This week Matthew Gardner, Windermere Real Estate’s Chief Economist, discusses current mortgage interest rates. Interest rates are currently right around 3% and mortgage applications, driven by those historically low rates, are up 25% over the same period last year. It’s amazing to look back to the early 1980s when mortgage interest rates were in the high teens. But, how long will interest rates stay this low and what impact are these interest rates having on home prices?
The condominium resale certificate is a critical part of every condo sale. Condos and homeowner associations are governed by documents that outline the duties and responsibilities of the homeowner and the community. When a buyer purchases a condo they are entitled to review those documents. The “resale certificate” is a 5-6 page summary supported by many other documents that contain information and disclosures that include the HOA’s governing documents (Declarations, ByLaws and Articles of Incorporation), budget and financial reports, assessments, reserves, reserve study, rules and regulations, pet and rental restrictions, meeting minutes, etc.
Why is a Resale Certificate Needed?
In Washington State the seller is required by law to deliver a current resale certificate to a buyer for review and approval. If not approved, the buyer may terminate the sale. The buyer’s lender will also review sections of the resale certificate as part of the buyer’s loan approval.
Who Prepares the Resale Certificate?
The documents are prepared by the HOA’s association manager (or a board member if the community is self-managed). The resale certificate is ordered by and paid for by the seller. Anticipate a fee of $275+.
In Washington State the seller is required to deliver the HOA resale certificate to the buyer per the terms of the Purchase and Sale contract (within 10 days unless otherwise specified). The buyer, once the package has been received, has five days to review the information and either approve or disapprove the resale certificate. If the buyer does not terminate within 5 days the resale certificate contingency is automatically waived.
I frequently review resale certificates and understand the importance these documents have for sellers, buyers and the successful sale of a condominium residence. If you have questions or need additional information, feel free to contact me.
This is a question I hear a lot. Real estate was dormant this spring due to the coronavirus pandemic. Since mid-May the housing market has made a robust and positive rebound.
The number of buyers currently in the market far exceeds the available inventory of homes for sale. Why are so many buyers searching for homes? Record low interest rates give buyers more purchasing power. They’re taking advantage of those low interest rates to purchase a first home, move up to a larger home or, since we’ll be working from home/learning from home for many months to come, find a home that is a better fit for changing live/work/learn lifestyles. We are fortunate to live in an area with a strong economy. Local and national companies continue to grow and recruit employees, but that growth is bringing more home buyers to the area who want to purchase a home.
Lifestyle needs change . . . job and workspace needs change . . . housing needs change. Right now housing inventory is the biggest challenge for buyers looking to purchase a home. It’s a competitive market. The shortage of homes is definitely tipping the scale in favor of sellers, and that trend is expected to continue through the end of the year.
If there’s a change or a move in your future . . . how can I help?
Over the past week I’ve suddenly received several phone and email “phishing” solicitations. I’d like to blame it on a full moon, but that was nearly three weeks ago.
I’ve been contacted twice and advised my Amazon account had been locked due to suspicious activity. Two different people have called to tell me a credit card was being used in another state, that the police had been contacted, and they would need additional personal information to verify they were really talking to the cardholder so that they could assist me. I reached out to both credit card companies – no suspicious activity or security breach reported on my accounts. I also had a call trying to sell me new windows for my home. Told that caller my home has no windows. (You have to have some fun with these calls.) The best calls have been the three from people representing “investors” who are ready to purchase my house immediately – for cash. I had to play along with these calls too. Turns out the caller didn’t know anything about my home including where it was located, when it was built, the number of bedrooms, baths or square footage. After no doubt frustrating the caller for a few minutes, I let them know I was a Realtor® and that when it came to sell my home I had that covered.
Maybe with everything going on in the world scammers think this is an easy time to take advantage of people who might be feeling stressed or vulnerable. In my business escrow and title companies, banks and lenders continually deal with wire fraud. Bad people have figured out how to hack into emails, secure bank and corporate websites and anywhere else they think there might be a quick and dirty way to make money and defraud innocent people.
Be very careful. Be suspicious of phone calls and emails you don’t recognize or can’t verify. Caution and educate your children, parents and friends. If you question something, whether it’s from a friend, relative, business associate, bank real estate broker, escrow or title, and especially if you’re involved in a real estate transaction . . . verify the sender. It only takes a few minutes to protect yourself. It also only takes a few minutes for a wire transfer sent to a criminal recipient to empty a bank account, and those funds can be impossible to retrieve.
We have enough to worry about these days. Be safe. Verify. Verify. Verify. And while you’re at it, wear a mask. Take care of yourself, your family and friends.
The number of homes available for sale declined in April and May for obvious reasons – there were health and economic concerns brought on by the COVID-19 pandemic. Since late May local home sales have been ahead of the same period last year. Buyer demand remains high but what is different about this year compared to last year is there are fewer homes for sale. The graph below, provided by the Northwest Multiple Listing Service for the Seattle Times, shows that new pending sales are well above the same period last year but new listings of homes for sale are 20% below the same period last year.
With barely a one month supply of inventory in many areas, homes are selling quickly. Multiple offers are more common, and many homes are selling above the list price. Buyers are finding more competition for the weekly supply of newly listed houses and condominiums coming on the market.
What’s driving this demand? Interest rates are at record lows making mortgages more affordable. Potential buyers can afford a larger home. And, after three months of quarantine, owners and renters whose homes offered adequate space when working off-site are seeking larger homes with more indoor space, a dedicated home office area and more outdoor live/play space. Buyers are ready to buy, but sellers don’t appear to be as motivated right now.
