More Waiting For True Jumbo Relief Required…..

Further exasperating the jumbo loan picture is the idea that Wall Street is going to segregate the new Fannie Mae and Freddie Mac loans that exceed the former conforming limits. This is going to limit the interest rate relief originally sought by the increased conforming loan limit initiative. Read this article from the Associated Press.

Fed Help Not Really Enough For King County….

 Daniel Billett of Response Mortgage in Seattle plans to refinance as soon as the new loan limits are confirmed.

The Saturday Seattle Times featured a cover story by Katie Hafner of the New York Times concerning the Federal stimulus packagerecently signed into law. (For some reason, the Seattle Time’s on-line version is not available, so this link takes you to the NY Times site.) While the story reveals that the new maximum limits for “conforming” loans may be as high as $729,950, it also explains that the limits are set in accordance with regional median sales prices. That means that our new local conforming loan limit will be about $544,000. It will help, but not nearly enough for the many homeowners sitting on 3 to 7 year adjustable rate mortgages in excess of $600,000. And there are a lot of them. The King County market needed a boost in the conforming limit to at least $650,000 on order to avert a looming meltdown in what I call the “upper tween-er market”: homeowners that earn enough to support properties valued from $700,000 to $1M, but are not liquid enough to reduce i.e., pay down their respective loan amounts to get under the conforming limit and refinance before their current jumbo ARM resets or expires.

Builders face a similar problem. With finished building lots coming on line at between $225,000 and $350,000 each, builders generally need to build finished homes worth between $750,000 and $950,000. The new conforming loan limit of $544,000, by itself, is not going to be sufficient to finance this type of product.

Since it has taken sine June of ‘06 to get this much help from the Feds, waiting for additional, or increased, assistance isn’t going to be practical for many homeowners and builders. I think it is more likely that the higher jumbo loan (non-conforming) rates will have to be endured for the foreseeable future. With those rates exceeding conforming rates by 1-2%, and fewer buyers willing to pay those rates, there will be downward pressure on prices of properties in the upper tween-er market.

(Note: I refer to this price range as the tween-er market because owners and buyers in the market above $1.2M generally have enough liquidity that they are comparatively immune to interest rate variances on this scale.)

Where is the Economy Headed?

Ben Bernanke looked about as comfortable as Roger Clemens at a Congressional hearing on the economy yesterday. In case he didn’t know, all the help the Feds are talking about is HAPPENING TOO SLOW! The credit crisis is actually a crisis when banks won’t lend to banks, never mind to you and me. The credit crunch is real!

Be very careful with your credit and assets. Stories abound of home equity credit lines being cut off, or called in, because of minor credit score variances. All credit sources are monitoring credit score movement with a very sharp eye seeking to pinpoint any problem borrowers before they get into trouble. Unfortunately, the net is cast farther and wider than necessary, and many unsuspecting borrowers are getting cut off at the knees when they least expect it.

Redmond Ridge East: Here It Comes…..

Nice coverage by the Seattle Time’s Ashley Bach on Redmond Ridge East, the final phase of the master planned community East of Redmond. Redmond Ridge, with the development of a nice, user friendly commercial core of businesses and services, coupled with the Trilogy Golf Course, is a great place to live. Murray Franklyn agreed to purchase this final phase from Quadrant Corp some time ago, but just closed on the deal last Fall as Quadrant worked through the development approval processes (see below). It is projected that new homes will be priced from the high $600’s to $1M+.

This Guy Is Smart, But I Could Have Saved Him The Time………;->

Having built a home in unincorporated King County a few years ago, I was introduced to the quagmire known as the building permit process at the King County Department of Development and Environmental Services ["DDES"]. The fees, the time, the various departments and their processes, was enough to ensure that I would not try it again.

Having worked with several small volume builders through the 1990’s, I witnessed first hand the frustrations these people were put through by DDES. However, I generally thought the builders were exaggerating. Not so. It’s worse.

Last Friday’s Seattle Times featured an article by the fellow above, Theo Eicher. Theo did his homework, there’s no doubt about that. His in depth study of the regulatory costs associated with home building in our region revealed what I learned the hard way: it’s expensive!

For years folks have asked me why houses are so expensive in King County and surrounding areas. My pat answer was, “the land supply is artificially constricted by land use regulations”. I guess I was right all along. But I didn’t know to what degree. That is what Mr. Eicher has managed to accomplish with his analysis. He, and his work, are to be admired for the impartiality with which it is conveyed. This is very good reading if you want to know why homes cost more in our region.

Gutters Revisited Before Spring Rains

Maybe you cleaned your gutters in the Fall, but now is good time to check for plugged downspouts and all downspout connections before the Spring rains arrive. A client recently reported that their crawlspace filled with water during the last heavy rain. Worse than the hassle of renting a pump to clear the crawl space was the water that the furnace ingested, causing it to break down. It doesn’t take more than one or 2 failed downspout connections to inflict misery and expense during a heavy rain. Take the time to make certain that all water is going where it is supposed to and you will save yourself considerable expense.

