Home Sales Asking prices up in 86 of 100 largest markets

Asking prices of homes listed for sale on real estate portal Trulia.com in January were up from a year ago in 86 of the 100 largest U.S. metros, including Seattle, according to a monthly report released today.

The report, which covers roughly 4.5 million for-sale and for-rent properties listed on Trulia through Jan. 31, showed asking prices up 5.9 percent from a year ago, and growing by a seasonally adjusted 0.9 percent from December to January — the biggest month-over-month gain since March 2012.

In some markets, the strong growth in asking prices doesn’t necessarily indicate that worries are over, said Jed Kolko, Trulia’s chief economist.

“In many local markets today, dramatic price gains can mask serious red flags,”Kolko said in a blog post. “Strong job growth, low vacancy rate, and low foreclosure inventory — not huge price gains — are signs of a healthy housing market.”

Signs of a healthy housing market

Trulia identified San Francisco, San Jose, Seattle, Denver and Salt Lake city as “booming” markets with strong fundamentals.

Find out just how much your house is worth in today’s market.  No pressure, obiligtion or fine print.  Just good solid information you can trust.

4 Ways Buyers Can Mess Up a Loan Approval

This happens all the time.  Home buyers have gotten approved for a mortgage and now they’re just waiting to make it to the closing table.

It is just a waiting game.  Don’t throw your loan approval into jeopardy by making one of these common mistakes:

1. Making a big purchase: Avoid making major purchases, like buying a new car or furniture, until after they close on the home. Big purchases could change the buyer’s debt-to-income ratio that the lender used to approve the buyer’s home loan and could throw the approval into jeopardy.
2. Opening new credit: Now isn’t the time to open up any new credit cards. Don’t do it!
3. Missing any payments: You need to be extra vigilant about paying all their bills on time, even if they’re disputing one.
4. Cashing out: Avoid any transfers of large sums of money between your bank accounts or making any undocumented deposits — both of which could send up “red flags” to your lender.

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.

Unrealistically Low Appraisal Values in Up Markets Are a Problem

Real estate agents continue to report that unrealistically low appraisal values continue to jeopardize sales. Appraisal values are in some cases affected by REOs which in some cases are reported as being used as comparable properties.

In other cases, appraisals are reported as not keeping up with the market. Also, there continue to be reports of appraisers having poor knowledge of local conditions as they come from outside areas (in some cases as far as 100 miles according to one agent.

• “Appraisals and BPO values are likely low because of the sort of comps that are available on the market. REO properties and lower value sales comprise the bulk of market activity which in turn leads to low appraisal and BPO values.”
• “Appraisals are definitely a problem. We are in a Vacation, second home area and we are getting appraisers from 100′s of miles away to appraise Lake Property. They don’t understand the values.”
• “Buyers are coming in with cash to close the gap between low appraisals and sellers sticking to their house price.”

How can one man lift a big rock?

How can one man lift a big rock?  Why does Donald Trump win so often in high-stakes negotiations?  How can you buy five income producing properties with very little of your own money?

You’ve heard me talk about it often.  It’s leverage.  Let’s take a quick look at why the concept of leverage is so crucial to growing wealthy. Leverage is the ability to use a small amount of your own money to control an asset of far greater value. For example, when you put down 20% on the purchase of a single family residential home, you are essentially using the bank’s money to extend your own buying power.

Assume that you have $100,000 cash to invest. You could find a $100,000 house and purchase it outright. A better idea would be to find five single family residential properties each costing $100,000. Rather than plow all your resources into one property, put down 20% on all five, let the bank loan you the rest, and suddenly you have a portfolio of five income producing properties.

If you’ve done your homework and chosen appropriate deals that provide positive cash flow immediately, you’re sitting in the proverbial catbird seat. Later, you’ll refinance all five loans in seven to twelve years and use the resulting proceeds to buy as many properties as you have the down payments to afford. You should NEVER pay off your loans, but rather frequently refinance into more and larger real estate deals.

Here’s the reality of this type of investing. You use other people’s money (OPM) to buy assets that you will eventually own. Along the way, you also use OPM to cover the monthly expense of your investment, which is the mortgage payment. How do you do this?

