74.6 percent of homes affordable to median-income households, trade group finds

Housing affordability hit a new high in the first quarter, surpassing the previous high set in fourth-quarter 2010, according to the National Association of Home Builders and Wells Fargo.

The Housing Opportunity Index found that 74.6 percent of new and existing homes sold in the first quarter were affordable to families earning the national median income of $64,400. That’s up from 73.9 percent in the fourth quarter of 2010, and it’s the highest level in the more than 20 years the index has been measured.

“With interest rates remaining at historically low levels, today’s report indicates that homeownership is within reach of more households than it has been for more than two decades,” Bob Nielsen, chairman of the National Association of Home Builders (NAHB), said after the index was issued last week.

“While this is good news for consumers, homebuyers and builders continue to confront extremely tight credit conditions, and this remains a significant obstacle to many potential home sales.”

The Seattle metropolitan area also became more affordable with 67.5 percent of homes within reach of those earning the median income of $85,600. That number is the highest recorded since the index started in the first quarter of 1999.

Before 2009, the national index rarely topped 65 percent, the association said. Last quarter was the ninth straight quarter the index was above 70 percent.

Indiana, Ohio and Michigan dominated among the most affordable metro areas. Among metro areas with populations under 500,000, Kokomo, Ind., was the most affordable area, with 98.6 percent of homes affordable to households making a median income of $61,400. The median sales price in the area was $88,000 in the first quarter.

California dominated among the least affordable metro areas. San Luis Obispo-Paso Robles, Calif., was the least affordable among the smaller metro areas with 47.6 percent of homes affordable to households making the median income of $72,500. The median sales price in the area was $320,000 in the first quarter.

Among metro areas with populations of 500,000 or more, Syracuse, N.Y., was the most affordable to households making the median income of $64,300. The median sales price in the area was $80,000 in the first quarter.

Another New York market, New York-White Plains-Wayne, N.Y.-N.J, was the least affordable among both the larger metros.

Less than a quarter of homes, 24.1 percent, were affordable to families making the median income of $65,600 in the first quarter. The median sales price was $425,000.

In other cities in Washington state, Spokane was the most affordable with 82.2 percent of homes within reach of those earning the median income of $60,300. Olympia recorded 81.8 percent; Tacoma, 78.5 percent; Bremerton-Silverdale, 70.1 percent; Bellingham, 69.7 percent; and Mount Vernon-Anacortes, 60.5 percent.

Source: By Inman News

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Renters finding landlords have upper hand in this market

Angi Ramos and her former college roommate Laura Waltner have been looking for months for a place to call “home.”

They’ve been trawling websites and have inspected a half-dozen units.

They’d prefer a newer building in Capitol Hill or Queen Anne — vibrant neighborhoods with lots of young people, restaurants and nightlife. Their search so far for a two-bedroom apartment under $1,500 a month has yielded only slim pickings.

“One unit had a great common area,” says Ramos, “but the washing machine was in the kitchen and the dryer was in one of the bedrooms.”

New, attractive buildings, such as the Illumina Lake Union Apartments, are full and expensive, says Ramos. Still, she says, the landlord suggests they check back every month to see when there might be an opening.

Similarly, when Hoa Do set out to find an apartment earlier this year, she says she did not expect to pay as much as $850 per month to rent a vintage studio near Seattle University. What’s more, the college senior regrets that her landlord would not relent on a nine-month lease.

“As a student, I prefer to pay month-to-month, because I never know if I will be studying abroad, or going home to visit family,” says Do, who is from Vietnam.

It’s a story being repeated all over Seattle. As vacancy rates dip below 5 percent, landlords are raising rents and offering fewer concessions or perks.

According to Apartment Insights, a web-based information service, the vacancy rate in the Seattle metro area hasn’t been this low since the latter part of 2007, and rental incentives are drying up in downtown Seattle, Capitol Hill and downtown Bellevue.

“The rental market is changing quickly from a renter’s market to a landlord’s market,” says Cassie Walker Johnson of Windermere Property Management, Lori Gill & Associates. Vacancy rates in highly desirable neighborhoods, such as Capitol Hill, Queen Anne and Fremont, are about 3 percent, the lowest in Seattle, she notes.

In contrast, rental markets with vacancy rates above 6 percent include SeaTac, Federal Way and Kirkland, according to Apartment Insights.

Landlord Christopher T. Benis, who is also a partner in the law firm Harrsion, Benis & Spence and represents tenants and landlords alike, calls the market “balanced.”

“We are raising rents now that we can, but all we are doing is trying to get them [rents] back to 2007 levels,” says Benis, who owns rental properties in Seattle.

