The sales numbers are in for May… it seems as though the tax credit ending hasn’t caused much of a hickup for the housing sales in the Seattle and Eastside markets.

New Eastside SFR Pendings in April 2010: 387
New Eastside SFR Pendings in May 2010: 435 (+12%)

New Seattle SFR Pendings in April 2010: 339
New Seattle SFR Pendings in May 2010: 376 (+10%)

New SFR Pendings in West Bellevue are also up 16% from the end of April 2010, and +12% from last week.

My offices sales volume in Bellevue increased from (+/-) $80,000,000 in April 2010 to $110,000,000 in May 2010 (+38%)

So homes sales, as they’re apt to do in Spring and Summer, are on the rise…and our market did not fall of the edge of the earth with end of the tax credit!

That is the good news for the day!

“THERE ARE NO SECRETS IN LIFE, JUST HIDDEN TRUTHS THAT LIE BENEATH THE SURFACE.” From the Showtime TV hit, “Dexter”. The highly anticipated Jobs Report arrived last Friday morning, showing 85,000 jobs lost during December…and while this was a bit worse than expected, the report also carried some good news, in that the prior month’s revisions showed that November actually had a final tabulation of job gains for the month, for the first time since December 2007. Additionally, the Unemployment Rate remained stable at 10%. While this all seems to indicate some level of improvement in the labor market – you do have to look beneath the surface to clearly understand the present realities for the labor market.

Let’s start with the headline number of 85,000 jobs lost. This comes from what is called the “business survey”, which uses many estimation tools, including the birth-death ratio of businesses, i.e. how many businesses were created or closed. The mechanics in coming up with the business survey allow the information to be gathered rapidly, but it also makes the information far less than accurate. On the other hand, there is also a “household survey”, where a sampling of households receive actual phone calls. Although the household number is not used by the Labor Department for their headline numbers of job losses or creations, some deem it to be a bit more accurate. The household survey paints a bit of a darker – but perhaps more realistic – picture, showing a whopping 589,000 jobs lost. But let’s dig deeper still.

The Labor Department does use the household survey to calculate the Unemployment Rate – and remember, it stayed stable at 10% – but the calculation is determined by how many people are presently in the workforce. And the household survey indicated that last month, 661,000 people left the workforce.

Whoa – what does “leaving the workforce” mean? And where exactly are they going? Let’s take a closer look to understand.

The Labor Department’s definition of this is a “discouraged worker”, who has not looked for a job during the past four weeks. Based on this definition, there are a few contributing factors that would help us understand why this would indicate such a large number of people “exiting the workforce.” And remember, more people exiting the workforce means less people counted as unemployed, and this number alone last month would have contributed to almost a half percent increase in the rate of unemployment from 10% to almost 10.5%.

So let’s talk about these contributing factors. First, frigid temperatures and piles of snow during December played a role in keeping job seekers home. Add to that the holiday season, as well as travel for family gatherings and vacations during this time, also contributing to pushing off the job search. And perhaps most importantly playing a role are the extended unemployment benefits – up to 99 weeks worth – which could also play into the decision to not seek work. Put this all together, and it might clarify the large so-called exodus from the workforce, which masks the true Unemployment Rate.

Overall – the job picture is still weak, at best. Census hiring in the next few months – although temporary – should boost job creations, which in turn may lead to upside Job Report surprises. This could lead to some tough days ahead for Bonds and home loan rates – count

 IT’S NO SECRET THAT MANY AMERICANS MAKE NEW YEARS RESOLUTIONS RELATED TO THEIR HEALTH AND FITNESS – AND THE GOOD NEWS IS THAT IT CAN BE SIMPLE. READ ON FOR A MORTGAGE MARKET GUIDE VIEW ARTICLE DESCRIBING A FEW SIMPLE TRIED AND TRUE EXERCISES THAT ARE EASY…AND WORK.

Did you know that all residents of the US have the right to obtain one free credit report from each of the three credit bureaus per year? Since your credit score is more important than ever due to today’s tightening credit standards, it’s the perfect opportunity to take advantage of this benefit.

But Beware…

Although you see commercials offering free credit reports, many companies actually charge a fee or require enrollment to qualify for the free report. That’s why one of your best resources is www.annualcreditreport.com for a free report of your credit history. This report of your credit history can help you check the accuracy of the information in your report. However, it does NOT include your credit score. If you want to know your number, you can pay an add-on fee from the service or simply contact me for help determining your actual score.

