National Headlines and Local Real Estate Markets

Do National Real Estate Headlines Actually Influence Local Markets?

This is a question we are frequently asked. Local real estate professionals know the best information for either buyers or sellers is local market data. However, we must realize that what happens in the national real estate market dramatically impacts regional and local markets. For example:

Are 30 year mortgage interest rates in North Dakota under 4% because of what happened in the their market over the last few years?

Of course not. They benefit from lower rates because of what happened in the national economy (if not the world economy).

Buyers all over the country are concerned about the reports of distressed properties about to come to market and what impact they will have on house values. The truth is only a handful of states will be adversely affected. However, if overall consumer confidence is shaken, every market is impacted. This is why it is important that you work with a real estate professional that understands three things:

  1. What the national headlines are saying and why they are saying it

  2. What effect the issue may or MAY NOT have on your local market

  3. How to simply and effectively explain both of the above to you

Agents who just ignore national headlines are hiding their heads in the sand. Agents who use the headlines as scare tactics to unfairly influence the actions of their customers are engaging in unethical behavior. Agents who take the time to keep abreast of the national real estate issues and are patient in explaining how these issues will impact you in the local market are true professionals.

The first two types of agents could cost you dearly. The last group will maximize the outcome of your real estate transaction – both personally and financially.


14 Post-Recession Real Estate Terms, Translated

By now, you’ve probably heard the age-old rules of thumb about translating home listings from real estate lingo to plain English: ‘cozy’ = tiny, ‘needs TLC’ = needs massive repairs, and ‘all original details’ could mean beautiful moldings or moldy linoleum, depending on the home.

Almost everything about the real estate market has changed over the last few years, though, so I thought it may be time to update the real estate lingo decoder that accounts for those changes in the market.(That’s a picture of Ralphie getting his decoder ring in the mail, by the by.)

To that end, here are 14 line items of real estate jargon, divided into 2 buckets and decoded for the post-recession house hunter.

Bucket #1: Transaction signals. Distressed properties – foreclosures and short sales – make up about a third of the homes currently on the market, and these transactions have their own unique flow, timelines and challenges compared with “regular” equity sales. So, it only makes sense that listing agents have developed a set of abbreviations to brief prospective buyers on what they can expect and should be prepared for if they make an effort to buy such a home, with just a glance at the listing:

1. REO: Real estate owned by the bank/mortgage servicer, this acronym refers to homes that were foreclosed and repossessed by the former owner’s bank. It also signals that buying this property will involve doing a deal with the bank; possibly dealing with a different escrow timeline, offer process or contract forms than a non-REO sale; and almost always taking the place in as-is condition, among other things. Oh, yeah – and it might also involve one more thing: a great deal.

2. S/S, Subject to bank approval: What once stood for stainless steel is now being used to describe a short sale – a property whose seller anticipates will net them less than they owe on the home. Short sales are often described as “subject to bank approval,” which simply points out the obvious truth about these transactions, that the seller has very little control over whether the bank will allow the transaction or what price and terms the bank will approve of, and that the transaction might very well take the better part of your natural life could take 6 months or longer to close. Talk to your agent for more details about short sales, and to determine how you can tell the success-prone short sales from those that are less likely to close.

3. Pre-approved short sale: Many knowledgeable agents say no short sale is truly “pre-approved” unless and until the bank looks at a specific buyer’s offer and the seller’s financials at the same time, but some listing agents designate a short sale as “pre-approved” when a previous short sale application was approved at a given price, but fell out of contract for some other reason.

4. Motivated seller: This is a perennial term in listing parlance, but against the backdrop of the current market, translates to something like, “Have mercy on me.” I kid – this phrase often signals a seller’s flexibility in pricing and/or urgency in timing.

5. Coveted: In a word, “expensive.” No, seriously, even on today’s market, many locales have a neighborhood (or a few) which have been relatively recession-proof, have been fairly immune to the foreclosure epidemic and have seen home values continue to rise. If you see the word ‘coveted’ in a listing, chances are you’re house hunting in that sort of neighborhood, or there’s something about the individual property the home’s seller is trying to position as unique and desirable, as compared to competing listings (i.e., the view, location of the lot, or floor plan).

