Friday, December 27, 2013

2014 Housing Outlook

Another year is perilously close to its end. The older you get, the faster they fly by. It's a cruel irony. When you are 7 years old it seems like an eternity from Thanksgiving to Christmas. Children can't wait, it takes soooooo long to arrive. Now it's like don't blink, Christmas is here; again. Slow down already!

2013 is essentially in the books. It was a strong year for real estate in our local market and in many markets across the fruited plain. The sales volume is up significantly over 2012 and the local median price is up nearly 14%. Final numbers will arrive from the MLS in the middle of January and I will be certain to post them when they arrive.

So in regards to the upcoming year; what might we expect? As much as I hate to try my hand as Nostradamus, I will endeavor to give an idea of where I think current trends in the real estate marketplace will take us in the new year.

There are many variables that effect the real estate market. Residential real estate or the "housing" market is affected mostly by the general economy and employment, as well as mortgage interest rates and the availability of lendable assets. There are dozens of other market indicators but those are the two big ones.

The economy and jobs market seems to be flat right now. We have a very soft economic growth and questionable job growth. This "soft" economy could be an inhibitor in 2014. 2013 already showed a market shift locally from the bottom/entry level to the lower to middle move up market. Pricing has been the biggest driver in the move up market as we hit bottom on pricing somewhere in 2011 and then saw the movement up as demand increased. In general I am quite bearish on the economy. I think we will continue to see a slow growth rate and that could pose problems for the housing market locally and in many of America's more expensive markets.

The real driver behind the robust numbers in 2013 has been interest rates. I believe that has been the largest contributor to this latest round of upward pricing over the last two years. Rates have been below 5% for quite a while and through the first half of 2013 they hit rock bottom as 30 year fixed rates were in the mid 3% range. The Fed has been backing these low mortgage rates and has shown every indication of slowly moving away from that position. So far I think the Fed has done a pretty good job of helping the housing market by keeping loan rates affordable. I feel that they will need to slow it down due mostly to legitimate budget concerns. As they back off, rates should creep up. As long as they stay below 6% the real estate market should remain healthy and strong. But the higher they go the fewer people qualify for loans. This could lead to more relaxed appreciation in 2014.

Looking at the data; my biggest concern is the middle section of the market. Many homeowners have been sitting in homes that are "under water". That is they owe more than the house is worth. This latest uptick in pricing is starting to free many of these people to sell as their home value climbs up above the debt they owe. I would like to see that upward trend continue. Although I don't expect to see 14% appreciation in the middle this year, I certainly am hoping to see 6-7%. This would help many people sell their middle market homes in the $250k to $300k range and either downsize or upgrade depending on where they are in their lives.

The entry level market right now is poised to continue upward pricing trends because there are two demand pressures on it. First is the traditional new family and first time home buyers looking to take advantage of favorable pricing and interest rates. Secondly is the retiring Baby Boomers looking to bail out of the big house they raised the kids in and move into to something smaller and more manageable. The Boomer generation is large enough that it is making a significant impact in pricing pressure in what is traditionally an entry level housing market.

I am seeing an interesting development as a result of these issues. There is a huge difference between 225k and 250k in terms of what one can buy. Anything under $225,000 is seeing high demand and strong appreciation. Conditions quickly begin to relax as the price moves up above $225k. We are seeing those garden variety three bedroom two bath homes nudging up against that $225,000 barrier but at a cool quarter million it's a spacious 2200 square foot four bedroom home.

That is really where the general economic conditions start to play a factor. With interest rates as low as they are, two $10-12 per hour workers can afford an entry level house in the $175-195k range. As we move up in price better jobs are required and that is what seems to be in short supply. If this economic trend continues and we see an increase in interest rates that will lead to a middle market pricing plateau. If the middle stagnates then the bottom will also feel negative pressure. This is why I feel like we will have less appreciation next year than in 2013.

Overall my outlook for 2014 is very sunny. Maybe not quite as sunny as 2013 in terms of activity and sales volume, but I do believe the middle market will perk up at least a little bit, this spring. As much as people love to see a roaring real estate market; it really is better to be the tortoise and not the hare. A nice and steady continuously northward march is healthy and secure. I think that is the trend for 2014.

So there it is; I am dangling out on the end of the wobbly limb of prognostication. In a nutshell, I am cautiously optimistic. There are too many variables to the housing market to really know with any certainty what will happen. All I can do is look at the data, make a few presumptions based on experience and hope for the best.

I wish you all a very happy new year!

Friday, December 20, 2013

Did you buy a House this Year?

Well, did you? If so, you really ought to consider talking to a CPA or a trusted tax professional. This is especially true if you bought your very first home. Our federal tax system is complicated and has both positive loopholes and negative traps. Buying a home is often beneficial to your bottom line on taxes. A tax professional can help you organize your deductions and clarify what you can and cannot "write off".

Prior to owning a home most people do not have enough deductions to justify using the 1040 long form. But once mortgage interest is added to the mix it is quite common to have every reason to itemize deductions. Now all those legitimate deductions you have always had can actually be utilized to save money on taxes. This is why it is so important to see a professional tax advisor.

Trying to itemize deductions on your own can be a very daunting task. Not only is it time consuming, but it is very easy to take a deduction that is not a legal deduction. In an audit, you may get into the proverbial hot water. It may cost anywhere from a hundred to a few hundred dollars to have a professional prepare your taxes, but it is well worth it in my opinion. Even if you are good at accounting and feel comfortable preparing your own taxes, I still think it is sound advice to at least have your taxes prepared occasionally by a seasoned tax professional. A significant change in tax, income or deductions status is a great time to utilize a tax preparer.

The federal government is going to waste your money anyway, so you might as well pay them ONLY what you really owe, right? OK, I know that the government has many viable and necessary expenditures, my tongue was inserted in the cheek on that last comment. But none the less, why pay more than you are required? If you want to give away money, give it to a local charity and help someone who is down and out. Or send me a check...tongue in cheek but less firmly on that one.

I hope everyone has had a spectacular year, I know I did and I am looking forward to an even better 2014. Happy Holidays to all of you. They will be a little merrier if you save money on your taxes this year.

Friday, December 13, 2013

Ho Ho Ho, Real Estate is in the Holiday Spirit

The real estate market is healthy right now. We are enjoying modest growth in pricing and strong sales volume. This is the kind of sustainable growth that is better than the rampaging growth of the 2004-2006 period.

The Regional Multiple Listing Service here in Clark County has posted sales summary data through first nine months of this year. 4728 real estate transactions have closed in those first nine months and that compares quite favorably with the 3805 through the first nine months of last year. This reflects a 24% increase in closed transactions. There is no shortage of buyers out there. The median price for 2012 was $194,500 and through the first nine months of 2013 the median is up 14% at $223,600.

Numbers tell many tales and a healthy pinch of the proverbial salt is in order with statistics. Has the actual value of any given home in Clark County appreciated by 14% this year? Not necessarily. Last year the market was still being driven by sustained growth with first time home buyers and the entry level market as well as a lot of REO (bank owned) and Short Sale transactions with typically lower closed prices. This year has seen a nice progression into the mid level price range as homeowners can finally sell that formerly upside down home. So as more transactions occur in the mid level, the median price rises. Even if the actual appreciation was very modest the median can rise much steeper if there is a market transition to more expensive homes.

All of that said, there has clearly been appreciation in the marketplace this year. Those three bedroom two bath 1200 square foot 1950s move in ready homes that were readily available for sale in the $130-140k range a couple of years ago are now easily $160-170k this year. But homes in the middle to higher price range have had much more modest appreciation.

I decided to dive in a little deeper. I took two county wide but very narrow market segments and will show actual growth in volume and appreciation between 2012 and through yesterday's closings this year. The first is a batch of typical entry level family homes and the second a typical first move up house. These are fairly small segments but this helps to keep them all truly comparable with as little variance as possible but still providing a large enough pool of data to be statistically sound. These all have very similar lots, in town and very similar sized homes, etc.

