Savvy Investors Should Take Advantage Of A Window Of Opportunity

May 8, 2012 By Douglas Lovitt Leave a Comment

Savvy investors should take advantage of a window of opportunity created by the Robo-signing Settlement.  For months now investors have been hearing rumors about and waiting for a tidal wave of “REO Shadow Inventory” to hit the local real estate market.  Unfortunately, at recent local real estate conference, representatives from Bank of America, Wells Fargo and J. P . Morgan Chase all dispelled these rumors.  They outright said they don’t have a big back log of foreclosed properties they will be dumping on the market.  In fact, they said just the opposite.  According to the new requirements placed on them by the recent Robo-signing Settlement, it will take them significantly more time to work their way through the foreclosure process.  If this is true, investors will see even fewer opportunities within the REO market.

Investors have also been given a lower priority within HUD’s bidding process and Fannie Mae’s First Look program. Both programs favor owner occupants over investors.  This has allowed some of the best investment properties to be gobbled up before investors get a chance at these bargains.

One of the areas that buyers have been avoiding like the plague is short-sales.  Why?  Most buyers that want to occupy a home simply don’t want to wait around for months to find out if their offer will be approved by the underlying lien holder.  They want to know now if they are going to be able to purchase the home so they can make plans to move.  Investors however don’t have the same urgency and should be preparing to enter this market aggressively between now and the end of the third quarter this year.

Since the Robo-signing Settlement, one thing is very clear.  The attitudes of the large banks and loan servicers are rapidly changing when it comes to short-sales.  Since the settlement, both are now more financially motivated to accept and approve a short-sale.  Now… combine this with the fact that the Mortgage Forgiveness Debt Relief Act  is currently scheduled to come to a halt at the end of this year, and you have a rare situation where both the seller and the lender will be very motivated to get a deal done!

If you want to learn more about how you can take advantage of this opportunity,

Give us a call today!

425-742-1515

Douglas Lovitt is the Managing Broker at
CENTURY 21 North Homes Realty, Inc.
1133 164th St SW Suite 102
Lynnwood, WA 98087

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March pending home sale rise-Recovery??

April 30, 2012 By Mike Moore Leave a Comment

Pending home sales increased in March and are well above a year ago, another signal the housing market is recovering, according to the National Association of REALTORS®.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 4.1 percent to 101.4 in March from an upwardly revised 97.4 in February and is 12.8 percent above March 2011 when it was 89.9. The data reflects contracts but not closings.

The index is now at the highest level since April 2010 when it reached 111.3. …
Quoted from the NAR Chief Economist, Lawrence Yun.

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Listing Inventory Continues To Tighten In Snohomish County

April 17, 2012 By Douglas Lovitt Leave a Comment

Despite the lack of local media attention, listing inventory continues to tighten in Snohomish County.  Potential home buyers are finding it more and more difficult to find and purchase quality homes.  When a buyer does find a well maintained home at a reasonable price, they quite often also find themselves having to compete with other buyers in a multiple offer situation.  This is good news for anyone attempting to sell a home. 

The average number of homes for sale in Snohomish County over the past 5 years has hovered around 4,500 homes.  Today, that inventory is down to just 2,115 homes and still continues to fall.  That’s less than half the normal amount of homes buyers usually have to choose from!  The reason is simple.  There are more buyers looking to buy right now than there are sellers attempting to sell.  Since May of last year buyer demand has slowly outpaced the supply of homes coming on the market. 

Out of the 2,115 existing residential listings on the market, approximately 66% (1,406) are normal non-distressed sellers.  The remaining homes for sale are either short sales (23% – 488 homes), bank owned properties (8% – 171 homes) or bankruptcy sales (2% – 50 homes). 

If you have been thinking about selling your home or liquidating an investment property, the next couple of months may be your best window of opportunity.  We expect to see an increase in the number of bank owned properties coming on the market beginning in June and July.  Many of the larger banks are currently working their way through a backlog of pending foreclosures.  Expect to see these properties to hit the market at very attractive prices.  They want to get them off their books as quickly as possible. 

If you want to sell…

Give us a call today! 

425-742-1515

Douglas Lovitt is the Managing Broker at
CENTURY 21 North Homes Realty, Inc.
1133 164th St SW Suite 102
Lynnwood, WA 98087  

“Statistics not compiled or published by the Northwest Multiple Listing Service.”

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Number of homes for sale in Snohomish County continues to fall

March 27, 2012 By Douglas Lovitt Leave a Comment

The number of homes for sale in Snohomish County continues to fall at a surprising rate.   As of today, the number of active listings has fallen to 2,185.  This is down nearly 9% just since the end of February.  To put this shortage into perspective, over the last five years the average number of homes for sale is usually around 4,500!

The buzz in my office meeting this morning (and for the past 3 weeks) was all about multiple offers.  Buyers are searching for good homes and the shortage of inventory is creating bidding wars!  Right now it is not unusual for the seller of a well priced quality home to receive 9 or more offers!  In fact, we just had one that received 28!  In most of these situations buyer are paying more than list price to get the home they want.

Further evidence of the dramatic shift back into a seller’s market is clear when you look at the average time it takes to sell a home.  In February, pending sales were averaging 91 days on the market before they sold.  Today, less than a month later, the market time has dropped to 76 days!  Those 15 days represent a huge swing and a very telling sign of how heated the market is becoming.