6. BOM, often accompanied by “No fault of the house:” Homes go in and fall out of escrows on today’s market constantly, often due to things the seller has no control over. BOM indicates a home that was in contract to be sold, but is now “Back on the Market.” “No fault of the house” may describe a situation in which the buyer lost interest in the home after a long short sale process or failed to get final loan approval, as contrasted to a situation in which the home’s inspection turned up deal-killing problems or the property failed to appraise at the purchase price.

7. Not a short sale, not a foreclosure. Sellers on “regular” equity transactions are often more negotiable on items like price and repairs, and are certainly able to close the transaction (i.e., let the buyer move in) sooner than sellers of REOs and short sale properties. Some also pride themselves on having maintained their homes in better condition than the distressed homes on the market. For buyers that seek quick certainty and closure, non-distressed homes can be especially attractive.

Bucket #2: Show Me The Money. The government’s role in financing homes has grown exponentially over the housing recession, so the alphabet soup of government housing and home financing agencies, their guidelines and programs is now more important to understand than ever.

8. OO/NOO: Owner-Occupied and Non-Owner Occupied – You’ll see this on listings in two different ways. First, the vast majority of home loans must comply with government loan insurance guidelines, including guidelines around how much of a condo complex must be owner-occupied (i.e., 75 percent, minimum, in most cases). Also, some bank-owned property sellers will consider offers from owners who plan to occupy the property if they buy it as much as a week or 10 days before they will look at NOO or investor offers.

9. FHA: Short for the Federal Housing Administration, which backs the popular 3.5 percent down home loan program. FHA guidelines also include somewhat strict condition and homeowners’ association dictates, so if a home’s seller notes that they are not taking FHA loans, they might be saying that the property has condition or other issues which disqualify it for FHA financing.

10. Fannie, Freddie: Fannie Mae and Freddie Mac, federally controlled company/agency hybrids that now back most non-FHA (conventional) home loans, and thus provide the guidelines most Conventional loans must meet, including guidelines around seller incentives like how much closing cost credit a buyer can receive.

11. DPA/DAP: Down-Payment Assistance or Down-Payment Assistance Program

12. FTH/FTB: First-time homebuyer/First-time buyer – cities, states and large employers like universities tend to be the last bastion of these programs which offer mortgage financing or down payment assistance, usually to people who have not owned a home in the relevant city or state anytime in the preceding 3 years.

13. HUD: The federal department of Housing and Urban Development, which governs the guidelines for FHA loans, acts as a seller of homes which were foreclosed on and repossessed for non-payment of FHA-backed loans, and publishes the Good Faith Estimate and settlement statement forms every buyer and borrower will be provided at the time they shop for a loan and close their home purchase, respectively.

14. HFA: Short for Housing Finance Administration, this acronym refers to a loose body of state
and regional agencies which offer an array of financing and counseling programs that varies by state, from down payment assistance for first time buyers to the Hardest Hit Funds that offer foreclosure relief assistance and principal reducing loan modifications to unemployed and underwater homeowners in the states hardest hit by the foreclosure crisis.

I’m here to help – 209-713-3244 or email me.

Senate backs plan to help Americans buy homes

first-time-home-buyers-7WASHINGTON — The Senate on Thursday backed a measure to help bolster the housing market by making it easier for people to afford a home in wealthier neighborhoods.

The Senate voted 60-38 to attach the proposal to a spending bill that the chamber will consider later this year. It would restore the size of the loans the government buys or insures to a maximum of $729,500 from the previous cap of $625,500.

The cap, known as the "conforming loan limit," determines the maximum size of loans the Federal Housing Administration and the government’s mortgage buyers, Fannie Mae and Freddie Mac, can buy or guarantee.

The higher loan limit expired at the end of September and was touted as one of the Obama administration’s short-term plans to shrink the government’s role in the mortgage market.

But with the housing sector hurting the country’s economic recovery, lawmakers and the administration are looking for solutions.

"Getting our housing market moving again is one of the most important tasks facing the country," said Robert Menendez, a Democrat from New Jersey who introduced the bill amendment.

The majority of Senators agreed that the lower loan limit was making a weak housing market even weaker. "It makes it harder for middle class homebuyers to get credit when credit is tight," Menendez said.

It is unclear what will ultimately happen to the provision, given the deep divisions within the Democratic-led Senate and Republican-controlled House of Representatives. It would have to pass both chambers before President Barack Obama, a Democrat, could sign it into law.

Republican Senator Richard Shelby said the measure would help homebuyers who "do not need federal subsidies." "This is not a good use of taxpayer dollars," he said.

