5 tips for making an offer in a hot real estate market

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Steady demand. Limited supply. That’s what we are seeing in real estate markets across the country right now. Inventory is particularly tight within the lower price ranges. “The starter house is nearly missing in some markets,” according to Jessica Lautz, managing director of survey research and communication for the National Association of Realtors.

Conditions can vary from one city to the next, but the overall trend in housing markets across the country is that supply is still falling short of demand.

Given these conditions, it’s important for home buyers to make a strong, smart offer when the right house comes along. Here are five tips for doing exactly that.

1. Understand the supply and demand situation in your area.

According to housing experts, a so-called “balanced” real estate market has five to six months of supply. This means it would take five or six months to sell off all homes currently listed for sale, if no new properties came onto the market.

Many real estate markets across the country have less than a three-month supply right now. And some cities have less than a two-month supply.

The first step to making a strong offer is to understand the supply-and-demand situation in your area. We are still seeing sellers’ market conditions in many cities, as of spring 2018. And this could persist for some time.

2. Study recent sales prices in your area.

This is something a real estate agent can help you with, but you can do some of it for yourself. The idea here is to get a good understanding of recent sales prices in the area where you want to buy.

This will help you in a couple of ways. It will save you time during the house-hunting process, by eliminating the need for repetitive research and pricing “sanity checks.” It will also help you make a strong, realistic offer backed by recent sales trends. And speaking of offers…

3. Make a strong and timely offer, backed by comparable sales.

In a slow housing market, where sellers are ready to jump on the first offer that comes along, home buyers have the luxury of taking their time. A buyer might start off with an initial offer below the asking price, just to open negotiations. The seller would probably come back with a counteroffer, or accept the first offer.

But it doesn’t work that way in a more competitive real estate market with limited inventory. In a tight market, buyers are better off making their first offer as competitive as possible. Otherwise, the house could go to a competing buyer.

4. Consider writing a love letter to the seller.

A house love letter, that is! Recent studies have shown that buyers in competitive real estate markets can improve their chance for success by writing a heartfelt letter to the seller. Sure, real estate is a business transaction. But there’s a personal side to it as well. Writing a personal letter to tell the sellers what you love about their home might just tip the scales in your favor.

5. Get an agent on your side.

It’s always a good idea to have help from a local real estate agent. It’s even more important in a tight market with limited inventory. An agent can help you move quickly, putting together a strong offer that’s supported by recent sales data.

~MetroDepth

Housing crash a distant memory for Seattle homeowners, Zillow says

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Now may be the best time to sell in Seattle, considering more than 97 percent of homes are worth more now than the peak level before the housing market crashed in 2008, according to a new Zillow study released on Thursday.
The median home value is 29.2 percent above the bubble peak level, with the average home worth $492,700 – an 11.4 percent increase compared to a year ago.
Unfortunately, the same can be said about rent, with a 1.9 percent increase over the past year and a median cost of $2,176.

The rest of the housing market around the country is doing pretty well, too, with half of all U.S. homes more valuable now than before the 2008 recession. The median home value stands at $217,300 — that’s 8.3 percent higher than last year. Home values have risen by 8.4 percent since the height of the housing bubble.

Similarly, six of the 35 largest housing markets – including five cities in Texas (Austin, San Jose, San Antonio, Dallas-Fort Worth, and Houston), and Denver, Colorado – have more than 95 percent of homes worth more now than pre-recession peak. Portland, Oregon comes in close, with 94.8 percent of homes more valuable now.

But, there are many home buyers across major U.S. cities still struggling to recover from the recession. Las Vegas remains one of the worst cities, with only 0.8 percent of homes more valuable than before the crash. Orlando, Florida comes in second, Riverside, California third, and Baltimore, Maryland and Phoenix, Arizona topping the list for the least valuable homes since the recession.

“Despite widespread and consistent home value growth today, the scars of the recession still run deep for millions of longer-term U.S. homeowners, and it may take years of growth for their home to regain the value lost a decade ago,” Zillow Senior Economist Aaron Terrazas said. “And while stabilizing growth in rents is likely a relief for those renters saving to become homeowners, many of those would-be buyers in a number of the nation’s hottest markets will be contending with home prices that are as high as they’ve ever been.”

~Karina Mazhukhina / KOMONews.com

Here’s How To Buy A House When You Have Student Loan Debt

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So, can you buy your dream house if you have student loan debt?

The common wisdom is bleak: student loans are preventing borrowers everywhere from living The American Dream.

It doesn’t have to be that way, however.

Here are 8 ways to maximize your chance of buying your dream home — even if you have student loan debt.

Student Loan Debt Statistics

If you have student loan debt, you’re not alone. There are more than 44 million borrowers who collectively owe $1.5 trillion in student loan debt, according to personal finance site Make Lemonade.

