Foreign investors taking advantage of U.S. market

Below is a Associated Press article on the current trend of foreign investors snapping up U.S. real estate at bargain basement prices. The Seattle area is experiencing a huge influx of buyers from Japan and China buying property, often times without even seeing it beforehand. The article points out that historically, buying property in the United States was only for the uber-elite of other countries. But our current down swing in the market has opened up ample opportunities for investors from all over the world to capitalize on real estate that is significantly cheaper than in their own cities.

Read the full article here: Seattle real estate deals for foreign investors...

Real Estate Red Flags

The Seattle Times published a great article this weekend on common items that can delay or jeopardize the closing of a real estate transaction. Many items can pop up without warning but as they point out, most of them can be avoided with forethought by the Realtor and lender.

Also interesting to note that several of their points occur on even the smoothest of transactions. For instance, the buyer's home inspection will most certainly open the door to further negotiations. Unless a home is highly coveted by more than one buyer and is so unique that buyers are willing to pay full price or more for an flawed home...then some form of negotiation will take place during the inspection phase. Another common issue are out of town appraisers. Lenders can no longer dictate specific appraisers to be hired so as a consequence, someone from Pierce County may end up appraising a home in Seattle. Such a drastic circumstance is somewhat avoidable by a quality loan officer but a Realtors should always be double checking the appraisers knowledge of the area and providing justification for the listing price.

Here's the link the full article.

King County home prices rise first time in 2 years...

King County home prices have posted a year over year increase for the first time in two years.

The Northwest Multiple Listing Service says the median price of a single-family home sold last month was $367,250. That price is a 0.9% increase from March 2009.

0.9% isn't anything to get too excited about...but at least it's something! Keep your eyes open for what the Seattle real estate market does after the spring buying season and tax credit deadlines pass.

Read the full article here.

Will historically low interest rates continue?

If you follow any media source that discusses the financial world, you are likely aware that interest rates are at historic lows. Much of this is driven by how the Federal Reserve acts. Since December of 2008, Ben Bernanke and the Federal Reserve have kept the key federal funds rate at 0-.25%. The federal funds rate has a major impact throughout the financial world...but also affects mortgage rates.

The common theory in the real estate industry is that the Federal Reserve can't keep their rate at or near 0% for much longer. Otherwise, things like inflation or speculative investing start to creep in because obtaining a loan is so affordable. Many experts have thought the Fed would increase their rate in June or July, thus causing an upward effect on mortgage rates. When a mortgage rate increases even 1/2 a percent, this significantly affects a home buyers purchase power.

This morning, Ben Bernanke said that the Federal Reserve must commit to keeping key interest rate at or near zero in order to continue the nation's economic recovery. He said they must do this for an "extended period." No mention of specific time frames. So for those potential home buyers still awake and reading this post...pay attention to the news coming from our fearless Fed chief (Bernanke) because his decisions will likely have an impact on your ability to buy what you want!

Home buying tax credits aren't just for 1st timers...

Seattle home prices post small increase for October

According to the Standard and Poor's Case/Schiller index, Seattle home prices rose 0.44% in October. This is the first monthly gain for our area in 2 1/2 years.

The Case/Schiller index tracks 20 major metropolitan areas and Seattle was one of eleven cities to post a monthly gain in October.

Read article here.

U.S. home prices appreciate?

A major index that tracks home prices in 20 major metropolitan areas, called the Standard & Poor's/Case-Shiller home price index, is reporting a modest increase in September. Their index shows prices rose 0.3% in September.

Obviously this is not a major increase and does not represent home prices in every market. But it is more positive news after yesterday's favorable report on increasing existing home sales.

Read the full article here.

Home sales rise to highest level since February '07

Due in large part to the old deadline for the first-time home buyer credit. Before the credit was extended to April 30th, 2010, buyers were rushing to close on their first home by November 30th, 2009. Naturally, this caused October home sales to rise drastically.

A few weeks ago, President Obama signed an extension to the $8k credit into law. In addition, there is a new credit for current homeowners so they can get $6500 if they buy a new home. For both credits, you must have a new home under contract by April 30th. The rules of the credits allow until June 30th for those contracts to finalize financing and close the transaction.

I am not alone in thinking that the extension and expansion of the home buyer tax credits will bring the typical spring buying season a little bit earlier than usual.

Read the full article here.

4% appreciation in 2010?

The National Association of Realtors recently predicted that real estate nationwide will see a 4% gain in appreciating values in 2010. This might seem far-fetched but if the extended and expanded tax credits have their desired effect...such gain in value isn't too outrageous.

The extension of the $8k tax credit and the new $6500 credit for repeat buyers aims to entice more people to buy a home between now and June. A large influx of buyers in the next 6 months would deplete the inventory of homes for sale, thus causing prices to stabalize and theoretically rise in some markets.

The big question in my mind however will be what the market activity looks like after the credits finally expire for good. If everyone thinking of buying in the next 2 years decides to buy early to get their government money, then what happens after the credit runs out? Who will be in the market to buy a home? Granted, people always need to move...but we'll really see the health of the real estate market when people aren't getting fat $8,000 or $6,500 checks in the mail.

This past spring and summer, Seattle certainly saw bidding wars for nice homes under $400k. So perhaps any appreciation will be dependent on the price point, city, neighborhood and type of home. But in the end, that's how it always works...

