South Sound locals have long known about the quality of living in our neck of the woods. Thanks to Kiplinger Personal Finance Magazine the world now knows too.
In its annual ranking of the nation's Best Cities, published in the July 2009 issue of the magazine, Olympia came in as the 6th best place to live, work and play. The report, which labels Olympia as the "Northwest Jewel", highlights the city's cultural attractions, work force and jobs, and educational opportunities.
Come join the celebration of this recognition at 11:00 a.m. on Friday June 12th at Olympia's Farmers Market.
To view the video report on Kiplinger.com visit:
http://www.kiplinger.com/video/index.html?bcpid=572031303&bclid=1571610693&bctid=23940572001&kipad_id=47
To read the printed report visit:
http://www.kiplinger.com/magazine/archives/2009/07/2009-best-city-olympia.html
Wednesday, June 10, 2009
Thursday, June 4, 2009
Positive News in the Housing Market
The housing market stats for May 2009 released today by the Northwest Multiple Listing Service (NWMLS) reveal some positive trends. Chief among those are an escalating number of sales and price stabilization in many of the 19 counties covered by the NWMLS.
Across the NWMLS Pending sales in May were up 17.7% from May 2008. While overall median prices are down 10% from year ago numbers, eight of 19 counties show price gains since January (Thurston County is one of those counties).
Most of the gains in sales are being seen in the markets closest to Seattle. King County pending sales are up 27% from a year ago. Thurston County pending sales jumped nicely as well, with a 17.5% increase.
Click image to enlarge.
The reason for the big difference between King and Thurston counties is price. King County's average sales price is down 16% from last year compared to a 10% reduction in Thurston County since May 2008. (It is also important to remember that King County's prices escalated at a much steeper rate than did Thurston County's during the run-up. This means that King County required a steeper correction to get back to sustainable prices.)
Those bigger price reductions in King County are bringing buyers back to its market at a faster pace. And while Thurston County's sales gains have been solid, our areas market average price will continue to see pressure as supply still outweighs demand.
While media attention tends to focus on market-wide numbers, like average and median prices, each individual house is unique in appeal and pricing. One house may be priced at market value while another is priced above it. Therefore, it is important for buyers to evaluate each house individually and not let overall market trends make the call.
If someone were to stay out of this market waiting for the market average price to bottom, that person may miss out on the perfect home that has already hit its bottom. We see examples of that everyday.
For more on this topic see our blog posting on 5/18/2009 entitled Well-Priced Homes Still Selling Quickly.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
Across the NWMLS Pending sales in May were up 17.7% from May 2008. While overall median prices are down 10% from year ago numbers, eight of 19 counties show price gains since January (Thurston County is one of those counties).
Most of the gains in sales are being seen in the markets closest to Seattle. King County pending sales are up 27% from a year ago. Thurston County pending sales jumped nicely as well, with a 17.5% increase.
Click image to enlarge.
The reason for the big difference between King and Thurston counties is price. King County's average sales price is down 16% from last year compared to a 10% reduction in Thurston County since May 2008. (It is also important to remember that King County's prices escalated at a much steeper rate than did Thurston County's during the run-up. This means that King County required a steeper correction to get back to sustainable prices.)
Those bigger price reductions in King County are bringing buyers back to its market at a faster pace. And while Thurston County's sales gains have been solid, our areas market average price will continue to see pressure as supply still outweighs demand.
While media attention tends to focus on market-wide numbers, like average and median prices, each individual house is unique in appeal and pricing. One house may be priced at market value while another is priced above it. Therefore, it is important for buyers to evaluate each house individually and not let overall market trends make the call.
If someone were to stay out of this market waiting for the market average price to bottom, that person may miss out on the perfect home that has already hit its bottom. We see examples of that everyday.
