Inventory levels got you down? But your equity is high? A solution for competing in this market. The Windermere Bridge Loan program can help…
Homeowners across our region are enjoying very healthy equity levels due to an amazing upswing in the real estate market over the last five years. In fact, the median price in King County is up 49% over the last five years and up 51% in Snohomish County. This growth in equity has given homeowners the exciting option to sell their homes for a price that will bear a sizable down payment or the ability to “buy all-cash” on their next home. This has many people exploring their next chapters, such as moving up to a larger home or downsizing for retirement. The strong price appreciation is great news and provides many opportunities; however, we have also faced some challenges in how to make these transitions work without moving twice.
Our biggest challenge for homebuyers in the marketplace right now is inventory levels. It is also the reason so many home sellers are doing so well. Currently, King County sits at 0.9 months of inventory based on pending sales and 0.6 months in Snohomish County. Historically, buyers that are also sellers would commonly secure a new home with a home sale contingency on the sale of their current home. Meaning the seller of the new home they are buying would give them a month or so to get their current house sold in order to be able to buy theirs.
Well in this market, utilizing a home sale contingency is only rarely an option, especially on desirable homes. So, the million-dollar question is this: how does one who has gained so much equity, now itching to get that bigger house, different location, or perfect rambler for settling into retirement, make this transition without having to move twice? We need to get creative and have a strategy. The Windermere Bridge Loan program has been a powerful tool to help homebuyers transition their equity without having to sell their house first.
This is an amazing tool for homeowners that own their homes free-and-clear or have gained a large amount of equity over time. This is also a low-cost and faster alternative to a cash-out re-fi or securing a HELOC which enables one to pull the equity out of their current house prior to selling it in order to make a non-contingent offer.
The way it works is we take the market value of the house the homeowner current lives in, established by a comparative market analysis (CMA) that I complete and is approved by my Broker. We then take 75% of the CMA value and subtract any debt owed, and that is the maximum amount the homeowner can borrow for their next down payment. For example, if the market value is $700,000: 75% of $700,000 is $525,000. Say the homeowner owes a remaining $225,000 on their mortgage; the max amount they could borrow would be $525,000 – $225,000 = $300,000. If that same homeowner didn’t have a mortgage then they could borrow up to $525,000 as that is 75% of the CMA value.
This tool enables people to make transitions without having to sell their home first, attempt a home-sale-contingent offer, or go through the lengthy and expensive process of a cash-out re-fi or securing a HELOC. What makes this tool so efficient, is that it doesn’t require an appraisal (like a re-fi or HELOC does), and these can easily be turned around in 5-7 business days. This tool provides the opportunity to quickly and inexpensively pull your equity out, be competitive, and eliminates the double move.
The fees associated with this program are a 1% loan fee on the loan amount (minimum fee of $1,000), a title report, credit report, recording fees for the deed, and interest that is incurred between the loan funding and being paid off once the subject home is sold. That interest is conveniently wrapped up in the closing costs when the client closes the sale of the collateral home, eliminating the need to make monthly interest payments. Clients who use this program are also required to list the home 30 days after the loan has funded. This allows time for the client to prepare their home for sale after they have moved out. Lastly, only homes in Washington state are eligible to be the collateral property, but note this can be a tool for relocating out-of-state which we are seeing a lot of.
In a strategy that is somewhat mind-blowing, we can sometimes use these bridge loans and never have to actually fund them. For example, if we secure a property non-contingent with the bridge loan and immediately get the subject home on the market, we can often secure a sale with a simultaneous closing, and never have to fund the loan. This eliminates the loan fee, interest, and the need to carry two mortgages. All this requires is getting pre-approved for the bridge loan and preparing the home for sale prior to shopping, so one is prepared to act quickly and line up both closings.
If you are excited about equity levels and today’s low interest rates and have thought about making that move you’ve been waiting for, but have been fearful of how to do it all – We can help. These two options, along with great attention to detail, hand-holding, and careful planning have helped many people make these exciting transitions. It is our goal to help keep our clients informed and empower strong decisions. Please contact us if you would like further information on how this might work for you or someone you know.
Finding the right home to purchase today is one of the biggest challenges for potential buyers. With so few homes for sale and construction of newly built homes ramping up, you may be wondering if you should consider new construction in your search process. It’s a great question to ask, and one to look at from the pros and cons of what it means to buy a new home versus an existing one. Here are a few things to consider when making the best decision for your family.
When buying a new home, you can often choose more energy-efficient options. New appliances, new windows, a new roof, etc. These can all help lower your energy costs, which can add up to significant savings over time. With programs like ENERGY STAR, your home also helps protect the environment and reduces your carbon footprint.
