Kitsap County Housing Snap Shot

Kitsap County home owners saw on average a 20% increase in their investment last year. Will it continue in 2006???

Here is what we are seeing today.
Absorption rate has gone from 10 weeks of inventory to 20 weeks over the last 6 months. This represents a slowing of the market, longer market time, not as many mulitiple offer situations and if this trend contiunues perhaps a shift from a sellers market to more of a buyers market.

Will it shift....too soon to tell. The slowing could be a result of the holidays, this effect is not uncommon. We will know more by the end of February which is when the spring market typically starts.

Stay tuned and I'll let you know.

FHA Eases Requirements on Mandatory Repairs

Buyers often find themselves in a catch 22. They find a house that they can afford but it needs repair, which is why it is priced low enough for them to even look at in the first place. The repairs are identified, the buyers are ready and willing to make the repairs but FHA or VA will not allow the buyer to participate in the repair work and seller is unwilling to make them. What is a buyer to do?????

This article in Realtor Magazine is good news for FHA buyers, we can only hope the VA follows suit.

FHA Eases Requirements on Mandatory Repairs

(January 13, 2006) -- The Federal Housing Administration hopes that easing rules on property conditions and mandatory repairs will allow the agency to reclaim a larger share of the overall housing market.

Lenders, real estate professionals, home buyers, and sellers should welcome the move because it will now allow a mortgage to close on a previously owned home even if minor defects—such as leaky faucets, cracked sidewalks, soiled carpeting, and missing handrails on stairways—have not been fixed beforehand. The mandatory repair rule for FHA loans—which turned many away from the agency—now will apply only to more serious defects such as structural problems, foundation damage, poor roofing, and electrical hazards.

The FHA currently has a 3 percent share of the mortgage financing market, compared with 11 percent less than a decade ago; but the change might allow the agency to loosen the grip that subprime lenders have taken on first-time, moderate-income buyers.

Source: New London Day (CT) (01/13/06); Harney, Kenneth

New Increase for VA Loan Limits

New Increase for VA Loan Limits

Last week I reported that the maximum VA loan amount was $359,650 in Kitsap County WA. I’m happy to report that the VA has just increased this amount for Washington and Oregon to $417,000.

This means that our service members if qualified, have a better chance of keeping up with the housing market as prices have gone up significantly over the past year. As a whole Kitsap County home prices have gone up 20%.

VA and FHA Loan Limits in Kitsap County WA

VA and FHA Loan Limits in Kitsap County WA

The VA and FHA loan limits are different throughout the U.S. This is the upper amount that a buyer can go to when using an FHA or VA loan.

VA $359,650
FHA $215,650

For more information about qualifying for a government loan see your Realtor or a Lender.

New Real Estate Loan Limits

New Real Estate Loan Limits

Fannie Mae just raised its loan limits:

Single Family       Was $359,650     Now $417,000
Two Family       Was $460,400     Now $533,850
Three Family       Was $556,500     Now $645,300
Four Family       Was $691,600     Now $801,950

Loans greater than this would fall into the jumbo loan category and will usually require different qualifications and higher interest rate.

Real Estate Statistics for Kitsap County 12/11/2005

Watching stats like these will help you determine what kind of a market you are in.
For Kitsap County Washington as of 12/112005

925 Active Listings
49 Homes went Pending last week
51 Average Days on Market

$277,488 Average List Price
$275,681 Average Sale Price

99% List price to sale price ratio

18.9 weeks of inventory

Learn more about Defining Your Market.

Remodeling your home: Cost vs. Value Report

Remodeling your home: Cost vs Value Report

Did you know that on average remodeling your bathroom may recoup 102.2% of your investment? On the other end of the spectrum remodeling your home office may only garner a 72.8% return of your money spent.

Here is a brief list:Bathroom 102.2%
Minor Kitchen Remodel 98.5%
Siding Replacement 95.5%
Adding an attic bedroom 93.5%
Deck addition 90.3%
Basement remodel 90.1%
Window replacement 89.6%
Roofing replacement 84.7%
Family room addition 83.0%
Home office remodel 72.8%

Please note….these are national averages. Contact your Realtor for a copy of Decembers Realtor Magazine which has more detail as well as a break down based on region and city.

