The Northwest received almost $330 million in Federal resources to revitalize our
communities, put people back to work and speed America back on the road to
recovery from what has come to be called “The Great Recession.”

In passing the Recovery Act, the Congress and the President specified a
wide range of activities to which state, county and city governments hard hit
by the downturn could apply Recovery Act funds – your tax dollars – from
meeting critical capital needs to expanding the supply of affordable housing,
from preventing homelessness to helping small businesses gain access to much
needed capital. Under the Act, those local governments were given full
authority to decide for themselves the specific what’s, where’s and how’s of
the projects that would best benefit their communities.

Here are some of the programs that will be funded
by the Federal money in the King County area:

• Promoting Energy Efficiency and Creating Green Jobs
• $40,250,758 to Washington State’s 29 housing authorities.
• $14,863,303 to 30 tribal organizations in Washington.
• Lead Hazard Reduction/Healthy Homes – $6,725,000 to to King County, City of Spokane
  and State of Washington.
• Supporting Shovel-Ready Projects and Assisted Housing Improvements
• Promoting Stable Communities and Helping Families Hardest Hit by the Economic Crisis
• Emergency Shelter Grant Program/Homelessness Prevention – $24,948, 653 to 10 grantees in Washington.

Recently, I was following another blog where a homebuyer was upset that they didn’t get the house they truly wanted because they were outbid.   The homebuyer opened by saying that they lost the house because they low-balled the seller upfront and the seller decided to accept another offer.  Consequently, they were not working with an agent and were receiving real estate advice from multiple sources.

I’m not going to make the blanket statement that they lost the house because they weren’t working with a good agent.  The buyer, in this case, made a blind offer and did not do any research on the home before deciding to make an offer.  The buyer mentioned that a family member told them that they simply offer a price that is lower than the asking price.  Unfortunately, the house was very competitively priced in reference to comparable properties.  When the seller received the offer they felt ambushed by the aggressive and lowball amount.  Also, the seller was in talks to receive an offer from another homebuyer whose agent presented a fair offer with details on how they found the value to match the offer.  It was presented in person with detailed explanation on the buyer’s intentions, and ultimately the seller was eager to work with the homebuyer.

Real estate is both an emotional decision revolving around your future home and also a business transaction that makes up one of your larger financial investments.  For these reasons, it’s important to have a strong report with the opposition.  And no matter how aggressive your negotiation, a clear line of communication will help control the direction your offer is going.  Put yourself in the opposition’s shoes and imagine if you were left to self-interpret another’s negotiation styles from a legal style form.  This is where a good real estate broker earns their value for you.

Whether you’re a cat person, a dog person or something in between you may be impacted by the “pet restrictions” that are part of your next home purchase.  When pet policies are part of a home’s or condo’s rules they can affect both your personal uses and investment potential.

For instance, in the Seattle market, I heard an interesting statistic that more home owners have pets than children.  Hence when a property doesn’t allow pets it is limiting those potential buyers for the home.  In a more detrimental market it could negatively impact the sales price as well.

Not having pet restrictions isn’t the greatest thing either.  It can be a double edged sword when an owner decides they want to raise an exotic or undomesticated critter.  For example, what if your neighbor raised wolves, rodents, wild cats, roosters, large fish breeds, etc.?  It could lead to unwanted noise, safety concerns, or a really bad odors!  These days, the most common restrictions on condo buildings are leash requirements, limits on number of animals , and bans on aggressive breeds.  All are in place for a reason and voted on by the residence in compliance with your county’s land use guidelines.

When buying your next home, please remember that real estate is meant to be a long term investment.  If your “family” may be planning to grow by way of a furry or scaly friend in the next 5 years, then it’s a good idea to be aware of the current home owner’s association (HOA) rules on pets, and possibly what is being talked about in the HOA meetings.

Seattle City Council has just adopted an updated plan for row-homes, townhomes, and cottages.  The first decade of the millennium was full of new construction and a majority of designs in Seattle were the townhomes.   

I don’t want to give you the wrong idea; I do not have anything against townhomes.  They are a great solution for denser urban communities, and they take advantage of low-rise residential building designs at affordable prices.  However, after a decade, there was little change to the look and layout of these homes.  There was a need for more diversity and these may have been overbuilt in some areas.

