Is silver the color of real estate recovery?

Some real estate professionals and others are pushing for a unique solution to the current market slump: importing homeowners.

The idea is to encourage wealthy retired people from other nations to relocate to the USA, where they would buy homes and live out their lives while spending their savings on US goods and services. Some are calling this the "silver card" system, like the "green card" that is sought by people hoping to work in the USA.

The National Association of Realtors website says they have directed their staff "to explore the feasibility of creating and implementing a retirement visa or 'silver card' for foreign nationals who are over 55 years of age, have documented income and own U.S. residential real property." A report is expected at the NAR meeting in May 2009.

"Millions of dollars would get spent in this country. It would be a boon to the U.S. economy — to real estate, people buying properties, the automobile industry, the restaurant industry, retail, airline travel, furniture makers, there are so many dimensions," says John Mike, chairman of the Realtors Association of the Palm Beaches in Wellington, Florida.

Immigrant advocates, meanwhile, would say that wealthy foreigners should not get special treatment when thousands of others — including relatives of US citizens — are waiting for visas. And whether the "silver card" immigrants could be a drain on the US health care system is another heated question.

Do You Know Your Real Estate Facts?

How well do you know the real estate market? Will today's Fed move to lower interest rates have a direct impact on mortgage rates? Has the market bottomed out yet? Is it a bad time to sell and a good time to sell? We can't answer all your questions here, but here are a few myths that need busting, and points that need making.

1. Peak-to-trough home price declines to date have been about 20 percent. Wrong. Measurements of home price declines can be skewed depending on which homes in which markets are being measured. For instance, the Case-Shiller Index, which indicates that home prices are down 20 percent, is heavily skewed towards homes with subprime loans and other distressed home sales. These troubled homes have experienced a steeper decline than home prices in general, says Yun, adding that both government data based on loans backed by Fannie Mae and Freddie Mac and data from the National Association of Realtors suggest much more modest price declines. TIP: If you're selling your home, the best thing to do is price your home right.

2. The much smaller number of new homes now under construction indicates the dismal outlook for the housing market. Wrong. The inventory of homes on the market is very high, so the last thing we need now is more new homes being built. Home builders have cut back sharply on production, which will help lower inventories and stabilize prices. The builders have done exactly what market forces are dictating under current conditions, Yun says. TIP: With many new homes completed but not sold, you can find great opportunities.

3. Even when the housing market recovers, home price growth will be only 4 to 6 percent per year -- much less than historical average returns for the stock market. Most buyers put less than 20 percent of their own money into a home purchase; this borrowing power can translate to a greater rate of return. This is how Yun explains it: Home price appreciation historically has been about 1 to 2 percentage points higher than consumer price inflation, which translates into about 4 to 6 percent per year. But this growth rate cannot be viewed as a rate of return like the stock market. The reason is that most people do not buy a home for all cash, instead making a cash down payment and borrowing the rest. The leverage this borrowing creates can magnify returns -- and losses. If price growth returns to historic norm, the price growth of 4 percent can easily turn into 20 to 30 percent rate of return if the home buyer makes a down payment of 10 or 20 percent. TIP: Get the fundamentals right when investing in real estate.

4. Impending baby boomer retirements and moves to small homes will cause a glut of homes on the market. Wrong. The first edge of the baby boomers has reached 60 years of age and the massive bulk of that generation will soon go into retirement, but far from trading down, many of these older homeowners are keeping their homes or moving to ones of comparable size. And even if more boomers do sell their larger homes in the years ahead, Yun points out, the rapidly growing U.S. population should absorb the inventory of existing homes on the market. TIP: Active seniors can find a retirement community that caters to their needs and interests.

5. The federal government takeover of secondary mortgage companies Fannie Mae and Freddie Mac is a bailout that will cost taxpayers bundles. Too soon to tell, says Yun. It's conceivable that taxpayers may have to cover some losses. It's also possible that the government takeover will result in no loss of taxpayer dollars. Even if taxpayer funds are used, the bailout would be preferable to the global economic problems that would have occurred if Fannie and Freddie had gone belly up. TIP: Uncle Sam is "bailing out" homeowners facing foreclosure. Find out more about the Hope for Homeowners plan.

6. The Federal Reserve controls mortgage rates. Wrong. Yun explains: The Fed's activities influence mortgage rates but don't directly control them. What the Fed sets is a very short-term interest rate called the Federal Funds Rate. Mortgage rates are determined by global savings as well as credit spreads and inflationary pressures. Over the past two years, the Fed has raised the Fed Funds Rate to 5.5 percent, and then cut it deeply to around 2 percent. All the while, the 30-year mortgage rate has averaged in the 6 to 6.5 percent range. TIP: Today's rates don't look bad compared to the 10 percent we saw in the early '90s and 17 percent in the '80s.

