Monthly Newsletter

Have you had dreams of owning a home or know someone that does?  Jumping into the market as a first-time home buyer can be intimidating, especially within the wild ride of the Greater Seattle market; but there is hope! In an effort to illustrate the reality for first-time buyers in today’s market, my office got together and identified several sets of buyers who recently found success in today’s market and asked them to share their stories. We think this is timely because it is the time of year that we see a surge in inventory, which gives buyers more selection and opportunity. We have two stories to share below, but before we dive into those let’s defy some first-time home buyer myths.

First, many people think it is necessary to have a 20% down payment saved in order to make their first purchase. That is simply not true. While a 20% down payment can help make you more competitive and naturally lowers your monthly payment, it is not the only option. There are loan programs with down payments as low as 3%. Nationally, in March the average down payment for all loans was 10%. For first-timers it was 6% and repeat buyers it was 14%.

Second, expectations around credit scores can use some clarification as well. In March, the average credit score for all loans was 722. For Conventional loans it was 742 and for FHA it was 677.  If your credit needs some work, contact me and I can put you in touch with one of my preferred lenders that can help with credit repair. There is hope, as these numbers are just the average. You’d be surprised that you don’t have to have perfect credit to get the process started.

Lastly, the cost to be a renter is high, and the return on your investment is nothing. Recently, Rent.com did a survey of landlords and 88% said they planned to raise their rents in the next 12 months. In the same survey, 53% said they’d rather place a new tenant with a higher rent versus renegotiate and renew with a current tenant.  This sounds expensive and unstable. Owning leads to building wealth and putting down permanent roots.

Now that we’ve gained some clarity on what it takes to qualify in today’s market, let’s jump into these two honest, yet heartwarming local first-time home buyer stories.

 

Three Teenagers, One Bathroom, No More

This happy family of five just moved in to this house earlier this month. Two hard working parents, Brandy and Juan, with three teenagers were renting a 3-bedroom, 1-bath rambler in Edmonds and needed more space. It was time to make a move, and they had saved up a 3% down payment for a new home. Their budget was $400,000.

The first step in the home buying process was sitting down with their agent for the initial buyer consultation. This is where they discussed market conditions, desired features such as bedrooms, bathrooms and garage, and their budget. This lead them to explore which locations had the inventory that met their needs in order to stay within their budget. They had to marry these three key points – we like to call this the Triangle of Buyer Clarity. They then identified a few workable locations that had inventory which supported their desired features and their budget and went for it. This upfront research and partnership with their agent lead to Brandy and Juan finding success rather quickly, saving them money in an appreciating market, and a whole lot of strife.

They did this and ultimately bought a great house in Marysville which fit their budget, afforded them the features they desired, and still provided a manageable commute into Lynnwood. Their mortgage payment is higher than their rental rate, but relative to the size of their new home and their investment. Not to mention, they are now on the equity-building train and don’t have to worry about a landlord displacing them. Their monthly mortgage payment is fixed with an awesome low interest rate, and they are super happy to have more than one bathroom for their teenagers.

 

From North Seattle to West Seattle

First, how cool is this house? Super cool! That’s just how Paul and Ange feel about their newly purchased home in the Highland Park neighborhood of West Seattle. They just closed in early April and have already attended two neighborhood BBQ’s, received gifts from their new neighbors, discovered new parks and restaurants and, wait for it…shortened their commute.

Paul described his new neighborhood, Highland Park, as “magical.” Previously, Paul and Ange were renting in Wedgwood for six years and loved it there. So much that they could not imagine living anywhere else. When they started their home search in late 2017, they kept to strict search criteria of North Seattle because that is what they knew and it was comfortable. After making two offers and not prevailing because they were getting beat out on price, West Seattle was suggested to them as a more affordable option by their agent. The price corner of the Triangle of Buyer Clarity was making itself known as a challenge in North Seattle, so it was time to reconvene.  They sat down with their agent and evaluated the market conditions in West Seattle compared to North Seattle and applied them to their feature list and budget, and voila: West Seattle was calling their names. You see, they wanted a more turn-key home, and the homes they were encountering in their price range in North Seattle needed a lot of work.

They went out on a limb and traveled over the bridge to start looking at homes. They quickly saw the difference – the homes they were interested in were not, as Paul said, “scary”!  The anticipated repairs they would have to make to the homes they were able to afford in North Seattle were daunting and unexciting. They felt much more at ease with the features that the West Seattle homes provided within their price range. They just needed to get comfortable with the idea of moving to a different community.

