Everett Real Estate the Hits just keep on Rolling

February 25th, 2010
Zillow Home Value Index

Experts wrong again and again and again

Homes for sale in Everett and Everett real estate in general just took another “unexpected” drop. Are you getting as tired of the “experts” being wrong, wrong, wrong again and again as I am. This broken record is not unexpected to me. For almost a full year the number of sales of new homes has dropped. There was a minor blip in October / November 2009 from the new home tax credit but all that did was suck purchases from December and January and put them into October/November. Month after month the “experts” have been wrong. I am whining but why can’t I get a job where I can be paid well and be wrong over and over. In my business and I am sure yours too, you get paid to be right.

Well new home sales PLUNGED to historic lows in January. Just to show you how wrong the MSM (main stream media) is Bloomberg wrote on February 24th that housing would be up. Here is a quote from the story.

“Purchases increased 3.5 percent to an annual pace of 353,000 new homes, according to the median estimate of 71 economists surveyed by Bloomberg News. Demand slumped 7.6 percent in December, the month after the incentive (the tax credit) was originally scheduled to expire.”

That’s right 71 over paid economists predicted a completely wrong scenario.

What really happened was New Home Sales plunged to 309,000 the lowest level since the US Commerce Department has kept records starting way back in 1963. How does this affect Everett real estate and homes for sale in Everett in general? Well think about this, if you can’t sell or will not buy a home then the economy in general will not recover. If consumer confidence doesn’t go up we will never see the “good times” again.

Right now as I write this Obama and the Liberals are arguing about health care. Mr. Obama stop the BS and get us some Jobs. Nancy Pelosi claims that 4 Million jobs will happen if we just pass the Obamacare health bill. What hogwash! If congress passes a bill that lowers payments for healthcare do you think that will increase the number of jobs?

The litany of bad news goes on and on.

  • Inventories went up to a 9.1 month supply. That’s from an 8.1 month supply in December and a 7.9 month supply in November.
  • In January the median price fell again by 2.4% compared to a year ago. And a year ago was a disaster.
  • In January, new home sales plunged 35% in the Northeast, fell 12% in the West, and decreased 10% in the South; they rose 2% in the Midwest.
  • Investors will note that new home sales, historically, correlate to an economic expansion.
  • The “unexpected” drop in new home sales should (but probably will not) raise questions about the efficacy of Obama’s new home buyer credit. You know the one that robs sales from the near future just to inflate the current numbers.

My friends please vote all incumbents out. Get rid of the incompetents that we have running this government.

How will we improve the market for Everett real estate and homes for sale in general? JOBS, JOBS AND MORE JOBS Mr. Obama.

Jim Johnson and comments are always welcome

Everett Mortgage on Line

Posted in Everett real estate, Homes for Sale Everett | No Comments »

Everett Real Estate Federal Tax Credit

February 22nd, 2010

Another Obama plan that will do nothing for Everett real estate

This information will not have a major impact on homes for sale in Everett and / or Everett real estate in general. The IRS finally got around to clarifying the guidelines for the home buyers tax credits. That’s right the $8000 credit for first time buyers and the $6500 credit for move along buyers.

This is the same credit that many think, myself included, hasn’t made a single additional sale since its inception.

Think about it, if I am on the market for a home for sale in Everett I am going to buy regardless of an $8000 credit. I personally think this credit is just like so many other things the Obama administration has done in that it is completely ineffectual. I think this credit has had no affect on demand for Everett real estate or the prices of homes for sale in Everett.

Because of abuse of the original credit the IRS and Congress revised the program last November. They also extended the credit life and included the $6500 move along portion.

In a few cases IRS and Congress found phony claims and so with typical reaction they punished everyone equally. For a while they didn’t pay legitimate claims. Using a sledge hammer to kill this fly here is what Congress wanted IRS to do. Congress directed the IRS to spell out documentation standards in detail and to install monitoring systems to try to spot fraud upfront. Among the keys to the monitoring system is that all documentation accompanying credit claims must comply with IRS’ detailed rules.

Here is what IRS came up with for anyone claiming the credit:

  • You must fill out the IRS form 5405 (the form is here www.irs.gov). This provides basic information supporting the claim for eligibility, appropriate dates, income information and amount of credit claimed.
  • A copy of the settlement statement called the HUD-1. This proves the transaction actually took place and who was party to it.

