What is Your Home Value?

Welcome to my most current Housing Trends eNewsletter. This eNewsletter is specially designed for you, dear blog reader, with national and local housing information that you may find useful whether you’re in the market for a home, thinking about selling your home, or just interested in homeowner issues in general. 

Please click on this link to view the Housing Trends November 2016 Newsletter http://wendywonder.housingtrendsenewsletter.com 

The Housing Trends eNewsletter contains the latest information from the National Association of REALTORS®, the U.S. Census Bureau, Realtor.org reports and other sources. 

Housing Trends eNewsletter is filled with local and national real estate sales and price activity provided by MLSs and the National Association of Realtors, U.S. Census Bureau key market indicators, consumer videos, blogs, real estate glossary, mortgage rates and calculators, consumer articles, and REALTOR.com local community reports. 

If you are interested in determining the value of your home, click the “Home Evaluator” link for a free evaluation report: 

http://wendywonder.housingtrendsenewsletter.com/dispContent.cfm?loadid=2&loadtype=0 

Sound decisions can only be made with accurate and reliable information, and I am happy to be a trusted resource for you. Thank you for the opportunity to provide you with this monthly eNewsletter, and I look forward to answering any questions you may have and to the opportunity to be your REALTOR® in the future. 

Sincerely yours, 

Wendy Ceccherelli
Home Land Seattle
Century 21 NW

The Next Market Crash?

If the housing market crashes, it will likely be due to the steep rise in student loan debt, accompanied with a drop in average earnings for college graduates. The nation’s student-debt tab has more than doubled since the last recession to roughly $1.3 trillion. The unemployment rate for college graduates ages 22 to 27 fell to 5.6 percent in 2013 from 6.4 percent at the recession’s peak in 2009. Among 22-year-old degree holders who found jobs in the past three years, more than half were in roles not requiring a college diploma. Millennials are staying away from buying houses in droves, and these are two of the major reasons.

They have seen their parents suffer through the last housing crisis, and they are understandably concerned. It is their parents' generation that lost the most during that financial crisis.

It is also the higher income middle class who pays the highest percentage in taxes. They are typically employees or wage earners, earning ordinary income which is taxed at the highest tax rate.

Real estate investors are familiar with capital gains tax, which is the second highest tax rate. This is a tax on the profits gained from the sale of an income-producing asset.

True investors are typically taxed on passive income, which is the lowest tax rate. Rent, interest, royalties and dividends typically fall into this category. This income is generated through the least amount of work, in that it does not require the earner to trade hours for dollars, as does an employee.

Managing debt, income, and taxes will determine one's fiscal health. Being savvy about finances will help any investor keep more of their wealth during any economic downturn.

Happy Investing!

Macro Economic Conditions

Expanding payrolls, solid consumption growth and housing market momentum support economic landscape. Against this backdrop, the Federal Reserve anticipates lifting its benchmark rate for the first time in more than nine years during 2015, though a move may not occur until next year. The imminent increase in the Fed Funds rate has raised questions among commercial real estate owners and investors regarding its potential effect on borrowing costs, spreads and asset valuations. However, the relationship between rising interest rates, a strong economy and continued vitality in commercial real estate seems quite compatible.
Read more here.  

In this context, where are investors finding the best real estate investment strategies? I've been told that commercial real estate follows a ten year cycle: For six years it is all about apartments and multifamily, for two years it is all about condos, and for two years, it is all about playing golf. 

I think we may be in the playing golf phase right now....What do you think, dear blog readers? Leave your thoughts and comments here at this post.

Happy Investing! 

Mortgage Interest Rates

What a week! Investors had to take cover as several market indexes swooned to depths not seen in quite some time. Stocks responded negatively to China's continued economic woes, the not-entirely-unexpected resignation of Greece's prime minister (although he may be reelected in September), and crude oil hovering around $40. Compared to the August 14 close, the Dow lost nearly 1,000 points--closing down about 6%, Nasdaq dropped close to 7%, and each of the major market indexes are now in negative territory year-to-date.

