A few years ago, our community was recognized as being among the “safest” places to live.  That study included crime statistics and the low probability of having a natural disaster.

The years of 2003 through 2006 experienced the major “building boom” in the Tri-Cities.   Following this period, we resumed normal and healthy new home construction.

As you may know, I recommend that everyone be mortgage free, if possible, when retirement approaches.  With mortgage rates being in the mid 4% range, this may be a good time to refinance and make additional mortgage payments to retire the debt.  One has to calculate the “pay back” period prior to making this decision.

Our pending sales are substantially less than last year at 294 sales versus 414 for the previous year during this period.  Our late summer and fall sales may be projected to be less than those for the previous year, but our “total sales” may be similar.  

 Some buyers are having difficulties finding sufficient options to meet their needs.  Our market continues to be influenced indirectly by the national recession. Weekly I meet potential home buyers who have a home to sell elsewhere.

Our market overall seems to be a sellers’ market below $175,000 and a Buyers’ market above $475,000.  Overpriced properties continue to sit on the market while those in good condition and priced well, are selling.

I assume with development money being limited, it is difficult to borrow for lot development.  The builders, who develop their own lots, seem to be having a distinct advantage.

One argument that I have heard by owners is my lender does not charge to refinance.  Lenders do not work for free.   The cost to refinance is normally applied to the principle; thereby building the cost into the loan.  Another option is the charge a higher rate to make a profit on the backend when the loan is sold.  

My recommendation is to analyze your needs and do the math.  If you need assistance, give me a call.

This month’s podcast addresses this subject.  Go to http://www.talkrealty.com/donhavre

Last week construction finally started on the Steptoe Street extension. The project includes construction of curbs, sidewalks, storm drains, lights and landscaping with irrigation. Much of the funding is from federal sources.   I believe communities like Hanson Park will benefit greatly from this road.   Some home buyers have been reluctant to purchase in this area because of the routing necessary to travel to the North Richland Business Campuses.

This road extension is just another sign of the Tri-Cities’ growth and good community planning.

The best home inspector for you is based partially on your personality and expectations.  If you are not going to be present during the inspection, an inspector using numerous photos can be helpful.  If you plan to observe the process, an inspector with good interpersonal skills is desired.

For more on this subject, listen to this month’s podcast at http://www.talkrealty.com/donhavre

The concentration of new lots appears to be for homes priced below $200,000.  This is in keeping with our average sales price of $191,000.

When we review the year, our total sales have experienced a 4% increase over the prior year. Both the average sale and median prices have increased as well.  Some believe the federal government incentive provided increased demand and therefore, increased prices.  I believe this situation to be true in the entry level market. If we experience a small decline in average and median prices within the next two month, this opinion will be supported.

Newer homes priced below $325,000 are in high demand. Most buyers are seeking newer homes and will purchase an older home if their budgets do not support new. Upper end older homes are in an over-supply situation.  Homes priced above $475,000 have supplies ranging from one to three years.

The new facility will be at 1710 East 7^th Avenue in Kennewick. It will be able to triple the number of animals receiving care from 40 to 120.  In 2009, the present shelter found homes for 687 unwanted animals.

If you are like me, you believe pets add to our quality of life. Sparky has been my office dog for years and our family has had dogs since I have been married for over 40 years.  If you consider this to be a worthwhile project, you can make a donation to BFHS, 8620 W Gage Blvd, Kennewick, WA 99336.

Our economy seems to be sheltered from the negative effects of the national economy.  Nationally about 4.3 million home owners or about 8 percent of all Americans are at risk of losing their homes because they have missed at least three months of payments or are in foreclosure.  Our foreclosure rates continue to be low.  We are indeed fortunate to be isolated from the national situation.

The problems associated with this mythology are that you can’t buy a house that already has been sold and secondly, buyers normally do not restrict themselves to a specific neighborhood.  For instance last week I viewed homes with a couple looking to purchase in range between $200,000 and $260,000.  We viewed homes in Kennewick, Richland, West Richland and Pasco.  Ultimately the couple purchased a home in West Pasco.  As real estate professionals, Jackie believes we need to do absorption studies by price ranges in all areas where buyers are likely to purchase.  This study will determine if we are dealing with a Buyer’s Market, Neutral Market or possibly a Seller’s Market.    Jackie does not believe we should eliminate the original market analysis, but add to it.  If we are dealing with the value of one property, we need to ask ourselves where buyers are also likely to search for homes.  

