REAL ESTATE news
Sales of existing homes slipped 0.7 percent in July, fourth straight monthly decline
Lower priced homes are experiencing fewer price reductions than upper end properties
Home value growth slowing in several hot markets
MORTGAGE & FINANCE news
Young homebuyers funding home down payment from their retirement account
Massive student debt makes homeownership almost impossible
Guide to understanding your home’s value
Declutter your kitchen and double your storage space
Questions to ask before buying a condo
Buyers see hope on the horizon in cooling Seattle market
Seattle-area drops to the #12 market for home price growth
Home price acceleration slows, but it’s still a challenge if you’re a buyer
Seattle #2 on list of best cities for ice cream lovers
Performing arts and affordable housing come together in planned Rainier Valley development
The SR-99 tunnel gets its stripes (and some running stick figures)
Port of Everett breaks ground on huge and historic modernization project
Where do Washington State’s billionaires live?
WEEKLY DOSE OF awesomeness
What do the smart home systems of the wealthy have that Alexa doesn’t?
(hint: Morgan Freeman)
KIRKLAND, Washington (June 6, 2016) – Just as expected, the month of May had an uptick in new listings (12,272), but just as many buyers (12,275) made offers on homes during the month to keep inventory depleted, according to the latest figures from Northwest Multiple Listing Service.
“Inventory is being squeezed from all directions,” reported Frank Wilson, branch managing broker at John L. Scott in Poulsbo. He said the pool of house-hunters includes young first-time buyers, renters whose rents are escalating, buyers who are returning to the market after recovering from a foreclosure or short sale, investors, and baby boomers who are purchasing for their retirement needs. Additionally, in Kitsap County where his office is located, there are military families who are transferring to a base there and want to buy.
By month end, member brokers reported 15,198 active listings in the Northwest MLS database. That’s down more than 22 percent from a year ago when buyers could choose from an inventory of 19,515 listings across the 23 counties served by the listing service.
“The May housing market was not just hot, it was frenzy hot,” commented J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. “Brokers are working like bees in a hive as the housing market creates a buzz of sales activity in the Seattle-Central Puget Sound area.” By his analysis, 80 percent of the homes coming on the market in King and Snohomish counties are selling within the first 30 days. “Many sell within the first week,” Scott reported, adding, “A healthy/normal market would have 30 percent selling in the first 30 days.”
MLS figures show there is only 1.76 months of supply system-wide. In both King and Snohomish counties, there is barely more than one month of supply – well below the 4-to-6 months that many experts use as an indicator of a balanced market.
“With less than two months of inventory, every new listing seems to draw multiple offers,” Wilson remarked. He also said homeowners who want to move up in this same market know they face a conundrum: “If we sell today, will we be able to buy tomorrow?”
Buyers are becoming more and more aggressive with offers and pricing, and that concerns some brokers, said Northwest MLS director George Moorhead. As the gap between pricing and value widens, some would-be buyers may overextend themselves. Also, appraisers are struggling with a lack of comparable sales versus multiple offers that escalate well beyond the listing price, said Moorhead, the designated broker at Bentley Properties. Since lenders base loans on appraised values, buyers will likely need to make up the shortfall.
Even though brokers say paltry inventory is limiting sales, the year-over-year volume of pending sales rose more than 7.4 percent last month. Members reported 12,275 mutually accepted offers, up from the year-ago total of 11,425. MLS data going back to 2004 shows that one-month total is the highest on record.
Prices also rose. The median price area-wide for last month’s 8,630 closed sales of single family homes and condominiums (combined) was $339,950. That’s up more than 7.2 percent from twelve months ago when purchasers paid $317,000 for the median-priced home. Ten counties reported double-digit price hikes.
In King County, the median price jumped more than 11.7 percent, from $434,000 to $485,000. Prices on single family homes surged nearly 16.5 percent, rising from $480,942 to $560,000. Condo prices were up 9 percent, but finding one proved challenging as inventory dropped 29 percent in King County.
Former MLS board member Ken Anderson, the president/owner of Coldwell Banker Evergreen Olympic Realty in Olympia, said last month set records for both pending and closed sales. “Low inventory coupled with the huge number of buyers has our market moving at a record pace,” according to his calculations. “Well-priced homes are selling in an average of just 12 days – a full month faster than the peak of the market in 2006,” he commented.
Brokers offer various suggestions to prospective buyers as they vie for scarce inventory:
- “The best advice I can offer to potential first-time buyers is to think outside the box” said Gary O’Leyar, a past chairman of the Northwest MLS board. He encourages buyers to consider purchasing a “stepping stone” property. Since the close-in neighborhoods in Seattle and Bellevue hold little opportunity for first-time buyers, their best option is to look further out, he suggests. “Consider future growth, such as in areas near light rail or other transit services, and areas that have good public schools,” said O’Leyar, the owner and designated broker at Berkshire Hathaway Home Services Signature Properties in Seattle. “Waiting on the sidelines to buy will likely lead to increasing rental costs, so why not make a real estate investment purchase and have some hedge against future inflation,” he added.
- “Relationships are paramount in this market,” said Lennox Scott. “If you’re looking for a home, make sure your broker knows your story and can convey it in a compelling way.”
