What's it really going to take?

OK. The Stimulus has been signed. Another $700 billion plus in new spending and tax reductions. $8,000 to new time buyers that they don't have to pay back! Is this enough to make consumers start spending? Is this the catalyst that will send the masses back into the housing market? What's it really going to take?

Sure, I think people should go out and buy houses. I can even construct very compelling arguments why this is the best time in years for people to buy their first home or move up into their next home. Warren Buffet's famous quote goes something like, "be fearful when others are greedy and greedy when others are fearful". I get it and I think that intellectually most people do also. Still, few are buying and home prices continue to drop in most markets.

So, what's it really going to take? What are you waiting for? Why aren't you buying homes? Is it...

Job security?

Waiting for the market to bottom out?

Waiting for interest rates to fall lower?

Hoping for more inventory?

General economic insecurity?

I really want to hear from the general public. Tell me your story. I would really love to know if there is something that someone can do to improve this mess we fallen (or jumped) into.

Habitat for Humanity Outlet Store in Seattle

Almost everyone is aware of the great work that Habitat for Humanity does for our communities in helping to provide affordable housing for families able to contribute sweat equity in the construction of their homes. The Seattle Chapter is an successful partner in that noble cause.

Funding is always a challenge for non-profs. One way the Seattle Chapter is meeting this challenge is by recently opening an Outlet Store. The way it works is that contractors, retail stores, developers and the general public donate items to the store which they then sell at a significant discount from retail prices. You can find appliances, building supplies, cabinets and fixtures, flooring, furniture... virtually the same kind of things you might find at a big box store only on a bit of a rotating basis. The donated items run the gamut from brand new to unused to gently used to on their last legs and are discounted accordingly. You can view a small sampling of theri current inventory here.

I've spent a couple of days volunteering at the store and I can tell you that the staff is very accomodating and professional. It's a friendly, fun place. If you don't live in Seattle you might check online to see if your community has Habitat Outlet.

The next time you have a home improvement project consider that you can find real bargains at the Seattle Habitat for Humanity Outlet Store, your used items, in good working condition, can be donated to Habitat for Humanity and that all of this helps to increase funding for this cause while decreasing waste in our landfills.

Completely Updated Rambler in South Seattle

Someone's going to love living here,

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98168-Seattle (Boulevard Park)

FOR SALE $344,950 Reduced!

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Open spaces and designer accents

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	Address: 10752 Country Club Lane S Type: Residential Style: Single Story Bedrooms: 3 Bathrooms: 2 Suite: No Living Area: 1,520 square feet Year Built: 1985 More Details

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	This custom, updated rambler on 1/2 acre has the feeling of a country estate with the convenience of in-city living. Very private feeling on a hidden lane next to Rainier Golf & Country Club. Living spaces feature desinger colors, upgraded carpets, window treatments and gleaming hardwood floors. Huge gourmet kitchen with stainless steel appliances, gas range, a breakfast bar and chef's prep area. All vinyl windows, a built-in vacuum, gas heat and water and an oversized 2 car garage. Fall in love when you step out back to your own private paradise with a huge deck, a hot tub and gorgeous landscaping. All this and just 15 minutes to downtown Seattle. Welcome home. More Description

Brokered and Advertised by Prudential Northwest Realty LID 1739025

Information is deemed to be correct but not guaranteed.

what is a DPA?

It's an acronym for Down Payment Assistance and refers to programs that have been eliminated by the recent so called Housing Rescue legislation. They worked by taking advantage of an FHA regulation that basically said that anyone could make the buyer's down payment on an FHA loan, except the seller. This lead to the formation of dozens of not-for-profit corporations that would grant down payments to FHA buyers. The two big names are Nehehiah and AmeriDream.

The way it typically worked is that in the purchase and sale negotiation, the buyer would ask a concession of the seller whereby the seller would pay 3% toward the buyer's closing costs and contribute an additional 3% to one of the not-for-profit down payment grant organizations. Then, at closing, the grant organization would return the 3% seller contribution as a grant to the buyer to pay the down payment. For the buyer this meant a true "0 down" loan. It always sounded a little smoke and mirrors to me but, as a Realtor ®, it helped a lot of people, including my clients, to buy homes they COULD afford, but were unable to save the down payment for or felt that waiting to save the down payment may not be in their best financial interest.

Congress, by passing the flawed HR 3221, has decided that these programs, WHICH USE NO TAXPAYER FUNDS, should be eliminated. That's too bad. From everything I can find, the foreclosure rate from these types of loans was no greater than any other FHA loan. These are not the sub-prime, 0 down, no verification loans that greedy and largely unregulated (and now failing) financial institutions used to fleece the unwitting public. They are fully documented, government backed loans.

There is legislation in Congress to enable these programs to be continued. It's HR 6694 and I urge everyone to contact their elected officials to ask for their support of this bill. You can do that by going to, https://forms.house.gov/wyr/welcome.shtml, or http://www.senate.gov/general/contact_information/senators_cfm.cfm

Both AmeriDream and Nehemiah also have links for contacting Congress.