7. It's the wrong time to buy. Wrong. All real estate is local. For those who are financially and mentally ready to buy, there has never been a better time to be a buyer in many markets. An abundant selection of homes and historically low interest rates give buyers an edge over sellers. The recently passed $7,500 federal tax credit for first-time home buyers creates an added incentive. For someone with a long-time horizon, Yun says, there is very little worry about home values since homes have historically provided a solid foundation for wealth accumulation. TIP: Compare the pros and cons of renting vs. buying to see what makes sense for you.

8. It's the right time for everyone to buy. No. All real estate is local, and everyone is unique. Someone who is not emotionally or financially ready should not be forced or induced to join the rank of homeowners, even when a market presents good buying opportunities. Potential homeowners clearly need to understand that the decision to move up to ownership requires sacrifices, like saving up for down payment and elevating their credit scores. Homeowners who lose their home to foreclosure serve no one's interest, Yun adds. TIP: Take a good hard look at your financial status and create a homeowner's budget to see if you're ready to buy a home.

9. It's a terrible time to sell. Wrong. In markets where home sales are picking up strongly, a seller can easily get an offer if the property is priced correctly. Also, Yun says, for those looking to trade-up, selling low on an existing home is more than offset by buying the new move-up home at a lower price. When the market recovers, home price appreciation on the traded-up home will bring bigger bang for the buck. TIP: Homebuyers want bargains in this market. If you price your home much lower than your competition, you might end up with a bidding war.

10. With the advent of the Internet, more and more homes are being sold by owners (FSBOs), and real estate practitioners are becoming obsolete. Nope. According to Yun, the share of home sellers who choose to go it alone when selling their home has actually decreased from about 20 percent in the late 1980s to about 12 percent today. Even after these sellers successfully complete a transaction, only 4 in 10 say they would sell their next home without the assistance of a real estate professional. TIP: You don't have to sign a listing contract to talk to a Realtor. Ask family and friends for referrals and interview a few. You might even get some free advice.

(source: HGTV's frontdoor.com)

Foreclosure Stats Released

Home foreclosures were down in September, according to a report released today but RealtyTrack. But the decrease of 12 percent from August still marked an increase of 21 percent over September 2007, and means that one in every 475 U.S. housing units received a foreclosure filing in September.

According to James J. Saccacio, chief executive officer of RealtyTrac:

Much of the 12 percent decrease in September can be attributed to changes in state laws that have at least temporarily slowed down the pace at which lenders are moving forward with foreclosures. Most significantly, SB 1137 in California took effect in early September and requires lenders to make contact with borrowers at least 30 days before filing a Notice of Default (NOD). In September we saw California NODs drop 51 percent from the previous month, and that drop had a significant impact on the national numbers given that California accounts for close to one-third of the nation’s foreclosure activity each month. Another example is North Carolina, where legislation was signed into law in August that requires lenders to provide homeowners and the state’s commissioner of banks a 45-day notice prior to filing a Notice of Default. We saw NODs drop 66 percent in North Carolina in September.

On the other hand, initial foreclosure filings in Massachusetts jumped 465 percent from August to September after being much lower than normal in June, July and August. That temporary lull happened after a new law took effect in May requiring lenders to give homeowners a 90-day right to cure notice before initiating foreclosure. But in September, about 90 days after the law took effect, initial foreclosure notices jumped back up close to the level we were seeing earlier in the year.

Read the report here.

That Big "Vacancy" Sign

It's a welcome thing if you're traveling a lonely highway late at night, eyelids drifting south. But the kind of vacancies corporate and residential landlords are facing as the economy slows to a crawl are less welcome.

US Census Bureau statistics show that 1 in every 35 homes in the US stands vacant, the highest recorded vacancy rate in history. The rental market is fairly strong, but Americans still seem reluctant to buy new homes in the continuing economic fallout of the mortgage loan crisis.

Commercial real estate faces a similar situation. New London, Connecticut, is facing a one-third vacancy rate among downtown storefronts (source: theday.com). Nationally, the suburban office vacancy rate is around 14 percent, which makes the 11 percent vacancy rate here in the Puget Sound region (source: thenewstribune.com) sound pretty rosy.

Deepening Deluge of Real Estate Resources

We still recommend going with a real estate professional when it comes time to buy or sell a home, but if you're just probing the market or curious about the value of your home or others in your neighborhood, you've got an increasing number of online resources at your disposal. Just bear in mind that none of these have the complete information available from your local Multiple Listing Service, which your real estate professional can tap into for you.

For comparison, we checked listings in the popular West Olympia zip code of 98502. The local MLS shows 432 current home listings.

