Tuesday, May 23, 2017

Snoqualmie Pass Real Estate, Mortgage, and the Economy - Seattle # 3 In Highest Construction Costs

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THE FOUR U.S. CITIES WITH THE HIGHEST CONSTRUCTION COSTS

Average construction wages hit $100 per hour in New York City, according to a new study of global construction trends.

By Jennifer Goodman

New York and San Francisco have taken over Zurich, Switerzland, as the most expensive cities in which to build, according to a new study that also shows the global effects of a shortage of construction labor.

Construction costs in New York are set to rise by 3.5 per cent over 2017, reflecting a major influx of real estate investment and surge in construction activity, according to the survey by professional services company Turner & Townsend. The International Construction Market Survey 2017 analyzes input costs – such as labor and materials – and charts the average construction cost for commercial and residential projects in 43 markets around the world.

Average costs in New York have hit $354 per square foot followed by San Francisco at $330 per square foot. Two other U.S. cities made the top ten: Seattle at $280 per square foot and Houston at $233 per square foot. In addition, construction price inflation in San Francisco and Seattle is forecast at 5 percent for the next twelve months – outstripping both a global average of 3.5 percent and national consumer price inflation.

In total, 58 percent of cities assessed by the study are identified as "warm, hot or overheating" – where the market is characterized by a high number of projects and intense competition for physical resources and labor that drives up prices.

Of the U.S. cities surveyed Seattle is categorized as overheating, while New York and San Francisco are considered hot. In the case of New York, Turner & Townsend points to major foreign real estate investment as contributing to the city’s boom in construction spending – which hit an all-time high of $42 billion in 2016.

North America has the highest labor costs of all the regions assessed within Turner & Townsend’s report –with average construction wages hitting $100 per hour in New York. This comes in the context of a global skills shortage for construction, with over half (24) of the 43 markets analyzed reporting labor shortages compared to 20 markets in 2016.

“In stark contrast to conditions in many other global regions, most U.S. cities are seeing a major construction boom – with investment in New York particularly hitting new highs and both San Francisco and Seattle set to see above country average inflation this year at 5 per cent price," says John Robbins, managing director USA, Turner & Townsend. “In common with the majority of developed economies, U.S. construction continues to suffer from an acute skills shortage which is driving up labor costs."

Friday, May 19, 2017

Snoqualmie Pass Real Estate, Mortgage, and the Economy - 4 Things First-time Homebuyers Need To Know

4 things first-time homebuyers need to know

My wife and I are hoping to be first-time homebuyers this year. We'll likely blow our savings on the down payment and closing costs. What's the best way to handle the costs for home renovations? Private loan? Just wait a year or two for our savings to replenish some? --Brian & Emily, Jersey City

Congratulations on your adventure into becoming homeowners.

Buying a home is likely the biggest purchase you'll ever make, and it's not always an easy one.

Low inventory has pushed home prices up in cities throughout the country, giving sellers an advantage. Homes sell fast, bidding wars break out and offers above the asking price are common.

All of this means that buyers need to be on their game and have their finances in order before entering the market.

Here's what experts said first-time buyers need to know:

1. What you can actually afford

Before buyers start their house hunt, it's important they know how much they can afford to spend.

"Start with a plan," said Chantel Bonneau, a financial adviser at Northwestern Mutual. "Don't let your imagination take over and don't let what you see from friends' houses drive your budget."

Buyers should list out all of their monthly expenses. Don't forget to include items like groceries, transportation, and discretionary spending, like gym memberships and nights out.

general rule of thumb is that housing costs shouldn't take up more than 30% of your before-tax income.

But experts said that the percentage can vary, especially if you have other debts, like student loans or car payments.

Spending too much on monthly housing payments can leave homeowners house poor, and unable to afford other expenses -- like saving for retirement.

"A home is not a good excuse to be reckless with the rest of your financial situation," said Bonneau.

In competitive markets, it's common for buyers to get pre-approved for financing to get a leg up. But experts said that just because a bank approves you for a certain amount, it doesn't mean that's what you should spend. Stick to a price limit you're comfortable with.

