Home Prices Drop, Along With Consumer Confidence

The Conference Board's consumer confidence index, released Tuesday, fell to 50.4 this month, the lowest reading since February 1992 and half what it was a year ago. The index dropped more steeply than expected from 58.1 in May. The consensus estimate of economists surveyed by Thomson/IFR was for a more modest decline to 56.5 for June.

Patrick Newport, an economist at Global Insight, expects the Case-Shiller index to fall another 20 percent to 30 percent. Prices should halt their descent sometime next year, he said.

"The numbers are going to get worse because inventory levels continue to be at record highs or near record highs," Newport said.

Much of the pricing pressure comes from foreclosures and so-called short sales, in which a lender accepts an offer less than the value of the mortgage. These distressed sales can be discounted by 20 percent to 50 percent, forcing home sellers to slash their listing prices to compete.

An industry group Tuesday said U.S. consumer confidence plummeted more sharply than expected in June to it lowest level in more than 16 years. The Conference Board's reading of consumers' expectations hit an all-time low. (Associated Press)

Tips for First-Time Homebuyers

Home-price adjustments in markets around the country have opened doors of opportunity for many renters. If you are transitioning from renter to homeowner, the prospect of making such a large investment may be exciting, while at the same time overwhelming. But it doesn’t have to be. Here are six common mistakes to avoid.

1. Not understanding the homebuying process. Educate yourself. Find a homebuyer seminar that you can attend or research online. The U.S. Department of Housing and Urban Development Web site (www.hud.gov) has an entire section devoted to homebuyers with common questions of first-time homebuyers, mortgage and home-buying programs information, downloadable tools such as a wish list and home-shopping checklist, tips on selecting a real estate professional, etc. Likewise, Prudential Real Estate’s popular Web site, prudential.com/realestate, offers consumers brand-new tools for the homebuying process, such as free home environmental reports, Value Range Estimates and Property Profiles, among other resources.

2. Not asking questions. There are many facets and intricacies to the homebuying process, so although you may gain a basic knowledge, you will still have questions. Don’t hesitate to let your real estate professional know that you are new to the process. Make sure you choose a sales professional who is willing to spend time with you and walk you through the entire process. He or she will expect you to have questions at each step—from house hunting, to making an offer to the closing. Remember, this is one of the largest financial transactions of your life, so you want to have a clear understanding of what’s going on.

3. Buying on impulse. Don't feel pressured into making an offer on the first home you see. Buyers, especially first-timers, may be impressed by the first two or three homes they view. Look at a good selection. List the positives and negatives about each home. Narrow the prospects to three or four and then return for a closer look. When you decide to make a bid on a property, work with your real estate professional to get all of your questions answered before making an offer. But don't wait too long to make an offer. The longer you wait, the greater the chance other prospective buyers may place offers, making it harder for you to negotiate a good deal.

4. Looking outside your price range. Before beginning your home search, consider getting pre-qualified to so get an idea of how much you may be able to borrow. Use this information as a starting point in determining your price range. Then take into consideration other factors that will affect your monthly budget once you are a homeowner, such as property taxes, homeowners insurance, utilities, private mortgage insurance (PMI) and maintenance.

5. Not planning ahead. Think about personal changes you are planning in the next five to seven years. For instance, are you starting a family, and if so, is the home large enough and will it continue to be? If this will be a starter home or if you think you’ll be relocating in a few year, you’ll probably want to pay closer attention to appreciation and resale value. If a double-income is necessary to qualify for financing and to make your payments, do your plans foresee an income sufficient to continue making payments?

6. Failure to focus on location. Don’t just focus on the house. Examine the community. Does it suit your lifestyle? Is the area safe, well-maintained, close to work, stores and schools? Find out about zoning and what new construction is planned on vacant land in the immediate area. Also consider the property marketability when it’s time to sell.

Above all, remember knowledge is key. No question is a silly question. Your real estate professional can be an invaluable asset throughout the process. Making smart home buying decisions will make the home-buying process less scary and your first home purchase a rewarding experience.

Prudential Olympia, REALTORS is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity.

Can You Afford That House?

Before you start searching for your dream home, you first need to determine a price range you can afford. According to the Federal Housing Administration (FHA), depending on the consumer’s current debt ratio, most people can typically afford to pay 31 percent of their gross monthly income for mortgage payments. For example, if you earn $50,000 annually, then your monthly income is about $4,167. Thirty-one percent of that is $1,292.