Roost (www.roost.com) show 376 listings in the same area; Trulia (www.trulia.com) lists 322 homes; Zillow (www.zillow.com) lists 434 homes -- which sounds impressive until you realize that their search criteria somehow included homes as far away as Shelton, WA; and Redfin (www.redfin.com) reports more than 500 results in a search for homes in the 98502 zip code. We're still puzzling over that number.

Obviously, you need to take these numbers with a grain of salt. As you do with home value estimates from Zillow or Eppraisal (www.eppraisal.com), which can vary by many thousands of dollars. So we'll stick with our advice to use these resources for rough research, then contact a real estate professional when it's time to proceed with a purchase or sale.

Should Homebuyers Use a Real Estate Professional?

With just the stroke of a few keys, you can find myriad resources on the Internet to help you in your search for a new home. Besides property listings, you can find out about specific communities, schools and mortgage options. Prudential Real Estate has made three great resources – Environmental Profile, Property Profile and Value Range Estimate – available on prudential.com/realestate that provide detailed real estate information just by keying in a U.S. property address.

With this wealth of information at your disposal, do you really need a real estate professional to represent you? Absolutely.

Think of it this way, when you go to an unfamiliar place, sure you could do a self-guided tour. However, your tour is much more rewarding and enriching when you have someone who is familiar with the location to guide you along because he or she has inside knowledge on the history, culture and stories that you may not have otherwise received.

The same can be said about sales professionals. Their role is more than someone to drive you around from property to property. They can be a great resource, especially to homebuyers relocating from other communities. He or she knows the local area including home values, taxes, utility costs, and school data, and may even be knowledgeable about resources pertaining to your special interests or needs. For instance, should you require help relocating an aging parent with you, your real estate professional may be able to direct you to local services or organizations for the elderly.

A sales professional can familiarize you with the processes involved in buying a home, alert you to potential risks, help you determine how much house you can afford, explain alternative financing strategies, as well as provide tremendous moral support.

Another benefit is having a strong advocate during the negotiating process. Sales professionals can help you objectively evaluate an offer then work to negotiate a favorable contract. During the process, he or she will review the contract and obligations before you sign, explain how contingencies and release clauses work, and so on.

And something easy to overlook is our familiarity with the complexity and risks inherent in the process. In the years I have been practicing I have been continually amazed at how quickly a seemingly simple transaction can grow legally complex and risky. When complex questions arise, a sales professional can help you quickly locate an attorney or other licensed professionals whose services you may require, such as home inspectors, engineers, surveyors and lenders.

As your single point of contact, a sales professional can manage the entire transaction including coordinating inspections, keeping in touch with the other real estate professionals, managing the documentation for the loan process, monitoring deadlines associated with contingencies, providing applicable paperwork, estimating closing costs, and helping prepare for a smooth and uneventful closing.

If you’re about to begin the process of buying or selling a home, consider involving a real estate professional. When the stakes are high, it’s comforting to have a specialist by your side.

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

Choosing the Right Home and the Right Community

If you are buying a home, one of the first things your real estate professional will do before taking you on home tours is interview you to determine the type of house you want, such as a 2,000-square-foot four-bedroom, split level with a formal dining room and two-car garage. But just as important is the type of community you want to live in. Knowing what your requirements are will help narrow your home search and save time.

To expedite the house-hunting process, start by making a list of the dream home factors that are most important to you and your family’s lifestyle. Consider style, location, proximity to work and schools, yard size, children in the community and, of course, price.

Price and location generally are the key factors you’ll use to identify the communities that best suit you. If you are moving within the same city, you may want to start your community search by getting in your car and exploring. There are also resources on the Internet that let you compare communities.

You’ll want to ask yourself critical questions, such as: Do you dream of something quaint and charming that can only be found in an older area? Or, do you prefer everything new? Are you willing to sacrifice size and space for architectural detailing? What about drive and commute time to the office and schools? Will you forgo the number of bedrooms and a big yard for proximity to a lake or other recreational areas?

Whether you have children or not, buying a home in a community with good schools is important. It not only adds value to your property, but also is an attractive feature when and if you decide to sell. There are plenty of resources available to get information about schools within the communities you are considering. Various Internet sites offer school reports and profiles. They provide statistical data such as graduation rates, college-bound percentages, and standardized test scores. You can also learn about special programs the schools offer. In addition to these reports, many schools have their own Web sites you can peruse. And of course you can always talk to people in the area or take a tour of the school.

Additional factors you’ll want to consider during your community search are crime, recreational activities, proximity to shopping and restaurants, and other specific family needs.

Once you’ve narrowed your search to two or three communities that fit your price range and lifestyle, make comparisons of price and sales activity. Your real estate professional can help you determine which communities are most sales-worthy at present, and which are more likely to continue to be.

There are many factors involved in selecting the right community for you and your family. Discuss your options with your real estate professional. This will provide the information he or she needs to help you find property listings to tour. Remember, a targeted approach to house hunting is less time consuming, less expensive and more efficient.

