Chinese shake up Puget Sound

$2 Billion and counting

  • Wealthy Chinese are sinking billions of dollars into Puget Sound area real estate, and by doing so they’re making a clearcut business case for protecting the environment and spending money on education.
  • The influx of foreign buyers, mostly Chinese were one of the top real estate stories of 2014.
  • It’s not just that many foreign nationals are buying here.  Rather, it’s how they’re executing transactions, with some paying all cash for pricey assets.
  • Experts predict that the trend will continue.  According to the National Association of Realtors, China has more than 2 million millionaires, and that 47 percent plan to move out of the country in the next five years.

News in Brief

  • Fannie Mae and Freddie Mac recently announced that first-time home buyers can now qualify for loans with down payments as low as 3%
  • HUD just released a mortgage letter (15-01) that announces a rate reduction for FHA’s monthly mortgage insurance premium.  This rate reduction is effective with all FHA case #’s issued after January 26th.
  • That means that new homebuyer’s payments will be lower!!

Local real estate leader calls December “One of the best on record”

  • Real estate brokers around Western Washington reported a strong finish to 2014.  December’s sales outpaced the same month a year ago by double digits, according to new figures from Northwest Multiple Listing Service.
  • December was one of the best Decembers on record.
  • MLS members reported modest year-over-year price gains (about 5.5%) for homes and condominiums that sold last month compared to 12 months ago.  The number of new listings added to inventory was nearly identical to activity of a year ago, but with pending sales outpacing new listings, the selection, as measured by total active inventory, dwindled by about 8% compared to a year ago.
  • Commenting on the combination of scarce inventory in some areas and expectations of rising interest rates, the head of one large real estate company advised, “Anyone thinking of buying a home should do it early in 2015!”
  • Prices, interest rates, and rents will continue to rise.
  • The cost of buying a home is not determined by price alone, but by price and the mortgage rate.
  • The longer a buyer waits, the higher the mortgage payment as prices and interest rates continue to increase.
  • MLS members reported 5,794 pending sales (mutually accepted offers) for an increase of nearly 11% from the year-ago total of 5,224 pendings.  In the four-county Puget Sound region, brokers notched 4,410 pending sales, the highest December volume since 2006.
  • High-end homes are selling well, according to brokers and MLS data.
  • Above the one million dollar price point in King County, we have seen back to back years of very strong activity.
  • Northwest MLS figures show nearly 2,000 homes priced at one million dollars and up sold in King County during 2014.  That’s up more than 25% compared to 2013.
  • For more modestly priced homes, first-time and move-up buyers are taking advantage of loosening lending standards.
  • “It’s much easier for purchasers to qualify for a loan now than it was just a few months ago.  The much needed 3% down payment loans are finally back for qualified purchasers,” he noted, adding, “This will allow more first time buyers to break into homeownership.”
  • In December our brokers experienced high open house traffic and strong demand from buyers as listing inventory declined.
  • Buyers are determined to take advantage of the continued low interest rates and to make their move sooner rather than later
  • Market activity stayed stady all the way into New Year’s.  “If this level of activity continues we will see yet another sellers’ market as inventory drops
  • MLS figures show there were 4,367 new listings added to inventory during December 2014, about the same as a year ago when members added 4,333 homes to the selection.  At month end, there were 17,659 homes and condos for sale.  That’s down nearly 8.1% from the year-ago inventory of 19,214 active listings.
  • Brokers are reporting tight inventory in several neighborhoods, particularly around job centers.
  • Buyers barely slowed down long enough to take the Christmas break
  • All this sales activity has eaten even further into already low inventory levels.
  • MLS figures show about 2.8 months of inventory system-wide.
  • Of the 21 counties in the monthly statistical report, King County has the tightest inventory, with only 1.4 months of supply.
  • Snohomish County was slightly better, with about 2.2 months of supply.  Six months is typically considered a healthy balance between supply and demand
  • Prices climbed nearly 5.5% from a year ago, rising from an area-wide median selling price of $275,000 to last month’s figure of $290,000.
  • That matches the price reported for October’s sales, a figure that was only surpassed in July when the median sales price overall was $300,000.
  • While some recent reports indicate a cooling of appreciation in 2015, unless more inventory hits the market, the anticipation would be that the percentage increased to be about the same as 2014 due to sustained demand.
  • If sellers are serious about getting their homes sold, it is not a good idea to ‘go fishing’ even though there may be high demand.
  • Buyers are serious about making a purchase, but they are in no mood to play games as they are well educated regarding price.  If the house is overpriced- even by a small amount – buyers will simply not make offers.
  • Fannie Mae’s recent National Housing Survey.  Its research shows 44% of consumers say now is a good time to sell a house, an all-time survey high.
  • Nearly two-thirds of survey respondents (65%) say now is a good time to buy.  “These results and attitudes will drive a healthy housing market in 2015.”

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