2. You need a buffer

While it may be tempting to throw everything you've got at your offer to stay competitive, experts recommended having at least some money left over after you close on a home.

"If buying a house takes your checking account down to $1,000, it's probably too expensive," said Bonneau.

Experts advised having at least three to six months in savings the day you become homeowners. One reason is that you'll need emergency savings now more than ever.

"You don't want a flat tire or a deductible on a medical plan to throw you into financial turmoil," said Bonneau. "When you are a homeowner, you have a lot more things that can go wrong."

If a home purchase leaves you with no liquidity, it might be worth considering waiting to increase your savings or lowering your price point, advised Neil Krishnaswamy, a certified financial planner with Exencial Wealth Advisors.

3. The true cost of owning a home

The down payment tends to be the biggest financial hurdle to owning a home, but there are many other costs that pop up along the way: appraisal, origination, credit report and notary fees can all add up.

And the costs don't stop just when the keys are handed over. There's the move, new furniture and costs like lawn care and utility payments that former renters might not be used to paying.

"I don't know if anyone truly understands the total cost of owning a home," said Krishnaswamy. "Things just continually come up that you want to do, either buy something to fill a room or fix or improve something. Most people underestimate the cost."

4. Renovations are not as seen on TV

Buying a fixer-up might allow you to snag a bigger home or afford one in a more desirable area, but experts warned there are huge risks.

"Know that it is always more expensive than what you are imagining ... or what you see on TV," said Bonneau.

If a home needs renovations, factor that into the total cost of buying, recommended Krishnaswamy.

A private loan is an option to finance the project, but can be difficult to secure, especially after just taking out a mortgage.

If your home appraises for more than you purchased it for, you could have the option of tapping your equity to help pay for renovations.

There are some mortgage options that include renovation expenses. For instance, 203k FHA loan allows homebuyers to finance the sale and rehabilitation on a single mortgage.

Another option is asking a friend or family member for a loan.

"If you are trying to secure the best low-rate loan, look at those closest to you, but be mindful of your relationship status if you can't pay back the loan," said Krishnaswamy.

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Wednesday, May 17, 2017

Snoqualmie Pass Real Estate, Mortgage, and the Economy - Homebuilders Look To Starter Homes

Homebuilders switch gears, look to starter homes

Begin move away from luxury homes

May 11, 2017

Kelsey Ramírez

As Millennials increase their share in the housing market, homebuilders are switching gears from the luxury market, which they focused on the past several years, to starter homes, according to an article by Laura Kusisto and Chris Kirkham for The Wall Street Journal.

Nearly all major builders are making this shift as Millennials, the newest generation of homebuyers who were born from the early 1980s to mid 1990s, increase their presence in the market, according to the article.

From the article:

“There’s an increasing confidence level in that part of the market,” said Gregg Nelson, co-founder of California home builder Trumark Cos. “The recovery is finally starting to take hold in a broader way.”

While the share of first-time buyers fell to a 30-year low in 2015 of 32%, that number increased in 2016 to 35%, according to the article. The historic average of the share of first-time buyers sets a bit higher at 40%.

From the article:

The housing recovery has been divided, as the luxury market has soared in recent years while the more affordable end of the market has struggled to make up for lost ground. Tough lending standards, slow wage growth, growing student-debt obligations and a newfound fear of ownership have combined to crimp demand among millennials in particular. The return of the starter-home market means the housing bifurcation is finally starting to narrow.

Tuesday, May 16, 2017

Snoqualmie Pass Real Estate, Mortgage, and the Economy - Foreign Investors Buying Up Properties

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Chinese investors buying up Puget Sound properties, affecting housing market as a whole

POSTED 5:26 PM, MAY 10, 2017, BY HANA KIM,

SEATTLE — When you think the housing market couldn’t get any hotter, it does and continues to set records.

The median price of a home sold in the Seattle area went for more than $700,000 last month.

On the Eastside, the price was even higher at nearly $900,000.

The skyrocketing prices can be a good thing if you already own a home but for buyers the market is tough.

And foreign investors are making it even harder.

Chinese investors make up the majority of foreign buyers in our area. They have always been interested in the Puget Sound area but several local realtors are telling Q13 News they are buying up residential properties at a rate they never seen before.

