Edgewood, WA Real Estate Blog

Most areas show a marginal improvement in markets, at least from a seller’s perspective. Keep in mind closed sales are contracts that were written 45-60 days ago when the seasonal selling period typically peaks.

Federal Way (areas 100 and 110) and NE Tacoma (areas 94-95) are exceptions.

All areas ( based on inventory levels) remain decidedly a buyer’s market.

• Number of Active listings: King & Pierce County WA
  
• Number of Active listings: Edgewood, Milton, Sumner, NE Tacoma, & Federal Way WA

• Number of Sold listings: King & Pierce County, WA
• Number of Sold listings: Edgewood, Milton, Sumner, NE Tacoma & Federal Way WA

• Average days on market: King & Pierce County WA
• Average days on market: Edgewood, Milton, Sumner, NE Tacoma & Federal Way WA

• Months of housing inventory: King & Pierce County WA
• Months of housing inventory: Edgewood, Milton, Sumner WA
• Months of housing inventory: NE Tacoma WA
• Months of housing inventory: Federal Way (100) WA
• Months of housing inventory: Federal Way (110) WA

• Median sold price: King & Pierce County WA
• Median sold price: Edgewood, Milton, Sumner WA
• Median sold price: NE Tacoma WA
• Median sold price: Federal Way (100) WA
• Median sold price: Federal Way (110) WA

Mortgage rates continue to trend upward today after a stronger than expected Retail Sales Report.  Tomorrow we have the CPI (Consumer Price Index) which is report that indicates inflation and has a high impact on mortgage interest rates.   Inflation is the “arch enemy” to bonds and mortgage interest rates are based on mortgage backed securities (bonds).  If the CPI reports higher inflation, we will see mortgage rates increase.   Rates have increased 0.25% since this Monday–I strongly recommend locking your rate in this market.

Mortgage rates continue to be very volatile often times changing 3-4 times per day.   I post live rate quotes on Twitter and you’re welcome to “follow me” to see what scenarios are currently being quoted.   The rates below are based on the same criteria that I used for my first rate quote and are priced with zero origination fees or discount points unless otherwise noted.

Conforming Loan Amounts up to $417,000

30 Year Fixed:  6.625% @ 0 Pts (apr 6.685%)

30 Year Fixed with 10 Year Interest Only:  6.875% @ 0 Pts (apr 6.932%)

5/1 ARM @ 0 Pts:  6.25% (apr 7.228%)

5/1 ARM @ 1 Pt:  5.75% (apr 7.084%)

Conforming-Jumbo Loan Amounts up to $567,500 for Pierce, King and Snohomish Counties. 

30 Year Fixed:  6.625% @ 0 Pts (apr 6.681%)

30 Year Fixed with 10 Year Interest Only:  6.875% @ 0.5 Pts (apr 6.973%)

5/1 ARM:  6.00% @ 0.5 Pts (apr 7.142%)

FHA Loan Amounts up to $362,790 in Pierce, King and Snohomish Counties

30 Year: 6.375% @ 1 Pt (apr 7.147%)

FHA Jumbo Loan Amounts up to $567,500 in Pierce, King and Snohomish Counties

30 Year:  6.625% @ 1 Pt (apr 7.394%)

VA  30 Year Fixed:  6.500% @ 1 Pt (apr 6.828%)

Rates posted are as of 9:30 a.m. June 12, 2008 and may and will change at any time. 

The numbers are interesting this month. As you would expect for this time of year, the number of listings is increasing for both King and Pierce Counties. Yet the number of absolute sales is decreasing. Buyers are holding back. Interestingly days on market for King county are drifting downward while they are drifting upward for Pierce County.

Months of inventory are up for both counties. This is the number of months it would take to sell all the homes on the market at that months sales rate assuming no new homes came on the market. Of course we know additional homes are always coming on the market. A four to six month inventory is considered neutral - neither a buyer’s nor a seller’s market. As you can see, we definitely have a buyer’s market in both King and Pierce Counties.

Keep in mind that “Solds” generally represent activity 45-60 days ago whereas “Pendings” (sold but not closed) represent activity 0-30 days back.

Inventory levels for local areas (Edgewood, Milton, Fife, Sumner, Federal Way & NE Tacoma) really shot up in May as more people put their homes on the market and overall sales activity decreased.

Median sales prices, while all over the board month to month, are down from a year ago.

