In The News • December 27, 2017

Make a Better Real Estate Resolution in 2018

by Paul Isenburg

Most of us will make resolutions with no expectations or true intentions of keeping them in the New Year. However, if one of your life goals for 2018 is to buy a home, I hope you will make and keep this resolution. Resolve to find an agent who is willing to listen to your needs and wants and offer you true solutions and strategies to achieve your goals. You need an agent who has the heart of a teacher, true market knowledge and the ability to communicate this to you. You also need to be willing to listen to them. Often we have to tell you news or information you don’t want to hear but need to. Every market has challenges and you need to understand them to succeed. You need to know what it takes to write a successful offer, have a strong picture of your abilities ready to present to a Seller’s agent and what parts of your picture need improving before you can or should write an offer.

There are lots of information sources on homes that you can find on line. This doesn’t make you an expert on getting to buy any one home. Ask any of the buyers who have been “trying” to buy a house for the last 1-2 years. They weren’t truly informed and prepared to buy in the present market, nor committed to work with the right agent. You need an agent to help you with the details of your picture and situation and one who is able to effectively communicate with you and the agent representing the Seller.

Many buyers think they will benefit from working with the Seller’s agent. This is most often not the case as this is a huge sign to the seller’s agent that you’re not truly prepared or committed to buying or you’d have an agent and team of people ready to represent you. Many Seller’s agents do not or will not practice dual agency, attempting to represent the seller and buyer in a home sale, so you will often be disappointed when they say no and you aren’t prepared to act on the home you want. Yes, you can go call any agent at that point, but now the seller’s agent still knows you aren’t truly prepared to act and this new agent is rarely aware of you, your strengths, abilities or intentions. You may think you know more about the home or market than “any” agent, and you may; but if you find the right agent for you, that agent will be able to help you understand the actual market and what it takes to get the home you want. What may seem like meaningless nuances to you often turn out to be critical differentiators to Sellers and their agents. Who your lender is; where your money is; how your earnest money matches your down payment and purchase price and many other details are often overlooked in preparing an offer. They matter.

An agent you want to work with will help you write better offers, clarify what steps you need to take to win and make sure you’re fully prepared with financing, source of funds, timing and several aspects of writing your offer so you can reduce your frustrations and win in the market. They might also surprise you and point out something you need to know about the home or neighborhood you think you want to buy in so you aren’t spending excess monies on home inspections or discovering, after you own the home, something you wish you’d known before you agreed to buy it. Most of us have sat through hundreds of home inspections and can point out items you may want to know before making your buying decision.

How do you find and agent like this? Maybe by contacting the agent who wrote this article or by asking people you know, who were truly happy with the agent they worked with–not because the agent gave them half of their commission, but truly happy with the knowledge, communication and assistance they provided them in their buying process. Talk to a few of these agents; see if you fit and communicate well with each other and are willing to commit to each other. Don’t expect and ask the agent to commit to you if you’re not truly willing to commit to them. It’s a lot of time and effort to educate buyers on the market, processes and nuances as well as finding the right home and what it will take to write the winning offer. If you walk away from the agent, they got nothing for their time and you still gained much. So, commit to working with one agent and stick with them unless they prove to not be holding up their end of the bargain in effort and actions. You can terminate the relationship if that turns out to be the case but it’s more likely you’ll succeed due to their guidance and you will save yourself a lot of frustration.

A similar situation exists for home sellers and those wanting or needing to sell a home and buy a new one. Many more questions need to be asked, answered and strategized around but all of them will be better addressed with the help of a great agent. Yes, your home can sell without any agent but did you truly get the best result from the sale? Doubtful. There are thousands of agents in our area but less than 20% of us do nearly 80% of the business, so resolve to find someone who will truly help you. It’s worth the effort and resolution

In The News • December 1, 2017

Loan Limits Increase in Western Washington

by Paul Isenburg

Most buyers need to borrow money to buy their homes. While interest rates do impact buyer’s ability to purchase, so does the amount of money they need to borrow. Most lenders plan to sell the loans into the secondary money market, typically FNMA (Fannie Mae) or FHMLC (Freddie Mac). These government sponsored entities set loan limits, how large of a loan they will buy and what the required down payment amounts and loan criteria must be met for them to buy these loans.

