According to Freddie Mac, mortgage rates had their sharpest rise of the year last week.  Here are the national average numbers:

30 year fixed-rate mortgages averaged 4.23% with an average 0.5 point.  That was up from 4.12% average.  Last year the 30 year fixed rates averaged 4.50%.

15 year fixed-rate mortgages averaged 3.37%, with an average 0.5 point.  That was up from last week’s 3.26% and one year ago they averaged 3.54%.

As someone who bought their first home in the early 1980s, those still look like incredibly low rates to me.  But, that is the latest from Freddie Mac.

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We have recently had some homes in the Lake Chelan area that are equipped with security cameras that can record both video and audio of people being shown the homes.

Video, like a nanny cam, is legal in all 50 states as long as it is not done in areas where privacy is expected, like bathrooms.

Audio is a different story.  Washington State requires notification of and consent of all parties for audio recording to be legal.

The recording of a buyer’s comments during a showing might give information to a seller that would advantage the seller if done in secret.

Listing agents should caution their clients about audio-recording laws.  However, when buying a home it is probably always a good practice to assume you could be being both video and audio recorded during your showing.

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The age of a home can usually be pretty well ascertained just by its floor plan.  Different consumer desires have been reflected in homes ever since homes have been built.

Examples include open floor plans that have replaced lots of individual rooms for various functions.

But here are the latest trends in consumer desires that are already changing home design.  None of these things are so 1990s, or even early 2000s.

  • Efficiency, in size and function are a big deal.  Size purely for drama is out.
  • More private outdoor spaces that are integrated into the living space are in demand.  Back yards that are wide open to public view are out.
  • The outdoor spaces are more integrated into the home space, through transitions that extend light and the connection between the outdoors.
  • Covered outdoor spaces are in, providing more living space and some protection from the weather or elements.
  • “Super Kitchens” that embrace being the hub of a home with seating and gathering spaces as well as work spaces for food prep and storage for appliances and Costco shopping trips.
  • Spa like master suites.  Granite and a couple of sinks are not enough!  The experience, from lighting, design, bathtubs and showers, should be spa like in its function and detailing.
  • Garages that have room not just for cars, but for hobbies and storage.  Bigger garages are in.

Read about 14 of the latest trends in home design!

 

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Redfin looked at over 10,000 offers that were written in 2013 and analyzed the results to determine the best strategies to win a bidding war on a home.

  1. The top factor that helped win is a cash offer.  Cash offers were 28% more likely to win a bidding war than an offer that includes financing.  In Miami, cash offers increased the likelihood of winning by 127%!  Cash offers were often accepted over higher priced offers that required financing.
  2. Having the home inspected before making an offer, a pre-inspection, was the next most successful strategy.  Offers with pre-inspections were 21% more likely to be accepted than offers without a pre-inspection.
  3. Offers that waived financing or inspection contingencies were 15% more likely to be accepted in a bidding war.  Waiving the contingencies is risky for a buyer, who could lose their earnest money.  However, waving the financing contingency assures the seller that you are likely to come through with the money even if your lender does not.  Simarly, waiving the inspection contingency makes your offer more attractive by removing concerns that you may back out or negotiate for home repairs.
  4. Personalized letters raised the likelihood of winning the bidding by about 9%.  Letters can help by making the transaction more personal rather than it being just a numbers game.

Cash talks, if you have it!  If you don’t, here are some other approaches that can help if you find yourself in a bidding situation on a home you want.

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Over the past 15 years, the net worth of the typical homeowner has ranged between 31 and 46 times the net worth of the typical renter.  While the National Association of Realtors would like to associate causation with that statistic, it is more likely that higher net worth people are more likely to own homes than lower net worth folks.

Most folks rent before they buy their first home as well.  The same article shows that the median homeowner has about $200,000 in net worth, about 36 times that of the median renter, with $5000 of net worth.  The median value of owners’ homes was $170,000.

Owning a home can be a way to help build equity, compared to renting, but comparing renters versus homeowners without correcting for age, income, etc. probably does not tell the whole story.

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NBC News has a great story on how Tim McGraw is providing mortgage free homes to veterans in need as a way of giving back.

