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

This Labor Day weekend, the Ashworth Cottages at Green Lake took huge price reductions, ranging from $70,000 to $150,000 on few remaining homes. Ashworth Cottages is a newly completed development of 20 Craftsman-style detached and semi-detached 5-Star Built Green homes that are LEED Platinum certified.

MLS #28117831, 8015-B Densmore Ave N
Priced reduced $70,000 to $529,950 on 8/30/08
(total of $140,000 decrease since 7/08/08)

MLS #28149204, 8010 Ashworth Ave N
Priced reduced $80,000 to $789,950 on 8/30/08

MLS #28107563, 8021 Densmore Ave N
Priced reduced $150,000 to $649,950 on 8/30/08

Elsewhere in North Seattle, I’ve noticed a few significant, cumulative price reductions recently. Here’s a sampling that I’ve come across that have been reduced around $90,000 to $250,000 since they were originally listed. Those currently in pre-foreclosure have had the biggest drops.

MLS #28124184, 5810 56th Ave NE
Original List Price: $1,000,000 listed on 5/8/07
Current List Price: $750,000, now in pre-foreclosure

MLS #28124738, 9734 Sand Point Way NE
Original List Price: $800,000 listed on 7/17/08 (yes, 2008)
Current List Price: $550,000, now in pre-foreclosure

MLS #28123987, 827 NW 65th St
Original List Price: $588,000 listed on 8/30/07
Current List Price: $419,000, now in pre-foreclosure

MLS #28118563, 3718 NE 70th St
Original List Price: $950,000 listed on 2/1/08
Current List Price: $859,900

MLS #28015462, 10741 19th Ave NE
Original List Price: $839,900 listed on 1/25/08
Current List Price: $739,000

MLS #28096595, 10745 19th Ave NE
Original List Price: $845,000 listed on 9/27/07
Current List Price: $757,000

Tags: Price reduction, Seattle Homes For Sale