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December “One of Best on Record”

Here’s the Northwest Multiple Listing Service’s press release on the market for December. I’ll have further analysis for you in the next week or so. Please email or call with any questions or for further information.

FOR IMMEDIATE RELEASE Jan. 6, 2015

Local real estate leader calls December “One of best on record”

KIRKLAND, Washington (Jan. 6, 2015) – Real estate brokers around Western Washington reported a strong finish to 2015. December’s sales outpaced the same month a year ago by double digits, according to new figures from Northwest Multiple Listing Service.

“December was one of the best Decembers on record,” observed J. Lennox Scott, chairman and CEO of John L. Scott Real Estate upon reviewing the latest statistics from the listing service.

MLS members reported modest year-over-year price gains (about 5.5 percent) for homes and condominiums that sold last month compared to 12 months ago. The number of new listings added to inventory was nearly identical to activity of a year ago, but with pending sales outpacing new listings, the selection, as measured by total active inventory, dwindled by about 8 percent compared to a year ago.

Commenting on the combination of scarce inventory in some areas and expectations of rising interest rates, the head of one large real estate company advised, “Anyone thinking of buying a home should do it early in 2015!”

“Prices, interest rates, and rents will continue to rise,” stated Mike Gain, CEO and president of Berkshire Hathaway HomeServices Northwest Real Estate in Seattle. “The cost of buying a home is not determined by price alone but by price and the mortgage rate,” he explained, adding, “The longer a buyer waits, the higher the mortgage payment as prices and interest rates continue to increase.”

Many buyers appeared to heed Gain’s advice during December. MLS members reported 5,794 pending sales (mutually accepted offers) for an increase of nearly 11 percent from the year-ago total of 5,224 pendings. In the four-county Puget Sound region, brokers notched 4,410 pending sales, the highest December volume since 2005.

High-end homes are selling well, according to brokers and MLS data. “Above the one million dollar price point in King County, we have seen back to back years of very strong sales activity,” commented Scott. Northwest MLS figures show nearly 2,000 homes priced at one million dollars and up sold in King County during 2014. That’s up more than 25 percent compared to 2013.

For more modestly priced homes, first-time and move-up buyers are taking advantage of loosening lending standards.

“It’s much easier for purchasers to qualify for a loan now than it was just a few months ago,” reported Gain. “The much needed 3 percent down payment loans are finally back for qualified purchasers,” he noted, adding, “This will allow more first-time buyers to break into homeownership.” Northwest MLS director John Deely agreed the new low down payment loan programs and mortgage rates are a boost to activity.

“In December our brokers experienced high open house traffic and strong demand from buyers as listing inventory declined,” reported Deely, the principal managing broker at Coldwell Banker Bain in Seattle. “Buyers are determined to take advantage of the continued low interest rates and to make their move sooner rather than later,” he added.
George Moorhead, designated broker and owner at Bentley Properties, reported market activity stayed steady all the way into New Year’s. “If this level of activity continues, we will see yet another sellers’ market as inventory drops,” suggested Moorhead, who is also a member of the Northwest MLS board of directors.

MLS figures show there were 4,367 new listings added to inventory during December, about the same as a year ago when members added 4,333 homes to the selection. At month end, there were 17,659 homes and condos for sale. That’s down nearly 8.1 percent from the year-ago inventory of 19,214 active listings.
Brokers are reporting tight inventory in several neighborhoods, particularly around job centers.

“Buyers barely slowed down long enough to take a break for Christmas,” said Windermere Real Estate president OB Jacobi. “All this sales activity has eaten even further into already low inventory levels.”

MLS figures show about 2.8 months of inventory system-wide. Of the 21 counties in the monthly statistical report, King County has the tightest inventory, with only 1.4 months of supply. Snohomish County was slightly better, with about 2.2 months of supply. Six months is typically considered a healthy balance between supply and demand.
Jacobi noted many Seattle neighborhoods have less than a month’s supply, increasing the competition among buyers.