By renting the place out! Assuming the deal is right, which it should be when you do your homework, a tenant’s monthly rent payment should cover the mortgage, all associated expenses, and still leave you with a little cash in your pocket. This is called positive cash flow.

Here’s the bottom line. There is no other asset which allows you to rent it out! Don’t try this in the precious metals market or on Wall Street. They’ll laugh you out of the place.

Let’s grab a cup of coffee and discuss the how investing can help you with your wealth goals!  Call me anytime at 425-330-0663.

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.

Are They Smarter Than Us?

People who are good with money are truly different from the rest of us. Know why? They use tax code to their advantage in ways the rest of don’t even know about or take the time to learn.

One example of this – they take the equity in their home, financed at a lower interest rate, then invest the it in tax-deferred accounts, according to a new study.

In other words, they are getting a tax break on both sides of the deal.  These investors deduct the mortgage interest on their tax returns and then sit back and watch their money grow tax-free.

The study found that taxpayers who itemize were more likely to have high mortgage debt and they also found that investing in a tax-sheltered retirement account was related to higher mortgage debt.

The results seem to indicate that the more sophisticated households are responding to government tax incentives by borrowing against their house and investing in their 401(k).

There’s nothing illegal here. The government has created this incentive.  It’s a wonder why even more people don’t take advantage of this this setup.

But is this a good idea to risk your home equity?

The downsides

In some ways, it’s not a good idea. For instance, the incentive — the mortgage interest deduction — that encourages homeowners to borrow against the value in their home results in this potential problem: It appears to encourage greater housing leverage and vulnerability to housing price shocks. Indeed, “there is increasing concern, especially in light of the recent housing crisis, that rising mortgage debt among older households is a prelude to foreclosure or financial distress during retirement.

Plus, you are more vulnerable to income shocks. If you lose your job at age 58 and you’ve got extensive mortgage debt and you’ve got all your money in sheltered accounts it might not be so easy to take your money early out of sheltered accounts to pay your mortgage every month.

What’s more, you could lose on both bets. The value of your house could decline along with the value o your 401(k), which is exactly what happened staring in 2006.  If you are in your late 50s, having an extensive proportion of your retirement savings invested in equities funds is the rational thing to do,” said Finke. “It just didn’t work out very well in 2008 and 2009.

Another potential downside is this: If tax law changes, especially the mortgage interest tax deduction, then you’ve got a little bit of risk there.

And finally, there’s the risk that you won’t invest the borrowed money in a sheltered account. Paying down one’s mortgage is an example of thrift and sound financial decision making.  And that’s essentially a behavioral argument That is saying that people are able to accumulate wealth passively by paying down their mortgage. And, if you encourage people to start pulling money out of their house they might then spend it on things that are not in their long-run best interest. So, you also have to consider when you pull money out of your house, are you really going to invest it in a sheltered account or are you the kind of person to buy an RV and deplete your wealth right before you need it the most in retirement.

The upsides

One positive, however, is this: When you look at your total portfolio, not just your financial assets, but the entire portfolio from which you plan to fund your retirement, you’ll find that taking on more mortgage debt changes your overall asset allocation in ways that might be beneficial.

As we age, we tend to accumulate home equity which is essentially increasing the bond share of our portfolios.  Borrowing against this home equity allows us to maintain our optimal portfolio balance of stocks and bond-like assets.

The home equity, Finke said, is not providing you the same kind of upside potential as an equity portfolio will.  What an economist would say is that you should have a rational allocation of your household wealth in bonds and equities. But what happens over time, with your home is that you are essentially investing more and more in a bond-like asset. And, so, by simply paying off your mortgage you’re investing more and more in a bond. And it may be rational for you, especially if you are in your 50s to be shifting some of the wealth into the stock market.

In practice

So what if you decide lever up your home and invest in retirement accounts?  Make sure you’re in a position to maintain your mortgage payments should you suffer an income shock. You’re exposing yourself to a certain amount of risk so you want to make sure you have enough in emergency funds to make your mortgage payment.

The present system encourages upper income households to increase their leverage and that could make them more vulnerable during a recession. If they lose their job, they may also lose their home.

Homes designed to produce as much energy as they use

How about your home paying you!  How cool would that be.  We been watching news and developments about homes designed to produce as much energy as they use — one of which is a stylish modern prefab to benefit Brad Pitt’s charity.

