Tri-Cities Real Estate Market Update – Second Quarter 2013

Posted on September 17, 2013 by Jessica

The second quarter (plus July) numbers are available from the MLS. Our second quarter number of homes sold is up significantly over 2012 with 893 homes sold in 2013 versus 815 in 2012. The number of homes on the market has also decreased (1392 homes on the market in July of 2013 versus 1456 homes on the market in July of 2012), meaning demand for the homes that are on the market has increased. An increase in demand results in an increase in price. Comparing July of 2012 versus 2013, average sales prices are up 2.6%.

The number of homes under contract is also up over last year significantly. Comparing July 2012 versus July 2013, the number of homes under contract have increased 26.2%. The first seven months of 2013 pendings were up an average of 13.48%.

According to the Tri-City Development Council, between the 2010 Census and 2013 estimates, the population has increased in this area about 5,000 per year. Remember, people need a place to live!

Rising Interest Rates and Homeowners – What You Need To Know

Posted on September 4, 2013 by Jessica

According to Bankrate.com, 30 year mortgage interest rates were at 4.74% week before last from 4.57% the week before) and are up 1.5% since the lows hit in December of 2012. This is also higher than one year ago when mortgage rates were 3.91%.

While this may not seem like a significant increase, it can have an impact on buying power. For example, on a $200,000 loan, the change in interest rates from 3.91% to today’s 4.74% is $98 more per month or $35,280 over the life of the loan.

Interest rates are expected to continue to rise which has caused some buyers who were previously on the fence to get into the buyer pool now to the delight of sellers. If you have been considering selling your current home and moving to something larger, in a better location, or something with higher-quality finishes, this would classify you as a “move-up buyer” and rising interest rates may affect you more than other types of seller/buyers. Here’s why:

First-time homebuyers don’t have a home to sell. Their buying power certainly ties into interest rates, but the financial impact is less when the loan amount is lower. For example, on that $200,000 loan example above, the difference was $98 more per month. However, on a loan of $140,000, that difference is lessened to $68 per month.

Downsizing buyers may be saving per month after downsizing as they may be using the equity in the more-expensive home they are selling to put a larger down payment on the home they are downsizing to. For example, let’s say a retired couple is selling their home they have lived in for 15 years. They will be selling it for $300,000 and have $100,000 in equity in it. They plan on buying a home for $209,000 and they are putting their $100,000 as a down payment, leaving them with a loan amount of only $109,000. The difference between 3.91% and 4.74% for this loan amount is $53 per month.

However, the downsizing buyer still needs to sell their home. As interest rates rise, the number of buyers who can buy their home at that price will shrink. Therefore, downsizing buyers do still need to watch rates.

The move-up buyer needs to keep a close eye on interest rates as they are considering their move. For example, let’s say the move-up buyer has a home they are going to sell for $200,000 and they want to buy a home that is listed for $300,000. In this case they have about $50,000 in equity in the first home. This means they will take out a loan of about $250,000 for their move-up property.

If interest rates go up as in the 3.91% to 4.74% example, this can affect the move-up buyer two-fold. First, the buyer pool for their home they are trying to sell will shrink, making it more difficult for them to sell (although it can be argued that the same thing will happen with the home they wish to purchase) Second, the amount they would need to pay each month for their mortgage will increase (by $122 per month!)

The bottom line? If you are thinking about buying or selling, interest rates will definitely have an impact on the home you can purchase and how many buyers are available to purchase your home if you are trying to sell. Move-up buyers should consider the number of buyers who are in the market right now, wanting to buy, as this could be a great time to sell and find a great deal at a good interest rate. But time is of the essence. Please call us to learn your options and what moving now versus moving later could look like. Please call Jessica at (509) 947-2230 or Jennifer at (509) 947-5670.

All mortgage examples are for a 30 year fixed rate mortgage and payment amounts include principal and interest only. Downpayments, homeowners insurance, property taxes, private mortgage insurance, closing costs, etc have not been factored into these examples.

What Do Buyers Want?

Posted on May 2, 2013 by Jessica

NAHB recently released their in-depth study, What Home Buyers Really Want which provides an overview of the most important features buyers are looking for in a home.

Nationally 65% of home buyers indicated their first priority in buying a home is to make sure the “living space and number of rooms” met their needs.

