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.

Announcements by Fannie Mae and Freddie Mac Will Impact Availability of Home Loan Financing In Kitsap County

If you read the news or absorb it from other media you a re likely aware that something called the secondary mortgage market supplies the funds for our home loans. So what is the secondary mortgage market?

When you borrow money to purchase or re-finance a home loan the company you initially deal with is called the originator. They originate the loan you receive. Most often, that company sells that loan to an investor who then collects hundreds and thousands of loans into pools. Then that company or in many cases others financial firms create a new security instrument (bonds) secured by a possessory interest in the loans. This is called a mortgage backed security. The pool of loans is held by a trustee (usually a trust department of a large bank). The trustee manages a mortgage servicer who then collects the payments form the mortgage loans and transmits the interest and principal to the trustee for disbursement to the people who purchased the bonds (bondholders) secured by the pools.

Bonds are sold to different kinds of investors in what are called tranches. These investors are seeking shorter and longer term maturities and yields. In this way the cash flows of all of the different loan payment terms are collected together and paid out in a form different form the manner in which they are paid in. Truly, these securities created by the bond indentures are rather marvelous examples of financial engineering.

When constructed upon loans with sound underwriting they provided a large, stable source of investing second only to the US Treasury securities market. That is, they did so prior to the 2005-2007 meltdown.

You see, the massive rise of national savings accumulated in countries like China and India created unprecedented masses of capital in the world that sought safe places to go. In 2005 The United States had a savings rate of 2% and accumulated savings of $158 Billion not including the value of real estate or stocks held as investment or home. China’s savings rate was 50% and $1.0Trillion. The Indians were saving at a rate of about 26% of income. It is not difficult to imagine how these thrifty populations and especially their governments, accumulated sums of capital that created an imbalance in the supply and demand of capital and safe vehicles in which to invest.

Well, times have changed and the poorly underwritten US home loans created to fill the unprecedented demand for securities eventually lead to the meltdown in the secondary mortgage market. When private investors indicated they were no longer interested in poorly constructed securities by, well, not buying them this put a little hitch in the giddyap of mortgage money supply. We probably all remember what happened next. Money supply goes away. No one can borrow money to buy houses. The roller coaster comes to a halt. Home sales volume plummets. New home builders go out of business. Banks take back sub-divisions. Lehman Brothers, Bear-Stearns and AIG go bust and the federal government ride to the rescue with the troubled asset relief program or TARP.

So, just what was TARP again? Well, the Federal Reserve created $1.3Trillion of new money out of thin air and used it make “open market” purchases of secondary mortgage market securities and treasury securities. They bought mortgage backed securities bonds in part through the government sponsored enterprises (GSE’s) like Fannie Mae and Freddie Mac. The FHA became the largest purchaser of newly originated loans and the federal government stepped back to watch private investors return to the capital markets.

Guess what?

The private investors haven’t returned yet. In 2009 and through the present in 2010 the GSEs purchased more than 90% of loans purchased and Moody’s noted since Q307, the Fannie and Freddie reported seven consecutive quarterly losses totaling $86.9Billion and $63.7Billion, respectively. So what, you ask, for Kitsap real estate?

A month ago Fannie Mae thought its forecast for mortgage funding would rise 2.8 percent in the first quarter of 2010, but now they’re saying it could drop 17.2 percent. On top of that they slashed their forecast for new loans for the year from 1.97 trillion in 2009 to 1.31 trillion in 2010.  That’s a 33% drop, one third less.  “I still don’t think investors and the media at large have grasped the variety of consequences that a year over year drop in mortgage volume in 2010 will bring. Just think about all the lost jobs and income or how many times ‘mortgage banking revenue’ has driven bank earnings,” warns mortgage industry analyst, Mark Hanson.  “A $1 trillion origination year would be down about 66% from the bubble years average and 75% from the peak.”  The fact that mortgage rates are so ridiculously low right now, and yet loan volumes and refinances are not gaining, is not a good sign.
Could this mean that less money will be available for home buyers for the rest of this year? Will congress renew the first time home buyers tax credit scheduled to expire on April 30, 2010? What will it mean that new home construction is at records lows for the entire time that the government has been collecting that information, reducing the supply of housing coming into the market? What does it mean that 17% of the “supply” of foreclosures in Kitsap County have entered pending status in the last 30 days?

