Beyond Real Estate

Is it just me, or does it seem like higher priced homes are selling faster than those in the median price range?

Up in my neck of the woods, we have several newer developments where homes are priced at or above $650,000 and several where homes are in the $300,000 range. Yet, it seems like those large, fancy ones are selling better.

I wonder if it’s because people are tired of living in sardine can neighborhoods? Or is it because those folks with enough money to be considered “well-off” aren’t having as much financial crunch as those average folks?

Any thoughts? I’d love to hear what you think.

~ Annie

After reading and hearing about the foreclosure issues facing lenders and homeowners alike lately, I’ve come to the conclusion that there are some misconceptions out there. I’d like to say a few words . . .

While it is true that many of those properties in foreclosure are owned by folks who bit off more than they could chew, there are a good number of properties owned by honest, hard working people that have hit hard times. I hate that some people think that *only* people who bought with zero down at high prices and bought more than they could truly afford are the ones in foreclosure. Simply not true.

Case in point: I have a friend I’ve known for literally most of my life who bought a house about 20 years ago and has until the past year, had an excellent job. She’s paid her mortgage faithfully for those 20 years and refinanced a couple of years ago to pay off her student loans.

Last year, she lost her job when she had to go back to school to update her degree. Her former employer promised to re-hire after she finished and to date, they have not.

Now, please don’t tell me it’s only dumb idiots who are facing foreclosure or that just because a person *is* facing foreclosure, they must be a dumb idiot who bought more than they could financially handle and they deserve to lose their home. That totally pisses me off, quite frankly.

Homeowners do deserve some form of help and I certainly hope they are allowed some.

~ Annie

With the current mortgage and foreclosure crisis, is right now a good time to buy a home?

It seems this is a question many people are asking. And many sources point to this being the case - the Fed has once again lowered interest rates, there is possibility of government backed bailouts for homeowners and home prices are falling in most areas. I’ve even seen this in my county where typically home values have risen more than 6% annually (and sometimes 6% every six months) for several years now.

On average, home prices have dropped 11% recently. This is quite huge. Coupled with the current 7-8% mortgage rate for the average borrower (5-6% for those with excellent credit), and the amount of house you can buy for the money has risen signifigantly.

It could definitely be a good time to buy a house. CNN Money has also mentioned it’s prime time for vacation home or second home shopping as well. There are some real bargains to be had.

However, this doesn’t mean one should go rush right out and buy the first thing they like - now is the time to do “due diligence.” Shop slow, shop around and watch out for any unfair practices in the lending industry.

I’ve heard it mentioned several times lately that some lenders are not providing Truth in Lending documents within the 3-day requirement. When questioned, borrowers have been told it will come with the loan documents at closing. This is totally wrong. The lender has 3 days from the date of application to provide the TIL to borrowers. Should this happen to you, kindly ask the lender if it was just misplaced or overlooked and to please send you another one. If they make excuses, they’re trying to hide something and you would be wise to demand it be disclosed immediately. Be fair about it, but be firm.

You know, it’s interesting to note that many of todays real estate millionaires got started back in the 80’s during the mortgage meltdown. Play right and perhaps you could be one of the next set of RE millionaires in 20 years. You can bet we are on the lookout for good deals and will snatch up any we see.

~ Annie

For the past week, I’ve noticed on several local RE websites and blogs that people seem to be saying not much has changed around the Puget Sound area, that the economic crunch hasn’t really been felt yet. But I’ve seen evidence elsewhere that points directly to the opposite.

My husband works for a stone wholesaler (granite, marble, etc) and February and so far, March, have been very slow for them. This is a company who sells slabs and tile to builders and contractors and the fact that their business has slowed down, tells me that we are indeed seeing some of the crunch in Snohomish County.

I’m just not convinced everything is rosy here. I find it odd in some ways, because trends in many areas of the country are showing it’s actually cheaper to build your own home right now than it has been for at least a decade, if not longer. Yet building has slowed tremendously here and as I mentioned already, slabs and tile are not selling.

Additionally, there are a couple of homes in our neighborhood that have been for sale for going on 4 months or so now. In the past few years, homes like these would have sold within 45 days, tops. One of them is a spacious home on a corner lot, about a block from a prime elementary school and whose price has been reduced at least twice since it came on the market. It’s even vacant! Someone could move right in! But there it sits . . . And a block away from us, is a duplex that was built last summer. It is still sitting there with a for sale sign as well.

You might remember my post last week “Real Estate Local: Tanked” and this is why I’m still trying to justify all this information in my own mind. Statistics from various sources and the news from those same sources are in conflict with one another. It’s baffling.

Historically, the Pacific Northwest has been slow to feel an economic crunch and while we haven’t noticed the same effects as the rest of the country even now, I think we are catching up to the recession everyone else has been feeling for quite some time.

What have you noticed? How is real estate being affected in your neighborhood?

Until later,
Annie

In many areas of the country, the real estate market has slowed to all but a crawl. And although it is certainly getting slower here in the Seattle area, I think we’re still in better shape than many cities. Although, I just heard today that the home prices in suburban areas just outside Seattle and Bellevue are falling by as much as $100,000. That’s huge for a lot of people.

This is good news for buyers, actually. Even though the mortgage industry is in crisis, people might still be able to purchase homes - and even homes they couldn’t touch a year ago - because prices are now becoming more affordable. Additionally, the Fed lowering interest rates again might be helpful. I’m not sure that’s they right way to “stimulate” the economy, though, but that’s a topic for another post.

Frankly, I’ve always thought the housing prices in North King and Snohomish Counties were grossly over-inflated in the last 10 years. I’m glad to see pricing that more accurately reflects where prices likely should have been all along.

Of course, the bad news is that folks who’ve bought more house than they could afford or who have to move for job reasons and what-not, likely won’t recoup what they paid. Will those people end up in foreclosure? I think a good number of them will and many already have. They won’t really have much other choice. And that’s incredibly sad.

These are the people the Fed should be helping. I mean, the government can back the purchase of Bear Stearns by JPMorgan Chase but it’s unwilling or unable for whatever reason to help the average homeowner? Isn’t the government supposed to help it’s citizens? (Don’t answer that - it’s rhetorical.)

This isn’t a political blog so I won’t get into that any further . . . So back to the topic at hand.

I don’t think the Seattle area will see the problems that have plagued Las Vegas, Phoenix and Florida over the past few years but the picture certainly isn’t as rosy as some would like to pretend. There are real problems and I don’t think we’ve seen the lowest end of it yet. I heard that foreclosure rates rose 60% in February - I think that’s low compared to what’s coming over the next 6 months.

Do you live in an area that has been hit hard by this? What are your thoughts?

If you live in the Greater Seattle area, what are your thoughts?

Feel free to post in the comments, but do please keep in civil and clean.
Thanks,

Annie

UPDATE 3.17.08 - 9pm PDT: Very interesting article on Huffington Post about the Bear Stearns bailout and foreclosure crisis. Rather eye-opening. Check it out.