Stagger Your Reports

Remember, you are only entitled to receive one free report from each bureau per year, so consider staggering the requests. For example, make a note on your calendar to order a report from TransUnion® one month, then one from Equifax® a few months later, and finally one from Experian® a few months after that. In essence, this will allow you to order three credit reports per year…and provide you the ability to monitor your credit throughout the year.

The Making Home Affordable Program is part of the Obama Administration’s plan to stimulate the housing market and the economy. This program offers two potential solutions for borrowers: refinancing mortgage loans through the Home Affordable Refinance Program (HARP) and modifying mortgage loans through the Home Affordable Modification Program (HAMP).

Home Affordable Refinance Program (HARP) Requirements:

Homeowners who own a one- to four-unit home, have not been 30 days late making a mortgage payment in the past 12 months and whose loan is owned or guaranteed by either Freddie Mac or Fannie Mae may qualify for this program. In addition, to be eligible for the HARP program, the first mortgage (including any refinancing costs) cannot exceed 125 percent of the current market value of the home.

Home Affordable Modification Program (HAMP) Requirements:

This program is designed to help homeowners who are struggling to make their payments because of employment cutbacks, medical bills or other change in income. To qualify for this program, homeowners must own a one- to four-unit home as their primary residence and have an unpaid principal balance that is equal to or less than:

1. Unit: $729,750
2. Units: $934,200
3. Units: $1,129,250
4. Units: $1,403,400

The mortgage must have originated on or before January 1, 2009 and the payment must be at least 31 percent of the homeowners’ gross monthly income. Homeowners also need to be able to present documentation of financial hardship in order to qualify for modification.

For more information or to apply for these programs, visit www.makinghome-affordable.gov or call the Homeowner’s HOPE™ Hotline at 1-888-995-HOPE.

Last Tuesday the Case-Shiller Home Price Index for 20 cities came in UP a seasonally adjusted 0.4% for October. This was the fifth consecutive monthly increase for the index. Year-over-year, prices are still down 7.3%, but that’s a less steep rate of decline than we’ve been seeing.

It looks like home prices could be stabilizing, though well below their peaks in most markets. This price decline, plus the dramatic drop in mortgage rates, have made homes more affordable than they’ve been in a long time. A writer for the Wall Street Journal compared home price index values, mortgage rates and average weekly earnings going back to 1987. The finding? On average, housing is as affordable now as it was in the mid-1990′s, when homes were a real steal. Of course, this conclusion is based on average prices, so affordability may be greater or less in individual markets.

Christmas Eve, the Treasury lifted the limit on the money it can put into Fannie Mae and Freddie Mac to keep their net worth positive over the next three years. Some economists point out that Fannie and Freddie could now replace the Fed as a big buyer of mortgage-backed securities to help keep mortgage rates down after March 31. That would be great, but nothing is certain. Smart buyers are taking advantage of TODAY’S low mortgage rates AND the expanded tax credit that requires a signed contract by April 30 and a closing by June 30!

Review of Last Week

SLIDING INTO 2010… The stock market was up for three out of the four days of trading last week, but New Year’s Eve saw a 120-point drop in the Dow, which left it and the other major indexes sliding down ever so slightly for the week. But for the year, the indexes were decidedly up, coming off the bottom stock prices hit last March. And there were other positive economic indicators to lift our spirits going into 2010.

Tuesday, Consumer Confidence for December came in at 52.9, continuing its upward move from the prior month’s 50.6 reading. This Conference Board survey showed consumers more optimistic, based on their expectations the economy will keep improving over the next six months. Wednesday, the Chicago PMI (Purchasing Managers Index) for November registered 60.0, way better than expected, reflecting continued growth in manufacturing in another key region of the country.

All this encouraging news was followed Thursday with Initial Unemployment Claims coming in at 432,000, well below consensus estimates and the lowest number we’ve seen in a year and a half! Continuing Claims also keep shrinking, now drifting into 4 million territory. Employment has always been closely tied to the health of the housing market, so positive moves like these should be noted by all interested parties.

For the week, the Dow was down just 0.9%, to 10428.05; the S&P 500 was down 1.0%, to 1115.10; while the Nasdaq was down 0.7%, to 2269.15.

The bond market, which closed early on Thursday, experienced a volatile week. When all was said and done, the FNMA 30-year 4.5% bond we watch ended the week up just 3 basis points, closing at $99.84. Mortgage rates still remain at historically low levels.

This Week’s Forecast

WAITING ON THE JOBS NUMBERS… The end of this week delivers the all-important Employment Report for December. A key element will of course be the Unemployment Rate. We might see a tick up from last month’s drop to 10%. While we await this news, the main focus for folks like us will be Pending Home Sales on Tuesday. ISM indexes will take the measure of Manufacturing on Monday and Service businesses come Wednesday.

