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Last month I posted an article about the appreciation that real estate in Issaquah Highlands has seen. The data I used included all single family homes (not condos) that sold during during two different time windows; January 2006 through November 2006 vs January 2007 through November 2007 and November 2006 vs November 2007. The post generated much debate about whether or not there has actually been any real gain in the typical home in the Highlands and some went as far to say that they would not be surprised if growth was flat if not negative.

I agreed that the numbers may have been skewed by the appreciation at the low and high end of the price ranges so in order to accurately analyze what is really happening to a typical house in Issaquah Highlands, we all agreed to a consistent definition of what the typical home looks like. I am going to use homes that meet the following criteria:

Home Type: Residential

Bedrooms: 3 to 4

Bathrooms: 2 to 2.5

Square Feet: 2000 to 2500

Rather than just look at the same time ranges as before, I am also going to expand the windows a bit. The new data will look at all of 2006 vs all of 2007 as well as Q4 - 2006 vs Q4 - 2007.

It turns out that the number of units for this refined data change quite a bit. This is primarily due to the square footage and bathroom constraints. Units analyzed has dropped from 381 for 2006 and 236 for 2007 to 59 for 2006 and 46 for 2007. The one piece of data that did not change too much was the sold price ranges these homes fall into. With the new constraints the home sold price ranges from $250,000 to $700,000. Without the constraints the homes ranged from $200,000 to $2,000,000 with 95%+ falling into the $250,000 to $700,000 range. So really what applying these constraints has done is 1) remove the high and low ends of the sold price ranges and 2) remove homes that were either much larger or much smaller (+/- 10%+) than the average home sold. Which brings us to the actual data.

Issaquah Highlands single family homes saw the median home price increase 16% between 2006 and 2007, from $534,900 to $617,975. However, the number of units sold are down to 46 in 2007 vs 59 in 2006. Days on market have increased as well indicating that the market has slowed down. (see graphs). 

Issaquah Highlands single family homes saw the median home price increase 21% in the Q4 - 2007 compared to Q4 - 2006, $509,990 to $615,000. The total number of units sold are still down and days on market have increased still supporting that the market has slowed in this area. (see graphs)

 

While market times are longer than we have seen in years past, the numbers show that home owners are still seeing appreciation year over year. What is getting home owners into trouble is the type of financing they have arranged. With some of the “creative” options that have been out there, it has not been difficult for home owners to find themselves upside down in a property. It is a very unfortunate circumstance for people to be in, but I don’t see that carrying over into causing real estate is a bad investment right now. We are fortunate to live in an area of the country that has a very diverse job base and a strong economy - not to mention that it is just plain beautiful. As buyers start the new year off and take a look into buying a home I say good for you. Just be sure to do it with your eyes wide open, look at all your options and make sure you understand the type of financing you are obtaining so that you don’t find yourself as one of the unfortunate souls that is upside down and backwards in their home.

Happy New Years!  It should a year of renewal.  I have hopes this year for our economy to finally get to the bottom of things and start moving on.  The whole daily surprise that the “housing” sectors numbers are low is getting old!  It is not that I want our economy to go into recession; it is not that I want any of our fellow employees to have trouble holding their jobs or getting new jobs.  I just want our news industry to quit hyping on this like it is a surprise.  Everyone expected it sooner or later, it just here now.  The facts are that interest rates are spectacular right now.  The fact is our national employment is still wonderful and the fact that we don’t know that real estate is cyclical is NOT a surprise. 

My goal this year is to look at the positives.  Homeowners are recognizing that home values are changing.  That there are pockets of appreciation but when they put their homes up for sale they are now listening to the real estate professionals and listing for “true” values instead of inflated values.  That there are many terrific bargains to be had and exceptional interest rates!  I appreciate that the lending sector has decided to go back to normal underwriting guidelines by having buyers do their due diligence in saving their money for down payments, buy within their means and show they can repay their debt with a solid credit history.  These are all good things and things I want to be a part of. 

I believe in American dream of owning a home and working for it.  I believe in hard work getting there and the satisfaction of achieving this dream!