Last year there were 47 detached single family, three bedroom homes with 1200-1400 square feet of living space, sold in Clark County that were on a small to medium city lot and were not bank owned or short sale transactions. The median price was $163,900 and 98.19% of original list price with an average time on market of 27 days. So far this year the numbers for the exact same search yielded 83 sales with a median price of $185,000 and 97.55% of original list price with an average of 22 days on the market. Well that is 13% appreciation in that segment and a unit sales volume growth of 77%. What about the move up market?

This time I ran sales of homes again, traditional sales, not short or REO. 2000-2500 square feet of living space, four bedrooms on a small to medium size city lot. 2012 had 71 sales with a median price of $232,000 and 95.79% of original list price and average time on market at 42 days. The numbers so far this year look like this; 170 sales at a median price of $251,125 and 97.01% of original list price with an average 39 days on market. This represents appreciation of 8% and a huge sales growth of 139%.

The overall synopsis follows the traditional model for market recovery. The bottom grows first and feeds growth to the middle of the market. With a 139% sales growth this year in the move up market, I foresee an opportunity for double digit appreciation in that segment for 2014. This of course depends on all the crazy variables in the real estate market and the economy at large. Marketing time continues to shrink and well priced homes get multiple above asking price offers. There is a segment of sellers that will "test the waters" with a high price and then end up reducing the price to sell. But 97% of original asking price is quite good.

Short sales in both of these segments were flat year over year. 23 sales in both 2012 and 2013 in the 3 bed segment. The 4 bed segment 31 in 2012 against 27 in 2013. I left out REO because the condition of the home varies so widely, banks often use auction methods and such, it is difficult to gauge those against traditional sales. If you look at the combined segments here, 2012 had a roughly 2:1 traditional vs short sale ratio and this year short sales remained flat while traditional sales skyrocketed so the ratio is now slightly more than 5:1. If this ratio carries through to the overall market it bodes well for our local market.

2014 is shaping up nicely for real estate. As the middle of the market begins to feel a surge so then the upper levels will enjoy favorable price movement as well.

Friday, December 6, 2013

Chilly Weather Means Prep for Vacant Listings

We have some legitimate cold weather arriving this weekend that may include temps down into the single digits. Homeowners that have vacant property whether it is for sale or not need to be prepared for this outbreak of cold. If the home has the furnace and or power off then a full winterization by a professional is a good idea. If the power and heat are on then do it yourself is pretty simple. Wrapping exterior pipes, water supply to house off and faucets open, etc. The Seattle Times has some tips for do it yourself winter prep on a vacant house.

I have a very vivid memory of showing a very expensive home in Camas, Washington in December of 2009, the last time I had a temperature below 10 degrees. This gorgeous home had water flowing out of the walls and onto the walkway at the front door which had become an impassable ice skating rink. Thousands and thousands of dollars worth of damage was done and for a couple of hundred bucks in prep would have been avoided. Needless to say my client did not buy that house.

When selling a vacant house this time of year, be sure to do a little winter prep in the front yard to maintain good curb appeal and safety. These are good tips for occupied homes as well. Keep the snow cleared on the walkways and if needed throw some salt down to keep the ice at bay.

If you are out and about hunting for your next house please use caution out there. It is not likely that the temperature will rise above freezing over the next several days. The air is dry so it may feel warmer than it is. around any corner could be an icy spot. Caution is advised.

Bundle up and enjoy the winter wonderland.

Monday, December 2, 2013

Equity Northwest Properties: It's THAT Time Again...!!!

In the absence of my blog post on Black Friday, I offer up this great blog piece by my colleague, Dan Jensen...

Equity Northwest Properties: It's THAT Time Again...!!!: by Dan Jensen We're nearly to the end of November already, and yes, it's THAT time again! "Taxes just ahead", cries th...

Friday, November 22, 2013

Ho Ho Ho It's That Time of Year, Again.

Christmas 2008, Vancouver WA
Holy Holiday Season, Batman, it's back! If you'll pardon the comic book parlance, it is a crazy time of year for most of us as Thanksgiving approaches and ushers in a hectic holiday period. Sometimes people are buying and selling real estate during the holidays and that can make a frantic situation downright dizzying.

There are positives and negatives surrounding real estate transactions during the holidays. Sellers can be assured that nearly every buyer looking at their house during the next six or seven weeks is a serious buyer that is ready to purchase a home. Why else would the add the frenzied process of home hunting on top of the looney-bin mental state of America's holiday season? Seller's also have the advantage of a tighter inventory during the holidays. Many seller's choose to remove their home from the market in December so they can enjoy a quiet and uninterrupted season. Tighter inventory often means higher prices. Many people tend to dress up the house for holidays and that can also be a positive for selling it.

Buyers also have a bit of an advantage during the holidays in that sellers tend to be motivated to sell if they are willing to hang tough and show through the period.

In general real estate still happens in the month of December and I find that pending sales are only about 10-15% lower than the autumn.

For sellers the winter time in general requires some care. Walkways should be kept free of leaves and ice or snow. Any holiday decorations should be arranged without any cords or cables crossing those pathways. Sellers should be encouraged to decorate but careful not to have too much clutter. Clutter does tend to make a home feel cramped.

Here are a few tips from the HGTV's Front Door on real estate during the holidays:


Friday, November 15, 2013

Banks can be a little rotten at times

I generally like to keep my posts as positive as possible. Sometimes however it is difficult to avoid a subject that has some negative tendencies. This is one of those time and needs to be addressed. Many of America's banks are handling real estate transactions in an appalling way. Buyers should be aware and cautious when entering into a transaction with a bank.

As many of you may know, the banks managed to tap into a large chunk of federal dollars in the form of what we commonly call "the bailout". These banks through various government programs are able to offset losses in foreclosures and short sales. The government wanted to be certain that our financial system did not collapse under the weight of the market crash in late 2008. Regardless of how we feel about the so called, "bailout", it happened and it's all water under the proverbial bridge now.

The problem is that many banks are working the system and taking advantage of the taxpayers and buyers. Banks often stall and dig in their heels on short sale transactions until they finally foreclose. Often it is the case that the bank fails to close on a short sale transaction that would have netted them say $200,000 only to foreclose and get a net of $150,000. Then they slither over to the feds and get more "bailout" money from one of those federal programs. I have seen this transpire many times over the last five years.

The latest trend among banks involve all this REO (Real State Owned) they now hold. Much of this inventory they are holding could have been off loaded in the short sale process that they seemingly sabotaged themselves. Milking the feds is apparently not enough. Now these institutions are preying on innocent home buyers. Banks are posting REO assets on auction sites with a real estate firm that will work for a tiny fee to "list" the property on a local MLS with no cooperating broker arrangement. Then they try to get buyers to engage in the transaction without the traditional representation of a real estate agent.

The modern system of the MLS cooperating brokerage arrangement transformed real estate for buyers from a shady proposition to a safe and properly represented transaction over 40 years ago. Now these banks are trying to circumvent all of the positive progress we have made in consumer protection. They want to lure buyers to an auction website without representation. It seems that some local MLS systems are a willing accomplice to this rather dastardly deed. They do not seem to object to listings being posted with no cooperating brokerage arrangement. Thus we see this reversion to the slimy 1960s used car style of home sales by greedy banks that just want to squeeze a little more profit out of the house the feds already bailed them out on.

Buyers should be aware that the listing agent has an obligation to the seller to negotiate the best possible terms for the SELLER. Banks are exempt from state mandated legal disclosures and often use their own in-house addendum forms that may have serious negative consequences to buyers. Most real estate agents work for a brokerage that won't be too pleased at taking on the state regulated responsibility of agency with out a cooperating brokerage arrangement. This puts the buyer in a position of either being unrepresented or having to hire an attorney or real estate agent for an additional fee.The more likely scenario is that the buyer will enter into a binding contract with the bank without representation. Who do you think will get shafted in that arrangement?

Buyers should be very cautious before entering into these agreements. Buyers that use an agent to purchase the majority of homes listed on the local MLS will enjoy the security of being legally represented under the state regulated agency laws without having to pay that agent a fee. The cooperating broker arrangement on the MLS assures that the listing fee paid by the seller is shared among brokers. This gives buyers the confidence that they will be well cared for and properly represented in the transaction. Some of our seedy banks are working hard to destroy that arrangement just to line their pockets with a little more gold.