Since actor Pitt founded the non-profit Make It Right in 2007 to build low-cost, sustainable homes for New Orleans’ Hurricane Katrina victims, green building has exploded nationwide. On Friday, two builders are announcing plans to offer affordable homes designed to produce as much energy as they use — one of which is a stylish modern prefab to benefit Pitt’s charity.

California-based LivingHomes, a developer of high-end, ultra-green, factory-built homes, is debuting its lowest-cost model ever — the C6 — that will be available in most states. The 1,232 square-foot. $179,000 prefab, which is about half the size of the average new U.S. home, has three bedrooms and two baths as well as a courtyard that blends indoor and outdoor living. Part of the proceeds from each home’s sale will be donated to Make It Right.

“This is by far the most energy-efficient home we’ve built,” says LivingHomes’ CEO Steve Glenn, noting it’s designed to earn the top or platinum rating from the U.S. Green Building Council. He says it’s also the easiest and fastest one to build, since it’s fully constructed by Cavco — a manufactured housing company with factories nationwide — in less than two months and installed on-site in one day.

Also late this week, Scottsdale-based Shea Homes, the developer of Trilogy resort communities and a builder in eight states, is announcing the launch of its “no-electric bill” home aimed at the age 55-plus, Baby Boomer set. The “SheaXero” will combine energy efficiency with solar panels to produce all the power the house is expected to need.

FOLLOW:  Green House on Twitt

Other production builders have also debuted affordable, zero-energy homes as green building appears to be gaining market share in a still sluggish housing industry. Green homes, which comprised 17% of new residential construction last year, are expected to increase to 29% to 38% of the market by 2016, according to a report last week by McGraw-Hill Construction, a part of The McGraw-Hill Companies.

By value, the McGraw Hill report said this growth equates to a five-fold increase — $17 billion in 2011 to $87-$114 billion in 2016. It attributes the hike to consumers’ interest in “higher quality” and lower utility bills as well as the decreasing costs of building green — down from an extra 11% in 2006 to 7% today.

At LivingHomes, Steve Glenn says the new C6 is “less than half the costs of our lowest cost home.” He says his company has learned from its own experience and from its partnerships with both Cavco and Make It Right on how to get the most bang for the buck.

The model’s average price of $179,000 does not include the solar panels needed to make the homes zero-energy nor does it include the costs of transportation, assembly, permitting and site preparation. Those items could add another $50,000. Land is also not included.

Glenn says the homes are not only energy-efficient but also sustainable because they use Cradle-to-Cradle inspired products such as cork flooring and natural wood millwork.

“Many of the products are available at The Home Depot,” Glenn said, citing their affordability and accessibility should replacements be needed.

The C6 was inspired by the modern homes built by developer Joe Eichler throughout California in the 1950s and 1960s that were organized around a courtyard accessed through multiple sliding glass doors. It has floor-to-ceiling glass, clerestory windows, light tubes and transom windows, as well as a lighting control system accessible from an iPhone.

Glenn says there are much cheaper prefab homes available, but they’re not nearly as stylish.

“We’re targeting people who really value design and sustainability,” Glenn says, adding his customers are likely to shop at Whole Foods, drive a Toyota Prius and practice yoga.

I’d love your comments on this.  Feel free to chime in.

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Report: Seattle Home buying Most affordable in decades

http://www.mynorthwesthomes.com

Home prices are at rock-bottom and so are mortgage rates.  According to the National Association of Home Builders/Wells Fargo Housing Opportunity Index hit a record level of affordability.

Buying a home is now more affordable than it has been in the last twenty years.

The index shows that 75.9%  families earning the national median income of $64,200, could afford a new or existing homes.

That was the highest percentage recorded in the 20-year history of the index, and a sharp increase from just three months earlier when 72.9% of all homes sold were considered affordable.

Today’s report indicates that home ownership is within reach of more households than it has been for more than two decades.

Those who obtain a mortgage, will be able to take advantage of rates that seem to hit a new low every week. This week interest rates for 30-year loans averaged a record low of 3.87%, according to Freddie Mac.

Where the deals are

The Seattle area is more affordable as well with 67.5 percent of homes within reach of those earning the median income of $85,600. That’s the highest number recorded since the index started in the first quarter of 1999.