Republicans in the House have been trying to quickly unwind Fannie Mae and Freddie Mac, which were seized by the government at the height of the financial crisis and now back the bulk of the mortgage market. But the administration has cautioned against removing the government’s support before the housing sector starts to stabilize.

Copyright 2011 Thomson Reuters

Most dramatic rise in multi-generational homes in modern times


Multi-generational housing on the rise

In 2010, it was reported that Realtors were seeing a rise in requests for multi-generational housing, a trend that increased this spring and according to the Pew Research Center, the most dramatic increase in the number of Americans living in multi-generational homes in modern history is upon us.

With one in ten Americans unemployed and even more underemployed, the stigma that once surrounded an adult moving back in with their parents is diminishing as the recession continues to plague American wallets and many flock to multi-generational living as a means of avoiding poverty.

The number of Americans living in multi-generational households has been rising slightly since 1980, but the multi-generational household population shot up most dramatically between 2007 and 2009, increasing from 46.5 million to 51.4 million.

Will this tide turn soon? Probably not…

According to Pew, “The current surge in multi-generational households is linked to the economy. The unemployed, whose numbers are growing, are much more likely to live in multi-generational households—25.4 percent did in 2009, compared with 15.7 percent of those with jobs. The ranks of the unemployed swelled by 7.2 million from 2007 to 2009, and the typical spell of unemployment in the Great Recession was the longest in four decades, adding to the financial strain on those without jobs.”

One in four of Americans aged 18 to 24 and one in five aged 25 to 34 reported moving back in with their parents and with the highest unemployment rate of Americans aged 18 to 29 seen since Nixon was in office, making the prospects unlikely that this age group will move out of relatives’ homes in the near future.

“While saving money is certainly an incentive for buying a home that accommodates multiple generations, the benefits go beyond just financial reasons,” said Diann Patton, Coldwell Banker Real Estate Consumer Specialist. “With two or three generations living under one roof, families often experience more flexible schedules, quality time with one another and can better juggle childcare and eldercare.”

If you want to know more about properties that would benefit this lifestyle, call or text me 206-713-3244 or email

America's Top Cities: Cheapest Real Estate In The World?


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Should You Challenge a Your Property Value?

clip_image001They say nothing is certain in life but death and taxes. When you’re a homeowner, that statement includes property tax–and potentially paying more of it if your property’s value is re-assessed by the county auditor’s office.

While counties vary in how and when property values are re-assessed, most have a process that takes place at least every five to eight years. You’ll know it’s underway when you receive notification from the county auditor’s office by mail. If you’ve been paying taxes on the inflated home values that dominated the market before the housing bubble burst, your notification may actually lead to a lower tax payment.

Nevertheless, despite the continued lull in the housing market’s recovery, some homeowners are receiving news from their county auditor that property values are slated for an increase. As a result, property taxes go up, too. Here is an explanation of your options if you are notified that your home value has been reassessed to an amount higher than what you believe the property is worth:

clip_image002Your Options

All counties allow the option for homeowners to react to reassessed values, whether up or down.  Start by doing a little sleuthing of your own, and use your county auditor’s website to research the home values of similar properties in your neighborhood (this information is free and public record). Gauge the “going rate” in your market by researching comparable home sales in your neighborhood, I’m happy to help with an analysis. You can go here to sign up for an account on my site.

Once you’ve gathered real value data, compare it to the new figure your country auditor has determined—and keep in mind that short sales and foreclosed property figures are typically not considered as a valid form of value comparison. If you still feel confident that there is a discrepancy between the “real” and reassessed value of your property, the first step is to understand how the appraisal process works, and the potential costs that it carries.

Unlike the home inspection that was conducted when you bought your property, that appraisal is actually based on a math-appraisal technique using statistics-based evaluation models, and at times, walking audits in a neighborhood. The appraiser will likely never see the inside of your home in determining the appraised value, but instead bases the figure on a variety of data points like square footage, county information, and the other fees that accompany a home sales transaction, like tax and title, real estate and broker fees.

When considering challenging a property reassessment, using a simple cost-benefit analysis approach, much like you would when considering whether or not to refinance a property.

Costs and Savings to Consider

clip_image003Start by figuring the difference between what you feel the value of the home is, versus the reassessed value proposed by the county. For example, if your home’s proposed “new value” is $300,000 but you believe that it is worth $225,000-there is a sizeable discrepancy of $75,000.