My goal this year is to pass along all the good information that our country has available to us all.  We can work if we want to, we can save money in our stock markets and feel fairly safe and we are allowed to travel freely from state to state and spend our well earned money on the economy. 

My wish to you all this year is your PHYSICAL HEALTH, YOUR MENTAL HEALTH AND YOUR FINANCIAL HEALTH.  I also wish to you that you achieve your goals and dreams you’ve set for yourself this year.   Happy 2008

Yours truly,

Barb Paetzold

CTX Mortgage

425 820-0601 direct

800 591-5626 toll

barb.paetzold@ctxmort.com

206 217-0591 fax

Congress has approved or renewed several tax relief measures to keep the dream of home ownership alive for both new home buyers and existing home owners this week. One of the biggest relief’s is the extension of Mortgage Insurance (”MI”) tax deductibility.

The legislation itself is no different than what was passed last year. MI premiums are still fully deductible for taxpayers earning up to $100,000, and partially deductible for those with incomes between $100,000 and $109,000. The only difference is that the deduction now applies to policies written through the 2010 calendar year.

Extending MI tax deductibility is a crucial move for many reasons:

• Risky low down payment loans are no longer a viable option and are being replaced by more secure loans with mortgage insurance.
• Mortgage insurance is not only safe and predictable, but it’s also cancelable and packed with several features borrowers want today.
• Consumers today have an increased understanding of how mortgage insurance can benefit them, and the extension of MI Tax Deductibility will help continue that trend.

If you have any questions or would like to better understand if Mortgage Insurance is right for you feel free to drop me an email or give me a call.

Over at the Issaquah Highlands Community Forum (must be a resident to gain access), there continues to be much debate and concern as to wether or not it is a good time to buy a home. In fact, a fellow Issaquah Highlands resident recently inquired about the Year of Year median home price change. I feel this question is worthy of an entire post outlining all the data from 2006 and 2007 and comparing both YTD sales as well as November only sales.

Issaquah Highlands single family homes saw the median home price increase 19% Year To Date, from $549,950 to $652,616, Year over Year. However, the number of units sold are down and days on market have increased indicating that the market has slowed down.

 

Issaquah Highlands single family homes saw the median home price increase 5% during November 2007 compared to November 2006, $581,800 to $610,000. Still, units sold are down and days on market have increased still supporting that the market has slowed in this area.

 

 

I have gone so far as to state in previous posts to say that I do think buyers can make a sound investment at this time. Despite the fact the market has slowed down and inventory is building, home prices have continued to appreciate in certain areas. Even though this market can be challenging for some, if not most, if you can afford it and you find the right home in the right location, investing in real estate in the Puget Sound area can still be a smart move. 

While we are not seeing the kind of gains we used to, we have still seen gains over this past year. I agree that the unabashed crazy increases that we have seen in the past is over for now and that it is not a good time to flip homes, but I still believe in real estate as a long term investment.

If you have any other questions or would like to see any other stats, please let me know.

People often ask me what do I think of the “sub Prime” lending industry and the “mess” that it has caused recently.

I think that the need to help people to get into a home is always important, however, I like to encourage people who want to buy to purchase within their own budgets. The sub-prime had and still does have a place in the home buying industry. It has been an interesting line to walk on as a lender. You have clients that really need it and can afford it. They understand the upsides and the pitfalls of taking out higher risk mortgages. If a home buyer understands these risks, have the financial resources when and if the products change then it can be a GREAT thing. It is the many clients who purchase without the full knowledge of how these products can touch their lives. Those clients who do not have the financial resources to hold them through the interest hikes.

I would like to say that IT IS UP TO THE LENDER to explain this process THOUROUGHLY and then the borrower needs to be responsible for the loans they sign up for. There are still 100% loans with GREAT rates for the buyers that can afford it and have the financial resources to make it work. There is also the FHA loan which requires as little as 3%. There is even talk that FHA may restructure the down payment into lower restrictions but with higher interest rates to absorb the bigger risk. FHA also allows for some past credit blemishes. Still a great program! The 2nd mortgage that helps to avoid the Private Mortgage Insurance is getting harder to get. Many lenders are requiring higher credit scores and larger down payments. Private Mortgage Insurance (PMI) may become more prevalent again. It is now tax deductible for many buyers. You will need to check with your lender if you are one of them. I love the lending market now. It allows for borrowers to once again to plan when and if they want to buy and not pressure them into purchasing now because the market may be buying them out of a qualifying position!

