For the answers we turn to the latest data for our local MLS.   The numbers show that we are rebounding from the bottom and it’s a great time to buy or sell.

Prudential agents can give you the complete picture of the marketplace and show you the best way to invest and build long-term wealth in the Leavenworth market.

Odds are that interest rates will rise in 2012, so let the low interest rates be your friend. Opportunity is Knocking! – Stephanie Cuthill-Realtor

The Federal Reserve stepped in and tossed a bucket of water on the fire.  The result was raging increases in interest caused by shorting the money supply and increasing the prime borrowing rate.  If banks could get their hands on any money it came at a very high price.  At one point I saw a mortgage interest rate of 24% being offered.  After that it settled down to a more sensible 18% where it lingered for some time. 

 Of course that environment was crippling for the economy and the real estate industry.  Homebuilders suffered mightily and many dissolved their companies due to lack of home sales.  The lack of demand for new homes caused former building contractors and sub-contractors to seek out any other kind of employment in order to pay monthly bills and just survive. 

 Fast forward a few years to the late 1980s.  Banks started being creative and invented adjustable rate mortgages.  The product wasn’t perfect and had some bad down sides, like no lifetime cap, and no rollover adjustment cap.  Still though, they made it so people could at least qualify to buy a home.  Those loans improved with time and the interest rate edged down toward 10%. 

Home sales picked up but since hardly any new homes had been built we were in short supply of product to sell.  Builders began to stir, to re-hire workers who had found other jobs.  They had to re-tool and get building plans and building permits and find building lots.  The process was time consuming and problematic.  The estimate at that time was a two year process for builders nation wide to gather their labor forces and catch up to current demand.  I’m sure it took them at least that long.

For the past year and a half many builders have been in a mode similar to the early 1980s.  They have dissolved their companies and are doing any other jobs they can find in order to survive.  Their sub-contractors likewise are no longer in the construction business and have been scattered far and wide. As home sales continue to increase now many homes will be disappearing from the market.  If builders are not replacing them by moving to supply the market demand then we will most certainly be facing a housing shortage.  It may seem absurd to go from a housing glut to a housing shortage but history has a way of repeating itself.  Builders may be skeptical about the economic uncertainty we hear so much about on all the news channels.  Their hesitance will only add to the coming shortage of new available homes.  In short, if you see something on the market that works for your housing needs right now, buy it.  Your options in the near future and for some time may become quite limited.   -Mike West

 Out of all the many billions, hundreds of billions in fact,  a billion here a billion there, pretty soon you’re talking about serious money, some of them were definitely spent wisely.  Those wise dollars were spent in the form of tax rebates given to folks who were able to purchase their first home in the past year and a half. 

 The first time home buyers rebate actually spurred sales of new and used homes nationwide and was reportedly the driving force that kept the building and real estate industries afloat.  Coupled with an FHA financing package which called for just 3.5% down payment, the rebate became a serious tool for first time buyers.  On a two hundred thousand dollar house the rebate was enough to replenish the buyer’s savings account for the entire down payment.  Unfortunately the government couldn’t get their act together enough to just let buyers use the rebate as the down payment.  That was too much to hope for I suppose. 

 The original first time homebuyers bill was set to end in November of 09 but because of being about the only truly measurable success of the entire bailout frenzy, it was extended.   As it stands now, if you can get a property closed by the end of April, 2010, you are still eligible for the rebate.  There is no reason it shouldn’t be extended again, or indeed that the rebate shouldn’t be expanded to cover all home buyers whether they are first time homebuyers or own several other homes.  Yes, there is a small incentive in place, a measly $6,500 all inclusive rebate which so far seems to have had little effect at all on the market.

At one time a fifteen thousand dollar tax benefit was proposed for anyone who purchased any home.  That reportedly brought home shoppers out to open houses in Seattle in large numbers according to Seattle brokers I spoke with.  Almost as quickly as it was announced it was withdrawn unfortunately.  In my opinion that incentive was just large enough to stimulate many new sales. It would have created enough sales, I believe, to shore up the entire housing industry to the point that we would possibly be out of the woods by now.  Alas, too many czars spoil the broth and the plan was scrapped.Now is the time.  If you are considering making a first time home purchase then get with it.  You only have until the end of April to get the job done.  FHA rates are still decent.  The selection of homes is still decent.  Prices are at what might be the lowest we will see since our economy seems to be improving and the tide floats all boats.  Prices are likely to increase as supply diminishes.  The first time homebuyers train is leaving the station.  If you hurry you can still jump aboard. – Mike West

I was around and in the real estate business in those years and things did recover slowly.  However, this time is not the same. 

