Amazing Real Estate Tips, Trends & Ideas

Amazing Real Estate Tips, Trends & Ideas for the Greater Seattle market: Local real estate news in the Greater Seattle market: Home prices and trends in Seattle, on the Eastside, and across the Puget Sound region. By Dave McFarland, Broker with RSVP Real Estate.

Jan. 28, 2019

Why It Makes No Sense to Wait for Spring to Sell

The price of any item (including residential real estate) is determined by the theory of ‘supply and demand.’ If many people are looking to buy an item and the supply of that item is limited, the price of that item increases.

The supply of homes for sale dramatically increases every spring, according to the National Association of Realtors (NAR). As an example, here is what happened to housing inventory at the beginning of 2018:

Putting your home on the market now, rather than waiting for increased competition in the spring, might make a lot of sense.

Bottom Line

Buyers in the market during the winter are truly motivated purchasers and they want to buy now. With limited inventory currently available in most markets, sellers are in a great position to negotiate.

 

Jan. 25, 2019

3 Things To Know About The Shifting Seattle Area Real Estate Market

Whether you are thinking of selling your house or buying a home, today’s real estate headlines can be confusing – perhaps even concerning. What is actually happening with mortgage rates? Are home values dropping or are they just rising at a slower pace? What impact will the economy have on the housing market?

If you are either a buyer or seller (or both), you need to know what it will mean to your family if you go ahead with the move. You need to understand three things:


1. What is happening in the housing market right now?

Consumers must get past those fear-mongering headlines and gain a deep understanding of what is truly happening. How strong is buyer demand right now? How much competition do listings have today compared to what they will have in the spring? People want to make an educated decision on what is probably their family’s greatest financial asset.

2. Why is it happening?

Understanding the individual pieces that impact the sale or purchase of real estate is important. Understanding how those pieces impact each other is critical. How does the amount of a down payment impact the mortgage rate a buyer will be offered? Can you still price your house a ‘little ahead’ of the market and still be sure it will sell?

3. How do the first two affect your local market?

Basically, you want an understanding of the overall housing market and a simple and effective explanation of how it will impact your personal real estate goals.

Here's the Bottom Line

The best way to get all three is to work with a professional who understands this shifting real estate market and can expertly guide you on the journey to reach your housing goals. Let’s get together to discuss what today’s market means for you.

Dec. 13, 2018

Leverage Your First House into Multiple Properties (Even With Limited Capital!)

Whether you're already living in a house you own or you want to buy your first house and springboard it into a bigger portfolio, let Dave provide some useful information to make this easier.

There are plenty of ways to do this—plenty of exit strategies and lots of different names used for it.  

Basically, we can show you how take a personal residence and inject some creative element or added value to produce a profit when you exit. There are lots of strategies to do this, and a lot depends on what type of starting resources you have access to.

Even if you don’t have a lot of starting capital, this is still very possible! You just need to have Dave find a deal for you that allows for a reasonable profit margin and be willing to get a bit creative. 

Everyone starts out in different places. If you have never bought a house, then buying your first with a value-add is an effective way to get started. You learn the buying process, and you get to make your first purchase with an investor mindset: big advantage!

If you already own a house, then you may have equity in it, or you may be able to refinance some of the cash out at a low interest rate. If you have a house that has equity but can’t grab the equity, now might be the best time to sell. Many Puget Sound neighborhoods have appreciated a lot, and if you’ve been living in it for two years, you may get to take the gains tax free. There are lots of options available and we can explain and help you to consider them all.

If you already own a home, you may have equity that you can borrow against. A home equity line of credit (HELOC) is like a credit card against your house. It’s set up using the existing equity you have in your house, which allows you to use the funds at your discretion. The best part is that, just like a credit card, you don’t pay anything until you actually deploy the capital. HELOCs are a great strategy that I highly recommend. 

If you'd like more information, call or text Dave McFarland at 425-330-0663.

Dec. 3, 2018

FHFA increases maximum conforming loan limit


Next year’s housing market is shaping up to be an active one after the Federal Housing Finance Agency (FHFA) announced higher conforming loan limits on November 27. On the heels of the FHFA’s increase in 2018, the baseline for single-unit home mortgages acquired by Fannie Mae and Freddie Mac will jump significantly next year, from $453,100 to $484,350 in most of the continental US.*  

Why the sharp increase?

