Clark County WA Real Estate Blog

Good news today!
The loan limits for FHA loans were raised today, from $304,950 to $418,750.  This will really expand the use of FHA loans for home mortgages, and give home buyers more options.  FHA loans offer low downpayments,  low closing costs, and easier qualifying. 

Going forward, FHA will be a bigger player in the home mortgage market.
That’s good news!

Let the good times roll.
Only a short while ago, lenders were more than happy to give loans to home buyers without a job, with poor credit history, and without verified income. While common sense would tell you that these types of borrowers are very risky, a lot of lenders seemed to have checked their brains at the door. Why not? They were collecting huge loan fees, and weren’t too worried about the quality of their loan portfolio since they were packaged and sold on the secondary market.

What has changed?
In the last year, the mortgage market has gone through some turmoil,with many mortgage companies closing their doors. Investors stopped buying these dubious loans, packaged and sold as CDO’s. It has been a painful transition for some, but going forward it will help the remaining lenders be more fiscally responsible and prudent. And, credit worthy borrowers will still be able to get loans. That’s all good.

Today’s Mortgage Market
Today’s home buyer is most likely to puchase their home with a conventional loan, or an FHA loan.

Conventional Loans
Conventional, or conforming loans are fixed rate 15 or 30 year loans, with a lending limit of $417,000. These loans require good credit scores, stable job history, and a modest down payment-5% or more.

FHA
For those who cannot afford to put at least 5% down, an FHA loan may be ideal. FHA also offers loan programs such as the Ameridream and Nehemiah, which offer 100% financing, although these programs are going to be modified or phased out over the next few months. The FHA loan limits are $304,950 in Clark County.

What fuels real estate appreciation?
Real Estate values are controlled by supply and demand. If supply stays constant and demand increases, values will naturally increase.

Washington State Population Growth
Investors and home owners can feel good about today’s report from Washington Realtors Association. Washington State is projected to grown from 6,488,000 in 2008 to 7,742,844 by 2020. That means over the next 12 years, we will see an annual average population increase of 104,570 or 1.6%.

My crystal ball says…
With today’s report, it is clear that pressure on housing inventory will be a long term trend. Additionally, when consumer confidence returns to the market, today’s oversupply will quickly evaporate, and we will once again have a housing shortage. Great news for homeowners, who will see the long term appreciation trends continue. If you are a buyer, don’t wait too long. Todays home prices, and low interest rates will only be with us for a little while. You have a small window of opportunity to take advantage of today’s buyers market.

The Open House is a great tool for exposing your listing to the neighborhood.
It’s a shame more Realtors don’t hold their seller’s homes open on Sunday afternoons.

I think of my Open Houses as ‘Active’ Open Houses.
Why are they Active?
Rather than just hold the house open on Sunday, I am more proactive. I like to send out postcards to the neighborhood the week before, announcing that I will be holding the home open. On Thursday, I put together Folders and Gift Bags for visitors. I like to think of the Open House as a ‘Home Party’. It’s my chance to talk up the seller’s home, find out what visitors think as they walk through, and perhaps even find a buyer.

Sunday afternoon, I place my signs out, and direct traffic to my Open House. I bring my Buyer’s Folders and Gift Bags, all ready to hand out to visitors. I turn on soft music in the background, turn on the lights, and get ready to meet and greet visitors. If you enjoy people as much as I do, it’s a lot of fun!

The Results?
When visitors leave my Open House, I want them to remember the experience, remember the home, and remember me. In a scenerio like this, everyone wins. The visitor has a pleasant experience, I get feedback on the seller’s home, and there is a chance that the home will sell at that Open House.

See you this Sunday, in Camas (Grand Ridge), where I will be doing an Open House from 1-4 PM. Looking forward to meeting you.

A short sale is when the seller owes more money to the lender than will be realized from the sale of the property. How does it happen?
I will use a hypothetical example. Owners Jim and Jasmine Smith purchased their home two years ago, in 2006, when the market was hot. They paid $400,000 for their home. They put down $20,000- and paid cash for all their closing cost. When the transaction closed, they had $20,000 equity.

Fast forward to today. They want to sell their home, but don’t know if they can afford to. They are afraid they owe more than their house is worth. Let’s take a look around the neighborhood, to see what their home is worth.

They have a neighbor, Mr. Jones, who has had his house on the market for the last 6 months. His home is exactly the same as the Smith’s home. He initially listed his home for $400,000, but has not had any showings and no offers. After three months, his agent recommended he lower the price to $380,000. Still no showings and no offers. Mr Jone’s is getting desperate, and needs to move in three months. He decided to lower the price again,to $360,000, hoping to get some showings and some offers. Two weeks later, Mr. Jones receives an offer for $350,000. He accepts the offer.

How does this affect the Smiths?
The market price for their home has now dropped from $400,000 to $350,000. They no longer have any equity in their home; they owe more than their home is worth. In other words, if they sold their home for $350,000, at closing they would be ’short’. They would have to bring cash to closing, or negotiate with their lender to ‘forgive’ some of the loan.