Edgewood, WA Real Estate Blog

Continuing on the subject of my previous post, here’s a look at the market composition of organic versus short sales versus bank REOs (Real Estate Owned – foreclosures or deed in lieu of foreclosures):

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So about 3/4 organic listings, 1/5 short sales, and about one in twenty are bank REOs.

Now take a look at the closed transactions over the past 30 days (from 10/14/09):

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Well, you can sure see where the action is -  bank REOs.  Only about one in twenty listings are REOs, but they disproportionately represented almost one in three of the total sales.

Surprisingly, it’s the organic sales that are most underrepresented.  The proportion of short sale listings to short sale closings isn’t that different.  And these are actual closings, not pendings.  As you can see in my previous post, the majority of short sales that close go pending multiple times.

The number of listings offered as short sales has climbed dramatically since the onset of the financial/housing crisis.

Rather than settle for the anecdotal and second hand information, I decided to take a closer look at the activity over the past 6 months of short sale activity.

The results are interesting, especially for a buyer considering a short sale.

There were 35 total short sales that actually closed for the areas I selected over the past 6 month period.  One often hears the horror stores about how long they take to close – if they ever close.  I wanted to know how long they actually took to close.

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As you can see, it’s true that many short sales take relatively longer than the typical organic pending period of 30-45 days… some an awful lot longer.  As a buyer the question of “is it going to take 30-40 days or 110+ days to close?… and am I OK with not knowing which?” is important to be answered before entering into a short sale.  Of course investor buyers have a lot less concern here as compared to an owner occupied type buyer.

Next I wanted to determine if it’s possible to glean any insight as to which short sale transactions will actually close so I decided to take a look at how many times a short sale property went pending before it actually closed.  Keep in mind the following graph includes only those properties that actually closed in the end, and doesn’t include properties that haven’t closed or those that slipped into foreclosure.

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As you can see, more than 50% of short sales that closed went pending more than once.  To me this implies that a buyer has a better chance of closing if they enter into a transaction for a property that has failed to close previously.  One explanation may be that the lender(s) need to be softened up by the market before accepting a price.

Another thing to note is the number of pending sales and the ratio of pending sales to closings will be really distored when short sales are included.

The last parameter I looked at was the number of price changes made before a property closed.  Here zero price changes mean the listed price wasn’t reduced before entering into a sale that closed (although it could have had transactions that failed to close multiple times).

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Note there is no information here regarding the size of the price change.   And there were a couple of examples where the price actually increased.  I was surprised to see this number of price changes.  I don’t know whether this has to do with sellers being unwilling to come to grips with the market or whether agents are attempting to provide documented evidence to lenders regarding the veracity of their sales price versus the market.

Never the less, it remains that successful short sales experience a high number of price changes.

Statistics for September 2009 for Edgewood and surrounding cities have just been updated.
Remember the data is not seasonally adjusted.

Looks like we are off the low prices of March and April (at least county wise), but I’m not confident this isn’t an aberation due to the first time homebuyer federal tax credit scheduled to expire November 30, 2009.

• Number of Active listings: King & Pierce County WA
• Number of Active listings: Edgewood, Milton, Sumner, NE Tacoma, & Federal Way WA
• Number of Sold listings: King & Pierce County, WA
• Number of Sold listings: Edgewood, Milton, Sumner, NE Tacoma & Federal Way WA
• Average days on market: King & Pierce County WA
• Average days on market: Edgewood, Milton, Sumner, NE Tacoma & Federal Way WA
• Months of housing inventory: King & Pierce County WA
• Months of housing inventory: Edgewood, Milton, Sumner WA
• Months of housing inventory: NE Tacoma WA
• Months of housing inventory: Federal Way (100) WA
• Months of housing inventory: Federal Way (110) WA
• Median sold price: King & Pierce County WA
• Median sold price: Edgewood, Milton, Sumner WA
• Median sold price: NE Tacoma WA
• Median sold price: Federal Way (100) WA
• Median sold price: Federal Way (110) WA

Statistics for January 2009 for Edgewood and surrounding cities have just been updated.

Notwithstanding some of the recent comments of the usual real estate spokespeople, the market price levels continue to deteriorate.  Remember the data is not seasonally adjusted.  Never the less, the trend is pretty easy to discern.

Peak to trough median prices widened in Janary and inventory levels continue to climb.

I’m not sure what happened in Northeast Tacoma last month but there were only 4 sales reported.  That really skewed the inventory figure for that area.  With so little data, one cannot rule out an anomaly rather than a trend.