Where's NAR on this issue? Where were they on HR 3221? Everyone talks about affordable housing. In light of the FHA down payment increase to 3.5% from 3%, along with what is already a severely depressed housing market, shouldn't our spokespeople be championing this last legitimate 0 down program?

BTW, I hate acronyms and institutional jargon. Don't you?

NCAA Rowing Championships Continued...

The WSU Women's Rowing team is arriving today in Sacramento, CA to prepare for this weekend's NCAA Rowing Championships at Lake Natoma. The official site can be found here. Racing starts on Friday morning and continues until Sunday for Div I and II.

WSU's rowing website reports that there were cheers and tears when the announcement was made that WSU had qualified for the championships. Having talked with Carly within seconds of the announcement, I can personally attest to hearing both.

Here's a complete list of all of the teams that qualified along with the 4 at large Varsity 8 boats 

TEAMS
Brown
California
Harvard
Michigan State
Ohio State
Princeton
Tennessee
Virginia
Washington
Washington State
Wisconsin
Yale

AT-LARGE EIGHTS
Clemson
Michigan
Southern California
Stanford

Jamcotimes will do the live splits and results while the NCAA site will have a live webcast, but so far I can't figure out where to find it. I'm too worn out from yelling Go Cougs!

NCAA Rowing Championships

Why buyers, sellers (and RealtorsĀ®) should like math

For most of us, math is something we only do when we have to - and all too often, not well. There's a very good reason we all need to be better at it, especially in these trying times. That reason is that there are huge benefits hidden in the math for buyers and sellers in some of our most active client categories. I'm talking about first time buyers, move-up sellers/buyers and relocating sellers/buyers. I'll use as an example a market where home prices have fallen 7% across the board from one year ago and to further simplify, I'll assume that there are no net proceeds from the sale (all too true) and no downpayment needed on the new home (I wish it were true). 

Seller has a home that would have fetched $350,000 one year ago. Studies show that the move-up buyers typically spend 50% more than the selling price of their previous home. That indicates a purchase price around $525,000. At 6% interest his principal & interest payment on a 30 year fixed mortgage is about $3150/mo.

Now, I'll factor in the 7% downturn in prices. Seller's home is now worth only $325,000. The home he buys has dropped to $488,000. In either case it's the same 7%, however there's a significant difference in the actual dollars. Seller's home has dropped $25,000 in value while the home he buys has dropped $37,000. $37,000 - $25,000 = $12,000 in hard cash the seller is saving. Not only that, his payment goes from $3150/mo to $2925/mo AND HE'S BUYING AND SELLING THE EXACT SAME TWO HOUSES! This also means that both houses are more affordable to first time buyers.

This would also work where a seller is moving to an area where prices have fallen the same as or more than the area where he's selling. It doesn't work as well for people downsizing or for homeowners with negative equity.

Housing will recover. It always does. Those smart people who take advantage of this opportunity will be very happy with their future financial rewards (and with their Realtor®).

Pac-10 Rowing Championships May 18th

The Pac-10 final for men's and women's rowing is this weekend (Sunday) on Lake Natoma near Sacramento, CA. My daughter Carly's WSU Cougars are seeded 2nd after Cal and are currently ranked 4th in the nation. Winning won't be easy, but could set up a national championship run. Wow. I never dreamed I be the parent of an NCAA Division 1 athlete, let alone a potential national champion.

If you want to see the races you can get the schedule at the WSU Cougars link above and  get live streaming at Pac-10.org, but you have to register. I don't know if there's any other way, sorry. Good luck Carly and Go Cougs (that hurts to say as a Washington Husky).

On another personal note, my 8 year old, Ryan, qualified for the 2nd round of the local Pitch, Hit & Run competition and will be testing his pitching skills at Garfield High School on Saturday the 24th. Isn't succeeding vicariously through one's children great?

WSU Women's Rowing

Not everything can be about real estate. My daughter, Carly, is a member of the 5th ranked WSU Women's Rowing Team (that's Washington State University). Last week the varsity 8 beat their cross state rivals, the UW Huskies (my alma mater), on the Husky's home course, RESULTS. Carly was in the varsity 4 boat which took a close third, good for her first outing of the year in a 4 person shell.

This week the team is headed to Stanford for a two day regatta, DETAILS. I wish I could be there but the Seattle real estate market appears to be picking up somewhat and I've got appointments Saturday and Sunday (plus who'd want to miss what may be the coldest April 19th and 20th in Seattle's history. They're predicting snow. Yea). 

If you've got a rower in your family I'd love to have you share your thoughts. Hanging with my kids last weekend on the Montlake Cut made for a near perfect Saturday moring. The Husky in me hates to say it but, GO COUGS!

FHA Loan Limits Announced

The new, ostensibly temporary (more on that) FHA loan limits have just been announced by HUD. In King and Snohomish Counties the loan limit for a single family home is a whopping $567,000. That's close to a $200,000 increase over the previous limit. In the recent past, because of the multitude of available Conventional loan programs, FHA programs have been mostly ignored. Not now. The increased limit along with less restrictive loan underwriting criteria may very well mean that FHA loans jump to the forefront of all residential loans for the foreseeable future.