The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of January 4 – January 8
Date Time (ET) Release For Consensus Prior Impact
Jan 4 10:00 ISM Manufacturing Dec 54.0 53.6 HIGH
Jan 5 10:00 Pending Home Sales Nov –3.0% 3.7% Moderate
Jan 6 10:00 ISM Services Dec 50.5 48.7 Moderate
Jan 6 10:30 Crude Inventories 12/31 NA –1.54M Moderate
Jan 7 08:30 Initial Unemployment Claims 01/02 445K 432K Moderate
Jan 7 08:30 Continuing Unemployment Claims 12/26 5.040K 4.981M Moderate
Jan 7 10:30 Crude Inventories 12/31 NA –1.54M Moderate
Jan 8 08:30 Average Workweek Dec 33.2 33.2 HIGH
Jan 8 08:30 Hourly Earnings Dec 0.2% 0.1% HIGH
Jan 8 08:30 Nonfarm Payrolls Dec 0 –11K HIGH
Jan 8 08:30 Unemployment Rate Dec 10.1% 10.0% HIGH

Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months. Some economists are beginning to feel the Fed will start hiking rates this Spring. But the vast majority of observers — 83% — still feel the Fed will hold to its commitment to keep rates low for an extended period. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.
Current Fed Funds Rate: 0%–0.25%
After FOMC meeting on: Consensus
Jan 27 0%–0.25%
Mar 16 0%–0.25%
Apr 28 0%–0.25%

Probability of change from current policy:
After FOMC meeting on: Consensus
Jan 27 1%
Mar 16 7%
Apr 28 17%

Top 7 Reasons to Buy Your First Home Today

1. Free Money. The $8,000 tax credit for first time home buyers is valid before December 1, 2009. This is a special tax credit from the government that you don’t have to pay back, as long as you stay in the home for at least 36 months.

2. Affordability. Based on recent property declines and current interest rates, home affordability has not been higher since it was first tracked over 40 years ago. Your grandparents couldn’t have received a better interest rate than you can today.

3. Tax Breaks. The IRS allows you to deduct the interest you pay on your mortgage, your property taxes and, in many cases for those who qualify, some of the costs to buy your home and mortgage insurance. Owning a home is a great way to lower your tax bill.

4. Build Wealth. Unlike paying rent, with each mortgage payment you make, you build equity and you decrease your income tax liability. Owning a home is still the best long-term investment.

5. Appreciation. As home prices have fallen precipitously in today’s tough economy, the basis for realizing appreciation in future years is very strong. Historically, even with other periods of declining value, home prices have exceeded consumer inflation. From 1972 through 2005, home prices increased on average 6.5%, according to the National Association of Realtors®.

6. Stability. Knowing you can establish roots and raise a family in one location, free of the desires or needs of your landlord to sell the property you are living in. This is something no other investment provides. You can’t live in a stock, and you can’t raise your kids in a bond.

7. Independence. Enjoy the freedom to do what you want to your home. After all, it’s yours to do what you wish. And, with any improvements you make, you have the ability to benefit from your investment. Try that with an apartment!
Mortgage Interest Rates for Fixed Rate Mortgages*

On November 6, 2009, President Obama signed a bill to extend the tax credit for first-time homebuyers (FTHBs) through June 30, 2010. The bill also opens up opportunities for others who are not buying a home for the first time.

To learn what the new tax credit means to you and your clients, take a look at the overview below.

Tax Credit for Homebuyers

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

Tax Credit Versus Tax Deduction

It’s important to remember that the tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a first-time homebuyer were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.
Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!

Higher Income Caps

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible

Joint filers who earn up to  $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price

Qualifying buyers may purchase a property with a maximum sale price of $800,000.

If you’ve been thinking about increasing your home’s value or just making your living space more comfortable, these ideas can help you start off simply. Before you start knocking out walls and renovating your roofline, consider these ways to make a big difference…cost-effectively!

1. Spruce Up Your Curb Appeal
Buyers often decide whether to look at your house before they even get out of the car. So, before you spend a lot of time and money remodeling the inside, take a good look at the outside. Washing windows, repainting trim, planting flowers and small shrubs, trimming tree branches and overgrown bushes, fixing screens, resealing your driveway, and mowing the lawn can make a big difference. Start out by making a list of 4 to 7 simple projects and then set aside an hour or two each day. In just one week, you – and potential buyers – will be surprised how appealing and welcoming your house looks when driving up.