- “Buyers must carefully study the market so they can make decisive but smart offers when new listings arrive on the market,” emphasized Anderson. “With the robust activity, success for buyers means making an offer that stands above the competition.” He also urges buyers to not forgo important protections like home inspection contingencies.
Wilson and other brokers do not see an easing in the inventory crunch “for some time to come.” Even if the Fed raises interest rates, he believes shortages will persist because of the backlog of buyers.
Moorhead noted new home construction is also seeing prices soar as many of the defunct projects from 2008 to 2012 are being completed and built out. “Finding land for new home plats is forcing more teardowns and pushing builders/developers farther out where services are not as prevalent. He said first-time buyers tend to be hardest hit since they’re priced out of many close-in areas and must look at commute times of 45 minutes or more.
“There’s good news for luxury homebuyers,” Scott suggests. It’s prime time to showcase such properties, he explains, and “this is the season when more luxury inventory hits the market. The good selection in King County is easing the pressure for homebuyers in the luxury ($1 million and above) market. A search of the MLS database shows there are currently more than 900 listings in King County with asking prices of $1 million or more.
Northwest Multiple Listing Service, owned by its member real estate firms, is the largest full-service MLS in the Northwest. Its membership of nearly 2,100 member offices includes more than 25,000 real estate professionals. The organization, based in Kirkland, Wash., currently serves 23 counties in Washington state.
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TAX TIP: The 121 Exemption When Selling Your Home
The reason to do a 1031 exchange is to avoid capital gains taxes on investment property. Almost once a week I get asked about the sale of a primary residence. When you sell your home, you have an exemption from most capital gains taxes. A great resource to get more details about that is an IRS Publication, updated annually, called Selling Your Home (Pub 245). You could go to IRS.gov to download that.
In short, there is a 121 Exemption for capital gains taxes up to $250K per individual or $500K per married couple filing jointly. You do have to have lived in the property as your primary residence for 2 out of the last 5 years, and you can only take this exemption, once every 2 years.
This has been used in a long term strategy to avoid paying capital gains on rentals by converting the property from investment to primary residence. The IRS got wise to this strategy and put some constraints on this.
It could still be part of a plan, but reach out to your tax advisor with questions and see if this is an option for you
It has come to my attention that the January Newsletter did not auto send as it was suppose too. I apologize here it is and some great stuff to check out. I can say however “The Eye on the Market” side Wow I am a busy girl! My partner lender just told me she secured a client of mine 3.75% on a home loan and she and I are excited at how much this is going to save families wanting to buy. Is 2015 your year? If so let me know and lets get you started!
Its Christmas season! Oh I love this time of year and if your around the Snohomish County area a lot of us have snow! We do and my kids are praying that it stays the whole month. Not sure I agree but it is nice. As with keeping with the season but, of course, a bit of Real Estate I have come up with a plan and I hope you all think its a good one. Every day till Christmas I am going to highlight a local city here in Snohomish county and a home currently on the market. Did you know there are 23 main cities here in our beautiful county? Plus a bit of Holiday cheer, tips and funnies. So lets get started (in no particular order).
Woodway- $7,950,000 Wow this has to be the most expensive house in Snohomish County! Get your groove on in this unique and exciting estate created for the enjoyment of the good life! Abundant amenities include indoor rain forest spa pavilion, indoor basketball court, 14 car garage and elevator. Fully gated and fenced on nearly four manicured acres. The lush grounds include a full size tennis court and a regulation little league field. Five bedrooms plus service quarters/guest house and 5.75 baths with endless space to entertain guests and friends. Your own 5-Star resort for sure.
Did you know- There are currently 78 people living in the U.S with the name S. Claus and one Kriss Kringle? What were those parents thinking?
Mistletoe was used by Druid priests 200 years before the birth of Christ in their winter celebrations. They revered the plant since it had no roots yet remained green during the cold months of winter.
In the show, “How the Grinch Stole Christmas,” the Grinch cuts out a Santa beard, but never wears it.
12 million packages are delivered by the U.S. Postal Service every day during the holiday season through Christmas Eve. The busiest delivery day: December 20th.
I hope you enjoy and cheers to a fantastic Holiday season!
The economy was very tough a few years back and I have met many that went through some very hard times but now have made their way back are financially stable, secure and ready to move on and plant roots again. It was so hard to have to tell these potential home buyers that unfortunately they were not able to purchase a home and had to wait.
But there is now some great news!!
You are no longer held to the 7 year foreclosure wait requirement!
There is of course still waiting requirements but they are more lenient.
- 4- Years from Chapter 7 and Chapter 11 Bankruptcy Discharge
- 2 years from Chapter 13 Bankruptcy Discharge or 4 years from Chapter 13 Bankruptcy Dismissal
VA Short sales- Now 1 year from completion was 2 years
Fannie Mae Short Sales– 4 Years from completion date
FHA– 3 Years from completion
USDA– 3 Years from completion date
As always check with your lender as these are only guidelines and different banks, brokers and mortgage companies will have some of their own programs.
I hope this helps and brings some families closer to their dream of owning a home again.