It’s really tough to be a homebuyer in Seattle

seattle

If you’re hoping to buy a home in Seattle, be prepared for rejection. A lot of it.

“For buyers, we are typically making six to 10 offers before we get a house,” said Rob McGarty, who has been a real estate agent in Seattle for 14 years. “The amount of emotional energy going into preparing these offers is huge.”

Home prices in Seattle are on fire: rising nearly 13% in February from the same time a year ago, according to the latest S&P CoreLogic Case-Shiller Indices.
Prices have risen so fast that it’s led to an affordability crisis, with no relief in site.
“Seattle seems to be defying all the laws of housing market trends,” said Daren Blomquist, senior vice president at real estate data firm ATTOM.

The problem is simple: there are more people looking to buy homes than there are homes available for sale.
Seattle’s population has been rapidly growing recently thanks in part to its large homegrown businesses like Amazon and Starbucks.

Amazon in particular has played a major role in Seattle’s economic growth and strength. The company employs more than 40,000 workers at its Seattle headquarters and pays out nearly $26 billion in compensation.
“Amazon has amassed a huge talent pool of employees that has caused other companies to open offices here,” said McGarty. “We have a ton of [San Francisco] Bay area companies that now have offices in Seattle … those transplants have driven prices up.”

Home values in King County, where Amazon is located, have appreciated twice as fast as the national average, according to Blomquist. Average annual home price appreciation from 1995 (when Amazon first launched) to 2018 was 6%, according to ATTOM. Over the same time period, the national average was just 3%.

Life as a buyer

After months of online searching, open houses and having several offers rejected, Kayela Robertson and her husband, Cody, had hit their limit. She said it was common to see the homes they lost out on go on to sell for at least $100,000 over the asking price with multiple offers. They were about to expand their search radius when they made their seventh offer.

“If we were going to be in Seattle, we had joked that we needed to get this house. This was the make it or break it offer,” she said. “If we didn’t, I would have to cave and move farther out.”
Fortunately, their seventh offer was accepted. To close the deal, they offered $140,000 more than the list price of $590,000. They also dropped all contingencies, included an escalation clause, put $100,000 in escrow and promised to close within two weeks.

The couple sold their home in Spokane in January for full asking price, and the money from the sale helped make their offer competitive. They closed on the new home a month ago.
“The house we sold was much nicer and bigger and was much less [than the Seattle home],” Robertson said. “It is still an adjustment that we are paying more than two times more for this house.”

After months of online searching, open houses and having several offers rejected, Kayela Robertson and her husband, Cody, finally snagged a home in Seattle.
Where Seattle goes from here

Despite being a seller’s market, Seattle homeowners are hesitant to sell. Last year, the city was among the best markets to sell a home, and the average home seller return on investment was 64%, according to ATTOM. But even if they get a good price, sellers are struggling to find a home to trade up to.

While the demand is clearly there, there’s only so much room to build in Seattle. It’s bounded by water and mountains. The city also has strict regulations when it comes to building apartment and condos, and 70% of the land mass in the city is zoned for single family homes, according to Matthew Gardner, chief economist at Windermere Real Estate.

“We aren’t very dense at all,” he said.

The home affordability problem could make the city less appealing to businesses. The city recently passed a new tax on big businesses that will help pay for affordable housing and fight homelessness.
At some point, the housing affordability issues and high cost of living, plus the new business tax, could cause companies to think twice about starting or expanding in Seattle.


“The two most important things when companies think about growing in a market is whether there is a suitable talent pool and how much they have to pay people, and the biggest part of salary is the local cost of living,” said Gardner.

~Kathryn Vasel, CNN Money

How Much it Costs to Buy a House in the Hottest Housing Markets of 2018

seattle

Most areas of the country are in a seller’s market, meaning there’s not enough inventory for all the interested homebuyers. About half of all the homes in the country are worth as much or more than they were in April 2007 — the height of America’s housing boom.

