Increased number of pendings and solds for four consective months now. Yes, we are experiencing an increase in buyer activity and a constant number of listings remaining, but the acitivity is not equal in all price ranges. Where is the majority of this activity? In June the NWMLS recorded 522 sold properties, of those properties, 430 were below the FHA limit of $417K and 243 were below the price of $300K. So, roughly 82% of all the sold properties in Snohomish county for the month of June were below the price of $417K. This is the first time home buyer taking advantage of today's market. In the month of June I was involved in 3 different sales (two listings, one buyer) in the price range under $417K that were multiple offer situations! There is a large group of first time home buyer's in the market right now, waiting for a quality home to come on the market that is well price!

Current interest rates have climbed to around 5.675%.

Current Real Estate Market -

The real estate market today is seeing a surge of  buyers, but the surge is limited to the first-time home buyer’s market, with FHA and USDA financing as the loans of choice.  The price range for this market is anything below the $417,000 price. With this surge of late, I am seeing many short sales and bank owned properties being purchased.  Why the surge?  Very low interest rates that are beginning to creep back up, the $8,000 dollar tax credit, lower home values, and overall affordability.

What is missing in today’s real estate market?

What’s missing in the market right now is the move-up buyer. Typical buyers in this class will be selling a “first-time home buyer” home and using the equity to move up to a larger home. But as I mentioned earlier, many of the homes that are selling now are either vacant (bank owned) or distressed sellers (short sales), meaning there’s no one to move to their next home. As I see it, this unique dilemma brings opportunity! 

Why the opportunity?

Home values have dropped  in the last two years to near 2005 price ranges in most areas. This means that homes have lost a total of 15% to 18% of their value in the last two years (this varies from neighborhood to neighborhood). For example, a home that was valued at $350,000 in 2007 has a market value of $287,000 (18%)  and a home valued at $550,000 is now  worth $440,000.  The $350,000 home lost  $63,000 while the $550,000 lost $99,000. This is the ideal situation for the “move up buyer”! Why? Because while the home you are selling may not be worth as much as it was last year, the home you are buying is an even bigger deal…in our example above, your net savings is $36,000! In addition, the homes in the $550,000+ price range are not moving, making sellers more motivated to make you a deal!

Conclusion -

This is a great time for first time home buyers to get into an affordable home, but even  a greater opportunity for move up buyers to purchase their next home. Interest rates are very volatile right now with the expectation of inflation on the horizon, so if you or someone you know is contemplating a change in real estate (buy, sell, or refinance) have them give me a call to see if now is the right time for them!

We now have a two month trend of increased pending and sold homes, with the number of available homes or new listings remaining roughly the same. Has the real estate market rebounded? Will this continue? From what I am experiencing and seeing, I believe it will continue. The key changes that contributed to this trend is the increase in the first-time home buyer market. With homes being more affordable now than in the last 30 years (wages compared to home values), interest rates still at historic lows, and the $8,000 tax credit, I do not see any of this changing in the near future. The tax credit will continue to December 1, 2009, and interest rates do not appear to be increasing on a consistent basis. In addition, home values are continuing to decline (although at a slower pace now then earlier this year), making this a great opportunity to buy. So, if you are someone you know is thinking about buying a home, rental, or second home now is great time to consider all the facts and make the best move for you!!

Current interest rates are around 5.00%.

I have currently come across some statistics that in my opinion have had a great deal in contributing where we are at in this real estate market and why we are missing our "move up buyers".

• 2000: Americans took out $26 billion in equity out of their homes
• 2004: Americans took out $139 billion in equity out of their homes
• 2005: Americans took out $450 billion in equity out of their homes
• 2006: Americans took out $650 billion in equity out of their homes

42% of this went to consumer spending or to pay off consumer debt!! So, we transferred our not secured debt into our homes?!!!

As I mentioned in last month’s update, we are seeing Real Estate activity pick up and why shouldn’t it? Interest rates at a or near a 50 year low, housing affordability is at the lowest it has been for the past few years, lots of incentives for first time home buyers, great inventory available and a strong buyers’ market makes this a great time to invest in real estate. I expect the activity to continue to increase through the year of 2009. When you come across a friend, family member, or co-worker looking to take advantage of this time have them give me a call!!

Interest rates continue to hang around 4.875% with no points.

I have been asked many questions on what is better or should I say worse, a short sale or a foreclosure on the forgiveness of debt and the tax's that might due on the forgiveness. Now, as a Real Estate agent I would and will always say to consult a Certified Public Accountant for your specific situation but I do have some insight in this matter.

There is some "forgiveness" on the debt forgiven in a home sale, loan modification, credit card debt forgiven, car loan debt forgiven, deed in leau of foreclosure, and other debts forgiven. I would like to focus though on the "short sale" part.

When a home is sold and the proceeds of the sale are less then what is owed on the home this is considered a short sale.  In a short sale the lien holders (banks) will typically forgive less than what the amount owed on the lien. When this amount is forgiven will typically be considered as income to the seller and taxed at the seller's tax braket. But in 2007 The Mortgage Forgiveness Debt Relief Act and Debt Cancellation will help. There is some relief either in solvency or what the purpose of the liens are on your home. This for more complicated than a one time blog and I will leave the details to the professionals but I did want to make it aware to all. So, please click on the link and educate yourself on this matter, it could save you money on your tax's!!!

You have probaly heard that now is great time to buy and many have shrugged this off due to the all the negetive press going on in today's real estate market. First off, today's real estate market in Snohomish County is not a bad market! Yes, the market is slower than years past, yes home values have dropped (for the better), and yes there are foreclosures and short sales (opportunities for buyers) but this is still a great time to invest in Real Estate! Let me explain why with some financial stastics-

Snohomish County 2005-

• Average Household income $62,080
• Highest median home value $315,000
• Averate interest rate 5.87%

Snohomish County 2006-

• Average Household income $63,313
• Highest median home value $355,000
• Average interest rate 6.41%

Snohomish County 2007-

• Average Household income $65,394
• Highest median home value $376,000
• Average interest rate 6.34%

Snohomish County 2008-

• Average Household income $70,167
• Average median home value down to $325,000
• Average interest rate 6.03%

Snohomish County current-

• Average Household income  TBD but should be equal or higher
• Average median home value- below $325,000
• Average interest rate 5.25%

So, what do I see- incomes have continued to go up on a average per household, home values are now in or near the 2005 year price ranges, BUT interest rates are at a all time low allowing buyer's to pay less for a home on a higher income level with home values at a all time low in comparison. Higher wages, lower interest rates, lower home values, and opportunities due to "urgent or distressed" home owners makes for a great opportunity to invest in real estate as a first home buyer or invester. These interest rates will come and go and will more than likely not come again. Will home values continue to drop, yeah more than likely but as a long term investment they will go back up!

Don't try to "time it right", if you have a stable income, with good credit, now is great time to look into buying a home!!!