Lower maintenance that comes with a newer home is another great benefit. When you have a new home, you likely won’t have as many little repairs to tackle, like leaky faucets, shutters to paint, and other odd jobs around the house. With new construction, you’ll also have warranty options that may cover portions of your investment for the first few years.
Another solid benefit to new construction is customization. Do you want a mudroom, stainless steel appliances, granite countertops, hardwood floors, an office, or a multipurpose room to homeschool your children? These items can be customized to your specific needs during the design phase. With an existing home, you’re buying something that’s already completed, so if you want to make changes, you may need to hire a contractor to help get your home ready for your family.
When buying an existing home, you can negotiate with the current homeowner on price, which is something you generally don’t get to do with a builder. Builders know their material and construction costs, and they have a price set for the model you’re buying. So, if you want to negotiate, then maybe an existing home will be best.
For many families, having an established neighborhood is also important. Some buyers like to know the neighbors, if it’s family-friendly, and traffic patterns before making a commitment. When you buy new construction, you won’t have a full view of some of those details until the lots around you are sold.
Finally, timing comes into play. With an existing home, you can move in based on the timeline you agree to with the sellers. With new construction, you need to wait for the house to be built. Depending on the time of the year you’re buying and the region you’re in, the weather can also be a factor in the timeframe. This is something really important to keep in mind, especially if you need to move sooner rather than later. Over the past few months with COVID-19 and social distancing regulations, some areas for new construction have been delayed.
Whether you want to buy a newly built home or one that’s already established, both are great options. They each have their pros and cons, and every family will have different circumstances driving their decision. If you have questions and want to know more about the options in your area, contact us so you can feel confident making a decision about your next home.
KCM Real Estate Blog
Today, Americans are moving for a variety of different reasons. The current health crisis has truly re-shaped our lifestyles and our needs. Spending extra time where we currently live is enabling many families to re-evaluate what homeownership means and what they find most important in a home.
According to Zillow:
“In 2020, homes went from the place people returned to after work, school, hitting the gym or vacationing, to the place where families do all of the above. For those who now spend the majority of their hours at home, there’s a growing wish list of what they’d change about their homes, if possible.”
With a new perspective on homeownership, here are some of the top reasons people are reconsidering where they live and making moves this year.
1. Working from Home
Remote work is becoming the new norm in 2020, and it’s continuing on longer than most initially expected. Many in the workforce today are discovering they don’t need to live close to the office anymore, and they can get more for their money if they move a little further outside the city limits. Lawrence Yun, Chief Economist for the National Association of Realtors (NAR) notes:
“With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.”
If you’ve tried to convert your guest room or your dining room into a home office with minimal success, it may be time to find a larger home. The reality is, your current house may not be optimally designed for this kind of space, making remote work and continued productivity very challenging.
2. Virtual Schooling
With school about to restart this fall, many districts are beginning the new academic year online. Education Week is tracking the reopening plans of schools across the country, and as of August 21, 21 of the 25 largest school districts are choosing remote learning as their back-to-school instructional model, affecting over 4.5 million students.
With a need for a dedicated learning space, it may be time to find a larger home to provide your children with the same kind of quiet room to focus on their schoolwork, just like you likely need for your office work.
3. A Home Gym
Staying healthy and active is a top priority for many Americans. With various levels of concern around the safety of returning to health clubs across the country, dreams of space for a home gym are growing stronger. The Home Builders Association of Greater New Orleans explains:
“For many in quarantine, a significant decrease in activity is more than a vanity issue – it’s a mental health issue.”
Having room to maintain a healthy lifestyle at home – mentally and physically – may prompt you to consider a new place to live that includes space for at-home workouts.
4. Outdoor Space
Especially for those living in an apartment or a small townhouse, this is a new priority for many as well. Zillow also notes the benefits of being able to use yard space throughout the year:
“People want more space in their next home, and one way to get it is by turning part of the backyard into a functional room, ‘an outdoor space for play as well as entertaining or cooking.’”
You may, however, not have the extra square footage today to have these designated areas – indoor or out.
Moving May Be Your Best Option
If you’re clamoring for extra space to accommodate your family’s changing needs, making a move may be your best bet, especially while you can take advantage of today’s low mortgage rates. Low rates are making homes more affordable than they have been in years. According to Black Knight:
“Buying power for those shopping for a home is up 10% year over year, with home buyers able to afford nearly $32,000 more home than they could have 1 year ago while keeping their monthly payment the same.”
It’s a great time to get more home for your money, just when you need the extra space.
