Home Buying FAQ: How Long Will I Live Here?!

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How long do I plan to live in my future home?

This may be the single most important question for you to answer.  Why? Because the answer directly affects the size and type of home that you buy, where it’s located, as well as the type of mortgage you use to finance your purchase.

Times have changed since our parents bought their homes.  Chances are, unless they’ve retired or are in professions where thy are required to relocate to different parts of the country from time to time, you parents are still living in the home in which you grew up.

Statistics from the National Association of Realtors (NAR, which your Realtor should be a member of), reveal that today, on average, people live in their homes only about 5 to 7 years. That’s it.  Then, they move.  

How are you supposed to know how long you’re going to live in your home?  I suppose there is no way to know for sure, but here are some general guidelines, which can be referred to as the Cycle of Life.

Cycle of Life:

Young and single:  If you buy a home here and you’re interested in having a long term relationship or getting married, it’s likely that what you can afford as a single person won’t be quite enough space for two.  Within five to seven years you’ll probably trade your one bedroom or two bedroom home for something larger.  Tip: look for a property that is an investment and in a neighborhood that is seeing appreciation. Ask your Realtor to help you locate a property that you may be able to turn into cash flow 5-7 years down the road

Newly Married:  You may want to start a family within a few years of your marriage.  Within 5-7 years, you’ll need additional space as your family starts to grow (and their stuff multiplies exponentially).

Divorced or Separated:  This can be another move.  At this point, in your second or third home, with young children in school, you’ll probably settle down for a while.  You may even find a house in a good school district and decide to stay for 10-15 years, until your children are through with school.

Empty Nesters: Once your children are grown and out of the house for good, you might decide to sell your big house, take your profits (up to $250,000 for qualified single homeowners and up to $500,000 for married homeowners, tax-free) and move to a smaller condo somewhere warm or perhaps cold, if you like skiing.

Vacation Home: And finally, it’s possible that you’ll purchase a second (or third) home, to which you may actually end up retiring.  The most popular age to buy a second home is 55-65, followed by 45-55, followed by 65-75, which mean the baby boomers are just beginning to enter their prime second home buying years.

Look Before You Leap

Before you start to look for a home, think about where you are in the Cycle of Life, and where you’ll be in five to seven years.

  • Is marriage, a life partnership, or living with someone else a possibility within five to seven years?
  • How many children do you plan to have during the next five to seven years:
  • Are your children near or at school age? Have you chosen the school district you want for them?
  • Is it likely you’ll be transferred for your job within the next five to seven years?
  • Do you have an aging parent in another part of the country who may require your close supervision or attention?
  • Do you have an aging parent or post-college-age children who might be moving back home with you? Will you need flexible living space that your current home can’t provide?

If you are thinking of buying a home, download my app (click on link OR download via QR code below) and pull all active, pending and sold listings in your neighborhood or desired neighborhood.  If you find a house you like, I am right at your fingertips and am happy to assist you!

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Market Mondays: First Time Home-Buyers + West Seattle

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The market predictions for 2015 are all about buyers – especially young home buyers – having their best shot in years at finding a home.

First-time buyers who stayed out of the market – either for demographic reasons or because they just couldn’t find the right entry-level home – will have a breakthrough year in 2015..

These predictions are based on housing data that shows rents continuing to skyrocket while the for-sale market levels off. That economic reality, increased inventory, and millennial s getting married and having children after delaying those choices, will give buyers more negotiating power.

In fact, it is predicted the millennial generation will overtake Generation X as the biggest group of home buyers in 2015.

This week I’m excited to look at the market in West Seattle., from the beach culture at Alki and tide pools of Lincoln Park to “city” living at The Junction (SW Alaska Street and California Avenue SW) and its proximity to the multicultural up-and-comer White Center, West Seattle is diverse and full of opportunity.  It is becoming an increasingly popular destination for young families and with it’s affordable housing opportunities, I am beginning to see why.  For those who are concerned about the commute, through some qualitative research (asking West Seattle friends about their commute), the average commute time to downtown Seattle is approximately 30 minutes, which isn’t too bad considering the lifestyle and community that West Seattle offers its residents.

Micro ’hood to watch: Arbor Heights. While it’s not a destination, Arbor Heights, full of modest homes built for Boeing workers in the 1940s, is on the rise. Sadly, it ranks 98th of 100 Seattle neighborhoods on Walkscore.com, which means you may have to drive to get a latte, a cupcake and a library book, but people love it because the backyards are huge, the views are expansive, and the kids can walk safely to the school right down the street.

Don’t miss: Primo shopping at The Junction, including a growing assortment of consignment boutiques; the fried chicken at Ma‘ono; anything from Bakery Nouveau; and a delicious, kid-friendly breakfast at Salvadorean Bakery and Restaurant (technically in White Center).