Youngstown, Ohio is the most affordable major metro area in the nation to buy a home, according to the NAHB. The faded steel town, located in eastern Ohio, could be on the verge of an economic renaissance with new gas drilling techniques that could help exploit nearby gas reserves, according to the report.

There, 95.1% of homes sold during the quarter were deemed affordable to typical local households earning the area’s median family income of $54,900.

The other metro areas near the top of the list included Lakeland, Fla., Modesto, Calif., Harrisburg, Pa., and Toledo, Ohio.

Among small housing markets, Kokomo, Ind. had the highest housing affordability index with more than 99% of all homes sold there affordable to typical families. Fairbanks, Alaska, Cumberland, Md., Lima, Ohio, and Rockford, Ill. were all very affordable as well.

In other cities in Washington state, Spokane was the most affordable with 82.2 percent of homes within reach of those earning the median income of $60,300. Olympia recorded 81.8 percent; Tacoma, 78.5 percent; Bremerton-Silverdale, 70.1 percent; Bellingham, 69.7 percent; and Mount Vernon-Anacortes, 60.5 percent.

New Yorkers could only shake their heads at the housing opportunities available outside their metro area. Just 29% of the homes sold in the New York metro area during the last three months of 2011 were affordable for the typical local family.

That’s the lowest level in the U.S. — even though locals typically earned $67,400, roughly $3,000 more than the national median. It was New York’s 15th consecutive quarter as the least affordable metro area.

Nearly as expensive are housing markets in Honolulu, San Francisco, Santa Ana, Calif., and Los Angeles.

We’d love to be your trusted source for news, information and all things real estate. Call Dave and his team today at 425-330-0663 and start planning your house warming party!

Start your home search here
Low down payment programs
Find a great deal on a Bank Owned Home

Let’s Have Some Fun Shopping For Your New Home!

That’s the message we have for our clients. Finding your next home should be fun and enjoyable. You’re moving into a new place and you get to choose which place that will be.

Think about that for a minute. You’ll meet new people, get a new outlook on your life, and you’ll probably be moving into a home more suitable for your lifestyle, or buying your very first home.

That’s exciting, yet many people miss the fun because they can’t get into the right frame of mind for it.

Financing, inspections, appraisals, and the pressures and anxiety associated with relocating can weigh down your spirit. And that’s why it’s so important to work with my team.  We work very hard to take the stress out of the buying process and allow you to enjoy it.

Having the right agent means having someone there to help search for homes and show you homes you’re going to want to see. Most buyers are searching on-line now, but our team knows the market and knows the right areas and homes that are going to fit your wants and needs. It’s a different experience driving all over looking at everything you can find, and having someone schedule and only show you through the homes that you’ll want to see. It’s not about wasting time- it’s about the experience.

Would you rather take two weeks seeing fifty homes that aren’t what you want and five that are, or would you rather spend an afternoon just seeing the five that are what you want? Actually wasting all that time going through those other homes can be very frustrating and drain the excitement from your search. If you spend thirty minutes walking through each home and driving to the next- seeing fifty homes means wasting twenty five hours of time being frustrated.

Having a great experience also means having an agent that is going to negotiate price and terms that are good for you, ensuring your investment is prudent, and that you win the deal.

Dave and his team handle the entire workload for you, scheduling inspections and appraisals and negotiating all the issues that arise from them. It means coordinating the transaction all the way closing so that you can enjoy yourself and the process. And it means having a single point of contact before, during, and after the sale where you can get answers to your questions and information.

Buying a home should be an exciting experience. You should be able to have some fun with it and not have to worry about the details. Let someone help you with your relocation and educate you about different areas and schools and the feel of different neighborhoods and cities.

Think of all the things you’re going to enjoy about your new space and all the memories you’ll make in your new home. Imagine reading in your new sitting room, or cooking in your new kitchen. Think of having friends and family relaxing and sharing conversation in your new family room. Have some fun with your search and work with an agent who will work for you and make the process more enjoyable so you can be excited and have some enthusiasm for your yet-to-be-discovered new home.

We’d love to be your trusted source for news, information and all things real estate.  Call Dave and his team today at 425-330-0663 and start planning your house warming party!

Start your home search here
Low down payment programs
Find a great deal on a Bank Owned Home