People are moving for a variety of different reasons today, and many families’ needs have changed throughout the year. If you’ve been trying to decide if now is the time to buy a new home, reach out to a local real estate professional to discuss your needs.
Keeping Current Matters
Here we are again, with a new school year right around the corner. We all know that this year won’t be anything like what we’re used to, or what we hoped for… those fresh supplies, cute outfits, and all the “first day of school” pictures spamming our Facebook feed. Your family might be mourning what should have been, or you might be stressed just thinking about how you’re ever going to manage it all. Regardless of the initial opening decision your school has made, or what you have decided is best for your family, there is a lot of uncertainty ahead of us this fall and winter.
Below are a collection of tips and strategies I’ve put together for making the most (or maybe just surviving) this coming school year. It won’t look like a “normal” fall, but maybe we can still make it a good one.
1. Plan a daily routine
Take the time before the year begins to plan out a daily schedule and family routine. It is tempting to let everyone sleep in as much as possible and log into their Zoom sessions from bed, but it won’t be the best scenario for truly learning or engaging. Having structure and goals to work towards will set up your students for success and give them a sense of security and predictability.
- Verify Materials
Make sure you have everything your kids will need to be successful. Your supply list this year might be fewer pens and markers and folders, and more along the lines of a PDF reader, note-taking apps, noise-canceling headphones, a stable WiFi connection, and pertinent account log-in information.
You might also think about purchasing some of those fresh, fun supplies, even if you won’t really need them. Maintaining a sense of normalcy will be important for everyone’s sanity. Some fun or pretty things for the kids to start the year with might go a long way for keeping their spirits up.
- Create a Learning Environment
Everyone knows the learning environment is important. A space too isolated could create opportunity to slack off. Sitting at the kitchen table might prove to be too distracting. Really think about what each person’s needs are and be prepared to move or switch things around if you find something isn’t working well.
When creating everyone’s work space, think about distractions, comfort, and access to power. Try to eliminate distractions as much as possible. Background noise or music can help with concentration. Help your child create a playlist of soothing music, or try an app like this one for productivity and focus.
- Plan Each Day
This is not the same as your family routine or school schedule. Help your student to make a plan for each day by taking a few minutes every morning to look at their schedule and assignments, and create a specific plan for that specific day. This will be especially helpful for older kids who might have lots of projects to juggle and independent work that can easily lead to feeling overwhelmed.
- Center the Child, Not the Work
This may not be for every household, as it’s definitely more of a parenting philosophy. Some families may find it much more important during this uncertain time to prioritize working hard, rather than getting good grades. If nothing else, keep in mind that we are in unprecedented times, and everyone deserves some grace as we move through this. Our children included.
- Encourage a Growth Mindset
A growth mindset doesn’t put the focus on what they’re learning in school, but rather how to think about what they’re learning. Developing a growth mindset will help your student reframe how they approach challenges in every aspect of their life. Kids with a growth mindset believe that their abilities, intelligence, and performance can improve over time. It’s the subtle difference between “I can’t do this homework. I don’t understand science.” and “I can’t do this homework yet. I don’t understand how to make sense of this problem.” Students with growth mindset see mistakes as ways to learn and will persist in the face of setbacks. We all need more of this, pandemic or not.
- Mask Prep
Even if your school is 100% remote learning for the beginning of the year, we should be preparing our kids now for the possibility of a hybrid learning model that will hopefully come later in the school year. Most of us are familiar by now with wearing masks to the grocery store or in the park, but those situations are not the same as wearing a mask for 7 hours straight during a school day. Start preparing your student now for extended mask wearing.
- Make sure you have several masks that properly fit your child.
- Practice is key. Don’t expect perfection at first, especially with younger kids. Just know that the more they wear masks, the more comfortable they will feel. Practicing at home gives them a safe space to take it off when they need a break.
- Build endurance. Start small, the way you would with any new habit. Have them wear the mask for small increments of time, and gradually build up.
- Make it fun. Do fun activities while they have it on. Let them pick out the colors or the fabric, or buy plain ones along with fabric paint and let them design their own. Disposable masks can be personalized with stickers around the edges. Help them enjoy wearing the mask by letting it reflect their personality.
- Explain the “why”. Children need to know why they have to wear the mask. Talk to them about germs and how the mask helps to prevent spreading sickness. Have lots of conversations with your teens and middle-school kids so they are armed with facts and information in case they experience peer pressure to stop wearing it.
- Model what you want your kids to imitate. When you are asking your child to wear a mask, you should wear it along with them, even around the home when they are practicing.