2. Does Your Entryway Invite People In?
A cozy first impression is crucial. Now that you’ve boosted your curb appeal, it’s time to turn your attention inside – starting just inside the front door. To make sure your entryway invites people to come in – rather than turnaround and run – try adding a wicker chair and table outside the door along with a fresh coat of paint to your foyer.
For even more impact, replace old light fixtures and update the floor in your entryway with a throw rug or easy-to-apply self-adhesive linoleum squares. These projects are inexpensive and easy enough to do yourself in just a few hours.

3. Spiff Up that Old Bathroom
Remodeling an old bathroom can make a big impact. You should start by simply de-cluttering the countertop. It’s amazing how spacious even a small bathroom appears after the styling products, pictures and miscellaneous bathroom decorations are removed.
From there, you can freshen up the paint, replace that old shower curtain, add a new medicine cabinet on the wall, and even upgrade your faucet and shower head for very little money. With a little more money, you can also install a double sink or re-tile the floor.

4. Hot in the Kitchen
Renovating an outdated kitchen is practically a sure thing – as long as you don’t splurge on extravagant items like hand-painted Italian tile or built-in espresso machines. Instead, focus on the basics: replacing the handles on your cabinets and drawers, freshening up the paint, installing new flooring, adding a backsplash, and painting or re-facing your existing cabinets. You can also make a dramatic impact by installing new countertops and even replacing your appliances. All of these projects will go a long way to making a new buyer feel at home.

5. Add a Second Bathroom
Perhaps no improvement makes a bigger impact on your family’s comfort and your house’s appeal than adding a second bathroom. The number of bathrooms is always a big sticking point for potential buyers, especially families with two or three children.

Although adding a bathroom costs more than simply fixing up your old one, it also increases the value of your house more. Plus, having that second bathroom may help you sell your house faster than if it only has one, which is an important point to consider in today’s market. So, if you have a house with roughed-in plumbing just waiting for you to take the initiative, you may want to consider adding that second bathroom you’ve always wanted.

However, if your house doesn’t have roughed-in plumbing or floor plans that called for a future bathroom, you’ll definitely want to consult a Realtor to discuss how much a second bathroom will add to your home’s value. After all, if you have to start moving walls and re-plumbing your house just to add a bathroom, you may find that your time and money are better spent on a handful of smaller projects that will ultimately add more impact.

Plan Ahead and Avoid Headaches
Overall, the best advice about adding value to your home is to start small, work your way up, and always plan ahead. You don’t want to get halfway into a renovation only to find that you have to update your entire electrical system or that your time and effort was wasted on a renovation that doesn’t add as much value as you thought. With a little planning and prioritizing, you can make your house more comfortable and valuable with very little time and money!

Aware and prepared buyers help boost Western Washington home sales during June
KIRKLAND, Wash. (July 6, 2009) Encouraging seemed to be a common response from brokers upon reviewing the June activity summaries from Northwest Multiple Listing Service. The report shows inventory continues to shrink, pending sales increased more than 19.5 percent from a year ago, and median prices system-wide are up 4.4 percent since January.

The positive movement in our real estate market year over year is really very encouraging, remarked Ron G. Sparks, managing vice president of Coldwell Banker Bain. Compared to 12 months ago, the Puget Sound region has nearly 7,000 fewer homes listed for sale, and nearly 1,200 more homes under contract, he noted, adding, In anyone’s book, that’s substantial improvement.

J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, echoed those comments. It’s encouraging to see that pending sales are at their highest since the credit bubble burst nearly two years ago, he stated. While the median home price is down about 9.5 percent from a year ago, prices have flattened over the past seven to nine months, he noted. This is an indication that the $8,000 tax credit is working and the market has reactivated itself in the more affordable and mid price ranges, Scott believes.

Northwest MLS brokers notched 7,733 pending sales of single family homes and condominiums (combined) in their 19-county market area last month. That’s a gain of 1,263 transactions from the same month a year ago, for a 19.5 percent increase. Seven counties reported jumps in pending sales of 30 percent or more: Cowlitz, Island, Kitsap, Mason, Pacific, Skagit, and Snohomish, with Kitsap County topping the list with its 55.6 percent increase.

Pending sales (offers made and accepted) in the four-county Puget Sound region (King, Kitsap, Pierce and Snohomish) rose more than 25 percent in June compared to the same month a year ago, increasing from 4,765 transactions to 5,693.

Closed sales and prices still lag a year ago, but prices are edging up since the beginning of the year. Brokers reported 5,146 closed sales of single family homes and condos during June, a dip of 4.3 percent from twelve months ago when they reported 5,379 completed transactions.

