Value is what’s selling in the current housing market

Value is what’s selling in the current housing market, with conditions continuing to favor buyers.

There were 6,037 pending sales last month, the highest volume since April when buyers scrambled to beat a tax incentive deadline.

Even though it’s a buyer’s market, the market is good for sellers who price their homes correctly.  Homes that are priced right from the start, at every price range, are selling quickly and for very close to asking price. In this market, it’s critical to price a home well from day one. If sellers plan to start high and gradually go lower, they’ll price themselves out of the market.

For single family homes (excluding condos) the median price was $275,000, down 3.5 percent from a year ago.  Prices increased from 12 months ago in nine counties (Clark, Grays Harbor, King, Kitsap, Kittitas, Mason, San Juan, Skagit, and Thurston).  In King County, which accounted for more than one-third of last month’s closed sales of single family homes, the median price was $380,000, an increase of 1.3 percent from the year-ago figure of $375,000.

Along with lower prices and record low mortgage interest rates, buyers have abundant inventory to consider, further bolstering their bargaining position.

The active listings inventory and the influx of new listings are still very strong for the buyers. Extremely low mortgage rates are enabling today’s purchasers to buy more home.

Current buyers are looking for value and have stable incomes and good credit. They’re taking the opportunity to purchase homes they couldn’t afford a few years ago.  This includes first-time buyers as well as move-up buyers with strong equity in their existing home.

Some people may not be aware of a forthcoming change in annual mortgage insurance premiums, a change that can reduce purchasing power.  Buyers may not be aware of plans by the Federal Housing Association to raise its annual mortgage insurance premiums by 3 percent on October 4.  With FHA loans accounting for about half of all home loans, the change will affect a significant number of borrowers.  When you do the math on a $300,000 loan, the increase equates to an extra $81 a month or nearly $1,000 annually.  This effectively represents a 3 percent loss in purchasing power, which for your typical FHA borrower can make a big difference when trying to buy a home.

Looking ahead, I expect a long, slow recovery of the housing market. I think we are going to see this same type of market through the end of the year and perhaps into first quarter 2011.