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Snoqualmie gets safest city nod…Ranks safest in state according to website’s matrix.

October 4, 2019 by Kathy Reichle Leave a Comment

Snoqualmie was recently named safest city in Washington State by backgroundchecks.org.

The city took first place on the company’s 2019 safest cities to live in Washington list, which is based off of property crime and violent crime data.

Other cities on the list, in order from 2nd to 5th place, include Enumclaw, West Richland, Sunnyside and Oak Harbor.

Snoqualmie received a safety index score of 0.59.

Backgroundchecks.org says in the methodology section of its website that they used recent FBI crime statistics to rank the state’s cities. That data set contained 7,430 cities, which was narrowed down to 2,929 cities with a population smaller than 10,000.

They also explained how they used their math to create the safety index scores.

“We then calculated violent crime rates and property crime rates by dividing the crime numbers by the population to get rates per 1,000. We also calculated the ratio of law enforcement workers to per 1,000,” the website says. “These were weighted with -50 percent for the violent crime rate, -25 percent for the property crime rate, and +25 percent for the law enforcement rate. The resulting metric gave us the safety index score. The higher this number, the (safer) the city is.”

That website also states that Washington has a lower-than-average violent crime rate but high levels of property crime, such as automobile theft.

This recognition comes after other recent nods. Snoqualmie also was recognized as safest city in Washington by the National Council for Home Safety and Security as well as by SafeWise.

“We are pleased to be recognized by multiple organizations as one of the safest communities in Washington,” Police Chief Perry Phipps said in a press release. “Our belief and commitment to ‘No call too small’ combined with a community effort of residents and city personnel help keep our city a safe place to live, work and visit.”

By Natalie DeFord

Filed Under: Eastside Real Estate Blog Tagged With: City of Snoqualmie, Safest City in Washington Sate, Snoqualmie City Hall, Trending Topics

PSE natural gas bills will be lower this winter

December 1, 2018 by Kathy Reichle Leave a Comment

Puget Sound Energy residential natural gas customers will see lower energy bills this winter after rates were adjusted lower to reflect the decreased cost of wholesale natural gas.

On Oct. 19, the Washington Utilities and Transportation Commission approved requests from PSE that, combined with lower natural gas costs, allowed the power company to reduce rates by 9.2 percent for residential customers. A press release from PSE said it would reduce the average bill by just over $6, bringing the total monthly bill to around $59. It is the lowest rates the utility has provided since 2004.

PSE conducts rate adjustments multiple times a year, Padula said.

Washington Utilities and Transportation Commission spokesperson Kate Griffith said rate adjustments must be approved by her office. Rate decreases were also approved for the Avista Corporation which serves the Spokane area, Cascade Natural Gas which serves cities statewide including Bellingham, Bremerton and Yakima. NW Natural also received a rate decrease. The company serves southwest Washington.

PSE provides natural gas service to more than 750,000 customers in King, Pierce, Snohomish, Kittitas, Lewis and Thurston counties.

By Aaron Kunkler

 

 

Filed Under: Energy Bills, Issaquah Real Estate, PSE, What's Trending Tagged With: Home ownership, Saving Money, Trending Topics

Nearly 1 in 7 homes in Seattle now worth at least $1 million

November 19, 2018 by Kathy Reichle Leave a Comment

This $2,748,000 home has five bedrooms four baths four fireplaces and four garage spaces.  It was originally built in 1938 but has just gone through construction (image: Joshua Lewis)

SEATTLE — A growing number Seattleites can consider themselves as million-dollar homeowners as housing prices continue to climb in the region.

Seattle is now ranks 10th among U.S. metro areas for percentage of homes worth $1 million or more, according to a newly-released study by Trulia. In 2018, 13.3 percent of all homes in the city are worth at least seven figures, up from 11.8 percent last year. The median house price stands at just under $565,000, Trulia says.

We’re still a far cry from the Bay Area though, where 81 percent of homes in San Francisco and 70 percent of homes in San Jose are worth $1 million or more. Oakland checks in third at 30.7 percent, Truila says. Seattle’s 13.3 percent just a little behind Los Angeles at 13.9 percent.

And Seattle’s million dollar homes aren’t just clumped in one or two spots. Trulia found out of the city’s 95 neighborhoods, 10 of them are classified as “million dollar neighborhoods” where more than half the homes are worth $1 million or more.

