By Polly Keary, Editor
For the first time since the Great Recession hit Snohomish County in 2008, home prices are starting to rise.
Interest rates are, too.
That makes it a good time to sell, and also means that if you are buying, buy now before costs rise even further. And if you are staying in your home, there are still some refinancing options that can help you get out from under the fallout of the recession.
Here is what you need to know about the new housing market, whether you are buying, selling, or staying in the home you own.
For the last several years, it has been a buyer’s market, with homes languishing on the market for weeks or months and sellers eager to consider offers.
But that’s changed, said Kimberley Lynn, a loan officer at Republic Mortgage in Monroe.
“Prices are going up and inventory is very low,” she said. “You’ll have a house go on the market at 7 a.m. and by 5 p.m there are multiple offers. Between April 1 and 15, all of a sudden, I don’t know what clicked, but people said, ‘I have to do this right now,’ and bam, overnight, a seller would make a price reduction and they’d get five offers the next day.”
According to realtor Teresa Willard, 84 homes have sold in Monroe in the last 90 days, with 64 percent of them selling in less than a month. Twenty-seven of those homes sold in 10 days or less.
As demand goes up, so do prices.
As prices rise, so do interest rates. People have gotten somewhat spoiled in recent years, Lynn reflected.
“In 1997, 1998, we had 7 percent interest and getting it down to six was so amazing,” she said. “Now people expect 3.7 percent, 3.5 percent, and we are moving closer to 4 percent.”
That all means that, if you are thinking of buying, now is the time to act.
“People should be getting the financing right now,” said Lynn. “Sometimes there’s things on their credit report or job history and it takes a month or two to fix, and then the house they love is gone.”
And lower-cost housing is getting snapped up fast, she added.
“People who aren’t going out and getting approved for the house they love, they are pricing themselves out of the market,” she said. “The inventory under $200,000 is almost wiped out right now.”
It doesn’t take a stratospheric credit score to buy, but for the majority of lenders, a score of 640 is needed, with some lenders going as low as 620.
It’s still possible to get a zero-down loan through a USDA program, and there is down payment assistance for families earning less than $92,000 per year, but it’s wisest to at least be ready to put 5 percent down, said Lynn.
“I think people need to start going back to planning ahead and saving for the down payment. I can’t tell you how hard it is to go buy a house and have no cash reserves afterwards,” she said. “I want my clients to enjoy buying the house, and having nothing left after closing, that’s stressful. I suggest saving for four to six months. Then they feel invested in what they’ve done.”
Then, she said, find a qualified loan officer and get preapproved, as preapproval is required to even make an offer on a home, she said.
It’s a great time to sell a house, Lynn said, especially for people who lost equity during the recession, or even those who wound up owing more on their homes than they were worth.
“Now that prices are going up, people can get out from underneath some of those mortgages and out from under their houses, and hopefully they can sell now without it being a short sale,” she said.
It’s a good idea to avoid a short sale, she added.
“A lot of people don’t realize the negative effects of a short sale,” she said. “They think it’s better than a foreclosure, but short sales are looked at by lenders as a foreclosure, just about. It’s three to four years before they can buy again.”
If you want to sell, make sure you have a qualified agent, she cautioned.
“Make sure that the realtor is knowledgeable and working full time, and that they work for a company with a good reputation, that they can get the job done,” she said. “Sometimes people think realtors just open the door to the house and help people sign papers, but listers need to know how to set prices, and have to be available just about 24/7 to show houses.”
For people who don’t plan to leave their homes, the new market can still offer some advantages.
“Some people are not refinancing when they should or could,” Lynn said. “There are still programs for people who are underwater. They came out with a program in 2009 to help people refinance Fannie Mae or Freddie Mac loans, but there are a ton of people who don’t know they can get that. It might save them $100 or $200 a month, and that could be groceries or gas money.”