Housing Market Lifts Off From the ‘Bottom’

off the bottomRecent housing indexes have shown single-family home prices are on the rise, providing more evidence that the “bottom” of the market is already behind.

"We’re wiping out just about all of the decline,” Joel Naroff, chief economist at Naroff Economic Advisors, told NBC.com about recent housing data showing home prices inching up. “It indicates the market has turned the corner on the pricing side.”

Some recent housing indexes suggest that the “bottom” of the market was reached in January 2012. Since that time, housing prices have been picking up in many housing markets.

But "the turnaround in home prices was unexpected," says Patrick Newport, an economist with IHS Global Insight. "The conventional wisdom in February, following that landmark agreement [of the $26 billion mortgage settlement with the nation’s five largest banks], was that we would see a surge in foreclosures of some size that would lead to lower home prices. This surge never materialized and home prices have turned.”

Newport points to several signs of a housing market on the mend. For one, housing starts are up, after reaching a low in the fourth quarter of 2011. Also, he says the FHFA monthly House Price Index shows a 3.7 percent increase in May year-over-year, which he notes is higher than inflation and “means that real housing wealth, a consumer spending driver, was also up.”

The increase in home prices is also leading to a fewer number of home owners who are underwater on their mortgages, owing more on their mortgage than their home is currently worth. The number of underwater home owners fell from 12.1 million at the end of 2011 to 11.4 million at the end of the first quarter this year, according to CoreLogic data.

Source: “Evidence Mounts that Home Prices Hit Bottom Last Winter,” NBC News

Is It 2007 All Over Again?!

back-to-the-future-deloreanMay of 2007 was a hot month for real estate, 7311 units went pending that month. May 2012, 7295 units went pending and was the second hottest month since then, just off the peak month of April 2011.

All of King county is crying for more inventory and median prices are creeping and in some areas leaping up! Area 530 saw an increase of nearly 20%. Countywide median prices bumped up 4.93% and Eastside 1.22%

Some outlying areas are not feeling the boost. As always real estate prices are neighborhood specific.

Multiple offers continue to be the trend while 48.25% of listings sold in the first month during April. Both buyers and sellers require preparation, not everyone is aware the bottom was hit last fall and most of the screaming deals are gone. Several sellers who could not sell last year or in 2010 have been pleasantly surprised with quick sales this year enabling them to move up.

June sales may tick down in units, typical most years but the current pace does not feel typical so stay tuned.

  Residential Condo

Current Residential Active Eastside/King County Listings



New Eastside/King Listings in The Month



% of change in Active Listings 2011-2012 East/King



Pending Eastside 2012

1012 +25.71%

291 +21.25%

Closed Eastside 2012

651 +19.01%

222 +18.72%

Closed King 2012

2056 +24.3%

562 +24.89%

Median Sales Price Eastside/King



% Change in Median Price Eastside/King

1.22 /4.93

1.1 /-2.33

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Good News: Interest Rates Will Remain Low

trends pics3.5 % Down Payments and Jumbo Loans Available

This is a great time to be looking for a new home. Historically low mortgage interest rates will remain low for the near future. Those low interest rates keep home purchases affordable, which is good news for buyers and sellers.

With the August United States’ debt ceiling crisis behind us, many people are starting to become more confident about buying or selling their homes.

Interest Rates

In early August, the Federal Reserve pledged to maintain historical low interest rates for another one to two years. Most likely, when the Fed’s pledge ends, interest rates will have to increase. However, we don’t anticipate a significant increase in interest rates until 2013 or later.

Down Payments

Even though underwriting for home loans has tightened up over the past several years and buyers are now required to put down larger down payments and have higher credit scores, the Federal Housing Administration, or FHA, still offers mortgages with a 3.5 percent down payment.

Expiring High Mortgage Balance Loan Limits

As a result of the 2008 mortgage crisis, loan limits were increased to allow more borrowers to secure conforming loans. On the first of October 2011, these temporary limits expired, and more buyers in higher-priced markets will need jumbo loans that will carry tighter qualifying requirements (i.e. credit scores) and slightly higher interest rates.

Although many banks stopped or significantly tightened lending underwriting for jumbo loan products when the housing crisis hit, they are now back in the market and filling the void created by the expiration of the higher loans balance. That’s good news for buyers needing jumbo loans and sellers of higher-priced properties.


The days of reckless lending and then the market’s pendulum swing to overly conservative lending practices are gone. The good news is that we are now back to sensible underwriting. Even though we have tougher qualifying requirements – larger down payments and higher credit scores – banks still want to provide mortgages, even at historically low interest rates. Call your broker for more information when planning to buy, sell or refinance your home.

Source: Trendgraphix, NWMLS