Though you may often only consider needing your Realtor when it comes time to buy or sell a home here is an example where they can offer an ongoing service.

Real Estate Statistics for 11/27/2005

Watching stats like these will help you determine what kind of a market you are in.
For Kitsap County Washington as of 10/23/2005

907 Active Listings
32 Homes went Pending last week
51 Average Days on Market

$277,143 Average List Price
$275,382 Average Sale Price

99% List price to sale price ratio

28.3weeks of inventory

Learn more about Defining Your Market.

Existing-Home Sales Show Markets Cooling

Sales of existing homes eased in October, with a moderate decline in both single-family and condo sales, according to the NATIONAL ASSOCIATION OF REALTORS®.

Total existing-home sales—including single-family, townhomes, condominiums, and co-ops – were at a seasonally adjusted annual rate of 7.09 million units in October, down 2.7 percent from September’s pace of 7.29 million. Sales were 3.7 percent above the 6.84 million-unit level in October 2004.

David Lereah, NAR’s chief economist, says markets are getting into better balance between demand and supply. “We are returning to more balanced markets between homebuyers and sellers, one that places buyers on a more even footing. Housing activity has peaked and is coming down a bit, and we expect further cooling in the coming months. We feel confident that housing is landing softly as rates continue to rise.”

The national median existing-home price for all housing types—including single-family, townhomes, condominiums, and co-ops—was $218,000 in October, rising 16.6 percent from October 2004 when the median price was $187,000. The median is a typical market price where half of the homes sold for more and half sold for less.

Total housing inventory levels rose 3.5 percent at the end of October to 2.87 million existing homes available for sale, which represents a 4.9-month supply at the current sales pace.

“The rise in inventory means that buyers will have a wider choice available to them, and the significant price appreciation over October last year shows that demand is still there, as markets continues to balance themselves,” says NAR President Thomas M. Stevens from Vienna, Va. “Buyers know that housing is a good investment,” says Stevens, senior vice president of NRT Inc.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.07 percent in October, up from 5.77 percent in September; the rate was 5.72 percent in October 2004.

Single-family home sales dropped 2.5 percent to a seasonally adjusted annual rate of 6.23 million in October from 6.39 million in September, but were 3.3 percent above the 6.03 million-unit level in October 2004. The median single-family home price was $216,200 in October, up 16.6 percent from a year ago.

Existing condominium and cooperative housing sales fell 4.4 percent to a seasonally adjusted annual rate of 862,000 units from a pace of 902,000 in September. Last month’s sales activity was 6.7 percent above the 808,000-unit level in October 2004. The median condo price was $229,800, up 15.3 percent from a year ago.

Regionally, existing-home sales fell 1.2 percent in the West in October to a pace of 1.64 million, and were 3.8 percent higher than October 2004. The median price in the West was 316,000, up 16.2 percent from October 2004.

Total existing-home sales in the South declined 1.8 percent to an annual sales rate of 2.76 million units in October, and were 7 percent above October 2004. The median price in the South was $196,000, up 18.1 percent from a year ago.

Existing-home sales in the Midwest fell 1.9 percent to annual pace of 1.58 million units in October, and were 1.3 percent higher than a year ago. The median price in the Midwest was $170,000, which was 10.4 percent higher than October 2004.

Total existing-home sales in the Northeast declined 7.4 percent to a pace of 1.12 million units in October, and were unchanged compared to a year ago. The median existing-home price in the Northeast was $252,000, up 10.5 percent from a year ago.

—NAR

Editor's Note: For more housing statistics, visit NAR’s Economic Research Division at REALTOR.org.

Access to information like this is one of the benefits of being a Realtor.

Housing Stats for 11/20/2005

Watching stats like these will help you determine what kind of a market you are in.

