Real Estate Blog

Cash Cows !!!!

2007-02-11T10:11:00.000-08:00

Americans are continuing to treat their homes as cash cows according to a report released this week by Freddie Mac.
During the fourth quarter of 2006, 84 percent of new mortgages that were the result of refinancing were "cash out" loans. Cash out is defined as a new mortgage that has a contract amount at least five percent higher than the balance of the mortgage it replaced.
While the rate of "cash out" refinancings was down slightly from the 87 percent level reported in revised figures for the third quarter it still resulted in $70.7 billion in equity pulled out of American homes in a three month period. In the third quarter, refinancing "liberated" $80.2 billion in cash.
Refinancing itself accounted for 46 percent of all mortgage loans during the fourth quarter, up from 41 percent during the previous period.
Frank Nothaft, Freddie Mac vice president and chief economists said, "The share of mortgages that were for refinance rose in the fourth quarter as 30-year fixed mortgage rates came down to where they started the year. Falling mortgage rates encouraged some people to refinance to lower their payments for example if they had an adjustable-rate mortgage that was scheduled to reset soon, but the primary driver of refinance continues to be equity extraction."
That is demonstrated by another piece of information contained in the report. The median ratio of new-to-old interest rates was 1.06, that is, one half of borrowers who refinanced took out a loan that increased their contract rate by 6 percent or about three-eights of a percentage point.
Another Freddie Mac economist, Amy Crews Cutts, speculated that "many families found it cost effective to cash-out equity through a new first mortgage even though it raised their rate. With the prime rate at 8.25 percent, a home equity loan or line of credit based on that rate may not make sense if the financing need is large, like a major home improvement or college tuition payments and will be paid back over several years."
(Part of the willingness to accept a higher rate also may reflect a pre-emptive strategy; refinance that 5.2 percent three-year ARM with a 6.15 percent fixed rate mortgage before the ARM adjusts to 7 percent.)
Properties refinanced during the fourth quarter of 2006 had enjoyed a median house-price appreciation of 28 percent over the term of the original mortgage, down from 33 percent in the previous quarter. The median age of the old loan was 3.4 years, about one month older than in the third quarter.
Cash-out loans have consistently represented at least 80 percent of refinanced mortgages since the fourth quarter of 2005 and mortgagors have accepted larger interest rates on their replacement loans for the last four quarters. Both of these factors were last present in 2000 and 2001. In the intervening time cash-out loans represented as little as 33 percent of refinancing and the median ratio of new to old mortgages was more likely to be in the 85 to 95 percent range.

Sold homes in seattle

2007-01-24T16:18:00.000-08:00

IF YOUR HOME ISN’T SELLING...
Video your home inside and out. Watch the tape as if you were a buyer. Do you see: clutter, dirt, dead plants, weeds? A home that looks too lived in or not lived in, does not show well.Look at the listing price, visit other homes that are on the market in your neighborhood or your town that are like yours and get a feel for what people are asking. When the market is hot and your home has not sold in a month or two, consider lowering your asking price for a speedy sale.DO NOT stay in the home when it is being looked at by prospective buyers. Your presence makes it hard for the prospective buyers to talk openly with their spouse or agent.Offer a Home Warranty for the buyer. The cost is not much for an added incentive that may sway the decision.When looking for a Listing Agent, look for one with a proven track record in your area. Local Agents know their market and most times have a list of leads.Don’t be fooled by thinking that taking your home off the market during the cold weather or holiday season is a good idea. This is a time when there are fewer listings on the market and if buyers are looking they will look harder at your listing. It may be inconvenient for you, just let your agent know you will need a 24 hour notice for showings of your home.

Posted By:

Basem K. Alkaddah
Real Estate Professional
(206)-948-2186
bkhaled@skylineproperties.com

King County Condos appreciate strongly; studios lead

2007-01-23T17:26:00.000-08:00

How much do Puget Sound-area condominiums appreciate compared with single-family houses?
Are they significantly more affordable than houses?
Which size condo is a better investment around here: a studio or one with two bedrooms?
Questions like these have long intrigued condominium buyers, but no comprehensive answers were available because there had been no in-depth analysis of condo appreciation and supply.