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

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)

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).

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.

Stronger Home Warrantees on the Horizon?

More protection for house buyers sought

Brad Shannon

Stymied by the builders lobby a year ago, consumer advocates at the Capitol are taking a new approach to winning warranty protection for homeowners who buy shoddily built homes.

The approach, which Rep. Pat Lantz aired this week in a House Judiciary Committee meeting, builds on legislation already on the books to protect purchasers of condo units. It includes a four- to six-year warranty against defects for single-family homes and duplexes, and it gives builders a chance to "cure" or fix flaws before a buyer can sue.

Sen. Brian Weinstein, the Mercer Island Democrat who had pushed for a law making contractors negligent for shoddy work just as lawyers or doctors are, said he likes the new approach.

"Hers is an easier sell," Weinstein said of Lantz's approach, which might have more political appeal. "The argument is why shouldn't the buyer of a new home have the same rights as the buyer of a condo?"

Lantz was preparing to bring the measure to a critical vote today in the House Judiciary Committee, which she leads. Friday is the deadline for keeping bills alive by passing them out of committee.

Builders who belong to the Building Industry Association of Washington and contractors' insurers are not convinced. They insisted in testimony Tuesday evening on Substitute Senate Bill 6385 that Lantz's amendment could add costs for homebuilders, especially small outfits, while burdening an industry in hard times.

They also questioned whether the legislation tailored in 2004-05 to deal with problems in the condo industry really fit the residential housing market — including requirements for inspections and arbitration, which are costly unless spread out across dozens or hundreds of units, as they are on condo projects.

Olympia builder Daimon Doyle testified that bad contractors make up perhaps 2 percent of the profession.

Doyle said the legislation could have a "devastating effect" on his insurance rates, and Amy Brackbury of BIAW warned it could undo work of several years to bring predictability to the insurance market for builders, driving up rates and home costs.

Using similar arguments, the BIAW and others persuaded House Speaker Frank Chopp, D-Seattle, to kill last year's warranty proposal that could have protected homeowners for up to 10 years for some defects.

Chopp is not saying what approach he will take this time. He referred questions Wednesday to Rep. Mark Ericks, a Bothell Democrat who is pushing for a bill to require a study of the industry and passage of a licensing requirement in 2009 for contractors.

Ericks said he doesn't have an opinion about Lantz's bill but is focused on getting the Senate to pass his measure, House Bill 3349. It would have the Department of Licensing study the need for contractor licensing and bring back recommendations to the Legislature for a bill he is sure would pass in 2009.

Olympia homeowner Karen Veldheer testified Tuesday in favor of the statutory warranty proposal, letting homeowners sue for damages if builders don't correct shoddy work. Veldheer said her family received a builder warranty as part of the sales agreement — "take it or leave it" — but the builder warranty was not helpful for recovering costs of repairs to her water-damaged house foundation in west Olympia.

King County attorney Sandy Levy said most homeowners have no meaningful rights in disputes with builders over construction defects.

"This bill will be very good to good builders, and very detrimental to bad builders," he said.

Levy argued for giving homeowners a longer period to discover major underlying defects such as foundation problems, and he said that if builders want mediation and arbitration to resolve disputes, they should pay for them. He also said he would favor more accountability to home inspectors.

The Olympian, Olympia WA, February 28, 2008

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?

Inside the Escrow Process

One of the stages of the home buying process is escrow. This process begins when the offer is accepted and ends once the financing is approved and the buyer and seller have fulfilled their requirements. So how does it work?

A neutral third party agent of the principals — buyer, seller, lender and borrower — is designated the escrow holder. This agent assists with the transfer of ownership by ensuring that the terms of the transaction are completed including safeguarding all funds (including the buyer’s deposit) and documents.

The escrow holder keeps track of obligations of the seller or buyer. For example, if the seller is required to supply a termite inspection, the escrow holder will make sure it is fulfilled before any funds are transferred to the seller. Findings in the termite inspection report must be corrected on or before the close of escrow.

In addition, the escrow holder receives from the title company a complete ownership history of the property and any liens on record in the preliminary title report. Any discrepancies that affect the condition of the title, such as condo liens, judgments, etc., against the buyer and seller, must be addressed prior to close of escrow.

The escrow process can last any number of days depending on what is agreed upon between the buyer and the seller. To assure a timely closing, it is important that each party provide the escrow holder requested information as soon as possible. For example, a lender will not fund a new home without a homeowner’s insurance policy. Without the lender’s verification that there is insurance, the escrow process may be delayed. An unsecured source of funding, such as a personal check can also delay the process, because it takes longer for those types of funds to clear.

The escrow process is just one step towards fulfilling the dream of homeownership. Your real estate professional can provide more detail on the escrow process, as well as answer other questions you may have about home buying and selling.

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

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.