Mortgage Rates & Federal Funds Rates

Recently there has been a lot of press regarding the Federal Reserve lowering interest rates. Many people believe this action also lowers home mortgage rates, but the 30 year fixed mortgage interest rate is not directly tied to the Fed’s rate cuts.

First, a little background: Each day, banks are required by law to keep a certain amount of money in reserves, so that the next day they’ll have enough liquid assets to do business (e.g. make loans, fulfill withdrawal requests…).

At the end of the day banks do not always have their minimum reserve requirements in store. So the banks lend each other money overnight to meet their reserves. The interest rate at which the banks lend each other money is called the Federal Funds rate. This is the rate Federal Reserve Chairman Ben Bernanke has direct control over and has been cutting lately. Bernanke’s desired effect is to stimulate our economy by making money available more cheaply to banks.

Lending institutions can pass along the savings to consumers with some loans. For example, the Federal Funds rate correlates closely to the Prime Rate, which is the interest rate banks use to lend to their best customers. The interest rate for a Home Equity Line of Credit is typically set according to the Prime Rate.

The Fed cannot step in and control the pricing on the 30 year fixed rate mortgage. This rate is determined by the market demand for mortgage-backed securities and bonds. Typically when the bond market is doing well and the stock market is doing poorly the rate for a 30 year fixed mortgage is lower.

Simply put, a slowing economy equals lower mortgage interest rates. While a growing economy equals higher mortgage interest rates.

Seattle Real Estate Market Review

The number of home sales for February 2008 in the greater Queen Anne, Magnolia, Ballard, and Greenlake areas is beginning to pick up. It continues to be off February 2007's number, but only by approximately 15% incomparision to 33% last month. The bad news is that there was a dip in home prices.

The average home sold for 2% less and the median home sold for 5% less than in February 2007. Homes that were priced right continued to sell well. The 72 homes that sold within the first 30 days of the listing date were purchased for just over 100% of the listing price (% sp/lp). While the 22 homes that sold between 31 to 60 days were purchased for approximately 97% (% sp/lp). A note to sellers: price your home right. It will save you time and money.

I'm beginning to believe more and more that the bottom of the current slow down was in October, November, and December of 2007. As we approach summer the real estate market should continue to improve.

Although the average and median priced home for this area was down, I believe the real estate market is unlikely to crash in Seattle as it has in other areas of the country.

Conforming Loan Limits Seattle

As I mentioned in my blog entry last month with this same title, both congress and the Bush administration have agreed to raise the conforming loan limit through the end of the year. This change is part of the economic stimulus package that was approved by congress recently.

For King, Snohomish, and Peirce Counties the conforming loan limit has been raised to $567,500.00. This is calculated on a new formula that is based on the median home price of the area, which allows Fannie, Freddie and the FHA to guarantee loans of up to that amount.

We must wait and see what the Banks will do with this change, but it is likely that conforming loans will be available in the greater Seattle area for up to that amount. A great help for individuals who intend to purchase a home or refinance with a loan between $417,000 and $567,500.00 by saving them approximately 1% of interest on their loan.

As more information becomes available on this topic I'll be sure to provide updates.

To check the loan limits your self click here.

Jean Mann at the Ballard Art Walk in March of 2008

I'll be hosting artist/singer/song writer Jean Mann at the Ballard Art Walk this month. It is on Saturday the 8th from 6 to 9 PM at the FORUM CENTER. To preview the show go to: http://www.andrewlparker.com/artwalk.htm

Work For Food in Seattle!

I'm making progress with my campaign to help the homeless in Seattle. To date I've raised $1050.00. To learn more about my campaign go to http://www.andrewlparker.com/Workforfood.htm.

Great Quote

"...to do my duty in this world as well as I am capable of performing it, and to merit the good opinion of all men." George Washington

Conforming Loan Limit

Both congress and the Bush administration have agreed to raise the conforming loan limit until the end of the year. This change is part of the economic stimulus package that was approved by congress recently.

For the greater Seattle area (Seattle, Tacoma, Bellevue) it looks like the new formula for determining this limit will be calculated based on the median home price. Fannie, Freddie and the FHA will be allowed to guarantee loans of up to 125% of that value.