But Seattle’s not the only city in the region with million dollar homes. Trulia finds that Bellevue has the highest percentage in the region of Million Dollar Neighborhoods. Of the 23 Bellevue neighborhoods identified by Trulia, nine are over the $1 million mark– three more than just two years ago. That’s 39 percent of all the city’s neighborhoods.

Other cities noted with at least one million-dollar neighborhood: Kirkland (5 out of 15), and Shoreline (2 out of 14). San Francisco, as mentioned, is pretty much million dollar city with 87 out of 102 neighborhoods having 50 percent or more million dollar homes.

Nationally, the share of homes worth $1 million or more has doubled since 2012 from 1.5 percent of all homes to 3.6 percent today.

 

Filed Under: Eastside Real Estate Blog, First Time Homeowner, Home Value, Housing Market, Issaquah Real Estate, King County home prices, Seattle, What's Trending Tagged With: Home ownership, Home Trends, Home value boosts, Trending Topics

American Homeownership Increases Again as Housing Market Looks for Balance

November 7, 2018 by Kathy Reichle Leave a Comment

More Americans became homeowners in the summer months, fresh evidence of a housing market that’s finding some stability after several rocky years.

The national homeownership rate was 64.4% in the third quarter, the Census Bureau said Tuesday. That’s a half-percentage point higher than a year ago.

 A look at the rate of homeownership since 2004. Census Bureau/Haver Analytics

 

After touching an all-time high of 69.1% in 2004 as the housing bubble inflated, the homeownership rate bottomed out at 62.9% in 2016 as waves of Americans lost their homes or sold under duress. At the same time, many Americans who would ordinarily become buyers were locked out of the market by stringent lending rules, a lack of affordable inventory and a challenging economic backdrop.

All that has made the post-crisis housing market not just less accessible, but less dynamic. It’s possible the moderation in home prices over the course of 2018, which some analysts believe came from would-be buyers pushing back against hefty price gains, helped many of them finally become owners.

The homeownership rate can be controversial. Some analysts believe that government policies that helped enable ownership more broadly were responsible for the housing crisis, although many others believe there’s blame to go around.

Still, the meager recovery to this point puts the homeownership rate only back to 1995 levels, well before the run-up to the bubble. That suggests it may be possible for many more Americans to become owners, if housing market conditions ease further. The vacancy rate for owners was just 1.5% for the second month in a row, tighter than the 1.6% it averaged throughout 2017.

By Andrea Riquier

Filed Under: Eastside Real Estate Blog, Home Value, Homeownership, Homeownership rate, Housing Market, Issaquah Real Estate, King County home prices, Mortgages, What's Trending Tagged With: Home ownership, Issaquah Real Estate, Trending Topics

To PMI or Not to PMI

November 2, 2018 by Kathy Reichle Leave a Comment

Is Private Mortgage Insurance (PMI) necessary? Will it help me buy a house? Is there a way around it? Those are the questions.

Actually, they probably constitute only the tip of the mortgage iceberg if you’re buying your first home. But squaring away the PMI query is an important effort that will help you zero in on the right loan for you and better understand your monthly commitment as a homeowner. Let’s tackle those questions.

So, what is PMI anyway?

Call it an insurance policy that protects your lender against the possibility that you could default on your loan. “One of the risk measures that lenders use in underwriting a mortgage is the mortgage’s loan-to-value (LTV) ratio,” said Investopedia. “This is a simple calculation made by dividing the amount of the loan by the value of the home. The higher the LTV ratio, the higher the risk profile of the mortgage. Most mortgages with an LTV ratio greater than 80% require that private mortgage insurance (PMI) be paid by the borrower. That’s because a borrower who owns less than 20% of the property’s value is considered to be more likely to default on a loan.”

Why do I need it?

Coming up with 20% for a down payment obviously isn’t easy. “Many first-time homebuyers don’t have that kind of money sitting around,” Randall Yates, founder and president of The Lenders Network, told us. So, PMI can spell the difference between being able to buy a home, and not—even if it costs you a couple hundred dollars a month.

How much will it cost me?

You can expect to pay between $30–70 for every $100,000 that you borrowed to purchase your home every month. Unison’s estimated monthly payments based on the example of a “30-year loan for $250,000 with an interest rate of 4 percent” breaks down as:

• Principal and interest: $1,194
• Property taxes: $100
• Homeowners insurance: $80
• PMI: $125

Do I have to pay PMI no matter what?