• Number of Active listings: King & Pierce County WA
• Number of Active listings: Edgewood, Milton, Sumner, NE Tacoma, & Federal Way WA

• Number of Sold listings: King & Pierce County, WA
• Number of Sold listings: Edgewood, Milton, Sumner, NE Tacoma & Federal Way WA

• Average days on market: King & Pierce County WA
• Average days on market: Edgewood, Milton, Sumner, NE Tacoma & Federal Way WA

• Months of housing inventory: King & Pierce County WA
• Months of housing inventory: Edgewood, Milton, Sumner WA
• Months of housing inventory: NE Tacoma WA
• Months of housing inventory: Federal Way (100) WA
• Months of housing inventory: Federal Way (110) WA

• Median sold price: King & Pierce County WA
• Median sold price: Edgewood, Milton, Sumner WA
• Median sold price: NE Tacoma WA
• Median sold price: Federal Way (100) WA
• Median sold price: Federal Way (110) WA

Mortgage rates continue to bounce all over the place during these volatile times in the market.  I thought it might be interesting to share a scenario that I’ve been pricing out this morning instead of just creating a rate sheet.

They are a couple who are looking at buying their first home.  They have saved up enough for 5% down payment and closing costs.  They have excellent credit (scores 740 or higher) and are just shy on savings as many first time home buyers are.   They orignally were seeking a “piggy back” type scenario where the first mortgage is at 80% of the sales price (to avoid private mortgage insurance) and the second mortgage at 15% (to make up the difference owing of their 5% down).   These types of programs have disappeared during the “mortgage meltdown” as no bank wants to be in second lien position in the event of a foreclosure.   There are still options for this buyer’s scenario. 

Conforming financing will still allow 5% down with private mortgage insurance.   This morning, I provided them with a Good Faith Estimate detailing how this would look based on their 740 low mid score (low mid score means that you take the two middle scores of both borrowers and use the lowest of the two):

They are looking at a home with a sales price of $390,000 with a loan amount of $370,500.

30 year fixed priced with 1 point:  5.75% (apr 6.694%) based on a 740 low-mid credit score.

Principal and interest = $2,162.14; plus private mortgage insurance of $240.83 and estimated taxes and insurance of $456.25 = a total mortgage payment of $2,859.21.

Down payment plus closing costs = $29,000.

I also included a Good Faith Estimate based on financing their home purchase utilizing an FHA insured mortgage loan.   Why?  Frankly mortgage and private mortgage insurance companies continue to tighten their guidelines with underwriting that overlays what is dictated by Fannie Mae and Freddie Mac (conventional lenders).  In this market, it’s good to have a back up plan just in case the bank or the pmi company decides that they don’t want to go up to a 95% loan to value anymore.

Here’s what the FHA scenario looked like this morning (I’m seeing that rates have improved slighlty as I write this post):

30 year fixed priced with 1 point: 6.000% (apr) with a base loan amount of $370,500 plus upfront mortgage insurance of 1.75%  ($6,483)  =  $376,983.  Credit scores with FHA may be as low as 620 without any adjustments to price or mortgage insurance (currently).

Principal and interest = $2,260.20; plus monthly mortgage insurance $169.81 and estimated taxes and insurance of $456.25 = total mortgage payment of $2,886.26.

Down payment* plus closing costs = $28,450.  *This down payment is based on 5% down.  With an FHA mortgage, they could elect to do as little as 3% down until the end of this year.  Effective January 1, 2009, the minimum required down payment for an FHA mortgage loans will be slightly increased to 3.5%.

You don’t have to have 20% down to buy a home and although we’re hearing a lot about how banks aren’t lending in the news due to the credit freeze, mortgages are still taking place.  I do advise meeting with a Mortgage Professional early on should you be considering buying or refinancing a home so that you can be in the best position possible with your credit.

Statistics for September 2008 for Edgewood and surrounding cities have just been updated.

Things appear to be changing a bit.  However, keep in mind the data is not seasonally adjusted (although you can see what was happening last year at this time).

Inventory seems to be coming down, at least for King County.  Prices continue to drift downward.  Some of this drift may be due to the disparity of rates between conforming and jumbo (conforming and non-conforming) loans.

I have not compiled pending data below.  The mainstream media is ballyhooing an increase in pending sales (an improving market) which generally reflects the most recent trends (0-30 days back versus actual solds which reflects what happened 30-60 days ago).  But keep in mind NWMLS changed the way pendings are tabulated.  Houses that were sold subject to inspection were categorized as actives.  Now they are classified as pendings subject to inspection.   So the method of classification has changed.  We’ll need to see how much effect this has by correlating pendings to solds in the future.

Never the less, it remains a buyer’s market.