This is all good news if you’re planning to sell your home. It’s less good news if you’re trying to find one. But as with most things when it comes to buying a house, like what kind of hidden fees you can expect during the process, where you live matters. Certain areas of the country are exploding in popularity, which is driving up the cost of homes.

Ahead, check out how much it costs to buy a home in the hottest real estate markets of 2018 according to Zillow’s latest housing report.  Hottest Housing Markets

Who’s moving where and for what jobs? Glassdoor study reveals top U.S. cities applicants are eyeing

Screen-Shot-2018-05-17-at-2.58.18-PM-630x383

Seattle is a leading destination when it comes to U.S. cities where people are most interested in moving for work, but it still trails several others, including San Francisco, New York, Los Angeles and more.

That finding is among many in a new economic research study out today from Glassdoor, the job and recruiting website. The study, Metro Movers: Where Are Americans Moving for Jobs, And Is It Worth It?, identifies, among other things, where job applicants are most interested in moving, where they’re interested in leaving, and which factors drive people to move for a new job.

The study is based on a sample of more than 668,000 online job applications started on Glassdoor during a one week period, from Jan. 8-14, for the 40 largest metro areas in the U.S.

“Metro movers” — defined by Glassdoor as job seekers located in one metro who start a job application in another metro — still find San Francisco to be the most attractive place to try to land work, despite a high cost of living and housing shortage.The city alone attracted 12.4 percent of all applications by job seekers looking to move cities. Seattle attracted 3.1 percent.

T1
It shouldn’t come as any surprise which company is attracting the most people, by far, to apply for work in Seattle.

T2
Companies in Providence, R.I., would appear to be having a hard time keeping people from leaving based on the fact that that city had the highest percentage of candidates applying for jobs elsewhere at 52.2 percent. The California cities of San Jose (47.6 percent), Riverside (47.3 percent) and Sacramento (44.4 percent) were in the top five, along with Baltimore (45.6 percent).

T3
So if you’re about to flee Providence or you’re trying to get to San Francisco, what’s the most attractive thing about where you’re applying?

Company culture is a top factor, according to the study — even more so than salary. A company with a 1-star higher overall Glassdoor rating is six times more likely to attract a candidate than a company that’s offering $10,000 more in salary, but has a lower culture rating.

But what do all of these metro movers want to do? A lot of them want to be engineers or developers. And, some will move for a new flight attendant gig.

T5
If all of this makes you just want to head to the bar for a drink, there’s good news there, too. If you like the person who serves you, it appears from the data that they’re not trying to go anywhere.

T6

~Kurt Schlosser, GeekWire

Crucial things to know before you hire a home inspector

home-inspectionHiring a home inspector before you make a purchase can save you thousands of dollars in unexpected repairs. But don’t assume every home inspector is the same.

Washington State law dictates the minimum standards for a residential home inspection. The state also requires home inspectors to complete 120 hours of special classes and 40 hours of field training and they must pass exams in order to obtain a home inspection license.

The best inspectors are also insured, and certified by a recognized home inspection certification organization.

While there are many excellent inspectors working in our state, unfortunately there are many who leave a lot to be desired. When you’re making one of the biggest investments you’ll ever make, you want someone who puts your best interest before keeping the deal alive.

Certified inspector Paul Rogers prides himself as being extremely thorough. So much so, that he says many real estate agents consider him a deal killer.
“I don’t kill the deal,” said Rogers. “I only report what the facts are. I have no vested interest in that property. My interest is in my client. Period.”

Ron Greene, a former electrical engineer, says he started doing residential inspections four years ago.

“I laugh when an agent tells me he hopes I don’t kill the deal,” said Greene. “I tell him, if the deal falls flat, it will be the home that killed it, not me.”
Greene says prospective home buyers need to understand that different home inspectors see things differently.

For example, one inspector might make note of swollen floor moldings. Another might investigate further to determine the actual cause of the swelling. Green also points out that some problems may not be easily detected by even the best inspectors.

