Hood Canal Blog 2013-04-14 15:16:00

North Sentry Mini Storage on the North Shore of Hood Canal is Sold to a New Owner.

The North Sentry Self Storage was recently sold to a new owner, and will be upgraded with a more modern platform of services available to the marketplace.  Thomas Wolter was the Real Estate Broker who represented the Buyer, and is assisting the assimilation of the business model, as well as setting up effective 3rd party management.  For any questions regarding this post please contact Thomas Wolter at: tom@thomaswolter.com, or see the website: www.hoodcanalliving.com.

Hood Canal Blog 2013-04-14 01:54:00

Hood Canal Real Estate, Mortgage, and Economy - April 13th, 2013 - Linked to: www.hoodcanalliving.com.

Interest Rates Maintain Improvement: The recent rally in the bond markets halted a 3 month period when rates were generally increasing. This increase was caused primarily by the sense that profits were not available, in the short term, via increasing prices of bonds ( which causes a drop in rates ) as it had for years prior. Bond prices hit historic high points as the full effect of European fiscal melt down, a stubborn recession in the US and the Federal Reserve’s QE programs were in full swing. Interest rates started to increase when there was a sense of stabilization in Europe, hope was growing for a sustained recovery in the US and continued strong gains in the stock market. This drew investors out of bonds in to those riskier assets. For now the direction of interest rates seems to be moving in our favor. The reason for this is there are growing doubts that the US will have a strong recovery in our economy. Many are concerned about the affects of Obama Care on employment as businesses grapple with the higher costs associated with mandated health care. Market experts had speculated that the problems in Europe had just been swept under the rug and the reality that there are still significant problems there is back in focus. There is also a lot of attention being paid to when the Fed will end or slow down the QE program. For now it seems it will not end in the near future and this is lending support for lower rates. The phenomenon that is unique is the stock markets continue to rally as interest rates have fallen over the last two weeks. The current stock market rally is not seen, by many, as reflecting the overall economy but the profitability of US companies. The bond markets seem to reflect a view of the overall economy with the idea it will have a spring swoon as it did last year. Slowing economies usually benefit interest rates. For now, there seems to be room for more improvement in rates over the next number of months.

Industry News
"If we had not winter, the spring would not be so pleasant." Poet Anne Bradstreet's words may ring true for the seasons, but less so for some recent economic reports. Read on for the details and what they mean for home loan rates.

Retail Sales fell by .4 percent in March. This was below expectations and was also the largest decline in nine months. The rise in payroll taxes, which began in January, is likely a big part of the decline in spending. The report shows we may just see another economic malaise this spring, like we have seen the last couple of years.

Further evidence of this can be seen by the fact that the first read on Consumer Sentiment in April fell to 72.3, the lowest level since July. In addition, the National Federation of Independent Business reported that its business survey index fell to 89.5 from 90.8 in March, suggesting that the jobs market is somewhat deteriorating. In addition, the survey found that business owners are growing more pessimistic on the economy. The survey has not shown an upbeat report in five years.

In other important news to note, inflation at the wholesale level remains tame as the Producer Price Index dropped to its lowest point in ten months. Also, the minutes from the Fed's latest meeting were released and they noted that there has been a solid improvement in the labor markets–but this was before March's worse than expected Jobs Report.

What does all of this mean for home loan rates? Remember that weak economic news often causes investors to move their money out of Stocks and into safer investments like Bonds. This includes Mortgage Bonds, to which home loan rates are tied. Last week's poor economic reports, combined with continued uncertainty in Europe and tame inflation news, benefitted Bonds and home loan rates in the second half of the week.

The bottom line is that now is a great time to consider a home purchase or refinance, as home loan rates remain near historic lows. Let me know if I can answer any questions at all for you or your clients.

The NFIB Index of Small Business Optimism fell 1.3 points to 89.5,disappointing, but not a surprise given the current state of paralysis in Washington and the still mixed news on the economy. The Fed is lending the economy a trillion dollars, raising the value of its portfolio to unfathomable levels.  In spite of assurances by many, the impact of creating nearly $2 trillion in reserves that can be loaned out is disconcerting at best, terrifying to some.  The economy is hardly growing, but corporate profits are at record levels, an incongruity to most Main Street folk who see the Fortune 500 valuation hitting record highs while millions of small employers struggle to stay in business and tens of thousands have closed their doors. This is also leaving commercial vacancy rates at elevated levels.  Virtually no owners think the current period is a good time to expand.  Over 75 percent think that business conditions in 6 months will be no better or worse than they currently are. Aggregated, there are no plans to create new jobs in the coming months, although some parts of the U.S. will experience job growth and some sectors will create new jobs (housing and energy in particular).  But overall, it appears that there will be little growth coming from the small business. This is not a good outlook as half of the economy is in small business. As the world economy slows we may see a growing impact on big business.

