Housing Affordability Reaches Record Highs

I am sharing this well written article from RISmedia, and hope you find it helpful.

Six Keys to Selling Your Home in Today’s Market

Posted By susanne On May 13, 2012 @ 1:06 pm In Consumer News and Advice,Home Buying 101,Home Owner News,Homeowner's Toolkit,Today's Top Story - Consumer | Comments Disabled

Article printed from RISMedia: http://rismedia.com

URL to article: http://rismedia.com/2012-05-13/six-keys-to-selling-your-home-in-todays-market/

I thought I would take a little time to smell the roses as they say and tell a success story of  sorts.

Approximately 10 months ago, I was showing a bank owned condo to a client, and I arrived prior to my client arriving which is fairly normal for me.  My military service taught me that on time equals 10-15 minutes early, and that has stuck with me all these years.  I was looking for answers as to what was covered by the HOA dues in the condo complex, and as I walked onto the back deck, I saw a couple BBQ-ing across the back fence.  I introduced myself and politely asked if they could share the data I was seeking, and they were happy to assist me. 

They then mentioned that they were in a bit of a jam and it looked like they would be PCS-ing to Colorado Springs and were way upside down in their home since they had purchased the condo in 2007 for approximately $197,000.  I had given them my card and expressed my desire to do what I could to help them with their monumental task.  You see, I cannot help myself when it comes to aiding our military service members and veterans. 

I had forgotten about the meeting as they were not sure what they would do, but one day, a few months later, I got a call from them after they had arrived in Colorado Springs and were trying to rent their condo to avoid the hassle of a short sale.  Unfortunately, the rules of the condo prohibited excessive rentals in the complex, and there was a waiting list for anyone wanting to rent their unit out.  Each person had a 60 day window to rent their unit, and if they were unsuccessful, then the next owner was granted a chance to rent.  Their rental agent was unsuccessful, and they could no longer afford to pay the mortgage in WA, and the rent in Colorado.

I explained the short sale process and we agreed to get to work.  I had seen that several units had sold in the $90,000 range as bank owned properties, and we listed their home for $99,000, and then planned a few reductions to sell the home.  This is usually important to show the lien holders that the home was indeed listed for a fair price rather than a give-away price.  After we listed the home, we caught wind of homes that HUD was selling in the complex in the $70k range.  This tactic of HUD and banks to undermine the market to sell their homes rapidly has really deteriorated our markets.  As traditional sellers struggle to even break even selling a home, banks are undercutting them which moves the bank's inventory... but has strangled home sellers across the country.  On one hand, a buyer can pick up a great bargain, but we have stalled our move up market in a big way.

Anyway, we received a cash offer for $70,000 and the agent representing the buyer told me they were buying two HUD homes in the complex for $70k each.  We accepted the offer and began the short sale negotiations.  This is the painful part of short sales.  I should mention that the condo could only be sold for cash due to the HOA having over 15% of the residences more than 30 days delinquent on dues.  This removes even conventional financing as an option.  After a few months, the lien holder approved the sale at $71,000, and the buyer agreed.  Within a couple of weeks we had the actual approval letter, and then the buyer bailed without ever doing an inspection.  We had no explanation for the rescission. 

Within a few weeks we had a replacement buyer and were able to substitute the buyer and get a new approval letter at the same $71,000.  This time the buyer stuck, and I am happy to report that this transaction is closing tomorrow, May 16, 2012.  The bottom line is that the seller bought a place for $197,000 in 2007, and the short sale was approved at $71,000 which leaves a deficiency of $126,000 plus any late fees etc for the mortgage delinquency caused by the transfer of one of our military families.  The short sale approval relieved the seller of all deficiencies so they do not need to pay any of the $126,000+ that they are short.

There is probably a 1099 going to be issued, but for the remainder of 2012 (maybe longer if extended by congress) the debt forgiveness act of 2007 eliminates the taxation of the forgive debt in this situation (always consult your tax professional please).  This has been a major victory in my opinion.