For more on this topic see our blog posting on 5/18/2009 entitled Well-Priced Homes Still Selling Quickly.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
Wednesday, June 3, 2009
Tax Credit Helping Thousands of Buyers
Early results show that the first-time homebuyer tax credit is helping hundreds of thousands of homebuyers. The following report from Real Trends demonstrates this fact.
According to very preliminary figures from the IRS, some 567,685 taxpayers claimed more than $3.9 billion worth of first-time homebuyer credits on their 2008 tax returns, according to Steve Cook of realestateeconomywatch.com. Even though 38,158 may be disqualified because the IRS has found they had ownership in a personal residence within the past three years, the total will certainly exceed the $4.6 billion estimated by Congress last year. The preliminary figures were from returns received by March 6-five weeks before 2008 returns were due. These preliminary returns means the credit helped to make possible at least ten percent of the roughly 5 million new and existing home sales last year. No doubt it was a deal maker in many of those transactions. Source: Steve Cook, Real Estate Economy Watch
Locally, we are also seeing buyers take advantage of the credit. And this year Congress expanded the credit to $8,000 and eliminated the pay-back requirement. This means that even more people will take advantage of the program in 2009.
Remember that the credit exists only on purchases through November 30, 2009. Considering that it is likely that more money will be spent than Congress allocated, it is not a guarantee that the program will be extended. It is, however, having a positive influence on entry-level price segments, which is where every housing recovery begins. If the current housing trends continue, the tax credit will turn out to be money well spent.
According to very preliminary figures from the IRS, some 567,685 taxpayers claimed more than $3.9 billion worth of first-time homebuyer credits on their 2008 tax returns, according to Steve Cook of realestateeconomywatch.com. Even though 38,158 may be disqualified because the IRS has found they had ownership in a personal residence within the past three years, the total will certainly exceed the $4.6 billion estimated by Congress last year. The preliminary figures were from returns received by March 6-five weeks before 2008 returns were due. These preliminary returns means the credit helped to make possible at least ten percent of the roughly 5 million new and existing home sales last year. No doubt it was a deal maker in many of those transactions. Source: Steve Cook, Real Estate Economy Watch
Locally, we are also seeing buyers take advantage of the credit. And this year Congress expanded the credit to $8,000 and eliminated the pay-back requirement. This means that even more people will take advantage of the program in 2009.
Remember that the credit exists only on purchases through November 30, 2009. Considering that it is likely that more money will be spent than Congress allocated, it is not a guarantee that the program will be extended. It is, however, having a positive influence on entry-level price segments, which is where every housing recovery begins. If the current housing trends continue, the tax credit will turn out to be money well spent.
Lower home prices still attracting buyers despite uptick in interest rates
The Mortgage Bankers Association (MBA) reported today that demand for home loans dropped this week as mortgage interest rates climbed over the past couple of weeks.
The stock market is likely to take this as bad news; however, a more detailed review the numbers actually tells a fairly positive story about the housing markets continued improvement.
The MBA report combines both purchase and refinance loans. All of the drop in mortgage activity is attributed to a drop in refinance activity. Purchase loans, on the other hand, actually rose during the past week.
This is an indication that the drops in home prices around the country are having a much stronger impact than mortgage rates when it comes to bringing buyers back into the market.
Buyers know that it takes a much steeper hike in mortgage rates than that seen over the last week to wipe out the benefits of buying when prices are down by double digit percentages. Because home prices across the country are moderating back down to sustainable levels, purchase mortgage demand remains strong.
Buyers simply look for value when purchasing a home. Recent surveys of home owners and buyers show that the vast majority believe buying a home is a good investment again. They believe that prices have come back to levels that should lead to sustainable appreciation in the years to come. This fact has a stronger impact on buyer sentiment than do relatively modest adjustments in interest rates.
As for refinances, they were bound to slow down. Even if interest rates remained flat, there is only so much refinancing that can occur - and a lot has occurred. Locally, most title companies report that fully 75-85% of their business has been as a result of refinance activity since the start of the year.