This week these groups have announced new loan limits for our area for loans originated in 2018. With our rising home prices, these increases in loan limits will allow buyers needing financing to buy higher priced homes while still keeping their down payments in the 3, 5, 10 or 20% down range. The current loan limit for conforming loans is $424,100 and will be raising to $453,100 for 2018. They also offer loans, called “high balance” loans, typically requiring 5+ percent down payments and this limit is raising from the $592,250 to $667,000.

These increases will help buyers afford our increased home prices and keep their down payment requirements in a more manageable range. For those that need or want to buy more expensive homes and needing to borrow larger amounts, these loans are still available and are labeled “Jumbo” loans. Many local and national lending options are still available for these loans. The down payments vary with credit scores and other factors and can offer competitive interest rates as well but are not sold off in the normal secondary markets, so loan terms vary with the lenders offering them.

If you need assistance on finding the right loan program for you, feel free to give me a call and we can find a solution that fits your needs best.

In The News • October 30, 2017

Gardner Report Q3 2017

by Paul Isenburg

Windermere’s local economist, Matthew Gardner, does a great job of monitoring and reporting on the economic health, trends and real estate related information in our region and breaking out specific areas too. See the info link below for the latest updates. Our region continues to experience record job and population growth, leading the country for the past full year. While it has created many issues in finding homes to rent or buy, it has also helped create great wealth for those of us currently owning a home and/or investment properties in the region.

It seems likely we’ll have another reasonably strong year for market activity but not with the degree of appreciation we’ve seen for the past 2 years. While some property types and homes have had 35% + appreciation over the past 2 years, the prognosis is for only 5-8% appreciation in 2018. This could mean the first half of 2018 will be the last opportunity to sell in to a strong market. I’m not expecting prices to fall in any near term basis but we’ve been seeing price flatten for most of the area since June and the spring will likely be the last spike up in pricing. If you want to capture this, it may be time to work on your home projects and be ready to come on the market by February to get the best exposure and strength of market conditions to work in your favor.

Buyers will likely find continuing upward pressure on interest rates but will also find prices leveling off as the summer arrives. At least that’s what my crystal bald head seems to be seeing. Let me know if I can help you with any planning or specific market conditions affecting you.

Gardner Report Q3

In The News • April 10, 2017

Home Values, Can you believe ……?

by Paul Isenburg

Every week, often daily, I’m asked, “Paul, can you believe how much ……, home prices are rising, over asking price bids are climbing too, quantity of people came thru an open house, submitted offers on a home……. On and on it goes. The simple and short answer is “No, I cant believe it.” I can rationalize it, but in many cases I can’t support the rises. They are just too crazy to believe. But is it real and can “it” continue—it appears so.

Pricing is always a matter of supply and demand and we are in a time of exceptional demand. Rents are continuing to rise and we are seeing 1,000+ people a week moving in to the central Puget Sound area of Seattle and the Eastside. With interest rates still in the excellent range of just over 4%, it’s easy to see why people want to buy vs. rent. People who have been renting want to buy. People who lost their homes in the recession want to buy. Seniors aren’t leaving the area like they did 10 & 20 years ago when they retired, so they want to sell and buy. Millennials are buying and all kinds of “lateral” buyers want to sell and buy–changing locations, shortening commutes, increasing or decreasing their home sizes in their current areas, etc. These are all huge buyer groups and they all want to buy. We aren’t even talking about the investor buyers, who, as most agents and active buyers in the market see, are out shopping and buying in huge quantities.

So when will we find homes for all these people? It is doubtful to be any time soon. Builders are building as fast as they can but often not in areas where more buyers want to be. Those that are willing to accept longer commutes can find options but in the overall, still at very low overall availability. Prices on new construction homes in the major urban areas can be found but not commonly under the $1M mark. We are rapidly pricing many buyers out of the market and this may lead to some exodus or reduction in the quantity of people moving here. Still with our region being home to Amazon, Microsoft, Google, Boeing, Costco, Expedia and a myriad of technology, medical research and Bio-tech companies, it’s not realistic to think this inward flow will be stalling out too soon.