In about 1982 I saw the interest rate charged by banks for home loans hit a high of twenty four percent. After a month or so of that they settled back down to eighteen percent and then finally sixteen percent where they stayed for a year or two.  As you can imagine hardly anyone could afford to borrow at those rates.  Bank loan officers were either moved to teller windows as clerks or fired for lack of loans to process. The money supply had also been shorted by the Fed so banks couldn’t even get their hands on money to lend if they wanted it. 

Prices stayed low for the years it took to normalize inflation and for loan rates to return to a safe and sane twelve percent.  Truthfully I thought that if we ever saw ten percent interest again it would be a miracle.  Well, miracles do happen and Ten percent came and eventually we were in single digits. 

At this juncture in the financial maelstrom we have all been slogging through, the situation is different.  Interest rates are in the mid four percent range.  FHA loans are available with a little over three percent down payment.  The money supply has not been artificially shorted.  In fact the money supply has been augmented artificially to epic proportions.  Financing for homes in general is readily available with any kind of decent credit.  Now there are even tax breaks to make home buying even more affordable and attractive. 

I believe home prices in some areas may still be sliding a bit.  Those areas such as Detroit, and Las Vegas, just to name a couple of examples, are over built and were pummeled by foreclosures.  Many other parts of the country though are not in that boat.  As I write this my son is shopping for homes in Honolulu.  That market wasn’t overbuilt nor was it hit hard with foreclosures.  The prices have started trending up already and if he wants to get the best deal possible he needs to buy something right now. 

Leavenworth is one of those same kinds of markets.  Homes and properties here are very limited. There were few foreclosures or desperate sellers. Right now there is a better than normal selection of both homes and land because of the slowdown in the past year.  Now though there seems to be a resurgence of buyers coming into the market.  They are shopping and trying to make their best deal. Sellers have become aware of an uptick in demand and so might have begun to be less anxious and less likely to consider a low offer. 

It’s a delicate balancing act to decide when the time is right for you.  A stock broker friend told me “nobody buys at the absolute bottom or sells at the absolute top.”  The micro-flash of time where the bottom of the housing market is reached and bounces back upward is elusive.  With great loan rates, tax incentives, and low prices, buying at the precise bottom of the market may be less and less important   In fact, at 4.6% interest amortized over thirty years, ten thousand dollars difference in price is only fifty dollars a month one way or the other.

I believe the Leavenworth market has hit that price bottom and is on the rebound.  Each market is different but if you want the very best deal on
real estate in the Leavenworth market, don’t wait, buy now! -Mike

 It is estimated that mega-corps have socked away over a half a trillion dollars this year more than they had in reserves in 2008.  They have accomplished this feat in several different ways such as; eliminating jobs, cutting inventory, deferring maintenance, etc.  Meanwhile business as usual, sort of, continued to pump new income into these businesses, albeit at a slower rate than before.  Still, with expenses cut to the bone, profits stacked up like gold in Scrooge McDuck’s vault. You know that old saying, “a billion here, a billion there, pretty soon you’re talking about real money!”

 Now the problem, what to do with those scrimped hundreds of billions.  A peril of having such vast cash reserves is that corporations start to look like ripe plums for hostile takeover artists.  Another peril is the “use it or lose it” scenario.  If they don’t spend the dough they will just end up giving it out as huge dividends to their stockholders.  What’s the fun in that?

 That’s where the American economy benefits in this whole Madoff for movie script.  They have to spend it, and fast.  Corporations are now poised to start refurbishing neglected portions of their companies.  They will now buy that new widget slinger they were putting off.  The old gang they laid off will soon be gathered once again around the corporate water cooler discussing what they did on their vacations.  Purchases will be purchased and products will be produced. 