There are sharks in the pond so be careful my friends, be very careful.

Monday, November 11, 2013

Jumbo Loans are Cheap, Think Big!

If you are able to consider homes in the 500k plus price range, this could be the best opportunity in a lifetime to own the home of your dreams. Prices have been on the upsurge in most markets all year. The high end market tends to trail the bottom.  Prices on the big houses are still pretty competitive. Now word has it, Jumbo loans are priced better than conventional right now! That 1.2 million dollar home from 2007 is still priced at 799k. With rates in the proverbial basement, why not make the move up. Below you will find an article written recently by NAR President Gary Thomas, with some insight.

By NAR 2013 President Gary Thomas

If you’re considering how nice it would be to own a larger home, this may be the time to buy.For the first time in history, interest rates on jumbo mortgages actually fell below the interest rate of conforming 30-year fixed-rate loans.

As REALTORS® well know, jumbo loans are those over the local limit that can vary from $417,000 to $729,750, depending on the county.Traditionally, consumers who needed a home loan bigger than a conforming mortgage would pay a higher rate of interest for the privilege of borrowing more money—often a quarter of a percent or greater, and for a brief period it was nearly two percentage points. But with mortgage rates much higher than a year ago and declining profits from refinances, banks have become more aggressive in pricing mortgages. As a result, it is now cheaper to borrow in the jumbo market which is currently dominated by private lenders.

With interest rates at historic lows, more buyers are willing to stretch to buy bigger properties and more buyers are able to qualify for a jumbo loan. But even non-jumbo home buyers should look into the competitive rates at banks and credit unions.

There’s no telling how long it will continue, but this unusual circumstance may offer an opportunity for REALTORS®. Think big!

Published 10-2-2013. Source, National Association of Realtors "Super Size It"

Friday, November 1, 2013

Retire to Washington

Washington State is not the first state you think of when pondering the exodus of retirees to "fairer" locales. You might think of the warmer sun belt states like Arizona and Florida. But Washington offers a unique combination of favorable taxes for seniors, a variety of climates from dry to wet and mild to wild. Washington offers its qualifying seniors a significant reduction in property taxes. There is no state income tax. Southwest Washington really hits the spot, because for those who like to shop and spend money the very nearby Oregon has no sales tax. A trip to the Oregon coast is easy and inexpensive.

Many retirees in the area keep two inexpensive (or expensive depending on their finances) homes. One in Washington State and another in California or Arizona. They fly south for the winter in November and return to our more tolerable climate in the late spring. usually it is better to claim Washington as the "home" state since we have favorable tax conditions for seniors. Although Washington is not the TOP rated state for tax friendly status, it would be when considering the live in Washington, play in Oregon angle offered by Southwest Washington.

Vancouver offers the glorious beauty of the west side of the Cascades with a moderate amount of rain and very modest snow. East of the Cascades delivers much more sunshine but also has more drastic swings in temperature and much more snow in the winter. Southwest Washington also offers close proximity to the aforementioned Oregon Coast and the metropolitan Portland area.

Speaking of the coast, Southwest Washington has the lock on reasonably priced beach property. The Oregon coast is world famous, largely because the state of Oregon spends millions of dollars promoting it. The southern Washington coast is equally spectacular but offers amazing values in property and taxation. This is especially true when compared to Oregon which is very tax unfriendly according to several prominent sources such as Money Magazine and Kiplinger.

Sourced from
Our southern neighbor, Oregon is rated as "least tax-friendly" for seniors while we enjoy the "tax friendly" status. Our base property taxes are much lower than Oregon and many seniors qualify for one of four property tax reduction programs. Sales tax is a much less intrusive tax than income tax for middle and upper income seniors. Arizona rated higher than Washington for tax friendly status but actually depending on income and spending habits we might be better than them as well. 

Now that all this taxation benefits are out of the way, we can consider other factors. The well known fact that Washington state is absolutely gorgeous is a strong draw. We have four distinct seasons here in Clark County but none are severe. That is tough to find anywhere on Earth. It seems like the proverbial slam dunk for a retirees to move here. And many of them are moving here. So there you have it, Washington State is the best northern state to retire to. Start packing.

Thursday, October 24, 2013

Finding the Elusive Livable $100k Home

So the bank said they'd loan you a 100 large. Well then, let's find you a home. What was that? You are really hoping for a single family detached house? Hmm, you are not going to make this easy, are you?

My first question is this; How do you feel about central Alabama? The Crimson Tide is ranked number one in the AP football poll. Perhaps Greater Detroit, the Motor City? No, you really want to stay here in the 'Couv'. Yeah, I understand, America's Vancouver is pretty tough to beat. Do you have any money in the bank, say another 75 grand? No? OK.

I am helping a wonderful client right now to find a house that can be financed by the VA (which means livable BTW) and our budget is in the $100k range with maybe just a little bit of wiggle room. This is a challenging task, but not as impossible as you might think. I have already found several homes that would be a little tough to get FHA or VA financing on, but are livable and under that $100,000 price point. These mind you are very small houses. "Cozy", we like to say in the real estate world.

This was listed at $99,500, It sold really fast!
Multiple offers over list price but still close to $100k
Vancouver USA has a nearly 200 year history and was quite robust during WWII. After the infamous attack on Pearl Harbor, the entire Fruit Valley neighborhood was erected in 1942 by the federal government to house civilian ship builders. These were small houses with roughly 700-1000 square feet. These homes can be had for reasonable prices. There are other areas with smaller homes, but I think Fruit Valley has the largest collection of affordable houses in the 'Couv'. The neighborhood has gone through a renaissance of sorts over the last ten years. There is the additional bridge over the rail yard at 39th Street. The park was renovated and quite a bit of modern new construction has been added.

Fruit Valley also offers close proximity to Downtown and the Port of Vancouver. My hunt for a $100k house definitely starts here. But Fruit Valley is not our only choice. One may prefer a more ancient home. There are 100 year old homes in Rose Village that can be had for a song. And if I look really close I may find a spattering of homes across many neighborhoods in that $100k range. Those are often hiding in pocket somewhere.

This is listed at $85,000. It is very nice and tidy inside.
It needs siding, but is still financable
Once our general economy starts to really roll again, the $100,000 house will disappear. Maybe forever. The full mortgage payment with taxes and insurance on a house like this is around $700. That is still about $300 less than you would rent it for. I am amazed that we don't have an even larger rush of entry level home buyers snatching these up.

These types of homes may not be as comfortable and modern as a comparable sized condo, but they will have better resale in general and do not have HOA dues. A condo with $200 a month HOA dues is like adding $40,000 to the price. Yes I said 40 large! The mortgage payment on $40,000 is about $200 a month. So a $80,000 condo with $200 a month HOA dues has the same payment as a house that costs $120,000. These little charming homes in America's Vancouver have provided families with shelter for over 70 years. These are a great opportunity for first time home buyers or even a first time investor. All hail, the $100,000 house, the Holy Grail of Real Estate! Eureka!

Friday, October 18, 2013

It's Getting Tough to Buy Condos with FHA or VA

500 Broadway, Vancouver, WA
Condos on the upper floors
Many buyers are interested in a condominium home. There are many advantages to this type of home. The homeowner is only responsible for the interior of the unit and they pay an HOA to manage the grounds, external facilities and common areas. Small modestly built condos can also be less expensive than a comparable home. There are disadvantages as well but once a buyer has decided that a condo is for them, they must be certain that they can finance it.

If the buyer is a veteran looking to use a VA loan or is intent on an FHA loan, they must be certain the condo is approved by HUD (Federal Government, Department of Housing and Urban Development). HUD has stopped approving condos on an individual basis and is requiring the entire complex to be approved. In the Clark County, Washington market I am finding that the overwhelming majority of condos are either expired or not approved at all.

If the condo is approved, the buyer and their agent ought be certain that the approval does not expire before the sale closes. This is paramount should the condo be a short sale. Short sales take much longer to close. Buyers should have at least 6 months and preferably a year of approval left is wise when offering on a short sale condo.

