Jim Freeman Named Local Listing Broker For Western Washington State

HUD, otherwise know as the Department of Housing and Urban Development after seven years of development has initiated major changes in the systems used to liquidate HUD housing inventory. The new system known as P260 combines new communications and reporting technology to speed up the process of listing and marketing homes acquired by HUD mainly through loan defaults and foreclosures. HUD is the agency responsible for managing and liquidating homes previously acquired by homeowners utilizing FHA mortgage insurance and other federal government backed home loan programs. Serious observers believe that the federal government may need to exit explicit and implicit grantees of home loans altogether in order to restore balance and confidence of bond buyers in the secondary mortgage market by leaving the field completely to lenders able to originate home loans with closer to historical yields and default rates.

With the failure of the housing finance system beginning in 2007 the FHA insured loans have grown to an estimated 40% of market share in 2010. This compares to approximately 3% by comparison in 2006. FHA loan programs were utilized by the government to bolster the supply of home acquisition financing, particularly for first time home buyers whose market share of the home sales figures have grown in parallel. Federal home loan programs and loans sold to the GSEs, fannie Mae and Freddie Mac are expected to be the only source of home financing until such time as the federal government decides how to end the losses debited to the treasury through loan defaults experienced by loans with government guarantees.

Home prices are still falling in most major markets around the country including Washington State. This means that loans originated in the early years of the current housing recession suffered asset value deterioration with the rest of the market and some of those loans defaulted when previously qualified buyers lost their ability to pay. Other borrowers that retained their capacity to pay defaulted because their home was worth less than what they owed. These are called strategic defaults.

Borrowers using loans insured by FHA are able to purchase a home with as little as 3.5% down payment and sellers are able to pay for the buyers closing costs up to 3.5% of the loan amount if they so choose. This arrangement is very attractive for borrowers needing leverage to purchase a home but when values drop much at all it is difficult for the lenders and the FHA insurance fund to make up the difference when liquidating houses for sale because of the lengthy foreclosure process and high cost of re-sale with standard market excise taxes, escrow fees, insurance, commissions and other costs.

Because HUD expects inventories to rise and with a desire to support healthy communities with responsible home ownership HUD has created the P-260 system for getting newly acquired homes to market by contracting with new regional asset managers, field service managers and local listing brokers.

Jim Freeman has been named as a local listing broker for western Washington State. As a managing broker for Coldwell Banker Park Shore working under contract with asset manager PEMCO Ltd, Jim will be helping buyers to connect with superb offers by HUD for affordable housing. To get more information and to obtain periodically updated lists of these low cost houses for sale please visit HUD homes in Washington.

The Remaining Growth Market in the Real Estate Investment Sector

Care Professionals and Investors Meet Up To Fulfill Rapidly Growing Demand In Assisted Living

Americans Over 65 To Grow By 35% between 2015 and 2025

Sarah's Place, a Successful Adult Family Home in Port Orchard

The metrics for the housing industry are pretty bleak. Recent statistics form the National Association of Realtors indicate that nationally homes sales declined 27% from a year ago in July. The July total closings for Kitsap County in 2009 were 284 units and only 204 in July of 2010,  a decline of about 28%. The number of pending sales in July 2010 totaled 376, a decline of 70 from 346 in July of 2010 or 20%.

This is of course great news for home buyers and to a lesser extent for real estate investors. The number of families that have lost their homes due to foreclosure has risen, a lot. Because most of them cannot qualify for a new home loan they are forced back into the rental market creating more demand for rental housing. This trend should continue to play out over the next 2-3 years but the growth in demand for rental housing will also be constrained by the continuing loss of incomes through job losses and business failures.

The untold good news for the real estate market in the coming decades concerns the aging of the population. In a recent economic report by First Research, a unit of Wells Fargo Bank, they indicated that the number of Americans over 65 will grow between 2015 and 2025 by 35%. The age at which these seniors enter into assisted living facilities will likely stretch out as the average life span increases but eventually aging baby boom generation will need various forms of assisted living options including in home care, adult family homes, skilled nursing facilities and nursing homes.

Institutional care facilities will be constrained by their funding model which depends largely on Medicare and Medicaid payments. Given the current fiscal crisis with state and federal governments revenues from these sources are more likely to decline that increase in the next decade or more. Most states have resorted to creating less costly, neighborhood based, small care facilities also know as adult family homes to close the care gap and give non-profit and for-profit entities a longer leash to solve the problem.

Recent investigative news reports in Washington have uncovered some concerns about the operation of a segment of these homes such as regulatory non-compliance. Although licensing standards and operations are rather strict and enforcement is constant the shear size of the current and coming demand has encouraged some operators to rush into the market with sub-standard living units and a lack of management and marketing skills needed to attain economic sustainability and the highest standards of quality care. However, the laws of supply and demand will prevail and individuals may have the best opportunity ever in today’s low cost environment to position themselves to be leaders in quality of care and provide themselves with  long term sustainable income.