Before you hire a home inspector, get referrals from other homeowners who give their inspector high marks.  Ideally, talk to more than one inspector and don’t limit your search to the few your agent suggests.
Find out everything the inspection will cover (review the state law linked above) and make note of anything that’s left out. Ask about their certification, and ask whether they have errors and omissions insurance, in case they miss something important.

Greene recommends home buyers also ask how long the inspection will take. He says even with a small home, a reasonably thorough inspection cannot be done in less than three hours and he typically takes 5 to 8 hours.
Local real estate agent Junior Torres says he gives his clients a list of questions including: How many inspections do you do in an average year?  According to Torres, more than around 30 inspections per month could mean the inspector is putting quantity over quality.

Rogers warns you should also be wary if the quoted price for the inspection is much lower than everyone else’s price. “You need to find somebody who is thorough, who isn’t discounting their inspection fee just to get the business,” Rogers said.

And even in this hot local housing market, where multiple bids are prompting many buyers to waive home inspections – the best home inspectors agree that waiving an inspection is never advised, especially with homes that have been flipped for fast profit.

~Connie Thompson, KOMO News

Seattle-area home-price growth from current boom has surpassed last decade’s bubble

BIZ-REAL-SEATTLE-BUBBLE-SE_t1170

SEATTLE – As the Seattle area continues its run as the nation’s hottest real estate market, it has now seen home prices surge upward for a full six years – with more growth in home values during the current boom than during past decade’s bubble.

Single-family home costs across the metro area grew 12.7 percent in February from a year earlier, the biggest increase in the nation for the 18th month in a row, according to the monthly Case-Shiller home price index, released last week. The report marked six years since home values bottomed out in February 2012. Since then, values have increased 85 percent – nearly triple the region’s historical average for a typical six-year span. Only San Francisco and Las Vegas had bigger gains during that period.

Even during the housing bubble last decade, prices didn’t rise this much. In the six years leading up to the peak of the bubble in 2007, Seattle-area prices grew a total of 73 percent before the bubble burst.

(During the bubble, home prices rocketed up quickly – fueled by lax and sometimes fraudulent mortgage lending that sowed the seeds for the Great Recession – but the peak surge only lasted a few years; this time, the growth has been steadier and keeps going and going.)

The recent boom locally has completely wiped out the effects of the recession on the housing market, when prices sank.

Local home values are now a bit higher than they were at the height of the bubble in 2007, even after accounting for inflation since then. Only Denver and Dallas have had price growth greater than Seattle’s since the old 2007 high.

There are no clear signs that we’re in another bubble. At the least, the elements that created last decade’s housing collapse – like homebuyers getting mortgages they couldn’t afford and rampant subprime lending – aren’t present this time around. The number of people defaulting on their mortgages locally is minuscule, for instance, and lenders are only issuing mortgages to people with good credit scores and financial assets.

A recession or other unexpected development – like a collapse at Amazon a la the Boeing bust of the 1970s – could change that, of course.

But for now the real-estate market shows no signs of slowing down amid record low supply of homes for sale and strong demand for homeownership. The Case-Shiller report noted that the Seattle metro area had the biggest job growth in the past year among the 20 regions covered in the report.

Compared with a month prior, home values increased 1.7 percent, according to the Case-Shiller data. The last time prices went up that much in a month was last summer.

The month-over-month growth also led the country, and was quadruple the national increase.

Seattle’s home-price increase of 12.7 percent, compared with a year earlier, was similar to the last several months and was again more than double the national rate of 6.3 percent.

Las Vegas again had the second-biggest home-price jump, and continues to heat up, with prices up 11.6 percent. San Francisco was close behind, followed by Denver, Detroit and Los Angeles.