Counties use a “millage rate,” or the amount per $1,000, to calculate taxes on property. To analyze your unique situation, you’ll need to identify the exact millage rate for your area. For the sake of example, assume that a millage rate of two percent for the above scenario. The $75,000 discrepancy in value would lead to an annual property tax increase of about $1,500, if the homeowner chooses to accept the reassessed value. You should also consider any special exemptions that you qualify for, such as homestead exemptions, or owner-occupied exemptions, which vary by homeowner situation and location.

Once you’ve run the basic numbers, consider how long you plan to live in the property to determine whether the proposed new amount is worth challenging. In the scenario above, a homeowner who intends to live in the home for the next five years would potentially pay about $7,500 more in property taxes.  If you decide to move forward once you’ve considered the long-term costs, the next step is to seek a qualified, licensed appraiser.

A typical appraisal fee is around $400, and could potentially be higher for complicated properties, like those with pools or located on a waterfront. I have a few appraisers whom I trust, and understand that the property is being appraised because of a new county auditor value.

If you do intend to sell in the next few years, it’s also important to understand that your property value as determined by the county won’t play much of a role in terms of your sale price. Should you contest the value and win a lowered home value with the auditor, but your neighbors accept the higher value, you won’t be “haunted” by the lower value down the road. As your real estate professional I recognize that there are a lot of inaccuracies in the process, and will use many data points to determine the fair market value of your home.

Let me know how I can help. Call me at 206-713-3244 or email me:

Are American homeowners leaving money on the table? [Interactive infographic]


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Mortgage rates are still at near-record lows, with 30-year fixed-rate loans averaging 4.09% (with an average 0.7 point) for the week ending Sept. 22, 2011, while 5/1 ARMs averaged 3.02% with an average 0.6 point, according to Freddie Mac. And many American homeowners are hoping to take advantage of those rates by applying to refinance their mortgages. In fact, the vast majority of recent mortgage applications have been applications to refinance: 78% for the week ending Sept. 16, 2011, according to the Mortgage Bankers Association.

That’s why it may come as a surprise that many homeowners are still not taking advantage of those savings opportunities. And we’re not talking about those who do not qualify to refinance (the 23% of homeowners with a mortgage who owe more to the bank than their properties are worth, for example). Credit Sesame recently analyzed data from its user base and found out that, on average, homeowners who would qualify for a refinance based on their credit profiles, income and the equity in their homes, are foregoing thousands of dollars in savings over a 10-year period: from an average of $38,387 in Nevada to an average of $97,170 in New Jersey.

In this interactive infographic, based on Credit Sesame data, we show you the average savings homeowners could reap over a 10-year period if they refinanced their mortgages, as well as average property values and homeowners’ average monthly debt payments (including mortgage, car and student loans, credit card debt, and home equity loans or lines of credit).

America’s Housing Report Card: Where does your state rate?


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San Juan County has most expensive Washington homes

San Juan County has the most expensive homes in Washington, among all the state's counties.

Puget Sound Business Journal by G. Scott Thomas , American City Business Journals

San Juan County has the most expensive homes in Washington, among all the state’s counties.

Among all the counties in Washington state, San Juan County has the most expensive homes. The median home price there (half cost more, half cost less) is $487,500.

That’s the 39th highest median price among all 3,143 counties in the nation, according to the U.S. Census Bureau’s American Community Survey. In King County, where Washington state’s second most pricey homes are located, the median price of a home is $398,600, the 68th highest price in the country.

The county with Washington state’s cheapest homes is Garfield County, where the median house price is $113,500, which is No. 1,322 on the list of all U.S. counties.

Where are the nation’s most expensive homes?

That would be Nantucket Island, a playground for the well-to-do in Massachusetts. Its status is confirmed by housing values.

The typical house in Nantucket County, Mass., is worth more than $1 million, according to the latest figures from the bureau’s survey. The median value of homes on the island is officially listed as $1,000,001, which is as high as the ACS goes. The actual figure is probably higher.

Nantucket is the only U.S. county with a median house value expressed in seven digits. The runners-up are Marin County, Calif. (a San Francisco suburb), at $880,000, and New York County, N.Y. (better known as Manhattan), at $800,400.

Another 31 counties — a mixture of affluent suburbs and upscale resort areas — have median house values between $500,000 and $800,000.