This means that home prices should continue to rise over the next several years. Will there be a top? Undoubtedly. When and where is only a guess for anyone. Some analysts point to expected business cycle patterns to say 2018 will see a slow down but that’s a relative term, slow down. With our region now topping the highest home value appreciation for 6 straight months, what will a slow down really mean? Rents are among the highest in the world, and still rising at some of the fastest paces; so what does a slow down really mean.

What I see is a major shift in the Seattle area home values that isn’t a bubble, but a giant ballooning expansion. Yes, the expansion will decline at some point; yes we could have some home values be somewhat in a bubble, but the general economic factors for these home values to stay up are much more likely than we’ve ever had in this region. Geo-political events can affect us; certainly; but this gigantic increase in our population seems likely to keep our housing in high demand for the foreseeable future, even if ripples appear that create some breaks in the speed.

What does this mean for you? If you are a home owner, your home has never been worth more than it is today. It will likely continue to rise in value over the coming years. If you are thinking about selling, you are in the strongest possible negotiation position. If selling and leaving the area is in your “near future” plans, you may want to expedite those plans to capture this market. Yes, your home is likely worth more next year, but you may not want to tempt a ripple in the market that may cause a short term stop to your prized position.

If you are a buyer, be diligent and vigilant. Find ways to get any extra monies you can so you can be in the strongest possible position for a buyer in this market. Don’t be timid about stretching on a house–paying $465K for a house listed at $435K may seem nuts but with home prices rising 10, 15, 20% in many cases over the last year and expected to be around 10% this year, getting the home you want, at a price you can afford should be “the” critical factor, not what price you paid vs. what the seller might have been asking. Obviously there are limits but a good agent can help you establish those. The point is your frame of reference and focus needs to be on your ability to find and buy what you want. The rising values will soon reward you for your boldness.

In The News • Uncategorized • May 25, 2016

Market Froth Continues

by Paul Isenburg

The frenetic pace of the real estate market continues to frustrate home Buyers while rewarding home Sellers. The data shows 13% appreciation on the eastside from last year but for those of us on the streets and in the negotiations, it's not abnormal to see prices up 20% since the beginning of this year. Bidding on homes seems to have little basis on comparable values or sales data and much more to do with capturing that home, regardless of price. Business practices are challenging and changing constantly; trying to figure out if or when to delay reviewing offers; how to make counter offers; what demands Sellers can make on Buyers and what incentives Buyers can create to have their offer selected by Sellers.The pace and frustrations are dizzying.

Eastside prices are at all time highs, at just under $783,000 up 13% from 2015. Seeking affordability, Buyers have driven up the median price on condos to $345,608; that's 15% above last year at this time.

73% of homes are selling at or above asking price with an average market time of 6 days; a timeline created by Sellers and agents delaying the review of offers to allow more buyers to view the home and generate more offers. While the average and median over asking prices are only 5.13 and 3.75% respectively, anyone actively in the market knows these figures are quite often in the 15-20+% range over asking price.

A staggering statistic is that sales of $3M+ homes is up 94% over 2015; not surprisingly this is drawing more sellers and inventory has jumped 31% for homes for sale in this price range. I'd be cautious if I were a Buyer in this range as there just aren't that many folks with incomes to support future purchases in this price range. This could be a great time to be a Seller for homes in this range, while there is still optimism by Buyers. Beware though, the increased inventory can mean a decline in leverage for home Sellers in this price range relative to lower price range Sellers.

Seattle's statistics are just as bullish for home Sellers with price up 19%, to just about $637,500 and again condo sales and prices are rising for those seeking close in affordability. Median condo prices are just over $400K, up 21% from 2015. Sales in the high end markets, $1-3M are up 25-36%, while inventories are declining 17-33%. The high end has lower overall price points than the Eastside but shows a very strong market in both areas, especially for homes under $2M.

What's driving this strength of market and how long will it last are constant questions I receive. Job and population growth as well as near record low interest rates are the main reasons for the why; as well as younger buyers entering the market and people who lost their homes to foreclosure or bankruptcy in the market turn down returning to buy. Rising rental rates are also forcing many to seek stability of their housing costs. Average house payments are a lower percentage of incomes for most buyers than rental rates. So why not own if you can find a home you like and pay less to own it that rent it.