Real Estate Miscellaneous Stats

King County House Prices Up 19% From March 2012:  We knew there has been a lot of pressure on home prices but March numbers are a real shocker. King County appreciation rates were not this high even in the heady days of the Real Estate Boom. With inventory down 40% from last year the tight supply of homes drove median values up to $392,000.00. Not only this number but, a 7% jump in prices from the previous month is also an indicator of what is happening in the market. Just how severe the shortage in homes listed for sale is can be seen in the stat that we have a 1 month supply of homes on the market. Four to six months is considered normal. Another surprising stat is 25% of all sales were cash as investors are still major factor in the markets. Most of the rest are placing 20 – 50% down payments. This is shocking Real Estate experts. An area by area look at the numbers is interesting. Seattle values rose 17% from last year with median values now at $462,375.00. Eastside values are up 17% as well to $552,415.00. West Seattle values jumped 30% to $365,372.00 which reflects the higher activity for ‘first time’ or affordable housing buyers. Unlike a couple years ago, the more affluent markets are not left behind. In the higher end West Bellevue market values are up 23% from last year with median value at $1.3 million. The question is how long can this run last? Most would say this is unsustainable but until inventories loosen up pressure will continue on valuations. With values moving higher more homeowners may be willing to sell and banks may introduce more foreclosed inventory to the market. Homebuilders are ramping up production but are limited by scarce land supply and some difficulty in finding laborers. What land is available is going to be in outlying areas such as Snohomish County. Their values were up 17% as well so there is pressure even in these markets.


Fannie and Freddy Extend HARP Refinance Program:  The program that allows underwater borrowers to refinance at current market rates is being extended by 2 years. The Home Affordable Refinance Program was extended until December 2015. So far 2.2 million refinance loans have been closed on this program. What they did not change is the June 2009 deadline for sale of the loan to Fannie or Freddy.


Crazy Tactics For A Crazy Market:  With many areas in the nation experiencing a frenzy not seen since the end of the Housing Boom, we are seeing agents suggest tactics that are unconventional. Inventory reductions in the hottest markets are down double digits and values are up. This is causing buyers to resort to drastic measures as competition is out in droves. For instance, the San Francisco Bay area has hundreds of shoppers showing up to reasonably prices listings. Some homes there have 30 to 50 bidding war participants. In some areas listing agents are limiting showings of homes to limited hours on the weekends to fan the demand flames.


Contingency Free Offer: Home buyers waive their normal contractual protection of inspecting a home for flaws or deferred maintenance. Many sellers aer                  wary of buyers who want to use inspection reports to renegotiate the purchase price downward based on less than perfect conditions in the home. With an abundance of buyers sellers do not want to bother with these nuisances and risk taking the home unavailable to other buyers. Other buyers are waiving financing contingencies. This can be risky unless their lender is reliable in their Pre- Approval review.


      Escalation Clauses: This is another throw back from the past. Buyers put a clause in their offer that states they will go a certain dollar amount above the    seller’s best offer. There is usually a cap but some are even excluding this protection. A buyer needs to be aware that appraisals often cannot keep up with rapidly rising sale prices and need to be prepared to put more down payment that the minimum of the sale price.


      Low Ball Listings:  This is play on psychology that is used in the best auction environments. Bidding can create a frenzy with buyers paying more than market value. Some astute agents are listing homes below fair market value with the idea that savy buyers will notice. They hope the attention will create a bidding war with the end price being higher than market value. Sellers in this situation need to be aware of any appraisal contingencies in the contract as this could remove their benefit for this strategy. They should also look for buyers who can place more down payment than the minimum required by the chosen loan program.

 Loan Program Of The Month. 3% Down Conventional Loan: I have many clients that come to me with the idea that they need to use an FHA loan when they have only enough money for a 3.5% down payment. FHA is a great program as it allows for lower credit scores with no rate penalties, higher debt ratios and a greater ability to accommodate derogatory credit history. The down side to FHA is the mortgage insurance premiums can be much more expensive than private insurance and it must be retained for a longer time period. For borrowers with good credit history and higher scores a better option is often a 3% down Conventional loan. Our products offer allowances for gift funds and one has lower MI coverage costs. This option also allows a borrower to choose between single premium or monthly MI. This can give a significant reduction in monthly payment and help a borrower qualify. Please have your client call for a consultation on which option is best for them.

Hood Canal Real Estate, Mortgage, and Economy - April 13th, 2013 - Linked to: www.hoodcanalliving.com.