When they found the house featured above, the leap of faith to West Seattle started to take shape. They prepped a strong offer, did their due diligence, and believe it or not, secured the home in a multiple offer situation at $805,000, which was not the highest price! They listened to their agent and wrote an offer with very strong terms as well as a very well-researched price.  Their agent kept in close contact with the listing agent and the Sellers chose their offer due to all of these factors.

Since moving in almost two months ago, they find themselves in a state of excitement and discovery every day. The community has been welcoming and conversations with neighbors and the random stranger at the grocery store come easily. Paul has observed a strong sense of curiosity within his new community as people are new to the area and are encouraged to build relationships and make discoveries.

In the end, Paul and Ange remained within their price range, bought a home with all the features they wanted, but made what seemed to be at the time, a compromise on location. That compromise ended up being, as they put it, magical! They have never looked back to Wegdwood with regret, only excitement over what their new neighborhood might bring.

The point of these two stories is to debunk the sentiment we hear from time to time, that first-time home buyers cannot find success in our market. With a well-laid-out plan strategically constructed by the agent and client, we are seeing many happy stories for first-timers. The end result is putting these new homeowners on the path to building wealth, growing thriving communities, and making their house their home.

If you or someone you know has dreamed about buying their first home, please reach out. It is my goal to help identify the opportunities that are available, the strategies that find success, and to educate along the way.

We are so fortunate here at Windermere to have Matthew Gardner help keep us informed on our economy and the real estate market.  Each quarter Matthew compiles in-depth research on counties from across Western Washington. Click here to download Matthew’s full Q1 report.

When you shop at a local Farmers Market, you’re buying outstanding freshness, quality and flavor. Knowing exactly where your food comes from and how it was grown provides peace of mind for your family. Plus, you’re supporting a sustainable regional food system that helps small family farms stay in business; protects land from development, and provides the community with fresh, healthy food. Find one near you!

Posted on June 6, 2018 at 5:10 pm
Casey Bui | Category: Newsletter

Monthly Newsletter

Why we are NOT heading for a housing bubble

Double-digit price appreciation has taken place for over 3 years now, so prices are up. Way up. In fact, in just the last year we have seen prices rise 14% year-over-year. When talking with people about our real estate market, the conversation often involves the question, “are we headed toward a bubble?” I get asked this question often, and I can understand why. With the Great Recession not too far back in our rear-view mirror, the fear that surrounds the bottom dropping out in our home values is real. The large price gains might seem familiar to the gains of the previous up market of 2004-2007, but the environment is much different, and that is why we are not headed toward a housing collapse.

Lending Requirements & Down Payments
Previous lending practices allowed people to get into homes with high debt-to-income ratios, low credit scores, risky loan programs, and undocumented incomes. They called this sub-prime lending. This led to the housing bubble bursting 10 years ago – because people received mortgages they were not equipped to handle. Borrowers were not properly qualified for their monthly payments, and with minimal down payments they had no skin in the game. There were also a ton of adjustable rate mortgages and interest-only loans, which created negative equity positions. In July 2007, the sub-prime loan products disappeared and literally became history overnight. This eliminated a large part of the buyer pool creating over supply, not to mention the foreclosures that followed due to these ill-equipped homeowners walking away. The combination of these two factors caused prices to plummet.

Conversely, in March of this year, the average credit score for an approved conventional loan according to Ellie Mae was 752. Banks are scrutinizing their borrowers much more thoroughly than in the past. Credit scores are only the start; solid documentation of employment, assets, and debt are all passed through strict underwriting standards before closing. During the days of sub-prime lending, banks were funding loans with scores as low as 560! This, coupled with many zero-down loan programs and the risky terms mentioned above, left many new homeowners with little to no equity. When you have little or no equity it is very easy to bail.

In addition to heartier credit scores, down payments have increased significantly. According to Attom Data Solutions the average down payment is 18%. To put this in perspective, the median price in Seattle Metro in the first quarter of 2018 was $775,000. 18% of that is $139,500! There is a marked difference in the connection to one’s investment with such a large amount on the line versus the common 0% down loans of the sub-prime era. When people have high equity levels they are not likely to abandon their home or miss payments.