There are problems with the HUD-1. IRS wants both the buyer and sellers to sign the HUD-1. In some states that isn’t required. On February 12, 2010 IRS loosened up that requirement and said they will allow whatever the respective state allows. That was very big of them.

Will this spur more sale of Everett real estate, I doubt  but who knows? Will this improve the outlook for homes for sale in Everett again who knows?

The form 5405 does say that both parties must sign the HUD-1 but IRS is now saying don’t worry be happy.

Nationwide, according to estimates by the National Association of Realtors, about 1.5 million repeat purchasers and 900,000 first-timers are expected to apply for credits this year.

Also don’t forget that if you are a repeat buyer you will need to prove that you lived in the home for 5 continuous years out of the last 8. They say property tax records or hazard insurance records or mortgage interest statements can help that. I say that stuff is open to abuse and doesn’t prove a thing.

I personally don’t think the credit will produce one single extra sale of any home for sale in Everett. I don’t think this credit will produce any measurable effect on Everett real estate at all.

Jim Johnson and comments are always welcome.

Everett mortgage on line.

Posted in Everett real estate, Homes for Sale Everett | 6 Comments »

Jobs key to Recovering Value of Everett Real Estate

February 20th, 2010

Again the Law of Unforeseen Consequences strikes at the heart of Government Actions

Or how to not think something through.

More wasted tax dollars and how that affects the market for homes for sale in Everett. Don’t expect the feds to help improve the outlook for homes for sale in Everett or the Everett real estate market in general. To put it politely they can’t find their behind with both hands at the same time.

Let’s take the new the weatherization plan, it’s part of the porkulis or stimulus plan, and your wasted $500,000,000 so far. (PS that’s a drop in the bucket) This is part of the Obama administrations $5,000,000,000 ( 5 BILLION DOLLARS) green jobs program that’s going to create 87,000 new jobs.

Fat chance.

It was going to make 593,000 homes more energy efficient, again fat chance.

Well the General Accounting Office has declared the program woefully behind. In fact about 98.24% behind and it may never catch up. Now how does that affect the market for homes for sale in Everett or Everett real estate in general? It’s those 87,000 green jobs that will not materialize. Or if they do these jobs will be temporary and not really help. I keep harping on this but without real private sector jobs there is no recovery. And “green” jobs that don’t last will not help either anyway.

Now I don’t know about you but if I wanted to weatherstrip my home I wouldn’t need to spend $8432 to do it. Nor would it take 5.9 guys to do it. But consider these statements directly from Joe Biden and Mr. Obama himself. The plan is not to insolate but to weatherize the homes. No new windows or new doors but simple stuff, just caulking and weather stripping only.

If I project to weatherize 593,000 at a cost of $5,000,000,000 then I am going to spend $8432 per home. If I am going to create 87,000 temporary green jobs then I will use 5.9 guys per home. This is typical of a government boondoggle that hasn’t been thought through. And sad to say some of you trust this government to do healthcare properly.

Why has it taken so long to get started you might ask? Again assuming that government can do anything right is an oxymoron. I defy you to name one thing the government does well outside of the military. And even the military has its problems if you are keeping up with current events.

It seems that a depression era law (the Davis-Bacon Act) requires that the Labor Department pays the going wage rate in every single county in America, and that’s about 3000 different counties. So after screwing around for almost a year they are finally starting to work.

If you remember a few months ago I had came out with my ideas on how to curb the bloated governments that are drowning us in red tape. If you recall I wanted term limits on every elected position and a sunset of every law and regulation for city, county, state and federal agencies. Term limits prevent absolute power from corrupting these eminently corruptible politicians. Sunsets would keep unelected bureaucrats from enacting more and more regulations that are killing our entrepreneurial spirit. Like the EPA declaring CO2 to be a greenhouse gas. The same CO2 that is necessary for life on this planet. Unelected bureaucrats are strangling our economy with a blatant power grab. Thank God Texas is fighting back, because Washington State with our political hacks would never do that.

A friend pointed out that if the government has an energy audit on your home they could come along and say your home must be upgraded or we will fine you. Given how starved for new revenue sources that isn’t as farfetched as it sounds.