These new codes should prevent a majority of the complaints from neighbors.  By creating the Streamlined Design Review (SDR), there will be better attention to designs so they flow with the neighborhoods.  For instance, townhomes with three or more units can only be put in multi-family zones.   Also, green building practices are encouraged and building materials between townhomes must be varied.

Multi-Family accounts for 9% of Seattle’s land development is typically the buffer space between single family homes (SFH) and the commercial development.  As Seattle has continues to grow it’s a comforting to see the attention on building design that will make sense in the long term.

During this holiday season, it’s not just our waist lines that are experiencing growth. Washington is expected to receive another Congressional seat in the US House, all thanks to the population growth in Washington state.  More specifically, the boom in the Seattle area is on the rise.

Let’s begin with a little history.  Between 1960 to 1980, in the Seattle area, there was a period of population loss; population decreased by 11%.  Then there were signs of growth from 1980-1990 where Seattle grew by 47,000 people, an increase of 9%.  In 2000, the census data for Seattle resulted in a higher than projected population number estimated as high as 548,000 people.  Now the 2010 Census data counts Seattle population at 563,374, surpassing the 1960 high score!

During the years of population decline, the locals weren’t fleeing the state.  They were moving into the surrounding cities or suburban areas. For instance, Bellevue became the next big city and, with it, a new demand for residential housing formed.  Edmonds and Shoreline were in high demand for choice schools, and affordability drove more new construction into the surrounding areas. Now that the surrounding areas have filled in with residence for the most part, the population growth has been steady for both Seattle and surrounding areas.

What does this mean for residential real estate?  There’s a steady influx of people relocating to the area, and they are looking to purchase homes. With a controlled amount of new construction, the amount of active inventory will normalize for the buyer pool to absorb.  There is still a way to go for all the condos to catch up to the recovery curve, but if SFH continue as seen in some areas they will eventually follow in the recovery.  May Seattle and its surrounding neighbors continue to grow during the recovering economic times.

It’s official: FHA was just given authority to change the amount charged to borrowers for both the Up Front and the Annual Mortgage Insurance premiums…and change them they did.

This will impact how you write up your FHA purchase agreements, as well as any monthly payments you might estimate for clients – so I wanted to get word on the new guidelines to you right away.

The new premium amounts will be effective on all FHA case numbers assigned on or after October 4, 2010 – so your clients that already have an FHA transaction in process won’t be impacted, but new FHA clients who come into process on or after October 4th will be subject to the new guidelines.

Here’s what you need to know:

• The Up Front Mortgage Insurance premium is now 1.0 % for all standard FHA programs, including on purchase money mortgages. This is a significant change from the 2.25% Up Front Mortgage Insurance typically in place on FHA 30 year Fixed Rate transactions.
• …but don’t break out the party hats just yet – the Annual Mortgage Insurance premium is now .90% for LTV’s greater than 95% on 30 year loans…and this is also a significant change from the .55% we’ve been accustomed to using when we calculate the monthly payment.
• There are different annual premium amounts for lower loan to values and for 15 year terms, so call me for more details if needed. And by the way, FHA now has the authority to raise the Annual Mortgage Insurance premium “at will”…up to 1.55%…so I’ll be keeping closely tuned to any changes and will be sure to keep you informed.

Most of us still expect to see the hustle and bustle in the downtown areas like Seattle’s city center.  Likewise, the expectation of the quiet life would be found in the suburbs.  The future is here, and more than ever, you will find a little of everything in any given area.

We are transitioning into a decentralized living model.  The Skyscraper of the 20^th century was built purely as office space.  With office space vacancy now on the rise, buildings either adapt or hit the antiques road show.  Now we are finding that balance of mixed use community developments.  You can live, lodge, shop and work in the same hotel/office/condo/retail building.  By combining your multiple needs into a convenient one-size-fits-all (or most), we are experiencing a migration back to the city center.