• Number of Active listings: King & Pierce County WA
  
• Number of Active listings: Edgewood, Milton, Sumner, NE Tacoma, & Federal Way WA

• Number of Sold listings: King & Pierce County, WA
• Number of Sold listings: Edgewood, Milton, Sumner, NE Tacoma & Federal Way WA

• Average days on market: King & Pierce County WA
• Average days on market: Edgewood, Milton, Sumner, NE Tacoma & Federal Way WA

• Months of housing inventory: King & Pierce County WA
• Months of housing inventory: Edgewood, Milton, Sumner WA
• Months of housing inventory: NE Tacoma WA
• Months of housing inventory: Federal Way (100) WA
• Months of housing inventory: Federal Way (110) WA

• Median sold price: King & Pierce County WA
• Median sold price: Edgewood, Milton, Sumner WA
• Median sold price: NE Tacoma WA
• Median sold price: Federal Way (100) WA
• Median sold price: Federal Way (110) WA

Conventional mortgage rates are priced by the lowest mid-credit score of the borrowers on the loan application.    On October 1, 2008, Fannie Mae will be implenting another price adjustment for “adverse market conditions” on all loans delivered.  This means that lenders are all ready beginning to price rates factoring in the price adjustments as some loans locked today may not be delivered to Fannie until 10/1/2008.    As I priced these rates out, it was interesting to see which banks are all ready factoring and how dramatic the difference to rate is from lender to lender right now.   The gap will narrow as we near October.

These rates below are based on a sales price of $500,000 with a loan amount of $400,000 utilizing a 30 year fixed mortgage with a 30 day lock priced with zero origination/discount points.   (Remember, whether or not you have your mortgage priced with a point is up to you.  Typically 1% in origination/discount points = 0.25% to rate).

720 or better mid-credit score:   6.625% @ 0 pts (apr 6.690).  Principal & interest (based on $400k loan amt) = $2,561.24.

699 – 719 mid-credit score:  6.750% @ 0 pts (apr 6.816).  P&I = $2,594.39.

660 – 679 mid-credit score:  6.875% @ 0 pts (apr 6.942).  P&I = $2,627.72.

640 – 650 mid-credit score:  7.125% @ 0 pts (apr 7.194).  P&I = $2,694.87.

620 – 639 mid-credit score:  7.250% @ 0 pts (apr 7.320).  P&I = $2,728.71

FHA is becoming a gaining all the popularity it lost in recent years past during the subprime boom.  Home buyers and borrowers–please verify that your loan originator is legally able to provide FHA mortgages (many are not) by checking HUD’s site.

FHA  30 Year Fixed with mid-credit scores of 600 or higher and a loan amount of $362,790 for Pierce, King and Snohomish Counties:  6.500%  (apr 7.337).  Principal, interest and mortgage insurance (based on $362,790 and a 640-679 mid-credit score) = $2,493.75.

FHA-Jumbo 30 Year Fixed based on a sales price of $500,000 and a loan amount of $400,000 (to compare with the conventional scenarios above) with mid-credit scores of 600 or higher: 6.625% (apr 7.440).  P&I plus mortgage insurance = $2776.59.

Note: the FHA payments are also factoring in FHA’s upfront mortgage insurance which is typically financed into the mortgage.   The FHA Jumbo scenaro would have the same rate with as little as 3% down. 

Speaking of FHA, with the recent  passage of HR 3221, down payment assistance programs funded by the seller (such as Nehemiah) are slated for extinction as of October 1, 2008.  Lenders are all ready refusing to close loans with DPAs.   As of January 1, 2009, the minimum investment required by a buyer is being increased to 3.5%.   This 3.5% may still be a gift or may now actually be a loan from a family member assuming the borrower qualifies for both payments.   This should be a welcomed option for “the Bank of Mom and Dad” who might not really want to “gift” funds and would prefer loaning the money instead.  

Rates quoted by Rhonda Porter, CMPS and Licensed Loan Originator 510-LO-32047 with Mortgage Master Service Corporation.   To see live examples of rates I’m quoting, follow me on Twitter.  

Statistics for July 2008 for Edgewood and surrounding cities have just been updated.

More of the same – median prices drifting downward. Still looking for a trend of increasing sales which would portend a “bottom”. It just isn’t there. Lacking an increase in sales, months of inventory is “stuck” at a high level.

Keep in mind figures are not seasonally adjusted.

Pierce County appears to be doing somewhat worse than King county.

With Federal Way located right on the border of King and Pierce County, it will be interesting to see what effect Weyerhauser’s reduction of employees will have. It can’t be good.

• Number of Active listings: King & Pierce County WA
  
• Number of Active listings: Edgewood, Milton, Sumner, NE Tacoma, & Federal Way WA

• Number of Sold listings: King & Pierce County, WA
• Number of Sold listings: Edgewood, Milton, Sumner, NE Tacoma & Federal Way WA

• Average days on market: King & Pierce County WA
• Average days on market: Edgewood, Milton, Sumner, NE Tacoma & Federal Way WA

• Months of housing inventory: King & Pierce County WA
• Months of housing inventory: Edgewood, Milton, Sumner WA
• Months of housing inventory: NE Tacoma WA
• Months of housing inventory: Federal Way (100) WA
• Months of housing inventory: Federal Way (110) WA

• Median sold price: King & Pierce County WA
• Median sold price: Edgewood, Milton, Sumner WA
• Median sold price: NE Tacoma WA
• Median sold price: Federal Way (100) WA
• Median sold price: Federal Way (110) WA