Our Thriving Local Economy, Job Creation & Californians
According to Matthew Gardner, Windermere’s Chief Economist, it is forecasted that there will be 46,000 more jobs in the Seattle Metro area in 2018. This has created high numbers of residual migration into our area from other states. In 2016 there were 50,000 people that moved here, and 47,000 in 2017. Many of these new Washingtonians are former Californians, specifically from the Bay Area. Unbelievably, our prices are attractive to this group, as they can take a similar tech job here and make the same income with a lower cost of living. If untethered and up for a move, it’s a no-brainer.

The most influential factor that has led the run on prices has been low inventory levels coupled with high housing demand. It’s simply the concept of supply and demand. The growth of companies like Amazon, Google, and Facebook in our area has created increased demand, especially for homes closer to job centers resulting in shorter commutes. When you have increased demand and not enough homes to absorb the buyers, prices go up. Over the last three years we have easily seen a 10%+ increase in prices year-over-year. That is above the norm, and will slow down once inventory increases. That slowdown will be welcomed and it will not be a collapse in values or a bubble bursting.

Interest Rates
Interest rates are increasing, and it is predicted they will reach close to 4.95% by the end of the year. This will naturally curtail price growth because it will not be as cheap to borrow money, which will cause buyers to temper their pricing ceilings. Bear in mind, that an interest rate of 4.95% is still historically low, we’ve just been incredibly fortunate to be able to secure long term loans with minimal debt service. The average interest rate over the last 30 years is 7%.

I understand that the recent increase in home prices has been big and that it might remind you of the previous up market before the crash. I hope that digging into the topics above has shed some light on how it is different. I always welcome the opportunity to have a conversation about these hot topics and discern how they relate to you. As always, it is my goal to help keep my clients informed and empower strong decisions. Please let me know if I can answer any questions or help you or anyone you know with their real estate needs.

 

Tax Reform

Now that the 2017 tax deadline has come and gone it is time to think about how the new tax reform of 2018 might affect you next year.  A few notable items are the limited mortgage interest rate deduction capped at $750,000, limited property tax deduction capped at $10,000 and moving expenses can only be written off by members of the armed services.  Read the full article here and take notes, so you are prepared for next year’s tax season.

 

Windermere Foundation

Thanks to your continued support, the Windermere Foundation collected over $330,000 in donations in the first quarter of 2018. Fifty-eight percent of the donations came from individual contributions and fundraisers, while 42 percent came from donations through Windermere agent sales transactions. This brings our grand total to $35,869,961 raised since 1989. We are very close to reaching the $36-million mark! These funds go towards supporting low-income and homeless families right here in our local community.

Thanks again for all you do to support the Windermere Foundation. Together, we are able to make a difference for those in need in our local communities.

For the full first quarter 2018 report, please visit the Windermere blog, and to learn more about the Windermere Foundation, visit www.windermere.com/foundation.

Posted on May 3, 2018 at 5:41 am
Casey Bui | Category: Newsletter

Monthly Newsletter

What the Same House Sold for 3 Years Later!
Price Appreciation Case Studies in South Snohomish & North King Counties

18407 62nd Pl W, Lynnwood  •  3 bedroom  •  1,305 sq ft

 

Sold in September 2014

$315,000

 

Sold in July 2017

$450,000

 

$135,000 INCREASE IN HOME VALUE: 42.85%

 

17836 1st Ave NE, Shoreline  •  4 bedroom  •  2,917 sq ft

 

Sold in November 2014

$560,000

 

Sold in January 2018
$800,000

 

$240,000 INCREASE IN HOME VALUE: 42.85%

 

Since 2014, home values have grown by over 10% each year, resulting in a resounding 35% or more return in pricing. Above are some examples of actual homes sold in late 2017 to early 2018 that also sold in 2014, and that were not remodeled or significantly improved in between sales. These examples show the growth in home values that we have experienced over the last three years due to our thriving local economy. I pulled these examples to show you actual pound-for-pound market data versus the statistical percentages I often quote in these market updates. I thought these examples were pretty telling and quite exciting.

This phenomenon has been driven by a lack of available housing inventory and super high demand due to the robust job market in our area influenced by companies like Amazon. In 2017, there were 1,000 people moving into our area each week! According to census data, that trend is supposed to continue.

The large price gains might seem familiar to the gains of the previous up market of 2004-2007 that resulted in a bubble, but this environment is much different, which is why we are not headed toward a housing collapse. Previous lending practices allowed people to get into homes with risky debt-to-income ratios, low credit scores, and undocumented incomes. A large part of why the housing bubble burst 10 years ago was due to people getting into mortgages they were not equipped to handle, which lend to the eventual fall of sub-prime lending and the bubble bursting. Matthew Gardner, Windermere’s Chief Economist speaks to this topic in this video.