Yet the refinancing has been healthy for the housing market. By making payments more affordable, refinances have reduced the amount of distressed properties coming on the market. This has kept the supply-side of the equation in check.
Thurston Countys inventory of homes has remained stable since the start of the year, hovering around 1,550 homes for sale. Last year, inventory shot up 46% from January to May, which is a more typical pattern of inventory growth during that time of year.
Keeping the inventory from rising has been very important because our demand is still lower than our current levels of supply. To find better balance, the market will see prices continue to adjust downward. As they do, we will see purchase mortgage applications continue rise and our market return to better health for the long-haul.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
The stock market is likely to take this as bad news; however, a more detailed review the numbers actually tells a fairly positive story about the housing markets continued improvement.
The MBA report combines both purchase and refinance loans. All of the drop in mortgage activity is attributed to a drop in refinance activity. Purchase loans, on the other hand, actually rose during the past week.
This is an indication that the drops in home prices around the country are having a much stronger impact than mortgage rates when it comes to bringing buyers back into the market.
Buyers know that it takes a much steeper hike in mortgage rates than that seen over the last week to wipe out the benefits of buying when prices are down by double digit percentages. Because home prices across the country are moderating back down to sustainable levels, purchase mortgage demand remains strong.
Buyers simply look for value when purchasing a home. Recent surveys of home owners and buyers show that the vast majority believe buying a home is a good investment again. They believe that prices have come back to levels that should lead to sustainable appreciation in the years to come. This fact has a stronger impact on buyer sentiment than do relatively modest adjustments in interest rates.
As for refinances, they were bound to slow down. Even if interest rates remained flat, there is only so much refinancing that can occur - and a lot has occurred. Locally, most title companies report that fully 75-85% of their business has been as a result of refinance activity since the start of the year.
Yet the refinancing has been healthy for the housing market. By making payments more affordable, refinances have reduced the amount of distressed properties coming on the market. This has kept the supply-side of the equation in check.
Thurston Countys inventory of homes has remained stable since the start of the year, hovering around 1,550 homes for sale. Last year, inventory shot up 46% from January to May, which is a more typical pattern of inventory growth during that time of year.
Keeping the inventory from rising has been very important because our demand is still lower than our current levels of supply. To find better balance, the market will see prices continue to adjust downward. As they do, we will see purchase mortgage applications continue rise and our market return to better health for the long-haul.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
Tuesday, June 2, 2009
Lower Prices Cause Pending Sales to Jump
Pending home sales across the country jumped 6.7% in April, which represents the largest increase since October 2001. The stock market responded postively to this news and closed up again today. Analysts were expecting only a modest increase in sales activity.
The big jump in sales is largely attributable to the lower prices seen around the country. For example, the median price of an existing home in California decreased by over 36% from April 2008 to April 2009, according to the California Association of Realtors. That drop in price led California to a 49.2% increase in home sales.
Closer to home, a 14% reduction in average sales price sparked a 15% jump in pending sales across Western Washington. Thurston County prices, however, have not corrected as much. Our prices are off just 9.6% from a year ago. Consequently, our market experienced a 4% decrease in pending sales.
Our local market continues to have much greater supply than demand. We have 8 months supply at the current pace of sales, which is well above a balanced market with 4-6 months supply. Under those conditions, prices will continue to adjust downward to bring the market back into balance.
From 2003-2006, Thurston County home prices appreciated at an average of 13.4% per year, compared to just 5.9% average over the 20 years prior. Even with the price corrections we have seen since the peak of our market, our average sales price is still nearly 6% above where our historic trendline would place prices today.
Click image to enlarge.
Our market is trending in the right direction, however. The gap between our actual average prices and a sustainable price based on our market's more modest historic growth rates is the smallest it has been in the past 5 years. (California did not start to see more sales until prices came back in line with its historic trendline. When prices got there, sales jumped up.)
