Wednesday, May 17, 2017

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

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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.

Monday, May 1, 2017

Snoqualmie Pass Real Estate, Mortgage, and the Economy - Condos Hard To Find

Why It's Hard to Find a Condo in Seattle

New condos are hard to come by and that’s not likely to change anytime soon

BY:

ELAINE PORTERFIELD

Seattle is awash in new luxury apartments, with tons more set to open in the next 18 months or so, but just try finding a condo to buy, especially a new one. With the exception of Luma—a luxury condo building on First Hill that sold out a few months after completion in 2016—virtually no condos have been built in recent years due to what local real estate experts call a perfect storm of factors. And that means an extremely tight to nonexistent supply of both new and existing condos, a blow for some first-time buyers who were relying on condominiums as an affordable entry point for homeownership.

“Why is there a condo shortage? Well, it could have to do with the number of quality Seattle condo projects currently involved in lawsuits or arbitration,” says Fionnuala O’Sullivan, managing broker and owner at Gerrard, Beattie & Knapp, a Seattle real estate company. “The core of the issue is the Washington Condominium Act. It is very difficult to summarize, but in a nutshell, there are provisions of the act that require certain warranties that a developer must comply with within four years. This makes condo development very expensive, and for many, it is simply not worth it.”

Basically, it comes down to the fact that anyone who builds a condo in the city will face some form of legal action, says Matthew Gardner, chief economist for Windermere Real Estate.

“So, in order to offset that fact, another layer of costs goes onto building condos,” Gardner says. Developers feel compelled to buy insurance against a lawsuit. “So it’s remarkably expensive and you are going to get sued. That’s why for the last several years, I’ve been told by contractors, ‘Why build condos when you can build apartments?’ If you know you’re going to get sued…it gives you pause for thought.”

And don’t expect developers to convert local apartments into condos anytime soon, either, he says, because the economics seldom pencil out when adding up the costs of purchasing the property, making improvements, taxes and other expenses.

“You can’t start repairs until the last tenant leaves,” Gardner says. “So, you have no revenue coming in terms of rent, but [the mortgage] stays the same. The proof is this: Look at the cranes in the city and look at what they’re building. Show me a condo. I will believe it when I see it.”

One rare new downtown condo development coming on the market is Nexus, a 41-story, 382-unit complex in the Denny Triangle neighborhood. Dean Jones, principal and owner of Realogics Sotheby’s International Realty, which represents Nexus, says such is the pent-up demand for new downtown condos that hundreds of potential buyers lined up last year on June 4, including some who spent the night in line, to slap down a $5,000 refundable deposit for first right of opportunity to purchase when the homes are officially released for sale.

Ben Kakimoto, a condo specialist with Keller Williams Realty, says he knows of only two other condo complexes underway at present: Gridiron in Pioneer Square, with 107 units, and Hendon Condominiums, a boutique-style development of 32 units on Phinney Ridge. “We are shocked how few condos there are” under construction, Kakimoto says. “There is such a need.”

Jones says he’s not sure if the condo market will loosen up for buyers. In addition to the threat of construction-defect litigation, booming rents and an influx of new, highly paid tech workers to the city mean that apartment builders can easily sell a new apartment complex to institutional investors at a price similar to selling condos to hundreds of individuals, he says. That makes the decision simple for builders: “These developers aren’t in public service,” Jones says.

What does it mean for buyers? Well, those fourplexes going up in places like Ballard are looking more attractive by the day.