As I started out I will end. There will be no recovery for Everett real estate nor will the market of homes for sale in Everett recover until we have real private sector jobs.

Jim Johnson and comments are always welcome.

Everett Mortgage on Line.

Posted in Everett real estate, Homes for Sale Everett | No Comments »

How to finance and refinance Everett real estate.

February 19th, 2010

Why Yield Spread Premiums can be a good thing for the consumer

YSP (yield spread premium) or also called rebate is very useful tool in financing or refinancing Everett real estate. For example I just did a refinance using an FHA mortgage. I used the YSP to pay for my clients closing costs. I saved him a ton of money, and didn’t take a bunch of his equity to make the loan.

I used the YSP to save my client money, lower his payment and save his equity. Some politicians want to eliminate the YSP because they don’t understand its uses. I am writing this blog to try and explain how this is extremely useful to the consumer. When you limit the consumer’s choices you always increase his costs.

I will try to keep the technical stuff and the numbers down but in a discussion like this it is hard to do. But here is how an FHA mortgage with a rebate can be used to refinance Everett real estate.

My client has a $425,000 payoff. His current payment is $3331.00 and that is principle, interest, taxes and insurance. He has an adjustable loan and his payments are going up. So he asked me to see if I could come up with a way to lower his payments and keep the cost down.

An FHA mortgage is the only one he qualifies for because of current market conditions. You see just like everyone else he has lost equity in his home due to market conditions. FHA mortgages allow a refinancing of your Everett real estate up to 96.5% of it’s current value.

We came to the conclusion that the value of his property is around $440,000.  At that value if I am using an FHA mortgage we are limited to a maximum of $430,100 as a new loan amount. If I could not use a YSP to pay for the loan costs I could only do an FHA mortgage if we could get an appraisal for $445,525. We might get that value and then again we might not.

I was able to get him a new loan for $422,000 by using the rebate (the YSP) and paying my clients closing costs with it. His new payment is $3017.95 and saves him $313.05 per month. With all fees he has a payback of 14 months. His loan is a fixed 30 year FHA mortgage at 5.375%.

If we had to get his loan without any rebate (YSP) his new interest rate would be lower at 4.875%. And his new loan would have had a monthly payment of $2964.63 per month but with a monster catch. You see his new loan amount would have been $435,500 and the payback period would have been over 49 months.

So you see here with the YSP we have a new loan at a lower loan amount and a slightly higher interest rate. But we didn’t take anywhere near as much of his equity to pay for the loan costs.

We saved him $13,500 in equity by using the rebate or YSP to pay for the loan costs.

YSP or rebate is a great tool for refinancing Everett real estate and in combination with a FHA mortgage can save you lots equity.

Jim Johnson and comments are always welcome.

Everett Mortgage on Line

Posted in Everett real estate, FHA Mortgage | 2 Comments »

Everett Mortgage-Why are loan Mods so hard to get

February 16th, 2010

Everett Real Estate May Never Recover

Ever wonder why loan Mods are so hard to get?

Wow, with sweetheart deals like this Everett real estate may never recover its value. If the value of homes for sale in Everett doesn’t recover then the entire economy will not recover any time soon.

Have you heard about the sweetheart deal the FDIC gave 1 West Bank? That is the bank George Soros owns. You know he’s the guy who bankrolls the Democratic Party. I well remember the old adage it’s who you know.

Well back in July of 2007 IndyMac Bank failed. 1 West Bank bought it in March of 2009. The FDIC gave 1 West a deal like you can’t believe.

1 West paid 70% of the value on all mortgages and 58% of the value of all HELOCs.  The FDIC guaranteed 1 West 80-95% of all losses for 1 West.

Everett real estate is having a hard time recovering because of foreclosures and short sales. The value of home for sale in Everett is suffering because of the same reasons. Ever wonder why it is so hard to get a loan Mod? Well here is why.

This is an actual example of why the FDIC bureaucrats should be fired, every damn one of them.

A homeowner owes $478,000 and with lates fees and missed payments the total due 1 West is $485,200. 1 West paid (70% of the $478,000) $334,600 for this mortgage. The homeowner can’t get a loan mod because IndyMac and 1 West wouldn’t allow it. The homeowner gets an offer of $241,000 and 1 West approves the sale.