This fact is helping a great many sellers find success in our market. Those who are setting asking prices to stay in front of the market trend are selling in near record time, at just 46 days on market. They are also selling for close to full asking price. When more sellers start to recognize the real market forces they too will find success. This in turn will lead to greater absorption of our excess supply, and that will bring our market back to more sustainable and healthy growth in the future.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
The big jump in sales is largely attributable to the lower prices seen around the country. For example, the median price of an existing home in California decreased by over 36% from April 2008 to April 2009, according to the California Association of Realtors. That drop in price led California to a 49.2% increase in home sales.
Closer to home, a 14% reduction in average sales price sparked a 15% jump in pending sales across Western Washington. Thurston County prices, however, have not corrected as much. Our prices are off just 9.6% from a year ago. Consequently, our market experienced a 4% decrease in pending sales.
Our local market continues to have much greater supply than demand. We have 8 months supply at the current pace of sales, which is well above a balanced market with 4-6 months supply. Under those conditions, prices will continue to adjust downward to bring the market back into balance.
From 2003-2006, Thurston County home prices appreciated at an average of 13.4% per year, compared to just 5.9% average over the 20 years prior. Even with the price corrections we have seen since the peak of our market, our average sales price is still nearly 6% above where our historic trendline would place prices today.
Click image to enlarge.
Our market is trending in the right direction, however. The gap between our actual average prices and a sustainable price based on our market's more modest historic growth rates is the smallest it has been in the past 5 years. (California did not start to see more sales until prices came back in line with its historic trendline. When prices got there, sales jumped up.)
This fact is helping a great many sellers find success in our market. Those who are setting asking prices to stay in front of the market trend are selling in near record time, at just 46 days on market. They are also selling for close to full asking price. When more sellers start to recognize the real market forces they too will find success. This in turn will lead to greater absorption of our excess supply, and that will bring our market back to more sustainable and healthy growth in the future.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
Monday, June 1, 2009
Foreclosure Sales not impacting prices too much
In our May 11, 2009 posting, Affordability Returning to the Local Housing Market", we suggested that foreclosure sales were not placing downward pressure on prices. We are seeing bank-owned properties priced at market value.
Now a report from the Federal Housing Finance Agency (FHFA) lends additional support to our thinking about our local market. In its May 27, 2009 report, The Impact of Distressed Sales on Repeat-Transactions House Price Indexes, the FHFA takes on the task of quantifying the effect of distressed sales on average home prices. By analyzing the California housing market since it peaked in 2006, the report concludes that distressed sales magnified price corrections by only 5.4%.
California's housing crisis has been one of the worst in the country. The House Price Index (HPI) compiled by FHFA shows a 41.3% price decline since the peak in 2006, accounting for all sales including distressed sales. When the HPI is formed without distressed sales only a 36% drop is evidenced.
Our local market has not had near the impact of foreclosures that California has seen. The FHFA's report suggests to us that prices in our market are not being artificially impacted by foreclosures. Instead, the volume of foreclosures that we are seeing is simply an addition to our supply of homes. Any increase in supply without a commensurate increase in demand leads to lower prices. But unlike California's 41% reduction in prices, we have seen prices drop only 12% since their peak in 2007.
Click image to enlarge.
To view the complete FHFA report visit: http://www.fhfa.gov/webfiles/2397/researchpaper_distress.pdf
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
Now a report from the Federal Housing Finance Agency (FHFA) lends additional support to our thinking about our local market. In its May 27, 2009 report, The Impact of Distressed Sales on Repeat-Transactions House Price Indexes, the FHFA takes on the task of quantifying the effect of distressed sales on average home prices. By analyzing the California housing market since it peaked in 2006, the report concludes that distressed sales magnified price corrections by only 5.4%.
California's housing crisis has been one of the worst in the country. The House Price Index (HPI) compiled by FHFA shows a 41.3% price decline since the peak in 2006, accounting for all sales including distressed sales. When the HPI is formed without distressed sales only a 36% drop is evidenced.
