Seattle Housing Buzz

Today several members of the industry testified before the Senate Appropriations sub-committee on Transportation, Housing and Urban Development. Lennox Scott, CEO of John L. Scott Real Estate, testified on behalf on NAR’s proposal for FHA enhancements to streamline the agency and incentives to spur homeownership.

According the Scott, FHA’s volume has increased four-fold since 2007 and now has a 30% market share. To facilitate FHA’s capacity to handle business and provide more loans, NAR has proposed the following improvements to FHA:

1. Increase funding for staffing and technology enhancements. FHA currently has about 900 on staff. With its substantial growth NAR estimates that FHA is understaff by about 160 positions. FHA’s current systems on average are 18 years old and NAR recommends that FHA upgrades its systems such as replacing the 30-year old legacy-based COBOL mainframe systems with web-based applications.
2. Monetize the $8,000 first-time homebuyers tax credit to make it available for use at closing through a collateralized loan against the tax credit. This would allow buyers to use the credit towards a down payment. NAR estimates this could incent up to 500,000 first-time home buyers into the market place, particularly when combined with FHA’s low 3.5% down payment requirement.
3. Make the higher loan limits permanent in order to provide stability in the market. Currently, the temporary loan limit for King, Pierce and Snohomish counties is $567,500.
4. Ease financing for condominium purchases through reducing the owner occupancy percentage and removing the environmental review requirement. NAR recommends reducing the 51% owner-occupancy ratio for all condo developments, thus allowing more condo buyers access to FHA financing. Additionally, removal of the environmental review will help streamline the approval process. NAR recommends that FHA accept state and local environmental review findings in lieu of a federal review.

Of the four proposed improvements the one that’ll have the most direct impact for consumers is making the $8,000 tax credit available at the time of purchase. Though this would only apply to FHA loans, FHA is becoming one of the most prevalent loan options for first-time homebuyers.

Tags: , $8000 Tax Credit, FHA, First Time Homebuyers Tax Credit

Passed by both houses of Congress and expected to be signed by the president, The $787 billion American Recovery and Reinvestment Act of 2009 (aka stimulus bill) has several provisions aimed towards real estate and housing. Here’s a brief overview.

Tax Credit
The bill includes several modifications to the current $7,500 first-time homebuyers credit, which includes:

• Increases the credit to $8,000.
• Removes the pay back requirement, previously it was a 15 year zero interest loan.
• Has a recapture component if the home is resold within three years
• Is retroactive to January 1, 2009 and extends through November 30, 2009.

Tax payers who purchase a home this year can apply the credit to their 2008 tax return.

Comparison chart of the existing tax credit and the new $8,000 tax credit.

Higher Loan Limits
Another provision of the bill reinstates the higher loan limits that were available last year for FHA, Fannie Mae and Freddie Mac. For King, Pierce and Snohomish counties the loan limit is expected to increase to its 2008 level of $567,500.

Neighborhood stabilization
The bill provides for an additional $2 billion for the Neighborhood Stabilization Program. The funds can be used to purchase, manage, repair and resell foreclosed and abandoned properties. The homes are to be used to assist people earning less than 120% of the area median income.

Energy efficiency credits

• Through 2010, homeowners who make energy efficient improvements (purchase of a new furnace, windows and insulation) can claim a 30% tax credit (up from 10%) with a $1,500 cap.
• $5 billion weatherization assistance for low-income households.
• $2 billion for Section 8 efficiency efforts.

Tags: , $8000 Tax Credit, American Recovery and Reinvestment Act of 2009, First Time Homebuyers Tax Credit, Tax Credit

Recently, the 2009 conforming, jumbo conforming and FHA loan limits were announced.

Effective January 1, 2009 (1-Unit properties in King, Snohomish and Pierce Counties):

• Conforming loan limit: $417,000, unchanged for the 4th consecutive year
• Jumbo conforming loan limit: $506,000, currently $567,500 as part of the economic stimulus package which expires December 31, 2008
• FHA loan limit: $506,000, currently $567,500 as part of the economic stimulus package which expires December 31, 2008

The net result is that this will have, essentially, little impact except for buyers within the $506,000 to $567,500 price range. You’ll have till the end of the year to take advantage of the jumbo conforming loan rates and FHA loan programs.