Tenants ought to shift their attitudes to reflect the changes, he says. “If they [tenants] think they can look at 20 properties and then come back to the ‘best one,’ that best one will probably be long gone.”

Little in the way of new development and declining home values contribute to a tight rental market.

Tom Cain, president of Apartment Insights, says fewer than 1,870 units are scheduled for completion this year, about 60 percent of last year’s level, and less than one-third of the 6,349 units built in 2009.

Walker Johnson, who specializes in leasing single-family dwellings, condos and small apartment buildings, says population growth is also driving down vacancy rates.

“About 75 percent of my new tenants are moving here from all over the nation to work at larger corporations who are hiring in our area,” she says.

Telltale signs of just how far the pendulum has swung include tenants plunking down more than the list price on rental homes and signing longer leases to qualify for a desired property.

“We are starting to see multiple applications in some situations,” says Walker Johnson, who expects to see hikes of up to 10 percent for rental homes from May through September.

For a Queen Anne family, the possibility of a rent increase on a four-bedroom Craftsman, where they’ve been living for nearly a year, weighs heavy.

“We feel the renewal negotiations are a huge strategy game, and we are fearful we will have to leave ‘our home’ or accept an increase that we simply don’t feel comfortable with economically,” say the husband and wife, who are not being identified due to ongoing negotiations with their landlord.

“This year, you have to jump when you find the right home, unlike a few years ago when properties languished on the market, for months, in some cases.”

Lawyer Lauren Sancken, who signed a one-year lease in April for a Capitol Hill flat with a patio garden and a spectacular view of the Space Needle, says she wishes she had signed a lease extension to lock in her rate.

“It is far more competitive than I expected, especially when several people are willing to submit applications and deposits right away. I found myself offering cookies, muffins, just to try to get a bit of an advantage on places that I really liked,” says Sancken.

Not surprisingly, tenants with limited means are being hit the hardest, says Jonathan Grant, executive director of the Tenants Union of Washington State.

“Many low-income tenants displaced by the foreclosure crisis, sometimes evicted by no fault of their own due to a landlord’s default on their mortgage, are now finding an even tighter market, while many former homeowners are returning to renting after losing their homes,” says Grant.

Adding insult to injury, many of those low-income tenants will have an eviction on their record from the foreclosure, further complicating their ability to secure housing, he says.

Ramos says she is not daunted. “We are willing to wait for a good one,” she says.

 Source: By Elizabeth M. Economou, Seattle Times

Washington State HomePath Buyer Incentive Offer

There’s great news from Fannie Mae: Buyers may be eligible to receive up to 3.5% in closing cost assistance through June 30, 2011 as part of the HomePath buyer incentive.

To be eligible for this incentive, the following qualifications must be met:

  1. Buyers and/or selling agents must request the incentive upon submission of the initial offer in order to be eligible.
  2. The initial offer must be submitted on or after April 11, 2011 and close by June 30, 2011. If an initial offer was made prior to the effective date, the offer is not eligible for the incentive.
  3. The sale must close on or before June 30, 2011. No exceptions will be made to this deadline.
  4. Only buyers purchasing a HomePath property as their primary residence may receive up to 3.5% in closing cost assistance. Second homes and investment properties are excluded from the incentive.
  5. Buyers must sign an Owner Occupant Certification Rider to the real estate purchase addendum.
  6. If the buyer’s total closing costs are under 3.5%, the difference will not be available as a credit to the buyer.

Keep in mind that offers submitted after May 15, 2011 may be difficult to close by the June 30, 2011 deadline. In addition, in California and Washington, there is also a $1,000 buyer’s agent incentive.

Contact me for specific details on this incentive offer and for all of your Fannie Mae HomePath financing questions. I’m always happy to help you in any way I can!

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Pricey Real Estate, Great Schools Don’t Always Mix

Pricey, upscale neighborhoods don’t necessarily mean the schools will be better than less expensive areas, according to new research by Forbes.com and GreatSchools, an education parenting web site.

Schools in areas with median home price above $1.1 million were not found to perform better than those in neighborhoods where homes were priced in the $200,000 to $399,000 range.

Forbes.com and GreatSchools analyzed data from 17,589 towns and cities in 49 states, using standardized tests and information on student performance along with median home prices for the area.

Researchers concede that with the methodology used, schools in larger cities, such as in Los Angeles and New York, are at a disadvantage than smaller towns because in larger cities schools that do not perform well will bring down the average for the school district.

5 Best Places for Schools and Real Estate

Here are five cities that offer the best schools for your real estate buck, according to Forbes and Great Schools.

