repeatedly raised about the Act:

• What is the maximum amount of debt relief under the Act? Up to $2 million may be forgiven for married couples ($1 million if single or if married but filing separately); of course, this must be for a principal residence. If there is debt forgiven above this amount the borrower is taxed at ordinary income rates.
• Does the Act apply to cars, boats, second homes, investment properties, credit cards, or other debt? Not under this provision. Only debt relief for a principal residence applies under the Act, however, bankruptcy debt relief is non-taxable, and that is sometimes true for insolvency as well.
• Do I have to report the forgiven debt, since I won’t be paying taxes on it? Yes! See the IRS and/or your tax professional for additional details.

I’m not suggesting that you hurry up and default on your mortgage loan so you can take advantage of the Act. However, it is important that you understand the implications of the Act and how it may affect you.

I encourage you to contact qualified professionals (such as attorneys or Certified Public Accountants) who can assist you with this program.  I have names of trusted service providers.  I also suggest you visit the IRS site for information on the Mortgage Forgiveness Debt Relief Act, which can be found on the IRS’s website. I used information from that site, in addition to information provided by NAR in preparing this blog post for you.

Most people are not aware of the Act’s existence, and pending expiration.  Call me at 425-330-0663 for more information on this important and expiring topic. Or just click here!

Book em danno

Our team is always looking for tools and resources that will help our clients make informed decisions in home buying. Now you can see what crime is like in that area you’re thinking about living in with Trulia’s Crime Map.

Drawing from three data sources, Crime Map starts with a national view for cities with available data, and then zooms into specific areas. Darker red areas and larger circles on the maps indicate more incidents, whereas green areas and smaller circles represent the opposite.

Click on regions or the scaled circles to see details on individual crimes during the past year.

This is good stuff and very useful for both home buyers and sellers.  For example, if you are thinking of selling your home, check out the crime stats in your area.  You’ll see what buyers are seeing when it comes to crime.

And then there’s the little things like permalinks for locations, filtering by crime type, quick zooms to locations with the most crime, and discussion pages. It’s that little bit of awesome sauce that makes for an extra informative application.

Housing market “healing itself,” numbers are “astoundingly good”

Pending sales may not appear to be much higher than 2011 (up 13.7 percent in January), but the numbers are very good, considering such factors as harsh weather and the tax credits that boosted sales at this time a year ago.

The latest figures from Northwest Multiple Listing Service show pending sales in January outgained the same month a year ago by 739 transactions. Brokers reported 6,132 mutually accepted offers in January to start the year with a 13.7 increase over the January 2011 figure of 5,393 pending sales.

Given that we lost a week with some of the worst weather in 16 years, the numbers are astoundingly good.  This is the first January in four that we can make a reasonable year-over-year comparison.  The numbers are no longer skewed by the artificial stimulus of various tax credits and incentives that date to 2009.  The improvement in the numbers show that the market is healing itself and standing on its own.

Declining inventory, extremely low interest rates, and positive job growth are contributing to rising optimism among industry professionals, but Northwest MLS directors say distressed properties continue to be a drag on the market’s recovery.

Inventory is down almost 20 percent from a year ago. Brokers added 6,666 new listings to inventory during January, with single family homes making up about 85 percent of those additions. At month end, MLS members reported 26,226 total active listings; a year ago, there were 32,647 active listings.

Despite the smaller selection, the price choices overall are wide ranging, from a low of $13,000 for a manufactured home in Sultan to an asking price of $26.8 million for a waterfront home on Mercer Island.

Snohomish County reported the sharpest drop in inventory, with the selection at about two-thirds of the year-ago levels (a decline of 32.6 percent). Several of the 29 MLS map areas within King County also reported declines of 30 percent or more in the total number of active listings.

The ongoing reduction of available inventory is still impacting the market.

The lower number of new listings coming on the market is due to a combination of factors, said J. Lennox Scott, CEO and chairman of John L. Scott Real Estate.  Among them are underwater sellers (who owe more on their homes than the current value), sellers with equity holding off for higher prices, and the lack of new construction/condominiums. The low number of new listings combined with the increase in sales activity is creating the shortage of homes for sale in specific areas and price ranges,” Scott reported.

Northwest MLS reported 3,469 closed sales last month, up nearly 8.2 percent from a year ago when members reported 3,207 completed transactions.

“A sellers’ market has returned in the areas close to the job centers of Seattle and Bellevue, up to the one million dollar price point,” Scott noted, adding, “We are also seeing the same situation in the more affordable price ranges in the surrounding market areas, caused by a shortage of inventory and healthy-to-strong sales activity.”

Echoing that sentiment was Northwest MLS director Frank Wilson, who said, “Inventory in many price points and locations is dropping and what buyers are finding are overpriced or under staged homes.” Wilson, the branch managing broker at John L. Scott Real Estate in Poulsbo, also foresees upward pressure on prices as choices become narrower.