The price of gold (COMEX) continued trending upward, selling at about $1,159.90 by late Friday afternoon. Crude oil (WTI) prices dropped further, selling at $40.29/barrel by week's end.

The minutes of the July meeting of the Federal Open Market Committee (FOMC) confirmed what had been alluded to by some individual members, including Chairwoman Janet Yellen--the economy in general is moderately gaining and the appropriate time is fast approaching for an interest rate increase. With recent strong economic indicators, the Fed is almost 100% certain to raise rates at any of the remaining meetings in 2015, September, October or December.

Overall, the housing market continued its positive trend. Home builder confidence hit its highest level since November 2005, according to the National Association of Home Builders.

Reaching the highest rate since February 2007, total existing home sales, which are completed transactions that include single-family homes, townhomes, condominiums, and co-ops, increased 2.0% to a seasonally adjusted annual rate of 5.59 million in July from a downwardly revised 5.48 million in June, according to the National Association of Realtors®.


The NAHB and NAR are reporting higher levels of confidence, that may be driven by fears of increased home mortgage interest rates, the rising rental incomes, or perhaps anticipation that millennials will be jumping in to the market. Whatever the reasons, keep an eye on this blog for the latest breaking economic trends and impact on housing prices.


Happy Investing!


Contributions to today's blog courtesy of Rebecca J. Faught with Waddell & Reed.

Food for Thought

What you need to know before buying a house:

http://online.wsj.com/article/SB10001424127887323906804579036763834997586.html?mod=e2fb

Current Housing Trends

Welcome to my current Housing Trends eNewsletter. This eNewsletter is filled with national and local housing information that you may find useful whether you’re in the market for a home, thinking about selling your home, or just interested in homeowner issues in general.  Please click on this link to view the Housing Trends Newsletter http://wendywonder.housingtrendsenewsletter.com  The Housing Trends eNewsletter contains the latest information from the National Association of REALTORS®, the U.S. Census Bureau, Realtor.org reports and other sources.  Housing Trends eNewsletter is filled with local and national real estate sales and price activity provided by MLSs and the National Association of Realtors, U.S. Census Bureau key market indicators, consumer videos, blogs, real estate glossary, mortgage rates and calculators, consumer articles, and REALTOR.com local community reports.  If you are interested in determining the value of your home, click the “Home Evaluator” link for a free evaluation report:  http://wendywonder.housingtrendsenewsletter.com/dispContent.cfm?loadid=2&loadtype=0  Sound decisions can only be made with accurate and reliable information, and I am happy to be a trusted resource for you. Thank you for the opportunity to provide you with this monthly eNewsletter, and I look forward to answering any questions you may have and to the opportunity to be your home investment partner in the future.  Happy Investing!

Life After Tax Credits

Real estate investors and other professionals are all wondering, what will happen to the real estate market, now that first-time homebuyer tax credits have expired (for all but military and certain federal personnel- see my previous blog)?

Financial experts disagree on the potential impact. Economists are of the unanimous opinion that homebuyer tax credits helped boost demand and sell more houses, although how many of those sales would have occurred anyway is unknown. The National Association of Realtors thinks that only 18% of the estimated two million home sales in the last two years would not have occurred without the tax credits. Yet persistently high unemployment and the large number of foreclosures present formidable obstacles to a full economic recovery.

The good news is that housing sales are up, mortgage rates are still at historical lows, and housing prices continue to stabilize in much of the country. Spring time is traditionally a strong season for home buying in the Pacific Northwest. I'll be keeping my eye on sales in the region, and keep it posted here on the "Seattle Real Estate Investor" blog....

ProActive Investors: Market Analysis

We have already warned in our past blogs that real estate investing is active, and requires diligence and determined effort. Another important quality of the most successful investors is that they are cognizant of current trends and events before the crowd has recognized what is coming. Every savvy investor needs to be watching real estate related stocks and analyzing what it means in investment direction and opportunity.

