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Bellevue could see another boom

January 8, 2013 By Leave a Comment

bellevue_waIt’s been a little over four years since downtown Bellevue has seen an office tower go up. The 15-story Summit III project was left unfinished in 2009 when the recession hit. But some developers believe that this Eastside hub will soon become the site of large-scale construction, reports the Seattle Times.

Five residential projects with more than 1,100 units and three office towers featuring 1.5 million square feet are in the works for 2013. Kemper Development plans to expand Lincoln Square by building two office towers to create additional office and retail space as well as a 120-room hotel and 200 condos or apartments. CEO Kemper Freeman says that construction should start in the early summer.

Demand for living and office space in the region is on the rise, and developers are focusing on downtown Bellevue, with its relatively low office-vacancy rate, as a site for construction. There’s growing concern that Seattle neighborhoods are getting overbuilt. Traffic, tolls on Highway 520, and talk of additional tolls on other roadways are causing commuters to consider living in the city where they work.

Lisa Picard, executive vice president of developer Skanska USA, says that the Bellevue “has really developed into an urban center.” The second largest city center in Washington made CNN Money’s 100 Best Places to Live list for 2011. What used to be a suburban business district has transformed itself into an urban destination with retail shops, restaurants, and cultural amenities.

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Housing Numbers from NAR’s Existing Home Sale Report

October 24, 2012 By Leave a Comment

orange-county-housing-marketThe National Association of Realtors’ (NAR) September Existing Home Sales Report revealed that sales declined modestly, but inventory continued to tighten and the national median home price recorded its seventh back-to-back monthly increase from a year earlier.

Total existing-home sales fell 1.7% but are 11% above the pace in September 2011.

Other findings revealed in the report:

  • Existing-home price: the national median was $183,900 in September, up 11.3 percent from a year ago.

  • Distressed homes – foreclosures and short sales accounted for 24 percent of September sales (13 percent were foreclosures and 11 percent were short sales), up from 22 percent in August and down from 30 percent in September 2011.

  • Foreclosures sold for an average discount of 21 percent below market value in August.

  • Short sales were discounted 13 percent below market value in August.

  • Housing inventory at the end September fell 3.3 percent which represents a 5.9-month supply at the current sales pace, down from a 6.0-month supply in August. Listed inventory is 20.0 percent below a year ago when there was an 8.1-month supply.

  • Time on market: the median was 70 days in September, unchanged from August, but down 30.7% from 101 days in September 2011.

  • First-time buyers accounted for 32 percent of purchasers in September, compared with 31 percent in August; they were 32 percent in September 2011.

  • All-cash sales were at 28 percent of transactions in September, up from 27 percent in August; they were 30 percent in September 2011. 

  • Investors, who account for most cash sales, purchased 18 percent of homes in September, unchanged from August; they were 19 percent in September 2011.

Single Family Homes and Condominiums and Co-ops

Existing Single-family home sales declined 1.9 percent to a seasonally adjusted annual rate of 4.21 million in September from 4.29 million in August, but are 10.8 percent higher than the 3.80 million-unit level in September 2011. The median existing single-family home price was $184,300 in September, up 11.4 percent from a year ago.

Existing condominium and co-op sales were unchanged at a seasonally adjusted annual rate of 540,000 in September, but are 12.5 percent above the 480,000-unit pace a year ago. The median existing condo price was $181,000 in September, which is 10.0 percent higher than September 2011.

Regional Numbers

Northeast: Existing-home sales fell 6.3 percent to an annual level of 590,000 in September but are 7.3 percent above September 2011. The median price in the Northeast was $238,700, up 4.1 percent from a year ago.

Midwest: Existing-home sales slipped 0.9 percent in September to a pace of 1.10 million but are 19.6 percent higher than a year ago. The median price in the Midwest was $145,200, up 7.0 percent from September 2011.

South: Existing-home sales increased 0.5 percent to an annual level of 1.93 million in September and are 14.2 percent above September 2011. The median price in the region was $163,600, up 13.1 percent from a year ago.

West: Existing-home sales fell 3.4 percent to an annual pace of 1.13 million in September but are 0.9 percent above a year ago. With continuing inventory shortages in the region, the median price in the West was $246,300, which is 18.4 percent higher than September 2011.

Lawrence Yun, NAR chief economist, commented:

“Despite occasional month-to-month setbacks, we’re experiencing a genuine recovery. More people are attempting to buy homes than are able to qualify for mortgages, and recent price increases are not deterring buyer interest. Rather, inventory shortages are limiting sales, notably in parts of the West.”

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Morgan Stanley Makes Bold Prediction on Housing

October 4, 2012 By Leave a Comment

housing-market-predictionsInvestment firm Morgan Stanley has high hopes for the housing market’s recovery this year and next.

