A well-regarded home loan lending wholesaler that rode a record boom during the subprime (bad credit home mortgages) market has abruptly closed after a market reversal, leaving 300 people out of work.
A Washington mortgage broker and his wife have been officially charged with multiple criminal offenses in what investigators are calling a foreclosure rescue scheme to get title to a local couple’s home.
Spokane, Washington, is among a few metropolitan areas being profiled in the U.S. Department of Housing and Urban Development’s quarterly report.
The U.S. Housing Market Conditions report will feature profiles of mortgage and housing activity in cities representing 10 regions throughout the country.
Spokane’s story will be posted on the HUD User Web site sometime in the next month and highlight a strong, sustainable segment of the Washington housing market, according to HUD economist Sondra King.
As hot-button topics go, Seattle housing prices are a sizzler guaranteed to generate complaints about how regular folks can’t afford to buy in the area.
It’s not just idle chatter.
The newest numbers, released Wednesday, put the median cost of a single-family home within Seattle proper at $440,250 — out of the reach of most workers, according to the Washington Center for Real Estate Research.
However, a new analysis by Windermere Real Estate shows the true median price of a stand-alone house is understated because the Northwest Multiple Listing Service (MLS) lumps town homes in with single-family houses.
The median price of a stand-alone house in Seattle last month was $460,000 — roughly $20,000 higher than the number released Wednesday by the MLS in its February housing market activity report.
Town homes only recently started emerging in Seattle as a workable solution to high housing costs. The housing style is growing rapidly, particularly in sought-after neighborhoods such as Ballard, Green Lake and West Seattle.
Town-house fever
Town-home sales are growing rapidly. These numbers reflect the percentage of single-family home sales in Seattle that are actually town homes, those more likley to be snatched up with a Washington mortgage loan due to their affordability:
Those areas are where Gary Cobb, owner of Cobb Construction, is building town homes as fast as he can for buyers who want house-like amenities, such as their own front porch and garage, without having a detached home’s price tag.
How much of a discount do town homes deliver?
Last month, Seattle’s town homes sold for $389,500 — about $71,000 less than the median-priced Seattle house. They accounted for 14 percent of all residential sales in the city, a much higher percentage than anywhere else in the King County housing market.
For example, last month Bellevue reported just one town-home sale in the MLS. Seattle had 93 — and even that may be shy of the real number due to an unknown percentage sell before completion, never reaching the open market, real estate agents report.
Cobb says that five years ago 20 percent of his business was building town homes. Now it’s 90 percent.
“The market has done nothing but heat up for town homes in Seattle,” Cobb says, and prices are the biggest reason.
He says that by tearing down one worn-out house and replacing it with three or more town homes on a single lot, he can keep costs down, offer new construction to first-time home mortgage applicants, and compete with other buyers for existing residences.
Click here to read the rest of this Seattle Times article.
The Seattle housing market is different than the rest of the country. And we’re not talking about the regions average rainfall.
Housing prices rose there last month, jumping nearly 15 percent from February 2006, causing some real estate experts to say it’s a “strong seller’s market.” This is quite an unusual story compared to most other states.
The February Northwest Multiple Listing Service (NWMLS) survey of Puget Sound home sales indicated that the median home sale price in King County rose to $393,250, up from $344,950 a year earlier.
In all the 19 counties surveyed, the median price last month jumped by 14.41 percent.
Condominium prices in in the King County housing market kept rising last month, increasing to a median of $285,250 from $228,950 a year earlier, or nearly a 25 percent increase. In Kitsap County, the median price paid for a condo jumped nearly 45 percent last month compared with a year earlier, rising to $347,475 from $240,000 in 2006.
Residential real estate professionals were pleased with the monthly tally. It means those seeking a Washington mortgage may need to tap into their wallet.
“The news is good and getting better,” said Dick Beeson, NWMLS director and home mortgage broker/owner of Windermere Real Estate/Commencement Associates in Tacoma, in a statement.
NWMLS officials said that low mortgage interest rates, coupled with the area’s job growth, will “sustain a healthy housing economy throughout the Puget Sound region.”
Three years of soaring home prices, low housing supply and multiple offers finally came to an end last year in Whatcom County, Wash., prompting home buyers and sellers to ponder what it all means for 2007.
According to the Bellingham (Wash). Herald, they will find out in the next few months. Spring is the traditional kickoff to selling and buying homes and could set the tone for when homes sales peak in the summer months.