Not necessarily. “There are a couple alternatives that may work for some buyers,” said Yates. “If you’re a veteran, you’re in luck because VA loans are the only type of home loan that doesn’t require PMI. A piggy-back mortgage or 80/10/10 is another option some buyers use if they do not have the full 20% down payment. The borrower puts 10% down and gets a second loan for the other half of the down payment. In this scenario, you would have two loans to repay, but you avoid paying PMI. If you’re in a rural area, you could qualify for a USDA loan. USDA loans are a type of government-backed mortgage that does not require a down payment and has a very low PMI rate of just 0.35% of the loan amount.”

Can I ever get rid of PMI?

You can, but it’s not easy. “To remove PMI, or private mortgage insurance, you must have at least 20 percent equity in the home. You may ask the lender to cancel PMI when you have paid down the mortgage balance to 80 percent of the home’s original appraised value,” said Bankrate. “When the balance drops to 78 percent, the mortgage servicer is required to eliminate PMI. Although you can cancel private mortgage insurance, you cannot cancel Federal Housing Administration insurance. You can get rid of FHA insurance by refinancing into a non-FHA-insured loan.”

WRITTEN BY JAYMI NACIRI

Filed Under: Down Payment, Finances, First Time Homeowner, Homeownership, Issaquah Lifestyle Blog, Mortgage Rates, Private Mortgage Insurance Tagged With: Finances, Issaquah Real Estate, Mortgage Rates, Private Mortgage Insurance, Trending Topics

Conditions are perfect for the real estate market in Seattle to cool some

October 23, 2018 by Kathy Reichle Leave a Comment

October will be the last month with good inventory — so now’s as good a time as any to buy

Summer is over, but the real estate market is just catching up.

The heyday for the market is typically between May and October, when the sunshine makes for nice pictures and easy open houses. Which means that the final month is here to take advantage of the housing market before the fall drop-off.

“Over the winter, new monthly resale listings will lower by approximately 50 percent compared to summer months,” J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, said in the latest Northwest Multiple Listing

Services report, noting that it’s been quite a season for Seattle’s market.

“The housing market close to the job centers has gone from a historic extreme-frenzy market in the spring down a few levels of hotness to a strong level of pending sales activity for new listings.”

Which is true; the Seattle 2018 real estate “season” came in like a lion and seems to be going out like a lamb: Housing inventory continued to improve in September, while the pace of sales has slowed in many counties.

Some balance has been restored to the market — across the NWMLS system, last month ended with 2.56 months of supply of single-family homes and condos. And though that’s not perfect (analysts prefer somewhere between four and six months of supply for a truly balanced market between sellers and buyers) it’s the highest level since February 2015, when brokers reported 3.56 months of inventory.

“This is a more traditional yearly market cycle taking the place of the unusually overheated real estate market of the past several years,” said John Deely, principal managing broker at Coldwell Banker Bain, in the NWMLS report.

“Given there doesn’t appear to be any end in sight related to the region’s job growth, with employees moving here and not enough units being built to accommodate them, we believe this market normalization will continue.”

In a normal market, October marks a steep drop-off in inventory as winter doldrums settle in; at this same time last year, analysts were also wondering if Seattle was going through a cool-down.

Scott’s advice then was about the same as it is now: “October will be the best month for selection and availability until late February.”

Get in while the getting’s good, Seattle buyers.

By Zosha Millman, SeattlePI

Filed Under: A little bit of Trivia, Eastside Real Estate Blog, Fall Changes, Home Value, Homeownership, Hottest housing markets, Housing Market, Investing in Real Estate, Issaquah Lifestyle Blog, Issaquah Real Estate, King County home prices, What's Trending Tagged With: Home ownership, Home Trends, Trending Topics

Slowing real estate might let us catch our breath — or knock the wind out of us

October 18, 2018 by Kathy Reichle Leave a Comment

Last year Seattle ranked first in a widely watched report on markets with an strong outlook for real estate. This year it’s not in the top 10. (Greg Gilbert / The Seattle Times)

An important real estate forecast knocks Seattle out of the top 10 booming markets. We still rank well, but some risks are also gathering.

If you read my colleague Mike Rosenberg, you already know that segments of the Seattle real-estate market are slowing.

We have an apartment glut thanks to heavy investment in multifamily housing coming out of the Great Recession. Sales and inventory numbers for homes in King County are back to 2012 levels. Prices are dropping many places after record leaps in recent years.

Last week came further evidence: For the first time in about a decade, Seattle wasn’t among the top 10 markets for the coming year in the “Emerging Trends in Real Estate” report by the Urban Land Institute and PricewaterhouseCoopers. Last year, we were No. 1.