This is very welcome news for existing homeowners that have been riding out the market hoping to reclaim some the value they have lost over the past five years.  And… it is great news if you are wanting to sell a home right now.

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Why is the inventory of homes for sale so low?

March 16, 2012 By Douglas Lovitt Leave a Comment

Why is the inventory of homes for sale so low? 

Readers of Tuesday’s blog post “Snohomish County Home Values on the Rise” raised this interesting question, so I’ll do my best to give you some answers.  I’m not sure anyone has the exact answer, but here’s what my experience tells me.

There are two things that appear to be keeping homes off the market right now.

First, homeowners historically fit into a fairly predictable pattern across the nation.  Typically someone buys a home and lives in it for 5 – 7 years before they sell that home and buy another one.  But when home values decline severely, they can quickly dip below what is owed on the mortgage.  When this happens, in order to sell you either have to bring money to the table to get out, or get your lender to accept a short sale.  If you want to buy something else right-a-way, then a short sale is not an option.  And, if you don’t have enough cash to buy your way out – you’re stuck.  So… since we are in that 5 – 7 year window since home values began declining, many would be sellers have no choice but to hold on and ride the storm out.  These homeowners would normally be putting their homes on the market now but aren’t. 

The second issue impacting inventory is that many of the banks are holding on to some of those homes they foreclosed on.  Think about this.  If you owed a bank and have taken big losses because of defaulted loans, would it make sense to your bottom line to simply dump those properties on the market?  Especially if you thought prices might begin to go up soon?  It might make more sense (and money) to hold on to them and slowly sell them off as values go up.  In fact, I see many of the lenders across the country hiring property managers to rent these properties out.  Why?  Money.  In some areas rents are high enough to more than cover their carrying cost, so any future gain in value is good for the bank’s bottom line.  It appears that even the banks feel that real estate is a good investment right now.   

I believe these two issues are having the largest impact on why the inventory of homes for sale is so low.

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Snohomish County Home Values on the Rise!

March 13, 2012 By Douglas Lovitt Leave a Comment

Ever since the 2007 collapse of the sub-prime mortgage market and the resulting financial crisis that swept throughout the banking industry, Snohomish County homeowners have been feeling the pain of falling home values.  Most of us have seen our home values drop 34% or more over the last five years. Ouch.

Well… there is finally good news on the way!  We’re about to see our home values begin to rise again.

"Number of Homes for Sale in Snohomish County, Washington"For the past 4 weeks in my Lynnwood office, the brokers have been talking about the lack of homes for sale.  The chart below shows the inventory levels of homes for sale in Snohomish County over the past five years.  Take a close look at this year’s January and February levels.  Typically, this time of year we see a seasonal increase in active listings.  The glaring fact is that homeowners have not been putting their homes on the market.  This lack of homes for sale has created a severe shortage of homes for buyers to pursue. 

The second reason that home values are poised to make a rebound is that buyer demand has been slowly rising over the past four years.  Throughout the month of February, it was very common to hear my brokers discussing multiple offer situations.  Frequently, they had submitted a buyer’s offer and then learned that the seller had received multiple offers from other buyers.  Most of the very clean, well maintained, and attractively priced homes we had listed have sold above their list price.  Why?  Inventory is extremely low, and buyers don’t have as many choices.

It’s no secret that for the past few years we have been in a “Buyer’s Market.”  But what exactly determines whether it is a buyer’s or seller’s market?  I keep a close eye on what we call the absorption rate.  The absorption rate is simply the total amount of homes for sale divided by the total number of closed sales for the previous month.  The result is how many months the current inventory will last. Effectively, this takes both the previous charts, combines them, and gives you a good look at how balanced the market is between buyers and sellers.  Six months of inventory is considered to be a balanced market.  More than six months is considered excessive inventory, while less than six months is a shortage.  The current chart very clearly shows that a shift back towards a seller’s market has occurred. 

The final chart shows what has happened to home values in Snohomish County over the past five years…

The picture isn’t pretty, but the encouraging part is that home values appear to have stopped their downward slide.  

If the current trends continue, extremely low inventory and rising demand, simple economics dictates that we can expert to see home values increase.

 

  

My advice to buyers – if you have been waiting for prices to hit the bottom, we’re there.  If you are considering buying a home, do it now while home prices and interest rates are at their lowest point.  Get yourself pre-approved for a home loan before you go shopping!  By getting pre-approved first, you make your offer more attractive to a seller, especially if they get more than one offer!  If you are out looking now, be prepared to make the seller an attractive offer as soon as you find the home you want.  Procrastination and low offers will only give another buyer the opportunity to purchase the home out from under you.

My advice to sellers – don’t get greedy.  Price your property to attract buyers.  A well priced property could actually turn into a bidding war and drive your net proceeds up!  I’m seeing numerous situations like this, but buyers aren’t even looking at or making offers on overpriced homes.  If your property needs repairs, do them!  Don’t expect buyers to ignore or look past things that need to be fixed.  Just because inventory is low, doesn’t mean that your buyer doesn’t have choices.  They don’t want to spend to spend their time or money fixing a home either – unless they can steal it from you.

Give us a call today   425-742-1515

 

Douglas Lovitt is the Managing Broker at 
CENTURY 21 North Homes Realty, Inc.
1133 164th St SW Suite 102
Lynnwood, WA 98087 

 

  “Statistics not compiled or published by the Northwest Multiple Listing Service.”

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