Go-to for out-of-town guests: Lincoln Park for the view.

Famous for: Current resident Eddie Vedder and former residents Frances Farmer and Ivar Haglund.

So, what’s happening in the housing market? Well, as of January 26th, 2015 there are 148 active listings which include both single family homes and condominiums.  The price range is between $143,100- $2.85 million with the median list price being $469,500.  In the past 90 days, there have been 368 homes sold, ranging from $113,500-$2 million with the median sale price being $399,000.  This puts months of inventory based on closed sales at 1.21 months, down slightly from December that was at 1.7 months inventory.  This indicates a really hot market, which is understandable based on historiclly low interest rates and a great place for young famlies who are first time home-buyers to move.

Months of inventory through Devember 2014. January 2015 is almost down to record low months supply of inventory.

Average price for sale vs. actual sale price through December 2014.

What does $400,000 get you in West Seattle? After doing some research, I have become quite the fan of West Seattle myself and below are a few pictures of what $400,000 will get you in West Seattle.

New Construction Town homes minutes from Alki + the city

If you are thinking of purchasing a home, please contact me at rachelwagner@johnlscott.com, shoot me an email and I can send you a buyer’s packet outlining the process.  It’s a great time to buy, and the more questions you ask up front the better prepared you will be when you decide to take the purchasing plunge.  Happy Monday everyone!

Market Mondays: Kirkland Condos and Holiday Happenings

Happy Monday everyone! Can you believe it’s almost Christmas? It’s been an amazing year and I can’t wait to see what 2015 has in store personally and professionally. I am grateful to be part of such an exciting and dynamic time in real estate.  Nothing is more fulfilling than walking alongside each and every one of you through this process.  While most people don’t think of the holidays as a good time for house-hunting, that may be just the reason to do it. Less competition with other buyers and more motivated sellers can mean a smoother transaction and more leverage in the negotiation process.

This week we are taking a quick look at the Kirkland/Bridle condo market.  There have been 94 condominiums sold in the last 90 days, ranging from a low of $105,500 – $3.1 million with a median sale price of $350,000.  With 43 active listings ranging from $169,950 – $5.75 million and a median listing price of $375,000 there is about 1.4 months supply of inventory in the market! There is typically a shortage of inventory during the winter months, however, sellers are still seeing 98% percent of their listing price…people are still buying houses! With low interest rates and a healthy market, it is a prime time to buy and sell!

As we move into 2015, where do you see yourself next year? Is buying your first home or perhaps moving into a larger home one of your goals? I have talked to a lot of people who are looking into buying homes in 2015 and I challenge you to write down what that looks like for you! We have a lot of exciting things planned and will be holding a webinar workshop for First Time Home-Buyers in January that will take you step by step through the process as well as allow for any questions you may have….so stay tuned and get your questions ready! 

As a continuation of last week and as I can’t help but marvel at all the beautiful light displays, there is one house that has developed quite the reputation in the Kirkland neighborhood AND shows huge support for our beloved Seahawks.  Dubbed the “Seahawks House” by locals, this home is a sight to behold, it’s one you MUST check out for yourself! Merry Christmas and Happy Holidays everyone!

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Market Mondays: 2015 Economic Forecast

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This week I have decided to step back briefly and look at the market from a macro level as well as discussing predictions for 2015 that were shared at a recent conference.  It’s interesting and exciting to see where the housing market is headed, as well as the economic health of the real estate market as we head into 2015.  Before I dive into that information, as of October 27th, 2014 King County is at about 2.6 months supply of inventory while Snohomish County is hovering around 3.1 months supply of inventory.  Those numbers are a 4.2% increase from October 2014 in King County and a 6.2% increase in Snohomish.  With interest rates at a 16 month low, it is a great time to get in there and take advantage of this market if you are thinking of buying or selling your home.

What is the state of the real estate market?  Well, we are currently down 10.6% nationally from peak values in 2006, however, we are slowly making our way back up as demonstrated by the graph below.

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As demonstrated above, all but one top 30 metro areas show annual home value appreciation.  Seattle Metro leads the Puget Sound in annual home value gain at 8.3%, while other areas of the country who were drastically impacted by the recession are seeing a big jump in annual appreciation as well.

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Seattle Metro is currently down 11.5% from it’s peak, compared to the national average of 10.6%.

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Although Seattle Metro is slightly below the national average, what we are seeing is a steady increase in inventory, resulting in a healthier and more sustainable market as well as softening the rate of appreciation (which is still significant, regardless).  The nature of markets are to rise and fall (think rolling hills), however, slow and steady is preferred over sharp inclines and falls.