How long this lasts? This is always the $64M question. Some economists predict our region could see this strength continue to 2021; not to the degree of the last year but still 4-5% per year as our local economy continues to thrive and our population grows. Until we see more folks retiring and leaving their homes and/or the area, something that was postponed by many with the economic downturn, This should increase home inventories and likely lessen local demand but we need a lot of inventory to make that happen and I don't see that happening too soon. New construction is increasing but much more so in the suburbs and further out ex-urbs; still in-fill lots and small subdivisions are increasing. Any inventory increase is welcome.

So, if you're a home Seller, it may be time to capitalize on near peak values. While the market may continue upward, the bulk of gains may be had and uncertain economic conditions could reverse this quickly. If you're home Buyer, stay vigilant and diligent. Hopefully the typical July to August slow down in sales will come back for this year, along with modest gains in selection and help you find your new home.

In The News • April 25, 2016

Q1 2016 Market Review for Western Washington

by Paul Isenburg

Enjoy this report from Windermere's Chief Economist, Matthew Gardner, on economic and real estate changes. If you don't see the hyper link, hover on "this report" above to go to full report.

The main takeaways to me are that our dramatic decline in available homes for sale in the King & Snohomish areas are finally showing declines in sales. Not surprisingly, this is putting more upward pressure on prices with King County up 13.6% from Q1 2015 and 10.7% in Snohomish County. In some neigbhorhoods and price ranges prices are up almost this much from Q4 2015.

Continued job growth and inbound migration are the major driving forces for the demand on housing; something that will continue with more renters coming back into the buying market. Rental rates are seeing a slow diwb in increases but are still on the upswing, especially for 2+ bedroom options and closer-in areas. Near record low interest rates are also driving demand as buyers try to capture the 3.5-3.75% rates avaiable for 30 year mortgages and even less for 15 Year or adjustable rate programs.

Bottom line: home sellers are doing very well on selling their homes but should obtain advice on selecting the best offers to close successfully. Buyers are needing better guidance on how to structure and present their offers but also need to plan for patience and frustratsion as multiple offer situations are the norm and with 12-25+ offers for any home for sale, even very good offers are struggling to succeed in the current market.

In The News • March 18, 2016

March 2016 Update

by Paul Isenburg

Some interesting statistics on our prices and activity levels so far this spring for the eastside and Snohomish County areas and how they compare over the last 10 years. The low quantity of homes for sale is beginning to be noted in the sales figures but overall the charts point to a very strong market for sales activity and prices.

Local Market Update – March 2016

March 10, 2016March 17, 2016 ~ Windermere Eastside

A severe lack of inventory has led home prices to reach an all-time high. With the supply of properties at its lowest level since 2003, the market is in dire need of more homes to meet buyer demand. That is excellent news for those thinking about selling their home. Sellers can expect a quick sale, favorable terms and a historically high sale price. Buyers will need patience and a strategy for competing with multiple offers.

Eastside

The Eastside, already the most expensive area in King County, saw home prices set a new record in February. The median price soared 20 percent over last year to $739,975. Inventory here is particularly tight, and the area remains a very strong market for sellers. Homes are selling quickly, even at the higher end. A $3.2 million home in Yarrow Point sold last month in just 14 days.

King County

The median price of a single-family home sold in February hit an all-time high of $514,975, a whopping 20 percent increase over the same time last year. The number of homes sold exceeded the number that were listed, depleting inventory at a rate that is unsustainable. For the market to remain healthy, more people need to make the decision to list their homes.

Seattle

The continued boom in tech company hiring helped propel home prices to peak levels in Seattle. The median price of a single-family home jumped 24 percent over a year ago to $644,950, a new high. Inventory is at critical levels. In the hot Ballard neighborhood there are currently only 17 homes on the market.

Snohomish County

Snohomish County remains a haven of affordability for those sticker-shocked by King County prices. The median price for a single-family home sold in February was $359,000, a moderate increase of 9 percent over the same time last year. However, Snohomish County is struggling with the same historic shortage of homes as King County. With less than a month’s supply, experts expect home prices to continue to increase.