The report focuses on the Seattle-Bellevue area, setting Tacoma (No. 53) out separately. And it doesn’t directly correlate with livability. Rather, it assesses investment and development trends, and for several years has chronicled the rise of high-quality urban centers.

Many people will see this as all good news, a pause from explosive growth that has also been blamed for lower affordability, rising inequality and social ills. I would add that markets go down as well as up, and every swing creates winners and losers.

Still, while Seattle’s growth isn’t stopping, going from the equivalent of 90 miles per hour to 50 would be felt, and in some unpleasant ways, too.

“Emerging Trends” is the gold standard in real-estate forecasts, based on interviews and surveys of hundreds of leading developers, investors and lenders.  It provides a deep analysis of the outlook for residential, retail, office, hotel and industrial properties, as well as the wider economic environment.

For next year, the top overall markets according to the ULI study are Dallas-Fort Worth, Brooklyn, Raleigh-Durham, Orlando, Nashville, Austin, Boston, Denver, Charlotte and Tampa-St. Petersburg.

At No. 16, Seattle still shows a decent outlook among the 79 markets surveyed. We rank No. 20 in homebuilding prospects. And second, behind Boston, in local market attractiveness for investors. Office demand is expected to continue doing well in the central business district. Being No. 1 isn’t everything. I’d take Seattle over almost any city among the top 10. But Seattle dropping off might mark an inflection point — emphasis on “might.”

The report also offers this caution about Seattle’s drop: “Seattle is still viewed as an attractive place in which to invest, but did media coverage of potential new supply being delivered and increased regulatory discussions sway the opinion of survey respondents?”

(I’d say the news coverage reflected real events and trends.)

Seattle’s population is expected to keep growing, next year at twice the national rate.  Hard as it is to process, Seattle also gets relatively good marks for housing affordability within the context of the Pacific Coast (Tacoma does even better). Demand remains strong for distribution space, too.  The report points to a local economy operating near capacity (e.g. employment) as a constraint on real-estate investment next year.

“This is evidenced by the comments from focus group participants in Seattle and Portland that attracting qualified labor is getting more difficult and could be hurting employment growth,” it reads. The unemployment rate for Seattle-Tacoma-Bellevue was 3.6 percent in August.  Assuming the larger economic climate is stable, we can expect Seattle to go from “hot” to “warm.”  Even so, a pullback in construction would be felt, and not just by speculators.

Being the crane capital of America was part of the enormous construction boom during this expansion. It put hundreds of millions of dollars into the city treasury. This has helped finance low-income housing and social services.

On the other hand, the economy is never static. Risks abound nationally and internationally, from trade battles and asset bubbles to new vulnerability in the banking sector. Geopolitical instability is rising. So are interest rates.

The past week’s wobbly stock market was centered in nervousness about potential inflation — enough at least to cut into profit margins. Popular tech stocks, including Amazon, were among the shares roughed up.  Nobody has repealed the business cycle, so this second-longest expansion in modern American history shouldn’t be taken for granted.  A veteran asset manager quoted in “Emerging Trends” says, “2019 will be a turning-point year.  I think about the capital markets correction that is coming. We have been used to easy money and very low rates for so long. Now is the time to harvest, to hedge, to be cautious.”

Seattle specifically has yet to see how a “separate, equal” HQ2 — yet to be announced — will affect it. Those effects could pinball to small-businesses, city tax revenues, vendors and even charitable giving, as well as hiring at the city’s largest employer.  The metro area would also be hurt by a stock market correction — not only in terms of lost wealth, but potential job cutbacks by companies in response.  But the stomach-knot scenarios might not happen. What we know is that real estate is slowing.  This boom has remade Seattle more dramatically than almost any since the Great Fire. It’s been a lightning rod for criticism, and not just from the social-justice warriors.

Too many classic Seattle three-story brick apartment buildings have been lost, diminishing lower-rent units for renters. Too many useful commercial buildings have been demolished for towers, annihilating affordable retail space and the human-scale delights of the city. Add in straight-up skyscrapers with no setbacks and little distance between them, plus loss of views toward the Space Needle.

I’ve watched these changes over a decade and wondered: Why does this happen in a supposedly progressive city?

Some will pour out corruption conspiracy theories. My guess about what happened is a combination of inattention to protection and design standards; addiction to construction fees; loss of imagination among architects, and political division — all happening as this firehose of demand came at us with great suddenness.  On the other hand, the real-estate boom has been pretty good to Seattle, and not only in terms of tax revenues.

