Lennox's Real Estate Blog

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Archive for the ‘The Economy’ Category

Seattle is a Special Market for Residential Real Estate

A sellers’ market has returned in the areas close to the job centers of Seattle and Bellevue, up to the one million dollar price point.  We are also seeing the same situation in the more affordable price ranges in the surrounding market areas, caused by a shortage of inventory and healthy/strong sales activity. Price increases are muted by short sales and foreclosures that are causing low appraisal values.

Unique market conditions prevail: Both low inventory and low interest rates at the same time.

Major factors leading to the current healthy/strong sales activity are positive job growth, population growth, home buyers taking advantage of the low rates and lower adjusted home prices, elevated number of investors in the market and historic low interest rates, in the upper 3% range.

The lower number of new listings coming on the market is being caused by under-water sellers and sellers with equity holding off for higher prices and the lack of new construction/condominiums. The low number of new listings combined with the increase in sales activity is creating the shortage of homes for sale on the market in specific areas and price ranges.

As always, thanks for reading.

Lennox

Written by Lennox

February 3, 2012 at 12:53 pm

New Solutions for America’s Housing Crisis

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I’ve recently had the honor of participating in the New Solutions for America’s Housing Crisis conference back in Washington, DC.  The conference was co-hosted by E21 and the Progressive Policy Institute, two economic policy organizations looking for resolutions to get America out of our current fiscal turmoil.   In attendance were strategic business leaders from the real estate and mortgage industries as well as key federal government policy makers.

The purpose of the conference was to discuss real solutions to the housing crisis and its effect on the economy.  Read the rest of this entry »

Written by Lennox

October 18, 2011 at 2:07 pm

King County Real Estate Sees Positive Shift

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Single-Family Inventory Levels Very Low Close To Job Centers

The psychology of the residential real estate market in King County is shifting in a more positive direction; the roller coaster has started to level out with single-family home inventory levels decreasing and prices stabilizing under $750,000 in markets close to the job centers in Seattle and Bellevue. Simultaneously there’s a pool of buyers that are motivated to take advantage of low interest rates and increased affordability. As a result, Read the rest of this entry »

Written by Lennox

March 25, 2011 at 5:09 pm

Puget Sound Housing Report 2010/2011

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Let’s start by reviewing what took place in the 2010 Puget Sound residential real estate market. Last year experienced a “surge/unsurge” with sales surging in first quarter thanks to historically low-interest rates and the Federal Home Buyer Tax Credit. But when the tax credit expired on April 30th, 2010, home sales took a dramatic drop.

Sales remained sluggish, but as the year progressed, inventory levels began to lower. By the end of 2010 the three-county area of King, Snohomish, and Pierce reported Read the rest of this entry »

Written by Lennox

February 22, 2011 at 1:16 pm

Talking Real Estate With Seattle Rotary

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On October 13, I had the immense honor of addressing the Seattle Rotary Club as a part of their weekly luncheon program.  This club is the largest in the world with 675 members, as well as the fourth oldest, founded in 1909. The last time I spoke to this esteemed audience I discussed technology and its impact on the real estate business. This time, I was asked to address the state of the residential real estate market – past, present, and future. The club was kind enough to record my presentation – which I will post below (entire presentation is broken out into 3 parts). A special thanks to Phil Smart for his witty commentary at the end of the Q & A – leave it to Phil to end it all on a high (and humorous) note.

As always, thanks for reading,

Lennox

 

Written by Lennox

October 17, 2010 at 10:39 pm

Shop Talk With U.S. Housing Sec. Shaun Donovan

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Last week I had the great honor of being invited to meet with U.S. Department of Housing and Urban Development (HUD) Secretary Shaun Donovan and Assistant Secretary for Housing and Commissioner of the Federal Housing Administration (FHA) David Stevens. The meeting took place on September 23 at the HUD offices in Washington D.C.

The meeting was arranged by Sen. Patty Murray’s office for the purpose of discussing the systemic problems facing the housing market and ideas to stimulate recovery. The meeting was also attended by Travis Lumpkin, Sen. Murray’s legislative assistant on housing issues. We discussed the concept of an urban down payment assistance program similar to the USDA’s program which currently helps households purchase homes in rural areas with no required down payment (more details about the program can be found in this previous blog).

Secretary Donovan and Commissioner Stevens acknowledged that one of the biggest challenges facing qualified first time buyers is not affordability, but rather having the down payment. We also discussed the importance of State Housing Finance Agencies and the need to renew high balance loan limits – which Secretary Donovan stated HUD has just come out in support of. The maximum $729,750 loan limit for Fannie Mae, Freddie Mac, and Federal Housing Administration-backed loans in high-cost areas will expire at yearend unless policymakers act.