From the information I've gathered the greater Seattle area has a median home price of $394,700, which would raise the conforming loan limit to $493,375.

Currently the difference between a conforming loan and a jumbo interest rate is about 1%, which is a lot. For example, a buyer who wishes to purchase a home with a 5% down payment with a 30 year fixed conforming mortgage at 5.75% for $437,850 would have a monthly principle and interest payment of $2,427. However if the purchase price of the home was $437,851 a jumbo loan would be required and the interest rate would likely be about 6.75%. Changing the month payment to $2,698. A difference of $271!

With the change to the conforming loan limit a buyer with a 5% down payment would be able to purchase a home for up to $518,000. Since this is a conforming loan the interest rate would be about 1% less than what is currently available, which could potentially save them $320 per month.

If you are considering purchasing a home for over $440,000 but under $518,000 it may be worth your while to wait until this change has taken effect. As more information becomes available on this topic I'll be sure to provide updates.

Seattle Real Estate Market Review

The number of home sales for January 2008 in the greater Queen Anne, Magnolia, Ballard, and Greenlake areas continues to be off by close to 1/3 as compared to January 2007, but homes are continuing to appreciate!

The average home sold for 6% more and the median home sold for 4% more than in January 2007. Homes that were priced right continued to sell well. The 40 homes that sold within the first 30 days of the listing date were purchased for just under 100% of the listing price (% sp/lp). While the 25 homes that sold between 31 to 60 days were purchased for approximately 97% (% sp/lp). A note to sellers: price your home right. It will save you time and money.

It's possible to speculate that the real estate market may have bottomed out in October of 2007. In the coming months we'll know. Typically home sales increase after the holidays. I expect things to pick up in the spring and summer and then cool back off next fall and winter.

This winter is a great time to buy. The real estate market is unlikely to crash in Seattle as it has in other areas of the country. The economy is good, job growth is good, and experts estimate 135,000 more people to move to Seattle in the next 5 years.

Louis Anderson at the Ballard Art Walk February 2008

I'll be hosting artist Louis Anderson at the next Ballard Art Walk. It is on Saturday the 9th of February from 6 to 9 PM at the FORUM CENTER. To preview the show go to: http://www.andrewlparker.com/artwalk.htm

Big Climb for Leukemia

Join my Team!!!

I'm putting together a team to do the Big Climb for Leukemia which is on Sunday March 16th. This is the 4th year RE/MAX Mutual Realty and I have been involved and to date we have raised over $6,000!

It is a New Year and this event is a great reason to get out and exercise. If you are interested click the link below. It only costs $35.00 and there is no minimum fundraising required.
http://www.active.com/register/index.cfm?event_id=1469165&subevent_id=891704&team_id=441718

Team membership is not limited to those who work at RE/MAX.

For more information on the Big Climb go to: http://www.bigclimb.org/

Thanks,
-Andrew

Seattle Real Estate Market Review

The number of home sales for December 2007 in the greater Queen Anne, Magnolia, Ballard, and Greenlake areas was off by close to 1/3 as compared to December 2006, but homes are continuing to appreciate!

The average home sold for 11.5% more and the median home sold for 2.5% more than in November of 2006. Homes that were priced right continued to sell well. The 63 homes that sold within the first 30 days of the listing date were purchased for just over 99% of the listing price (% sp/lp). While the 45 homes that sold between 31 to 60 days were purchased for approximately 96.5% (% sp/lp). A note to sellers: choose an agent who will price your home right. It will save you time and money.

It's possible to speculate that the real estate market may have bottomed out in October of 2007. In the coming months we'll know. Typically home sales increase after the holidays. I expect things to pick up in the spring and summer and then cool back off next fall and winter.

This winter is a great time to buy. The real estate market is unlikely to crash in Seattle as it has in other areas of the country. The economy is good, job growth is good, and experts estimate 135,000 more people to move to Seattle in the next 5 years.

Seattle Real Estate Market Review

November 2007 turned out better than expected for the greater Queen Anne, Magnolia, Ballard, and Greenlake areas. The number of homes sold is still down by close to 1/3 as compared to November 2006, but homes are appreciating.

The average home sold for 5% more and the median home sold for 4% more than in November of 2006. Homes that were priced right continued to sell well. The 65 homes that sold within the first 30 days of the listing date were purchased for just under 100% of the listing price (% sp/lp). While the 44 homes that sold between 31 to 60 days were purchased for just over 97% (% sp/lp).