Seattle home costs have grown more than 10 percent, year-over-year, for 26 months in a row. That’s pushed the median cost of a single-family house to $820,000 in Seattle and $926,000 on the Eastside. Even more affordable areas have recently hit record prices: $485,000 in Snohomish County, $350,000 in Pierce County and $341,000 in Kitsap County.

~Mike Rosenberg, The Seattle Times

Western Washington Real Estate Market Update

content_18057_WWAGardnerReportQ1_Masthead

The following analysis of the Western Washington real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact me.

ECONOMIC OVERVIEW

The Washington State economy added 96,900 new jobs over the past 12 months, representing an annual growth rate of 2.9%—still solidly above the national rate of 1.5%. Most of the employment gains were in the private sector, which rose by 3.4%. The public sector saw a more modest increase of 1.6%.

The strongest growth was in the Education & Health Services and Retail sectors, which added 17,300 and 16,700 jobs, respectively. The Construction sector added 10,900 new positions over the past 12 months.

Even with solid increases in jobs, the state unemployment rate held steady at 4.7%—a figure that has not moved since September of last year.

I expect the Washington State economy to continue adding jobs in 2018, but not at the same rate as last year given that we are nearing full employment. That said, we will still outperform the nation as a whole when it comes to job creation.

HOME SALES ACTIVITY

There were 14,961 home sales during the first quarter of 2018. This is a drop of 5.4% over the same period in 2017.

Clallam County saw sales rise the fastest relative to the first quarter of 2017, with an increase of 16.5%. In most of the other markets, the lack of available homes for sale slowed the number of closings during this period.

Listing inventory in the quarter was down by 17.6% when compared to the first quarter of 2017, but pending home sales rose by 2.6% over the same period, suggesting that closings in the second quarter should be fairly robust.

The takeaway from this data is that the lack of supply continues to put a damper on sales. I also believe that the rise in interest rates in the final quarter of 2017 likely pulled sales forward, leading to a drop in sales in the first quarter of 2018.

G1

HOME PRICES

With ongoing limited inventory, it’s not surprising that the growth in home prices continues to trend well above the long-term average. Year-over-year, average prices rose 14.4% to $468,312.
Economic vitality in the region is leading to robust housing demand that far exceeds supply. Given the relative lack of new construction homes— something that is unlikely to change any time soon—there will continue to be pressure on the resale market. As a result, home prices will continue to rise at above-average rates in the coming year.

When compared to the same period a year ago, price growth was strongest in Grays Harbor County at 27.5%. Ten additional counties experienced double-digit price growth.
Mortgage rates continued to rise during first quarter, and are expected to increase modestly in the coming months. By the end of the year, interest rates will likely land around 4.9%, which should take some of the steam out of price growth. This is actually a good thing and should help address the challenges we face with housing affordability—especially in markets near the major job centers.

G2

 

G3DAYS ON MARKET

The average number of days it took to sell a home dropped by seven days when compared to the same quarter of 2017.

King County continues to be the tightest market in Western Washington, with homes taking an average of 24 days to sell. Every county in the region saw the length of time it took to sell a home either drop or remain essentially static relative to the same period a year ago.
In looking at the entire region, it took an average of 61 days to sell a home in the first quarter of this year. This is down from 68 days in the first quarter of 2017 but up by eleven days when compared to the fourth quarter of 2017.

Anyone expecting to see a rapid rise in the number of homes for sale in 2018 will likely be disappointed. New construction permit activity—a leading indicator—remains well below historic levels and this will continue to put increasing pressure on the resale home market.

G4

CONCLUSIONS

This speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors. For the first quarter of 2018, I have left the needle at the same point as fourth quarter of last year. Price growth remains strong even as sales activity slowed. All things being equal, 2018 is setting itself up to be another very good year for sellers but, unfortunately, not for buyers who will still see stiff competition for the limited number of available homes for sale.

G5

~Dr. Matthew Gardner, Windermere Real Estate

Seattle homes sold at fastest pace ever in 2017, Zillow says

seattleskyline-630x473

Homes in Seattle sold in an average of 47 days in 2017. That’s the fastest it’s ever been, according to a new analysis by Zillow.

