Was this House Remodeled? How to Spot Home Repairs When You’re House Hunting

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Searching for that perfect fixer-upper to call home can be a bit overwhelming, can’t it? As a prospective buyer you’re really forced into some heavy duty priority juggling. Neighborhood, sale price, house features, yard features, cost of improvements and as-is condition are just a few of the big ones.

What about identifying problematic old repairs? What was done? Was it done right? Is something being covered up?

Even if you have a real estate professional on your side, and you should, the decision as to when and where to make an offer falls squarely on your shoulders. Once you’ve made your offer and the seller has accepted it, chances are you’re in for some expenses. Home inspectors, termite tests, surveys and more are usually at the buyer’s expense.

What if you had a little bit of knowledge that could help you narrow the field? What if you could recognize potential problem areas before making the offer and investing in an inspection?
While certainly not a comprehensive list, there are a few things that might alert you to a previous repair.

Wall or Ceiling Texture
Wall and ceiling surfaces can be very hard to match exactly. Look closely at the texture on the walls and ceilings, both within a room and from room to room. If you see a difference, you’ll know that someone did some wall or ceiling replacement somewhere along the line.

Mismatched Floorboards
Another hard-to-match surface is hardwood floors. Pay close attention to the floors as you walk through a prospective purchase. Look for “lines of demarcation” that show a difference in flooring. Look at the color, the wood grain, width of planks, visible nails, etc. Even a perfectly repaired floor usually leaves some telltale sign.

Newer Electrical Switches and Outlets
Also take a look at components like electrical outlets and switches. Are they different from one room to the next. If so, it’s a sure sign some remodeling or repair work has been done.

New Roofing
Sometimes it pays to have a closer look at things that are seemingly “wonderful upgrades,” such as a new roof, new siding, etc. These are certainly good things in and of themselves, but not if they are merely a Band-Aid atop a more serious problem.

What You Want to Know
You may be wondering what the point of all this is. The bottom line is that these little indications just give you something to ask about. They give you a reason to learn more about the house itself and the work that has been done. The more you know before you make your offer, the less likely you’ll be to get into a contract on a house that you really don’t want.

If there’s been a new roof, ask if there were leaks. Ask to see up in the attic and look for large sections of replaced roof decking. If you see that, look closer for rotten framing or damaged ceilings below.

If a wall or ceiling looks to have been repaired, ask why. What was done? Was there damage repaired or was it a remodel? Was the contractor who performed the repairs licensed and did he or she offer any sort of warranty on the work? Is that warranty transferable to a new owner?

Avoid Putting Sellers on the Defensive
One word of caution: Be careful not to sound like you’re just looking for a problem for the purpose of beating the price down or making trouble. It’s a fine art to ask about these things without putting the seller on the defensive. Once that happens, the deal can go south very quickly.

It’s worth the risk, however, to really know what has gone on and why. So keep your eyes and ears open! Previous repairs and remodels are part of a house’s history (if it’s more than a few years old), so don’t let your newfound eye for detail turn you away. Just enjoy the process of learning the history of a house.

~Tim Layton, RealEstate.com

Eastside Market Review – Third Quarter 2018

The Eastside Market Review is showing that the market has slowed somewhat in the 3rd quarter of 2018. It looks like we are transitioning into a more balanced market.  Read the full report below:

https://windermereeastside.com/2018/11/06/eastside-market-review-third-quarter-2018/

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Seattle home sellers are lowering list prices faster than anywhere else

Earlier this week the news was that the average Seattle-area homebuyer has been successfully able to negotiate a deal at below list price for the first time in four years.

But that’s only half the story: In a lot of cases, sellers are now doing the work for buyers by lowering the list price themselves.

At the start of the spring, when the local market was still on fire, just 5 percent of all homes on the market in the metro area had a reduced listing price, according to Zillow.

Now, 22 percent of all listings are being pitched at a reduced price, the most since Zillow began tracking the data in 2010.

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Nowhere else in the country has seen a change that dramatic.