The same student loan debt statistics report also found that:

Nearly 2.2 million student loan borrowers have a student loan balance of at least $100,000.
There is $31 billion of student loan debt that is 90 or more days overdue.
There is nearly $850 billion of student loan debt outstanding for borrowers age 40 or younger.
With student loan debt statistics like these, it’s no wonder some think it’s impossible to own a home when you are burdened with student loan debt.

Not so.

Here are 8 steps you can take right now:

1. Focus on your credit score

FICO credit scores are among the most frequently used credit scores, and range from 350-800 (the higher, the better). A consumer with a credit score of 750 or higher is considered to have excellent credit, while a consumer with a credit score below 600 is considered to have poor credit.

To qualify for a mortgage and get a low mortgage rate, your credit score matters.

Each credit bureau collects information on your credit history and develops a credit score that lenders use to assess your riskiness as a borrower. If you find an error, you should report it to the credit bureau immediately so that it can be corrected.

2. Manage your debt-to-income ratio

Many lenders evaluate your debt-to-income ratio when making credit decisions, which could impact the interest rate you receive.

A debt-to-income ratio is your monthly debt payments as a percentage of your monthly income. Lenders focus on this ratio to determine whether you have enough excess cash to cover your living expenses plus your debt obligations.

Since a debt-to-income ratio has two components (debt and income), the best way to lower your debt-to-income ratio is to: repay existing debt;
earn more income; or do both.

3. Pay attention to your payments

Simply put, lenders want to lend to financially responsible borrowers.

Your payment history is one of the largest components of your credit score. To ensure on-time payments, set up autopay for all your accounts so the funds are directly debited each month.

FICO scores are weighted more heavily by recent payments so your future matters more than your past.

In particular, make sure to:

Pay off the balance if you have a delinquent payment
Don’t skip any payments
Make all payments on time

4. Get pre-approved for a mortgage

Too many people find their home and then get a mortgage.

Switch it.

Get pre-approved with a lender first. Then, you’ll know how much home you can afford.

To get pre-approved, lenders will look at your income, assets, credit profile and employment, among other documents.

5. Keep credit utilization low

Lenders also evaluate your credit card utilization, or your monthly credit card spending as a percentage of your credit limit.

Ideally, your credit utilization should be less than 30%. If you can keep it less than 10%, even better.

For example, if you have a $10,000 credit limit on your credit card and spent $3,000 this month, your credit utilization is 30%.

Here are some ways to manage your credit card utilization:

set up automatic balance alerts to monitor credit utilization
ask your lender to raise your credit limit (this may involve a hard credit pull so check with your lender first)
pay off your balance multiple times a month to reduce your credit utilization

6. Look for down payment assistance

There are various types of down payment assistance, even if you have student loans.

Here are a few:

FHA loans – federal loan through the Federal Housing Authority
USDA loans – zero down mortgages for rural and suburban homeowners
VA loans – if military service
There are federal, state and local assistance programs as well so be on the look out.

7. Consolidate credit card debt with a personal loan

Option 1: pay off your credit card balance before applying for a mortgage.

Option 2: if that’s not possible, consolidate your credit card debt into a single personal loan at a lower interest rate than your current credit card interest rate.

A personal loan therefore can save you interest expense over the repayment term, which is typically 3-7 years depending on your lender.

A personal loan also can improve your credit score because a personal loan is an installment loan, carries a fixed repayment term. Credit cards, however, are revolving loans and have no fixed repayment term. Therefore, when you swap credit card debt for a personal loan, you can lower your credit utilization and also diversify your debt types.

8. Refinance your student loans

When lenders look at your debt-to-income ratio, they are also looking at your monthly student loan payments.

The most effective way to lower your monthly payments is through student loan refinancing. With a lower interest rate, you can signal to lenders that you are on track to pay off student loans faster. There are student loan refinance lenders who offer interest rates as low as 2.50% – 3.00%, which is substantially lower than federal student loans and in-school private loan interest rates.

Each lender has its own eligibility requirements and underwriting criteria, which may include your credit profile, minimum income, debt-to-income and monthly free cash flow.

Student loan refinancing works with federal student loans, private student loans or both.

If you make these 8 moves, you’ll be better positioned to manage your student loans and still buy your dream home.

Zach Friedman, Forbes

In Seattle real estate market, inventory is finally up

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According to the Northwest Multiple Listing Service (NWMLS) Seattle ended June with more than a month of inventory for the first time since September 2016.

In the Seattle city limits in June 2018, NWMLS saw 1,246 active listings, a 75.5 percent increase from the year before. Seattle ended last month with 1.2 months of inventory—a figure based on number of homes for sale and typical sales time—which is nearly double what the market had the previous year.

While this didn’t translate to a decrease in housing prices, they did rise less than last month or last year. Median closing prices rose 8 percent compared to June of last year—but at that time, home values had risen 17 percent. So although the median closing price for last month in Seattle was a whopping $740,000, or $812,500 for a single-family home, it rose far less quickly than this time last year.

