Real Estate Information Archive

While many parts of the nation are experiencing a soft housing market, the Tri-Cities reported a very good year for 2009.  We experienced a 10% increase in sales from 2008 to 2009. Both the average sales price and median sales price were higher for the Dec 2009 as compared to the same month during 2008.  Unless we start to see more listings in the lower price range, we could have a housing shortage.  Regional builders who do their own land development and specialize in the lower price ranges must have experienced terrific sales.   

Our December 2009 statistics indicate that all price ranges to $325,000 are leaning towards a “seller’s market”.  Above $325,000 we have a market shift towards a “buyer’s market".   Builders who build in the upper price ranges should be cautioned to be conservative in the number of homes built until the market has a correction.

I believe our market has been positively influenced by the tax credit and stimulus money for Hanford Clean Up activities.   It will be interesting to watch the market after the tax credit period expires. 

For addtional information go to www.Key2Homes.com

The Tri-Cities Building Association reports building permit activity during the year.  Since 2005 we experienced a decline in new construction through 2008.  Last year had an 8% increase in new construction over the prior year.   The City of Pasco continues to lead the growth in the Tri-Cities.  The following chart illustrates the decline followed by growth.

President Obama signed the Worker, Homeownership, and Business Assistance Act of 2009 into law November 6, 2009. The legislation greatly expands the First Time Homebuyer Tax Credit by making more first time homebuyers eligible for the credit and now includes homebuyers that are not first time homebuyers.  

First Time Homebuyers

The current law is extended until April 30, 2010. Buyers have until that date to have a signed purchase agreement. There is an additional 60 day grace period to complete the financing. More first time homebuyers are eligible because the new law raises the annual income limits from $75,000 to $125,000 for singles and from $150,000 to $225,000 for married couples.

Current Home Owners

Over 60 percent of current home owners will be eligible for a tax credit of up to $6,500 if they purchase a home by April 30, 2010. These homebuyers must have lived in their home for five consecutive years over the previous eight years to qualify. Qualified homebuyers can get the credit if they purchase a home for $800,000 or less as their primary residence between November 7, 2009 and April 30, 2010. The income limits are the same as the First Time Homebuyer listed above.

Sunday I was reading the Business section of the local paper.  It contains a segment on Money Rates in the Tri-Cities.  The article has a table listing mortgage rates for various Tri-City banks. I believe this table is of limited value for two reasons.  One is that interest rates are dependent upon credit scores.  I can only assume the published loan rates are for those with the best credit scores. 

Secondly the annual percentage rates (APR) are dependent upon loan origination and processing fees.  When a present or future home owner combines the loan rate with the loan origination fees, the annual percentage rate (APR) is identified.  The APR is the rate that really informs the consumer about the price of the loan. Therefore, it makes more sense to publish APR’s.  This is the standard for comparisons.   Always ask your lender for the APR and compare this rate with other lenders.   This is a service performed by many mortgage brokers.

 With the change in Tri City Association of Realtors accounting of active listings (for sale) and under contract, it is difficult to compare these statistics of the previous year.  Trends that can be followed are the sales, average and median prices. The sales for last month, October 2009, exceeded sales during the same month for the last five years.  Only June 2007 exceeded last month’s sales most recently.

What caused this explosion of sales?  I believe two factors contributed to this situation. One is the stimulus money introduced to the Tri-Cities supporting many of our federally funded programs. Secondly, there has been a rush for “first time home buyers” to close on their transactions prior to December 2009.  When we review the average and median prices, we experienced a drop in both price indexes. The average price for October 2009 indicated a price drop of 6.1% over the previous month.   I believe this data indicates that the lower end of our market where first time home buyers are most likely to purchase is most active.

When I review our absorptions rates, we do not register a Buyers’ market until we have homes priced above $325,000.  Homes priced above $475,000 indicate over a two year supply.  Home buyers should be able to negotiate favorable terms above this price.

With the change in Tri City Association of Realtors accounting of active listings (for sale) and under contract it is difficult to compare these statistics of the previous year.  Trends that can be followed are the sales, average and median prices. The sales for September 2009 are 14% less than they were September 2008.  The average price dropped from $196,900 September 2008 to $194,000 September 2009; while the median prices increased from $165,000 to $170,000 during the same period.  When we consider both statistics, we really have seen much change in our prices during the last year.  I believe we are on the eve on increased prices again.

It seems clear that not only is our inventory (homes for sale) less than a year ago; our total sales are less as well.   Homes priced less than $225,000 seem to be favor sellers while homes price above $325,000 lean towards a buyer’s market. Homes priced above $425,000 can be categorized as being in a severe buyer’s market.   Older homes in the upper price ranges are having difficulties competing with the newer homes.  Sixteen percent of our total inventory is new construction.

The clock is ticking and the federal government’s $8000 tax credit for selected home buyers will be finished effective November 30^th.  If one is using bank financing, it may take up to 45 days to close on an accepted real estate contract.   Therefore, those desiring to take advantage of this program, have approximately 30 days to write a contract.  For more information on this program, watch the video. Click Here

 Our real estate legal contracts for Kennewick, Richland and Pasco Wa Homes are changing almost at lightning speed.  The situation has resulted in that we no longer maintain paper files of purchase and sale agreement forms in our office.  Some of the changes are as a result of previous court rulings and others are as the result of meeting State guidelines.

Last week I wrote a contract with an inspection addendum.  From the time I printed the form, had it signed and delivered to the listing agent, the form changed to a newer version.

One reason that I mention this situation is that it seems to me that if one uses the “standard forms” found in stationery stores, most likely they are out of date.  If you have elected not to use a real estate professional during your next transaction, I highly recommend that you secure the services of a real estate attorney. A real estate transaction can have a significant impact upon your rights and responsibilities.

Our market continues to be in three tiers whereby the owners of homes priced below $275,000 are enjoying a healthy real estate market.  Homes priced below $175,000 that are in good condition are in short supply.  During previous months, it was common to find many quality homes in West Pasco priced below $150,000.  Now one may have to build a home in this price range. Homes priced above $425,000 are in excess supply and builders should be advised to be cautious in building “spec” homes in this price range.

Our sales of 336 homes reflect a major increase in homes sold during a monthly period.  This figure exceeds all monthly sales during the year 2008.  Total sales from Jan-July 2009 are 8% less than the same period of 2008.

It will be interesting to observe our market once the “first time home buyers” excise tax credit program expires November 30, 2009.

As energy costs continue to rise, many home buyers are concerned about the efficient of homes being considered.  One standard is the “Energy Star” designation.   To qualify for this standard, the home is supposed to be at least 15% more efficient than a standard built home.   To achieve this standard the home is to have a sealed duct system; high performance heating and cooling systems, and efficient lighting and appliances.   When I reviewed the web site for “Energy Star” builders, it is apparent the many energy efficient builders are not identified.   I recommend you discuss the efficiency standards with your builder or builder’s representative.

For more information on the Energy Star program CLICK HERE