A note to sellers, choose an agent who will price your home right. It will save you time and money.

A side note I've been tracking the last few months is the fact that there is a dramatic increase in listings that have not sold but have been taken off the market (i.e. expired, cancelled, temp. taken off the market) in central and north Seattle. Comparing November of 2007 to 2006 the number of homes that have been taken off the market is up by over 100%. Many sellers who do not need to sell are either renting or staying put. If these sellers were in a different position and had to sell now the market would look much different.

The Seattle Times ran a story today looking at the King County real estate market titled "Home prices slip to '06 level." The title speaks for itself. The current market is one that has not been scene for sometime. It is a buyers market in which sellers are making concessions.

Comparing October to November of this year, October was the slower month. One may wonder if October was the bottom of the current slow down. It is hard to say, but the answer to that questions will come in the months ahead.

With the holidays upon us the market will remain soft for the rest of the year and into next year. Things should pick up in the spring and summer of 2008. This winter is a great time to buy. The real estate market is unlikely to crash in Seattle like other areas of the country. The economy is good, job growth is good, and experts estimate 135,000 more people to move to Seattle in the next 5 years.

Work For Food!

Believe it or not I've decided to “work for food” in 2008. I plan to donate a portion of my personal real estate commissions to support local food banks and soup kitchens in an effort to raise $15,000.

I got the idea after driving to my mother’s home for Thanksgiving. While stopped at a light I saw a woman with a sign that read “Anything Helps.” This is a common sight but it prompt me to act.

My normal reaction to this situation is to act as though the homeless person is not there. If I can, I block my view so I don’t make eye contact. I then sit there feeling uncomfortable waiting for the light to change wishing I knew of a way to help, other than by giving them my spare change.

I’ve been acting out this same scene for years, but I’ve decided to do something about it in 2008.

There are over 8,000 homeless people living in Seattle. I intend to support two non-profits that are close to my office in Ballard, the Ballard Food Bank and the Phinney Neighborhood Association’s (PNA) Soup Kitchen.

The Ballard Food Bank’s mission is to assist individuals and families in maintaining self-sufficiency by providing assistance for basic needs. “We distribute food, clothing and personal hygiene items. In addition, we also have a meal program that provides three hot lunches a week, and we hold mail for those with no permanent address. These services are offered to Ballard, Queen Anne and Magnolia families who are having trouble making ends meet,” says Executive Director Nancy McKinney. “The majority of our income comes from private donations.”

According to Ann Bowden, Development Director of the PNA, “Our soup kitchen serves three meals a week, two lunches and one dinner. We feed 200-250 homeless, low income, elderly and disabled people each week or more than 22,000 each year.” The PNA partners with two churches, St. John United Lutheran on Phinney Ridge and Calvary Lutheran in Ballard. Much of the food comes from Northwest Harvest and Food Lifeline. The soup kitchen requires one staff person and 5 to 6 volunteers to run and is a substantial expense to the PNA’s budget each year.

In a final gesture of goodwill, I will make the donations in the name of my clients. Even though the money will come from my personal proceeds, I’d like my clients to feel part of the giving experience.

For more information I can be contacted at 206-930-8238, info@AndrewLParker.com, or http://www.andrewlparker.com/ .

For more information on the Ballard Food Bank or the PNA visit http://www.ballardfoodbank.org/ and http://www.phinneycenter.org/ .

Are buyer's agents needed?

Buyers surfing the internet and visiting open houses occasionally find the home of their dreams on their own. When this happens are they better off to enter a contract with the seller using the Listing Agent or contacting a Buyer’s Agent?

When securing the listing the Listing Agent signs a contract with the seller and agrees to sell their home for the most money with the best terms. A Buyer’s Agent, on the other hand, agrees to represent the buyer and help them buy a home for the least money with the best terms.

Purchasing real estate is a complex and major transaction with many details to be handled. A Buyer’s Agent will help structure an appropriate offer and negotiate the terms that are in the buyer’s best interests, which is a service that is truly a good value.