Jim Freeman, a managing Broker, and Ellie Renne, associate broker with Coldwell Banker Park Shore Real Estate in Port Orchard, WA have launched a service to help current future owners of adult family homes and assisted living facilities to start, acquire, sell or improve adult family home businesses. For more information please visit www.AssistedLivingAssistant.com.

Miles Yanick & Company is a full service Architectural, Land Planning and Interior Design firm serving Kitsap County and Western Washington.  They can be contacted by phone at 206-842-6516 or email at office@milesyanick.com.

Contact:

Miles Yanick

Phone:  206-842-6516

Email: milesyanick@milesyanick.com

According to the June, 2010 Kitsap Market Statistical Summary there were 1,297 closed sales of existing homes for the year ending 6/30/2010. In a separate study I discovered that a total of 708 of those closings were classified as bank owned properties or required third party approval (aka short sales). Let’s do the arithmetic. That is 708 divided by 1,297 or 55% of all sales were closed by these highly motivated sellers.

So what about sales that were not in the distressed category? Well, anybody selling in this market must meet the price competition. If non-distressed home sellers want to sell in this market they must meet the price competition by the banks. Why would any rational buyer pay more if there were a good supply of real alternatives at a lower price?

Of course this is good news for buyers. But there is even more reason for buyers to be interested now. As a broker I am constantly working with buyers in this market. At any given time I have 5-6 individuals or couples actively looking for the right home at the right price. As of the date of this post the mortgage lenders that I work with have been offering 30 year fixed rate loans with an annual interest rate of 4.5% and an A.P.R of 4.789%. What does this mean for a buyer?

I have connected to a video of a new recent new listing of mine in the Olalla area. This home has more than an acre of level, forested land for privacy, is tidy and comfortable as an enchanted cottage and is less than 15 minutes to the Southworth Ferry. The seller is not distressed but has moved out of the area.  This smart seller does realize that she needs to price it right and has done so.

If a buyer can qualify for the loan terms quoted above their payment on this home would be approximately $1,488.68 per month including principle, interest, taxes and insurance and would be fully paid in thirty years. Paying bi-monthly (twice per month) would accelerate the time to payoff. What’s more, in the current market that home would probably rent for about the same amount.

For someone in the 30% tax bracket the home interest deduction could be worth $360 per month. This means that a buyer is effectively paying only $1,128.68 per month.

Oh, and by the way, if you can qualify for VA or USDA Rural Development financing you could buy a home like this with zero down and ask the seller to pay for your buyers closing costs. If you could qualify for a FHA loan the down payment would be only 3.5%.

How much longer do you think that these historically low interest rates will stay low?

If you want a list of foreclosures in Kitsap or other homes that you can buy with zero down just click on the link. Or, if you have a friend or relative that is renting now and might like to “lower their payment” and live in a darn fine home, do them a favor and let them know what is going on. Just send them a message with a link to this article.

If you had an interest in looking at this home contact me at Kitsap Real Estate Advisor

Click On This Image To Get Your Free List of Kitsap or Gig Harbor Foreclosures or Bank Owned Properties

Trends for residential sales are not yet breaking positively for Kitsap County. The active listing inventory of homes in June 2010 was at 1,879 versus 1,758 for June 2009. Median asking price was $319,000 compared to $350,000 one year ago. Median days on market was 126 for June 2010 versus 133 one year ago.

The number of pending sales was 239 in June 2010 and 372 in June 2009. Their respective ratios were 13% and 21% showing a precipitous drop. Pending sales ration are near term indicators of sales activity and the near term direction of price trends. The median price for pending sales for June 2010 was $265,000 and $246,125 a year ago. This is a sign perhaps of increased activity in move up sales. Days on market was 107 for June 2010 and 86 for June 2009.

Closed sales in June 2010 were up slightly for June 2010 at 266 units vs. 249 for June 2009. There is a more impressive difference in the Year To Date tally with 1,297 for YTD 2010 and 1,090 one year ago. The median closed price was $236,000 in June 2010 and $245,000 in June 2009. Days on market were 156 in June 2010 and 83 in June 2009.

This is likely because the lid has come off prices asked by lenders for foreclosures in Kitsap and short sales. I guess so when you consider that in the last twelve months the number of closings tagged as bank owned properties and third party approval required totaled 627 or 48%. Sure looks like those lenders are setting the price for everyone else.

Home Loan Rates Are At Record Lows.

Loan rates available to qualified buyers on July 15th, 2010, even those with zero down were between 4.5% and 4.75%. This means that if you were to obtain a loan for the median priced closed home in Kitsap in June, 2010 for $236,000 for 100% of the purchase price that your payment of principle and interest for a 30 year fixed rate loan would be $1,195.78. Throw in $300 per month for taxes and insurance and that might be say $1,496 per month for your housing expense which is about the same rate you would need to pay in rent for most of these homes selling at the median.