Without an extension, the maximum loan limit would drop back to $625,500 on Jan. 1, which would cause a significant drag on the fragile market. According to NAR’s deputy chief lobbyist Jamie Gregory, Sen. Murray, chair of the Housing and Urban Development Appropriations subcommittee, has inserted language into a HUD appropriations bill to extend the current limits.

This meeting could not have happened without the direct support of Sen. Murray and her staff and I am very thankful to them for providing me with this unique opportunity. Sen. Murray continues to be an advocate for housing and she is one of the few in Congress that understands housing issues. It is my opinion that losing her presence in the Senate would be a huge loss to our industry.

On the flight back to Seattle I reflected on the significance of this meeting and any results that may come from it. Then I decided that the ultimate outcome would be if President Obama turned to Secretary Donovan during a Cabinet meeting and asked him what his plan is for re-establishing a healthy housing market, and Secretary Donovan responds with “down payment assistance for urban markets”.

As always, thanks for reading.

Lennox

Written by Lennox

September 30, 2010 at 10:53 am

The Road To A Sustainable Housing Market

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The highly anticipated restoration of the USDA’s single-family rural housing program that guarantees home loans for rural buyers was passed by the Senate on July 28 and is on its way to President Obama’s desk for signature. With the support of its members, the National Association of REALTORS® has vigorously lobbied to restore funding for the rural program since last March, and hailed this development as a great victory for rural home buyers.

I couldn’t agree more.

But before I go into why I support this legislation, I’d like to provide a little background on the USDA’s Single-Family Housing Guaranteed Loan Program and why I believe it can serve as a successful model for a much needed urban down-payment assistance program.

According to Wikipedia, the United States Department of Agriculture was established by President Abraham Lincoln on May 15, 1862 in order to help out the United States economy. Through Federal funding, its purpose was the collection of agricultural statistics and other agricultural purposes; President Lincoln called it the “people’s department.” For many years, the Department of Agriculture was crucial to providing concerned persons with the assistance they needed to make it through difficult periods, such as the Great Depression; this included loans for rural landowners.

Fast forward 148 years and what we have now is a robust program that in 2009 provided over 140,000 loans and $16.6 billion in grants to achieve homeownership and improve housing in rural areas. They also funded $11.2 billion for direct and guaranteed single-family housing loans to provide additional credit for affordable home loans. USDA loans used to be considered “farmers’ loans” but that is no longer the case. Rural America is home to about 50 million people, but only 6.5 percent of the rural work-force is directly employed in farm production. This means that USDA must support not only the farms, but also the communities that surround and support them.

In 2009, the USDA enacted changes that provided assistance to millions of homebuyers who did not have the down-payment funds required by conventional loan programs. USDA loans currently stand alone as the only zero-money-down program available to borrowers who have not served in the military. And like their conventional counterparts, the USDA program adheres to strict underwriting standards, assessing each borrower’s credit, income, and cash flow. As a result, the agency’s portfolio of loans has a low default and delinquency rate of 1.72% (compared to a 2%- 5% default rate for conventional loans and 15% for subprime).

Earlier this year, the USDA exhausted its $13.1 billion funding, leaving many qualified homebuyers with few-to-no financing options and putting a squeeze on our nation’s economy. Thankfully, the Federal Government recognized this fact and responded by passing legislation that increases the Rural Housing Service (RHS) commitment authority allowing guaranteed loans. The RHS is expected to announce new guidelines shortly after the president signs the bill; one anticipated change is a higher “guarantee fee” of 3.5% that can be folded into the mortgage and will enable the program to be self-sufficient.  

Homeownership is historically an instrumental part of the U.S. economic engine, so it’s critical that we take measures to ensure that the housing market has a strong foundation for sustainability. I would argue that by creating a program similar to the USDA’s for city dwellers, there is the potential to bring in hundreds of thousands of homebuyers annually and billions of dollars in state and local taxes every year, as well as higher Federal Income Tax revenue (click here to read a detailed analysis).

The success of the USDA’s Single-Family Housing Guaranteed Loan Program proves that alternatives to conventional loan products can be successful and result in responsible, long-term homeownership with low delinquency rates.  Now is the time to expand the market and create a down payment assistance program for urban homebuyers who face similar challenges to their rural counterparts. Perhaps it could be called the United States Down Payment Assistance program—or USDPA. Has a certain ring to it, doesn’t it?

As always, thanks for reading.

Lennox

Written by Lennox

August 3, 2010 at 3:03 pm

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