Read full article here.

$6500 tax credit for repeat buyers

Lost amid the excitement of the recent extension of the first-time buyer credit is the NEW $6500 tax credit for current homeowners who buy another house. This particular credit could be more important than anything else for the real estate market.

Homeowners who have wanted to move for the last 2 years but remained in their home due to the soft market will hopefully be motivated to make the move when the government is giving away $6500. The middle range of the market nationwide has been slow for some time. Homes above $400k tend to languish on the market because the pool of buyers has been low.

Hopefully now that will change.

Here's a great article from the Seattle Times that explains the credit in more detail.

Tax credit extended and expanded...here are the details

Last Friday, President Obama signed the Tax Credit Expansion into law. This extends the first-time buyer tax credit and creates a new tax credit for current homeowners who buy a new house.

This is a really big deal - Just ask any first-time buyer who has been trying to make the old deadline!

The tax credit extension coupled with low interest rates, creates a prime opportunity to buy your first home, move up to fit your growing family or downsize while the government helps you!

Below is a summary of the new modifications in the extension and expansion of the tax credit:

• The $8,000 tax credit will be extended and available for first-time buyers through April 30th, 2010.
• Prospective purchasers with written contracts in place as of April 30th, 2010 will have until July 1st, 2010 to close the transaction.
• A NEW $6,500 tax credit will be available for current homeowners. To qualify for this provision, you must have used the home being sold as a principal residence consecutively for 5 of the previous 8 years.
• Income limits are expanded to $125,000 on a single return and $225,000 on a joint return.
• The limitation on the cost of the purchased home is $800,000.
  

Here are some really great websites that provide more information and answer situational questions:

• www.federalhousingtaxcredit.com
• www.wahomeowners.com

Seattle sales trend upwards

It's nice to see the red 'pending sales' line continue it's upward trajectory. The continued increase is due in large part to the home buyer tax credit which was just extended. Let's see if the extension causes sales to continue during the typically slower winter months.

Extending home buyer credit gaining major steam

Reports this morning are suggesting the Senate has agreed to pass some form of an extension on the $8k home buyer tax credit. In fact, they are also talking about expanding the benefit to select move-up buyers that have owned their current home for at least 5 years. To clarify, nothing is official yet...but it is exciting news nonetheless.

Here are a couple links to the story:

Article on msnbc.com

Article on cnn.com

King County sales update

Sales in King County are up significantly from a year ago and prices show signs of stabilizing. Prices are down 7.9% from one year ago but this is the smallest decline since December.

I anticipate sales to surge again in October as we race towards the 1st-time home buyer credit deadline.

Here's the full article from the Seattle Times.

Should $8k tax credit be extended?

Update: Here's a new article from the Seattle Times that discusses the same $8k credit topic written about in the below blog post. Check it out.

This is the question of the moment. At least in real estate circles it is. The theory behind extending it and possibly expanding it is that the credit will continue to stimulate the housing recovery. On the other hand, it will obviously cost a lot of tax payer's money.

As a Realtor, I am definitely in favor of extending AND expanding the tax credit. On the ground, I see signs of market improvement and increased sales activity. However, we are not out of the proverbial woods quite yet. Perhaps allowing our politicians to spend at this rate will bite us later...and that's where I think I'm a bit shortsighted.

But in just speaking about what will help our housing market...I say give $15k to ANY home buyer for the next year. Now that's true stimulus.

Here's an interesting take on the impacts of extending or discontinuing the tax credit.

Buyers' market or sellers' market?

When people talk to me about the real estate market, they are often under the assumption that we're in a complete buyers' market. A buyers' market means that less than 45% of available homes are selling every month. This in turn shifts power to the buyer and gives them the ability to ask the seller for more concessions.

Articles in the media (such as this one) make the public think that they can submit low ball offers that ask for all closing costs to be paid and the seller's first born child.

In Seattle, certain neighborhoods and certain price ranges actually reveal a different story. Tons of 1st time buyers are in the market and snapping up single-family homes under $400k. In most of the in-city neighborhoods of Seattle, sellers actually hold much of the bargaining power.

Crunch time for 1st-time buyers...

We've reached the midway point in September and any potential 1st-time home buyer must get a home under contract soon or risk the possibility of not qualifying for the $8k tax credit. Average time to close a home from accepted offer to closing the transaction is about 45 days. Making an offer today and not experiencing any bumps in the road would mean closing at the end of October. Since today's lending market is the equivalent of a gravel forest service road, buyers are almost certainly going to experience at least a few minor bumps or delays. It's imperative to give yourself a cushion to close before 11/30/09.

Here's a Seattle Times article that discusses the countdown toward the deadline.

1st Time Buyer Alert!

Less than $200k for a cute townhome!

Extend and expand the 1st time buyer credit?

Rumblings about a possible extension on the 1st-time buyer tax credit have been growing lately. Let's hope the government abides by the old philosophy of, "If it ain't broke, don't fix it."

Unless of course they want to give all buyers even more money!

Here's a recent article from the Seattle Times about efforts to extend the credit and even raise the dollar amount.

Oh, Market...Where art thou?

So is the market really improving here in Seattle? Take a look for yourself. Decreasing active listings and rising pendings and solds suggest we're at a better place than last fall and winter.