This move is a direct response to rising property values across the country. The FHFA’s third quarter 2018 House Price Index report – also published on November 27—estimated the average cost of a one-unit home in the U.S. increased by nearly 6.9% over the last year.* According to the Housing and Economic Recovery Act, the conforming loan limit must be adjusted every year based on changes to average home prices. In addition to one-unit properties, the new limits include:  

  • $620,200 for 2-unit properties 
  • $749,650 for 3-unit properties 
  • $931,600 for 4-unit properties  

High-cost areas
Conforming loan limits are even higher in high-cost areas like Alaska, Hawaii, Guam and the Virgin Islands. While the exact number varies by county, the new baseline for a one-unit property in these parts of the country will be $726,525, with a four-unit maximum amount of $1,397,400.  

What does this mean for me?

At the end of the day, the FHFA’s announcement will result in an expansion of credit that creates more opportunities for people to become homeowners. A higher conforming loan limit means you can now borrow more money under the conforming loan guidelines, which are generally less stringent than non-conforming jumbo loans. Potential benefits of securing a conforming loan include:

  • A better chance of qualifying for a property inspection waiver—no need to schedule an appraisal before close. 

  • A streamlined condo questionnaire—this makes it easier to purchase a condo. 

  • Less documentation—Freddie Mac loan products may require one year of tax returns instead of two.  


What’s next?

Larger conforming loan amounts are on the horizon. Contact Dave McFarland at 425-330-0663 to find out if you qualify!  

Oct. 28, 2018

An Eye On Mortgage Interest Rates

With mortgage interest rates on the rise, we’ve gotten quite a few questions on where rates will be in the coming year. 

The Mortgage Bankers Association and to Fannie Mae are pretty good sources for information on the subject.  Here is a brief summary of their thoughts:

While we are in an upward trend, it doesn’t appear that the year over year increase that we saw in 2017 to 2018 will continue. 

  • 4th Quarter 2017:  In the 4th quarter of 2017 the average rate for a 30 year fixed mortgage was 3.9%. 
  • 4th Quarter 2018:   In the 4th Quarter 2018 the average rate was 4.8%.  Pretty darn close to an entire point.  This is about a $27,000 loss in purchasing power from 2017. 
  • 4th Quarter 2019:  The good news is that the Mortgage Bankers Association believe the increase in rates will slow, so that at the end of the 4th quarter in 2019 rates will be around 5.2%.   This equates to an $11,000 loss in sales price from 2018. 

At the same time we’re also starting to see prices stabilize so it all sort of equals out in the end.  Housing selection continued to improve during September while the pace of sales slowed in many neighborhoods.

A new report from NWMLS shows double-digit increases in inventory in several area neighborhoods, led by a 78 percent year-over-year gain in King County.

Overall, the month ended with 2.56 months of supply of single family homes and condos, well below the 4-to-6 months analysts use as an indicator of a balanced market between sellers and buyers. 

The current level is the highest since February 2015 when there was 3.56 months of inventory. In King County, supply exceeded two months for the first time since January 2015.

Bottom line:

Rate increases should be nominal moving into the 2019 New Year.  We should see continued improvement in housing inventory too.  It's still a very good time to buy or sell a home.

If you want additional details, graphs or charts, let us know and we’ll send you additional details.

Oct. 25, 2018

Still Think You Need 15-20% Down to Buy a Home? Think Again!

According to a new study from Urban Institute, there are over 19 million millennials in 31 cities who are not only ready and willing to become homeowners, but are able to as well!

Now that the largest generation since baby boomers has aged into prime home buying age, there will no doubt be an uptick in the national home ownership rate. The study from Urban Institute revealed that nearly a quarter of this generation has the credit and income needed to purchase a home.

Surprisingly, the largest share of mortgage-ready millennials lives in expensive coastal cities. These cities often attract highly skilled workers who demand higher salaries for their expertise.

Seattle has it's share of young people who are eager to buy a home of their own.  Neighoborhoods like Kirkland, Redmond and Bellevue on the eastside and Belltown, Queen Anne and Ballard on the westside are full of people saving for the big 20% down payment.

So, what’s holding these mortgage-ready millennials back from buying?