It is supply and demand that is creating these huge gains in prices. An increase in inventory would be healthy and would temper price growth. Many folks who have been waiting for their current home values to return in order to make big moves involving their retirement, upgrading homes, investing, or even buying a second home are well poised to enter the market. If you are one of those people, I hope these examples provide insight on the increase in home values and how they might pertain to your goals.

Potential buyers might shy away from the market due to affordability. While it is expensive to buy a home in the Greater Seattle area, the people that have become homeowners over the last three years have built some amazing wealth. Interest rates remain low, helping to absorb the cost of a home in our area. Last month, I wrote a Love Letter to Buyers which helped layout the advantages of participating in today’s market and how to be successful. If you or any one you know is considering making a purchase, it is worth the read.

As we head into the active spring and summer months, if you’d like me to provide you a complimentary Comparable Market Analysis (CMA) on your home, so you have a better understanding of your home’s value, I’d be happy to do that. This would be an important component in charting your 2018 financial goals, and what a great time of year to gather that information! It is my goal to help keep my clients informed and empower strong decisions.

 

 

Celebrate Earth Day with us! Bring all your sensitive documents to be professionally destroyed on-site by Confidential Data Disposal. Limit 20 file boxes per customer.

We will also be collecting non-perishable food and cash donations to benefit Concern for Neighbors Food Bank. Donations are not required, but are appreciated.

Saturday, April 21st, 10am – 2pm.
4211 Alderwood Mall Blvd, Lynnwood 98036

*This is a shredding-only event. Only paper will be accepted – no electronics or recyclables.

 

 

 

Spring Gardening Tips to Help Get Your Yard Flourish-Ready

It is approaching that time of year when April showers will start to bring May flowers, so no better time to get outside to start prepping the garden. First, one must get their hands dirty cleaning out the beds, tending the soil and trimming back plants to prepare for new plantings and fresh growth. For a complete list of Spring gardening tips, click here.

Posted on April 3, 2018 at 12:46 am
Casey Bui | Category: Newsletter

Monthly Newsletter

I hope your Valentine’s Day was a sweet one, but it got me thinking. I am often sharing with you the advantages of this market for home sellers, which is unbelievably positive. With that said, I thought I’d take some time to give the potential buyers in our marketplace some love, hope, and of course, data!

Dear Greater Seattle Home Buyer,

Let’s just be up front: buying a home in today’s market is not easy. Quite frankly, it can be a wild roller coaster ride with twists and turns; but remember, folks pay a lot of money and stand in long lines for roller coaster rides. Imagine the excited pit in your stomach as the cart clicks up to the highest point before you plunge down a steep drop, and the thrill of raising your hands up because you trust that you are going to be okay. These emotions also accurately reflect the feelings of today’s home buyer – it can be a wild ride! Let’s also note that many roller coaster riders return to the back of the line right after getting off. Home ownership is also a good exercise to repeat and is often the investment that leads to the most built wealth in one’s life.

So how does one ensure that they are not the Nervous Nelly who stands in line for over an hour, finally makes it to the front to be strapped in to the cart, but who then chooses to bow out? The one that sits on the sidelines watching others throw up their hands with a thrill in their eye; the one with that tinge of regret as their friends rejoin them back on hallowed ground to recount their adventure. Wow, this is getting dramatic! Here are a few tips to follow that will ensure that one can find success securing a home in today’s market and get on the equity building train.

Waiting is Even More Expensive
In 2017, the year-over-year median price gains across our region were strong. In fact, here is a little break down.

North Snohomish County: $371,000 up 13%
South Snohomish County: $508,000 up 14%
North King County: $715,000 up 14%
Seattle Metro: $710,000 up 15%
South King County: $405,000 up 13%
Eastside: $865,000 up 15%

The appreciation is for real and as each month ticks by, prices are going up. That is why it is incredibly important to have a plan and realistic expectations. In referring to the chart above, it is plain to see the affordability of each area. Buyers have had to get creative and honest with themselves regarding the city or neighborhood in which they land. Commute times are one of the biggest indicators of home cost. It is paramount to line your budget up with a realistic commute time and then dig in. Too often I’ve seen buyers tightly grip to the idea of an in-city commute, only to have it end up being a more suburban choice in the end. The months wasted trying to perform in a market that didn’t match their budget ended up costing them at least 1% a month, based on last year’s appreciation. Getting real saves time, money, and heartache.