I have trouble justifying the expense of the systems that claim “you’ll never have to clean your gutters again”. Having observed some of these systems over time, I am not impressed. While some may work with large leaves and debris, they are ineffective and susceptible to plugging with pine needles. The same holds true for homes under large cedar trees. Perhaps your experience has been different. If you think your $5,000 investment has worked well, tell us about it. In the meantime, if you would like help cleaning and/or restoring or replacing your gutter system, we highly recommend Integrity Gutters, LLC. Wayne Whitney has been in business forever, and is an expert at evaluating existing gutter systems and making astute, cost effective recommendations and repairs. You gotta love a guy that wants to do the right thing and not just try to sell you something you don’t really need.

Integrity Gutters, LLC

Wayne Whitney, Owner

integritygutters7777@comcast.net

(206) 354-9406

When and How to Transplant Trees

If you have trees that should be moved because they are either getting too large for their location or too close to your house, now is the time to start planning that move. It should happen within the next two months according to a paper from Washington State University.

We have about a dozen trees that need to be moved this year, or they’ll get too large to move at all.

Watch For Miscellaneous Fees i.e., Check Your HUD Statement

I mentioned in a previous post that home buyers/borrowers will need to be on their toes as lenders will be trying to maximize profits from each transaction, at least in the foreseeable short term. The only way to know what you are being charged is by carefully reviewing your HUD ["Housing and Urban Development"] statement that you receive from your escrow agent. Sometimes, questionable fees may appear. Don’t be cowed by an “Administrative Fee” when you are already paying a “Loan Origination Fee”. Ask about the validity of a “courier fee” if you suspect that all of the documents were faxed.

Ken Harney’s article in the Sunday Seattle Times is about this very subject. Surprising to me was the mention of add-on type fees by real estate companies. I have never heard of such a thing locally, but I admit that I am not familiar with the compensation arrangements for anything but traditional full service brokerages.

We make it a policy to attend every closing in person in order to review the HUD statement with our clients. If we are unable to attend in person due to a schedule conflict, we will arrange to obtain a copy of the HUD from the escrow agent prior to closing so that we can at least review it with our client over the phone before they sign closing documents.

There have been many times that we have recommended refuting some fee that was not anticipated. It is rarely a lot of money, but that is not the point. The point is that every borrower receives a GFE ["Good Faith Estimate"] from their lender in advance of closing. If there are to be any variations between a GFE and HUD, they should be thoroughly disclosed and discussed with the borrower well in advance of signing closing documents. Items (costs) that pop up a day or two prior to closing should never be accepted without a complete explanation. Statements such as “these are standard fees” or “this is the way we always do it” will not suffice if the charge was not on your GFE.

My Favorite Yard Tool

Although this was an entry in a Monday Morning Coffee email last fall, I’ve had requests to publish this information here to make it readily accessible for those of you that wish to pass it on.

Those of you that know me are aware that I love tools, all tools. But one of my indispensable favorites is my Echo PB 603 Backpack Blower ($389). Like most folks I thought something like this would be overkill, so initially I purchased a small hand held unit for about $200. It seemed fine, except that after about an hour of use my wrist and elbow were pretty tired trying to keep it aimed where I wanted the leaves to go. I didn’t think I was making much progress getting the job done, at least not much faster than I could manage with a standard lawn rake. Disappointed, I returned it to Home Depot. Later that weekend I stopped in at McLendon’s Hardware in Woodinville. There I received an education about blowers, and manufacturers. I walked out with my Echo backpack, knowing Diana was NOT going to be happy about this frivolous expenditure on yet another tool.

Aside from the $400 investment this tool has been pretty incredible. I have used it relentlessly for 4 years to clean up not only our own yard, which is sizable, but also those of our clients when the situation calls for it. It has saved countless hours of backbreaking work and frustration. Our lawn, gardens, driveway, and even trails through the woods around our home are easily maintained with the power of a backpack. It’s almost enjoyable.

Pictured above is the Echo PB-620 which I believe is the updated version of the one I have. Mine starts easier than any 2-cycle tool that I own, except for my Echo String trimmer. It seems Echo has ease-of-starting down to a science compared to the Stihl and Honda tools that I own.

So if Fall/Winter leaves are killing your lawn and staining your driveway, get one of these and you will have one less headache to deal with. You’ll end up cleaning the street in front of your house, possibly your neighbor’s! yard as well. ALSO, be sure and get a quality set of protective ear covers.

TREX Decking: It’s Not Working

TREX decking took the industry by storm over 15 years ago. But now, as we see more and more homes with TREX decks that are over ten years old, the truth is…..it does not age well. Prone to discoloration, there is no way to restore color. Prone to swelling, similar to LP siding, it is impossible to replace pieces of TREX decking without having new boards stand out like a sore thumb.

Gorgeous when first installed, easy and quick to install, uniform in color and texture compared to wood, people love it when it is new. But there was ever anything that makes resale properties look tired, it is a worn and faded TREX deck.

Until there is a means by which this material can effectively be refinished, we recommend to all homeowners in the Northwest: stick with cedar. Yes, it’s a lot of work and expense to refinish every year or two. But the fact is, that it can be made to look good many times over with proper care. The same cannot be said of TREX.