For example, let’s look at a recent better-than-expected profit report from Lowes, the home improvement retailer. This report caused positive reactions from analysts, leading to suggestions of investor confidence in an economic rebound, and consequently, stocks rose about 3%. This was interesting news, particularly in light of the seemingly conflicting report that Lowes first quarter earnings of $476 million were the company’s lowest for that period since 2004.
The investor's job is to take this information, and use it in guiding investment decisions.Further delving into the Lowes situation revealed that consumers were continuing to avoid big ticket renovation projects. This was traditionally the backbone of Lowes bottom line. However, surprisingly, do-it-yourself oriented products such as paint and hardware sales increased. That, in conjunction with improving consumer confidence, and slowing home price declines suggested the economy was stabilizing. This may suggest the worst is over, and a recovery may be slowly on the way.

While home prices remain low and property owners still unsure of the future, now could be the optimal time to deal. There is hesitancy in large home renovation, suggesting that confidence is shakey, but the slowly rising tide of small improvements indicate fingers in the economic winds. When consumers are convinced housing prices have hit bottom, they tend to spend more on their homes.In conjunction with the Lowes report, the National Association of Home Builders reported rises in its housing market index. It may be carpe diem time, and the investor who scrutinizes these kinds of economic indicators will emerge most successfully.

Sell Houses Fast using the "SOLD" method!

In today's economy, everyone is running for cover hoping to wait outthis recession before it breaks them. Refuse to participate in thisdownturn! There are smart ways to continue to prosper, sell your housein record time, and keep that necessary cash flow spigot open. Excess inventory and falling market prices can be turned to your advantagewith a very simple system that William Bronchik calls “the S.O.L.D. system. “ This is the system that the best investors use, those 20 % of wealth generators who seem to consistently outperform everyone, even in the worst times. Any house can be sold at a fair price within 30 days using this system- even now. The basic principles of the SOLD system are:
S- Salesmanship- how to best market and present your property and close the deal
O- Owner Financing- many people don't have large down payments available, but may be able to buy if the owner accepts part of his equity in payments rather than large cash closings. A larger pool of potential buyers obviously increases the likelihood of a sell!
L- Lease/Options - rising interest rates have resulted in greater rental enthusiasm, with the benefit of higher rental rates. You can lease/option to avoid broker fees and pay no commission upon sale.
D- Dressing it Up- Staging gives your propertythe extra "wow factor" to promote quick sales for the optimal price. Confidence is often the key to success.

Let me help you make your property profitable despite any gloomy economic outlook!

More Thoughts on the Bottom

The housing crash affected markets across the country with cities that had been resistant, like San Francisco, falling spectacularly in the past year by a whopping 32% or more. Most analysts present a pessimistic picture, but seem to believe housing prices have bottomed out in many parts of the country. Prices are at the level seen around 2003, but would need to fall to the levels of 2000, to go back to pre-bubble prices. The silver lining is of course that it is a buyer's market, and there are great deals out there. If the economy rebounds soon, with inflation ignited by the stimulus package, then home prices will rise again. However, albeit with the current very low mortgage rates, home prices compared to average earnings are still higher than they were at the height of the 1989 property bubble. When that bubble burst, it took 8 years for market recovery. This current crash is larger, and the recovery could be respectively longer.
What kind of loan would a savvy investor in our area need in order for their rental to cashflow? The chart below shows the current average rental rates in King and Snohomish counties, as recorded by The Department of Housing and Urban Development's 2009 Fair Market Rent Documentation :
Efficiency-$720
One-Bedroom-$820
Two-Bedroom-$987
Three-Bedroom-$1,395
Four-Bedroom-$1,704

The chart below shows the loan that could be supported by the average rents above:

Payment* Sales Price Loan Amount Cash At Closing*
$1,700.00 $460,000.00 $345,000.00 $122,907.36
$1,500.00 $407,000.00 $305,250.00 $108,971.68
$1,300.00 $355,000.00 $266,250.00 $95,298.93
$1,100.00 $300,000.00 $225,000.00 $80,837.36
$ 900.00 $245,000.00 $183,750.00 $66,375.80

Most investors will be looking for returns that do not require such a large cash outlay upfront. In that case, housing prices still have a ways to fall!