Prices climbed nearly 5.5 percent from a year ago, rising from an area-wide median selling price of $275,000 to last month’s figure of $290,000. That matches the price reported for October’s sales, a figure that was only surpassed in July when the median sales price overall was $300,000.

Some MLS members, including Diedre Haines, expect similar increases this year.
“While some recent reports indicate a cooling of appreciation in 2015, unless more inventory hits the market, I anticipate the percentage increases to be about the same as 2014 due to sustained demand,” said Haines, who is Coldwell Banker Bain’s principal managing broker for South Snohomish County.

Haines, a past board member at Northwest MLS, cautioned sellers about unrealistic pricing. “It is well worth repeating that if sellers are serious about getting their homes sold, it is not a good idea to ‘go fishing’ even though there may be high demand,” she advised, adding, “Buyers are serious about making a purchase, but they are in no mood to play games as they are very well educated regarding price. If the house is overpriced – even by a small amount – buyers will simply not make offers,” she emphasized while urging sellers to heed the advice of their agent.

Brokers also stressed the importance of a home’s appearance. “Homes need to be in the best condition possible, de-cluttered, including cupboards and closets, cleaned, especially carpets and floors, freshly painted, and attractively staged,” advised Haines. “The outside appearance needs to be in top-notch condition and have the best ‘curb appeal’ possible. These factors are vitally important in obtaining the best and highest price,” she added.

Looking ahead, brokers believe many factors signal a continuing housing market recovery. For example, Mike Gain, a past chairman of Northwest MLS, points to Fannie Mae’s recent National Housing Survey. Its research shows 44 percent of consumers say now is a good time to sell a house, an all-time survey high. Nearly two-thirds of survey respondents (65 percent) say now is a good time to buy. “These results and attitudes will drive a healthy housing market in 2015,” Gain believes.)

Download the full press release here: News Release Dec. 2014

Happy New Year!

Here’s to a happy and healthy New Year!
May all your dreams and wishes be realized.

Stay Tuned in 2015 for:

  • 2014 Seattle market update (January)
  • Fabulous Seattle homes for sale
  • Monthly videos created by me
  • And much more

And to Start the Year Out Right, here are my predictions for the 2015 Real Estate Market:

Each year I review what has happened during the year, research what the experts say for next year, and share my thoughts on what will happen in the market in 2015.

Median Sold Prices – Home prices will continue to increase nationally by single digit numbers, between 5-6% whereas Washington State home prices will increase around 7%. Urban metro areas (such as Seattle) in high demand by millennials will see an increase probably in the double digits. Home prices in October 2014 were up by 6.4% year-over-year, after climbing 10.6% in 2013. There are still areas of very high demand and low inventory which will continue to push prices upward. However, many homeowners surveyed suggest they will sell their homes next year, increasing potential inventory and putting downward pressure on prices.

Inventory – It is a good thing that more homeowners are expected to sell their homes next year as I predict that more buyers will be entering the market for a home. Improved job markets and lower unemployment rates, along with stabilizing home prices and fewer bidding wars, will bring more buyers into the market. Buyers who left the market in 2014 due to disappointment over lost offers will return. Increased inventory and slower market time gives buyers the time they need to get financing and look at more homes. The bottom line is inventory will increase due to more sellers in the market, but I expect that buyers will be purchasing that inventory, so there won’t be big fluctuations either way.

Interest Rates & Mortgage Availability – The improving economy is a sure sign that interest rates will increase in 2015. The new rates will balance job growth and higher inflation rates. The Federal Reserve indicated it will increase the federal funds rate in 2015 (the federal fund rate has a significant effect on mortgage rates). I expect the 30 year fixed rate mortgage rate will reach 5% by the end of 2015. Government officials have also indicated that mortgage credit should become more available in the foreseeable future, which will allow more buyers to qualify for a mortgage and will allow some people to qualify for a lower-rate mortgage. The FHA is raising its loan limits for King, Snohomish and Pierce counties to adjust for rising median home prices; the loan limit in 2015 for a single-family home is $517,500, up 2.3% from $506,000 this year. Additionally, the FHA is bringing back loans with only a 3% downpayment.