There are several online tools to calculate a monthly mortgage you can afford using factors such as your current monthly expenses, down payment and the interest rate. You can also work with a lender to get pre-qualified for a loan. This estimate will help you gauge how much money you may be able to borrow and the monthly mortgage payments.

However, the amount you are able to afford for a home loan should not be your only consideration for determining your price range. With homeownership come other housing expenses.

Utilities

The most obvious of additional housing expenses are utilities—gas, electricity and water. But don't forget about telephone, trash collection, and cable or satellite bills.

Taxes

As a property owner, you are responsible for property taxes. The rate will vary from city to city. In our community, the tax rate is 0.00972 percent. That means for a home with a market value of $200,000, yearly taxes will run $1,944. To get a general idea on how much the tax bill will be for a property, ask the seller for a copy of the previous year's tax assessment. Your real estate professional can help you refine these figures.

Association Dues

Another cost you may incur is homeowner association (HOA) dues. Most condominiums and some (residential developments/subdivisions/neighborhoods) have HOAs, which are legal entities, created to maintain common areas and enforce deed restrictions. As a property owner, you are required to pay the established monthly or annual homeowner association dues. Be sure you factor this cost into your budget.

Maintenance

You also need to consider the upkeep of your home. You should budget for seasonal maintenance such as lawn care, pest inspections and carpet cleaning, as well as unexpected repairs. The amount you budget will depend on the age of the home, as older homes tend to require more repairs such as installing a new roof, painting and replacing older appliances.

Insurance

Depending on the type of coverage and your area, the costs for homeowners insurance each year can be anywhere from a few hundred to thousands of dollars. And, if you live in an area that has high risks for flooding, earthquakes, hurricanes, etc., you may need supplemental insurance.

Remodeling/Upgrades

Unless the home you purchase is picture perfect, you’ll more than likely be adding your personal touch. Therefore, you need add to your housing budget the costs for remodeling and upgrades. According to “Remodeling Magazine’s” 2007 Cost vs. Value Report, the national average for a midrange minor kitchen remodel is $21,185; a bathroom remodel averages $15,789.

Even minor cosmetic fix-ups such as light fixtures, window treatments, carpeting and decorative cabinet knobs can begin to add up.

By determining all the costs associated with homeownership, you can go into your home search with a reasonable price range that will allow you stay within your budget.

Prudential Olympia, REALTORS is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity.

Washington State Home Sales Down

Housing sales cropped across Washington State during the first quarter of 2008, according to a newly released report from the Washington Center for Real Estate Research at Washington State University.

Thurston County saw a decline in existing home sales of 22.8 percent over one year ago, and a 54.7 percent drop in building permits.

Statewide, existing home sales fell 29.7 percent, and building permits were down 46.7 percent.

Thurston County homes fared better in holding their value, with a median resale price of $257,700 (up 1.1 percent from 2007) compared to the statewide median of $293,600 (down 2.4 percent from 2007).

Green Your Home for Earth Day

Eco-friendly. Carbon footprint. Global warming. Energy-efficient. These catch phrases have become part of our lexicon as we’ve become more aware of our impact on the environment and our role in protecting it. As a homeowner, there are some simple, inexpensive steps you can take to make your home energy-efficient. Get started on the road to being “green” with these five tips:

Change Your Light Bulbs
By replacing just five incandescent light bulbs with compact fluorescent (CFL) bulbs, you can save $100 per year on electric bills while using up to 75 percent less energy and removing greenhouse gases from the environment.

Buy ENERGY STAR® Appliances
ENERGY STAR-qualified appliances, such as refrigerators, washers and air conditioners, meet a higher level of energy efficiency set by the Environmental Protection Agency and U.S. Department of Energy than standard models. According to ENERGY STAR, if just one in 10 homes used ENERGY STAR-qualified appliances, the impact could be compared to planting 1.7 million new acres of trees. And, switching to these appliances is not only good for the environment, but easy on your pocketbook. Although these appliances may costs more, you can reduce your energy bill by $80 per year.

Seal Up
Cracks and air leaks represent cash seeping from your doors and windows. Get rid of air leaks in doors, windows and other areas by caulking gaps and cracks. This will help decrease your heating and air conditioning bill. But make sure you use silicone sealants. Acrylic caulk tends to shrink, while silicone sealants are waterproof and won’t shrink or crack, creating less waste.

Use Less Water
Did you know that roughly 60 percent of a home's water consumption takes place in the bathroom, according to the California Urban Water Conservation Council? The largest culprit is the toilet, which accounts for 27 percent of your household supply every year. By installing low-flow toilets, showerheads and faucets, you can save thousands of gallons of water each year. In addition, replace leaky fixtures. That slow-dripping faucet can waste as much as 2,400 gallons of water per year.