The good news for FHA buyers is that some banks are offering a 95% conventional loan. These loans do not require FHA approval on the condo unit or complex. They will however have some underwriting requirements that could pose problems. For example, most banks are looking for at least 50% owner occupied units in a condo project. These conventional loans require a slightly higher down payment than an FHA loan but offer superior terms regarding mortgage insurance. It is always a good idea for buyers to meet with a mortgage professional prior to home hunting.

When offering on a condo, buyers should be certain that their agent is thorough in vetting any potential issues with financing.

Since I am on the subject of condos, I will touch on HOA issues as well. Condo projects have HOAs that oversee the common areas and buildings. Since the unit owner only owns the space inside, the HOA owns the buildings and land. The HOA is a common ownership of all the unit owners. Essentially condo owners have two things they own. They hold title to the unit (interior space of their unit) solely as an individual and then they hold title to the whole complex property as a partial owner, usually held as tenants in common. They have an equal share with each of the other owners or possibly proportionate to the relative value or size of their unit.

HOAs are required to keep to state standards for financial disclosure and management. Before buyers commit to a purchase on a condo or other property with an HOA, they should be certain to check out the HOAs financial and legal status. There are times when an HOA is involved in litigation. They can be either the plaintiff or the defendant. In either case, financing is nearly impossible to obtain while there is an open litigation or a judgement is in force.

Attached Townhouse in Camas, WA
This is not a condo
Condos should not be confused with other homes in planned unit developments. Many neighborhoods and attached housing projects have an HOA but they are NOT condos. A condo is unique in the ownership as just the space inside the walls. Attached housing with common walls such as a townhouse or row houses are often held in ownership the same as detached housing. The owner owns the structure and the land. Typically the HOA (if present) takes care of keeping the neighborhood consistent by enforcing rules designed to protect its integrity. These HOAs may also provide upkeep and care of other amenities such as a neighborhood park, swimming pool, etc. In these scenarios, the HOA is not responsible for the structure of the buyers home, roof, siding, etc. The dues are likely to be lower than those in a condo. The FHA and VA loans will not require HUD condo project approval on these types of developments.

Buyers should work with an experienced agent when considering a condominium home. They can be a wonderful opportunity for quality living, but they have a few quirks that require thorough care during the purchase process.

Friday, October 11, 2013

The Sales Data Looks Healthy

I just spent the better part of this morning analyzing recent data from our local Multiple Listing Service and decided to run my 13 month analysis. One thing we often get in real estate is snippets of data year over year. This can be a good quick check to see which way the market has moved over a year, but lacks the insight provided by a monthly look at the trend over that whole period.

Many people like to see great leaps in price or sales but that can be unhealthy. Of course it is not as unhealthy as a depreciating market or precipitous drop in sales. But a rapid rise can lead to a premature peak and result in an uncomfortable drop in the market. Think about the four years of 2004 to 2007.

Data acquired from Regional Multiple Listing Service for Clark County, WA 
9-2012 through 9-2013 single family homes, excluding condos
Generally a modest and smooth appreciation in home values along with solid relatively flat seasonally adjusted sales is very healthy. Guess what? That is exactly what we have right now. The 50 year average appreciation for homes runs right around six and a half percent per year with a little more in up markets to offset the down markets. So an 8-10% annual appreciation over a decade is pretty healthy.

The median price for Clark County, WA is up from 197k in September 2012 to 237k as of September 2013. That represents a non-seasonally adjusted jump of around 20% but the curve will flatten again as we approach the winter. That sharp increase is a much driven by a movement from entry level buyers to mid level buyers as it is about actual appreciation. What I mean is that the inventory for the 125k-150k move in ready home dried up. Most of those entry level buyers are still making the same income they made a few years ago and they are priced out of the market. However those who sold their entry level homes a year ago made the move up in the last year driving the move up market. That moved the median price up disproportionately to actual appreciation.

I believe we will see a 30 month growth in median price starting from June of last year and ending on January 2015 at close to 30% which will average to around 10% annually. This is would be healthy. The current flat economy will keep things well regulated and without some improvement could lead to a fade in this valuation bump we had recently. The first spurt of growth is also often bigger as fence sitters jump into the market. If the market growth slows to a more modest 8-10% that is not a bad sign. On the contrary, it could lead to a steady long term rise in prices that is sustainable over a decade or more.

All that said, the real estate market is affected by many variables in the economy. Interest rates are a strong driver of real estate sales and they have been in the basement for several years. They could be on the rise as the federal government backs off their support of mortgage securities.  Even if rates continue their upward march toward normalcy, the market can still enjoy some growth. The fed will most likely continue their support of rate suppression until the economy is on solid footing. A growing and healthy economy will produce more qualified home buyers. We will lose some entry level buyers to higher rates but gain some in economic upward mobility as things shape up on the job front.

Inventory remains tight but there could be a pent up supply waiting to come on the market. Many people have been sitting on those homes they bought in the boom of '04-'08. They bought at or near the top of the market and have been unable to sell since the crash because they owe more than the market will pay. That is beginning to change as the prices move upward. Many of those people will soon be in a position to sell and many may exercise that option to take advantage of these still relatively low interest rates. Furthermore it has been reported that many banks are strategically holding on to REO inventory which adds to that potential inventory increase over the next few years. An increase in inventory will flatten out the sharp appreciation, but the availability of willing buyers should keep things modestly improving. Overall the real estate market is in position to enjoy a sustained gentle growth pattern that is healthy and beneficial to a recovering economy.

Thursday, October 3, 2013

Don't Overlook a Home's Potential

Our local real estate market and many markets around the country have transitioned into a seller's market after several years of a very strong buyer's market. The upper half of the price range is still fairly neutral but the lower half is clearly favoring sellers. In a seller's market, buyers must be able to look past minor imperfections if they want to find a house at a good 'value'.

Photo from Anthony Real Estate, via Google Images
The turn key, move in ready, charmer will get bid up over asking. Often those homes end up being less of a value than that cosmetic fixer buyers sometimes look past. Paint and indoor decor are easy to update. A bad roof or siding can be more expensive, but often homes that have been left with that old 1970s interior are overlooked. Updating an otherwise solid older home can be done over time as the buyer lives in the house. all too often throwing in some new carpet and a fresh coat of paint can completely transform the feel of a house. These dark old houses may sell for ten to fifteen thousand less and require half that for the remedy. Therein lies the value.

For first time home buyers, it is imperative that they take advantage of our current low interest rates and our still fairly low prices. I have attached an article from that offers some good insight into cosmetic fixers.

Cosmetic issues are easy to remedy
By Michele Dawson

Home shopping for first-time home buyers, it's an exciting, albeit nerve-wracking, experience. If you're like others in the market for their first home, you probably have in mind exactly how your soon-to-be home will look. But it's important not to fall into the bad decorating, dingy walls and dirt-bare back yard equals bad-home trap. If you don't see past the hideous wallpaper, funky light fixtures and avocado green carpeting, you may miss out on a home with great potential. And, if you're looking for a home in a seller's market where homes are being snatched up as soon as they go on the market, you'll come to realize you can't be choosy if you want to make a competitive offer.

One of the first things to do is to get pre-approved for a loan and determine the maximum you can afford to offer for a house. Don't look at homes that are asking for more than 5 percent above your maximum, otherwise you'll be setting yourself up for disappointment if you find the perfect—but outside your budget—home. So what to do? The floor plan of the home is extremely important. If a floor plan isn't quite to your liking, consider rearranging it or adding on. If you're looking at an existing home and will need to remodel or expand to suit your needs, the estimated cost of renovation needs to be considered when making an offer. Also, consider the features of a home: 

Walls. While these are among the easiest to remedy, they also make a huge first impression. If the walls need to be painted, are covered in wallpaper or are painted a color you find distasteful, picture them crisp and clean in the color of your choice—that's how they could look after you paint them. 

Floors. Like walls, carpet or floor surfaces that are old or outdated can be easily replaced. You could even ask for a carpet allowance in your bid, especially if you're in a buyer's market. 