You take the original loan amount plus late fees and missed payments of $485,200 less the $241,000 and you get a loss on sale of $244,200. FDIC guaranteed 80% of the loss so they pay 1 West ($244,000 X .8) $195,360.

1 West got $241,000 (short sale) plus $195,360 (FDIC loss guarantee) = $436,360 for the house that they paid $334,600 for. So 1 West gets a profit of $101,760.00. To add insult to injury 1 West got the homeowner to sign a note of an additional $75,000. Multiply this over 1000’s of homes and you see why there is no incentive to do a loan modification for anyone. There is much more profit in a foreclosure or a short sale. Now you see why Everett real estate is having a hard time recovering. Now you see why the market for homes for sale in Everett is so soft.

Do you see why 1 West can sell any home for any price because they are guaranteed a profit on every home mortgage they bought? They have no risk what so ever on any mortgage. Now do you see why lenders make loan mods so hard to get. There is no incentive to make a loan mod and every incentive not to.

To top even that 1 West will only get these payments if the show a $2.5 Billion loss. So guess what, they don’t do loan mods because they will not get paid by the FDIC if they do.

I will leave you to figure out who is actually paying George Soros and 1 West to screw up the entire American economy.

Now you can see why Everett real estate may never recover. Now you know why the market for homes for sale in Everett is so soft.

Want to watch a video on this? http://www.thinkbigworksmall.com/mypage/player/tbws/23622/1017333

Jim Johnson and comments are always welcome.

Everett Mortgage on Line.

Posted in Everett real estate, Homes for Sale Everett | 7 Comments »

New Appraisal Rules Lowball Homes for Sale In Everett

February 9th, 2010

Appraisals are taken from Wrong Point of View

A major factor in why the market of homes for sale in Everett is so soft is the point of view of the appraisal. I think that the new HVCC appraisals will force a lowball approach to appraisals. If a willing buyer and a willing seller make a price that is the sales price. When many buyers and sellers agree to prices that is a market.

HVCC is the Home Valuation Code of Conduct. And it is a political rule made by a political person for political gain. It is delaying the recovery of our economy in its own not so small way.

The HVCC appraiser is hired from a risk adverse point of view. The lender wants no risk so he induces or even orders the appraiser to produce lower value appraisals. With a market that was normal or rising that would be ok. It might provide a check to speculation. That would be providing there was many lenders in the market and we had a free market. Something we haven’t had for a long time. Here is what happened to me just last week.

I recently spoke to a captured appraiser (one working for an AMC (the lender) not the buyer or seller) at a local watering hole. She was upset that the real estate agent had worked her over trying to get the appraisal increased by about 10%. She had valued the home for $335,000 and he said it was worth the freely agreed upon price of $365,000. She had included 2 foreclosed homes in the three comparables in the appraisal and they had driven the value down. Remember a willing buyer and seller agreed to $365,000. Her point of view was the buyer could be paying $35,000 too much.

Well she doesn’t set the market and that is not her business. The appraiser should only report the market not set it. The appraiser and by extension the lender is setting the market. Remember the lender ultimately doesn’t have to make the loan.

Many real estate professionals think the HVCC idea isn’t working. I think the HVCC appraisal has depressed the market of homes for sale in Everett. They have unnecessarily depressed the prices and perhaps prolonged the economies recovery.

If the appraiser is hired by the buyer the lender can always say no and not do the loan. So the argument that the lender gets an unbiased appraisal is simply wrong.

The National Association of Realtors says nearly one in four of its members has reported clients losing a sale due to appraisals. The National Association of Home Builders, meanwhile, said low appraisals were sinking a quarter of all new home sales and argues it’s not fair to compare distressed properties to brand-new homes. To which I wholeheartedly agree.

Part of the problem, critics contend, is that many real-estate appraisers are now hired under new industry rules. In some cases we have seen low cost appraisers hired from outside the area coming into areas where they don’t have market knowledge.

The HVCC rules are designed to limit conflicts of interest that can bias an appraisal, the rules bar mortgage brokers from ordering appraisals themselves, forcing them to do so through a mortgage lender. But the lender is a party to the transaction. The lender is risk adverse and will always lowball any transaction if they can. It is the nature of bankers to ask for more collateral. The appraisal was supposed to be independent from everyone in the transaction. By allowing the lender to hire the appraiser it distorts the value.