Foreclosures – The foreclosure crisis is near its end. 2014 saw foreclosures down 30%. We will see a further decline in 2015 with a return to low levels.

These are just a few of the things I predict 2015 will bring us. For further information, please don’t hesitate to give me a call at (206) 790-0081 or emailJamie@JamieFlaxman.com. I would be happy to share what my 2015 predictions mean for your real estate holdings.

 

Market Update

Although the holiday period is usually slow for home sales, November activity this year was up 13.6% from November of last year, for the city of Seattle. For the 21 counties that encompass the Northwest Multiple Listing, activity was up 3% over last year. And for the four Puget Sound region counties (King, Kitsap, Pierce and Snohomish) the total of 5,220 pending sales marked the highest level for November since 2006

Lack of supply continues to be the norm for the Puget Sound area, with inventory stagnant in Seattle at 1.4 months). And that number goes much lower for high demand neighborhoods such as Phinney Ridge (less than 1 week), Wedgewood (3 weeks), Magnolia (1.1 weeks), and Capitol Hill (3 weeks).

The average sales price in Seattle was up 14.6% over last year and 2.4% from October.

And interest rates remain below 4% – there is no better time to buy.

If you’d like a report for your neighborhood, please give me a call or email.

Buyers – Use the Holidays to Your Advantage

If you are a homebuyer, there is a very advantageous time in the market that you should know about, but you need to be ready to act quickly. From mid-November until the end of the year, many buyers put their home searches on hold until after the holidays. However, there are sellers who want to get their home sold as evidenced by the fact that their home was not taken off the market for the holidays.

These sellers are serious about getting their home sold; some even have the goal of getting the home sold and closed by the end of the year, possibly for tax, timing, or psychological purposes. Buyers who want favorable terms should evaluate whether they can indeed close by year end.

Here are the five steps I recommend buyers take immediately to take advantage of this time in the market:

  1. Meet with a lender and get as much footwork done as possible for your loan up front. This could include everything from submitting tax returns, turning in paystubs, submitting bank statements and accounting for deposits, etc. Make sure all this paperwork is provided to the lender so as you are packing, there isn’t a frantic search for one piece of paper which might be buried in the boxes.
  2. Determine if the purchase of the home needs to be contingent on the sale of your current home. Of course, if you are a first time homebuyer, you don’t need to worry about this, but if you are selling a home and you need the proceeds to purchase the next home, this may not be an option. The lender will be able to let you know your options.
  3. Strategize with your broker. Sellers who had high hopes of closing by the end of the year probably put their homes on the market in summer or beginning of fall. Make sure you have looked at all the homes that meet your criteria and make an aggressive home viewing plan with your agent.
  4. Once you find the right home, write a fair offer. Take into account the benefits the seller may receive by closing quickly as well as the possible inconvenience to you that closing quickly entails. This may include a slightly lower purchase price, having the seller cover some closing costs, etc. Your agent should help you determine a fair offer.
  5. Consider a rent back period to the seller. If you and the seller want to get the home sale wrapped up by the New Year but don’t want to spend the holidays shuffling boxes, consider a rent-back to the seller. In this scenario, you are the landlord and you are renting the home back to the seller for a specified period of time.

Starting the new year in a new home may be a possibility with a bit of strategy. Please contact me to learn more: (206) 790-0081 or send an email: jamie@jamieflaxman.com.

Selling Your Home in the Winter

Many prospective sellers feel they should wait for spring to sell their home. They feel this way because of the seasonal downturn in the market and because homes don’t look as good without exterior flowers and plants and the general grayness of our part of the country. However, there are several good reasons to list your home during the winter. The most serious buyers will still be out there – those that need to buy because of job relocation or need different space. And inventory is at it’s lowest, giving buyers fewer choices, so your home will stand out more. Mortgage rates are expected to increase in 2015, so buyers may have greater buying power earlier in the year.