I believe her comments have merit and we will start providing the “long list” of potential options to our clients.

When the first time home buyers’ index is reported, Benton County reported 111.3 which is the third best factor among the 39 counties in Washington State. Franklin County reported a factor of 99.4.

Benton County reported a negative 3.3% change in building permits as compared to a year ago, while Franklin County reported a positive 59.6% increase in building permits.  As I previously reported, we could be facing a shortage of building lots this year in Benton County.

For updated Tri-Cities housing information go to http://www.Key2Homes.com

http://money.cnn.com/magazines/moneymag/moneymag_realestate/2010/biggest_gains.html?hpt=T2

The National Association of Realtors Economist, Lawrence Yun, is projecting that interest rates will be at least 6% by year end.  As of Friday’s closing, the average was 4.99%.     If these projections are accurate, a $200,000 home in January of 2010 will have a value of $209,200 a year later.  Assuming one were to purchase with 5% down, 30 year mortgage, the monthly payment would change from $1018.80 to $1,191.55 a month or a difference of $172.75 a month.  In addition the Buyer during January 2011 would not be eligible for federal tax credit.

When I hear that Buyers are not in a hurry to purchase, it could mean substantially higher mortgage payments. 

For example, the City of Kennewick has zero new lots through February 2010.  During the previous year, total lots brought on-line were 107.  The figures for the City of West Richland are 0 lots for this year versus 130 for last year.  The City of Pasco has 18 lots for this year versus 267 for last year.

Many of the lots being developed are by the large builders who develop their own lots and specialize in homes for first time owners and initial trade up buyers.  The problem with this trend is that the smaller builders may be forced out of business unless building lots become more readily available.   The smaller builders do much of the custom construction in our area.

If the trend does not reverse itself, we are likely to see fewer new homes during 2010.

Our absorptions rates increased slightly for homes priced below $200,000 last month.  These homes are now in normal market situation.    Homes priced above $375,000 continue to be in an oversupply situation. 

The Tri-Cities rental market is very active.   It’s very difficult to find a three bedroom apartment and where they exist, waiting lists are present.

With interest rates at historically low rates, this is a perfect time for those eligible for tax credits to purchase.    First time and previous buyers, who qualify, must have a contract written by April 30, 2010 and close prior to July 1, 2010.

• It has been a rough four years for the housing recession.
• 2009 experienced more sales than 2008; however the prices were lower during 2009.
• Yun is projecting a 15% increase in residential sales for 2010.
• The first two quarters will benefit from the housing tax credit.
• The final two quarters will benefit from job growth.
• Increase pressures on residential housing will be affected by 16 million renters who have the ability to purchase a median priced home in their areas.   Many of these renters are waiting and watching the market.
• The US population growth is about 3 million each year.
• In many markets prices have overcorrected and are now starting to rebound.
• We have a 6 month supply of houses which means that we should start to see annual appreciation rates of 3-5% for years to come.
• Interest rates for fourth quarter of 2010 most likely will increase to 6%.
• Foreclosures for 2010 will be similar to 2009.  These foreclosures are based upon sub-prime borrowers making loan previously they can’t afford and strategic defaults (home owners who can afford the payments, but are discouraged about reduced property values and stop making payments).
• Foreclosed properties are selling much faster than they did in 2009.
• Commercial real estate will have a bad year in 2010.  Commercial values have fallen 40%.  This situation presents a buying opportunity for those with cash.  
• Temporary employment is rebounding and should precede permanent jobs.

If Lawrence Yun’s predictions are accurate, now is the time to purchase homes in the lower price ranges.  Once jumbo interest rates decline, home buyers in the upper price ranges should start buying.  For those with cash, purchase commercial properties at a discount.

Home Buyers continue to be highly emotional when they are viewing homes and ultimately identify the home that best meets their needs. It is absolutely critical that a home show well to receive top dollar and sell in the shortest time possible.

A few weeks ago, I recommended to a future home seller that the master bedroom floors be repaired to eliminate squeaking.    The subfloors were not properly secured.   The home owner thought this was a useless repair and if necessary could be done prior to closing.  My observations are that if one hears excessive floor squeaking, this causes doubt with the potential buyers and causes them to ask, “What else is wrong with the home”?

One has to ask why car dealers try to keep their autos extremely clean so they show well.  They don’t let the vehicles accumulate dirt and then offer $20 to have the vehicles washed after purchase.  The marketing principles are the same for housing and autos.

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