For now, however, prices are showing mixed signs –stabilizing in some areas while declining or increasing in other areas.

The median price for last month’s closed sales of single family homes and condominiums (combined) was $214,990, down about 11.7 percent from a year ago when the median selling price was $243,500. The price changes ranged from year-over-year increases reported in five counties (Ferry, Grant, Kittitas, Mason, and Pacific) to declines of up to 40 percent (in Clallam and Grays Harbor counties).

“Price increases are muted by short sales and foreclosures that are causing low appraisal values,” observed Scott.

MLS directors Jacobi and Wilson agreed.

“We are simultaneously seeing the continued rise in pending and closed sales,” Jacobi stated. “Usually pent up demand and rising sales means that prices will be going up. But, unfortunately, that isn’t the case thanks to the high level of distressed properties that continue to drag down the entire market,” he explained.

“What is tempering our real estate recovery in Kitsap and much of Puget Sound are the short sales and REO properties that are on the market and the way the banks are dealing with their sales process,” said Wilson, while pointing to several encouraging signs.

All the pieces are in place for a more normal market in much of Kitsap, Wilson said. “With pending sales up 17 percent in Kitsap, buyers are taking advantage of the values this market is offering and the extremely low interest rates. If this trend continues we should begin seeing price appreciation as we progress into the year,” he remarked.

Improving numbers show the artificial stimulus of the tax credits was not the key to the recovering market, suggested Anderson. “Instead, today’s affordability has buyers in all price segments returning – and feeling more confident about the future.”

Northwest MLS director Darin Stenvers believes “the perfect storm is brewing.” He said the pent-up need for homes in good condition is creating shorter market times and sales close to the original asking price. “It is a great time for sellers who have been waiting,” said Stenvers, the office managing broker at John L. Scott Real Estate in Bellingham.

“The market is almost done with the needed correction,” Stenvers stated, adding, “Distressed homes and REOs are not going away fast but have slowed and should soon level off.” He also foresees a loosening of overly restrictive lending guidelines.

Reflecting on a real estate career that dates to 1990, Wilson said, “I remember at the height of the market people would say ‘I wish I would have bought some waterfront back in 2001…or I wish I would have picked up a couple of rentals a few years ago’.”  For these people, “the clock has been rolled back and you now have an opportunity to purchase real estate near the bottom of the market,” he suggested.

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 22,000 real estate brokers. The organization, based in Kirkland, Wash., currently serves 21 counties in Washington state.

Got a Million?

In 2011 in King County, 735 houses sold for 1 million or more.  471 were on the Eastside.  The most expensive one sold for $14.75 million in Hunts point.  Snohomish County saw 18 homes sell for 1 million plus.

Is The Seattle Housing Market Improving?

OK everyone is asking “is the real estate market better yet?” I say what area, what street, heck what time is it.  The point is it’s changing folks.  Mostly improving.  There is still a room to grow but we are seeing more people jump into the market.

The National  Association of Home Builders has an “Improving Markets Index” in an effort to track cities with improving markets. The good news is that the index grew last  month, with 40 cities being added to the 41 already on the list.

To make the list, a city has to show recovery as measured by three criteria:  housing price appreciation, job growth, and single-family housing permits.

By those measures, large metro areas such as Dallas and Philadelphia are  recovering, as are smaller cities including Denver, Honolulu, Indianapolis, and  Nashville.

We are seeing some real improvements in the Seattle market as well.  In some areas, multiple offers are in play.  If you’d like more information about your neighborhood, call us today.

Pending Home Sales, after hitting a 19-month high in November, dipped a bit for December, yet came in 5.6% above where they were a year ago

QUOTE OF THE WEEK…“Before everything else, getting ready is the secret of success.” –Henry Ford

INFO THAT HITS US WHERE WE LIVE…Getting ready for a recovery could be the theme of last week’s housing reports.

Pending Home Sales, after hitting a 19-month high in November, dipped a bit for December, yet came in 5.6% above where they were a year ago. The National Association of Realtors chief economist observed, “Even with a modest decline, the preceding two months of contract activity are the highest in the past four years outside of the homebuyer tax credit period.”

Thursday saw December New Home Sales drop 2.2%, to a lower-than-expected 307,000 annual rate. Yet sales remain in the narrow range they’ve occupied since May 2010. And the best news was that new home inventories dropped to 157,000, the lowest level on record, since 1963. Unsold new homes under construction and unsold completed new homes are at or near record lows. Experts say this is what’s needed to get ready for a sustained housing recovery. Finally, the FHFA price index for homes bought with conforming mortgages was UP 1% in November.

BUSINESS TIP OF THE WEEK… Our motivation colors our work. People driven by money can appear self-serving. But people driven to do the best for their clients usually come off as effective and valuable.