In respects to FHA, effective January 1, 2009, the down payment amount will increase from 3% to 3.5%. So, there is a little incentive to save on upfront cash by buying before December 31st.

The $7,500 first time home buyer credit (aka interest-free loan) is still available through July 1, 2009.

Tags: conforming loan limit, FHA, FHA loan limit, FHA Loans, First Time home buyers credit

Ok, so I’ll weigh in here. Redfin recently announced their updated buyer-side performance statistics. Redfin agents, they say, beat other companies by negotiating 1.015% off the list price compared to .087%. Locally, Redfin states they’re able to negotiate more off the sales price for their buyers compared to all other agents, 98.89% to 99.38%. And, when combined with buyer rebates, they save their buyers $12,262 on average. This amounts to 2.45%…what they call the Redfin Advantage. Very commendable, indeed.

So, how did my buyers fare? Would they have done better with Redfin?

Over the same period, on average, I negotiated 2.76% off the list price saving my buyers $15,666 off the top. This figure does not include subsequent seller concessions such as seller paid closing costs (not wrapped into the sales price) and credit for repairs and so forth, which amounted to an additional $3,833, on average.

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Redfin buyers save on average: $12,262 which include the buyers rebate.

Ben’s buyers save on average: $19,499.

Tags: Buyers Agent, Redfin, Seattle Real Estate

The Washington Realtor Association recently surveyed home buyers throughout the state and compiled some interesting results.

Home buyers typically purchased a home within 13 miles of their current residence, averaging 1,790 sq ft with a median price of $300,000.

• Of homes purchased, 72% were single family dwellings and 25% were new construction.
• First-time buyers accounted for 41% of all homes purchased in 2007. They had a median income of $54,700 and their median age was 31 years. Nearly half of first-time buyers were between 25 and 34 years old.
• Of all buyers, the median household income was $73,900 with a median age of 38 years.
• Demographically, 63% were married couples, 21% single females, 6% single males and 9% were unmarried couples. (Don’t know who the other 1% were, though.)
• Seventy-six percent of buyers between 18 and 24 purchased a home out of a desire to own and establish a household.

Technology-wise, 73% of buyers began their home search online while 14% of first-time buyers and 22% of repeat buyers began their search by contacting an agent.

• However, 91% of all buyers utilized the internet at some point to search for homes.
• Interestingly, 37% reported they first learned of the home they purchased through the internet while 30% said their Realtor located the property for them.
• The typical internet searcher was 38 years old and visited a median 12 homes. The typical buyer who did not utilize the internet was 49 years old and only saw a median 4 properties.

Real estate agents assisted 85% of buyers who purchased a home.

• Though, buyers tended to search for homes for two weeks before contacting an agent.
• During the home search process, 72% of buyers indicated their agent was a useful information source.
• Of qualities important in selecting an agent, 98% of buyers stated honesty and integrity were most important. When asked to rate their agent’s performance on those qualities, 87% indicated they were “very satisfied”.
• And, 68% of buyers stated they would use their agent again.

Tags: Home Buyer, Home Search, Seattle Real Estate

One of the Puget Sound’s pre-eminent builders, John F Buchan Homes, is offering buyers a private jet membership with Flight Options. The membership package is valued at $100,000 and can be used to fly on one of several private jets operated by Flight Options.

“John F. Buchan has set the standard for luxury home construction, backed by a tradition of quality and design,” said Louis Howard, Buchan’s EVP. “We also pride ourselves on being innovative and going above and beyond the competition.”

Howard says that he not only sees the private jet membership as an incentive for buyers, but also as a means to take their lifestyle to an entirely new level. The jet membership campaign launched on December 7 and will run through January 31. Only full-price, non-contingent offers on completed John F. Buchan Homes priced at 1.2 million dollars and higher are eligible for the private jet program.

Buchan communities are predominately located on the Eastside and Bainbridge Island. For more information on Buchan properties, please visit www.buchan.com.

Tags: Buchan Homes, John F Buchan, John L Scott, Private Jet, Seattle Real Estate