Three of the ten most-wanted features in a home were associated with energy efficiency:

94% wanted ENERGY STAR rated appliances (with 36% viewing these as a “must have”)
91% wanted an ENERGY STAR rating for entire home (with 28% rating this as a “must have”)
89% wanted ENERGY STAR rated windows (with 35% rating this as a “must have”)

Organization is also very important, with 93% of buyers wanting a separate laundry room, 90% wanting a linen closet in the bathroom, and 85% wanting a walk-in kitchen pantry. Garage storage space also scored high nationally.

In the Tri-Cities, we are also taking note of that trend, with buyers asking for larger garages and/or a separate shop for “toys”. “Smart storage” is the trend here locally. This includes everything from closet organization systems to garage organization systems and more!

Additionally, having a full tub/shower option in the master bathroom is important nationally.

Interestingly, nationally buyers are shying away from two-story spaces such as in the living room or family room because they are being viewed as “energy inefficient”. In fact, locally, we are seeing very high demand for single-story homes.

Locally, we are also seeing a high demand for “low maintenance” exterior and landscaping. Stucco or Hardiplank siding along with native landscaping is what buyers are attracted to. People are very busy and our cold winters and windy conditions can wreak havoc on wood exteriors or elaborate landscaping.

Finally, one trend we are seeing locally is buyers wanting some kind of “wow” factor in a home. Something that makes the property stand out. That might be a view, a backyard for entertaining, or an entry with punch. Also, trendy contemporary finishes such as concrete and glass are in-demand at the moment.

If you are thinking about moving or making some updates to your property, keep these “buyer must-haves” in mind and think about what you really want – or need! – in your place to call it home. Please call Jennifer at (509) 947-5670 or Jessica at (509) 947-2230. We can take a look at your “must have” list and help you determine the best way to get there!

Tri-Cities Real Estate Market Update

Posted on March 1, 2013 by Jennifer

The fourth quarter numbers are out from the Washington State Center for Real Estate Research. Median resale prices are up 8.3% over the previous year as are the number of sold properties.

	Resales	% change from last quarter	% change from last year	Median Resale Price	% change from last year
Benton County	3,100	+2.6%	+.3%	$189,300	+8.3%
Franklin County	640	+3.2%	+1.6%	$189,300	+8.3%

*Numbers are seasonally adjusted

The below lines represent the past year’s inventory and homes under contract. As the lines get closer together, this represents the housing inventory being consumed at a faster pace (in other words, demand for housing has increased). As the lines get further apart, this represents a surplus of inventory. As you can see, our inventory levels are lower than this summer, but are not quite as low as they were last January, but the number of homes under contract is a bit higher than the number of homes under contract last January.

Spring is right around the corner, and we are excited for things to come. If you have been thinking of buying or selling this spring, let’s set up some time to discuss your plans and create a strategy. Please call Jennifer at (509) 947-5670 or Jessica at (509) 947-2230.

Sources: http://wcrerdata.be.washington.edu/WSHM/2012Q4/Snapshot%204Q%202012%20v2.pdf and the Tri-City Association of REALTORS®.

Housing Affordability in the Tri-Cities

Posted on January 28, 2013 by Jennifer

According to the National Association of REALTORS®, 2012 was a record year in terms of housing affordability. The Housing Affordability Index is measured by the relationship between median home price, median family income and average mortgage interest rate. A higher index indicates the more purchasing power buyers have.

An index of 100 is the point at which a median-income household has exactly enough income to purchase a median-priced existing single-family home with a 20% down payment and 25% of gross income allotted for monthly mortgage principle and interest.

December’s Index numbers are not yet available, but at the end of November, it stood at 198.2 while it stood at 194 for the year overall – the most affordable on record since the Index was developed in 1970. This is an increase over 2011 when the index was 186 overall (which was the previous record).

Although the Federal Reserve has promised to keep interest rates low and wages are steady and moderately on the rise, interest rates will likely increase slightly in 2013, and with median home prices increasing, the National Association of REALTORS® has predicated the Housing Affordability Index will average 160 during 2013 – still the third-most-affordable year on record.

Here in the Tri-Cities, the median home price ending third quarter was $184,700, a 1.9% increase over the previous year. And although we have seen unemployment rates rise locally, the ratio between monthly income and mortgage payment remains better than most markets during the third quarter at 10.1% (nationally this ratio is at 13.8%).