In The News • March 2, 2016

Bubbles vs. Affordability

by Paul Isenburg

There are a lot of worries and speculation being voiced about home values in our area being at bubble levels and worries about when and what will cause the bubble to burst. The graph below may help allay some of those fears as it shows the monthly payments for homes over the past 27 years and how those relate to affordability and home value appreciation.

The graph shows the average house payment in our area and home sales activity over this period. What it illustrates is that while our home values have risen, as have overall sales, the decline interest rates has helped to keep our increasing home values and payments affordable. The payment peaks correspond to market value peaks and similarly to declines, whether from the 1990 decline, the Dot.com decline in 2000 or the run up and subsequent fallout from the "Great Recession" of '07-'09. This also shows that our home sales are back at full recovery in quantity and for many homeowners, at or above prior peak values. Yet our payments are well below peak values. This bodes well for continued strength in housing values.

Historically we see that our payments tend to run just below the appreciation trend line with the few rises preceding our market struggles. We had a much larger peak in the '07 run up, and certainly a much bigger fall. At the far left of the graph you can see that we've just begun to peak above the trend line again; so what does this mean? In the past we've seen 1-3 year durations to these peaks in payment values. However, we are currently in a stable to declining interest rate market and a bit more of a struggle for world economies. Might this affordability prolong our ability to remain above the trend line?

For the core Seattle and Eastside communities the answer is likely yes. Many of the large local employers are continuing to have strong employment and certainly we have more workers coming into our market from other regions of the country and the world. With a more broad-based wage increase and stable to low interest rates, it's likely we have another 2 years of value rises but as many of us might remember from our high school math classes, the theory of Regression to the Mean, will likely catch back up to us and we'll see a combination of rising interest rates and declining values at some point in our relatively near future.

While it's difficult to predict when, it is usually better to be selling into these peaks rather than at or just past them. That said, if there is no reason for you to be moving in the near future, then relax and don't worry about this. However, if you are wanting to sell in the not too distant future, then you may want to make plans to do so sooner, so you can capture the peak value of your home. If you're buying or would buy after you sell, it's still good to know our near record low interest rates are in your favor and will help you make that next home purchase the most affordable we'll likely see in any near term timeframe. Since you will likely be staying put in that new home for 5-7 years, then any intermediate downturn isn't really affecting you. You weren't planning to sell and move, so ride it out, like most of us did during the last downturn and we'll see rebounding values on the other side, just further down the road.

So does this mean we're going into or are at a bubble in the market? Not in any traditional sense as our home values are based more on job, wage and population growth; our local economy is one of the strongest in the country and the very low interest rates are keeping home affordability more in check than in previous run-up periods. Can values drop? Most assuredly. Are we likely to see something like 2007-2009? Not very likely, barring catastrophic world events. Our home mortgages and home equity positions have all strengthened and this will dramatically reduce any bump in defaults, foreclosures and dramatic drops in home values. So relax, capture your gains or step up to that next home with more confidence in your future.

In The News • February 10, 2016

Interest rates & you….

by Paul Isenburg

Economists and financial forecasters have been telling us to expect interest rates to rise for the past 5 years or more, yet rates resisted. Now they have dropped back down to a 3.625% range for 30 year fixed rate mortgages; even for jumbo loan amounts–loans above a $417,000 amount, that typically aren't bought or secured by government entities like Fannie Mae and Freddie Mac. The rates get even lower for 15 year mortgages, now closer to a 3% rate.

This can be a great opportunity for those wanting to buy a home. Most of 2015 saw rates bouncing between 3.75 and 4.125%. The payment differential between our current rates and what you may have could be a $60-85+/month in savings. This also means that those of you who bought a home a few years ago and possibly were required to pay for mortgage insurance can now consider refinancing your loan and remove this mortgage insurance premium while possibly lowering your interest rate too. Two ways to help lower house payment. Since much of our area has seen 9-15% appreciation, just in 2015, and similar rises in 2014 values, many of us have greater home equity than we anticipated. A 20% equity is required to remove mortgage insurance in most cases. If you still like your home there is no reason to sell it but you may want to consider refinancing it to remove this insurance premium or lower your payment or switch to a shorter term mortgage to help pay off your home sooner. .