1. Falmouth, Maine
Median home price: $351,550

2. Mercer Island, Wash.
Median home price: $708,740

3. Pella, Iowa
Median home price: $148,200

4. Barrington, R.I.
Median home price: $296,010

5. Bedford, N.H.
Median home price: $293,730

The full report can be found atwww.forbes.com/greatschools.

Source: “Pricey U.S. Homes Don’t Mean Better Schools,” Reuters News (April 27, 2011)

Property-tax deadline looms; need some help?

With the first installment of property taxes due May 2, Barbara Alsheikh has her work cut out for her.

“For many people, it is the first time they have really looked at the property-tax bill,” says Alsheikh, supervisor for the King County Tax Advisor Office.

“And before writing the check, they have questions about the value of their property, the levy rate and the amount due.”

The Tax Advisor Office is independent from the assessor and provides residents with advice and assistance, including appeals.

“We are, in effect, a one-stop shop for property questions,” she says.

The primary complaint this year, says Alsheikh, is that a drop in house values did not result in lower tax bills.

“It is a very tough year for many taxpayers,” she adds.

The property-tax bill is not based on real-estate markets at all. Like Ohio, Washington state operates under a “budget-based” property-tax system in which taxing districts, such as fire departments and library and school districts, submit their annual budgets to the assessor, who then determines the taxing rate necessary to meet the adopted budgets.

King County Assessor Lloyd Hara says several factors are at play.

“The most common is that voters approve a property-tax measure, typically a school levy, and that increases the overall property-tax levy that is reflected on the 2011 bill.”

Taxpayers in King County, on average, will pay about 3.33 percent more in property taxes this year, according to Treasury Operations Manager Scott Matheson.

Only 17 percent (or $624 million dollars) of property taxes support King County purposes, says Phillip Sit, Department of Assessments communication and outreach coordinator. The other 83 percent is divvied up among state and local government.

While taxpayers cannot appeal their property taxes, they have the right to appeal the valuation (assessment) of their property — the basis upon which their taxes are calculated — to the King County Board of Equalization, an independent board made up of citizens appointed by the King County executive. Generally, this must be done within 60 days from the time official property-value notices are received.

Alsheikh said her office typically handles about 800 calls in the first two weeks after billings are mailed in February.

Assessed value should not to be confused with market value, which is defined as the amount a buyer, willing but not obligated to buy, would pay to a seller, willing but not obligated to sell.

Assessed value is determined by actual sales and the real-estate market, rather than the current market, notes Alsheikh; assessed values use historical data, which lags behind real time by one or two years.

“Like any business, the budget for a public service tends to increase over time as employees’ wages and benefits, energy costs, transportation and facilities’ costs increase. In addition, voter-approved ballot issues tend to increase the taxes each year,” says Alsheikh.

Meanwhile, taxpayers who are unable to pay their property tax in full are encouraged to contact the Assessor’s Office. Additionally, seniors or disabled persons, may be able to qualify for a property-tax exemption or deferral program.

Alsheikh, for her part, won’t be slowing down anytime soon. She says her busiest season will begin in a month or two, when new official (property) value notices will be mailed out.

“We strive to put each taxpayer on “equal” footing with the assessor’s staff,” she says. “But we don’t take sides; we aren’t out to ‘beat’ the assessor. The goal for all three agencies [including the Office of the Assessor, the Treasury, and the Tax Advisor] is the same: fair and equitable distribution of property taxes.”

Of the 6,000 to 7,000 phone calls the office gets, Alsheikh said, perhaps 10 percent are asking for research and appeal advice.

At the end of last year, nearly 12,300 accounts, including households and undeveloped property for a business, hadn’t paid any taxes for 2010; and just below 12,750 accounts paid only the first half of their taxes owed for the same year according to Scott Matheson, Treasury Operations Manager for King County.

Together, those figures represent 3.7 percent of the 681,757 accounts that were billed last year. “Our historical collection rate,” notes Matheson, “has held steady at around 98 percent for the last several years, and we don’t expect to see a change this year.”

Source: By Elizabeth M. Economou, Seattle Times (4/22/2011)

House Flippers Return, Still Finding Profits

More investors are taking on the risk of flipping homes, despite falling home prices and sluggish real estate markets across the country. But investors say there are still profits to be made in the house flipping business.

Nearly 1 million homes were bought as investment properties in 2010, according to the National Association of REALTORS®, and a record number of buyers purchasing properties with cash currently are flooding the market.

Flipping homes for profit is easier in rising markets, but not many markets are reporting increases in home prices, analysts say. In Washington, D.C., Justin Konz of RestorationCapital says his clients are going through four of five properties a month and are making gross profit margins of 35 percent or higher.