On average,  sellers cutting their list price here have reduced it by 3 percent, the same as the national average. In the city of Seattle and the Eastside, that translates to a cut of about $25,000 to $30,000.

It’s a double advantage for buyers: Not only are list prices dropping, but the average buyer is then able to knock the price down further in negotiations, a reversal from recent years in which bidding wars designed to escalate list prices were the norm.

That’s another area where Seattle stands out on the national stage.

In the city of Seattle, homes now go for 0.6 percent below list price on average, after selling for 4.1 percent above list price a year ago. That 4.7 percentage-point shift is the biggest in the nation among the 50 biggest cities, according to data from Redfin.

However, the fact remains that Seattle has some of the most expensive real estate in the country, and the changes in recent months haven’t put much of a dent in that. Five years ago, the median house in Seattle cost $461,000. It peaked this spring at $830,000 — an 80 percent rise over five years.

~Mike Rosenberg, Seattle Times

 

Home prices have finally hit a wall on the West Coast

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Home sellers have had it easy over the last few years. Housing demand has risen along with the improving economy, and home builders have struggled to build at a pace that keeps up with that demand. The result was a shortage of housing inventory that allowed sellers to sit back and let buyers bid up the price of their home.

But data from the last two months suggests that the housing market is entering a new stage, especially on the West Coast, where home prices have risen beyond most people’s capacity to pay. Instead of bidding wars, houses are sitting on the market longer, and price cuts are becoming more common. Buyers are starting to regain the upper hand.

“If we’re right, nationally, we’ve already entered the early stages of a buyer’s market,” writes Rick Palacios Jr. director of research at John Burns Real Estate Consulting. “Should supply levels cross above five months we’ll be watching for flat [or] possibly declining resale prices in some markets, especially where affordability is already very stretched.”

Housing supply constraints have been a primary factor in driving prices up, but there are signs this is changing. Data from the National Association of Realtors shows that “months of supply”—a leading indicator of housing supply that divides the number of active listings by the pace of sales—has ticked up year-over-year in the last few months after years of declines.

But real estate experts often say there’s no such thing as a national housing market—new homes for sale in New York, for example, don’t mean anything for people who live in San Francisco—and the spikes in supply are most pronounced on the West Coast.

Some of the biggest jumps are in markets that have been red hot over the last 5 years, namely the San Francisco Bay Area, Seattle, and Denver. Active real estate listings in September were up by a whopping 113 percent year-over-year in San Jose, 81 percent in Denver, 47 percent in Seattle, 33 percent in San Francisco, 34 percent in San Diego, and 12 percent in Los Angeles.

But the trend isn’t limited to the largest markets, as smaller cities across California, Colorado, Washington, and Oregon have seen jumps as well. Of the 30 markets that showed the highest spikes in active listings in September, 19 are in those four states.

While the number of active listings has risen, home sales have fallen dramatically across the U.S., as inventory woes and affordability constraints continue to drag down the market as a whole. But as with supply spikes, home sales are falling by double digits in some markets on the West Coast. In September, home sales were down 24 percent year-over-year in Seattle, 16 percent in San Jose, 16 percent in Los Angeles, and 13 percent in San Diego.

The combination of more homes on the market but fewer sales means that despite surging demand for housing, homes are sitting on the market. And given the affordability crisis sweeping across America, especially on the West Coast, this points to only one thing: Home prices have outpaced wages in these markets and people simply can’t afford to buy.

In Southern California, the year-over-year rate of home price appreciation—meaning the rate at which home prices are going up—began to decline in the spring and has continued to do so into the fall. Northern California was a little later to respond, but San Jose and San Francisco registered their first year-over-year declines in September.

 

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Another wild card in this dynamic is rising interest rates, which are once again approaching 5 percent. Rising rates were cited as a possible cause of last week’s stock market selloff, and the housing market is particularly sensitive it. When interest rates rise, monthly mortgage payments go up.

For markets where home prices have already hit their ceiling, rising rates will likely cause home prices to drop just because something will have to give for people to be able to buy a home. Unfortunately for home buyers, the price drop won’t result in lower payments, just that they will pay less on the principal of their mortgage and more on interest.

