The local housing market continues to grow on a yearly basis, with prices for single-family homes in November 2014 having risen by 6 percent over November 2013, but the market also saw slowing monthly growth for the third month in a row, according to the S&P/Case-Shiller home price index released Tuesday. Despite the slowdown, Zillow’s Chief Economist Stan Humphries told The Seattle Times that the Seattle area’s housing prospects for 2015 are still strong, and the slowdown represents merely the market settling back in to normal levels. The Seattle market continues to outperform both the 20-city index and the national market, which saw annual growth rates of 4.3 percent and 4.7 percent respectively. Rates for 30-year fixed mortgages have held steady over the past week at 3.58 percent.
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Many homeowners will tell you that they entered and exited the real estate market several times before making the final offer and closing on their home. As a buyer, you’re not always tied down to a time frame, priorities might shift and unexpected things happen that could delay purchasing a home. The beginning of a new year is a great time to review your goals and resolutions for the year ahead, so if you’ve been thinking about buying a home, and want 2015 to be the year you take the plunge, here are a few tips to help you stay afloat in today’s marketplace.
Prospective buyers are usually shopping online, and reviewing several of their dream listings at home, researching the mortgage process, and trying to grasp the local market. Serious buyers partner up with a real estate agent well versed in the neighborhoods, and can walk them through the home buying process. Agents have completed many transactions, and will have the knowledge and experience to put you one step ahead. It also helps to stop thinking that you’re going to get a great deal on your dream home. The great Seattle marketplace is competitive, with low inventory and a growing number of serious buyers, so if you’re truly interested in buying you might want to stop hunting for a bargain. Making a low ball offer on a home when you’re first entering the buying process might seem ideal to test the waters, but it might also sabotage your offer, and lose you a home. Your agent can help you determine a fair offer, and ultimately help you find listings that match your criteria. Every buyer has a unique set of goals and needs, so contact your local real estate agent today to get started on the home buying process.
Renters scanning Craiglist for their next home often only need to consider one factor when determining housing costs: rent. Rental rates often include utility charges, and although there are additional expenses such as renter’s insurance and furnishings to consider, your monthly costs are relatively straightforward. But when you decide to buy a home, things get a little more complicated. On top of principal and interest on your mortgage, you’ll also pay property taxes, homeowner’s insurance, and, in some cases, mortgage insurance or homeowners’ association dues, as part of your monthly payment. So with all those numbers to keep track of, how do you figure out how much home you can afford? Here are some tips to help you crunch the numbers, courtesy of Zillow.
Four major factors comprise the bulk of your monthly housing costs: Principal on your mortgage (determined by the price of your home), interest (varies depending on current interest rates), property tax (varies depending on where you live), and homeowner’s insurance (varies by insurance company, environmental risks, etc.). Experiment with a mortgage calculator like Zillow’s to see how your monthly payment changes based on fluctuating interest rates and more or less of a down payment.
While initial upfront monthly costs for home ownership can seem high in comparison to your rent payment, owners get the benefit of deducting mortgage interest and property taxes on their annual tax return. So, keep in mind that you’ll end up getting back some of those monthly costs.
Decide On A Mortgage Type
For many renters, the prospect of saving up enough cash for a 20 percent down payment can make home ownership seem like an impossible dream. But many don’t know that conventional mortgage companies require as little as 5 percent down, and a mortgage through the Federal Housing Authority (FHA) can be had for only 3 percent down. For a $300,000 home, a 5 percent down payment equates to only $15,000, much more realistic than the $60,000 you would need in order to put 20 percent down. Keep in mind that if your down payment is less than 20 percent, you will be required to pay mortgage insurance, as well. Typical mortgage insurance on a $300,000 house is about $150 per month, though just yesterday President Obama reduced premiums on mortgage insurance for FHA-loan holders. Five-year adjustable-rate mortgages typically come with lower interest rates, though as the name suggests, your rate will change (most likely increase) after five years.
If You Don’t Already Have One, Get A Credit Card
Though it may seem counterintuitive to get a credit card if you don’t need one, they serve as helpful records for mortgage lenders who want to make sure you have a history of paying off your debts in a timely fashion. If you don’t have a credit card, consider getting one with the lowest interest rate you can find, and make sure to pay off your balance as you go instead of racking up unnecessary debt.
In Seattle’s housing market, where the supply of homes over the past year never exceeded two months’ worth of inventory, a whole new generation of home buyers could be poised to make an even bigger dent in the pool of available homes in 2015. Millenials – people born after 1980 – have been putting off home purchases due to factors such as high student debt, stagnant wages resulting from the recession, and a desire to not be tied to a permanent home, but they could be a bigger force in the housing market in 2015, according to a new report in The Seattle Times. With the median rent in King County now standing at $1,750 per month, home ownership is beginning to look more appealing to many in their late 20’s and early 30’s who have thus far been exclusively renters.
Rents in the Seattle area (King and Snohomish counties) grew at a staggering rate of more than 8 percent in 2014 and are projected to continue to rise in 2015. An estimated 12,273 new apartment units slated to go on the market next year are expected to increase competition for renters and help ease price hikes somewhat, but the glut of new units likely won’t provide much relief for those with budgets at the lower end of the spectrum. For example, in Ballard, where many of these new buildings are going up, apartments built after 2010 are renting for an average of $1,731 per month – not exactly affordable for many single renters. Overall, Seattle remains the 8th most expensive place to rent in the country, with a median rent of $1,580 for a one-bedroom apartment.
Seattle median home prices continue to rise on a yearly basis, having grown 11 percent in 2014, according to the Puget Sound Business Journal, but most are predicting slower, yet steady growth for 2015. The median price for a single-family home in Seattle in November this year was $357,000. In King County as a whole, the median price was $440,000 in December, just slightly lower than the 2007 peak of $455,000. Stan Humphries, chief economist at Zillow, told The Seattle Times that he expects to see continued moderation of price gains over the next year, compared with the double-digit growth the market saw in 2013 and early 2014. OB Jacobi, president of Windermere Real Estate, said in a statement that he expects price growth of 4-6 percent in 2015.