Who is attracted to and moving into the new downtown?  It’s not for everyone but it is a market-driven phenomenon.  Here are a few homebuyer demographics that are seeking this lifestyle:

1. Empty nesters – All the kids are out of the house and it’s too soon to plan on assisted living.  Why not live in close proximity to everything you need and want?
2. Downsizers – The current house is more chore than enjoyment.  This is a chance to reinvent your lifestyle.
3. Snow birds – The term is coined for the seasonal occupant who, in this case, would reside here during the sunny mild summers for which we all love Seattle.
4. Investors – As a rental it would have everything a tenant needs–shopping, jobs, and entertainment–all nearby.
5. Entertainment loft – Keeping the primary residence in the ‘burbs, but having this opportune bedroom in the city. 
6. Business professional – Working and living in the same urban environment.

Just as city centers are diversifying and becoming more livable communities, businesses are migrating to more affordable locations for the real estate bargains.  The decentralization of urban and suburban will progressively become balanced.

When you are in the market to buy a condo there are some thing you need to know about Home Owners Associations (HOA).  The HOA is responsible for building amenities, maintenance and, in some cases, utilities.  As an owner, you may have some voting rights for the management of the budget, but the majority has the final say.  I like to make sure that my homebuyers review the building’s finances to know whether or not the HOA is financially strong or as useless as a Deutsche mark.   

Here are some important factors for your condo buyers — or to have reviewed by your advisor or attorney. Typically, I will make sure the seller is contractually obligated to supply these documents in the purchase and sale agreement:

1. Examine the assets & liabilities statements to see if there are funds to balance the expenses.
2. Examine the HOA’s money reserves to make sure there is enough to maintenance and operating expenses.  If an emergency cost arises this could cause a drastic increase in HOA dues
3. Examine the last 2 years of financial statements to make sure spending is consistent.
4. Find out if the building is regularly spending money on repairs and upgrades. You may find this in a reserve study or capital impotents/maintenance budget.  Allowing all kinds of maintenance to pile up can lead to a huge assessment or HOA lawsuit to pay for the bills later on.
5. Examine the last year’s condo board meeting minutes for any suggestion of contingent liabilities, which suggests there may be a lawsuit in the wings. While lawsuits usually are covered by insurance, you’ll want to know whether or not it’s a litigious board.

All these are great starting places to look at the financial strength of a condo HOA.  However, you should be prepared to discover additional questions to answer during your investigation.  I believe it is better to be forewarned when it comes to making one of you largest investments and working with a real estate broker can help you navigate these pitfalls.

This spring I handed house keys to a first time buyer who’d been dreaming  of owning his own home for over ten years.  In fact he’d been approved a few years ago by a lender to buy in another state.  He wrote an offer, got it signed and was packing and ready to move.  The week of closing the bank told him he no longer was qualified.  The rug was pulled out from under him that time, so he was very nervous.

This time around our buyer qualified for the Washington State Housing Finance Commission Down Payment Assistance Program.  We looked around and found a townhome style condo in Edmonds with a two car garage for under $200,000.  We negotiated a credit for his closing costs from the seller.  He did pay for the inspection, though he was reimbursed for this at closing.  He walked in the door to his new home with zero down payment, zero closing costs!  

Many first time buyers qualify for this program: Down Payment Assistance through the Washington State Housing Finance Commission (WSHFC).   Talk to a professional about your individual circumstances and see if you qualify.  Or better yet attend one of our seminars to learn more about homeownership.

Now, it’s gone.  Sayonara, tax credit!  However, don’t let it discourage you.  The tax credit created what is sometimes called a “sales frenzy.”  but rushing into buying a home only to take advantage of a tax credit may not be as rewarding of an investment for someone who truly isn’t ready for home ownership.

Real estate is a long term investment.  Buying a home is based on individual situations.  To decide, ask yourself important questions, such as:  Am I financially secure enough to make a payment?  Can I see myself living in one place for at least five years?  From my experience, the tax credit wasn’t necessarily the most important point, but it did sometimes help make the decision to buy.  Speak with a real estate professional about your needs.

The good news is that, although the tax credit will not be renewed, I have already seen slight adjustments in pricing to make up for what the tax credit created.  For example, some sellers offer a similar buyer’s concession upfront already negotiated for the buyer.  In other words, the market has a way of correcting itself so don’t feel like you’ve missed out on anything.