McGraw is working with Chase Bank and Operation Homefront in awarding homes, mortgage-free to veterans returning from Iraq and Afghanistan.  The families selected have to prove they can be responsible homeownerf for two years, and then own the home free and clear.

Thanks to Tim McGraw, and to our veterans.  That can’t be said enough.

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Redfin reports that they expect listing price drops to drive a surge in home sales this fall.  There are a couple of issues driving their expectation.

Home sales have been below last year’s since November.  Additionally, pricing is becoming more stable with July showing virtually flat pricing.  Those factors have driven the market to a more balanced price negotiation point between buyers and sellers.

Additionally, 23.7% of homes listed in July had price reductions, compared to only 17.7% one year earlier.  Price drops are happening more aggressively this year as both buyers and sellers are seeing a softer market than was expected.

Lake Chelan has an additional factor, with its tourist season taking a dramatic downturn every year after Labor Day weekend.  It is a great time to make offers on homes at Lake Chelan.  Think of it as the “Labor Day Sale.”

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The Wall Street Journal published an article about strategies for pricing your home for sale.  It is a pretty good read.  The author recognizes that the list price is a negotiation tactic that sends a message to potential buyers.  Setting the list price is both an exercise in the psychology of pricing as well as one of the biggest challenges facing real estate agents and home sellers.

The list price does send a signal to the market.  The same type of psychology that applies to the retail trade applies in housing.  A price ending in a 9, like $499,000, is generally a better choice than rounding up, to $500,000.  The home just seems less expensive to the buyer.

The fact is most homeowners overestimate the market value of their home.  That often leads them to choose the real estate agent who suggests the highest price, rather than one who will get their home sold, for a realistic price.  Sellers often add up the cost of renovations with the expectation of getting all of that back on sale.  It can take months, or sometimes years, on the market for some homeowners to learn that the market doesn’t care how much was paid for the home, or its remodel.

Using a very precise number for the list price, a number like $785,475 as compared to $785,000, can indicate that a home is less negotiable.  At Lake Chelan it is unusually difficult to get good comparable sales for most homes.  The market is small, and most homes or their locations are unique.  The process becomes more complex than just setting list price and should include a strategy for price adjustments based on market feedback and the desired timing of the seller.

Timing can matter too.  Sometimes being on the market in the winter, when there is less competition, can get a home more, serious showings than being on the market competing against many similar homes.

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Freddie Mac has at least three reasons mortgage origination is going so slowly, in spite of low interest rates.

Sure, refinancing is down.  Home sales so far are down about 5% from last year.  Many are sick of mortgages and more people are paying cash.

But the part that caught my eye is that Freddie Mac says the key to an increase in mortgage origination will be “sustained economic growth and jobs.”

That is the kind of talk that makes me thing 2016 can’t get here soon enough!  LOL.

On another note, local mortgage guru Sandy Calicoat is not working at New American Funding.  She tells me that she has programs for “Condotels, Hobby Farms (to include residences with acreage/agriculture), leaseholds,  manufactured homes, FHA, VA, USDA, low to zero down programs, low credit score qualification, high loan to value for jumbo loans, and much more.”  

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Low demand from first-time home buyers is slowing the housing recovery.  Home sales did rise 2.4% in July to a 5.15 million annual pace, but it is still well below the 7.1 million peak sales pace from 2005.  Home sales are still running about half their historic norm of about 800,000 single family home sales.

Lack of credit for first-time buyers and affordability issues are keeping demand low.  First time buyers usually buy existing homes, which frees those existing homeowners to move up to more expensive homes.  When the first time buyers aren’t in the market, the entire market feels the domino effect.

Single family home starts in July were up 8.3% on an annual basis after an extremely weak June.  

However, low disposable income is expected to keep the second half of 2015 from being particularly robust.  Income growth has only averaged 2%, which barely keeps up with inflation.  The new jobs being created pay about 20% less than the jobs that were lost in the recession.  Millennials are burdened with higher unemployment, lower credit scores and more student debt than previous generations.

So, those baby-boomers wanting to sell their McMansions in the next few years will be wanting to see the younger generations employed, making money, and creating households to get housing demand up again.  Over the last several years I have seen too many folks wanting to sell their homes or properties and downsize into retirement only to find out their home is not worth what it was when they came up with their plan.

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