View. Things like old, ugly—even dirty—windows and window treatments can make a view appear less desirable. Those things can be improved, so unless the only view you have is of your neighbor's clunker on the side of the house, don't get hung up on what is surely a fixable view. 

Landscaping. Your best bet is a moderately landscaped yard because you can always improve landscaping without spending too much. Worst case, even if you're looking at dirt, landscaping is one of the easier projects to tackle. Plus you get to design it however you'd like if you're starting from scratch. 

Closets and garages. You can never have too much storage space, which is why so many newer homes have three-car garages. But if you encounter a converted garage that is now a bedroom or storage room, don't give up. Converted garages can almost always go back to their original purpose without much cost or labor.

Kitchen. The most popular room in the house, many homeowners want their kitchen to be large and have modern appliances. Don't let outdated color schemes deter you because there's nothing like a fresh coat (or two) of paint to make a kitchen your own. Plus, if you like the rest of the house enough to make an offer, you can give the kitchen a minor spruce-up with some new appliances or a major overhaul complete with new counter tops, cabinets, and flooring.

The exterior. If the home doesn't have good curb appeal, try to picture it with a fresh coat of paint and revitalized landscaping.

Pools. If you want a pool, buy a home with a pool already built in. Pools are expensive and you will not get a full return on the cost when you go to sell. Let someone else lose the return. The cost of repairing a pool is less than putting one in, so if you're looking at a home with an old pool that looks like it's in bad shape, it's still a better bet than putting one in later.

When making an offer, consider what you can't live without, as well as your budget. Also, be sure you hire a professional home inspector to inspect the house. If the home's systems are in good working order and the house has everything you want except a minor item or two, make an offer accordingly. Most importantly, keep in mind that unless you're building your dream home from scratch, you'll probably never find the perfect home. But seeing past a previous owner's bad decorating choices to the core of the home and its potential for livability will yield you the home you've always wanted. It may take some work, but hey—it's yours.

Friday, September 27, 2013

Rates up a FULL point over last year.

The all time record low rates of this past spring are now in the history books. We have seen them creep up by a full point over the last few months. But it is important to understand that historically speaking any rate under 6% is a good rate. That said 4.5% is a GREAT rate. If this upward trend continues however, this extended period of extra buying opportunity will finally come to a close.

Higher rates will eliminate some people from the dream of owning a home. For others it will limit the size, type or neighborhood of their next home. Yet there are still buyers out there waiting. Waiting for what? Even higher rates, bigger payments or worse another decade of renting?

Over the last thirty years rates have averaged much higher than today's rates in the mid 4s. The chart below shows the average mortgage rate on a 30 year fixed loan since 1975. Our current rates are still the best in over forty years.

The last three years have truly been a golden era for buyers in the American home market. Prices have been low as we recover from the "crash" of 2008-2009. Rates have been at or very near ALL TIME record lows for the last two years. This golden era has already lasted twice as long as I expected it to and something will have to give. Either rates will spike, prices will spike or a little of both. The bottom line remains that this is a great opportunity to take advantage of a rare combination of low rates and low prices. First time home buyers can get into a well priced home with payments lower than rent.

If an entry level homeowner has some equity, they can sell their small house and move up to a big house while prices are still low and rates are low. I think many home owners sitting on a house they bought in 2005-2007 are waiting for values to rise. Some have to, because they need equity. Others are sitting on equity and are waiting for a better price. The problem with the latter is that it may be seriously flawed logic. If prices rise 10% over the next year they will get an extra $15,000 for their current $150k home. But that move up larger house currently listed at $250k will likely rise $25,000. So in essence they are stepping over the proverbial quarter to pick up that proverbial dime. And as they wait, they run the risk of also having a higher interest rate next year on that new larger and more expensive home. If that happens they could spend tens of thousands of dollars in additional interest over the life of the new loan. 

The empty nester looking to downsize can still take advantage of these low rates now. Even if they get a little less cash out of their larger home now, they may save tens of thousands in interest on that final home for retirement with our current low rates. I cannot over estimate this old saying, "You will feel the sting of high interest long after the joy of a low price has faded away." Conversely, you will enjoy the benefit of low interest, long after the sting of a high price has faded away. Price is fleeting, interest is forever, well at my age it is forever anyway. 

Based on the chart above, some of us may not even be alive next time we have rates in the threes. These current mortgage rates are being suppressed by the federal government's willingness to buy the mortgages at the low rate. They are doing this to prop up the real estate market while the economy recovers. Once the fed backs away from that policy, and they will, rates will likely return to a more "normal" 6-7%.

This is a pivotal moment in the real estate for anyone considering a purchase, a sale or both. How many times have you looked back in life and said, "If I only had done this, or that..." You know, like buying Apple stock when it was five bucks a share in the mid 90s. Now is one of those times in real estate but the bottom has been revealed and things appear to be moving up. As I said in my book, 'Don't Panic', "Buy low and sell high, and that is right now, my friends."

Thursday, September 19, 2013

Got 300 Grand? If so, this market will treat you well.

This is a somewhat anecdotal post but I can back it up with some sound data so here I go. It seems that this market has gotten quite hot at or near the bottom of the price range. $150k-200k homes are selling fast and often with multiple offers. For those of you fortunate enough to have a little larger budget the buyer's market has not died just yet. There is a more inventory and fewer buyers and that seems to have created a more buyer-seller neutrality based market. Right about $275,000 things begin to loosen up. Buyers can kick a few tires and be patient as the try to find the perfect home at the best price. Let there be no mistake a well priced home at $300k will sell fast, but a home that is pushing the price ceiling may sit around for a while.

If you are a buyer, you have to try and balance the price and threat of higher interest rates as you decide your path. As a seller you have the same potential problem. If a seller chooses to hold out for a higher price, they may get it, or they may lose out all together if interest rates are uncooperative.

The primary idea is that those of you looking at spending $275k or more can probably find a great house at a pretty good value. This is good news.

According to local MLS data, the last 90 days in Clark County, Washington had 447 active units between $275k and $375k and only 189 active units in the bread and butter $150k-$200k price range. Inventory is very tight at 1.9 months for entry level but a more healthy and neutral 4 months for the high price range. This is an opportunity for people sitting on a three bedroom 1300 foot ranch to get top dollar and then step up to the dream 2200 foot, four bedroom house that is still priced relatively cheap.

interest rates are still very low. We had a spike over the last six weeks but favorable news coming from the fed yesterday has settled things down. The Freddie Mac Washington State average rate is currently 4.21%. Most people looking for a low cost loan are going to pay closer to 4.75%. any rate under 6% is historically a good rate so we remain well below that.

get out there and kick some tires. you might find your dream house and it might be cheaper than you think.

Monday, September 9, 2013

Online Auction Sites becoming the Rage with Banks

Many banks are starting to use online auctions for the sales of REO (Real Estate Owned) This is the term commonly used to describe real estate that is owned by a bank, obtained in foreclosure. HUD has been doing auctions for years on its FHA inventory but their auctions are not run live. HUD auctions use sealed bids. REO managers have a different idea. They want to market the house in a classic Ebay style environment. They want to drive the price up as high as possible with a bidding frenzy. This can be a great way for REO sellers to sell, but can have pitfalls for buyers which I will discuss a bit later.

One of the real areas of concern I have is short sales. I see this movement towards online auctions with short sales. Many banks are having their debtors sign an auction agreement along with the other short sale documents. The house is then placed up for auction terms and often the auctioneer does not even notify the listing agent. It seems that banks are going to continue to push ethical boundaries on short sales and in some cases take advantage of the American people while cashing in on federal programs like HAFA (Home Affordable Foreclosure Alternatives).

I have had some positive experiences with one loan short sales under auction terms. It seems the first lien holder often pre-negotiates the deal with the auction house and the short sale can move ahead with efficiency. The problem is that there is sometimes a second lien and the auction house either fails to disclose to the buyer or discloses in a fashion that is difficult to find. This can cause allot of grief for the buyer and the home owner.

