House prices making mortgages more attainable...

Price declines for real estate nationwide are starting to make mortgage payments line up again with incomes. Especially in the Seattle market where sky high prices simply priced many would-be buyers out of the game. Now, low prices coupled with a few new incentives to entice buyers and stimulate the housing market are causing Seattle home buyers to get more serious. Home buying incentives:

• $8,000 first-time homebuyer tax credit of 2009
• Fannie Mae and Freddie Mac increasing the loan limits for larger loans. The limit increase -- from $506,000 to $567,500 in the Seattle area -- means people can get larger loans without entering the private jumbo mortgage market, where rates are much higher and standards much tougher than for conforming loans.
• Home prices in many parts of Seattle are back to 2006 prices.
• The Federal Reserve acting to keep rates low

Many mortgage professionals are hearing (yes, this is speculation) that rates will rise in the second half of 2009. Rising interest rates all but zero out any potential drop in home prices...possibly making the next 6 months one of the best times to buy a house in the greater Seattle area in quite some time.

Importance of Staging

Prepping a house for sale is of vital importance in any market but especially in a slower moving one like we're in right now. With so many houses for buyers to pick from, sellers must have every aspect of their home polished and perfect to grab buyers' attention. Staging the home prior to selling is one super common way to prep a house. If a home will be occupied during its time on the market, then a home stager can come in and consult on how to arrange furniture. One major component is removing unnecessary items to declutter the home. If a home is vacant, then stagers can bring in their own furniture and arrange it in a way that highlights the positive aspects of the home.

A Seattle real estate agent actually is credited for establishing the home staging industry in the 1970s. Homes for sale in Seattle are often staged in some way. If you're considering selling your home, it's a good idea to tour Seattle open houses of comparable homes to see the difference between staged and non-staged homes. Knowing your competition gives you perspective on where your house stands prior to putting it up for sale.

The Seattle Times has a great article on staging and its impact on selling quickly in this market.

Read the full article here.

Another one bites the dust...

The Marlborough is scheduled for foreclosure auction in May. This building is a 13 story Gothic-revival building built in 1927. Formerly apartments, The Marlborough is one of several projects for Live Historic. They were in the process of converting the building on First Hill into condos. You can see Live Historic's projects: here.

While they make a nice product, it looks like we can chalk this up as yet another casualty for developers. I'm not quite sure the building will fetch the $19.9 million in debt the company has towards this project since it will more than likely turn back to apartments for the time being.

The 4th quarter was a tough one for Seattle real estate but it's likely this project has been in trouble for some time.

Queen Anne High School Condos up for auction

The Seattle PI reports:

The 12 remaining unsold units at Queen Anne High School Condominiums will go up for close out auction on March 22. Nine two-bedroom units previously priced from $474,950 to $599,950 will have minimum bids of $245,000 to $325,000; a studio condo previously listed at $254,950 is down to a minimum of $145,000; and a 1,432-square-foot penthouse is down from $999,950 to a $650,000 minimum. Buyers who arrange financing from Wells Fargo Home Mortgage and close within 30 days of the auction will get $2,500 toward closing costs.

The auction is scheduled to start at 1 p.m. at the Grand Hyatt Seattle, 721 Pine St. Beverly Hills-based Kennedy Wilson's Auction Group, which is hosting, has scheduled a "how-to-buy" seminar starting at 1 p.m. March 15 at the Queen Anne High School Condominiums Auction Information Office, which is open from 10 a.m to 5 p.m. daily at 201 Galer St.

The former high school has a total of 137 condos.

This project is interesting and I think a majority of the units in the building are pretty cool. Some of the smaller ones don't have some of the common ammenities such as a washer and dryer but it is a good use of an old building. Much preferable, in my opinion, than tearing it to the ground. Shoot me an email if you would like more info on the auction.

More on the tax credit for home buyers 2009

First-time home buyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction--a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income. The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.

Tax Credit vs. Tax Deduction

It's important to remember that the $8,000 tax credit is just that...a tax credit. The benefit of a tax credit is that it's a dollar-for-dollar tax reduction, rather than a reduciton in a tax liability that would only save your $1,000 to $1,500 when all was said and done. So, if a homebuyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they would owe nothing.

Phaseout Examples

According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.

To break down what this phaseout means to home buyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:

Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000 and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Example 2: Assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer's income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.

Homes that Qualify

The tax credit is applicable to any home that will be used as a principal residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principal residence also qualify.

$8,000 First-time Home Buyer Tax Credit

Last year the government passed a first-time home buyer tax credit that allowed eligible participants to receive $7,500. The big catch was that this had to be paid back at 0% interest over 15 years. The 2009 version of this tax credit is much improved and should cause many buyers to jump off the fence prior to November. Who wouldn't want $8,000 to pay down their loan or furnish their new place with furniture? This should be a big incentive to Seattle home buyers who are already enjoying lower prices and interest rates! Below are the basics of how the tax credit works.

• Effective dates: applies to purchases from January 2009-November 2009


• Tax Credit available up to $8,000 for first-time home buyers only.