What does this future hold. These limits are meant to be temporary. The thinking is that when the economy improves sufficiently, the rates can be brought back down to more conservative levels. I don't think so. Can you imagine the outcry from real estate professionals and the homebuying public when HUD tries to lower the rate?

To look up the new rates across the county go to HUD's site.

Final food for thought. If you've ever wanted to own investment property, the FHA loan limit for a fourplex with the borrower (you) living in one of the units is over $1,000,000. Wow.

Is Now The Time To Buy?

A recent article at Realtor.org references another article from Time Magazine that both discuss the timeliness of buying or selling a home... today. They both carry differing points of view. Realtor.org is persistent in presenting the fact that homeownership is key to building personal wealth over time. Time Magazine postulates a more insistent viewpoint, that waiting to buy may very well cost you money. The logic goes something like this. If the economy stays exactly as it is, then waiting may bring lower prices. However, as economies change, the very forces that cause the economy to improve will also cause interest rates to rise. To see for yourself how this might work try the following:

Go to the "Services" page of my website, www.bradsNWhomes.com and scroll down to the mortgage calculator. Enter a price of $367,000 at 0 down with an interest rate of 6% and a 30 year term. Then enter a purchase price of $331,000, 0 down, interest at 7% and the same 30 year term. What you'll find is the same payment of about $2200/month.

Think about that for a moment. If interest rates rise even modestly to 7%, home prices would have to fall by over 10% for your purchasing power to remain unchanged. In Seattle, not likely. While inventories are growing and prices have probably peaked, local job growth will continue to influence home prices for the foreseeable future.

Update On New FHA / Conventional Loan Limits

Ecconomic Stimulous Package Should Boost Home Sales

I'm not the only one saying it, but the Economic Stimulus Package signed today by the President has a big boost for homebuyers, homesellers and Realtors®. No, I don't mean the $300 to $1200 check that should go out to all taxpayers in May. That won't cover one month's mortgage payment in most markets. I'm referring to the temporary increases in the FHA and Conventional loan limits. According to Inmann News in cities, like Seattle, where home prices are high, FHA and Conventional loan limits will be increased to as much as $729,750. The previous limit was a max of $417,250.

What this will mean is that some of the pressure on "Jumbo" loans, which carry higher interest rate, will disappear simply because buyers won't have to use them to purchase homes in cities, like Seattle and the surrounding area, where median home prices are $450,000 and more. This will be very good news for many in the short run.

In the long run, however, watch out. Here's one scenario that might prove calamitous if left unchecked. Suppose the more affluent look to these increased loan limits with lower interest rates as a buying opportunity. So far so good, right? Maybe, but that will drive up the demand for home loans causing a possible rise in interest rates. If interest rates do rise, that will have the effect of slowing down the very real estate market it is meant to stimulate, especially for the first time buyer who tends to buy less expensive homes and isn't benefited by the increased limits. This will need to be monitored very closely. First time homebuyers account for between 35 and 40 percent of all home sales.

Nevertheless, if you're in the market for a new home and your loan would have previously fallen into the "Jumbo" category, don't wait. This is better than finding money on the street.

Seattle Area Real Estate Market For 2007

After speaking with dozens of fellow Realtors® at the recent NAR Expo in Las Vegas it was clear to me that the media has made us all too aware of how bad the national real estate market is. However, whenever I mentioned that I'm from Seattle, I was nearly universally met with a response like "... oh, your market's pretty good" or something of the sort. It's true. And as confirmation a Seattle Times article published January 23 mirrored my own evaluation of local Northwest Multiple Listing Service statistics. Download a PDF of my Year to Year Comparison of Resale and New Construction Homesale Stats for both condos and single family homes in King County, WA

The bottom line is that while home sales are down slightly median home prices rose by 7% and condo prices rose by 12% in King County, home to Seattle and its suburbs.

Marketing Tip On RealTown

Magic Words Improve Consumer Response

Marylin Lewis from MSN Real Estate writes that Professor Paul Aglin, a real estate economist from the University of Windsor in Ontario, after researching 20,000 home listings has discovered some "magic words" used in real estate advertising that improve the chances of a home selling. The study took place between 1997 and 2000 in two counties in Ontario, Canada.

Assuming that the study has relevance to US real estate, it's not surprising to learn that descriptive adjectives like "beautiful" and "gorgeous" when used in ads decreased market time by around 15%, the word "landscaping" by 20% and "handyman special" by a whopping 50%. Unfortunately, according to the study, "handyman special" also seemed to indicate a 30% decrease in sales price. Why is unknown. And whatever you do, don't use the words "must sell" or "motivated". For some reason these had a large negative impact on market time. To read the entire article click HERE.

It's no surprise to me that using positive descriptive adjectives like immaculate, gorgeous, pristine, beautiful, turnkey, gleaming, fabulous, and a host of others is important in real estate marketing. If I can excite the public to view my listings with language, my sellers home has a greater chance of being shown and I am doing my job.