"We expect to see 2012 end with an increase of 7 to 9 percent for the year in aggregate home prices after considering seasonality effects for the remainder of the year, with the possibility of a 10 to 12 percent increase on the bullish side and a 4 to 6 percent increase as the bear case," according to Morgan Stanley analysts in its latest Housing Markets Insight report. "We view the bear case outcome to be relatively less likely."

Morgan Stanley analysts say that home shoppers need to have more access to credit in order to finance their home purchases to keep the housing recovery strong. A tight lending environment has kept many would-be buyers out.

"Recent actions by the Federal Reserve, the commitment to keep interest rates lower for longer as well as the launch of an open-ended QE3, convince us that this low mortgage rate environment and the demand response for housing are likely to prevail for an extended period — well into the future," the Morgan Stanley analysts conclude.

Source: “Morgan Stanley Declares Housing Out of the Woods,” HousingWire

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Will The Mortgage Forgiveness Act Be Extended?

October 4, 2012 By Leave a Comment

helpAs the year winds down, we are getting more and more inquiries about the Mortgage Forgiveness Debt Relief Act of 2007 and whether or not it will be extended past its original expiration date of December 31, 2012. This is important as people who are selling their home through a short sale may be faced with a tax liability if they don’t close by the aforementioned date.

Here is the way the IRS explains the tax liability:

“If you borrow money from a commercial lender and the lender later cancels or forgives the debt, you may have to include the cancelled amount in income for tax purposes, depending on the circumstances. When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is normally reportable as income because you no longer have an obligation to repay the lender. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.

Here’s a very simplified example. You borrow $10,000 and default on the loan after paying back $2,000. If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of $8,000, which generally is taxable income to you.”

What does the Act accomplish?

Let’s go back to the IRS for the explanation:

“Normally, debt that is forgiven or cancelled by a lender must be included as income on your tax return and is taxable. But the Mortgage Forgiveness Debt Relief Act allows you to exclude certain cancelled debt on your principal residence from income. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.”

(For more information on the ACT from the IRS, click here)

This relief also applies to most short sales. Therefore, the question of whether or not the Act will be extended is crucial for anyone considering selling their house through the short sale process.

Will the Act be extended past the end of the year?

No one knows for certain. Diana Olick of CNBC recently reported on the issue:

“So what is the possibility of congress extending the tax relief? One Hill-watcher puts it at 60-40. The Senate Finance Committee passed a package of tax extenders right before the recess, including a one year mortgage relief extension, but leadership in the House of Representatives has not figured out how it wants to handle these extenders. With the looming ‘fiscal cliff,’ tax cuts are an increasingly tough sell. This particular extension does have bipartisan support, but that doesn’t always mean passage in Congress, especially around a presidential election.”

Without knowing whether the Act will be extended, we suggest anyone considering selling via the short sale process do it now.

Source: KCM

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Home Ownership Rate Stands at 65.5%

October 1, 2012 By Leave a Comment

home ownersAmericans still favor home ownership. The U.S. homeownership rate continues to remain around 65.5 percent, the U.S. Census Bureau reported late last week. The home ownership rate is nearly the same as it was in the second quarter of 2011 at 65.9 percent.

The Census Bureau also reported that vacancy rates for housing were 2.1 percent and vacancy rates for renting were 8.6 percent in the second quarter.

The home ownership rate peaked at 69.2 percent in 2004. Home owners outnumber renters in nearly 100 percent of the nation’s 3,095 counties evaluated by the Census.

Keweenaw County, located in Michigan’s Upper Peninsula, posted one of the best home ownership rates: 89.8 percent.

Source: “National Home Ownership Rate Is Pegged at 65 Percent,” The Business Journals

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Housing Market Lifts Off From the ‘Bottom’

August 1, 2012 By Leave a Comment

off the bottomRecent housing indexes have shown single-family home prices are on the rise, providing more evidence that the “bottom” of the market is already behind.

"We’re wiping out just about all of the decline,” Joel Naroff, chief economist at Naroff Economic Advisors, told NBC.com about recent housing data showing home prices inching up. “It indicates the market has turned the corner on the pricing side.”

Some recent housing indexes suggest that the “bottom” of the market was reached in January 2012. Since that time, housing prices have been picking up in many housing markets.

But "the turnaround in home prices was unexpected," says Patrick Newport, an economist with IHS Global Insight. "The conventional wisdom in February, following that landmark agreement [of the $26 billion mortgage settlement with the nation’s five largest banks], was that we would see a surge in foreclosures of some size that would lead to lower home prices. This surge never materialized and home prices have turned.”

Newport points to several signs of a housing market on the mend. For one, housing starts are up, after reaching a low in the fourth quarter of 2011. Also, he says the FHFA monthly House Price Index shows a 3.7 percent increase in May year-over-year, which he notes is higher than inflation and “means that real housing wealth, a consumer spending driver, was also up.”