County-wide, the inventory picture also improved, although home prices continue to rise; King County ended the month with 1.3 months of inventory compared to .84 last year. And while home prices are rising less quickly than this time last year, too, it’s not by as much. County-wide, home prices rose 10.2 percent over last year—compared to 15.7 percent over the previous year.

Even if home values are rising less quickly, they’re still already high—and still, according to the Puget Sound Regional Council, going up by about $5 every hour of every day. With renters already cost-burdened at a higher rate than homeowners, there seem to be fewer options for entering into homeownership. For people already priced out, there’s not a lot of good news here.

But it’s decent news for current househunters worried about getting priced out before they can get an offer accepted, agents short on listings, or current homeowners sitting on their properties because they’re worried about their next steps.

Meanwhile, though, there’s not much relief in sight for would-be homebuyers in Tacoma. As the City of Destiny’s rent rises faster than Seattle, closing prices have jumped more than 13 percent in Pierce County. Inventory is down and median sale prices are up across the city proper, with the biggest jump in home price, 34.6 percent, in central Tacoma.

~Sarah Anne Lloyd, Curbed Seattle

Is Seattle’s red-hot real estate market cooling down?

 

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For the first time in 10 years since the recession, the number of homes for sale in the Seattle area has increased considerably, reports The Seattle Times.

“There aren’t as many bidding wars right now,” said Beata Miklos, Managing Broker for Savvy Lane, a local online brokerage firm. “There isn’t as much urgency for buyers to place offers because they know that it’s softening up a little bit.”

Fierce competition for low-inventory of homes for sale has led to extreme bidding wars and lightning-fast sales. Now, the total number of single-family homes on the market in King County has jumped 43 percent in June from a year ago. And condo inventory has risen to an eye-opening 73 percent.

The Times reports homes already on the market are sitting unsold for longer periods of times, according to monthly data released Thursday by the Northwest Multiple Listing Service. Brokerages tell the NMLS since mid-spring, they’ve noticed fewer bidding wars and more homes selling for list price or below.

The total inventory of homes listed for sale has grown for three straight months on a year-over-year basis, reports the times, but the region still has a ways to go to make up for the past 10 years of declining numbers of homes for sale.

Robert Wasser of Prospera Real Estate said the price drop from May to June is the first price drop in King County since before the recession.

~Liza Javier, King5 News

Seattle homes sell for $123k over purchase price

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SEATTLE – A new survey has found that homes in the Seattle metro area sold for an average of $123,000 more than their original purchase price last year – a gain of 44.7 percent.

Nationally, people who sold their homes last year made $39,000 on the sale, or about 21 percent compared with what they originally paid. Only San Jose, Calif., and San Francisco notched higher price gains than the Seattle metro area.

The survey, by real estate firm Zillow, also found that the typical seller in the Seattle metro area owned the home for nearly 10 years before selling it in 2017.

In the Seattle area, dollar gains on home sales varied greatly from one neighborhood to the next.

Sellers earned the most in the Laurelhurst neighborhood of Seattle, earning $586,000 more than they paid for the home. At the percent gain level, sellers in the North Beach neighborhood of Seattle, gained the most, with a 112.4% gain on the sale of their home.

Elsewhere in the Seattle-Bellevue-Tacoma metro area, homeowners on Mercer Island made the greatest dollar gain – selling their homes for a median of $470,00 more than they paid for the home. At the percent level, sellers in Bellevue reaped the most, with a 73 percent gain.

A short supply of homes for sale has kept upward pressure on home prices, especially in markets where available homes are hardest to find. The profits are welcome news for home sellers who are able to cash in on higher home prices, but demonstrate how difficult the market is for buyers.
In addition, it is increasingly common for homes to sell for more than the listed price – in 2017, nearly a quarter of all homes sold for more than the asking price, up from 18 percent in 2012.

Some other key findings of the Zillow survey:
– The Houghton area posted the biggest dollar gain of any Kirkland neighborhood, with an average gain of $505,500.
– In Bellevue, the Somerset area saw the largest price gain of $560,000, with Cougar Mountain coming in second highest, at $473,000.
– The North Redmond area notched the biggest dollar gain in Redmond, with an average increase of $371,005.
– Seattle neighborhoods that experienced an average gain of $400,000 or more include Laurelhurst, North Beach, Madrona and Montlake.
– The View Ridge-Madison area posted the biggest gain of $116,000 in the city of Everett.
– The Madrona area of Federal Way notched the biggest gain there, with an increase of $99,500.
– The northeast area of Tacoma posted a gain of $104,719.