Regardless of where rates go, though, home prices on the West Coast markets where supply is up and sales are lagging appear to have nowhere to go but down.

~Jeff Andrews, Curbed

How Interest Rates Affect Buying Power

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Whether you are thinking about buying or selling a home, interest rate trends are an important factor to consider. Mortgage interest rates have been rising and experts, including Windermere Chief Economist Matthew Gardner, predict that they will continue to increase in 2019.

Interest Rates and Buying Power

The chart below shows the impact rising interest rates would have if you planned to purchase a $675,000 home while keeping your principal and interest payments at $3,500 a month.

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Every time interest rates increase by a quarter of a percent, your buying power decreases by about 3 percent.

What this means for buyers:
With prices moderating and interest rates slated to rise again, now is a good time to buy. If you’re betting on prices falling, you need to consider the strong possibility that an increase in interest rates would offset any potential price savings.

What this means for sellers:
Listing your home now means you will attract a larger buyer pool before interest rates rise.

Seattle’s hot real estate market begins to slow

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Real estate markets, including Seattle’s, are seeing a dramatic slowdown, according to an analysis by Redfin.

Seattle was one of 14 metro areas in the country this spring where half or more of the homes listed for sale between March 5 and April 29 went under contract within two weeks.

But things are changing, at least for now.

By mid-September, spring’s fastest-selling markets, including Seattle, saw big declines. About 35 percent of homes for sale in Seattle were off the market in two weeks or less over the summer – a drastic change from spring, when 72 percent were off the market within two weeks.

According to Redfin Chief Economist Daryl Fairweather, sellers are waiting longer for offers and many are having to drop their list price to attract buyers.

There are a few exceptions. Omaha, Nebraska; Grand Rapids, Michigan; and Boise, Idaho are still seeing more listing go pending faster than a year ago, though the markets have slowed since spring. The common factor, Redfin points out, is they’re smaller cities away from the coast where homes are more affordable.

“This points to a lack of affordability as potentially the biggest factor in why the previously red-hot markets have slowed so much this year,” the report states.

King County and much of the Puget Sound region saw housing inventory break past two months for the first time since January 2015, according to a recent report.

Housing inventory – or how long it would take to sell all homes on the market – sat at 2.83 months in King County, which is a 78 percent increase over last year. Snohomish (2.18 months), Pierce (2.01 months), and Kitsap (1.93 months) counties all saw increases in inventory as well.

Inventory in King County has steadily risen about 40 percent since May.

~King5 News

How backyard cottages could open up Seattle’s housing market

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Seattle City Council took a step closer toward legislation that would make “accessory dwelling units” easier to build, helping to offset mortgage costs for Seattle homeowners.

This comes hot on the heels of a study released by the City Council, evaluating “the potential environmental impacts of proposes changes to the City’s Land Use Code intended to remove barriers to the creation of accessory dwelling units (ADUs) in single-family zones.”

In layman’s terms, the city is looking to simplify and streamline the process for homeowners to build ADUs on their properties, known colloquially as backyard cottages or in-law units.

Homeowners would then be able to rent these units out, providing an additional source of income that could then be put toward anything from day-to-day living to mortgage payments. Alternatively, it also opens up more housing options for renters.

“We believe that backyard cottages will allow homeowners to increase the number and variety of housing choices in single-family zones,” said Councilmember Mike O’Brien in a press release announcing the release of the study.

Imagine buying a home with a mortgage outside of your price range, but being able to balance that out — or even completely cover the mortgage cost — by collecting rent from a backyard cottage. Opening up zoning requirements to make that easier is the goal for the City Council, touting it a small, creative fix to help offset Seattle’s ballooning housing market.

A planned bill would “remove some barriers to building ADUs, including changes to off-street parking rules, owner-occupancy requirements, and design standards.” The Seattle Times estimates that this would add approximately 2,500 ADUs in the next 10 years, and prevent 500 houses from being torn down to build “McMansions.”