In Bellingham last year, nearly 60 percent of home sales took place between March and August, with the highest number sold in May-June, when Washington mortgage demand is traditionally highest.
Those in the real estate industry expect Whatcom County is in for more of a typical year, where home mortgage costs might rise as prices appreciate by slight amounts and overall sales remain similar to 2006. Those sales were about 20 percent lower than the previous three years.
“I believe 2007 will be a run-of-the-mill, regular market when it comes to home sales,” said Gragg Miller of Coldwell Banker. “The bottom has not fallen out of this real estate market, but we won’t be going back to the high demand seen in the past few years, either.”
If 2007 is a relatively flat year when it comes to home sale prices, it will continue a historical trend that local economists have noticed in recent decades.
Hart Hodges, the director of the Western Washington University Center for Economics and Business Research, likens the trend to a staircase, where a few years of a hot market are usually followed by a few years of flat home sales.
The last two times the Washington housing market has seen significant price appreciation (late 1970s, early 1990s) were followed by about five years of flat levels of home appreciation.
For some real estate agents, the expectation of a flat year means it will be a more balanced market between buyers and sellers.
Mike Kent of Windermere Real Estate said business has picked up since the end of January, but the number of days on the market is still over 100, compared to the 18-day average seen in the summer of 2005.
“Price is the critical component in this kind of market,” Kent said. “If someone is selling a home to try and get as much profit as they can, the home will sit. If the seller is motivated because they need to move or something, a well-priced home can still get multiple offers.”
The type of home also will become more important for sellers. High-end homes did particularly well in Whatcom County, as well as first-time homes priced under $250,000. What will be a challenge for home sales are properties in the $350,000 to $500,000 price range, where an oversupply exists.
At the end of 2006, experts estimated the county had a 7-9 month supply of used single-family homes in that price range, and an eight- to 12-month supply of new homes - reflecting how hard it has become for many buyers to afford mortgage loans for homes that pricey.
Follow the link to continue reading this article in the Bellingham Herald …
For many years, people of all income levels were able to buy homes in the Seattle housing market because there were houses available within whatever price ranges were necessary for them to do so.
Today, a shocking proportion of the population is excluded from the housing market because Washington mortgage costs are just too high.
What happened? Edwina Johnston, a member of the Citizens Alliance for Property Rights and a guest columnist for The Seattle Times, has an idea.
Since the early 1990s, the trend, nationwide (and worldwide), has been for governments to adopt the environmental schema of the U.S.-U.N. “Agenda 21″ agreement of June 1992, espousing the concept of “smart growth” (forcing all new growth into the cities) and “sustainability” (maximum use of urban owners’ lands, with restoration and preservation of rural owners’ lands).
The results in this locale are selective interpretations of the 1990 Washington state Growth Management Act, urban growth boundaries (”UGB”) that define urban areas beyond which little growth may occur (”smart growth”); and regulations to implement environmental “sustainability.”
Unfortunately, recent government predictions and provision of available land within the UGB were not sufficient for the reality of the ongoing increase in jobs and population.
Future human activity is hard to predict. Consequently, as Seattle mortgage demand soars, urban land was not available to build housing to satisfy it. This causes land to become ever-more scarce and, so, ever-more expensive.
In order to recoup the cost of the resulting expensive land, home builders had to build larger, more expensive homes, instead of smaller affordable ones.
Besides that, the many stringent environmental building regulations and their time delays (time is money) affected construction and cost for both single- and multi-family home units.
Add to all that the use of veto power when neighbors coalesce to keep high density out of their neighborhoods and you can understand why there is an affordable housing shortage and spiraling home prices in this area.
In centrally controlled markets, builders have to work within parameters set for them and cannot increase supply independent of government; whereas in free markets, when prices rise because of demand, builders will choose to increase supply, which will decrease prices.
In their analysis of that phenomenon, several experts note that physical cost of construction as a percentage of home prices has diminished over previous years and that it is the rising cost of land and the regulatory permitting process that have effected that.
Officials emphasize that the inelastic cost that raises price is regulation, which limits supply by determining the timing and cost of production. As population increases, home builders do not have control over speeding up the permitting process and/or lowering costs.
Consequently, supply does not keep up with demand and home mortgage costs invariably rise. This will continue as long as demand rises, regulation restricts supply of land, and regulatory permitting costs remain a significant portion of the cost of production.
Here in the Northwest, the result of central planning is a large bloc of happy voters whose homes have appreciated hundreds of thousands of dollars during this government-created, spiraling-home-price bonanza.
However, there is also another large and fast-growing segment of voters who cannot participate because they are effectively priced out. Do we want to keep doing the same thing under the banner of environmentalism?
In order to rescue both the local environment and people, let us return to the free-market policies that made this a nation of economic opportunity for all and a nation of freedom secured by strong property rights.
SOURCE: Seattle Times
While demand for Seattle mortgages has waned recently, the following is very good news for real estate insiders across the region:
The loan is notable for its size and the fact that it comes from a single source. Most importantly, it signals a vote of confidence in the Seattle housing market by an outside bank. It comes at a time when bankers nationwide are pulling back from funding residential projects due to the weak, and, in some markets, overbuilt, residential housing market nationwide.
The loan is the final stage in Escala’s capitalization, and some experts think it may be the largest residential construction loan made in Seattle to date.
“Most of the banks around here don’t want to take more than a $50 million bite on their own,” said Michael Makar, senior managing director of CBRE/Melody and Co. in Seattle. “Typically, you’ll see big syndications put together” to share the risk.
Melody is a leading originator of commercial debt and equity capital, and Makar typically works on commercial rather than residential financing.
Matthew Gardner, principal at Gardner Johnson, a land use and economic consulting company based in Seattle, is fielding calls daily from outside financiers wanting to know why they should treat Seattle any differently from other markets.
Those other markets, most notably Southern California, New York City and southern Florida housing, have seen a huge slowdown in residential sales and currently have a glut of available units that has led to price reductions of up to 20 percent in some areas.
Some of those cities have also been overbuilt and saw huge price jumps caused in part by real estate speculators.
A weaker national economy and an initial edge upward in mortgage interest rates put the brakes on overexuberance in many markets nationwide, leading to more cautious lending everywhere, Gardner said. Many financiers are looking for developers to put up larger equity stakes as well.
Currently there are some 9,000 condo units proposed or under construction in Seattle, and Gardner predicts only 65 percent, or 2,000 units a year, will get built.
“A lot of these projects aren’t getting funding,” he said. Meanwhile, mortgage lenders who previously wanted to fund three or four projects in Seattle are pulling back and may only do one, he said.
So why was Fremont Investment and Loan, a national firm based in Brea, Calif., so confident in Seattle and Escala that it decided to take on the risk, especially since this is the bank’s first downtown Seattle investment, and only its second in the market?
“Seattle is different,” Gardner said. “We’re not overbuilt. This isn’t a big speculative market, where people are jumping in and out. We have very positive demographics from an income standpoint, and Seattle has a good job growth forecast.”
For that reason, a Washington mortgage in the area is rarely a popular commodity. This is one sector where buyers are not necessarily in control.
* Source: The Seattle Business Journal
Spokane, Wash., and North Idaho home buyers may get a much-deserved breather from runaway real estate prices this year, according to the Spokeman-Review.
Local experts predict that the pace of price increases will slow in 2007. During the last two years, residential real estate values rose at double-digit rates, outpacing most income gains and dampening the hopes of many home buyers.
Dan Flanagan, past-president of the Coeur d’Alene multiple listing service, said the influx of out-of-town home buyers should slow. That in-migration fueled property-value increases of nearly 30 percent in 2005 and 13.3 percent last year.
“We still have a tremendous amount of people who want to come up here, but they’re having trouble selling homes in other places,” said Flanagan, who predicts that this segment of the Idaho housing market will increase by about 5 percent this year.
In Spokane County, Rob Higgins of the Spokane Association of Realtors said the residential real estate market is stabilizing and Washington mortgage demand returning.
He forecasts that Spokane will return to a more normal rate of appreciation in 2007 — about 4-6 percent, compared with the 14.5 percent rate seen in 2006.
In the past few years, Kootenai and Spokane county markets have taken a twist: While low-to-middle income buyers have struggled to find reasonably priced houses, an emerging population of affluent residents - who don’t depend on Washington or Idaho mortgage financing - are spending half a million dollars and up to live in condos and upscale developments.
Old mill sites in North Idaho are currently being revamped into mixed-use developments and historic buildings in Spokane converted to condos.
Last year, Spokane issued building permits for 79 condos in a half-dozen complexes. Spokane is starting off 2007 with permits pending on about 200 units — including projects in the former home of Joel Inc. and the City Place condos, going into the Ridpath Hotel’s former Executive Court.
