6 Reasons Why Now's a Good Time to Buy a Home

This is an exerpt from an article by Carla Fried. Below are six reasons why anyone who is pondering a home purchase might want to consider making a move sooner than later. Potential first-timers certainly have  far easier logistics than current homeowners who need to sell to make a move. If you're under water on your loan, trading up might not be feasible. But there are indeed plenty of current homeowners sitting on ample equity. For them and for potential first timers, here are six reasons why now just might be a smart time to make your move.

1. The worst of the price declines is likely over. From the market peak in 2006, the S&P/Case-Shiller index of 20 housing markets is down 32 percent. Ugly indeed. But what's important is what comes next, not what we've just come through. And no one is suggesting we have another 30% to go. Mark Zandi, Moody's Analytics chief economist recently said that another 5% slide in home prices might be on the tap. To be clear no one is suggesting roaring price gains are on the horizon either. The takeaway is that we're potentially at an important pivot point where we're moving from steeply falling home prices to an extended period of stabilizing prices.

2. Mortgage rates are at historic lows. Right now the 4.6 percent interest rate on a 30-year fixed rate mortgage is beyond fire-sale cheap as is the 3.78% interest rate for a 15-year mortgage. Assuming rates will stay where they are at, or even fall some more, seems a risky bet. Fannie Mae expects the 30-year fixed rate will hover around 5.2% percent by the fourth quarter of this year, then rise slightly throughout 2012 to 5.4% percent or so. The 2012 forecast is 5.7 percent, more than a full percentage point above where we're at today.

If you take out a $300,000 30-year fixed rate loan today at 4.6% your monthly tab will be $1,537. But lets say you instead decide to wait another year or more on the theory prices are heading lower. If during your wait the 30-year fixed rate rises to 5.7 percent you would need home prices to fall nearly 12 percent to come in at the same monthly cost as what you can target now. That's more that double the price decline most market watchers are expecting.

3. Mortgages for pricey homes are heading higher. Even if mortgage rates don't budge between now and the fall, mortgages are expensive homes are still going to cost more. Right now lenders can write mortgages for as much as $729,750 in certain high cost areas and still have that mortgage qualify as a :confirming " Fannie Mae or Freddie Mac loan. That's a big deal to lenders who are typically eager to sell off their loans into the secondary market--and right now Fannie and Freddie are the secondary market. But as of Oct 1, the maximum loan amount for a conforming mortgage will fall back to $625,500. If you intend to borrow more that that you will be shut out of the conforming loan market, and will have to opt for a jumbo loan. Jumbos typically carry higher down payments and the mortgage rate cat me .50 percent higher that the conforming loan rate.

4. Qualifying for a mortgage is likely to get harder, not easier. The goal of Washington in the coming years is to shift more of the mortgage market out of the hands of Fannie Mae and Freddie Mac and into the hands of the private market. It is admittedly too early to know when and what that transition might look like. But whether the government backing is scaled down or disappears all together, that means higher borrowing costs. Moreover, there's already a new regulation being considered that would require banks that want to keep selling 100 percent of their mortgages to Fannie and Freddie to hold borrows to tougher lending standards.

5. Scary national statistics are especially deceptive right now. Realty/Trac reported that 28 percent of home sales in the first quarter of 2011 were foreclosures, and the average foreclosure sale price was 27 percent less than what a non-distressed home went for. But peel back from that ominous headline statistic and there is more nuanced story playing out that goes to the heart of the old maxim; All real estate is local.

6. Less competition. There may be plenty lookey-loos at open houses these days, but the anemic sales pace is proof that there are fewer serious buyers looking to make a deal. That makes it less likely your find yourself in a bidding war today. It also means you can negotiate more effectively with eager sellers. Wait to dive in and you could find yourself in a more crowded pool of buyers. Its just common sense that once there are clear signals of recovery, demand will pick up. Being a little early/ahead of the curve gives buyers more elbow room.

Huge Discount in Whatcom County for Bank Owned Properties

These are difficult times that we are experiencing in the current real estate market, however there are real opportunities for the investor or home buyer to purchase properties at a discount. In an article written by Dave Gallagher of the Bellingham Herald properties purchased in Whatcom County in the second quarter of 2011 had a average discount of 32.5 %.  Most of these properties were owned by the lender. In the second quarter, Whatcom County homes in the foreclosure process or bank owned accounted for 16.2% of total sales, with an average price discount of 30.2% compared to non-distressed property according to RealtyTrac, an online company that complies foreclosure information.

Nationally, sales of homes in some stage of foreclosure or bank owned were much higher than Whatcom County, accounting for 31 percent of all sales, up from 24 percent in the second quarter of 2010.

The average price discount nationally (32 percent) was similar to the local level, according to the report.

Foreclosure related sales accounted for 65 percent of all resendential sales in Nevada in the second quarter, the highest in the U.S.

Washington state's foreclosure-related sales accounted for 25.3 percent of all sales.