This is still a great time to buy a house if you are a first-time homebuyer, or ready to upgrade to something bigger! With interest rates still low and prices have not increased significantly, buyers have more buying power than almost any other time in history. Couple this with bankers lightening their lending requirements in 2013 and it is a phenomenal time to buy. Give us a call to learn more about just how much home you may be able to afford. You may be surprised! Call us: Jennifer (509) 947-5670 or Jessica (509) 947-2230.

SOURCE:

http://www.realtor.org/topics/metropolitan-median-area-prices-and-affordability/data

Tri-Cities Housing Market Update

Posted on January 15, 2013 by Jennifer

The National Association of Home Builders/First American released their Improving Markets Index in January, and the Tri-Cities made the Index due to home price appreciation, an increase in employment, and an increase in building activity.

The Index measures improvements from “troughs” in building permits (measured from the U.S. Census Bureau), home prices (measured from Freddie Mac), and employment (measured by the Bureau of Labor Statistics). Each metro area has different trough dates depending on the lowest point in each of those individual areas. Cities that made the Index are those who have shown improvement from their trough over the last six months. Here is how the Kennewick metro area shaped up:

Let’s take a closer look at the new housing permit data from the U.S. Census Bureau. As you can see in the chart below, building permits for each month were higher than the previous month for each month in 2012 with the exception of April of 2012.

Total permits for 2011 were 1598 and increased by 28.84% in 2012 to 2059 (measured from January – November for both 2011 and 2012).

We have a few more months until spring when the new home construction season starts and we at Devoted Builders and Referred Real Estate are looking forward to being a part of it!

If a move is in your future this spring, we would love to help! Please give us a call – Jessica (509) 947-2230 or Jennifer (509) 947-5670. We would love to get you into the home of your dreams!

SOURCES:

Multi-Generational Housing Making a Comeback

Posted on January 4, 2013 by Jennifer

Studies have been done on it. Books have been written about it. And now homes are being built or remodeled to accommodate it. What is it? A return to the multi-generational household!

While the last few decades have seen a decline in multiple generations living under the same roof, that trend tends to be reversing as more and more adult children are moving back home and homeowners are taking in their aging parents.

Sharon Graham Niederhaus, co-author of Together Again – a book about multiple generations living under the same roof, interviewed over 100 families who are living in this manner. She noted, “The balance and proximity and privacy is the key to success,” and indicated that “independence” and “separate facilities” such as a kitchen, bathroom, and separate entrance are essential to living together in harmony.

For hundreds of years it was not uncommon for several generations to live together although the trend towards smaller family units began to take hold after WWII. According to USA Today, the number of multi-generational households in our country is currently the highest since the 1950s. The current trend is directly related to the economy, but many have noted the positive impact of having either their parents or adult children move back home.

PulteGroup Home Index (done by PulteGroup Inc, a national homebuilder) recently did a survey of homeowners with children 16-30. Fourteen percent indicated that they have one adult child who has moved back in with them and a whopping 31% expect that an adult child will return back home in the future. They also interviewed homeowners with living parents and found that 15% indicated a parent was already living with them and 32% expected that at some point they would be living with a parent.

In both cases, the number of multi-generational homes will double in the future if those numbers are correct. So how will current homeowners accommodate the additional people? Of the homeowners who were currently living with a parent or planning on it in the future, 72% planned on either renovating or purchasing a home with a floorplan that would work more effectively for the expanded family. 49% of the homeowners who were either living with adult children or planned to expected to renovate or move.

Builders across the country are beginning to see and provide floorplans which reflect this trend, and Devoted Builders is no exception. In fact, in 2011 the National Association of Homebuilders did a survey of builders and what they expected homebuyers would want in terms of new home amenities by 2015. They determined that 60% of custom new construction homes would have two master bedroom suites by 2015.

Here in the Tri-Cities, we have had several clients in the last few years who have had several generations living in the same household. We have seen adult children living with aging parents so they can help take care of them ensuring a higher quality of life and care. Also recently we have seen younger adults moving into Mom and Dad’s house to either go back to school or save money for a new house or simply due to loss of employment.

In our area most homes with multi-use spaces are in high demand, command higher prices and see a shorter time on market, especially if priced in a price range which is seeing a high turnover.

Our advice? If you are thinking you might need some extra space in the coming years, plan for it now. With interest rates and lower prices, it is a great time to either buy the home you will need in the future, begin planning for a remodel, or even begin thinking of building. We are here to help and advise. Please call Jessica a call at (509) 947-2230 or Jennifer at (509) 947-5670 – we would love to hear about your plans!

SOURCES: