Olympia, WA State Capitol Building

Built in 1922, restored and refurbished for the 1989 state centennial, it is claimed to be one of the most beautiful Capitol's in the nation. It is also the fourth tallest masonry dome building in the world, rising 287 feet high. While on campus don't forget to check out the Justice Building, Vietnam Memorial, World War II Memorial, State Library, and the Governor's Mansion.

Our beautiful Capitol building is just one reason we love Olympia. Tours are available of this wonderful building, visit http://www.ga.wa.gov/visitor/ for more information.

Trading Up in a Down Market

In last quarter’s newsletter, we mentioned that home sales in the mid-range ($300,000 -$500,000) would start to move again. After falling off sharply throughout the second half of 2009, sales in that range are now back to levels seen a year ago. More sellers have recognized the need to price competitively; and buyers are seeing the opportunity that trading up in a down market brings.

As prices started to correct downward, many trade-up buyers put off moving because they believed their own home would not sell for what they wanted. However, selling their current home is only half of the equation. The purchase of the new home is the other half. Purchasing that trade-up home makes more financial sense in a down market than in an overheated seller’s market. The recent sales numbers indicate that more buyers now recognize that fact.

It seems that most sellers in this price range are also able to benefit. Homes bought in this price range are the homes that owners hold the longest. As a result, they have built enough equity over that longer holding period to realize a nice return - even if it is not the abnormally large gains some realized a few years back.

Housing Market Update

After a slow start to the year, home sales have picked up a bit of steam. Through the first quarter of the year, Thurston County home sales increased nearly 10% over last year. That is saying something after January, when sales were off 17%. Since then sales have easily outpaced 2009 levels.

What is the reason for the rise in activity? The national media gives much of the credit to the federal government stimulus, particularly the home buyer tax credits that expire at the end of April. Those credits, up to $8,000, have been a nice bonus for buyers. However, they are not the primary motivation for buyers in our region.

We find that the reasons people want to move are the same as always – life changes. The reason people are now acting on the desire to move is price.

According to the latest home buyer survey from the National Association of Realtors, the top reasons for moving are:

1. Desire to own a home;
2. Job-related relocation or move;
3. Desire for a different home size;
4. Change in family situation;
5. Affordability of homes;
6. Desire for a home in a better area;
7. Desire to be closer to friends and family.

Six of these seven reasons for buying are very consistent from year to year. However, catapulting onto this year’s list is a new entrant – affordability. The number of people who expressed affordability as the primary reason has nearly tripled. It is no surprise that prices are down all across the country. In nearly all markets, the drop in prices is much more significant than the $8,000 tax credit.

Here in Thurston County, it is indeed home prices, and not so much the tax credits, that are capturing buyer’s attention. Over the past couple of years, retreating prices kept many buyers on the sidelines. These buyers had a desire to move, but simply put off acting until prices appeared more sustainable. That waiting game has built pent up demand.

With prices of many homes back to affordable and sustainable levels, buyers are coming back. The median sales price for a home in Thurston County is now $228,200, down almost $30,000 or 11.5% from a high of $257,970 in 2008. As a result, home sales in March were up 27% from last year.

Perhaps the best example of how price is driving demand is the number of days that a home is on the market. The typical buyer visits a couple of dozen homes before purchasing. Prior to visiting those homes, they have looked at dozens more online. This amounts to a lot of comparison shopping. Buyers are ignoring overpriced homes and acting quickly on those that are well priced.

In March, well priced homes (those that did not require a price reduction before a buyer made an offer) sold in a record time of an average of just 23 days. That is more than three weeks faster than during our overheated seller’s market in 2006. On the other side of the coin, homes that were overpriced (those that required at least one price reduction before selling) averaged a record 217 days on market.
Click image to enlarge.

Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.

Mortgage Interest Rates Holding Steady

Despite the fact that the Federal Reserve a month ago stopped its program to buy mortgage-backed securities, mortgage interest rates have remained stable and low.

Freddie Mac reported today that the average rate for a 30-year, fixed-rate mortgage was 5.06% for the week ending April 29, 2010. The day after the Fed program ceased, the average rate was 5.08%.

We had commented that rates were likely to rise when the Fed ceased this stimulus program. It is still worth keeping an eye on rates, as they could still move. The stability over the past month, however, has been appreciated by today’s homebuyers.

To view the Freddie Mac’s Weekly Mortgage Market Survey visit: http://www.freddiemac.com/pmms/#Historical

Spring Arts Walk in Olympia

Come on downtown this weekend to celebrate the arts in our community! Experience visual and performing arts in over 100 businesses by hundreds of artists Friday April 23rd and Saturday April 24th! Enjoy hands-on family activities, demonstrations and impromptu street performances.