I am not a genie so I can’t tell the future with any certainty. However, I would not waste what could be the perfect storm of low home prices, low mortgage rates, relative abundance of mortgage money and an $8,000 tax credit to go by the wayside.

Anthony Cota of Sound Lending is a good fellow to contact to see if you can get a home loan today before things change. You can call him at 877-312-5100.

The five properties that we had on the tour were chosen because our poll of area real estate agents had indicated that they were special values based upon their listing price. And guess what? Every one of those properties has gone under contract.

And, the inventory of foreclosure properties has been reduced by quite a bit. Maybe the government is serious about the first time home buyer tax credit deadline of April 30? Could be. It seems that a lot of buyers are taking it seriously because as of Friday morning the inventory of foreclosed properties in the Bremerton area was 20 homes. But, the number of properties that had gone pending was 31. Normally, the ratio of active to pendings is more like 5 or 10 to one. In normal markets this would signal a probable rise in prices. Of course, this is what we saw before last year when the first tax credit deadline approached.

To quench the fire of your statistical inquiry even further just a couple of weeks ago the total inventory of foreclosed homes in Kitsap real estate was exactly 100. The inventory today is only 83. Hmmmm. What could that mean?

This is the type of real time information and insight that you need to make successful foreclosure purchases.

If you have a friend that could use this information and help please forward this message to them. They can register for the tour by visiting Kitsap and Gig Harbor Foreclosure Tours.

Will Farms In Kitsap Be Preserved As Productive Farmland and Open Space or Subdivided For Housing?

Hansville Nursery

Jim Freeman, associate broker at Coldwell Banker Park Shore announced on February 15, 2010 the listing of the 144 acre Hansville Nursery land for sale. Also known as the Old Homestead Plat the owner, Olympic Property Group LLC, a subsidiary of Pope Resources Group, has operated the land as a Douglas Fir tree nursery for more than 20 years. Recent price and volume declines in the lumber industry forced a decision to shutter the nursery operation in 2009 and put the property on the market.

Download a sale brochure for the Hansville Nursery here.

The infrastructure improvements installed to support the nursery operation make it an ideal site to consider conversion to pastured grazing and eventually vegetable and fruit production. The improvements include a cold storage warehouse, a processing warehouse, a two bay equipment maintenance garage, a five bay tractor shed, four miles of drain tile to collect and manage water storage ponds, a well, an irrigation system, truck dock, three phase power, an office, restrooms and crew room. The entire property is surrounded by an eight foot deer fence and adjoins densely populated housing subdivisions known as Shorewood. Neighborhood residents often enjoy walks through the property and many have asked about the possibility of preserving the property from further subdivison.

What's Next For Kitsap Farm?

Because of the old Homestead Plat plans a portion of the property enjoys paved and gravel roads. Public water is available from a system that adjoins the southern boundary. No sewers are available in the area.

Farms play a significant role in Kitsap cultural, historical and economic life although most people are unaware of this. The Kitsap Conservation District has estimated that there are 9 major watersheds in the county and a greater number of lesser watersheds with 1,874 tax parcels as being used for agriculture not including Christmas tree farms. The total area of these parcels is 10,819 acres with an average size of 6.3 acres. That being said the trend in recent years has been a diminishing acreage under cultivation in the county and a trend away from local food production to things like hay production and equestrian uses.

As a member of a community organization dedicated to building a local food network Jim Freeman and the Kitsap Community and Agricultural Alliance have been active in efforts to preserve farmland in Kitsap County and plan for succession of aging farmers. The KCAA has efforts underway to apply for farmland preservation grants through the Washington State Conservation Commission and the Recreation and Conservation Office. Discussions have also been held with the PCC Farmland Trust and the Great Peninsula Conservancy.

Other uses for the property as improved include tree nurseries, forest land and open space. Otherwise, the property is capable of subdivision into as many as twelve building lots due to the current zoning and historical entitlements.

For more information please visit Land For Sale In Kitsap County.