We effectively removed a financial monkey from the backs of some of our country's finest citizens and allowed them to move on with their lives without the painful burden this home would have caused them.  We are so thankful that we were able to be a part of this solution, even if the financial rewards of the commission of $71,000 is really a very small dollar amount for the work that went into completing this short sale.  Sometimes, the resulting "inner peace" and knowledge that you truly helped someone in need negates the need for financial gain... and this is one of those times.

Thank you Mallory and Guadelupe for allowing me to help with this difficult task, and I truly wish you the best moving forward.  I do hope you will keep in touch.  Be safe, and thank you for all you do!

Ok Ok Ok, it's been months since I've updated the stats.  It has been a while, and I am happy to show some positives that we hope are good signs moving forward.

First, we are way low on quality inventory at reasonable prices.  When they come on the market, they go pretty fast, and often have multiple offers as well as bidding wars.  In fact, we are down 28.6% year over year for the month of April in Active Listings.  And look at the Median List Price!  It is up $9,500, or 4.3%  over last year in April, and only down $2,525 YTD, or 1.1%.  This is the best we've seen, but of course it is the list price, and the sold price looks a bit different.

April 2012 Stats for Pierce County

Year to Date as of 5/13/2012

In fact the sold stats tells us that the YTD is down 10.7% year over year, but April is only down 1.54% year over year.  This further illustrates the recent shift in our market, and should give us all a bit of confidence that things are finally starting to turn around.

I do want to remind you that there is an uptick in bank owned homes coming on the market after a lul in activity after the big hold up in the foreclosures that is now gearing back up.  Appraisers have seen an increase in bank appraisals on foreclosed homes, and several REO Listing Agents we speak with indicate they are seeing a surge in activity.  We can hope the banks are a little smarter with their pricing as well, since their appraisals should indicate a stable, or even an increasing market in some areas.

By the way, it is worth mentioning that the activity of the banks, and the investors has a direct impact on the statistics, and looking at the 4.3% increase only solidifies this.  The last couple of months has seen a large decrease in bank owned homes, and the lower inventory levels has changed the stats.  I just wanted to say "I told you so".

The next few months will help to illuminate the market trend moving forward, and I hope to be a bit more on top of the stats so that I can share the numbers with you.

Today there is an article in the Realtor magazine that talks about there being a 4% rise in home prices annually over the next 4 years.  I would be happy to see some values rise in the areas that were hit really hard, like Tacoma and Pierce county.  The article does mention the hardest hit areas are expected to have the highest gains, but I would warn that if we rise too fast again, we will fall.... again.  We need stability in lending and home values to recover. 

The better news is that economic growth, and even job growth can be tied to home sales.  As home sales return to a more normal pace, and include the move up buyer again, we will see jobs come back as well.  There just needs to be a balance to the market, and we have not had a balance for several years.

An interesting number is 72..... and the rule of 72.  This simply says that if you divide the appreciation rate into the number 72, you will know how long it will take for the price of a home to double.  If the appreciation rate stays at 4%, then the price of a home will double in 18 years (72 divided by 4).  If it averages 3% then the time frame is 24 years.  This is a safe average for economic growth.

Here is the article from Realtor Magazine. 

Home Prices to Rise 4% Per Year?

In the past, I have been able to locate low priced homes that were desirable enough for the lower income home buyer to consider owning a home instead of renting.  Lately I am struggling to find homes that we can go after and ever hope of obtaining financing.  Here is the latest example of the struggles in our market for such buyers.

The buyer is qualified to $110,000 and can use the FHA 203k Rehab Loan program.  This means she can be up to $110,000 including purchasing the home, and having renovations done.  This is a special program that allows FHA home buyers to buy a fixer and have it done the way they want.  The cool part is the renovations are done after closing, so the renovations are not done prior to them owning the home.  A good model for this buyer would be to acquire a home for $70-80,000 and then renovate up to $30,000 so the home is obtainable and when renovated, it is actually a good value for the work and the waiting the buyer goes through.

We are seeing less homes that qualify for this program, and the ones that appear to be available are plagued with seller issues that make the home virtually unable to be shown to buyers, so they are sitting on the market waiting to be foreclosed on.  Now you may wonder, as I do, why a home would be for sale but the sellers make it impossible to show the home?  I have to guess the sellers are waiting as long as they can to move so they are living for almost nothing.  They have defaulted on the mortgage, and rather than selling the home and moving on, they figure they can stay in the house for a long time for free while the bank forecloses.  