Many Chinese investors are purchasing luxury homes, and even if you are not personally playing in that arena, experts say the frenzy is affecting the housing market as a whole.

Q13 News recently went home shopping with Heather Scherie Manzer.

When Manzer walks into a home she is looking for love.

“I am of the mindset you have to love a house,” Manzer said.

And it`s happened. She’s fallen in love five different times.

“I’ve had my heart broken yes,” Manzer said.

She`s lost every single property she`s bid on for the past three years.

Among the competition are Chinese investors who many times overbid and pay in cash.

Broker Gary Lu with John L. Scott specializes in the cash-bidding world.

“Seattle is the top city for Chinese investors,” Lu said.

Lu has an interesting perspective -- he represents local buyers frustrated over the fierce market.

“I grew up here and I completely understand,” Lu said.

At the same time, wealthy foreign investors hungry for a good investment are keeping him busy.

“I am their personal shopper,” Lu said.

In fact, Lu says some Chinese investors have never even set foot in the Emerald City.

“Not just one client, many of my clients they have never even been to Seattle,” Lu said.

The attraction to the Puget Sound region is multifaceted -- from panoramic views to higher education and the burgeoning tech industry -- there is much to be coveted in our region.

“If you look at the whole West Coast by comparison we are very affordable,” Lu said.

Adding to the attraction -- Vancouver, Canada, imposed a 15% tax on foreign buyers last year. Quickly, searches for Seattle properties surged.

For example, in November 2016 inquiries went up by 125%, according to Juwai.com, a Chinese version of Zillow.

“You can see that as a good sign or a bad sign,” Lu said.

The good is the economy is getting a boost but the bad is that it`s drying up inventory.

And in some cases, properties are even sitting vacant, purchased by Chinese investors who never moved in. And that kind of practice is one reason Vancouver voted to tax foreigners.

“Not sure we`ve become the next Vancouver,” researcher James Young said.

Young, with the UW’s Runstad Center for Real Estate Studies, isn`t concerned so much about investor vacancy rates as he is with pace of development locally.

“There is no way to build enough houses right to meet the demand, it`s almost impossible,” Young said.

And for people looking to buy an average home in our area, what`s going on in the luxury market matters.

“If there are fewer opportunities for people to move up, they are going to stay in that house longer, which means there are fewer opportunities for first-time home buyers,” Young said.

There`s a lot of current to move up from the middle, and that trickles down to first-time buyers who can`t get that entry-level house.

“When you can’t buy a house because they are getting bought up, it`s a hard pill to swallow,” Manzer said.

The emotional roller coaster means Manzer’s realtor Mitch Lomax is also playing therapist.

“Let’s count to 10, let's sleep on it, I am sure the sun will come up tomorrow,” Lomax said.

He`s preaching patience and unbridled optimism.

“What is happening right now is unusual, it will become a more balanced market,” Lomax said.

When that will happen is anyone`s guess. In the meantime Manzer is not giving up.

“We are saving in cash so we can compete,” Manzer said.

One realtor on the Eastside told me that last year 70% of her listings were sold to foreign investors, mostly to Chinese investors.

But Chinese investors are not the sole reason why we are seeing skyrocketing home prices.

Lu says even if Chinese buyers were to leave the market tomorrow, he believes the trend would still continue because of the strong economy.

Monday, May 15, 2017

Snoqualmie Pass Real Estate, Mortgage, and the Economy - 5 Reasons Not To Purchase Home With Cash

5 Reasons Not to Purchase Your Home With Cash

U.S. News & World Report - Money

Devon Thorsby4/12/2017

When It Makes Sense to Pay Off Your Mortgage Early

Especially in today’s tight seller’s market, homebuyers are looking for any way to get a leg up on the competition when putting in an offer on their desired home.

If you have the means, an all-cash purchase is a great way to fast-track a deal. A seller is more likely to accept your offer, the success of the deal isn’t reliant on a lender’s OK following an appraisal and you would own the home outright after the transaction.

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“All things being equal, it’s very likely that your offer would be the most attractive that they’d be considering with limited risk for the seller,” says Marcy Keckler, vice president of financial advice strategy for Ameriprise Financial, a financial planning and investment advice company.