Our local market has not had near the impact of foreclosures that California has seen. The FHFA's report suggests to us that prices in our market are not being artificially impacted by foreclosures. Instead, the volume of foreclosures that we are seeing is simply an addition to our supply of homes. Any increase in supply without a commensurate increase in demand leads to lower prices. But unlike California's 41% reduction in prices, we have seen prices drop only 12% since their peak in 2007.
Click image to enlarge.
To view the complete FHFA report visit: http://www.fhfa.gov/webfiles/2397/researchpaper_distress.pdf
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
$8,000 Tax Credit Update
For those of you who regularly visit our blog you know that we have been providing information about the federal tax credit program for first-time homebuyers. That $8,000 tax credit has certainly helped that segment of buyers, but it has not reached its full potential because buyers had to wait to get the cash until they filed their 2009 tax returns next year.
Now there is a program that will help some of those first-time buyers take advantage of the cash today. The following is the latest from CNNMoney.com about the tax credit.
"First-time homebuyers will now have access to quick cash to help them with their downpayments.
"Last week, the U.S. Department of Housing and Urban Development (HUD) announced that first-time homebuyers using FHA-approved lenders can now get an advance on the $8,000 tax credit created by the stimulus package and apply it toward their down payments or closing costs. As part of the stimulus package, Congress created a refundable first-time homebuyers tax credit in hopes of helping on-the-fence buyers to take the home-purchase plunge. But buyers couldn't collect the $8,000 credit until tax time, rather than at closing time-when it's needed.
"The delay created an obstacle to reigniting the housing market because most first-time buyers -- the ones who would buy much of the available inventory -- have only saved enough to cover 4% of the purchase price, according to the National Association of Realtors.
"The mechanics of the new program, according to NAHB Economist Robert Dietz, allow lenders to purchase tax credits from the buyers and then collect the rebate from the IRS. Homebuyers must still come up with FHA's mandatory downpayment of 3.5% on their own, but they can use the tax credit to lower their principal balance and save on monthly payments.
"The initiative also authorized downpayment help programs already offered in Colorado, Missouri, New Jersey, Pennsylvania, Tennessee, Washington and other states. To quickly infuse cash into their housing markets, the housing finance authorities in these states created bridge loans to allow buyers to borrow against the $8,000 credit and then repay it with their tax refunds."
Source: CNNMoney.com
Now there is a program that will help some of those first-time buyers take advantage of the cash today. The following is the latest from CNNMoney.com about the tax credit.
"First-time homebuyers will now have access to quick cash to help them with their downpayments.
"Last week, the U.S. Department of Housing and Urban Development (HUD) announced that first-time homebuyers using FHA-approved lenders can now get an advance on the $8,000 tax credit created by the stimulus package and apply it toward their down payments or closing costs. As part of the stimulus package, Congress created a refundable first-time homebuyers tax credit in hopes of helping on-the-fence buyers to take the home-purchase plunge. But buyers couldn't collect the $8,000 credit until tax time, rather than at closing time-when it's needed.
"The delay created an obstacle to reigniting the housing market because most first-time buyers -- the ones who would buy much of the available inventory -- have only saved enough to cover 4% of the purchase price, according to the National Association of Realtors.
"The mechanics of the new program, according to NAHB Economist Robert Dietz, allow lenders to purchase tax credits from the buyers and then collect the rebate from the IRS. Homebuyers must still come up with FHA's mandatory downpayment of 3.5% on their own, but they can use the tax credit to lower their principal balance and save on monthly payments.
"The initiative also authorized downpayment help programs already offered in Colorado, Missouri, New Jersey, Pennsylvania, Tennessee, Washington and other states. To quickly infuse cash into their housing markets, the housing finance authorities in these states created bridge loans to allow buyers to borrow against the $8,000 credit and then repay it with their tax refunds."
Source: CNNMoney.com
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