>> Review of Last Week

UP AND DOWN… It was a week where investors couldn’t decide if they felt positive or negative about the economy and the major market indexes reflected this, with two of them heading up for the week but the third one ending down. The big news? The Fed extended its pledge to hold interest rates exceptionally low — from mid-2013 to late 2014. And for the first time, the FOMC set a specific inflation goal: 2%. Also for the first time, the Fed released the rate expectations of each member. The median showed no change this year or next and a hike to only 0.75% by the end of 2014.

Other good news came with Durable Goods Orders, up a better than expected 3% for December. Unfortunately, this was followed by initial jobless claims, up 21,000 for the week, to 377,000. Finally, the Advance GDP estimate for Q4 came in at a 2.8% annual rate. This was better than Q3, but less than expected. Economists were also disappointed that a large part of the increase was only due to an unexpected buildup in inventories.

For the week, the Dow ended down 0.5%, at 12661; the S&P 500 closed up 0.1%, at 1316; and the Nasdaq gained 1.1%, to 2817.

The Fed’s announcement it will hold rates low even longer, plus their inflation target, did wonders for bonds. The FNMA 3.5% bond we watch ended the week UP 1.01, to $103.22. National average mortgage rates edged up a bit in Freddie Mac’s weekly survey of conforming mortgages, though they’re still at historically low levels. Experts put this to the improving housing market data.

DID YOU KNOW?…Tuesday’s Employment Cost Index measures changes in wages, benefits and bonuses for a group of occupations. It’s an inflation indicator because prices can go up with increased labor costs, unless offset by productivity gains.

>> This Week’s Forecast

INFLATION, MANUFACTURING, JANUARY JOBS… Hot buttons this week touch all the hot topics. Monday we see the Fed’s favorite inflation measure, Core PCE Prices, expected to stay within the central bank’s guidelines. The manufacturing sector gets covered in Tuesday’s Chicago PMI, forecast down a trifle, but Wednesday’s ISM Index is predicted up for the month.

The hottest of the hot data comes Friday, with the January Employment Report. The forecast is for a smaller gain in payrolls than last month’s. Historically, as employment improves, it pulls housing along with it.

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… At last week’s FOMC meeting, the Fed extended its goal of keeping the Funds Rate super low through late 2014. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

After FOMC meeting on:	Consensus
Mar 13	0%–0.25%
Apr 25	0%–0.25%
Jun 20	0%–0.25%

Top 10 Cities: Green Living, Health, Air Quality and Other Stuff!

Top 10 Overall:

• San Francisco
• Washington, D.C.
• Seattle
• Boston
• New York City
• Minneapolis
• Denver
• Portland, Ore
• Los Angeles
• Chicago

These cities earned the highest combined scores. In order to earn a spot on this list, cities had to rank highly on positive lists (such as “best public transit”) and rank low or not at all on negative lists (such as “worst allergies”).

Top 10 Most Frequent List Appearances

• New York
• San Francisco
• Washington, D.C.
• Seattle
• Boston
• Minneapolis
• Denve
• Los Angeles
• Chicago
• Miami

These cities showed up most frequently on the lists featured in Scientific American’s top 10 cities lists for the past four days (green living, health, air quality, technology). New York City, the overall winner, appeared on more than 60 percent of all the collected lists, whereas the cities that tied for second earned spots on almost half the lists; the third-place cities showed up in the rankings about 30 percent of the time.

Not all of the lists on which these overall scores are based were created using conventional statistical or scientific methods, therefore their validity should be suspect. We have presented this information mainly for discussion. Scientific American gathered the lists from several online sources. To earn a place on the “overall performance” list, cities had to appear on multiple lists, and earned points based on their rankings. Each city’s points were added up to arrive at the overall score. A high rank on a positive list such as “best public transit” earned a city points whereas a spot on a negative list such as “worst allergies” detracted points. Each city’s points added up to its overall score.

What do you think?  I can speak for a couple of these cities.  How about you?  I’d love your comments.

Finance Multiple Properties!

Hey all my investor friends, do you know most lenders will not do any new loan for any borrower that owns multiple financed properties?  However, I know lenders that will finance all the way up to Ten Financed Properties with a Conventional Loan.   Not all lenders will do this.  In fact, most won’t touch it.

They have great terms including no point loans. Please call me or email me if you have any questions regarding Investor Loan products.  My team is closing most of our FHA loans now in less than 20 days and we are still offering same day approvals including evening and weekends.    Call me anytime for details!

Single Moms – Where Is The Best Place To Live?

I recently saw report with a list of the metros across the country that are thought to be the best places for single moms to live.

They looked at different aspects of a city that might make it more attractive for a single mother to raise a family and came up with this list of five metrics, and the following top 10 list:

1. Women’s Income 2. Housing Affordability 3. Crime 4. Education Spending 5. Walk Score

What do you think?  How does Seattle rank on those metrics?  I’d love your thoughts!