Up until recently though, the City of Seattle has been charging an arm and a leg in zoning fees for anyone trying to build an ADU on their property.

“Most of the municipalities in the Pacific Northwest are in the fee-generating business,” noted KIRO Radio’s Ron Upshaw. “What this entire thing has been structured for up until this point is for them to collect fees.”

Hopefully, homeowners are about to see some relief once the City Council finally settles on new legislation.

Between this, and a promising report from Northwest Multiple Listing Service (MLS), it seems as though the local housing market could finally be softening for new buyers on a budget.

“In the South Sound the market has shifted into neutral and is idling at the moment,” Dick Beeson of RE/MAX Professionals said in the Northwest MLS report. He went on to point out how housing availability improved in Pierce and Thurston counties, “but nowhere near what King County has experienced.”

“Buyers are taking deep breaths as they survey this new territory,” said Beeson, claiming that potential buyers will soon see more homes available for sale for the first time in three years.

If homeowners are made able to both offset their own costs and provide additional housing to renters, that can only mean good things for anyone looking to buy in Seattle in the near future.

~My Northwest

Condo prices in Seattle continue to speak to the strength of the real estate market

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You may have heard Seattle is experiencing a cool down. Not so fast.

The market is definitely slowing within the city (if not Thurston County), but that doesn’t mean that prices have dipped all that much. The median closed sale price fell by about $45,000 from the month before, but it was still up $30,000 from the same time last year, according to the latest Northwest Multiple Listing Service report.

The NWMLS report writes, nearly 60 percent of the current inventory of homes and condos has an asking price of $750,000 or higher, making affordability an ongoing concern. And while the single-family home is still king in Seattle and King County, condos are also seeing higher prices.

The median closed sale price for condos in Seattle during August (the last month for which information was available) was $504,500. That’s a 6.21 percent increase from the same time last year.  Area-wide, that jump looks more like 8.1 percent, while across King County the jump in median condo prices was 11.3 percent.

Some good news is that condo prices are going through the same market-wide cool down as single-family homes: Active listings jumped nearly 58 percent, and closed transactions dropped off by about 15 percent.

But that’s not necessarily enough to turn what was once seen as a “starter home” into an affordable option. It’s also not a sign of a pending bubble or rapid inflation, as far as brokers can tell; like all the other changes in the city, blame it on the strong local economy.

“Even with some doom and gloom about sales being down in many counties, inventory doubling in some areas, and appreciation holding at around 8 percent for the year, our market is still very healthy and recovering from the depleted inventory of the past three years,” George Moorhead, designated broker and owner, Bentley Properties, Bothell said in the report.

~Zosha Millman, Seattle PI

Rent vs. buy: Millennials take a different path to homeownership

should-you-rent-or-buyAs more millennials move up the earnings ladder, get married and start families, housing is increasingly taking center stage.

Though millennials have a higher number of college graduates than Gen Xers and Baby Boomers, they’re less likely to own a home, according to the Urban Institute. In fact, their rate of homeownership was about 8 percentage points lower than Gen Xers and baby boomers at the same age.

Among the barriers to homeownership, according to the study: delayed marriage, student debt, and choosing to live in high-cost cities. What puzzles analysts is that in many of these cities the cost of renting versus buying a home is about the same.

An analysis by CoreLogic found that the median rent and median home prices in cities with a significant millennial population didn’t show meaningful disparities. In fact, in many markets, the monthly mortgage at the current 4.5 percent interest rate was around the same amount as renting. Of course, it’s important to keep in mind that buying a house encompasses more than just monthly payments, so things like coming up with a downpayment and maintenance costs can be a barrier.

Bigger cities, bigger paychecks, bigger price tags

People who live in expensive cities tend to earn more but they also devote more of that income to housing.

One financial rule of thumb is to spend under 2.5 times your gross income on a house. That means if you or you and your spouse earn a total of $100,000 per year, you generally shouldn’t buy a house that costs more than $250,000. This could be challenging to impossible in places like San Diego and Boston.