Real estate company Redfin analyzed homes listed from March 22, 2011 through March 21, 2013. They found that those listed in the winter have a 9% greater likelihood of selling, sell a week faster, and sell for 1.2% more relative to list price than homes listed other times of the year.

To sell your home in the winter, there are some key things to do. Keep your home warm and cozy – buyers need to be comfortable when they come in the house and the warmer it is, the more likely they’ll stay longer. Leave lights on and shades open to keep the home bright. Make sure the yard stays neat and the roof is clean. Stage the home and have professional photographs that show off the home at its best.

Thinking about listing your home this winter or spring. Give me a call or email to discuss a complimentary market analysis and marketing plan for your home.

Real Estate Today

I just returned from the National Association of REALTORS (NAR) convention in New Orleans. My understanding is that more than 20,000 Realtors attended the event. The convention was filled with speakers, workshops, and vendors, sharing their knowledge, experience, and products.

There were hundreds of vendors at the expo, selling everything including jewelry, how-to-books, websites, and lead generation programs. Exhibitors included well known companies such as Zillow and Trulia and smaller ones that most have probably not heard of before.

The best workshop I attended was led by David Knox. David is an expert on pricing, selling, and negotiation. The reason I appreciated this session was that it focused on what is important in real estate today: relationships, trust, pricing, and negotiation. It wasn’t about the hottest new technology toy or how to buy clients through the Internet. It was back to the basics, this is how you do a real estate transaction. It encouraged open communication between broker and client, building a trusting working relationship.

At the core of my business model, I believe in developing relationships with my clients. Integrity and honesty are key components of how I work. I want to help each individual client meet their real estate need; I’d rather close less transactions per year and know that my clients will truly appreciate and benefit from the services I provide.

Either Way, You’re Still Paying a Mortgage

Either Way You're Paying a Mortgage | Simplifying The Market

There are some people that have not purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent free, you are paying a mortgage – either your mortgage or your landlord’s.

As a paper from the Joint Center for Housing Studies at Harvard University explains: 

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

Also, if you purchase with a 30-year fixed rate mortgage, your ‘housing expense’ is locked in over the thirty years for the most part. If you rent, the one guarantee you will have is that your rent will increase over that same thirty year time period.

As an owner, the mortgage payment is a ‘forced savings’ which will allow you to have equity in your home you can tap into later in your life. As a renter, you guarantee the landlord is the person with that equity.

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, owning might make more sense than renting since home values and interest rates are still at bargain prices.

Does it Matter Which Lender I Use?

Yes, and it matters more than you think. Buying a home will likely be the largest financial transaction of your life. Do you want to trust a random person on a website or at an 800 number, or someone you can call anytime (including evenings/weekends on their cell phone) or even meet with in person?

I am representing 2 buyers on transactions that close in the next few weeks. One is using a local mortgage broker and the other a large national lender. I also just had a transaction close with one of the big banks.

Here’s the main difference I have experienced with these different lenders – how well they communicate what’s going on with the loan. The local lender sends a weekly update on the loan; she also calls or emails relevant information as they come up. I was notified immediately when the appraisal came in (whereas the national lender never told us it was in or approved, we had to call repeatedly to learn that). With the national lender and the big bank, I had to reach out to both of them if I wanted any information. And it was hit and miss if a phone call or email was returned.

The most important question, of course, has to do with whether the lender can close the loan on time. While the big bank did close on time, it wasn’t because of their efforts. The bank wanted to extend closing; however, the buyer was adamant about the loan closing on time and between her and the escrow officer, they made it happen.

While I’m fairly confident the national lender will close on time, they are saying they wish they had more time (they already have 35 days). Local lenders are closing loans in as short a period as 10 days; 35 days should not be necessary.

You know the phrase “buy local,” let’s expand that to “mortgage local.” With the connection you make with the local mortgage officer (and with national lenders, there may be many different people you work with), you are more likely to have a smooth transaction. Plus, our local economy benefits when you mortgage local.

For a list of recommended lenders, contact me at jamie@jamieflaxman.com or 206-790-0081.