Friday, August 19, 2016

Summer Real Estate Trends

Local trends in the market place show a continued healthy market here in Clark County, WA. July showed a slight dip in sales but new listings stayed a bit flat so that gave us a much needed boost in inventory. It was not a big boost but it helps. With 2.1 months available it is still tight and the market still favors sellers. I am finding that the multiple offer feeding frenzy is occurring less often and only on homes that are really well priced. Agents marketing homes at close to fair value are seeing quick turn around but not the craziness of a month or so ago. Sellers looking to puff up their price are finding some market resistance.

This my friends is what a healthy market looks like. Well priced listings attract multiple offers, properly priced listings go pending in less than a month, and over priced listings dangle in the breeze until the market catches up to the puffed up price. 

Clark County is sitting at a median sales price of just over 300,000 and growth is showing about 0.4-0.5% monthly gains, which is a healthy annualized number of about 5-6%. Anything higher is not sustainable.

Builders continue to produce new homes, The modern trend of big house on small lot continues as land values and increased state and local regulations push costs higher on land development. Homes in the sub-median price ranges will continue to see robust activity and multiple offers. Above median still seems to be a healthy market with a leaning towards seller favor between the median and $450,000, swinging to neutral from $450k to $750k and still favoring buyers, although only slightly, once above $750k for the most part.

This is a solid and sustainable market and if it continues we will see slight fluctuations between slowing to 2-3% growth then perking up to say 7-10% briefly. All of this based on local and national economic trends.

It's a good market my friends.

Friday, August 12, 2016

Enjoy This Blast from the Past!

Rates continue to remain super low. We have been talking about a low rate bubble for quite some time and it looks like things will stay the same until at least early next year when a new presidential administration will take over.

Originally posted October 16th, 2015, by Rod Sager

Holy Rate Basement Batman! Banks are Practically Giving Money Away!

Have you looked at the mortgage rates lately? Most lenders are offering qualified borrowers a 30 year fixed rate loan at around 3.5% These may not be the lowest rates ever but if not, they are very close to the lowest ever. I have discussed the notion that interest rate is far more important than purchase price especially if one intends to stay in the property for a long term period of seven or more years. Imagine borrowing $240,000 from the bank at 4.5% over 30 years fixed. By all measures this is a good loan at a great rate. The principle and interest payment (PI) would be $1,216 per month. But right now you may very well find lenders offering 3.5% 30 year fixed loans. Now the $240,000 mortgage payment looks more like $1,078. That is a whopping $138 per month less! That is a savings of $16,560 over ten years and nearly 50 grand over the life of the loan! In the heavily paraphrased words of the immortal Doctor McCoy, my God man, why aren't you buying a house!

Seriously my friends, these are truly fabulous times. Sellers will get the strongest offers when rates are low because more buyers will qualify at the higher price. Buyers will get the most bang for their buck at 3.5%. Buyers can also qualify for a lot more money. The same buyer that qualifies to borrow $240,000 at 4.5% will qualify to borrow $270,500 at 3.5%. These super low rates will allow buyers to essentially get 12.5% more money for the same monthly payment. 4.5% is a great rate, 3.5% is a OMG rate! Be sure to check with your favorite mortgage professional as there are a few variables that banks look at such property taxes, mortgage insurance, etc. But in general these are pretty accurate figures.

Yes prices have crept up and many entry level buyers have found themselves in a pickle. But there is a window of opportunity to effectively take 12.5% off the price of a house. Seller wins, buyer wins, everybody wins, except the bank. That my friends is a good scenario. Happy hunting!

Friday, August 5, 2016

Planning on Collecting a Pension in Retirement?

I write a monthly blog called "Retire to Washington". As far as real estate goes, many people choose to sell the "family" home and 'downsize' to something less formidable when they retire. People sometimes choose to move away from the community they raised the family in as well.

There are multiple factors involved in such decisions. Sometimes parents follow their children so as to be near grandchildren. Sometimes it is an economic decision searching for a place that offers tax relief or other financial advantages for a retiree. Weather can drive the decisions as well and the high number of retirees in Arizona and Florida certainly are indicative of that.

Here in America's Vancouver and Clark County, Washington, we have many ideal conditions for retirees. The title of this post asks if you are planning to collect a pension in retirement. If you are, then Washington State is one of only 7 states in the USA that does NOT tax income. Our neighbor to the south collects an income tax described by industry experts as one of the most aggressive in the country.

Income tax is the biggest government kill-joy for retired people there is. Most folks find themselves in retirement with little in tax deductions. The kids are gone, you're retired so there is no job related deductions, the house is either paid off or nearly so and the interest deduction is all but gone. Then here comes the heavy hand of government to collect their tax. There's little avoiding the feds on this, but at the state level, Washington lets you keep all of your income.

Many people fail to recognize the significance of this deadly combination of income tax and no deductions. In nearby Portland, OR one merely needs to earn a gross of about $16,000 to find themselves in the most common bracket which is a molesting 9%. To put it in perspective, Oregon collects no sales tax, but plunders the average Oregonian for 9% income tax. If one earns $30,000 in taxable income they will bequeath to the 'Empire of Oregon' some $2700. Here in Washington state we do have a state sales tax of 6.5% and locally it is 8.25%. On the surface it may seem close, but stop and think about it. Do we spend every income taxable dollar on sales taxable goods and services. The answer is: hell no, we do not. A person earning a taxable income of $30,000 will likely buy less than $10,000 a year in  sales taxable goods. That's less than $825 a year in sales tax and only a third of the burden imposed by the gluttons in Salem down in the Beaver State.

What could you do with an extra $1900 each year? Obviously those with two pensions of a larger retirement income will find this tax savings all too juicy to pass up. The real estate angle is simple. If the sweltering heat of the desert isn't your idea of a comfortable retirement, then skip on Arizona and come straight to Washington State to buy that last house!

As always, I must pull by best Doctor Leonard McCoy impersonation: "I'm a Realtor®, not an accountant"! I am not a tax professional and any decisions made regarding taxation and its effects on your personal situation, should be taken under the advisement of a tax professional.