For Kitsap County Washington as of 11/20/2005

953Active Listings
72 Homes went Pending last week
52 Average Days on Market
$278,189 Average List Price
$275,704 Average Sale Price
99% List price to sale price ratio
13.23 weeks of inventory

Learn more about Defining Your Market

Helping Home Sellers With The Square Footage Question

Your client is ready to buy their dream house, but they question the square footage listed on your flyer and want to know how exactly is was determined. What do you do? And what if it’s inaccurate?

Due to lack of well-defined standards, and always-evolving definitions of square footage, agents typically rely on a previously calculated assessment figure which may have come from a county tax authority, a private appraiser, the seller, or a builder’s blueprints. However, often times, these figures don’t agree.

Due to discrepancies between county, seller and appraiser square footage figures, you should always indicate that the square footage represented in any advertising materials is “approximate” or “deemed reliable but not guaranteed.” If a discrepancy in square footage figures does arise, a buyer should be advised to investigate the sources, and seek advice from a qualified appraiser.

Redmond, Washington real estate appraiser Alan Pope says “square footage is often broken down into “finished” and “unfinished” living space. “Finished” living areas are described as “covered with sheetrock and wallpaper or paint.” A heated area is also a good indicator of finished space. Areas like attics or basements, which are “potentially liveable” are classified as “unfinished.” Finished and unfinished areas are added together for the listed square footage total.”

Square footage is calculated by using the home’s exterior measurements to the
smallest even foot. An appraiser measures the entire perimeter, noting all measurements on a sketch. Many assessors now use a laser measuring device. The appraiser starts with making a sketch of the entire perimeter, delineating “finished” versus “unfinished” at the end of the process.

To calculate area data, the home is broken down into the basic shapes of rectangle, triangle, or circle. The analysis can take fifteen minutes for a rectangular ranch house, or up to three hours for more intricate homes. A conscientious appraiser then adds his or her calculations together to ensure they “compute.” Alan likens square footage calculation to “building a puzzle – from the outside in.”

A few general notes—which may differ by county or state:

• A split-level entry way is only counted once.

• Though potentially it could be divided into upstairs and downstairs space, a two-story cathedral ceiling living room is counted once.

• Areas not directly accessible from finished living space such as storage sheds, breeze-ways, covered patios and detached cottages are never included in the square footage total.

• Garages are generally not included in square footage figures.

• Closets in a finished area are included in “livable space,” whereas a furnace closet in the basement would be calculated as “unfinished.”

• An area with a low ceiling, such as a loft, is measured only where ceiling height is at least four feet.

• For an attached dwelling such as a condominium, square footage measurements can be made from the inside surface of the wall, with an extra six inches added to compensate.

As an agent, it is important that you do not take a square footage stance. However, if the issue is important to your buyers, they need to make it a condition of purchase, and seek a professional to determine measurements.