How do I feel about what the governments is doing for those clients who need to be bailed out? Well that is a whole other subject. If you really want to talk about that one, you will need to reply and ask me about my opinion

***Cartoon provided by Maine Cartoons***

Do you have little or no credit lines or limited credit period? If you have a friend or a relative with great credit, become an authorized user on their revolving credit cards. Become an authorized user on a spouse or parents account. The line will show the history of that account on your credit report.

How should you select which card will improve your FICO score the most? Here are the most important criteria:

• Revolving account
• At least 5 years old (the older, the better)
• High or significantly large available credit
• Low balance carried (preferably paid down to $0 every month)
• Perfect payment history.

Current Rates

30 Year Fixed: 5.625% (APR 5.752%) - Lower

30 Year Fixed with 10 Year Interest Only: 6.25% (APR 6.363%) - Unchanged

40 Year Fixed: 6.50% (APR 6.615%) - Higher

5/1 ARM (2/2/6 caps): 5.50% (APR 6.530%) - Lower

5/1 ARM 10 Year Interest Only Payments: 5.625% (APR 6.834%) - Unchanged

FHA/VA 30 Year Fixed: 6.00% (APR 6.467) - Lower

JUMBO (Non-Conforming) Rates

30 Year Fixed: 6.625% (APR 6.752%) - Lower

30 Year Fixed with 10 Year Interest Only Payment: 6.75% (APR 6.867%) - Lower

5/1 ARM: 6.750% (APR 6.878%) - Higher

5/1 ARM Interest Only: 6.875% (APR 6.915) - Higher

Conforming loan limits are currently up to $417,000 and Jumbo loan limits are $417,001-$650,000. Quotes above are based on 30 day pricing with a 1% loan fee and a credit score of 680 or better. Quotes are also based on full loan documentation files and a minimum of 5% down. If you are planning on putting less than 20% down you will need Private Mortgage Insurance or a second mortgage to cover the difference.

The programs above are only a sample of what is available. Rates were published Monday, December 3, 2007 @ 10am and are subject to change.

For further information on any of these programs or additional programs or questions about improving your credit score, please feel free to email me or give me a call on my direct line (425) 820-0601 or my mobile.

There is a short week a head with all the markets closed on Thursday and only a half day on Friday. Some economic notes to mention, Consumer Price Index (CPI) registered 0.3%and the Core CPI at 0.2%. With that said, the Federal Reserve will be leaving us minutes on Tuesday. I’m guessing the Fed WON’T cut rates for December at this point. The economy is still quite jittery regarding the housing pressure and retail sales short in October putting pressure on the market. Maybe a sprinkle of good news starting the holiday season, Wal-Mart released “way better” than expected earnings for the last quarter. Also nicely noted, the following BIG retailers showed good earnings:

• Nordstrom
• Barnes & Noble
• Target
• Whole Foods
• Gap
• GameStop
• Limited

Who knows, we may be in for a fun and filling week! Enjoy!

Current Rates

30 Year Fixed: 6% (APR 6.125%) - Unchanged

30 Year Fixed with 10 Year Interest Only: 6.25% (APR 6.363%) - lower

40 Year Fixed: 6.25% (APR 6.356%) - Lower

5/1 ARM (2/2/6 caps): 5.625% (APR 6.578%) - Higher

5/1 ARM 10 Year Interest Only Payments: 5.625% (APR 6.834%) - Unchanged

FHA/VA 30 Year Fixed: 6.375% (APR 6.813) - Unchanged

JUMBO (Non-Conforming) Rates

30 Year Fixed: 6.875% (APR 7.005%) - Higher

30 Year Fixed with 10 Year Interest Only Payments: 7.00% (APR 7.120%) - Higher

5/1 ARM: 6.625% (APR 6.741%) - Higher

5/1 ARM Interest Only: 6.750% (APR 6.867) - Higher

Conforming loan limits are currently up to $417,000 and Jumbo loan limits are $417,001-$650,000. Quotes above are based on 30 day pricing with a 1% loan fee and a credit score of 680 or better. Quotes are also based on full loan documentation files and a minimum of 5% down. If you are planning on putting less than 20% down you will need Private Mortgage Insurance or a second mortgage to cover the difference.