Cash transactions make up a minority of home purchases. In 2016, just 23 percent of U.S. homebuyers paid cash for their homes, according to real estate information site Zillow’s Consumer Housing Trends Report 2016.

But even when you have enough liquid assets to purchase a home without a loan, is it always a good idea? Here are five reasons not to buy your next home with cash.

1. You need to keep some liquidity.

It’s not wise to purchase a home with cash if you have just enough liquidity to pay for it. Cash is important to have on hand for any number of things that might come up – from a new roof to losing your job to a medical emergency. You want to have enough money to sustain you for at least a few months if you were to lose your income, which varies based on your lifestyle but should be at least a few thousand dollars.

“It’s especially important that if you’re a homeowner that you have enough other money available to pay for things that might come up,” Keckler says.

2. You qualify for a solid mortgage.

If you have enough cash to purchase a home outright, lenders will likely view you favorably for mortgage options.

Plus, the current environment for mortgage lending is fairly optimistic. The Lenders One Cooperative, an alliance of independent mortgage bankers and lenders and a subsidiary of Altisource, just released its Mortgage Barometer for 2017, which shows 94 percent of 200 mortgage lenders surveyed expect an increase in mortgage purchases this year. Compare that to 2016, when just 62 percent of lenders said the same.

Generation X and millennials are considered two populations with the most potential for growth as borrowers, with at least 85 percent of lenders surveyed noting opportunity in those age groups. Both generations are unlikely to buy a home with cash, according to the Zillow report – just 18 percent of Gen Xers and 22 percent of millennials purchased homes without financing in 2016.

“People are pretty comfortable with taking on debt,” says Justin Vedder, vice president of national sales for origination solutions at Altisource. He notes the younger generations’ familiarity with student loans and other financing make a mortgage an easier choice than older generations, who have built up greater wealth over time but may not be as used to having significant debt.

Vedder also points out that, while on the rise, interest rates remain near historic lows. With enough cash to put down 20 percent on the home with a fixed-rate mortgage, you could keep a large portion of your liquid assets and pay 4.13 percent interest, plus the significant down payment would prevent you from paying private mortgage insurance. Compare that to October 1981, when mortgage rates hit an all-time high of 18.45 percent, according to FedPrimeRate.com.

3. Your money may be better invested elsewhere.

Even if you’re looking to buy outside a major metro area with steep home prices, if you have enough cash to pay for a home outright, you’re sitting on a pretty big pile of money. But the decision isn’t just between paying for property and having it sit in the bank. Consider other forms of investment to grow your wealth.

It could be investing in the stock market, mutual funds or a personal business you feel confident will bring greater returns. Keckler is quick to point out, however, that no investment is a sure thing. As with a home purchase, there is risk when investing your money anywhere.

4. You’ll miss out on a sizable tax break.

All homeowners with a mortgage receive a tax break on the interest paid to the lender.

“The interest [tax break] you accrue when you pay on the loan is huge,” Vedder says, giving the example of a relative who owns a small business. After doing her taxes for 2016, she told Vedder she’d like to buy a home to help reduce the amount she owes when tax season comes around.

Keckler notes that if President Donald Trump's administration moves forward with tax code reform, the mortgage interest tax deduction may be eliminated. But tax reform has not yet been discussed in detail and remains only a possibility.

5. There’s no guarantee home values will continue to increase.

Home prices are on the rise and in many markets are at an all-time high. And they are expected to continue to rise, if at a less intense pace, in 2017. But if the housing market crash in 2008 was any indication, there’s no such thing as a guarantee in real estate.

“A lot of people feel that [because] the market fell out in 2008, putting all your money in your home is a big risk,” Vedder says.

Always weigh the pros and cons. Especially in today’s market where homebuying is extremely competitive, an all-cash offer can provide the needed leg up to get the seller to consider your offer more seriously than others. You may not even be the highest bidder, but the seller knows a cash offer will make the closing process easier.

If you want to set yourself apart from other buyers but see the benefits of having a mortgage, Vedder suggests using the cash to your advantage and financing after closing. “You could differentiate yourself and get a loan later,” he says.