~KOMO News

Seattle-Tacoma-Bellevue area has nation’s 4th strongest economy

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A new survey ranks the Seattle-Tacoma-Bellevue area as having the fourth-strongest economy in the nation.
The new report, by Business Insider, ranked the strength of the nation’s 40 largest metropolitan areas based on five criteria: unemployment rate, average weekly wage, job growth rate, gross domestic product per capita, and GDP growth rate.

The survey then placed those criteria on a common scale and combined them to get a picture of the overall state of each metro area’s economy.

The study found that some metropolitan areas, such as Seattle, have particularly strong economies. Others, such as Cleveland, Virginia Beach and Providence, are much weaker.

According to the report, Seattle’s economy has been supercharged by hosting the headquarters of Amazon, even though the online giant has a mixed relationship with the locals of its home city.
Seattle’s 2016 GDP per capita of $86,889 was the fourth-highest among the 40 largest metro areas, and its third-quarter 2017 average weekly wage of $1,445 was the third-highest in the nation.

The Portland-Vancouver area was ranked 13th, with an above-average GDP growth rate of 3 percent.

The five metro areas with the strongest economies, in addition to Seattle, were (No. 1) San Jose, Calif.; (2) San Francisco, Calif.; (3) Austin, Texas; and (5) Denver, Colo.

~KOMO News

King County housing inventory increases, but buyer fatigue remains

Unknown-3A surprise surge in home inventory means some good news for house hunters in King County.

The May numbers, supplied by the Northwest Multiple Listing Service this month, show an increase that’s late in the home selling season.

“Big jump. 36 percent jump year over year in active inventory and so it’s almost 1,000 new units came online in King County,” said Matthew Gardner, Windermere Real Estate Chief Economist. “One jump in a month is a good thing. I want to see it continue.”

It’s better news for buyers who’ve seen 44 months of negative inventory numbers. May snapped that streak.

“For the buyers, more inventory is good,” said Rebecca Carlson, a Coldwell Banker Bain broker.
Carlson noted as inventory was going up last month, she said many buyers took a break.

“They’re feeling frustrated by multiple offers, having to waive everything, and not feeling like you have much control as a buyer,” said Carlson. “Depending on the area and the neighborhood, we’re just seeing fewer buyers looking.”

In King County, there were 1.12 months of inventory left on the market. That’s how long it would take to sell every home if no more homes were put up for sale. A balanced market is 3-6 months.

~Ryan Takeo, King5 News

5 tips for making an offer in a hot real estate market

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Steady demand. Limited supply. That’s what we are seeing in real estate markets across the country right now. Inventory is particularly tight within the lower price ranges. “The starter house is nearly missing in some markets,” according to Jessica Lautz, managing director of survey research and communication for the National Association of Realtors.

Of course, conditions can vary from one city to the next. But the overall trend in housing markets across the country is that supply is still falling short of demand. Given these conditions, it’s important for home buyers to make a strong, smart offer when the right house comes along. Here are five tips for doing exactly that.

1. Understand the supply and demand situation in your area.

According to housing experts, a so-called “balanced” real estate market has five to six months of supply. This means, in theory, that it would take five or six months to sell off all homes currently listed for sale, if no new properties came onto the market.

Many real estate markets across the country have less than a three-month supply right now. And some cities have less than a two-month supply.

The first step to making a strong offer is to understand the supply-and-demand situation in your area. We are still seeing sellers’ market conditions in many cities, as of spring 2018. And this could persist for some time.

2. Study recent sales prices in your area.

This is something a real estate agent can help you with, but you can do some of it for yourself. The idea here is to get a good understanding of recent sales prices in the area where you want to buy.

This will help you in a couple of ways. It will save you time during the house-hunting process, by eliminating the need for repetitive research and pricing “sanity checks.” It will also help you make a strong, realistic offer backed by recent sales trends. And speaking of offers…

3. Make a strong and timely offer, backed by comparable sales.

In a slow housing market, where sellers are ready to jump on the first offer that comes along, home buyers have the luxury of taking their time. A buyer might start off with an initial offer below the asking price, just to open negotiations. The seller would probably come back with a counteroffer, or accept the first offer.

But it doesn’t work that way in a more competitive real estate market with limited inventory. In a tight market, buyers are better off making their first offer as competitive as possible. Otherwise, the house could go to a competing buyer.

4. Consider writing a love letter to the seller.

A house love letter, that is! Recent studies have shown that buyers in competitive real estate markets can improve their chance for success by writing a heartfelt letter to the seller. Sure, real estate is a business transaction. But there’s a personal side to it as well. Writing a personal letter to tell the sellers what you love about their home might just tip the scales in your favor.

5. Get an agent on your side.

It’s always a good idea to have help from a local real estate agent. It’s even more important in a tight market with limited inventory. An agent can help you move quickly, putting together a strong offer that’s supported by recent sales data.

~Content provided by MetroDepth

It’s really tough to be a homebuyer in Seattle

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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