Waterfront Development Project

The Waterfront Development Project  will create an entirely new life style for Bellingham Washington. Please go to "local news" which contains an "Executive Summary" on the initial land use in 2005 for this project covering 220 acreas. This post will be an update on the timing and scope of the project considering the local and national economy. What has not changed is the impact this development will have on the economics and life style of this community and adjacent property values. The most significant life style enhancement will be the opportunity to walk or bike from Fairhaven to the Project on two over-the-water boardwalks and continue on to the Hotel Bellwether Complex (upper left hand corner) in a traffic free environment.

Before the 220 waterfront acres will be available for private investment the city must  build the necessary street connections to the property which are estimated to cost $78 million. The Waterfront Development Committee expects to have a draft of the plans available by the end of 2011. Initially the port and city officials envisioned the creation of 6 million square feet of new residential, retail, light indutrial and office space on the waterfront, more than six times the square footage at Bellis Fair Mall within 20-30 years. The new plan expects redevelopment by the end of 2025 that would total 3.5 million square feet, if the city can find ways to pay for the street projects that would make that possible. The plan still suggests that the southern portion of the waterfront site, in and around the port's shipping terminal will eventually be redeveloped for mixed use, but there is no date estimated for that development, which could potentially accomodate another 3 million square feet of buildings. The first area of development for high rise condo's could be in the lower left hand corner once this park area is clear of contaniments. The second over-the-water boardwalk terminates at that park.

Off Campus Student Housing

Enrollment in U.S. colleges is expected to increase by over 13% to more than 19.5 million students by the year 2015. Reports show that only 30% of college students are currently housed on campus, leaving 13.6 million students to find off-campus housing. With over 4000 colleges in the United States, the shortage of student housing is felt nationwide and with the tightening of credit markets the financing available for new construction projects has been reduced increasing the demand for off campus student  housing.  Western Washington University in Bellingham can only provide on campus student  housing for 30 % of its enrollment. These parameters will create a market segment that will be a "safe haven for investors" in Off Campus Student Housing (OCSH) for the next 5-7 years. An added leverage to provide additional return in Off Campus Student Housing are multifamily units that are located on "adjacent properties". These are properties that are "adjacent" to the Waterfront Development Project. The location of "adjacent properties" is defined in "Executive Summary Waterfront Development" in "local news". Please take look at 4 typical OCSH properties for sale in Gallery 4, photo’s 4-2, 4-3, 4-3 & 4-5. These are excellent examples of  Off Campus Studend Housing located on “adjacent properties”.

Demand, Growth, Appreciation

There are many factors here and it is hard to prioritize but lets start with the need for people to get out of the grid lock in traffic when they retire. In our cities across the country commuters are spending more and more time commuting back a forth to work. Our inability to provide rapid transit for our commuters costs us dearly in lost time and frustraton for the commuter. Given a choice when they retire, retirees want to live in a community where they can have some guarentee they can travel from A to B in a designated period of time, have a moderate climate, health care and recreation. Bellingham has no traffic grid lock primarily because we are a retirement community without set commuter patterns. Our growth will come from a new generation of retirees the "baby boomers" who started comming on the market January 1, 2011 at a rate of 10,000 per day which will continue for the next 19 years and with that comes Demand, Growth and Appreciation of Bellingham's property values as a "retirement community". At the end of the 1st quarter of 2008 Bellingham's 5 year home appreciation rate was greater than 50% and we will recover from this recession and return to that 5 year appreciation. You can view this graph on my web site page "Developers, Investors".


Our "Waterfront Development Project" will make a huge contribution to Demand, Growth and Appreciation with the addition of a over the water boardwalk in 2012 from Boulevard Park to the Waterfront District enabling walkers and bikers to walk and  bike from  Fairhaven to the Waterfront District free of automobiles. To learn more about the "Waterfront Development Project" please visit "local news" on my web site http://www.beautifulbellingham.com/  .

Invest Now in Bellingham Real Estate

With interest rates at a all time low and the recovery of the real estate market just begining now is the time to invest in Bellingham Real Estate. Add to that Bellingham is a perfect retirement community with our strategic location, recreation, 40 miles of trails and 15 minute access to all services within the city limits. And there is a new market dynamic of 10,000 Baby Boomers entering the market every day which started on January 1, 2011 and will continue for 19 years. If that is not enough we have the Waterfront Development Project which will transform the city connecting Bellingham to its waterfront and provide a new life style with over-the-water board walks, traffic free pedestrian walkways, hospitality and housing. Please visit "local news" on my website to learn more about the the scope of the the Waterfront Development Project. I will do my very best in this blog to make a case for real estate investors to consider investing in Bellingham and I am looking forward to the interaction. This will be a series addressing (1) Demand, Growth, Appreciation (2) Off Campus Student Housing (3) Waterfront Development Project (4) Adjacent Properties (5) Short Sales, Bank Owned.