Viewed separately, the volume of closed sales of single family homes nearly equaled year-ago totals (4,463 closings last month, down from 4,516 for June 2008). Condo sales were off nearly 21 percent, dropping from 863 closings to 683.

The area-wide median price for last month’s closed sales of single family homes and condos combined was $285,000, a drop of 9.5 percent from the year ago figure of $314,900. In the Puget Sound region, the volume of closings nearly matched year-ago totals (3,885 versus 3,908), but prices are down about 10 percent. The median price for last month’s completed sales in the four-county area was $305,950; a year ago it was $340,000.

There is a definite upsurge in sales activity, from a pending sales perspective and a “lookers becoming buyers” perspective, observed NWMLS director Dick Beeson. Agents are reinvigorated that buyers can and will make decisions more today than any other time over the past 12 months, according to Beeson, the broker at Windermere Real Estate/Commencement Associates in Tacoma.

Beeson believes mortgage rates remaining low, declining inventories, and the recent stretch of warm, dry weather helped spur some buyers to act. He said the “word’ on the $8,000 tax credit has finally reached the streets, as more buyers come in aware, prepared and excited about taking advantage while the advantage is available. (The federal tax credit of up to $8,000 is available for qualified first-time home buyers purchasing a principal residence before December 1, 2009.)

House-hunters will find fewer choices than a year ago. MLS members added 11,410 listings of single family homes and condos to inventory during June, down 13.5 percent from the year-ago total of 13,187.

At month-end there were 34,278 single family homes and 7,039 condominiums offered for sale, for a total of 41,317 listings. That’s down 17.6 percent from a year ago when MLS members represented sellers of 50,143 properties.

Buyers continue to look for modestly priced homes, with first-time buyers accounting for about 40 percent of today’s market, according to estimates by Beeson.

Although the supply is plentiful with asking prices of current inventory ranging from $24,000 to $32 million, homes at the lower end of the price spectrum tend to be in short supply in some areas. In King County, for example, MLS data indicate less than 9 percent of the inventory of single family homes has an asking price under $250,000.

For condominiums in some submarkets, brokers report projects that demonstrate their market value are finding success. Sam Cunningham, managing broker and partner in Realogics Brokerage, which specializes in center city condominiums, believes prices are stabilizing and consumer confidence is improving.

Cunningham reports inventory levels in the downtown Seattle market have been declining for a year and there’s no new construction planned. He suggests timing the market for buyers may finally have more to do with preferred selection and interest rates than waiting for dramatic price drops.

MLS figures indicate the median sales price for condos that sold in Seattle’s downtown core last month was $449,450. That’s down about 8 percent from a year ago, but reflects four months of steady increases.

Commenting on the MLS report, Sparks, of Coldwell Banker Bain, remarked, If there is a downside, it might be that this improvement isn’t uniform across the region. As an example, he said his company’s Lynnwood office saw year-over-year closed sales increase 144 percent, while the Gig Harbor office reported a meager 4 percent gain.

Data show some neighborhoods are rebounding faster than others, Sparks observed. In what appears to be a transitional market, accurate neighborhood information is more critical than ever, so buyers, sellers and their agents really need to do their homework he emphasized.

Short sales continue to be a drag on prices and source of frustration for brokers and agents, according to Beeson. A National Association of REALTORS analysis revealed that distressed homes typically sell for 20 percent less than the normal market price, thereby drawing down the overall median price.

Many pending sales are yet to close because of short sales, which Beeson estimates take twice as long to close as a more conventional transaction. Many pendings have to be resold because the first buyer tires of waiting for the lender’s response.

Beeson also notes the next challenge will be reactions to the next round of foreclosed properties that are expected to come on the market in the next six months. He said there could be another dip in prices, but adds, I think we’ve been through the worst.

Northwest Multiple Listing Service, owned by its member brokers, is the largest full-service MLS in the Northwest. Its membership includes approximately 27,000 brokers and agents. The organization, based in Kirkland, currently serves 19 counties in western and central Washington.

We have started to get a lot more calls from our investor clients thinking about getting back into the market. This is certainly a great time to be thinking about buying investment real estate, whether it is a single family investment property, a condo investment or a commercial investment property such as an apartment or office space. Whatever your preference, all of these markets are signficantly deflated and investors will make great returns when the market rebounds. If you are interested in purchasing investment property, be sure to give us a call!

Here is a link to a good set of tools to help you with investment property!
http://www.trexglobal.com/partner/casey_sullivan