 Yep, it looks like corporate America will create its very own stimulus package and we will be the beneficiaries.  Their spending will rise like the Phoenix from the ashes of frugality. We might be able to say we were Googled to economic well being.  One way or another those tsunamis of cash will hit our shores, hopefully sooner than later.  Watch for it.  Expect it.  Count on it.  Coming soon to a pocket book near you.   –Mike West

 I offer you this different point of view.  It’s not a totally new one but one with which not very many people are familiar.  There is one sure way to avoid the painful effects of a deflating dollar, buy real estate.  It isn’t so much THAT you are buying a tried and true hedge against inflation but HOW you are buying it that’s important.  The key here is that the document you use to buy a house or property with, whether it be a mortgage or private contract, is your salvation.  The effect of locking your purchase price to a number of dollars at today’s value effectively stops inflation dead in its tracks. 

 I will illustrate this point by passing along a story told to me by Karl Rieche, a shrewd German gentleman who migrated to the U.S. in 1938 and worked for me until he retired.  He told the story of the deteriorating German Deutschmark which was inflating so fast that his father, a railroad engineer, had to get paid twice a day.  Karl and his siblings had to pick up that pay and run directly to the store to buy food in order to get the most for their money at that moment.  He said that the only people who benefited from such wild inflation were those people who had mortgages or contracts written years earlier on their homes.  Those debt instruments were, of course, for a set dollar amount without any consideration for future inflation.  He said that debtors were chasing down their creditors and “unmercifully” paying them off with buckets full of inflated and devalued money.  For some of us who have had our fill of our banker’s bad behavior, that picture might bring a smile to our faces.  I can feel that sensation creeping over me as I write this.   

 So, to recap; if inflation doesn’t occur then hurray, the fed has done its job and we are in sound financial waters.  However, if day follows night and inflation does rear its ugly head, be in a safe position.  Hold some gold, maybe some silver, but for sure, lever your way to financial security. Use mortgages or contracts to tie up some real estate right away before severe inflation even starts.  You’ll be glad you did.   – Mike West

One of the best tools for making your dream home more affordable while saving on the cost of power, heating and cooling is the energy-efficient, or “green,” mortgage.

Most energy-efficient mortgage, or EEM, programs let you qualify for bigger loans than you would otherwise by folding in the additional cost of making improvements for energy efficiency or of purchasing an already energy-efficient home. Another version of the green mortgage provides discounts on loan fees or interest rates for homes that are certified as energy-efficient.

Because mortgage interest payments are tax-deductible, an energy-efficient mortgage can be a more cost-effective way to finance home-energy improvements than using a credit card, bank loan or cash, which usually offer no tax benefits.

The Federal Housing Administration, Fannie Mae and the U.S. Department of Veteran Affairs each have some version of a green mortgage. Freddie Mac, while having no formal energy-efficient mortgage program, allows lenders to take the projected utility savings from home upgrades into account when setting the loan amount.

Qualifying for a green mortgage
There are two ways a home can qualify for a green mortgage. For existing homes, you’ll need energy-saving improvements verified by a Home Energy Rating System, or HERS, report, following an inspection by a certified home-energy rater. To find one in your area, go to the Web site of the Residential Energy Services Network, click on “Home Energy Ratings” and then select “Find a Certified Rater.” For new constructions, a builder must certify that home meets energy-efficiency guidelines. If you’re trying to find out just who is offering green mortgages in your area, I suggest checking the Web site of your state’s housing finance agency for information or contacting your state energy office. You can locate that number on the Web site for National Association of State Energy Officials. Contact me for more info at 509-860-2417 – Scott Christie, Realtor, Prudential Mike West Real Estate

Donovan’s remarks came in an address to several thousand Realtors^® gathered this morning at The Real Estate Summit: Advancing the U.S. Economy, a special daylong session at the Realtors^® Midyear Legislative Meetings & Trade Expo here.

Secretary Donovan said that important changes, which the National Association of Realtors^® has been calling for, will help consumers purchase a home. “We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a downpayment,” Donovan said. According to Donovan, the FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

Donovan said the Obama administration plans to further stabilize the housing market. “I do think we have some early signs hat the market overall is stabilizing,” said Donovan. “Since January we’ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate.”Donovan said the Obama administration plans to further stabilize the housing market. “I do think we have some early signs hat the market overall is stabilizing,” said Donovan. “Since January we’ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate.” – Scott Christie, Realtor, Prudential Mike West Real Estate