Where to Find the Deals

Flippers mostly are finding their homes through foreclosures auctions, REOs, and short sales. They seek homes at rock-bottom prices that will have low fix-up costs, no more than about 5 percent or 10 percent of the purchase price.

In Florida, where investors are finding it more difficult to flip homes because of the drastic drop in prices and high inventories, flippers are targeting inner-city properties that are being sold at steep discounts. For example, some of houses are selling for $30,000 when they once sold for $200,000.

Perry Henderson, a real estate agent and investor in Austin, Texas, says the biggest opportunities in flipping are the “ugly” houses that have lingered on the market or “old houses that somebody’s grandma lived in for 40 years and didn’t do anything to. Now, she’s passed away and her family wants to sell quickly.”

Real estate investor Brian Fuller, who with partners buys and sells more than 200 properties a year in the San Diego area, says he’s drawn to the “biggest eyesore on the block.” He says they then “ turn it into the best looking house there. We’re helping pull up values in the neighborhood.”

Source: “Vulture Investors Flipping Their Ways to Big Profits,” CNNMoney.com (April 13, 2011)

Homeowners facing foreclosure about to win right to mediation

More homeowners in Washington state could get help avoiding unnecessary foreclosures under a bill awaiting Gov. Chris Gregoire’s signature.

The bill, the “Foreclosure Fairness Act,” would give distressed homeowners working with housing counselors or attorneys the right to in-person mediation with the bank or company servicing their mortgage. Consumer advocates expect Gregoire to sign the bill Thursday.

Washington, among the 27 states where court approval of foreclosures isn’t required, would become only the third state — after Nevada and Maryland — to adopt a foreclosure-mediation program in which a homeowner can seek to modify terms of their loan.

“There’s no silver bullet, but this will at least be a competent response to the irresponsibility of the financial industry,” said Bruce Neas, a Columbia Legal Services attorney who helped negotiate the bill.

State regulators, who receive hundreds of complaints each year against national mortgage servicers, have been stymied by federal rules that limit their power to intervene.

The only recourse for homeowners has been going to court, where they’re usually outmatched by servicers.

Also Wednesday, federal regulators announced they had ordered eight national banks — Bank of America, Citibank, HSBC, JPMorgan Chase, MetLife Bank, PNC, U.S. Bank and Wells Fargo — to hire an outside firm to review all foreclosure actions from 2009 to 2010 and submit a plan to remedy “all financial injury to borrowers caused by any errors, misrepresentations, or other deficiencies” identified by outside consultants.

The move by state lawmakers to require mediation comes as the foreclosure crisis in Washington continues. In the first three months of the year, more than 5,600 homes were seized and more than 7,000 were headed to foreclosure auction, according to RealtyTrac.

The bill before Gregoire also would provide an estimated $7.5 million for foreclosure-prevention efforts and more than double the number of housing counselors. Washington has just over 40.

“The real hope is that by adding the counselors, the banks and families would reach some kind of agreement before going to mediation,” said Kim Herman, executive director of the Washington State Housing Finance Commission.

Under the proposed law, once a homeowner becomes delinquent, the servicer must send a letter asking the owner to contact the server and urging the person to call a housing counselor or attorney for help.

Homeowners who respond to the letter would be given 60 more days before the servicer could file a notice of default.

If the counselor or attorney couldn’t resolve the issue with the servicer, they could refer the homeowner to a mediator through the state Department of Commerce.

The Commerce Department selects the mediator, who must hold a session within 45 days. The homeowner and servicer share in the cost of the mediator’s fee, which can be up to $400.

If the mediator finds the servicer didn’t participate in good faith, a homeowner can use that to ask a court to stop the foreclosure. The state Attorney General’s Office also could pursue penalties against servicers.

When lawmakers opened negotiations on the bill, consumer advocates were surprised by the bankers’ first move.

Without prompting, the Washington Bankers Association offered to pay a $250 fee for every default notice filed, with the stipulation that 80 percent of the money pay for housing counselors.

“It did surprise people,” Herman said.

The association, which represents national and community banks, suggested the fee because it wants more delinquent homeowners to work with housing counselors, said James Pishue, the group’s president.

National studies show that homeowners who work with trained housing counselors have much higher success rates in reaching an agreement with their servicer.

“We thought that would prevent the need for mediation,” Pishue said. “Ultimately it results in fewer foreclosures.”

Marc Cote, a housing counselor who oversees the state’s foreclosure-prevention hotline, said he’s pleased with the measure.

“The main thing I’m hopeful for is that the mediation piece will inspire servicers to resolve the hundreds, in my experience, of [loan] workouts that are still not resolved after months and months.”

Source: Sanjay Bhatt, Seattle Times (April 13th, 2011)