People that are bidding on these auction homes should have a real estate professional aid them in the process. Typically the homes are listed on the local MLS and your real estate agent will get paid by the listing broker under the terms of the listing agreement. By all means a buyer should always have representation in a transaction involving large amounts of money.

In general the auction houses appear to be decent business operators. The problem is that another party to the transaction is now involved. The more parties in a real estate transaction the more likely it is to fail. Buyers and sellers can be taken for a long and uncomfortable ride when there is two banks and auction house involved in the deal.

If a buyer decides to bid on an online real estate auction, they should consult their trusted local real estate professional. That agent can do some quick research to help the buyer decide whether or not the home is viable. The agent can also help determine a good bidding range. It is paramount to remember that auction terms are designed to get an emotional response by the bidders. The emotion that screams, "I want to win" so as to drive up the price. Some auctions even have disclosures that suggest overbidding will result in mandated payment even if the property does not appraise. This could be a problem for a buyer using a loan to purchase.

In my experience dealing with the short sale departments at most banks is akin to getting a root canal without Novocaine. So adding the auction element on these sales is surfing in dangerous seas. Caution is heavily advised.  

Finally, there are some banks now taking their REO inventory directly to auction without listing on the local MLS. They hire a local licensed agent to make the sale legal under state law, but offer no representation for the buyer. I believe that American banks are already about as ethical as your average mugger, now they are trying to engage the direct home buying public in a "dark alley deal" that will almost certainly take advantage of the buyer. If the auction house is listing a property that is not listed on the local MLS, I would tell most buyers to run away. Seasoned investors may feel compelled to bid, but inexperienced buyers really should not take the risk of engaging in a transaction without a buyers agent involved.  

Wednesday, September 4, 2013

Local Dentist offers Mouth Guards for Student Athletes

Here is a community service announcement. One of my followers has created this press release which could be valuable for our local student athletes and their parents. As a local Realtor I enjoy be able to pass on valuable information to our community. Thanks to Tim for the information.

With the start of the new school year, Vancouver dentist Dr. Bowyer is giving away free mouth guards to student-athletes.  “Every year, I treat children with chipped or breaking teeth from their student activities, which can easily be prevented with consistent use of a mouth guard,” says Dr. Bowyer.

The National Youth Sports Safety Foundation estimates that more than three million teeth and over would be knocked out each year without the use of mouth guards.  This includes preventing over 200,000 serious dental injuries.  Student athletes are over 60 times more likely to suffer a dental injury when not using a mouth guard.  The most common injuries are flying elbows to the mouths, and impact from sports equipment.  Traditional contact sports, such as football, boxing, and martial arts require mouth guards.  Mouth guards should also be used in non-contact sports, including basketball, baseball, soccer, and wrestling.

Likewise, mouth guards help protect athletes from concussions.  Upon impact, a mouth guard helps an athlete clench the jaw muscles, thereby helping to stabilize the skull and neck.  Mouth guards distribute and dissipate the force of an impact, minimizing the severity of traumatic injury to the head and soft tissue.

Finally, a common mistake students make with mouth guards is infrequent replacement and sanitization.  Unsanitary mouth guards increase the intensity of mouth cuts and abrasions, increasing chances of infection from bacteria, yeast, and fungi that mouth guards routinely collect.  Also, mouth guards should be replaced regularly, or when edges become sharp or jagged, or if the mouth guard no long fits and promotes oral irritation.

“I can not stress enough the importance of athletes wearing a mouth guard, especially for those wearing braces” says Dr. Bowyer.  “Parents should consider a mouth guard as mandatory safety equipment.”

From Sept. 4th to Sept 30th (M-TH), Dr. Boywer is providing these free mouth guards to anyone who stops by his office – children and adults alike.  Dr. Bowyer’s office is located at 300 SE 120th Ave, Suite 700, Vancouver, WA  98683, 360-253-2640.

About Dr. Bowyer: Dr.  Bowyer is a Vancouver native.  He earned his undergraduate degree from the University of Washington, and a dentistry degree from the Columbia University School of Dental and Oral Surgery.  After completing his second year, Dr. Bowyer was one of two students selected  to participate in an honors program at the 5th Avenue Manhattan Dental Clinic.    Dr. Bowyer has taught at Clark College School of Hygiene, and has taught as an assistant to 1-3 year dental students.  Dr. Bowyer has been awarded from the Academy of General Dentistry and honored by Columbia University as the Best General Practitioner in his class.  Dr. Bowyer is a member of the American Dental Association, Washington State Dental Society, American Academy of General Dentistry, AAOI (Academy of Osseointegration) and the American Academy of Cosmetic Dentistry.

Friday, August 30, 2013

Real estate is a local business.

(I wrote this for the Equity Northwest Blog and thought I would re-post it here.)

How often have you heard the expression, "real estate is about location, location, location"? If we are to take this idea at face value, then real estate is a local business. Local companies are much more in tune with the neighborhood trends, community developments, municipal and county regulatory and legislative agendas, and other important facts about the area. It stands to reason that working with a local real estate professional in a local company is a good idea.

This blog has been established to get good real estate information out to the public. We often post tips about home care, and local market trends. Today we will talk about the importance of local businesses and local professionals.

When choosing a real estate agent, buyers ought to think about the local aspect of real estate. Will this person understand the immediate market they are interested in? Is the company they represent a locally owned company or a national franchise? If the latter, then are they at least locally focused. Purchasing a home is most likely the single most expensive thing most people will ever buy. It seems obvious that care and attention to whom trust is placed to represent that transaction is paramount.
Local is critical because the difference between a "house" and a "home" is local. Building a home from a house is done with family, friends, neighborhoods, schools, churches, clubs and services. Local, local, local is as important as location, location, location because knowing the right location requires a local awareness.

If moving from Portland, OR buyers should consider carefully before using a dual licensed Portland agent for a Clark County home purchase. Although Portland is just across the river, it is a state away. Real estate in Oregon is conducted in a similar fashion but there are many different facets and nuanced subtleties that can be significant enough to bring about pause.

It's been more than a decade since Gene Thompson left one of America's largest national real estate firms to open his own brokerage here in Vancouver U.S.A. Equity Northwest Properties has always adhered to Gene's idea that real estate is a local business. One of the advantages to large national chains has always been resources. But national chains are typically run from a corporate office in some far away place. Local branches are often force fed a staple diet of the latest corporate headquarters buzz program. As we turned the century over to a new millennium many of those "resources" began to become widely accessible through the ever present internet technology. Now smaller, local companies have similar access. The resource edge offered by the big national brokerages has eroded significantly since 2000.

That has allowed companies like Equity Northwest Properties to thrive. Local Realtors® working local markets with a local corporate policy is pure bliss. This local minded business model has allowed Gene's company to evolve into one of the region's largest independent brokerages with offices in Vancouver, Camas and Kelso. Between the three offices are affiliations with the two largest multiple listing services in the Pacific Northwest, both the RMLS and NWMLS. That makes Equity a very local company with a regional reach. This is a powerful combination.

In conclusion buyers and sellers should strongly consider the local aspect of real estate when deciding upon whom they will hire to represent them. The best decisions are made with the best information and real estate information is local to the core.

Friday, August 23, 2013

Why Autumn is a good time to buy a house

Today I would like to offer up a good reason that frustrated buyers may find the proverbial light at the end of the tunnel as the fall season approaches.

During the summer months, most real estate markets enjoy a surge in sales activity. Many home buyers are families with children and the idea of moving in between school years is very attractive. It also does not hurt us locally that we have fabulous summer weather with which to enjoy touring homes. In any market the law of supply and demand is ever present. The summer months are yielding more buyers and thus the market experiences buyer pressure. If that sales pressure is not alleviated by increased supply (listings) then prices will nudge or even surge upward. We have seen this effect locally and around the nation this summer.

As our summer comes to a close many buyers have left the market. These buyers may only be out temporarily to get the family adjusted for the new school year or perhaps they feel that next year will be better for them to buy. Of course some of those buyers became purchasers. For the patient buyers this could be a small but significant bonanza. Those buyers that have left the market represent a relief of sales pressure. My experience has been that more buyers tend to leave the market in the fall than sellers. This creates an opportunity to buy that may not have been available in the height of the summer sales madness.
Current Listing in the Felida area of Vancouver $274,900 

Some of the run up in price is caused by multiple offers becoming an auction like frenzy driving up the price. Sometimes its less exciting than that, but houses seemed difficult to find this summer. The autumn tends to soften that just a touch and that could be the edge a buyer needs to get the house they want at a price they can live with.