The spring Arts Walk includes the incredible Procession of the Species produced by Earthbound Productions.

For artists, art lovers and the art curious, this event is a wonderful opportunity to embrace the arts in all forms! Maps with listings of venues and artists are available two weeks before the event at participating locations and at The Olympia Center, 222 Columbia St. NW, in downtown Olympia.

For more information, call 709.2678 or send an email to sjohnso1@ci.olympia.wa.us.

Map - listing of venues and artists
Registration Form
How to Participate
General Event Guidelines
Spring 2009 Event Photos - The Olympian

SBA recovery lending extended through May

Two of the U.S. Small Business Administration's key small business loan programs have received $80 million in additional funding from Congress.

The enhancements, first made available under the American Recovery and Reinvestment Act, include a higher guarantee on some SBA-backed loans and small business fee relief.

The SBA estimates the money will support about $2.8 billion in small business lending under the 7(a) and 504 programs.

Under the extension, SBA may continue to reduce loan fees and provide higher guarantee levels on 7(a) loans through May 2010, or until the funds provided under the bill are exhausted.

This extension has no effect on the continued availability of financing under other Recovery Act programs, including SBA's America's Recovery Capital (ARC) loan program and the agency's Microloan program. Recovery Act funding still remains available for both of those programs.

Tips for Staging Your Home!

Check out this video compliments of our exclusive YouTube channel On Location!

Pending Home Sales up Big

Thurston County home sales during the month of March were quite robust. The month saw pending sales jump 30% compared to March 2009. The 409 pending sales last month made it the fourth best March on record.

Sales continue to be concentrated in the lower price ranges, as buyers are seeing value there. The average sales price during the month was $245,684 compared to $253,555 last year. The popular first-time home buyer tax credit, which gives up to $8,000 to first-time buyers, is no doubt helping that end of the market.

While sales in the mid to upper price ranges are starting to pick up, they are still off year ago levels. In March 2009, there were 33 sales over $350,000. This March there were only 26 sales. Buyers are starting to see more value, as sellers have begun to bring prices in line with current market realities.

April will be a telling month for all sellers as the tax credits, including the $6,500 repeat homebuyer credit, expire April 30th. As we have reported in past posts, we believe the credit has not been the primary reason that sales have picked up. That distinction belongs to price. The credits are, however, a nice bonus for buyers. We expect buyers who are actively in the market today will be eager to act on the credit before the end of the month. The sellers who work to get competitively priced will be the ones who gain the attention of those buyers.

This is the Last Month to Act on the Tax Credits

It is the last month for the home buyer tax credits. Millions of buyers around the country have taken advantage of them. How many more lock in before the credits expire on April 30, 2010 remains to be seen.

Most of our clients who have benefitted from the credit were not motivated primarily by the credit. Instead, they wanted to move for the same reasons nearly all buyers act – to meet the changing needs of their lives. Whether it is a bigger or smaller home, one closer to schools or work, or a home better suited for hobbies, these buyers found a home better suited to their current needs.

To the extent buyers are jumping based on financial incentives, it may be more about price and affordability than the credit. With average prices down about 12% since the peak, buyers are finding that prices of many homes are at levels of affordability not seen in years. The price reductions are far more substantial than the amount of the tax credits.

The lower home prices combined with great mortgage rates have been the bigger financial drivers of the decision – not the tax credit. Still, for people who are inclined to venture into the housing market, the credits are certainly an added bonus.

There are two credits available. One is for first-time buyers (which includes someone who has not owned for the past three years). That credit is $8,000 (or 10% of the purchase price, whichever is less).

Repeat buyers, who have owned a home for five consecutive years out of the past eight, will receive a $6,500 credit (or 10% of the purchase price, whichever is less).

For more on the tax credits, visit www.irs.gov

Watch Mortgage Rates in the Month’s to Come

Mortgage rates edged slightly higher this week, according to Freddie Mac’s weekly Primary Mortgage Market Survey. The average rate on a 30-year, fixed rate loan stands at 5.08%. Last week the rate was 4.99%. Average fees and points for the loan is 0.7%.

Yesterday, the Federal Reserve ended its year and a half long program of buying mortgage backed securities (MBS). That $1.25 trillion program manufactured demand for MBSs, which in turn has contributed to lower mortgage rates. It is unclear what impact the market will feel now that the program has concluded. Many experts agree that rates will begin to rise without this stimulus. Private investors are expected to demand higher yields on MBS, which will bring rates up.

With the exception of a brief spike last June, rates have been bouncing just above and below 5% for well over a year. This has been a period of remarkably stable rates. The Fed’s MBS program is a big reason for that.

For more on the MBS program see our related post on February 11, 2010 entitled Buyers are Acting While Rates are Low.