Nationwide an average of 40% of all sales were foreclosures. Foreclosures are at an all time high because of many factors outside the scope of this article.

Foreclosure sales should not be used as a factor in an appraisal for new homes or well maintained owner occupied homes. Right now it’s like there are 2 different markets for homes for sale in Everett. Investors and fixer uppers who buy the foreclosures and everyone else who buys the new/well maintained homes.

So right now the point of view of an appraiser and not a willing buyer ans seller sets the market value of homes for sale in Everett.

Jim Johnson and comments are always welcome.

Everett Mortgage on Line.

Posted in Homes for Sale Everett | 14 Comments »

FHA Mortgage rates to Rise

February 8th, 2010

Everett Mortgage Expect higher Interest Rates Soon

As of March 1st expect FHA mortgage rates, VA mortgage rates, and all other long term interest rates to rise. Expect prices for homes for sale in Everett to fall. I am not Chicken Little and saying the sky is falling but there is going to be some very dark clouds coming soon. Here is why. The Federal Reserve Bank (the Fed) will no longer be buying Mortgage Backed Securities (MBS) on the open market. I know you are saying how is that going to effect FHA mortgage rates?

Well a lender makes a 100 or a 1000 home loans and then packages them into a MBS. They sell that MBS on the open market. The price the open market is willing to pay is what determines what interest rate will be charged on the mortgage. If the interest rate on a particular VA mortgage or an FHA mortgage isn’t high enough the MBS will not get sold and that’s not good. Banks only make their outrageous profits if they churn your money several times. Remember that the deposits they use to make an FHA mortgage or a VA mortgage is your money. Simply lending it out once isn’t enough they have to lender it out several times over but that’s another story.

The Fed has been buying MBS with below market interest rates and in doing so they have kept the interest rate below market. You the taxpayer have been subsiding the mortgage market. I’ll bet you didn’t know that did you?  When the Fed stops buying the open market must buy the MBS or the entire housing industry will come to a screeching halt. To sell the MBS banks will inevitably have to charge more interest.

Now why will prices fall on homes for sale in Everett? The price a home can sell for has a great deal to do with mortgage money liquidity. If interest rates are up that means a buyer with a limited budget can not buy as much home as before. If I have a $1000 a month maximum payment I can buy more home at 5% than I can at 6.5%.

So when the fed stops buying MBS on March 1, 2010 expect prices to fall on homes for sale in Everett. Expect interest rates to increase on all FHA mortgages, VA mortgages and all long term projects.

Jim Johnson and comments are always welcome.

Everett Mortgage on Line.

Posted in FHA Mortgage, Homes for Sale Everett, VA mortgages | 4 Comments »

Everett Mortgage- How to find the right school

February 7th, 2010

Some Planning will Help Find the Right School

I had a client ask me about schools and just how to pick the right one. Schools vary so when picking a home for sale in Everett you should do some homework first if a particular school system is important.

So what is the best way to find the right school? Let me state for the record I am not a school expert.

Well first you need to define what is right for your children. Most schools are good at most things but some are better than others at certain things. If your children want or need more math or science or something in an unusual vein (drama, arts, etc) the task gets even harder. In these cases what you want may only come from a specific teacher and that is beyond the scope of this article.

If you are new to the area this will take some time and effort but it is a lot easier than it used to be. Because some school districts are more highly regarded the price of a particular home for sale in Everett may stretch your budget.

I know of 2 web sites that can help you pick the right school. Please know that nothing takes the place of actually going to the school and meeting the teachers and student body.

The first web site is the Washington State School Report Card Web Site run by the Washington State School Superintendent’s office. This site provides the Washington Assessment of Student Learning test scores for every PUBLIC school in the state. The site allows you to compare test scores with other schools of similar size and composition. It also provides teacher and demographic information about each school. I noticed that the site only covers grades 3 through 10. I don’t know why 1st, 2nd 11th and 12th grade are not covered. This site is located here: reportcard.ospi.k12.wa.us.

The second site is www.greatschools.org. Great Schools is a nonprofit organization that rates schools on a 1-10 scale based on test results compared with other schools in the state. It gives you a quick and easy way to compare schools in a neighborhood. They cover public and private schools. I found that to be a very nice inclusion..