It’s also important to remember that by financing, you’re taking on additional costs with loan origination fees and the interest paid over time.

“Your net cost of purchasing is going to be less if you’re paying cash,” Keckler says.

Whether you decide to purchase your home with cash or a mortgage, it’s a matter of what you feel most comfortable with. Keckler notes that zero financing might provide a greater sense of security emotionally, even if it’s not the same guarantee financially. “It may be a big sigh of relief to just know that you own the home outright, and that you don’t have to worry about mortgage payments,” she says.

Tuesday, May 9, 2017

Snoqualmie Pass Real Estate, Mortgage, and the Economy - Mortgage Rate Edges Down

Average US 30-year mortgage rate edges down to 4.02 percent

By THE ASSOCIATED PRESS

WASHINGTON — May 4, 2017

more +

Long-term U.S. mortgage rates barely moved this week after rising last week for the first time in five weeks. The benchmark 30-year rate remained above the key threshold of 4 percent.

Mortgage buyer Freddie Mac said Thursday the average rate on 30-year fixed-rate home loans ticked down to 4.02 percent from 4.03 percent last week. The rate stood at 3.66 percent a year ago and averaged 3.65 percent in 2016, the lowest level in records dating to 1971.

The rate on 15-year mortgages was unchanged from last week at 3.27 percent.

The steady mortgage rates came amid a cautious market. With the economy on solid footing and unemployment at a near-decade low, the Federal Reserve remains in the midst of a campaign to gradually raise interest rates from ultra-lows. But this week, the Fed took a pause, keeping its key short-term rate unchanged after having raised it in March for the second time in three months.

Despite the low borrowing rates that could lure prospective homebuyers, the housing market has remained hampered by limited supply, rising home prices and tight mortgage credit. The bad news for buyers is that the number of houses for sale has dropped to its lowest level in nearly 20 years.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged this week at 0.5 point. The fee on 15-year loans rose to 0.5 point from 0.4 point.

Rates on adjustable five-year loans edged up to 3.13 percent from 3.12 percent last week. The fee increased to 0.5 point from 0.4 point.

Monday, May 8, 2017

Snoqualmie Pass Real Estate, Mortgage, and the Economy - US Homebuilder Sentiment Slips

US homebuilder sentiment slips, but overall outlook positive

By ALEX VEIGA

Apr. 17, 2017

U.S. homebuilders are feeling slightly less optimistic about their sales prospects, even as their overall outlook remains favorable.

The National Association of Home Builders/Wells Fargo builder sentiment index released Monday slipped to 68 this month. That’s down three points from 71 in March, when it jumped to the highest level since June 2005.

Readings above 50 indicate more builders view sales conditions as good rather than poor. The index has been above 60 since September.

The April reading fell short of analyst predictions. They expected the index to dip to 70, according to FactSet.

Readings gauging builders’ view of sales now and over the next six months also edged lower, as did a measure of traffic by prospective buyers.

Despite the decline in the latest builder sentiment survey, sales of new U.S. homes have been robust this year and are expected to continue climbing.

Low mortgage rates and a solid job market have helped drive home sales steadily higher. Sales of new U.S. homes increased in February at the fastest pace since July, reaching a seasonally-adjusted annual rate of 592,000. That sales pace was nearly 13 percent higher than in the same month last year.

A pickup in mortgage rates last fall helped spur sales early this year. In recent weeks, mortgage rates have been edging lower, making the cost of home loans less expensive.

The average 30-year fixed mortgage rate has fallen the past four weeks, declining to 4.08 percent last week. That’s up from an average of 3.65 percent all last year, but still low by historical standards.

This month’s builder index was based on 307 respondents.

A measure of current sales conditions for single-family homes fell three points to 74, while a gauge of traffic by prospective buyers declined one point to 52. Builders’ view of sales over the next six months slid three points to 75.

Tuesday, May 2, 2017

Snoqualmie Pass Real Estate, Mortgage, and the Economy - Boomers Remodeling To Stay

If you build it, they'll stay; boomers remodel their homes

By JOYCE M. ROSENBERG

Apr. 05, 2017

NEW YORK (AP) — If you build it, they will stay.