Buyers should not be discouraged as the cooler days of fall settle in. Rates have settled down a bit and still remain very low by historical standards. The Fed is indicating they will be backing off the support of these low rates as the year closes. This could be the opportunity some buyers have been waiting for to own the home they have always wanted. The window could close in the next few months as interests rise and buyers become panic prone bidders. Call your favorite Realtor® today and happy hunting.

Friday, August 16, 2013

July's MLS sales figures for Clark County were stellar

The numbers are in for July from our local multiple listing service and they look great. Looking back first at last year, July 2012 was healthy but not stellar. Inventory was starting to tighten up and demand was strong enough in certain segments to generate multiple offers. 499 transactions were closed in July 2012 for Clark County against this year's total of 696. We are still well off the frenzied pace of 2005-2007 but clearly the best we've seen since "the crash".

Evaluating numbers is never as easy as just looking at the one or two "big" stats. Often people, including some Realtors®, look at median price or total unit sales as an indicator that all market segments are moving equally. Just because the median price is up 21% by no means suggests that any random house that was sold last year is now worth 21% more this year. The real estate market is very complex with neighborhood fluctuations, locations, home size, price range, and styles often performing independent of each other based on market demand or supply.

The chart below shows the "big" over all county stats for this local market and then breaks the numbers down a little further to show some broad segment trends. The big question for John and Sally homeowner is often geared towards, "can I sell MY house right now"? If John and Sally own a condo they may not be much better off this year than they were last year in market appreciation. The condo market is almost always late to recover.

Last year the sales figures were heaviest in the entry level market. Those $125-150k three bedroom ramblers were being snatched up and as such, supply tightened up and prices soared. This year that market segment was priced high enough that demand slowed down a little, but the middle market surged with larger four bedroom houses seeing significant increases in unit sales. Those bigger mid sized homes saw a massive 59% increase in sales but a more modest 13% increase in median price.

Last year I said that the bottom has to tighten up first before the middle can take off. Well, the bottom did tighten up and now the middle is taking off this year. That is driving the increase in median price. The smaller two bedroom houses have peaked with only a 1.3% increase in median price despite a large surge in unit sales of 46%. Even the bread and butter three bedroom market that was red hot last year, is showing preliminary indications that the buyers are nearing their limits. The 18% increase in median against a large surge of 29% in units sold is still quite robust, however. The sellers in the entry level often move up to that bigger house and as they sell their 2 and 3 bedroom homes they move into the middle market. The 59% increase in unit sales in that segment will likely produce more impressive median increases when we check the numbers in a few months.

Of course this discussion has to hinge on keeping other complex variables favorable, such as the general economy, jobs and the ever critical mortgage rates.

The big takeaway for homeowners is the fact that their home that may have been upside down or too tight to sell, could in fact be a seller today. Contact your favorite Realtor® for a Comparative Market Analysis on your home. Most offer this service for no charge, I certainly will.


Tuesday, August 13, 2013

CoreLogic: Rapid Rise in Home Prices 'Remarkable'

This just in from the National Association of Realtors®


During the first six months of this year, home prices jumped 10 percent, the fastest pace in 36 years, CoreLogic reports. Mark Fleming, chief economist with CoreLogic, called the 10 percent jump "remarkable."

In June, the latest data available, home prices were up 11.6 percent year over year, according to CoreLogic’s home price index, which reflects distressed sales as well. June marked the 16th consecutive month of increases.

The pace of home price appreciation is showing signs of slowing. In June, prices rose 1.9 percent compared to May -- a slower pace for increases than in recent months. From April to May, prices rose 2.6 percent, while they rose nearly 2.8 percent in April from March.

Some analysts point to a slowing due to rising mortgage rates, fewer investors making purchases, and a rise in inventory levels of homes for sale. The National Association of REALTORS® reported that inventories of existing homes for sale rose to 5.2 months in June from 5 months in May. A six- to seven-month supply is considered a balanced market.

Still, prices are not showing signs of stalling. CoreLogic analysts predict that home prices will be up 12.5 percent year over year in July.

The five states with the highest home price appreciation year-over-year, according to CoreLogic’s June stats:
  • Nevada: +26.5%
  • California: +21.4%
  • Wyoming: +16.7%
  • Arizona: +16.2%
  • Georgia: +14.3%

Source: “Home Prices Rising at Fastest Pace in 36 Years,” Mortgage News Daily (Aug. 6, 2013) and “Home prices rise again, but at a slower pace,” USA Today (Aug. 6, 2013)

Rod's two cents: I think we will continue to enjoy a robust and healthy appreciation over the next 12-18 months.  I don't think it will continue at these break neck speeds, however. Interest rate volatility and a slow surge in new resale inventory as homeowners right the ship financially will balance things back to a healthy but modest rate of growth in the middle single digits.

Monday, August 5, 2013

Keeping an Eye on the Market

I wrote this article for the Equity Northwest Properties Blog this morning and decided to re-post it here for you.

There is a huge inventory of homes that were purchased at or near the height of the market from 2004-2008. The average homeowner moves every seven years so many of these homeowners that bought at the peak are getting towards that "time to move" point. The problem is that values for many of them are still not quite high enough to clear the loan obligation. Many of these would be sellers are sitting on the fence patiently waiting for the market to yield the price they need to exit clean.

For Realtors® and sellers this is a 'watch the market' time. We enjoyed a robust 8-12% gain in values over the last twelve months. If this upward pricing trend continues, many homeowners will finally exit the proverbial tunnel and be able to sell their home and clear all liens and fees.

Our local market and many other markets around the nation are seeing tight inventory, especially in the entry level price range. This is driving an increase in price. Low interest rates are also helping to keep demand relatively high. As these 'top of the market' homes become viable to sell again, we will see less of a squeeze on inventory. This can be a bit precarious, too much inventory may cause prices to flatten out if demand does not keep up. So long as interest rates remain at or below 5%, I believe the market will continue its growth, even if inventory levels fatten up. A combination of higher rates in the more normal range of 6-7% and bulkier inventory would likely cause the prices to stop rising or at least severely slow down.

What does all this really mean? For buyers that really want to own, rather than rent, now is truly the time to buy. Rates are low and there is no guarantee they will remain low. Prices are rising but still relatively low. For sellers, things are a little dicey at the moment. Selling now could be the genius move of the decade or it could be one of those "oops" I should have waited situations. No one really knows what this fragile market will do. If you are a owner occupant seller and you actually want to move then selling as soon as possible makes sense. If you are selling based on an investment then you are forced to gamble a bit. Wait or sell? For an investor I would wait a little longer but of course that may or may not pan out. In the end, I believe real estate should be a long term investment and waiting will rarely cost you money, it may just cost you some time.

Sellers and would be sellers should remain 'market engaged'. In other words, pay attention. Things are moving in generally positive directions and the opportunity to sell will present itself soon. Potential sellers should stay in contact with their favorite agent or broker and 'keep and eye on the market'.

Tuesday, July 30, 2013

Relocating? Rent for a few months first?

Many people find themselves involved in a real estate relocation. Perhaps a job change, promotion, or family related issues. In these situations there are times when the relocation is to an area that is unfamiliar and far away. It can be very difficult to gauge neighborhoods and services in the short visits as buyers look for a new home.

It may serve buyers well to rent a home or apartment for six months to a year keeping the bulk of their items in storage while they learn the area. An advantage to renting is mobility. Once you are ready to move, you give notice, pack up, and leave. Selling a home however is a more enduring process. I believe that it is wise to carefully evaluate the schools, shopping, proximity to work, neighborhood condition and lifestyle, before buying a home. This may take several months to really understand.