- Exercise Daily
This might get difficult when the winter weather sets in, but it is so important that we are all exercising every day. Even just a 30 minute walk does wonders for our bodies and our minds. Physical activity will make your student feel better, function better, learn better, and sleep better. It will reduce anxiety and improve overall health. Make this one a priority!
If you’re looking for somewhere to donate your household items and clothes, there are a lot more options than just Goodwill.
For many of us, all the extra time at home this year has sparked bouts of de-cluttering and purging. Whether you have already cleaned out your linen closet, or you’re still planning to tackle the garage, an important key in this process is what to do with all the stuff.
Most thrift stores in King & Snohomish counties are open under Phase 2 right now, but many of the more well-known spots have restrictions on what they will take, and when they are accepting donations. If you’ve made your way through a donation line at Goodwill, you probably know that they are not currently accepting any furniture. But did you know that many of the smaller, independent shops are taking large pieces?
Do a Google search for “thrift stores near me”, and call the smaller ones to see what their donation acceptance policies are during COVID. Or use this great national directory where you can put in your zip code and find lots of nearby shops.
Below are a few Puget Sound organizations where your gently used household donations support important causes like homelessness and youth mentoring. Make sure to check their website or call for their current COVID policies.
-Habitat for Humanity https://www.habitatskc.org/store/
-Big Brothers Big Sisters Puget Sound https://inspirebig.org/donate/donate-used-clothing/
-See if there is a women’s shelter near you that is in need of household items or clothes https://www.womenshelters.org/
-St Vincent de Paul Seattle https://svdpseattle.org/give-today/homegoods/
-Northwest Center https://www.nwcenter.org/donate.html
-Value Village https://www.valuevillage.com/donate
-Salvation Army https://salvationarmy.org/
Giving is a good thing!
Phase 2 Snohomish County – Now What? Our office re-opened on June 15th, and we’ve been allowed to expand our activities to serve our clients in the safest way possible. We can now show homes to three people at a time instead of two! Yay! Contact us for all the details…the change is good!
For those seeking a useful way to spend their time during social distancing—or anyone simply interested in forging a deeper connection with their homes—HB has launched Home Love, a series of daily tips and ideas to make every minute indoors more productive (and gratifying!).
Summer is on its way and warmer temperatures have us running outside to enjoy any space we have. Whether you’re working with a fire escape patio or a wide open backyard, we’ve rounded up plenty of ways to work with what you have. Read on—the perfect outdoor activity awaits.
Those with less space can opt for an outdoor version of the boho swing chair, for a space-saving version of the vacation staple.
We’re all doing our part to save the bees, planting flowers and plants that will help attract and boost the population, but for those ready to take the next step and foster a hive, beekeeping isn’t as hard as it looks.
Beekeeping isn’t just for the honey, either. Owning bees can help give a boost to your garden, provide propolis, wax and other by-products for health and home, and serve as a science lesson during homeschooling.
Whether you’ve been sucked into the tie-dye trend or are looking for a classic shibori, hand dyeing slipcovers, curtains, or napkins can is a fun way to customize your home goods and enjoy outdoor space. All you need are a few buckets, a clothesline, and good idea.
4. Keep Free Range Chicken
As urban food deserts spread, people are turning to their backyards and roofs to host their own mini-poultry farm. The low cost of chicks and the high cost of eggs might be attractive to first time chicken farmers, but they are still animals. Just like our pets, chickens need proper care to stay healthy.
Curious on where to start? Find our favorite chicken coops here.
Maximize your time outdoors by planning nighttime activities, especially for hot summer days. A big sheet, a picnic blanket and some popcorn can give you the summer screening experience we’re all missing without leaving your yard.
Need some help with your outdoor theater? Find our guide to backyard screening here.
Create a backyard summer camp with tents, blankets, and nature lessons for kids. If you have outdoor space to spare, fire pits are perfect for s’mores or even tin cookware for those missing mountain days. Our favorites blend in with outdoor decor for a stylish look when out of use. Shop fire pits here.
Sound baths are the space-saving way to get zen at home and create a spa-like space. Forest baths, based on the Japanese shinrin-yoku, invite people to absorb the sights, sounds and smells of nature as a way to re-connect and center themselves.
The best part? You don’t need to go on a hike to experience it. Sound baths are best when the body is still, so lay a blanket in the backyard and let your mind wander.
Urban sounds interrupting your introspection? Our guide to sound bathing and home spas gives tips on how to enjoy no matter your location. Read it here.
8. Make Clay Pottery
When it’s too hot to turn the oven on, substitute kiln or polymer-based clays with sun or air-drying clay mixtures. These can be shaped and left to dry in the outdoors and can look just as beautiful as the traditional version.