“Your cash flow out should be no worse than what you would pay in rent. Now, if you’re paying 50 percent of your income in rent and 45 percent in a house, then I’d say looking at a house is probably worth it,” says Richard Green, director of the USC Lusk Center for Real Estate.

“Three years ago, when interest rates were lower, buying was better from a cash-flow perspective than renting was. But, now that interest rates have gone up, that’s not the case anymore.”

The up-front costs are tough for millennials

Even if you can afford monthly payments, pulling together a down payment is a problem for many young homebuyers.

In Washington, D.C., where millennials make up 35 percent of the population, programs like the Home Purchase Assistance Program, or HPAP, are popular with young singles and families, says Polly Donaldson, director of the DC Department of Housing and Community Development, or DHCD.

HPAP provides up to $80,000 in gap financing and up to $4,000 for closing costs to eligible residents. These interest-free loans don’t have to be paid back immediately.

The chart below shows the cities with highest millennial populations and median home price and rents.

Millennial Cities: Cost of Buying vs. Renting
METRO AREA PERCENTAGE OF MILLENNIALS MEDIAN HOME PRICE MEDIAN RENT
Sources: The Brookings Institution (population); CoreLogic (home and rent prices).
Washington, D.C. 35% $430,000 $2,200
Austin-Round Rock, Texas 27% $309,000 $1,700
San Diego-Carlsbad, Calif. 27% $560,000 $2,300
Urban Honolulu, Hawaii 26% $570,000 $2,100
Boston, Mass. 25% $504,000 $2,500
Houston-The Woodlands-Sugar Land, Texas 25% $240,000 $1,600
Los Angeles-Long Beach-Glendale, Calif. 25% $615,000 $3,200
Orlando-Kissimmee-Sanford, Fla. 25% $241,000 $1,600
Seattle-Bellevue-Everett, Wash. 25% $550,000 $2,600
Chicago-Naperville-Arlington Heights, Ill. 24% $250,000 $1,900
Dallas-Plano-Irving, Texas 24% $290,000 $1,800
Las Vegas-Henderson-Paradise, Nev. 24% $275,000 $1,400
Minneapolis-St. Paul-Bloomington, Minn. 24% $258,000 $2,000
New York-Jersey City-White Plains, N.Y.-N.J. 24% $465,000 $2,300
Phoenix-Mesa-Scottsdale, Pa. 24% $260,000 $1,500
San Francisco-Redwood City-South San Francisco, Calif. 24% $1,300,000 $4,500
Atlanta-Sandy Springs-Roswell, Ga. 23% 225,000 $1,600
Philadelphia, Pa. 23% $170,000 $1,600
St. Louis, Mo. 23% $160,000 $1,300
Charlotte-Concord-Gastonia, N.C. 22% $230,000 $1,500
Detroit-Dearborn-Livonia, Mich. 22% $95,000 $1,300
Miami-Miami Beach-Kendall, Fla. 22% $300,000 $2,000

Seattle, both expensive and millennial dense, is one of the highest-priced housing markets in the country. Median home prices are $550,000, so finding an affordable home is no easy feat. Although there are down-payment assistance programs, they only go so far in a place where home prices are prohibitively expensive for most homebuyers.

“The city has remained really committed to helping first-time homebuyers, but we’ve also recognized that even our down-payment assistance programs is a challenging model,” says Jennifer LaBrecque, program manager for the City of Seattle Sustainable Homeownership & Weatherization program. “We provide $55,000 in deferred down-payment loans to buy a home, but if you look at what a low-income person can afford and what a house costs, that money goes toward closing that gap but not all the way.”

The down payment is just the beginning. Buyers should also factor in property taxes, insurance, applicable association fees and repairs. The average homeowner’s insurance premium, for example, is about $1,000.

Although homeownership is alluring for a number of reasons, Green says, it’s not right for everyone. Here are some questions would-be homeowners should first ask themselves:

Where will you be in the next 5 to 10 years?