Myths About Down Payment Requirements! 

Most of the millennials surveyed for the study believe that they need at least a 15% down payment in order to buy a home when, in reality, the median down payment in the US in 2017 was just 5%, and many programs are available for even lower down payments!

The study goes on to point out that:

“Despite limited awareness, every state has programs that provide grants and loans to make homeownership more attainable, with average assistance in various states ranging from $2,436 to $21,171.”

Bottom Line

With so many young families now able to buy a home in today’s market, the demand for housing will continue for years to come. If you are one of the many millennials who have questions about their ability to buy in today’s market, let’s get together so we can assist you along your journey!

Who Has a Question?

Aug. 29, 2018

What Does The Recent Rash Of Price Reductions Mean To The Real Estate Market?

In a new report from Zillow, it was revealed that there has been a rash of price reductions across the country including the Northwest. According to the report:

3 Things:

  1. There are more price cuts now than a year ago in over two-thirds of the nation’s largest metros.
  2. About 14% of all listings had a price cut recently.
  3. Since the beginning of the year, the share of listings with a price cut increased 1.2%


Senior Economist Aaron Terrazas further explained:

“A rising share of on-market listings are seeing price cuts, though these price cuts are concentrated at the most expensive price-points and primarily in markets that have seen outsized price gains in recent years.”

What this DOESN’T MEAN for the real estate market…

This doesn’t mean home values have depreciated or are about to depreciate.


A seller may put a home worth $300,000 on the market for $325,000 hoping a bidding war will occur and an overanxious buyer will pay more than its actual value. That has happened often over the last few years. If the seller gets no offers and reduces the price to $300,000, it doesn’t mean the home dropped in value. It is still worth $300,000.

Home prices will continue to appreciate over the next 12 months. In this same report, Terrazas remarks:

home values are still expected to appreciate at double their historic rate over the next 12 months, but the frenetic pace of the housing market over the past few years is starting to return toward a more normal trend.”

What this DOES MEAN for the real estate market…

This does mean that sellers should be more conservative when it comes to the price at which they list their homes – especially sellers in the upper end of each market.

Sellers have been listing their homes at inflated prices hoping a super-hot market will deliver a buyer willing to pay virtually any price to ensure they don’t lose the house. That strategy has worked somewhat successfully over the last two years. However, the time that strategy would have worked may have passed.

Again, quoting Aaron Terrazas in the report:

“The housing market has tilted sharply in favor of sellers over the past two years, but there are very early preliminary signs that the winds may be starting to shift ever-so-slightly.”

Bottom Line

Prices are not depreciating. However, if you want to sell your house quickly and with the least amount of hassles, pricing it correctly from the beginning makes the most sense.

 

So if you’re curious what your home would sell for in today’s market, we’ll do a quick analysis for FREE. You can call Dave at (425) 330-0663. Or click here to check yourself.  www.mytruehomevalue.org

Aug. 20, 2018

Puget Sound Housing Market Snapshot

But that’s just a quick market update of what’s going on locally here in the greater Puget Sound area.

So if you’re curious what your home would sell for in today’s market, we’ll do a quick analysis for free. You can call Dave at (425) 330-0663. Or click here to check yourself.  www.mytruehomevalue.org

July 19, 2018

If you have less than perfect credit scores

First of all – what is a FICO score?

A FICO credit score can be generated for anyone with at least one reported credit tradeline 
(car loan, store card, credit card) in the past 12 months and is based on data from the three credit bureaus:
Equifax, Experian, and TransUnion. All three bureaus generate a separate credit score, each being slightly
different.

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Payment History: late payments, tax liens, bankruptcies, etc.
Accounts Owed: outstanding balances on accounts
Length of Credit History: the longer your history, the better
New Credit: inquires/applications for new credit accounts
Credit Mix: the mix of credit cards, retail accounts, loans, etc.

Tips to Increase A FICO Score

1.     Check the name, address, SSN, and all public records entries on the report for accuracy

2.     Make sure all the tradelines show up only once and belong to the borrower

3.     Allow negative data to ‘season’ through time thresholds (e.g. 6 to 12 months)

4.     Reduce outstanding balances on revolving debt to 25% of the allowable high limit.

5.     If there is NO positive credit, open ONE secured or regular credit card, charge ONE tank of gas each month and then pay it off to $10 ONCE THE BILL COMES IN.


