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Before deciding to buy a home, keep in mind these facts

Abbee, left, Joe and Patience Thompson stand outside their Ferndale home, on June 22, 2010.
Abbee, left, Joe and Patience Thompson stand outside their Ferndale home, on June 22, 2010. THE BELLINGHAM HERALD

With former Air Force senior airman Joe Thompson enlisting in the National Guard, balancing work schedules and taking nursing classes, a big yard and family nearby played a larger role in his family's home purchase than a tiny Federal Funds Rate.

"The biggest thing, with a 16-month-old, was that we saw we could plan on being here for a while," says Thompson, who moved with wife Patience and daughter Abbee from a Bellingham rental to a Ferndale home this past April after a three-month search.

For their neighbors, the opposite could be true. Or it could change tomorrow.

With record-low interest rates battling record bank blunders for headlines, many potential buyers question if now is the right, or wrong, time to purchase a home. The answer depends on your situation - and on how recent market changes affect you.

Here are five trends to consider before making the leap.

A BUMMER SUMMER COULD ENTICE BUYERS

A tax credit for first-time and other homebuyers helped the housing market perk up before the credit's April 30 deadline for sales under contract. But analysts worry its absence may erase the traditional summer "bump" in sales activity.

Already, this past May, U.S. new-home sales fell by 32.7 percent from April - the deepest decrease on record with the U.S. Commerce Department. Existing -home sales also decreased 2.2 percent nationwide between this past April and May, according to the National Association of Realtors.

Fewer sales often mean dropped asking prices. And with interest rates for 30-year-fixed mortgages hitting an all-time low of 4.69 percent in late June, bargains may exist for remaining buyers, says Keith Cook, managing broker at RE/MAX Whatcom County.

"There are going to be a lot of good deals," he says, "and a lot of things are going to be selling at below what they were a few years ago."

Finding those deals, however, is another story. The tax credit primarily drew in first-time buyers seeking properties at a lower price point - which shrunk the local inventory of houses priced at less than $300,000 and moved that sector "slightly into a seller's market," says Gragg Miller, president of Bellingham's Coldwell Banker Miller-Arnason. Meanwhile, high-end properties remained stable.

This has left a "dead zone" in the $500,000-to-$700,000 price range, says Susan Templeton, mortgage planner at Bellingham's Loannetter.

"People see the $500,000 cutoff and are getting underneath that," she says.

OUTLYING AREAS MAY GET PRICIER, EH?

Between this past January and May, closed sales increased 64.5 percent in Blaine, 55.9 percent in Lynden and 31.4 percent in Ferndale - compared to Bellingham's 9.4 percent growth, according to the Northwest Regional Multiple Listing Service.

"[Buyers are] going there to take advantage of lower prices," says Miller. And in fact, the median sales prices for Ferndale and Lynden still were less than Bellingham's for the year's first five months.

But in the same period, Bellingham's median sales price is more than 10-percent less than in 2009, while Ferndale's has fallen by only 2.4 percent and Birch Bay's and Lynden's have grown considerably.

In other words, the buyer base for outlying cities is changing. And that's because of a distinctly northern influence

"Birch Bay sales activity is almost all Canadians," says Mike Kent, broker at Windermere Real Estate and host of "Radio Real Estate" on KGMI 790 AM. "Most are second-home or purely investment-buyers. But there are people who can't afford a house in Vancouver, (B.C.) but who want to own in the U.S. so they can own something somewhere."

A weak dollar, the potential sales-tax change for Canadians, and the start of a large bridge project near Vancouver also could draw more demand - and higher price tags - in northern Whatcom County, Kent says.

REAL ESTATE AGENTS' ROLES HAVE CHANGED

You've scoped Redfin for a bargain, cross-referenced the price on Zillow, noted the curb appeal with Google Street View and checked out the county assessor's site for any red flags. Got the real estate agent beat?

Not quite.

"We know that buyers are more educated now and use our Web sites 30 to 50 times before coming in," says Ben Kinney of Keller Williams Realty, Bellingham. "They don't have to drive around with me to look at 30 properties they're not interested in. Now, they say, 'These are the properties you are showing me today.' They're not wasting their time."

But separating the wheat from the chaff in an online-listing search can be easier said than done. For Rachel Carter and her husband, Thomas, their real estate agent's ability to spot a property listed $50,000 out of their price range - but long unsold - capped their three-year home search with a new house in Bellingham's Birchwood neighborhood.

"The biggest lesson for us was not to limit our search by list price, I think," she says. "Because if it were not for our Realtor, we would not have found this house."

Sellers' agents have noticed, too. According to Coldwell Banker Miller-Arnason, sellers received 92.2 percent of their list price in the first five months of the year, up from 90.6 percent in the same period in 2009. Five years ago, Miller says, it was common to expect bids at 10 percent more than list price.

FORECLOSURES AND SHORT SALES RULE

"Distressed" properties - or those in which homeowners have or will soon default on their loan - comprised about 26 percent of all Bellingham sales this past April. That's less than April's national average of 33 percent, according to the National Association of Realtors, but still a one-in-four chance you'll encounter them. The key is knowing the difference between their three common types: foreclosures, real estate owned properties (REOs) and short sales.

Foreclosure sales occur when a lender or lien-holder sells a property via auction to offset the borrower's debt. If the foreclosed-upon property goes unsold, it becomes the bank's property - or an REO. Beware that REO properties are often sold as-is - and they could be vacant for a while.

Short sales, on the other hand, occur when homeowners owe more than their home is worth. In lieu of foreclosure, the bank decides that the best way to recoup some of its investment is via selling the home ASAP.

Priced to sell, short sales can be deals. And ordeals: It can take anywhere from 60 days to nine months to receive even a response to your offer to the bank, Kent says

"And just because you have an offer doesn't mean a bank has to accept the price," Kinney says. "They can wait 128 days to say they're not interested."

Even if the price is right, a short sale may not be prudent for buyers looking to move quickly.

FINANCING IS TIGHT - BUT NOT IMPOSSIBLE

Besieged by losses in recent years, mortgage lenders are more conservative about what they lend and to whom. But they're a bit more liberal on paperwork.

It's common for lenders to seek buyers' documentation of income, assets - even a street-name change. Inherited money from an estate? Have the death certificate handy.

"I think people feel invaded by how much they have to come to table with," Templeton says.

Having your paperwork in order ahead of time can be a game-changer, she says. Each new document request adds time to the loan process.

And if 20 percent of the home's asking price is a bit too much to ask for a downpayment, well, understand you're not alone.

In the first quarter of this year, 19.76 percent of all home purchases - including 30.76 percent of new-home buys - had Federal Housing Administration (FHA)-insured financing, up from 4.08 percent five years ago. FHA loans allow for downpayments as low as 3.5 percent for eligible borrowers.

No-downpayment government-insured loans also exist. For rural borrowers, including those in most of northern Whatcom County, U.S Department of Agriculture financing is designed to foster homeownership. And for veterans such as Joe Thompson, the U.S. Department of Veterans Affairs (VA) loan program aids military families. VA often take about 45 days to close.

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