Interest Rates are a’Rising
This aspect is actually one to pay very close attention to. We have been amazingly spoiled with historically low interest rates over the last five years. In fact, there is an entire generation of buyers who only know rates that have hovered from 3.5 – 4.5% – that is close to 3 points under the 30-year average! A good rule of thumb regarding interest rates, is that for each 1-point increase a buyer loses 10% of their buying power. That means that if you have a $500,000 budget and the rate goes up by a point, that you are now shopping for a $450,000 house if you want the same payment. Note, that shift does not take appreciation into consideration. Today’s rates have helped buyers bear the home prices in our area. It is predicted that rates will rise in 2018 by .5 to 1%.

Rents are High and Don’t Build Wealth
Seattle is now the 5th most expensive city to rent in the country according to the US Census Bureau. With rising rental rates, still historically low interest rates, and home prices on the rise, the advantage of buying versus renting has become clear for folks who have a down payment saved, good debt-to-income ratios and strong credit. Currently, the breakeven horizon (the amount of time you need to own your home in order for owning to be a superior financial decision vs. renting) in the Greater Seattle area is 1.6 years according to Zillow research.

Partner with a Broker Who Will Get the Job Done
A broker that has a process is key! It starts with an initial buyer consultation. I liken the buyer consultation to the seat belt you would wear on the roller coaster ride. When you go to the Dr. they start with your intake, check your vitals, ask questions, etc. The buyer consultation aims to unearth a buyer’s goals, research the areas they are interested in, address financing, and illustrate the challenges of the environment, so one can be successful. Time is money, and this consultation brings clarity, efficiency and trust. This upfront education coupled with a high level of communication and availability is paramount. The depth of the relationship will lead to success, and is the ingredient that enables a buyer to throw up their hands and take the thrilling plunge. It is hard to do that without a seat belt!

Get Your Finances in Order
Aligning with a trusted real estate professional is key, but so is aligning with a reputable and responsive mortgage lender. Getting pre-approved is the minimum, but getting pre-underwritten is a game changer. Finding a lender that is willing to put in the work up-front to vet credit, income, savings, debt, and all other financial indicators will lead to being pre-underwritten, which listing agents and sellers appreciate! Also, be aware that you do not always need to have a huge down payment to make a purchase work. Employment, assets, credit, and what you have saved all work into your ability to acquire a loan. I have seen plenty of people secure a home with 3-5% down. Education and awareness create clarity, and investing into understanding your financial footing equals empowered and more efficient decisions. Note that I mentioned “responsive”. This is a 24/7 market, and lenders who don’t work evenings and weekends can get in the way of a buyer securing a home. If you need a short list of lenders that fit this description, please contact me.

‘Tis the Season – Inventory is Coming
Have hope! This is the time of year where we see inventory climb month over month. There will be more selection, but bear in mind it is also the time of year that the appreciation push happens. If you are feeling 75-80% in love with a home, it is one to act on. You’re never going to “get it all”, so a willingness to focus on priorities will pay off, because waiting will have an expense.

If you or someone you know is considering a purchase in today’s market, please contact me. It is my pleasure to take the time to educate, devise a plan, and help buyers find success in a challenging, yet advantageous market.

 

 

Celebrate Earth Day with us! Bring all your sensitive documents to be professionally destroyed on-site by Confidential Data Disposal. Limit 20 file boxes per customer.

We will also be collecting non-perishable food and cash donations to benefit Concern for Neighbors Food Bank. Donations are not required, but are appreciated.

Saturday, April 21st, 10am – 2pm. EARTH DAY!
4211 Alderwood Mall Blvd, Lynnwood 98036

*This is a shredding-only event. Only paper will be accepted – no electronics or recyclables.

 

We are so fortunate here at Windermere to have Matthew Gardner help keep us informed on our economy and the real estate market.  Each quarter Matthew compiles in-depth research on counties from across Western Washington. Click here to download Matthew’s full Q4 2017 report.  Also, I recently hosted Matthew’s 2018 economic forecast for the Greater Seattle area and had it professionally recorded.  If you are interested in receiving access to view the entire presentation, please contact me and I’ll send it to you.

Posted on March 1, 2018 at 5:30 am
Casey Bui | Category: Newsletter