3 Common Myths on Credit Scoring

MYTH: Paying off credit cards, collection accounts, tax liens, etc. will always increase the FICO score

FACT: The FICO model score reflects updates from “Date of Last Activity,” so paying off an old collection account can count against your borrower

MYTH: Closing accounts with zero balances will increase the FICO score

FACT: Closing accounts can raise the overall credit utilization, which can end up decreasing the FICO score

MYTH: Public records, judgments, liens, etc. negatively impact the FICO score forever

FACT: Most are removed from a credit file after 7 years (10 years in California)

>> FICO scores can range from 300 to 850 under the following categories:

Did You Know?

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What causes a “No Score” from one or more of the bureaus?

There could be 3 main causes:

1.       There’s not enough information in the borrower’s credit report to calculate a score

2.       The borrower’s file has not been updated by a creditor within the last 6 months

3.       2 out the 3 identifying elements to access the file don’t match the bureau’s database

 

How Do I Correct Errors?

  1. With proper documentation from your borrower, use IR’s Credit Rescore service to update any errors and get a new credit report in as soon as 24 hours
  2. The borrower can contact the credit bureaus directly to correct any errors
  3. Informative Research can initiate a credit dispute process with the bureaus on behalf of the borrower free of charge; this usually takes 30-40 days

FAQ

What are some positive and negative impacts on a credit score?

Positive

Paying bills on time

Low balances compared to maximum credit available

Positive credit management over the past 2 years

Negative

Delinquent payments and collections

Opening too many accounts in a short period of time

High total outstanding debt and derogatory public records


How do mortgage lenders use a credit score?

Lenders use credit scores to predict how likely a borrower is to repay a new debt based on past credit behavior. FICO scores are also used to determine the type of mortgage, costs, and interest rates.

Why do scores obtained by the consumer often differ from those on a lender’s credit report?

There are no regulations that state a specific score must be displayed to the consumer, so different entities can choose which score they want to display from the multiple bureau options available to them. On the other hand, lenders are required to pull a specific score for mortgage lending so there’s consistency when making a lending decision.

 

If you appreciate the value of this blog, please forward it along to a friend who has an interest in the real estate market.  

Have a great week!

 

June 29, 2018

Next Recession in 2020? What Will Be the Impact?

Economists and analysts know that the country has experienced economic growth for almost a decade. They also know that a recession can’t be too far off. A recent report by Zillow Research shed light on a survey conducted by Pulsenomics in which they asked economists, investment strategists and market analysts how they felt about the current housing market. That report revealed the possible timing of the next recession:

“Experts largely expect the next recession to begin in 2020.”

That timing concurs with a recent survey of economists by the Wall Street Journal:

“The economic expansion that began in mid-2009 and already ranks as the second-longest in American history most likely will end in 2020 as the Federal Reserve raises interest rates to cool off an overheating economy, according to forecasters surveyed.”

Here is a graph comparing the opinions of those surveyed by both the Wall Street Journal and Pulsenomics:

Recession DOES NOT Equal Housing Crisis

According to the Merriam-Webster Dictionary, a recession is defined as follows:

“A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”

A recession means the economy has slowed down markedly. It does not mean we are experiencing another housing crisis. Obviously, the housing crash of 2008 caused the last recession. However, during the previous five recessions home values appreciated.

According to the experts surveyed by Pulsenomics, the top three probable triggers for the next recession are:

  • Monetary policy
  • Trade policy
  • A stock market correction

A housing market correction was ranked ninth in probability. Those same experts also projected that home values would continue to appreciate in 2019, 2020, 2021 and 2022.  

Others agree that housing will not be impacted like it was a decade ago.

Mark Fleming, First American’s Chief Economist, explained:

“If a recession is to occur, it is unlikely to be caused by housing-related activity, and therefore the housing sector should be one of the leading sources to come out of the recession.”

And U.S. News and World Report agreed:

“Fortunately – and hopefully – the history of recessions and current issues that could harm the economy don’t lead many to believe the housing market crash will repeat itself in an upcoming decline.”

Bottom Line

A recession is probably less than two years away. A housing crisis is not.