This is problematic and I have to say shame on the agents for allowing folks to put the home on the market in such a manner that they are not allowing showings without major obstacles.  It has become far easier to sell homes in the $250k+ price range, and in fact, the low priced homes are way more work for way less rewards (from an agent's view-point).  

Erik and I have pressed on and struggled to help all of our clients whether they are the $80,000 buyer or the $500,000+ buyer.  We believe the first time buyer that can afford the $110,000 house has the same desire to own a home, and many times they want it even more.  

So fellow agents and Realtors, let's do a better job of preparing our sellers for the showing process, and guide them to allow the homes to be shown without the hassles we are seeing right now.  I called 6 sellers this morning to attempt to preview homes for buyers, and 5 of the 6 have reasons the home cannot be shown today, tomorrow, or even this week.  Really?  It tells me they are not actually wanting to sell the homes, and when I look... the days on market is pretty high on most of the homes. 

I guess I will go look at the one that I can for the sake of the buyer, and hope for the best.

Thanks for reading!!!

Wow..... Seattle hits the top 7 hottest market list.  Check it out........

Boom Towns: 7 Fastest-Growing Cities

US homeownership at 15-year low, Census Bureau finds

I did take this article from out Tacoma News Tribune online, and even though the news is a national number, it is always a good indicator of a trend.  Our market tends to be a bit different than the national, but most are since real estate is locally different all over.

The trend that is in line is that home ownership is down.  Now to be fair, it was up higher due to government programs aimed at boosting home ownership.  These programs were in fact, at the heart of the housing bubble and began in about 1996 when the then-present "in power" president and his cabinet members wanted to push numbers higher for certain minority groups.

Just to be clear, we are not at all against anyone owning a home, but we believe there is a certain set of steps to take to prepare one's self for home ownership both financially and mentally.  A renter mindset is not healthy for home ownership, and just allowing someone to qualify for a loan is not equal to preparing them to own a home.

Enjoy the article.

The homeownership rate in the U.S. fell to 65.4 percent in the first quarter, hitting a 15-year low amid still-high foreclosure rates and a stronger market for rents.

Sellers pay attention.  This stuff really does matter.... shared via Realtor Magazine.

5 Ways to Sell a Home Faster, For More Money

Okay, so I am driving in Puyallup coming from showing some homes to a client, and I look over and see this gimmicky, cheesy, non professional looking advertisement outside a real estate office.  I wanted to say "houses houses" to sound like the little Roman looking dude on the "Pizza Pizza" commercial. 

It may be a little grainy, but it appeared to be a teenager out front with a sign that says 50 Homes in Puyallup under $1000 per month with Zero Down.  Now I am all for helping people understand what a home costs on the monthly budget, but if the homes are truly $1000 per month or less and include Taxes and Insurance, then I wonder if they are in good enough shape to get a loan.

Here is an example:$150,000 with 0 down and 4%, along with $2800 a year in taxes and $550 per year for home owners insurance is $995.29 per month.  Now this is a good budget for someone to understand.

Zero down is likely referring to USDA loans in Rural areas, so this would mean way south in Puyallup (Silver Firs) or homes that have deferred maintenance (loan issues?)  FHA with no money down does not exist without down payment assistance programs, and then with mortgage insurance the purchase price drops to allow the added monthly expense.

My point is less about the budget number and more about the level of professionalism this "advertisement" projects.  Are we now going to be doing the cheese ads to attract real estate buyers?  I left the car business to be amongst a more professional group of colleagues, and in this down market, there is less and less professionalism to work with.  In fact, studies have shown that 73% of real estate agents today are not making their primary income from real estate, and this means it is a part time deal for them.  We are full time Realtors and dedicated to our clients.

At least the kid is not wearing an ape suit or something like that.  I really hope this is not a new trend, and I also hope that the consumers will not respond to this sort of cheese display.  This is merely a tactic to increase traffic in to the office, and I wonder who would actually see this kid and the sign and change their plans to go see what the ad is really all about.