King County has progressed to Phase 1.5 of the Governor’s “Safe Start Proclamation”. How does that impact buyers and sellers as they search for homes or list their homes for sale?
- Real estate firms may open their offices again. In compliance with State guidelines, staff, brokers and guests will be required to wear face masks when in the office. Common areas and conference space will have restricted access. The number of staff and brokers permitted to be in the office will need to follow State guidelines.
- The most significant change is that now three people (vs. two) are permitted at a property for real estate activities. This permits a husband and wife or partners to view the property together along with their broker. A buyer may now attend an inspection along with the broker and inspector.
- Sign installation companies are again permitted to install/remove real estate signs.
As we begin to move about more freely, an abundance of caution will continue in an effort to keep everyone healthy. Showing homes will continue to be by appointment only with sufficient time between appointments. Buyers and brokers will be required to wear face masks while inside a home and observe all health protocols required by the State along with any additional guidelines requested by the homeowner. Public open houses are still prohibited. Brokers, in an effort to maintain social distancing guidelines, will not transport clients in their car but continue to meet them at properties.
These guidelines are in place to continue to keep everyone safe and healthy as we begin to resume our normal lives. Brokers have become more comfortable working within these guidelines and assuring buyers and sellers that they can safely search for or sell their homes. This is the new normal and we aren’t likely to see the “old normal” for a while.
We’re 12 weeks into more experience dealing with the impact of COVID-19 on the economy and specifically the local real estate market. After a significant market decline in new listings, buyer interest and closed sales in March and April (not at all surprising) real estate came back strong starting in early May.
- the number of pending sales is trending higher and homes are selling quickly
- more new housing inventory is coming on the market reflecting prices comparable to February prior to the COVID-19 pandemic and Washington State’s stay home/stay healthy order
- sales prices in the last two weeks are also rising with multiple offers more common and homes selling above list prices
- buyer applications for new mortgages are on the rise – interest rates are at record lows making buying a home more affordable
Matthew Gardner, Chief Economist for Windermere Real Estate provides his weekly look at the economy and specifically the real estate marketplace in our area.
It’s not surprising to know home sales declined in mid-March as we sheltered at home. Moving into mid-April both buyer activity and pending sales began increasing, all while home prices remained strong. Nationally median home prices rose in every region of the US in April.
Locally buyer activity and home values also gained momentum. Short market times and multiple offers were more common by late April, especially in affordable price ranges. Even the high end market, hit harder by the health crisis and volatile stock market, began to recover with more expensive homes coming back into the market.
What can we expect for the local condo market this summer? Over the last 30 days 131 condos in the Eastside marketplace have sold. The average time on market was just 15 days with an average sales price of $620,420. The average sale price vs. list price was 100.08% with 78 of those 131 homes selling at or over the list price. Condos currently under contract with sales pending have been on the market an average of just 14 days. As reported by the Mortgage Bankers Association and National Association of Realtors®, buyer mortgage loan applications are up for the fourth consecutive week – a strong indication buyers are back in the market and ready to take advantage of record low interest rates.
Recovery of the local economy will have an impact on the real estate market as we move toward summer. Based on buyer activity and mortgage applications, as we find our “new normal” it’s clear buyers are ready to step into home ownership. Available housing inventory is still lagging behind compared to the same time last year. It remains to be seen if there will be enough housing inventory to meet buyer demand this summer. Low inventory will certainly keep pressure on prices resulting in fewer discounts in the marketplace.
These are interesting and complex times. As the COVID-19 pandemic continues to develop, brokers are following strict recommendations from public health officials and government agencies to ensure we are helping to reduce its impact. Ensuring that agents, office staff and clients are safe and healthy is the top priority.
Real estate is still happening – homes are still being listed for sale and buyers are still purchasing those homes, exhibiting a surprising high level of interest. Matthew Gardner provides good information and perspective on the current market and the health crisis vs. the housing crisis experienced in 2008.
Earlier this month, as concern regarding the coronavirus grew, my company, Windermere Real Estate, followed by the NWMLS a few days later, made the decision to suspend all open houses in an effort to protect the health of buyers, sellers and brokers.
There will be little real estate business transacted during the State of Washington’s mandated “shelter-at-home” period. Escrow and title companies and lenders will continue to work, as much as legally permitted, to be sure sellers and buyers involved in transactions already under contract will close on time.
Even before the mandated “shelter-at-home”, many sellers requested no open houses and buyer traffic dropped significantly at homes (mostly vacant) where open houses were scheduled. What about open houses in the future? While I always include open houses in my marketing plan, at the seller’s option, it is one of the marketing activities that delivers the least return to, and honestly, most inconvenience to sellers. The majority of my real estate business focuses on condominiums, and its not unusual to find open houses restricted or prohibited by the HOA. Homeowners who purchase in a secure building do so because they want to live in a community offering safety and where public access is limited to owner controlled, owner invited guests. A public open house that allows dozens of strangers to access a building is an intrusion on the privacy and security of everyone who lives in the community.
With the advancement of technology, professional and drone photography, 3-D and 360 degree virtual tours, buyers can virtually walk through a property before scheduling a private appointment with their broker to see the home. Going forward we may see fewer open houses, especially in secure residential buildings. Open houses create a logistical challenge for the hosting broker, sellers, buyers and the concierge staff, and are an intrusion to the privacy of all homeowners in the building.