These are truly unusual times for buyers. How much longer will this perfect storm of conditions last?

Conveniently Located Commercial Property Optimized For Local Business

Anderson Properties has announced that they have made special warehouse office condos for sale or lease at 650 Bovela Lane in Poulsbo, WA. Each unit is approximately 1,692 square feet and have various existing configurations of office improvements and warehouse space. They are ideally suited for commercial  real estate uses or storage. Located just off Viking Avenue at Bovela Lane you can reach Highway 3 at Finn Hill in under 10 minutes.

Some units are already leased and may be purchased as investment property. Special SBA financing is available along with potential seller financing. For more details about these units or to request a list of commercial industrial Kitsap real estate please visit:

http://www.kitsaprealestateadvisor.com/modules/wfchannel/index.php?pagenum=32

Here is a “different view” of a foreclosure listing in Port Orchard. If you like this kind of view I would be interested in finding out. YouTube allows you vote or comment so feel free.

Robert Shiller of the Case-Shiller Housing Market Index

Real estate investors, lenders, brokers and increasingly homeowners need to track home values more closely to make decisions that have outsize effects in their personal financial lives and collectively on the economy. One of the most watched housing indices is something called the Case-Shiller Index developed by Yale economist and author Robert Shiller and his graduate student, Mr. Case. The index is so closely watched because it tracks price movements of actual homes in major markets over time rather than rely on statistical medians that cannot correct for differences in the types of homes that are developed and sold in regional or SMSA markets in different market cycles.

To understand real estate market cycles I highly recommend reading a book by author Robert Campbell. Campbell also publishes a bi-monthly real estate market timing newsletter the predictions from which I share with my clients.

But, for more insight from Robert Shiller check out this recent interview with Robert Shiller by the Motley Fool:

http://www.fool.com/investing/general/2010/04/20/shiller-the-housing-recovery-could-be-on-shaky-gro.aspx

While there are some good things to bring optimism to the Kitsap real estate markets a slowdown in foreclosures is not one of them.

Read more about it in this Puget Sound Business Journal Article.

Fed members previously said that the use of “extended period” referred to three or four meetings, but the new explanation suggests that the Fed’s language “could legitimately be used until just before tightening is set to start, and thus does not convey much information about the likely start date of Fed tightening,” said Barclays Capital economist Dean Maki in a research note.   However, at the meeting a number of policymakers “pointed out that the economic recovery could not be sustained over time without a substantial pickup in job creation, which they still anticipated but had not yet become evident in the data.”  Fed members also highlighted concerns about the housing market, where gains are “leveling off” despite government support such as the homebuyer tax credit, and said commercial and industrial real estate markets continue to weaken.   “The housing market is still tenuous. The last thing the Fed wants to do is torpedo any improvements,” Canally said. “The Fed does  not want to raise rates and be responsible for squashing the recovery and killing the housing market.”

What does this mean for Kitsap real estate sellers and buyers. While home mortgage rates are more directly correlated with long term treasury securities short term interest rate increases will put upward pressure on those instruments.

Bank of America (BoA) announced last week that it would begin cutting loan balances for distressed mortgage borrowers and in the process created a lottery – if you’re lucky enough to be in its portfolio and smart enough not to pay your mortgage, you win.  Specialty servicers have been around for a while, handling the worst-of-the-worst; loans at least 90 days late, and one of the tactics they have used is principle reduction.  It sometimes works well with the worst cases.  But now BoA is taking the practice mainstream, and not surprisingly more loans are going 90 days late.

Business is booming for specialty servicers these days.  Last week the Federal Deposit Insurance Corp. sold specialty servicer RoundPoint a 50% stake in a portfolio of mostly non-performing mortgage worth almost $500 million.  Unlike the bank the entity that owns a mortgage (the bank or a group of investors), mortgage servicers are the companies that handle the day-to-day administration of mortgages. They collect payments, maintain escrow accounts and confront borrowers about late payments. They also initiate the foreclosure process when borrowers default.  Dozens of specialty services have sprung up to take on these difficult jobs. They mostly deal with loans three payments or more late, which is about 5% of all mortgages, according to the Mortgage Bankers Association (MBA).   One of their main solutions is cutting the principal balance so that homeowners no longer owe more than their houses are worth.  “Our clients would rather do a principal-reduction than an interest-reduction workout,” said Gagan Sharma, CEO of BSI Financial. “Many bought the loans at discount so they’re happy to pass the savings down to consumers.”

This could have many intended and unintended consequences. More borrowers might be encouraged to default in order to negotiate for a principle write down and perhaps keep their home thus lowering the available inventory. Kitsap real estate could still be in for downward price movements.