Just paint with a clear or tinted sealant to prevent water leakage if your end result is a vase. And reminder: some self-hardening clays are not food-safe.
Extra square-footage in your yard? A fresh coat of paint and upgraded lighting can upgrade a tool shed into a she-shed or a home office space.
If you have the space, but not the structure, Amazon can ship you a DIY tiny home kit. Ranging from storage sheds to guest homes, the kits come with everything you’ll need to build an at-home escape. Shop our picks here.
Now that all that hard gardening work is paying off, it’s time to bring the celebration full circle. Cook a meal with fresh herbs and vegetables, setting the table with a wildflower arrangement. Change up the table setting to match your cuisine to give the feel of your favorite summer brunch spot.
Hosting a virtual picnic can be a great way to upgrade your zoom happy hour and have everyone asking how you pulled together your backyard. Get your patio inspiration here.
11. Create a DIY Swim Park
Whether it’s for kids to build a championship-worthy sand castle or just to function as a zen garden feature, sand pits are the versatile lawn item the backyard is missing. Easily covered and hidden, sand pits are cheap and easy to assemble for hours of playtime or just giving you the feeling of a beach vacation without leaving your home.
Far beyond your dad’s grill, portable kitchen gadgets are coming in all types, making al fresco cooking and dining so much easier. Maybe your grill is due for a modern upgrade, or picnic ready pizza ovens are more your style. Either way, you won’t need a contractor or a culinary degree to navigate your outdoor kitchen.
Have old pieces laying in your garage? Maybe your entry table is begging for a trendy navy blue chalk paint. Now that we are using our masks for medical reasons, home improvement projects are better done outside, in fresh air, and by hand. No power sanders, spray paints or compressed air sprayers allowed.
It’s a good thing we can still refinish, repurpose, and repair our favorite pieces with that change of seasons.
The pressure the COVID-19 global pandemic is putting on the economy is a reality. As real estate brokers, we take great pride in having the honor of being your trusted advisor when it comes to your investment in the housing market and protecting the value of your home. We have been asked several times, “Is this the Great Recession all over again?”
At Windermere, we have continued to rely on the expertise of Matthew Gardner, Windermere’s Chief Economist. This is a chart he shared from Black Knight Financial comparing the housing market as we headed into this global health crisis versus the start of the Great Recession in 2007. Matthew predicted the Great Recession and does not shy away from heeding the truth, even if it is not great news. We trust him and I hope you do too.
Some key points of note:
With the share of homeowners having less than 10% equity being materially lower in 2020, in the event of an economic contraction, the likelihood of owners owing more on their homes than they are worth is significantly less, which allows more owners to use their equity to get through challenging times if needed and keep their homes.
Average Current Loan to Value (LTV) is also lower—we owe less on our mortgage balances reducing the amount of leverage.
Average Debt to Income (DTI) at origination is similar, but prior to the Great Recession, many borrowers’ incomes were not vetted thoroughly prior to loan approval which created false qualificiation—remember hearing “stated income loans” then?
Average Current Credit Scores are now significantly higher. Coming into 2020, borrowers were in such a good position, the Mortgage Delinquency Rate of 3.3% was the lowest on record.
Payment to Income Ratio is the % of income needed to service a mortgage. Despite home prices climbing faster than incomes, the lower amount for 2020 is primarily a function of lower interest rates which the majority are fixed.
The last 4 data sets typify the primary reason we saw the housing market bubble burst in 2007. When rates reset on Adjustable Rate Mortgages (ARMs), homeowners were crippled with massive monthly payment increases. Now, as the Federal Reserve has lowered rates, many homeowners with ARMs will likely see their rates drop and the amount of ARMs are down by 75%.
Bottom line, we are heading into this economic challenge with a much more formidable foundation based on more stringent lending practices, higher equity levels, and we are anticipating a shorter 1-2 year V-shaped recovery, compared to the long U-shaped recovery of the 5-year Great Recession. In fact, we have seen pending sales rise over the last three consecutive weeks, some even with multiple offers.
Every neighborhood and every price-point has its own story. Please reach out with any questions or concerns. It is our goal to help keep you informed and empower strong decisions.
To access Matthew Gardner’s explanation via video please access: https://www.windermere.com/blogs/windermere/authors/matthew-gardner-chief-economist-windermere-real-estate/posts/matthew-gardner-weekly-covid-19-housing-economic-update-4-27-2020
It is easy to get overwhelmed by all the things you’d like to get done around your house during the Stay at Home orders. Use this simple checklist to help “chunk it down” room by room. Celebrate your accomplishments one room at-a-time and before you know it, you’ve made amazing progress.