• Number of Active listings: King & Pierce County WA
• Number of Active listings: Edgewood, Milton, Sumner, NE Tacoma, & Federal Way WA

• Number of Sold listings: King & Pierce County, WA
• Number of Sold listings: Edgewood, Milton, Sumner, NE Tacoma & Federal Way WA

• Average days on market: King & Pierce County WA
• Average days on market: Edgewood, Milton, Sumner, NE Tacoma & Federal Way WA

• Months of housing inventory: King & Pierce County WA
• Months of housing inventory: Edgewood, Milton, Sumner WA
• Months of housing inventory: NE Tacoma WA
• Months of housing inventory: Federal Way (100) WA
• Months of housing inventory: Federal Way (110) WA

• Median sold price: King & Pierce County WA
• Median sold price: Edgewood, Milton, Sumner WA
• Median sold price: NE Tacoma WA
• Median sold price: Federal Way (100) WA
• Median sold price: Federal Way (110) WA

Due to the (marginal) increase in the risk of bank failures given the current credit mess (we’ve now had 4 bank failures so far this year), I included an article in my April Newsletter concerning FDIC insurance limits and making sure you’re adequately covered. Although the risks are small, it costs nothing to do it right and the ramifications could be huge.

I had a question this morning regarding how to properly title informal trust accounts, specifically payable on death accounts (POD). The question was what exactly needed to be in the account title to make sure FDIC insurance properly extended the coverage to the beneficiaries (in light of insurance coverage limits).

Although I included a general link to the FDIC site in the newsletter, I had trouble re-navigating the site to find the exact answer so I am providing it here as others may have similar questions.

FDIC insurance coverage and limits are a little obtuse, but again, it’s worth your time to get it right. My client’s bank had incorrectly titled an account (for FDIC insurance purposes) and only because my client had read the April newsletter did he have reason to question it.

If you have specific questions not answered on their web site, you can contact the FDIC here.

We’re at month’s end and after reviewing May’s Edgewood statistics I’ve moved on to home sales in Milton. It’s always much more interesting to look at activity by price range by single area as opposed to overall stats for multiple area groupings the MLS publishes if you want the nitty-gritty on a specific area. Here’s the data for May in NWMLS area 71 which includes Milton, WA.

Click to enlarge

As you can see, not a lot of sales or pendings compared to the number of listings. As a rule of thumb, figure the sales went pending 30 to 60 days ago, and the pendings occured in the last 30 days. Pendings are a more immediate reflection of what’s going on although you have to be careful as a given a home could be pending more than one month, whereas a closed only happens once.

There’s not much separating any of the price ranges. The two active listings in the under $200K price range are a “mistake” (probably intentional to get more views) as they are actually condos that should be listed as condos.

The following shows continuous days on market (CDOM). It’s much more representative of the condition of the market than simple days on market. Days on market (DOM) is how many days the home has been on the market under the current listing - but a home could have been listed many times by one or more agents. CDOM only resets to zero when a property has been off the market for at least 90 days.

As you can see, homes in the $300K-349K price range have been sitting a long, long time. They’ve probably been listed and relisted by multiple times by multiple agents.

Click to enlarge

Note, however, the CDOM for the 2 homes that sold - only 24 days.

You can just feel the “stickyness” of home prices. Sellers are hanging on to yesterdays prices, and buyers are waiting for them to drop. I usually calculate inventory numbers (how many months of inventory given the current rate of sales assuming no new homes come onto the market). But with no sales in all but one category…

Of course one can consider an overall average for Milton and say there were 55 homes on the market during the period and 2 sold, so the inventory is 55/2 = 27.5 months or just over 2 years. That’s pretty ugly.

But two homes did sell and its not rocket science why. It comes back to whether a seller wants to list their home or sell it.

Since this is my first post at Edgewood Blog, I thought I should take this opportunity to review how I price the mortgage interest rates that are posted here.  Here are the factors (all which impact rates) that I use for the purpose providing readers an understanding of what direction mortgage interest rates are going.   If your scenario is different, your rate may be too.   The rates quoted below (and future posts) are based on the following for conventional mortgages:

• Purchase transaction.  Refinance and cash-out refi’s may have adjustments to rate.
• Owner Occupied - Single Family Residence.
• Low-mid credit score of 720.   This means that if a two people are qualifying for the mortgage, the lowest middle score (from the 3 credit bureaus) of the two borrowers is used for pricing the mortgage.   If the lowest mid-score is 719, the rate/pricing will be impacted.
• Zero Points.  No discount or origination points are included in this quote.  How you price your mortgage is your choice, however I’ve found that more often than not, paying points may not pan out.   Typically, but not always, 1% (of the loan amount) in origination/discount points equals 0.25% to interest rate.  Roughly, if you deduct 0.25% from the rates below, you’ll be close to a quote based on paying a point.
• 30 Day Lock.   This means that the transaction is closing within 30 days.   The longer the rate lock period, the more the rate cost.
• Full doc loans.  I almost feel like I don’t even need to add this…however I’m still getting calls for people in search of stated income loans.  
• Impounds.   Rates quoted include having taxes and insurance included in the mortgage payment.  Waving your reserve account (aka impounds, escrow account) actually costs you 0.25% to rate.  Lenders charge this either upfront or price it into the mortgage interest rate.
• No prepayment penalty.   None of the rates I’m quoting include a prepayment penalty.
• Loan to Value.   Conventional rate quotes are based on an 80% loan to value (20% down payment).   However, you can buy a home with less than 20% down.

This is just a sample of rates/programs that are available.

Conforming-loan amounts up to $417,000 for 1-unit properties.  The conforming rate quote below is based on a sales price of $500,000 and a loan amount of $400,000.  

30 Year Fixed:  6.250% (APR 6.314%)

30 Year Fixed with 10 Year Interest Only Payments:  6.500% (APR 6.559%)

5/1 LIBOR ARM:  5.625% (APR 6.955%)

Conforming-Jumbo-loan amounts from $417,001 to $567,500 for Pierce, King and Snohomish Counties.  The quote below is based on a sales price of $700,000 with a loan amount of $560,000.

30 Year Fixed:   6.375% (APR 6.486%)

30 Year Fixed with 10 Year Interest Only: 6.875% (APR 6.947%)

5/1 LIBOR ARM:  5.625% (APR 6.946%)

Jumbo/Non-Conforming-loan amounts for $417,001 and higher.   For purposes of this rate quote, the sales price is $850,000 with a loan amount of $680,000.

30 Year Fixed:  7.500% (APR 7.593%)

FHA.  Pricing based on a credit score of 600 or better with loan amounts up to $362,790 for Pierce, King and Snohomish Counites with a minimum 3% down payment with 1% discount/origination point.

30 Year Fixed: 6.250% (APR 7.032%)

FHA Jumbo.   Pricing based on loan amounts from $362,791 - $567,500 in Pierce, King and Snohomish Counties with a minimum 3-5% down payment with 1% discount/origination point.

30 Year Fixed:  6.375% (APR7.160%)

VA.  Pricing based on credit scores of 620 or better with loan amounts up to $417,000 with 1 point.  Loan amounts beyond $417,000 for VA loans are also available.

30 Year Fixed:  6.375% (APR 6.700%)

Prime Rate (what HELOCs are based on):  5.00%

Rates quoted are as of June 2, 2008 at 8:30 a.m.  and may change at anytime.   This is not a guarantee nor is it a commitment of interest rate.  For live rate quotes for various scenarios, follow me on Twitter. 

Rates provided by Rhonda Porter, CMPS and Washington State Licensed Loan Originator 510-LO-32047.

Morris, Edmund (1864) Ten Acres Enough: The Classic 1864 Guide to Independent Farming. ISBN 0-486-437-X

I found a reference to this book as I was searching on-line for information about heirloom seeds. I was intrigued because of the publishing date.

The book is about a man telling his story of leaving the big city to become a truck farmer. Weary of the pressures and vicissitudes of working in a metropolis, he saved his money and moved his family to the country where he purchased 10 acres to farm.

Although a novice farmer, he apparently was both an avid reader, as well as a willing student of successful farmers. Written for people searching for a way out of city life, he details his discoveries and lays out a road map for those who choose to follow his path.

Although intended as a practical guide, I found it quite an inspirational book. It reminded me of Stephen Covey’s 7 Habits book.

The author’s strongest messages include:

1. You can’t use too much compost
2. Go for quality over quantity in all things
3. Don’t be afraid to try new things (but keep it small until you if it works or not)
4. Failure in one pursuit does not imply failure in the next - keep moving, keep trying, keep a good attitude

This little book was worth the time to read it although it gets a little tedious towards the end (especially given the writing style of the 1860’s). It’s particularly apropos for those who have a back-to-the-land farming inclination.