Are you ready for some good news?

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According to the National Association of Realtors and as demonstrated by the Zillow Real Estate Research for Professionals tool, negative equity has declined steadily since quarter 1 of 2012, which is great news for home buyers and home owners alike.  However, negative equity remains at 17% nationally and is highest in the bottom value tier.  The number of homes underwater is above 25% nationally and 30% in the Seattle area.  The middle value tier is 13% and the top value tier is 6% in the Seattle area.  Although these numbers are declining annually, there are still many homeowners who are underwater, especially in the bottom value tier.

As we move into 2015, mortgage rates are expected to rise, with interest rates expected to reach the 5% mark (which is still fantastic, historically), while rent affordability is below the historical average on a national level.  Renter households are forming faster than owner households for the first time since the late 1980’s and the market is responding with higher rental rates and a shortage of available rentals while the market struggles to keep up with the demand.  (translation: don’t rent if you can buy!)

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Below are some year over year percent change forecasts for Snohomish County, by city.  Appreciation rates are expected to continue to gain, however, slightly less than in 2014.  With rental rates skyrocketing, as well as a shortage of available rentals and low interest rates, now is a great time to get into a home for a first time home-buyer.  Investment properties in the bottom value tier to generate rental income are also a great option, it’s an exciting time in the real estate market around the country.  Please contact me with any questions you have at rachelwagner@johnlscott.com or call/text 425.324.0302.  I am available to help with any of your real estate needs.

And in other Simple Tranquil Living news, the holidays are quickly approaching! Okay, so that may not be news to you, but here at Simple Tranquil Living we have a lot of fun with holiday festivities so stay tuned for a special Halloween post and perhaps another GIVEAWAY! Happy Monday everyone!  

Finance Friday: Improve Your FICO Score Quickly!

With mortgage interest rates hovering near record lows, you may want to either refinance your mortgage or purchase a new home before rates go higher again.  There is no better time than now to buy a home, interest rates are expected to climb which can have a big impact on the amount of home you can purchase!

The question is — can you qualify for refinancing or a purchase loan?

Since the recession, lenders have tightened loan qualification standards and their most widely used tool to determine if you qualify for a loan and at what interest rate are your credit scores. Credit scores are determined by a software algorithm that analyzes your credit and payment history.

These “FICO” scores run between 300 and 850, with the highest numbers considered to be the best scores. The 47% of Americans with credit scores of 720 or higher receive the best interest rates, according to MyFICO.com.

Credit scores make a significant impact. For every 20-point credit score increase, according to Zillow, the average low APR declines 0.12 percent, a savings of $6,400 on a $300,000 home over 30 years.

Improve your credit scores

FICO scores are based on your credit history. Each credit reporting bureau, Experian, TransUnion, and Equifax calculates its own score, so you may have three scores.

The first thing you need to do is review your credit reports for errors and get them resolved as quickly as possible. Visit freeannualcreditreport.com to get copies. You can then purchase your credit scores for approximately $14.95 from each agency or all three at myfico.com.

FICO scores change with every new piece of information that comes into the credit reporting bureau, so the credit score you receive today can be improved quickly by following some dos and don’ts.

 

Don’t close credit card accounts. FICO scores utilize a credit utilization ratio that turns against you because it appears that you might be overusing your available credit.

Don’t max out or consolidate credit cards. Credit card companies like it if you only use about 30% of your available credit on your card. You’re better off having small balances on multiple cards than a large balance on one card.

Don’t apply for new revolving credit or transfer balances. If you’re buying a new home, it’s tempting to buy some new furniture, but don’t open that account until after your loan closes. You don’t want “inquiries” to be raised in the scoring algorithm.

Don’t change jobs right before you apply for a home loan, although job changes within the same field are considered more favorably in scoring.

Do pay all bills on time and with at least the minimum payment due. Lenders like on time payment histories.

Do pay down your debt, as lower income-to-debt ratios are attractive to lenders. Start by reducing credit card balances first, beginning with the balances that generate the highest interest rates. Revolving credit is considered riskier debt than installment loans such as student loans or car payments.

Do shop lenders simultaneously. Credit score software takes into account several inquiries from mortgage lenders as normal, but if you space rate-shopping out over weeks or months, that could impact your credit score negatively.

Remember, mortgage lenders are most interested in your ability to repay their loan. The most important factors are job and debt payment history. Job security — long-term employment in the same field and on-time.

There are literally thousands of people renting that could be saving money by owning their own home, and like I mentioned earlier, there is no better time than now.  If you are wondering if this applies to you, contact me at rachelwagner@johnlscott.com and I can connect you with a lender who can educate and begin the process.