Housing Bubble Questions and Answers

In past posts we've discussed the housing bubble. Here is an article I ran accross from the National Association of Realtors. What is a housing bubble? As broadly interpreted, a housing bubble refers to an unsustainable gain in home prices. The premise is that a price bubble is at risk of “popping,” resulting in a loss of equity. Has there ever been a national housing price bubble? No, not since good recordkeeping began in 1968. There was a national decline in the 1930s during the Great Depression; however, home prices were not a prime concern in that era. The greatest issues were essentials such as food, clothing, employment and shelter of any kind. Declining home prices were a natural result of a general economic collapse caused by the stock market crash in 1929. What is the “normal” rate of home price growth over time? Since 1968, the national median existing-home price has increased an average of 6.4 percent per year. However, that includes a period of high inflation. A better frame of reference is in relation to the overall rate of inflation. Home prices typically have increased 1.5 percentage points faster than the rate of inflation, as measured by the Consumer Price Index. What are the biggest factors that drive home prices? In simple terms, it gets down to supply and demand. The inventory of homes available for sale has been historically low since 2001, which is why home prices have been rising at above normal rates. In a balanced market between home buyers and sellers, there typically is a six-month supply of homes on the market. Over the last four years, the supply has hovered around 4.5 months. By contrast, in the recessionary period of 1990-1991, there was in excess of a 9-month supply. What conditions are necessary for home prices to soften or decline? Generally, two conditions are necessary for price softness in a given area: an oversupply of homes available for sale, and adverse economic conditions – generally a weak local job market. Sometimes these conditions occur against a backdrop of overall economic weakness, recession or high interest rates. Where and when have home prices declined in the past? What were the general market conditions? Most metropolitan areas, especially in the Midwest and South, have not experienced price declines in the era of modern recordkeeping. In the period from the mid-1980s though the early 1990s, many metros in the Northeast and on the West coast saw localized declines. Typically, this occurred in large population centers with very little capacity for growth. When housing shortages developed during a period of high demand, prices grew at sharp double-digit rates – often over 20 percent per year – for several consecutive years. After local economic conditions declined in those areas, home sales stalled and the inventory of unsold homes rose, which eventually led to price softness or decline. How long have home prices declined in the past? Although there are exceptions to any general finding, most metro areas that experienced price declines were relatively short lived (several years). Most homeowners who went through such downturns -- but stayed in their home for a normal period of homeownership -- still netted healthy gains when they sold. People view homeownership as a long-term investment as opposed to the kind of quick-in, quick out investment that Wall Street is fond of. Unlike stocks, homeowners don’t panic sell simply because a home down the street sold for less. Home prices tend to be sticky on the downside -- usually a single digit decline in any given year following a sustained period of double digit gains. Very few people buy at the top of a market and then sell in a short timeframe. After several years, home prices level and return to normal appreciation patterns. Should we be concerned that home prices are rising faster than family income? No. There are three components to housing affordability: home prices, income, and financing costs – the latter are historically low. During the last four-and-a-half years of record home sales, there has been a shortage of homes available for sale. As a result, home prices during this period have risen faster than family income. However, in much of the 1980s and 1990s, the reverse was true – incomes rose faster than home prices. On a national basis, according to the Housing Affordability Index published by the National Association of Realtors, a median income family who purchases a median-priced existing home is spending a little over 20 percent of gross income for the mortgage principal and interest payment. In the early 1990s, a typical mortgage payment was in the low 20s as a percent of income, and in the early 1980s it was as high as 36 percent. Overall housing affordability remains favorable in historic terms. What are the prospects of a housing bubble? There is virtually no risk of a national housing price bubble, based on the fundamental demand for housing and predictable economic factors. It is possible for local bubbles to surface under the right circumstances, but that also is unlikely in the current environment. There are tight supplies of homes available for sale in most of the country, and labor markets have been improving. In other words, the two conditions necessary for price softness do not exist in most of the country. The strong underlying demand for homes results from the simple fact that the population is growing faster than the supply of homes. In addition, it is highly unlikely that the cost of construction will decline. In fact, construction material shortages are expected to continue and the cost of building and development is trending up. Baby boomers remain in their peak earning years. Echo boomers – the children of the baby boom generation – are just entering the period of life in which people typically buy their first home. The echo boom is the second largest generation in U.S. history. Considering the median age of a first-time buyer is 32, echo-boomers will be a big factor over the next decade. In addition, immigration has been strong for many years. Census data shows that immigrants eventually achieve homeownership rates higher than do native born Americans – this also will be a strong factor in housing demand in the future. Also, minority ownership rates have been trending up. All this means the demand for housing is historically high and is one of the reasons 2005 will be the fifth consecutive year of record home sales. Even in an economic downturn, the demand remains. If conditions become unfavorable, home buying may be postponed, but a general price decline remains highly unlikely. What is likely to happen with home prices? The forecast is for mortgage interest rates to rise slowly over the next year, which will have a minor breaking effect on home sales. The good news is that will help inventory levels to recover and allow the market to come into a closer balance between buyers and sellers. In other words, a general slowing in the rate of price growth can be expected, but in many areas inventory shortages will persist and home prices are likely to continue to rise above historic norms.