If you’re not planning on sticking around in the same house for at least five years, then you should consider renting, says Ilyce Glink, author of “100 Questions Every First-Time Home Buyer Should Ask.” This is a real estate principle known as “the 5-year rule.”

“It’s really hard to break even in less than five years, unless you buy a really ugly property, fix it up and the market is right, then you might get lucky and make money. But you can’t count on it,” says Glink.

It typically takes five years to get ahead because selling a house is expensive. Home values typically don’t increase fast enough to offset closing costs if you sell too quickly. These costs can eat away at your bottom line if you don’t have sufficient equity built up.

“In the end, buying and selling is going to be about 10 percent of the value of the house right there — it could even be more than that,” says Green.

The five-year rule is especially important for young buyers who aren’t sure if they’re going to change careers, want more space or start a family.

The opposite is true for millennials who plan to live in the same house for many years. These folks should consider buying because, over time, the house will likely appreciate in value.

“You still have to pay to live somewhere. For most Americans the biggest portion of their net worth, where their retirement cash will come from, is in their house,” says Glink. “And the way they get there is by paying down their mortgage every year, the faster the better. What they do — without even thinking about it — is they stockpile this huge amount of savings.That’s where homeownership becomes a better deal.”

Do you have an emergency fund saved?

Renting is advantageous because the fixed costs are relatively inexpensive compared to owning a house. When you rent, you don’t have to worry about costly repairs.

“You need to make sure you have some money put away if a furnace or an HVAC system dies. That could be $10,000 right there. Boom,” says Green.

“You have to ask yourself: do I have access to that kind of money? The driveway needs paving. The roof needs replacing. And even in good homes these systems wear out every 15 to 20 years.”

Homeowners who don’t have rainy-day funds run the risk of accruing debt by using credit cards or taking out loans. This could cut into  the financial benefits of owning.

Millennials have to ask themselves, says Glink, what are they willing to sacrifice to be homeowners?

“Owning a home costs money and millennials are very focused on experience. That’s eating out or traveling to everybody’s weddings or international travel. Are you prepared to give that up? Are you prepared to give up your weekly massage? Where are you willing to trade off?” says Glink.

Do you want flexibility or stability?

Your lifestyle is another factor in whether you’ll be happy as a homeowner. People who don’t want to be pinned down to one city might find homeownership a burden. It’s difficult to accept a job offer in another state when you have to sell your house first.

Conversely, people who want to live in a particular area for many years will likely find comfort in knowing they can’t be evicted by a landlord and that their monthly housing payments will remain constant.

“When I talk to millennials about renting or buying there’s an issue of timing and there’s an issue of money. And timing is everything. They have to ask themselves: ‘Am I going to be switching jobs and moving cities? Do I want that kind of flexibility? If they do want flexibility because they’re still figuring out where they want to live, then renting is a good solution,” says Glink.

~Natalie Campisi, Bankrate

Seattle home prices soared by 100 percent over past six years, study says

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Average home prices in the Seattle area have skyrocketed by nearly 100 percent in the six-year period after the post-recession housing market hit bottom in 2012, says a new report released Thursday.

That was the steepest price hike among the largest 20 cities in the U.S. and well above the national average, according to the study released by the real estate sales and analysis site Trulia.com.

The report found that home values in the nation’s largest metro areas increased by an average of 53.1 percent from 2012 through 2018. But in the Seattle metro area, home values shot up by 99.6 percent.

A major factor fueling the sharp home price increases in Seattle – and other metro areas that have experienced soaring home prices – has been the rate of population increase exceeding the pace of new home construction.

In the Seattle metro area, the population has grown by two people for each home construction permit issued from 2012 through 2017, which forces home prices upward.
In addition, employment has ballooned by 12.4 percent during the same period in Seattle, the report says.

The new report found that home prices in urban areas increased by more than double the rate as rural areas – 53.1 percent in cities as compared with 27.9 percent in rural counties.

The reason: many metro areas have seen robust growth in jobs while many rural areas have stagnated.

In the 100 largest metro areas, population expanded 4.8 percent, while population in rural counties fell 1.0 percent.

~Komo News