Some of the condo results are surprising.
Take appreciation. Lore relegates condos to default housing, if you will, for people who can't quite swing a house purchase. But buyers apparently don't feel that way.
Demand has caused condos to appreciate handsomely, thank you.
Since 2000, King County condominiums have outperformed single-family houses two out of five years. And even when they haven't, their appreciation has been strong.
In 2005, for example, the county's single-family houses appreciated 16.3 percent per square foot. Condos climbed a healthy 13.5 percent.
Here's the kicker: Last year, the median price per square foot for condos in King County was $211 — or $4 more a square foot than houses in the county.
In the first six months of this year, condos in King County have appreciated 21.9 percent a square foot compared with the same period in 2005. That's slightly faster than the 19.7 percent that single-family homes appreciated in the first half of this year.
Who would have thought it?
And would anyone have thought that one-room studios would appreciate faster than every other condo size?
Last year condominium sales accounted for 25 percent of King County's total home sales, up from 22 percent in 1999.

Having all of downtown Seattle as an amenity obviously resonates with many owners. Last year, the area with the second highest appreciation — behind the Central District/Madison Park — was Belltown, where condos appreciated 23.2 percent.
But look at the annual average appreciation trend over the past five calendar years, and there's a surprise: Some areas south of the city — places people wouldn't necessarily think of as having a lot of condos — have appreciated significantly.
Among them are Burien (9.5 percent) Des Moines (8.3 percent) and Federal Way (8.7 percent).
That's on par with single-family houses in Bothell, Issaquah/May Valley and Seattle's Magnolia neighborhood, which all rose at an annual rate of 8 to 9 percent a year over the past five years.
Half of the eight cities in the southern portion of Snohomish County saw condos post double-digit appreciation last year. The leaders were Mukilteo (23.8 percent) and Edmonds (20.7 percent). Condos in those towns appreciated more than neighboring single-family homes.

Roughly three quarters of the region's condos are in King County. They run the gamut, from older, recently converted apartments to upscale downtown high-rises, such as One Lincoln Tower adjacent to Bellevue Square, which typifies a new trend: a hotel — in this case, the Westin — topped by condominiums.
Several such projects are among the 49 condo projects planned for downtown Seattle. Their units are expected to be priced from the $200,000s to more than $5 million.
The neighborhoods that now have more than 3,000 units each are Belltown, Kirkland, Federal Way and Capitol Hill/Montlake.
Those with less than 800 each are Kingsgate, Burien, Mercer Island and Kenmore/Bothell.
Belltown can boast the highest median condo price last year — $359,990 (for all size units combined). That was roughly the cost of a median-priced single-family house in Lake Youngs or North Greenwood last year.

But make no mistake: 2005's condominium prices were far cheaper, in general, than single-family prices, giving a boost to middle-income buyers in affordability-challenged King County.
A Times analysis of King County detached-home sales found that just nine of 86 areas throughout the county and one within Seattle were affordable last year to buyers earning $59,718, the county's median household income. Virtually no neighborhoods on the Eastside or in North Seattle were within reach.
Contrast that with condos.
Buyers whose household income matched the median could afford the median-priced condo in 32 out of the 41 areas in the Times analysis. Among them was Magnolia.
To afford that pricey neighborhood, buyers needed to earn $55,622, which supported the median-priced condo purchase of $245,000. For a house (median price: $578,500) the household income required was $131,336.
Condominium data for Snohomish County could not be closely matched with single-family home data because the geographical areas differed.

In the Seattle area, there are three main categories of condo owners: first-time buyers, often singles; empty nesters ready to downsize; and investors. They'll have a lot more to chose from in the coming years.

There is significant condo construction in Bremerton, Bainbridge Island, Everett, Federal Way, even Bellingham. Downtown Seattle is expected to add more than 8,000 units over the next four year!!!