The programs above are only a sample of what is available. Rates were published Monday, November 12, 2007 @ 10am and are subject to change.

For further information on any of these programs or additional programs, please feel free to email me or give me a call on my direct line (425 820-0601) or my mobile.

Are the turbulent storms of last week over yet? Wall Street took a 552 point fall for the Dow while Citigroup, Wachovia and GM took big hits in the financial sector. What’s next? Big Ben told congress that he expects the U.S. economy to slow “noticeably” and still feels there are strong possibilities of inflation.

However….the facts so far support some control: Q3 productivity rose 4.9% and unit labor costs dropped 0.2%, so inflation stays under control. In addition, Initial Jobless Claims came in at 317,000, way below expectations and the lowest reading in a month.

Here are some fun little facts I found:

1. OIL AND MILK - If the price of a gallon of milk is $3.89, then a barrel of milk would cost $163.38 (note that 1 barrel equals 42 gallons). The price of a barrel of oil closed last week at $96.32 (source: BTN Research).

2. WE’RE # 1 (AGAIN) - The 3 most competitive economies in the world according to a Switzerland-based think tank are 1) the USA , 2) Switzerland and 3) Denmark The US has been top-ranked for the last 3 years (source: World Economic Forum, Financial Times).

3. I’M A LITTLE SHORT THIS MONTH - 1 out of every 29 mortgages in the USA was delinquent with their required monthly payment at the end of the 3rd quarter 2007. At the end of calendar year 2005, the ratio was 1 out of every 48. (Source: Equifax, Wall Street Journal).

4. BIG BUCKS FOR THE FIFTH GRADER - The average cost for 1-year of college education at an in-state public college is $13,589 for the 2007-08 school-year (cost includes tuition, fees, room and board). The total 1-year cost has increased +6.5% per year over the last 30 years. If that same annual rate of inflation continues into the future, then a 5th grader today will ultimately pay $100,000 for his/her 4-years of public college education during the years 2015-19 (source: College Board).

Current Rates

30 Year Fixed: 6% (APR 6.125%) - Unchanged

30 Year Fixed with 10 Year Interest Only: 6.25% (APR 6.365%) - Lower

40 Year Fixed: 6.250% (APR 6.358%) - Lower

5/1 ARM (2/2/6 caps): 5.625% (APR 6.434%) - Higher

5/1 ARM 10 Year Interest Only Payments: 5.625% (APR 6.834%) – Unchanged

FHA/VA 30 Year Fixed: 6.375% (APR 6.813) - Unchanged

JUMBO (Non-Conforming) Rates

30 Year Fixed: 6.750% (APR 6.881%) - Higher

30 Year Fixed with 10 Year Interest Only Payments: 6.875% (APR 6.995%) – Higher

5/1 ARM: 6.250% (APR 6.914%) - Unchanged

5/1 ARM Interest Only: 6.250% (APR 6.680) - Lower

Conforming loan limits are currently up to $417,000 and Jumbo loan limits are $417,001-$650,000. Quotes above are based on 30 day pricing with a 1% loan fee and a credit score of 680 or better. Quotes are also based on full loan documentation files and a minimum of 5% down. If you are planning on putting less than 20% down you will need Private Mortgage Insurance or a second mortgage to cover the difference.

The programs above are only a sample of what is available. Rates were published Monday, November 12, 2007 @ 10am and are subject to change.

For further information on any of these programs or additional programs, please feel free to email me or give me a call on my direct line (425 820-0601) or my mobile.