It means something recent house hunters already have learned — be ready to move fast when you find the home you want.

“As demand has outpaced supply in the housing market over the past three years, buying a home has become an exercise in speed and agility,” said Zillow Senior Economist Aaron Terrazas.

The 47 day average in made Seattle the third-fastest market for selling homes in 2017. Only San Jose, Calif. (41 days) and San Francisco (43 days) were faster.

Zillow said May and June were the fastest-selling months in 2017. Homes stayed on the market for 42 days. That includes closing.

It’s just going to get worse in 2018. Zillow predicts there will be 19.7 percent fewer homes on the market this year.

“This is shaping up to be another competitive home shopping season for buyers, who may have to linger on the market until they find the right home but then sprint across the finish line once they do,” said Terrazas.

Be prepared to pay more than you planned. Zillow says 52.4 percent of homes in 2017 sold for more than the asking price.

Nationwide, it took 81 days for the typical U.S. home to sell in 2017. The slowest market for selling was New York City (134 days).

~Travis Pittman, King 5 News

Eleven Things to Know About Mortgage Interest Deductions for 2018

BBJ388b.img

With the passing of the Tax Cut and Jobs Act, a lot is about to change financially for citizens in the United States. One of the ways is how it will reflect financially for homeowners. Although this tax cut is for 2018 (meaning citizens won’t see changes until February of 2019), there will still be a dramatic change for U.S. homeownership. For a summary of things you need to know follow this link:  2018 Mortgage Interest Deductions

First thing to do now if you want to buy a home soon

mortgage-calculator-tennessee

If you’re planning to buy a home this year, you’ve hopefully saved up more than you think you’ll need for a down payment. But stockpiling money isn’t the only thing that should be on your financial checklist before becoming a homeowner.

First and foremost, you should check in on your credit score, says Suze Orman, financial expert and former CNBC host. That’s because, the higher your credit score, the better rate you’ll be able to get on a mortgage. And that matters because even a fraction of a percent can dramatically alter the total you’ll pay over time.

“Your goal should be to get the best possible loan,” Orman writes in a recent blog post. “The better your financial profile is, the lower the interest rate you will be offered. Even a small interest rate difference can add up to tens of thousands of dollars in savings over the life of a loan.”

FICO credit scores range from 300 to 850 and signify your trustworthiness to financial institutions. While anything over 650 is considered decent, Orman recommends aiming for a score of 740 or higher before applying for a loan.

If your score is less than ideal, Orman recommends taking three immediate actions to improve it: pay down credit card balances, pay down other debt, such as student loans, and stop buying anything that isn’t completely necessary.

You want to improve your credit utilization ratio, which is calculated by dividing your balance by your credit limit. Ideally, you’ll never hold a balance of more than 30 percent of your limit. So If you have a card limit of $10,000, you never want your balance to exceed $3,000.

As you get ready to consider putting in an offer on a home, you want to pay down as much debt as possible and refrain from splurging.

“The best advice is to charge as little as possible in the months leading up to a home purchase,” Orman writes.

You’ll also want to have excess cash on hand that can prove to lenders that you’ll be covered even in the event of an emergency. “Though there is no hard-and-fast rule, lenders want to know that if you get laid off, or sick, you can cover the mortgage for at least a few months,” Orman says.

~CNBC

Five First-Time Home Buying Mistakes to Avoid

1-intro7

Thinking about buying your first home? Before you can unlock the door to homeownership, you have to take some important first steps including:

Getting approved for a mortgage.
Choosing the right real estate agent.
Finding the right home that fits your budget.
Here are five common mistakes first-time homebuyers should avoid.

1. More to it than mortgage payments

Many first-time homebuyers decide to buy when they feel ready for a mortgage. But just because they can afford the mortgage payments doesn’t mean they can afford to own a home, says New York attorney Rafael Castellanos, president of Expert Title Insurance.