Adjust the Thermostat
When adjusting your home’s thermostat, the rule of thumb should be: turn up the dial in the summer and down in the winter. Lowering the temperature by just one degree will reduce your electrical costs. And if you use a programmable thermostat, you can program your air-conditioning and heating systems to reduce output while no one is at home or at night while you sleep. Ceiling fans are also helpful in circulating the air to keep the room cool in the summer and warm in the winter.

Going green doesn’t have to be overwhelming or costly. By making just a few small changes within your home, you can help decrease energy consumption and help make the world a “greener” place.

Prudential Olympia, REALTORS is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity.

Buyer's Market?

For the fourth consecutive month, Thurston County home sales fell more than 20 percent on a year-over-year basis in March, the Northwest Multiple Listing Service reported today.

And while Thurston County homes prices largely have remained steady compared to other Western Washington counties, they rose a scant .01 percent in March from the same period last year, the data show.

In March, combined sales of single-family residences and condominiums fell 20.9 percent to 314 units from 397 units last March. Combined median prices increased .01 percent to $249,925 from $249,900, the listing service reported.

Total closed sales in March fell to 314, down from 397 for Thurston County in March 2007. New listings in March were also down, to 626 from 720 a year ago.

IKEA gets macro

Apparently not content with filling the insides of homes, IKEA is moving in a new direction, providing entire houses.

BoKlok is a groundbreaking new concept to housing that involves providing space-saving, functional and high quality properties at a price that enables as many people as possible to afford a comfortable home.

First pioneered in Sweden by furniture company IKEA and construction firm Skanska, BoKlok has now arrived in the UK under an exclusive licence to property company Live Smart @ Home.

BoKlok, roughly translated, means ’live smart' and its concept is based on customers’ real needs and wishes – a safe environment, roominess and access to green space. BoKlok homes have a flexible, open-plan layout, high ceilings and large windows, giving the rooms a light, airy and contemporary feel.

IKEA's BoKlok homes are available only in the UK, Sweden, Denmark, and Norway. For now. More info at www.bloklok.com

See a virtual tour.

Now Is A Great Time To Buy A Home

If you’re ready to buy a home and can afford it, now is a great time to buy. Mortgage interest rates remain very low. In many areas, buyers have a lot of inventory from which to choose and long-term homeownership continues to be one of the best ways for the typical American to build wealth.

Don’t let all of the negative media attention about the “mortgage meltdown” keep you from pursuing your homeownership dream. Mortgage industry woes are primarily limited to subprime loans and other types of creative and comparatively risky financing products. While the mortgage industry stalled briefly to reconsider its more exotic loans, there is plenty of conventional financing available for qualified homebuyers. Interest rates remain at historically low levels – still less than 7% for the typical, 30-year fixed-rate mortgage.

Indeed, the market has changed. It’s gone from a frenzied seller’s market to calmer buyer’s market. In fact, buyers haven’t seen a market this strong in years. When the national median home price dropped for the first time on record, the decline made huge albeit misleading headlines. For starters, there is no such thing as a national real estate market. All real estate markets are local and driven by local factors that include the local economy, housing supply and demand factors and other attributes like geography.

The slight decline followed years of unprecedented steep home price appreciation and the reality is that only a handful of markets experienced price declines. Corrections in markets that experienced exorbitant home price appreciation were expected and signal good news for buyers. According to 2007 third-quarter National Association of REALTORS® (NAR) statistics, the vast majority of the nation’s metropolitan areas showed rising or stable home prices with most areas experiencing modest gains.

Right now there are many homes from which to choose and in most areas buyers don’t have to deal with the harried and hurried competition of multiple bids. The changing market has also changed the inventory landscape to include fewer speculative sellers and a larger share of serious and motivated sellers.

Prospective homebuyers have some time to shop inventory and thoroughly compare home types and prices, amenities, neighborhoods, commutes and other important real estate-related features. And buyers have stronger price negotiation power as sellers compete for their attention by offering concessions or other incentives.

While all real estate markets have ups and downs, Americans continue to consistently build wealth through homeownership. According to the NAR:

· One average, the value of a home doubles every 10 years. During the past three decades, home values have increased an average of 6.6% per year.

· The average homeowner today has 36 times the wealth of the average renter. Homeowners are essentially paying themselves when they pay their mortgages and this means they’re building equity. Homeowners also benefit from some real estate-related tax write-offs like mortgage interest.