So when shopping for a home for sale in Everett you can now judge the school district.

Jim Johnson and comments are always welcome.

Everett Mortgage on Line.

Posted in Homes for Sale Everett | No Comments »

Everett mortgage-Obama Tax Credit just hot air

February 7th, 2010

Another Useless Idea

Will the new jobs tax credit affect Everett real estate? Will it help with homes for sale in Everett?  Will it change an FHA mortgage rate?

I am sorry Mr. President but the new credit will not help. I think this is nothing more than a publicity stunt. Unless this is truly the hand of someone so ignorant of how jobs are created that Mr. Obama doesn’t realize this will not make a single new hire happen.

Unfortunately here is what will happen. If you are in business a tax credit of $5000 plays no part in the decision you make on whether you hire or not. You have to have the business sales to justify the cost of the hire. If I have the sales then I will hire if I don’t $5000 will not make me hire. All the other terms and strictures are nonsense.

Let’s review the “benefits” of the credit and see if it will affect Everett real estate. Let’s see if FHA mortgage rates will go down. Let’s see if this will produce jobs and help homes for sale in Everett. The 2 main ideas are as follows:

1)      Businesses will receive a $5,000 tax credit for every net new employee that they employ in 2010. The total amount of credit will be capped at $500,000 per firm, to ensure that the majority of the benefit goes to small businesses.

2)      Small businesses will be reimbursed for the Social Security payroll taxes they pay on real increases in their payrolls. Specifically, firms that increase wages, expand hours or hire new workers would get a credit against the added payroll taxes that result. This bonus would be based on Social Security payrolls, so it would not apply to wage increases above the current taxable maximum of $106,800.

Look carefully at item number 1. As I stated above there is no reason or justification to hire unless the sales are already there. So any hire will have happened regardless of any credit. This is another drain on tax receipts with no benefit to the taxpayer.

Item number 2 is just another federal giveaway that doesn’t improve or enhance hiring. Again this is another drain on tax receipts with no benefit to the taxpayer.

This tax credit is just another useless giveaway that accomplishes nothing. It will not help improve the market for homes for sale in Everett. It will not improve FHA mortgage rates and it will not help Everett real estate.

Jim Johnson and comments are always welcome

Everett Mortgage on Line.

Posted in Everett real estate, FHA Mortgage, Homes for Sale Everett | 6 Comments »

New FHA Mortgage Rules

January 30th, 2010

FHA Mortgages now allow flipping

The FHA mortgage has now become much more useful because they will allow a new mortgage on a rehabilitated home. The term is called flipping. Buying a home and then flipping it before 90 days have elapsed. Prior to this ruling a buyer had to hold a property at least 90 days before an FHA mortgage could be obtained for a new buyer. FHA has signed a waiver that takes effect on February 1, 2010 and is limited to sales meeting the following conditions:

1)     Of course all transactions must be arms length for all parties. This will be determined using some of the following practices. The seller should hold title, the seller / property should not show a pattern multiple transfers within the last 12 months and the property was marketed openly.

2)     In situations where the properties sale price is equal to or greater then 20% above the acquisition cost the waiver and a new FHA mortgage could be issued only if the lender justifies the increase in value with a second appraisal and documents the costs (labor and materials) incurred to improve the property and the appraiser includes the documentation with the appraisal. The lender must also provide an inspection report to the purchaser but it doesn’t necessarily need to be a 203(k) consultant doing the inspection.  The inspector must also be an arms length participant in the transaction. The inspection must be a full top to bottom structural inspection. The inspection must include at a minimum the foundation, floors, ceilings, walls, roofs, all exteriors, appurtenant structures such a decks, balconies, walks and driveways and include the  insulation and ventilating systems.

3)     The waiver is for forward mortgages and doesn’t apply to reverse mortgages or an HECM (Home Equity Conversion Mortgage) used for a purchase.

FHA / HUD has found that many buyers of REO and foreclosed properties have the means to buy repair and resell quickly. Because of the dramatic increase in foreclosures the 90 days rule was inhibiting the sale of some of these homes. By allowing new FHA mortgages on these homes FHA hopes to help improve the resale market.

Jim Johnson and comments are always welcome.

Everett Mortgage on Line

Posted in FHA Mortgage | 6 Comments »

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