Seattle Housing Market Prediction

I read the news article (see link below) and thought I’d pass it on to you. It outlines three experts’ predictions of the future housing market for Seattle WA. To summarize, Fortune Magazine predicts that home prices will fall 19.5% in the next five years, Forbes Magazine says homes prices will rise just over 3% this year, and Moody’s Economy thinks there will be a slight drop from now until next summer when home prices will start to appreciate 14% through 2012.

Who’s right? It’s hard to say. Since we really can’t predict what the market will do, the important thing to keep in mind is that it is best to move when the timing is best for you. If you intend to buy and hold your home you should do fine because historically the value of real estate has always increased.

Our housing prices have national media guessing, Seattle PI http://seattlepi.nwsource.com/local/338733_economy08.html

Super Beer XX!!! The PNA's Annual Winter Beer Taste

Join me for Super Beer XX! This is the Phinney Neighborhood Association’s annual beer taste which will be taking place on November 10th starting at 7:30 PM. I’ll be volunteering for the event, and it would be great to share some excellent brews and a good time with you. For more information go to http://www.andrewlparker.com/bestbeertaste.htm .

By the way I won’t be participating in the Ballard Art Walk in November. See you in December

Seattle Real Estate Market Review

October 2007 was a down month as expected for the greater Queen Anne, Magnolia, Ballard, and Greenlake areas. The number of homes sold dropped by close to 1/3 with the average home sold for 2% less and the median home sold for 4% less than in October of 2006.

Homes that were priced right still sold right away. The 145 homes that sold within the first 30 days of the listing date were purchased for just over 100% of the listing price (% sp/lp). While the 41 homes that sold between 31 to 60 days were purchased for just over 97% (% sp/lp). A difference of about 3%. A note to sellers, choose an agent who will price your home right. It will save you time and money.

A side point I noted in my last entry, is the fact that there is a dramatic increase in listings that have not sold but have been taken off the market (i.e. expired, cancelled, temp. taken off the market) in central and north Seattle. Comparing October of 2007 to 2006 the number of homes that have been taken off the market is up by 69%. I believe many sellers who do not need to sell are either renting or staying put. If these sellers were in a different position and had to sell now the market would look much different.

With the holidays right around the corner the market will remain soft for the rest of the year. To conclude I expect the market in 2008 to be similar to 2007. Things should pick up in the spring and summer of 2008. This winter is a great time to buy. The real estate market is unlikely to crash in Seattle like other areas of the country. The economy is good, job growth is good, and experts estimate 135,000 more people to move to Seattle in the next 5 years.

This posting was edited on November 7th due to mathematical errors.

Super Beer XX!

I'm on the Phinney Neighborhood Association (PNA) Beer Committee and it's time for the 20th annual winter beer Super Beer XX. It is on Saturday November 10th from 7:30 to 9:00 PM. Choose 10 samples to taste from over 20 Northwest micro-breweries who bring their new winter ales and other favorite beers to taste. Enjoy pub snacks provided by the PNA Beer Committee, blue grass music and a silent auction of beer paraphernalia.

Tickets are $25 for PNA members and $30 for the general public. Ticket sales are limited, so buy your tickets early.

View Confirmed Breweries List

For additional information, call (206) 783-2244 or email pna@phinneycenter.org.

Purchase Tickets Online

If you'd like to volunteer for this fun event and get free admission let me know!

TreeHouse Drop Site

I'm gathering new and gently used clothes for Treehouse a non-profit that supports foster kids at my office in Ballard. If you’ve been needing to clean out the kids closets, this is a good opportunity to donate to a great cause.

For more information about Treehouse go to http://www.treehouseforkids.org/index.htm .

To view their wish list go to http://www.treehouseforkids.org/pdf/Treehouse%20Wish%20List.pdf .

PSI Basic Seminar...Amazing!!!

I’ve just experience an amazing weekend! I spent the last four days involved with the PSI Basic seminar, and I feel it has significantly changed my life. I’ve learned many new tools to help me grow both professionally and personally and am already seeing things change in my life for the better. I have met a group of new friends who are committed to helping me grow in positive ways, I have learned to identify and change the thought processes which are counter-productive, and I have learned to take the problem-solving concept of “thinking outside of the box” to a new level.

I’m on cloud nine and looking forward to the future!!!

http://www.psiseminars.com/index.html