Many people however, may be like me. I hate moving. If this is the case, then it becomes paramount for the buyer to consult a true buyer's agent. Many real estate agents don't like showing homes and dealing with the buyer's side of a real estate transaction. Ironically, they are often the first type of agent a prospective buyer meets. The buyer is sitting out in front of a house with the 'Acme Real Estate' company sign and the call the number. That agent may be the classic 'listing' agent.

If buyers are relocating to a 'strange new world' it is advised that they interview a few agents and find one that is willing to spend some time working with them, showing multiple homes in a variety of neighborhoods best suited to their needs. In the end this helps to ensure that best possible purchase and the highest chance of many happy years in their new home.

Saturday, July 20, 2013

How is the Rental Market?

There seems to be a solid demand for rental housing. I placed an add for a rental unit and have been flooded with inquiries.

According the the federal Housing and Urban Development, rents continue to rise.

Below is the HUD Fair Market Value chart for 2012 followed by 2013...

These charts are for Clark County at large and are used for HUD's various programs to evaluate rents for a variety of things such as subsidized housing, rents used as income for mortgage loans, etc. These values tend to be conservative in nature. Although it is only a guideline we see a upward trend that does not appear to be slowing down. Some of Clark County's hottest neighborhoods have seen rent increases of 20% over the last year which is far greater than the roughly 5% indicated on this chart.

For prospective home buyers this means you can lock in a 30 year fixed payment now rather than face increasing rents over the next few years. Home prices are on the rise but rents are too. Jump in while mortgage rates remain low or continue to hand your landlord more and more of your hard earned cash.

Friday, July 12, 2013

If it is priced right it is GONE!

The local real estate market has a glaring deficiency. There is a serious shortage of inventory. This lack of available homes to buy has created the illusion of a wild market. We have moved from a buyer's market to a seller's market. Typically this transition is caused by a wave a buyer's coming into the market. At this time it is all about a lack of new inventory. The problem may lie in the scarcity of new development. Builders are stepping back into the market, but noticeably and understandably they remain cautiously optimistic.

The problem with existing homes is that many sellers are either underwater or too close to close. They are holding out for the market value to reach a point that they can sell and walk with enough cash to move up or move on. Until new inventory arrives the buyer's will be faced with few choices. This allows seller's to control the terms. All that said, the buyers are still looking for value. Most buyers in the market are struggling to justify the run up in price. I have found that overpriced listings will still sit in the market for extended periods. The action is in the well priced listings. Although the market is showing warm signs of a new lease on life, buyers also remain cautious as well. The 2009 crash is still fresh in their minds.

There is not a deep enough demand for sellers to run up their price. The market has a solid ceiling. If you price it right you will see it sell in less than 30 days. Sometimes a seller may list their home on the high side of the price range because they are trying to sell at a price that will clear all liens. Buyers should be aware of the market conditions and the reason one house may be "worth" more than another similar house. A traditional sale of a move in ready house will typically fetch more money than the identical house being sold as a short sale or even bank owned. Bank owned properties generally result in smooth transactions but often the bank behind the scene is very strict on terms. Short sales can be like a trip down the rabbit hole. I am finding that well priced move in ready homes with traditional terms are receiving multiple offers and well above asking price. Short sales and beat up bank owned properties continue to require longer marketing times.

Potential sellers that have been waiting for the market to come to them, may need to evaluate their situation now. Those who would choose to move "up" to a larger house may want to consider selling sooner, rather than later. The rising price allows for more equity to build in their current home but also leads to higher prices on the next house. If that house is a move up house, it is likely more expensive than the current house and will rise also. A ten percent market shift will net you $20,000 more on a current $200,000 home but the price of the next house that is $300,000 will rise by $30,000. That is the classic case of stepping over a quarter to pick up a dime.

Buyers need to pull the trigger. Prices are edging up and the longer a buyer procrastinates, the "smaller" their next house becomes. This is a great time to buy or sell a house. Jump in, the water is fine.


Friday, July 5, 2013

Learn to look past little flaws

There is one thing I can not over-emphasize to buyers looking at homes. That is to look past imperfections that are easily remedied. Too many buyers will eliminate a house because the carpet is ugly or the paint scheme is funky, or maybe it is kind of dirty. These are easy fixes and the things that really matter are those that are irreparable. The neighborhood, the busy street, the nearby airport, structural damage, etc. These are things that a difficult or impossible to repair.

When looking at homes this summer, buyers should try to ignore the ugly carpet or the weird paint scheme in the bathroom. Buyers should look for things like the flow of the floor plan. The kitchen layout. The functionality of the space for the buyer's specific needs. These are things that need to be just right. An interior repaint or replacement of carpet is a relatively inexpensive thing when considering the price of the home.

Many great values can be found in real estate during a rising market. Many sellers jump into the market thinking they can get their price without repainting, carpeting, etc. Their house will not be as competitive with the house that is fixed up. This can result in savings to the buyer in purchase price that is much more than the cost to remedy.

Buyers that buy these very light fixer homes also benefit from the opportunity to use materials and design themes that suit them. In a market with tight inventory like we have right now buyers can not be too picky or they will simply not find a house. The is some urgency as prices rise purchasing power drops. Holding out for a move in ready perfect house might cost a buyer $20,000 more than buying that slightly more used house today.

In conclusion buyers should consider the essential functions and flow of a house as priority over the surface condition. As long as the home has solid bones, is located right and suits the buyer's needs, the superficial stuff is just that, superficial.

Friday, June 28, 2013

Moving this Summer?

Summertime is here and many people find themselves engaged in buying or selling a house. This is the busiest time of year for most of the real estate industry. Interest rates are on the rise as I indicated last week (see article). Buyers are jumping in to the market and that means people are moving.  If you are moving this year here are some helpful tips from the National Association of Realtors ®

17 Tips for Packing Like a Pro
Moving to a new home can be stressful, to say the least. Make it easy on yourself by planning far in advance and making sure you’ve covered all the bases.
  1. Plan ahead by organizing and budgeting. Develop a master “to do” list so you won’t forget something critical on moving day, and create an estimate of moving costs. (A moving calculator is available at
  2. Sort and get rid of things you no longer want or need. Have a garage sale, donate to a charity, or recycle.
  3. But don’t throw out everything. If your inclination is to just toss it, you're probably right. However, it's possible to go overboard in the heat of the moment. Ask yourself how frequently you use an item and how you’d feel if you no longer had it. That will eliminate regrets after the move.
  4. Pack similar items together. Put toys with toys, kitchen utensils with kitchen utensils. It will make your life easier when it's time to unpack.
  5. Decide what, if anything, you plan to move on your own. Precious items such as family photos, valuable breakables, or must-haves during the move should probably stay with you. Don't forget to keep a "necessities" bag with tissues, snacks, and other items you'll need that day.
  6. Remember, most movers won’t take plants. If you don't want to leave them behind, you should plan on moving them yourself.
  7. Use the right box for the item. Loose items are prone to breakage.
  8. Put heavy items in small boxes so they’re easier to lift. Keep the weight of each box under 50 pounds, if possible.
  9. Don’t over-pack boxes. It increases the likelihood that items inside the box will break.
  10. Wrap every fragile item separately and pad bottom and sides of boxes. If necessary, purchase bubble-wrap or other packing materials from moving stores.
  11. Label every box on all sides. You never know how they’ll be stacked and you don’t want to have to move other boxes aside to find out what’s there.
  12. Use color-coded labels to indicate which room each item should go in. Color-code a floor plan for your new house to help movers.
  13. Keep your moving documents together in a file. Include important phone numbers, driver’s name, and moving van number. Also keep your address book handy.
  14. Print out a map and directions for movers. Make several copies, and highlight the route. Include your cell phone number on the map. You don’t want movers to get lost! Also make copies for friends or family who are lending a hand on moving day.
  15. Back up your computer files before moving your computer. Keep the backup in a safe place, preferably at an off-site location.
  16. Inspect each box and all furniture for damage as soon as it arrives.
  17. Make arrangements for small children and pets. Moving can be stressful and emotional. Kids can help organize their things and pack boxes ahead of time, but, if possible, it might be best to spare them from the moving-day madness.
Good luck this summer and enjoy the weather and your new home.