One other consideration while rates are low may be to refinance your home and pull out some equity in your home to pay off other debts. I'm not a big fan of using our homes as a piggy bank but interest rates on credit cards, cars and other large purchases have been rising and those interest payments aren't tax deductible. Your home's interest rate is deductible, in most cases, and often at substantially lower rates than our other debts carry. As always, a conversation about your long term goals, needs and circumstances is wise to see what the best steps for you may be, but our homes are now back to, at or above their peak values and this can help you solve some financial planning issues.

If you are thinking you'd sell your home in the near future, refinancing may not make sense; but it is possible to do a no-cost refinance and while you won't get the lowest rates of today, you'd likely be at a 4-4.25% rate. That is still a very attractive figure and can help you reach other financial goals while not adding to your loan balance.

There is lots of talk about interest rates rising this year and I'd say it's stil likely they do, but for now, the rest of the world's major economies are struggling more so than the U.S. and this has meant large institutional lenders around the wrold are buying U.S. mortgage backed securities as a safe haven for their monies until the world's ecoomies reach calmer levels. I'm not expecting this to happen too soon, so it's likely rates stay in a narow range around 4% most of this year, with some dips, like we're seeing right now, presenting themselves to all of us as savings opportunities. Let me know if you'd like a recommendation for a good lender or to talk more about your specific circumstances. I'd be happy to help.

In The News • February 3, 2016

Communication is a two-way street

by Paul Isenburg

The information age is changing the speed and style of our communications; this can be seen in all phases of our lives but has unique negative implications in the real estate market. Obviously everyone wants to have information available to them and real estate information is wide open for anyone to find. Buyers can find homes for sale now in hundreds of places and websites. I don't think this has necessarily been a good change as many of the website's information is out of date or otherwise inaccurate and that's frustrating. As an agent, I really can't control everywhere my information may show up nor if or when any site that may skim my information will ever bother to update it. I'm sure we would all be better served with fewer websites but more reliable ones.

Equally frustrating is the notion, mostly by home buyers, that they should be able to contact any agent at any time and get an instant call back from that agent. This would be less frustrating if the same buyers would have an open conversation about their information, but that's not what they want. I certainly understand that it should be and likely is possible for you to know a home's size, age, bed/bath count or school district information without having to talk to every agent that has a home for sale that you're interested; but you can learn all of this information and more about any home and only have to talk with one agent; if you have a good agent to help you. I can alleviate a lot of your frustration and save you a lot of time too.

For home buyers in particular, an upfront conversation with a quality agent is priceless and critical. You may think you know what you want but having someone ask you some relevant questions about the Why behind your wants can help you and the agent focus on what really does matter to you. It should also help you learn the true market conditions for any given area or price range. In many parts of our region and around the country it's common to say "it's a sellers market" but this is rarely universally true. There are almost always holes in the "norm" of a market. The Puget Sound area had a nearly 75% sale ratio last year; this is extraordinary. Good sellers markets in the past might have hit 60%; but this still means 1/4 of all the homes on the market last year didn't sell . What were those homes and is there any chance you would have liked or wanted one of them? Even if, as was often the case last year, the market really was wholly in the Seller's favor, the up-front communication/consultation would have educated you on how you compete in such circumstances and given you options on how to win without going above your budget, having all cash to buy or taking unnecessary risks that could cost you way too much money in the long run. Communication is critical and needs to be cooperative and open. An Accredited Buyer's Representative, like myself, will show you how to win, if you will talk with us.

My point is, when you're asking someone for information, you may find it more useful and beneficial to ask them for help or recognize that someone trying to understand something about you may truly be able to help you and much more so than by just giving you an answer to a question you thought was most important. Be open to having two way communication. If the agent you called isn't a good fit for you, spend some time to find one who is. We're out there and with 28 years of experience I can help you understand that real estate isn't just about you or me finding a home on line that interests you. There is so much more to buying that home than just finding it but you have to be open to talk with a competent, quality agent to learn what you don't know that might hurt or frustrate you. Don't be afraid of an agent with true knowledge and a desire to teach and help you.

Search on-line; it's fascinating but when you want to buy a home, start with some quality communication with "Your" agent.

Eastside

King County

Seattle

Snohomish County

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