Admin

Finally...The Secret to Success in Real Estate in Wenatchee...

By
Mortgage and Lending with Mortgage Advisory Group CL-36130

...and it takes a local mortgage originator to figure it out.

 If you read the Seattle PI on Sunday of this past week you learned this:

  • Chelan and Douglas County are in the top 5 areas of growth for Washington State
  • Chelan and Douglas County populate approximately 105,000 people
  • Our growth has been approximately 14% (mostly retirees)
  • Our median home sale price is $239,000
  • Almost all of the growth areas contributed new construction as a large growth factor

So I have to ask this...our valley's median income does not support a $239,000 loan.

Where do we get our down payments?

  • Retirees? (Most are not from here...good luck.  Heard of a reverse mortgage?)
  • Premium pricing? (please forgive me brokers)
  • Seller Paid Costs and Prepaids (sorry sellers, just seems to come up more and more in conversation.  Don't blame your Realtor).
  • Interest only loans (thank you Fannie Mae for the recent enhancements)
  • Forget down payment...I want a $1200 rent payment (works for some people...I need as many tax deductions as I can find).

The solution is simple and I will start it right away.  For all of the general contractors I work with I will call them and tell them to lower their prices...last August you could buy new for $185,000.  I recently closed ~6 new construction for ~$190,000 and the are being flipped for a profit.  Is our market overpriced?  You're the professional you tell me.

 

Show All Comments Sort:
J Perrin Cornell
Coldwell Banker Cascade Real Estate - Wenatchee, WA
Broker, ABR, VAMRES

I do not think the market is overpriced... though some segments of it are and if you read my posts that is a concern. But good thoughts Kevin!

Lets remember some things:

  1. Part of our price structure is being driven by land. Only 15% of land in Chelan County is available and a large portion has already been built on. In Douglas no infrastructure or very limited. In three years the cost of lots have climbed faster then the general housing costs. So the $30,000 increase in lot costs since "04-05. equates to approx a $120K increase in housing costs. There are many reasons for this and they are not spelled greed.

  2. Growth from people arriving in, is something like 30-35% of MLS sales. They generally have a little more to spend on housing though it is not bottomless.

  3. Pricing is alwasy a strong culpret but basically the market is what it is. I don't set it, you don't and buyers and sellers don't either. It is an amalgum.  Currently (actually for about six months now) we have been seeing a lot of price reductions in the MLS. I think it is largely the result of too much exhuberance, too little experience (about 1/2 of the real estate agents in the area have been in business 2 yrs or less) little or poor marketing and the market recogmnizing true value (as opposed to a market reversal).

  4. You see a portion of the market I don't. But in my business (well over 70 sides last 12 months) I have not seen interest only, or ARMS (WHY in the current market?). I have seen a good percentage of 80/20, and seller paid costs. I thought this had tightened a little then BofA announces 5.75, 30-40 yr fixed, seller paid down and $900 closing costs (oh yeah 10 yrs interest only)... But honestly this is the lenders attempt to meet a growing need. True you can argue is it driving or pushing the market and if it is a good thing. But the need (or at least want) is there.

  5. Consumers come in for their share too. How many 1200 sq foot homes with vinyl floors and counters, one bath, minimal 2 car garage, baseboard heat and no dishwasher or disposal are you seeing built... the consumer will not accept a minimal product.. ok some will but not enough to risk a builders financial future. Heck, lots in Malage (good lots with a view and good location and surroundings) are having trouble selling at $10,000 under current market or $50,000 under current home marketing costs. It is changing but slowly.

IF a builder or seller can afford to build and sell at 180-250K there is lots of business (no inventory supporting your point). Above 400K the market slows down. I believe this price range is dependent on outside influence (out of area buyers for one) and the lack of lower cost housing in our area prevents people from selling and moving up leaving that segment with a very soft bottom. Put another way... under $300K we have a market that is demand driven and cost pulled. Above 400K it is cost driven and demand pulled. I currently have three builders and one land developer and one remodel. My advice to all is Stay away from anything that leads to 400+ prices and keep as low as possible.

Finally, I do NOT mean to imply that the market is currently soft or in trouble. Not so. BUT we need some adjustment rather than willy nilly advancement to keep it fueled and growing at a sound rate. My thoguhts for 2007 are 8-12 % or so. But to really keep things moving forward we need to solve the sub $250 (actually 200K) part of the equation.

Mar 01, 2007 01:47 AM
Kevin Nelson
Mortgage Advisory Group CL-36130 - Wenatchee, WA
MLO-121548

About solving the 200k - that was the point I was trying to make, however, there is (very little) inventory.  Keep in mind all inventory is not listed on the MLS (not FSBO either).  It seems to me as if bigger outside money is overshadowing a large part of our valley's income.

I was going to check our newest home trade magazine (released today) to find a little more information, but it looks like we are without an index again.

ARMSs are out right now.  Most lenders seem to be offering their fixed rates at comparable prices and no prepayment penalties.

You will see more 75-25 loans as opposed to 80-20s.  Conforming lenders price these better.

Interest Only...why stop there?  How about a 40 fixed.  Add interest only to that (came out January 28th).  Or a 50 year fully amoritizing loan.

There are great loan programs right now for first time home buyers with very little down payments.  I can get them approved fairly easily with minimal documentation - I just need the properties.  That's the tough part.

 

Mar 01, 2007 03:12 AM