The small businesses that dominate the home remodeling industry are expecting robust growth in the next few years, thanks partly to baby boomers who want to remain in their homes.

Home remodelers say they've had a pickup in projects from boomers who are in or approaching retirement and are seeking to modify their houses. It's a trend known as "aging in place," an alternative to moving to smaller quarters or a warmer climate.

Many of these homeowners are hoping to make their surroundings easier to manage and safer in case they have health problems.

They're replacing bathtubs with walk-in showers, installing safety rails, widening doorways and building ramps — features known as "universal design" since they can be used by anyone, regardless of physical ability. Boomers are also redoing their kitchens and sprucing up other areas — since they're staying put, they want to enjoy their surroundings.

Zach Tyson estimates that 30 to 40 percent of his revenue is now coming from boomer renovations, up from 15 to 20 percent five years ago. Most of the projects come from homeowners who are healthy and mobile now, but want to be prepared if illness or injury hits.

Besides making bathrooms safer, they're enlarging rooms so wheelchairs or walkers can be used more easily, and also to give the rooms a more open feel.

"It's trending up, for sure," says Tyson, co-owner of Tyson Construction in Destrehan, Louisiana.

The oldest of the 76.4 million boomers, the U.S. generation born after World War II, are turning 71 this year. As more of them retire and make decisions about where they want to live, there will be a great need for accessible housing, according to a report released in February by Harvard University's Joint Center for Housing Studies.

"A large share of these households live in older homes in the Northeast and Midwest, where the housing stocks have few if any universal design features," the study said.

The report predicts home improvement spending by homeowners 65 and older will account for nearly a third of the total amount of remodeling dollars by 2025, more than twice the portion that group spent in 1995-2005. Owners age 55 and over already account for just over half of all home improvement spending.

"The boomer activity seems to be driving the market," says Abbe Will, a research analyst at the Harvard center.

That's a change from the past, when older homeowners generally handled maintenance, repairs and landscaping but tended not to renovate. And some of the boomer-driven remodeling is coming from younger homeowners who expect their parents might later come to live with them and want to be ready, Tyson says.

The requests Tiffany and Bryan Peters get from boomer customers include replacing traditional turning doorknobs with lever handles that can be pushed down. Homeowners want motion-sensor light switches and faucets, and non-slip flooring. In bathrooms, they're replacing fixtures with models that are designed for people with disabilities — showers than can accommodate wheelchairs, and toilets at the same height as wheelchairs, Tiffany Peters says.

"We've definitely experienced an increase in requests for aging-in-place work," says Peters, who with her husband owns a Handyman Connection franchise business in Winchester, Virginia. "We get several requests a month."

Home remodeling companies began seeing an increase in boomer spending about 18 months ago and expect it to contribute to their growth in the next few years, says Fred Ulreich, CEO of the National Association of the Remodeling Industry, a trade group.

"We see this as something that is dramatically affecting the marketplace," Ulreich says.

Boomers typically live in homes that are several decades old, prime targets for remodeling, Ulreich says. Unless they move to a brand-new home that's designed for aging in place, their decision is likely to mean remodeling.

Sal Ferro says boomers are his biggest group of customers, but he's not getting many requests for aging-in-place projects. It's more renovations to make their homes more enjoyable.

"They're finally getting the projects done that they always wanted. They're getting that kitchen or bathroom," says Ferro, owner of Alure Home Improvements, based in East Meadow, New York.

Some remodeling companies are specifically marketing to boomers, sending salespeople to trade expos and events those customers are likely to attend.

Miracle Method, a franchise business that refinishes kitchens and bathrooms, has increased its outreach to boomers, says Erin Gilliam, the company's marketing manager. Franchise owners say much of the 11 percent growth in the franchise's overall business in the past year was driven by boomers, she says.

Gilliam's husband, Gabriel, sees the trend in the franchise he owns in Salt Lake City. He estimates that revenue from boomers has risen between 10 and 20 percent, and the growth is prompting him to hire more workers. He has five staffers now, having added one per month the past three months, and expects to reach 10 in the next year.

"I'm hiring as quickly as I can," he says.