“They have an idea of what their mortgage payment is going to be, but they don’t realize there’s much more to it,” he says.

Property insurance, taxes, homeowners association dues, maintenance, and higher electric and water bills are some of the costs that first-time homebuyers tend to overlook when shopping for a place.

“Keep in mind property taxes and insurance have a tendency of going up every year,” Castellanos says. “Even if you can afford it now, ask yourself if you’ll be able to afford the increased costs later.”

2. Looking for a home first and a loan later

Homebuying doesn’t begin with home searching. It begins with a mortgage prequalification — unless you’re lucky to have enough money to pay cash for your first house.

Often, first-time homebuyers “are afraid to get prequalified,” says Steve Anderson, a broker and owner at Re/Max Benchmark Realty in Las Vegas. They fear the lender may tell them they don’t qualify for a mortgage or they qualify for a loan smaller than expected. “So they pick a price range out of the sky and say, ‘Let’s go look for a house,’” Anderson says.

And that’s not how it should be done. Yes, it’s more fun to go look at houses than to sit in a lender’s office where you have to expose your financial situation. But that’s a backward approach, says Ed Conarchy, a mortgage planner and investment adviser at Cherry Creek Mortgage in Gurnee, Illinois.

“You get preapproved, and then you find a home,” he says. “That way, you’ll make a financial decision versus an emotional decision.”

3. Not getting professional help

New to the homebuying game? You’ll need a reputable real estate agent, a good loan officer or broker, and perhaps a lawyer.

Venturing into this process alone, without professional help, is not a good idea. While every rule has its exception, generally, first-time homebuyers should not try to deal directly with the listing agent, Anderson says.

“If you are getting divorced, are you going to go to your husband’s attorney for help? Of course not,” he says. “Same here. If you go to a listing agent, they are only going to show you their listings. You must find a buyer’s agent to help you.”

If you hire an agent without a referral from friends or family, ask the agent to provide references from previous buyers. The same goes for loan officers or mortgage brokers.

“It’s very hard for first-time homebuyers because they don’t know who they are dealing with,” Anderson says.

It’s crucial to find a professional who will give you “truly independent advice,” Conarchy says. Sometimes that means hiring a lawyer.

4. Using up savings on the down payment

Spending all or most of their savings on the down payment and closing costs is one of the biggest mistakes first-time homebuyers make, Conarchy says.

“Some people scrape all their money together to make the 20 percent down payment so they don’t have to pay for mortgage insurance, but they are picking the wrong poison because they are left with no savings at all,” he says.

Homebuyers who put 20 percent or more down don’t have to pay for mortgage insurance when getting a conventional mortgage. That’s usually translated into substantial savings on the monthly mortgage payment. But it’s not worth the risk of living on the edge, Conarchy says.

“I’d take paying for mortgage insurance any day over not having money for rainy days,” he says. “Everyone — especially homeowners — needs to have a rainy-day fund.”

Need a mortgage but don’t have much of a down payment? Search today for a low-down-payment mortgage.

5. Getting new loans before the deal is closed

You have prequalified for a loan. You’ve found the house you want. The contract is signed and the closing is in 30 days. Don’t celebrate by financing another big purchase.

Lenders pull credit reports before the closing to make sure the borrower’s financial situation has not changed since the loan was approved. Any new loans on your credit report can jeopardize the closing.

Buyers, especially first-timers, often learn this lesson the hard way.

“They sign the contract and they want to go buy new furniture for the house or a new car,” Anderson says. “I remember one case where, just before closing, the buyer drove to the office and said, ‘Look at my brand-new car.’ I told them, ‘You’d better go back to that dealership.’”

Luckily, the dealership agreed to wait a couple of days to report the loan to the credit bureaus, he says. Otherwise, it could have killed the deal.

~Polyana da Costa, Bankrate