• A first-time home buyer is a buyer who has not owned a home during the last 3 years. (Joint purchase applies to both parties)


• Eligible Property: Any residence that will be used as a principal residence. (Including single family, attached townhouses, condos, manufactured homes and houseboats) No second homes or investment properties.


• Income Limits: Adjusted gross income for single filers with incomes below $75,000 and couples with incomes below $150,000.


• Estimated partial credit for single filers with income up to $90,000 and couples up to $170,000. This is a general example. Please consult a tax advisor for stipulations on the partial credit.


• Tax Credit vs. Tax Deduction: the true benefit is a dollar for dollar tax reduction, rather than a reduction in liability. If you owe $8,000 in income taxes and you qualify for the tax credit, you owe nothing.


• Tax credit only needs to be repaid if home sold within the first 3 years.


• Purchases closed in 2008 will not be eligible for the 2009 revision of this tax credit.

Take advantage of the $8,000 tax credit today!

January Numbers to Know

The following graph depicts single-family home sales in the city of Seattle. Overall inventory continues to drop which is a good thing to see for the health of the market. Pending sales are down from a year ago but up from the past few months. This potentially points to more activity from buyers in the new year. As we begin the spring buying months, I expect these numbers to creep up a bit more. Ideally, the $8,000 tax credit acts as a catalyst to move sales up even more.

Obama to unveil mortgage relief plan

Even in a stronger real estate market like Seattle, many homeowners still need help to stay in their homes. Obama will outline the details for his upcoming plan to stabilize the mortgage industry in order to help struggling homeowners. In anticipation of the plan, government-controlled mortgage finance companies have halted all foreclosures until March 6th. Obama seems to recognize the importance of housing in relation to the nation's economy and is expected to allocate roughly $50 billion to keep homeowners in their houses.

While foreclosures are higher in the Seattle area than in years past, other areas have been hit much harder by the downturn in real estate. One of those, Arizona, is where Obama has chosen to deliver his address for the mortgage plan.

Read full article here.

More on the home buyer tax credit...

Well, it appears that in the negotiations to find middle ground between the bill that the House passed and the one the Senate passed...the $15k deal proposed by the Senate was wiped out. Of course, nothing is official until President Obama signs the package into law. But this isn't the best news for home buyers or for people like me in the real estate world. It appears the credit was eliminated to lower the overall cost of the stimulus package and perhaps put more focus on creating jobs. $15k or no $15k, people can't buy houses if they don't have a job!

There is a slight silver lining however. It seems as though the Senate and House agreed to make the current $7500 first-time home buyer tax credit permanent...meaning, a person can keep the money vs. pay it back as current law now requires. It also looks as if it might be bumped up to $8000. This could have a direct effect on Seattle real estate as it seems a lot of younger buyers are waiting out the "unknown."

In the end, I just hope the stimulus works for our country even if it doesn't have an immediate impact on the housing market. Roughly $8k will still be great for any Seattle home buyer making their first purchase...or their first purchase in 3yrs. Free money is free money!

Again, nothing is official yet. So I will have a full explanation of the bill as it relates to real estate as soon as I can.

$15,000 home buyer credit?

It's not official law quite yet but the Senate took a bold step yesterday to truly stimulate the real estate market. They approved an amendment to the upcoming stimulus package that would essentially give $15,000 to anyone who buys a home in 2009. This money would come in the form of a tax credit and will not have to be paid back! The provision states that a home buyer can receive 10% of the price of their purchase up to $15k. Home prices in Seattle essentially dictate that most buyers will qualify for the full amount. If you owe money on your 2009 taxes, the amount you owe would be taken out of the $15k. This is great news for our markets, economy and any buyers sitting on the fence.

If you've been waiting for prices to drop or interest rates to drop, $15,000 should be enough reason to make you buy now while both rates and prices are low! The longer a person waits, the more buyers will enter the market to cash in on their tax credit. This will have a stimulating effect on the market and cause prices to level out or rise in some micro-markets.

Read the NY Times article explaining the tax credit.

"Will the last person leaving Seattle..."

...Please turn out the lights.

Nearly everyone is familiar with the famous saying from the 1970s. If that that specific phrase, then perhaps one of the many altered forms that pop up in any depressed city or institution. According to the Seattle Times:

The message has been copied all over the world, with the word "Seattle" replaced by Detroit, St. Louis, New Jersey, Australia and even "the planet." And it has been used for other occasions in which a catchy, sardonic slogan is desired — "Will the last person with ethics on Wall Street... "

The two minds behind this iconic message are Bob McDonald and Jim Youngren. The pair were selling commercial real estate during one of the darker periods in Seattle's economy. Boeing had recently laid off 60,000 workers and the state's unemployment rate was more than double the national number at 13%. The two posted the sign as part satire and part business opportunity.

Now, with recent layoffs from Seattle's major companies: Boeing, Microsoft and Starbucks...stories and blogs have started to recycle the famous line.

Read the full article here.