· Sixty percent of the average homeowner’s wealth is their home’s equity. For homeowners who’re in their homes for the long-term, home equity typically is their single largest source of wealth.

Because every market is different, it’s a good idea for potential homebuyers to contact a local real estate specialist to learn more about what’s happening in his or her community and real estate market. The bottom line in real estate doesn’t change – if you’re ready to buy and can afford to make a long-term homeownership commitment, it’s always a good time to buy!

Prudential Olympia, REALTORS is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity.

Apprecation or Slump? Depends on Where You Live

For the first time in nearly thirteen years, home prices in the US experienced a quarterly decline, according to a new report released by the Office of Federal Housing Enterprise Oversight (OFHEO).

While select markets still maintain robust rates of appreciation, our newest data show price weakening in a very significant portion of the country,” said Lockhart. “Indeed, in the third quarter, more than 20 states experienced price declines and, in some cases, those declines are substantial.”

Many of the cities and states experiencing the sharpest declines this quarter were the same cities and states experiencing the sharpest increases just a couple of years ago, suggesting some price corrections in those markets.

Of course, national averages don't tell the whole story. Washington State was one of the exceptions, with the fifth-highest rate of appreciation (7%) during the quarter. And a particular hot spot is Wenatchee, which for the third consecutive quarter had the highest four-quarter appreciation among the 287 Metropolitan Statistical Areas on OFHEO’s list of “ranked” cities. Annual appreciation in Wenatchee was 15.7 percent.

You can download a PDF of the complete OFHEO report here.

Be Afraid...

Or not. But Lawrence Yun, the chief economist with the National Association of Realtors, wasn't sounding upbeat when he told the organization's national convention "We're in a time of fear."

What's so scary? This is the first year since the Great Depression to register a nationwide decline in median home prices, Yun says according to a Seattle Times story, and he expects the market to be flat throughout 2008.

Of course, the national average is just that -- an average. Local markets may be doing worse...or better. Here in Olympia, residential sales have slowed somewhat, but we're certainly not knocking on Depression's door. And a number of new projects promise to inject new life into downtown Olympia, including a new Washington State Employees Credit Union headquarters, a new City Hall, and the port development including the new Hands On Children’s Museum.

Area Home Values Up Record 18.9 Percent

Despite a slowdown in the Olympia-area real estate market in recent months, the assessed value of the average home in Thurston County rose a record 18.9 percent this year over a year ago, according to assessments now being mailed to property owners.

"We live in a very desirable area, and the market is reflecting that," Assessor Patricia Costello told The Olympian. "Particularly with raw land and the waterfront, that type of property is not available much anymore, and demand is high."

Of course, some people wonder why the value of their property is going up even as the real estate market seems to have stalled. Writing in a local online discussion group, some local homeowners were sanguine, while others proposed a California Prop.-13 style limit on property taxes, freezing the taxable value at the price originally paid for the home. Others, like justin_time, protest that "this is a backdoor way to get a tax increase. ... I would also love to know what this tax increase is going to be used for. The county can justify this however they want, but for me it is a 46% tax increase."

Your thoughts?

Cheering Gloomy Buyers

Feeling iffy about spending money on a new home in today's market? Some Tacoma firms are looking to lift you out of your spending funk.

The News Tribune reports that the Master Builders Association of Pierce County and the Washington Realtors are rolling out ad campaigns touting the upside of buying in the Tacoma area. And buying now, not later.

Pierce County's median home price in August climbed 4.4 percent compared with the same month in 2006, though the county had 2,702 new-construction houses and condos listed for sale compared with 1,947 the same month in 2006, according to the Northwest Multiple Listing Service.

Read the story.

Washington's Most Affordable Homes

Yes, location DOES matter. To the tune of $534,679.

That's the difference between the average sale price in Bellevue and the Tri-Cities, the Washington State cities with the most expensive and least expensive real estate, according to a new study of 2007 home prices.

Bellevue, just across Lake Washington from Seattle, weighed in with an average home sales price of $763,667, while homes in Central Washington's Tri-Cities (Kennewick, Pasco, & Richland) averaged $228,98.

Elsewhere, the study found that Beverly Hills, California, is the most expensive housing market in the nation (average price $2.21 million) and Killeen, Texas is the most affordable (average price $136,725).

The survey evaluated average selling prices for single-family houses of approximately 2,220 square feet with four bedrooms, two-and-a-half baths, a family room, and a two-car garage in 317 markets across the nation. The average sales price of all these subject homes was $422,343.

You can view the state-by-state results in an online slideshow.