The increase in home prices is also leading to a fewer number of home owners who are underwater on their mortgages, owing more on their mortgage than their home is currently worth. The number of underwater home owners fell from 12.1 million at the end of 2011 to 11.4 million at the end of the first quarter this year, according to CoreLogic data.

Source: “Evidence Mounts that Home Prices Hit Bottom Last Winter,” NBC News

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Good News: Interest Rates Will Remain Low

June 12, 2012 By Leave a Comment

trends pics3.5 % Down Payments and Jumbo Loans Available

This is a great time to be looking for a new home. Historically low mortgage interest rates will remain low for the near future. Those low interest rates keep home purchases affordable, which is good news for buyers and sellers.

With the August United States’ debt ceiling crisis behind us, many people are starting to become more confident about buying or selling their homes.

Interest Rates

In early August, the Federal Reserve pledged to maintain historical low interest rates for another one to two years. Most likely, when the Fed’s pledge ends, interest rates will have to increase. However, we don’t anticipate a significant increase in interest rates until 2013 or later.

Down Payments

Even though underwriting for home loans has tightened up over the past several years and buyers are now required to put down larger down payments and have higher credit scores, the Federal Housing Administration, or FHA, still offers mortgages with a 3.5 percent down payment.

Expiring High Mortgage Balance Loan Limits

As a result of the 2008 mortgage crisis, loan limits were increased to allow more borrowers to secure conforming loans. On the first of October 2011, these temporary limits expired, and more buyers in higher-priced markets will need jumbo loans that will carry tighter qualifying requirements (i.e. credit scores) and slightly higher interest rates.

Although many banks stopped or significantly tightened lending underwriting for jumbo loan products when the housing crisis hit, they are now back in the market and filling the void created by the expiration of the higher loans balance. That’s good news for buyers needing jumbo loans and sellers of higher-priced properties.

Conclusion

The days of reckless lending and then the market’s pendulum swing to overly conservative lending practices are gone. The good news is that we are now back to sensible underwriting. Even though we have tougher qualifying requirements – larger down payments and higher credit scores – banks still want to provide mortgages, even at historically low interest rates. Call your broker for more information when planning to buy, sell or refinance your home.

Source: Trendgraphix, NWMLS
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National Headlines and Local Real Estate Markets

June 11, 2012 By Leave a Comment

Do National Real Estate Headlines Actually Influence Local Markets?

This is a question we are frequently asked. Local real estate professionals know the best information for either buyers or sellers is local market data. However, we must realize that what happens in the national real estate market dramatically impacts regional and local markets. For example:

Are 30 year mortgage interest rates in North Dakota under 4% because of what happened in the their market over the last few years?

Of course not. They benefit from lower rates because of what happened in the national economy (if not the world economy).

Buyers all over the country are concerned about the reports of distressed properties about to come to market and what impact they will have on house values. The truth is only a handful of states will be adversely affected. However, if overall consumer confidence is shaken, every market is impacted. This is why it is important that you work with a real estate professional that understands three things:

  1. What the national headlines are saying and why they are saying it

  2. What effect the issue may or MAY NOT have on your local market

  3. How to simply and effectively explain both of the above to you

Agents who just ignore national headlines are hiding their heads in the sand. Agents who use the headlines as scare tactics to unfairly influence the actions of their customers are engaging in unethical behavior. Agents who take the time to keep abreast of the national real estate issues and are patient in explaining how these issues will impact you in the local market are true professionals.

The first two types of agents could cost you dearly. The last group will maximize the outcome of your real estate transaction – both personally and financially.

by THE KCM CREW

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Where are the sales?

March 6, 2012 By Leave a Comment

sale_price_distribution

At the sub-market level, Kirkland remains as the most expensive submarket in the Seattle metro area for single family new construction during the fourth quarter of 2011 with the average price of transacted units of approximately $827,000. Sammamish was second at $691,000 and Bellevue/Mercer Island ($668,000) rounds out the top three. The most affordable markets were Black Diamond/Enumclaw ($222,000), Sultan/Gold Bar/Index ($235,000) and Marysville ($254,000).

The sharpest single family home price escalation was seen in the Sultan/Gold Bar/Index sub-market where, as a function of very little development, prices rose by 366%. This was followed by Stanwood (76.6%, Carnation/Duvall (58.1% and Arlington/Granite Falls (41.2%). The most prominent declines were found in Black Diamond/Enumclaw (-36.3%) and North Seattle (-27%). When we look at the market, one thing remains clear, and that is the lack of inventory for sale. This has started to have an effect on transactional activity which is sure to continue to decline unless more houses come onto the market for sale.

In all, several sub-markets appear to be showing signs of stabilizing relative to values. When placed in concert with increasing incomes and an improving employment situation, it may be possible to
speculate that the residential market is in its trough and that further pronounced declines in price are unlikely.

That said, we will be looking for some good numbers come out for the first quarter before we are willing to suggest that the market is in any form of recovery on a regional basis.

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