Those look good don’t they! The 50^th consecutive month of jobs growth. 166,000 new jobs were created in October, twice the number than expected. That has to say something about our economy doesn’t it?

Do you want to hear about a few more economic stats? How about the Q3 GDP @ 3.9%, Personal Consumption up 1.8% and of course unemployment previously stated holding steady at 4.7%. Let’s continue to watch what happens out there. If these types of numbers continue to prevail, it COULD be a good time to buy. With people making more money and saving more, how can that be bad!

Current Rates

30 Year Fixed: 6% (APR 6.125%) - Unchanged

30 Year Fixed with 10 Year Interest Only: 6.375% (APR 6.491%) - Unchanged

40 Year Fixed: 6.375% (APR 6.484%) - Unchanged

5/1 ARM (2/2/6 caps): 5.50% (APR 6.753%) - Lower

5/1 ARM 10 Year Interest Only Payments: 5.625% (APR 6.834%) - Lower

FHA/VA 30 Year Fixed: 6.375% (APR 6.813) - Unchanged

JUMBO (Non-Conforming) Rates

30 Year Fixed: 6.500% (APR 6.629%) - Unchanged

30 Year Fixed with 10 Year Interest Only Payments: 6.625% (APR 6.713%) - Unchanged

5/1 ARM: 6.250% (APR 6.914%) - Unchanged

5/1 ARM Interest Only: 6.375% (APR 6.970) - Unchanged

Conforming loan limits are currently up to $417,000 and Jumbo loan limits are $417,001-$650,000. Quotes above are based on 30 day pricing with a 1% loan fee and a credit score of 680 or better. Quotes are also based on full loan documentation files and a minimum of 5% down. If you are planning on putting less than 20% down you will need Private Mortgage Insurance or a second mortgage to cover the difference.

The programs above are only a sample of what is available. Rates were published Monday, November 5, 2007 @ 10am and are subject to change.

For further information on any of these programs or additional programs, please feel free to email me or give me a call on my direct line (425 820-0601) or my mobile.

I SEE ANOTHER FED RATE CUT, DON’T YOU?… Wake me up Wednesday at 2:15 in the afternoon, OK? That’s when we’ll have the Fed’s announcement on rates.

No question it’s a biggee.

But, seriously, I’ll be up early that day for Q3 GDP, Employment Cost Index and Chicago PMI, which are also key. No doubt the Fed themselves may have taken a peak at the very significant October employment reports (especially Non-farm Payrolls), but we’ll have to wait ’til Friday to see how it all fits together. Thanks to Mortgage Market Guide for the heads up.

Current Rates

30 Year Fixed: 6% (APR 6.125%)

30 Year Fixed with 10 Year Interest Only: 6.375% (APR 6.491%)

40 Year Fixed: 6.375% (APR 6.484%)

5/1 ARM (2/2/6 caps): 5.625% (APR 6.666%)

5/1 ARM 10 Year Interest Only Payments: 5.750% (APR 6.737%)

FHA/VA 30 Year Fixed: 6.375% (APR 6.813)

JUMBO (Non-Conforming) Rates. Pricing is based on the same criteria above, with the exception that the loan amount is $417,001-$650,000 (20% down)

30 Year Fixed: 6.500% (APR 6.596%)

30 Year Fixed with 10 Year Interest Only Payments: 6.625% (APR 6.713%)

5/1 ARM: 6.250% (APR 6.914%)

5/1 ARM Interest Only: 6.375% (APR 6.970)

Conforming loan limits are currently up to $417,000. Quotes below are based on 30 day pricing with a 1% loan fee and a credit score of 680 or better. Quotes are also based on full loan documentation files and a minimum of 5% down. If you are planning on putting less than 20% down you will need Private Mortgage Insurance or a second mortgage to cover the difference.

These programs are only a sample of the many products available. Rates published Monday October 29, 2007 @ 10am and are subject to change any time as well as programs may change without notice. This is not a guarantee nor is it a commitment of interest rate.

For further information on any of these programs or additional programs, please feel free to email me or give me a call on my direct line (425 820-0601) or my mobile.

Barb Paetzold - Mortgage Expert

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