“I think 2007 is going to be a defining year in terms of how deep that market is,” said Dave Black, CEO of Tomlinson Black Commercial, speaking about the higher-end downtown condo market.
Although national home loan trends don’t necessarily apply to Spokane and Kootenai counties, financial experts predict less activity from short-term investors, who some blame for the rampant price increases in North Idaho and Western Washington in 2005.
With the stock market rebounding, mortgage rates expected to rise and some property values already dropping, experts say that speculative investing isn’t quite as attractive.
Local developer Jim Frank, owner of Greenstone Corp., explained the impact of speculative investing.
“When the market slows — as is the case right now — the speculators become sellers depressing the market. The result is that the speculative activity distorts the markets in both directions, helping to cause a boom and then bust cycle,” Frank said.
A number of communities in the Western Washington market are grappling with issues related to affordability, said Chris Venne of Community Frameworks.
The Spokane-based nonprofit, which plans, finances and builds affordable housing, held workshops on the creation of affordable housing in high-priced markets for audiences in Kellogg, Boise and Sun Valley, Idaho. Attendees ranged from city and county officials to developers, he said.
SOURCE: Spokane Spokesman-Review
The Seattle Times reports Wednesday that the media have been abuzz over the past year about the softening housing market.
It’s not just something going on in the Emerald City.
The buzz is so deafening that in a survey, U.S. newspaper and broadcast editors voted the slowdown in home sales, home construction and home prices the top business story of 2006.
At the same time, local analysts point out that even though home sales in the greater Puget Sound region have slowed, now is still a good time to buy a home in the Seattle area.
What does this slowdown really mean for consumers? Is it wise to sit back and wait for a home in the hopes that prices may drop and your Washington mortgage will end up costing less? Most real estate experts in the region say don’t bet on it.
One reason the region has not experienced the steep decline seen in other markets is that while other parts of the country face an abundant oversupply of housing, the Seattle housing market not.
In Washington state, the Growth Management Act (GMA) actually limits the supply of new housing entering the market by directing where new it can occur. As long as GMA is in place, the Seattle area is very unlikely to find itself in a housing glut.
Another key factor, in addition to low mortgage rates, is that the area in and around Seattle has a healthy supply of jobs and a strong regional economy — factors most experts agree help keep prices from falling.
While it is true housing prices fell nationwide last quarter, median prices are still on the rise throughout the region. In November, prices for all home sales were up 12.7 percent in Snohomish County, 13.6 percent in King County and 10 percent in Pierce County from a year ago.
Housing appreciation rates vary significantly from one market to another.
Still, the reality is that in a softer real estate market, buyers are now in the driver’s seat. Prices are competitive and the cost of mortgage loans has held steady at near-record lows.
Today’s low rates give first-time home buyers a golden opportunity to begin building household wealth. Not to be overlooked are tremendous tax benefits received by homeowners as they accumulate equity in their homes.
Of course, no one can really predict the peaks and valleys of the housing market. But we do know that, thanks to the GMA, the region will balance housing starts with market demand.
Sitting on the fence waiting for the absolute best deal is a gamble that prevents consumers from taking advantage of buying a home, while prices are moderating.
A Seattle mortgage is not a bad investment. Housing markets periodically adjust according to overall economic conditions, yes. But over the long term, real estate consistently appreciates. Nationally, appreciation has historically been 5-6 percent annually. At that rate, the value of a home doubles every 13 years.
In today’s housing market, the real risk is in waiting to buy a home. We know that home loan costs are low now. We know that inventory is good, and many builders are offering move-in incentives.
Boom real estate periods tend to be known as seller’s markets as inventory is tighter and most of the advantages are with sellers, not buyers. Slower real-estate markets, on the other hand, are buyer’s markets.
In Seattle, homes are still selling, but within a normal range of time. Not like some cities where the real estate market is in a slump, the Seattle area is healthy and analysts feel certain it will stay that way.
As a result, the deep discounted prices some consumers have been hoping for simply won’t be happening here. For consumers sitting on the sidelines, the bottom line is simple. Homeownership is always attractive.
Besides being a stepping-stone to financial security, homeownership provides a sense of community and personal satisfaction. Studies even show that homeowners are more content with their lives, enjoying a stronger sense of belonging and increased activity in community groups.
The bottom line is simple: Housing is always a smart investment and all across the city, mortgage interest rates are still near 40-year lows. Savvy consumers know this is a great time to buy a home.