On the commercial side, it’s been driven by demand from some of the top companies offering some of the best jobs. We’re not cursed by the desert of huge surface parking lots or store fronts emptied out by changing consumer patterns and online competition. Speculation is an element in rising housing prices, but demand was the big driver. Real estate and construction are significant employers.

In the America as it is, rather than what I might wish it to be, this is a gift horse that shouldn’t require obsessing over its dental work.  In the many left-behind localities — places without the bother of an Amazon headquarters — inequality and opportunity are worse than here and future prospects are dim. These include some of the once-greatest American cities.

Seattle has been lucky, and made its luck. Now we’ll see whether what’s happening in real estate is a natural downshifting or something more.

By 

Jon Talton
The Seattle Times

Filed Under: A little bit of Trivia, Eastside Real Estate Blog, Home Value, Homeownership, Housing Market, Issaquah Real Estate, King County home prices, Larry and Kathy Reichle, What's Trending Tagged With: Home ownership, Home Trends, Trending Topics

Lawn Care For The Fall: Essential Tips to Follow

October 15, 2018 by Kathy Reichle Leave a Comment

All summer you’ve been watering, cutting, trimming and feeding your yard in the hopes of having the greenest plot of land in the neighborhood. So what should you do to get your lawn in shapefor the cool breezes of autumn? These six steps will help you get a head start on the colder weather.

Aeration and Overseeding

If you live in a climate with cool-season grass, fall is the perfect time to aerate your lawn because the air is cool and the soil is still warm from the heat of summer. The earlier you can do this, the better the results will be for your yard. Depending on where you live, September or early October is the best time to tackle this project. You’ll pay around $120 for lawn aeration.

Aeration removes small plugs of soil from your lawn, allowing greater amounts of air, nutrients and water to reach the root system of your grass. It also reduces soil compaction in the process. Following aeration, you might want to overseed your yard. Overseeding makes it easier for seeds to germinate while the soil is loose.

Feed Your Yard

Fall is the prime season of the year to fertilize cool-season grasses. Unlike warm-season grasses, which often go dormant in the fall and winter, cool-season grasses can actually hit their peak growth rates during the fall. This means they need a full dosage of nitrogen to help boost the health of the soil and your grass. Most importantly, this will help prevent the growth of weeds, which choke out the grass over time.

Cut Down on Mowing

Throughout the summer, you’ve gotten into the habit of mowing weekly. But if you have cool-season grass, it’s time to start cutting back on the number of mowing events each month. Generally speaking, every other week should be your maximum. If you have too much leaf coverage on your yard, you can mulch those up, but remember to leave your cutting deck high so you aren’t cutting off too much of your grass in the process.

The professional recommendation is not to cut off more than one-third of the total blade of grass each time you mow. Doing so can result in scalping the lawn, which stunts the growth of your grass. If you live in a warmer climate with warm-season grass, you can likely skip mowing altogether because your grass is going into its dormancy cycle.

Leaf Removal

There are two approaches you can take when dealing with falling leaves. At a bare minimum, you should remove any fallen foliage within seven to 10 days because it blocks sunlight from reaching your grass. But, if you get a relatively light leaf fall each autumn and you own a strong mulching mower, you can turn fallen leaves into a composting gold mine. If you mulch your leaf fall on a regular basis — at least once a week — you are recycling the nutrients back into the soil. If your leaf pile is too big, consider hiring a pro. You can expect to pay about $310 for professional leaf removal services.

Sow and Reseed

Believe it or not, but fall is a great time to reseed the bare patches of your yard and sow new sections of lawn for cool-season grasses. Applying fresh soil and some new seed to barren patches of your yard can help prepare your lawn to bounce back in the fall. As mentioned earlier, this time of year is often the strongest for cool-season yard growth, so take advantage.

Winterize Your Sprinkler System

If you have an underground sprinkler system to help you keep your yard green all summer, it could be the biggest threat to your utility bill and soil during the winter months. If you fail to blow out your underground system, the water left in the pipes could freeze, expand and burst the pipes. This could lead to a water leak in your yard that could compromise the integrity of the soil and cause serious damage. If you live in a cooler climate, it’s important to winterize your sprinkler system immediately.

Conclusion

With one weekend of work, you can accomplish most of these tasks and have a yard that looks great for the coming fall months.

WRITTEN BY ANDREA DAVIS

Filed Under: A little bit of Trivia, Curb Appeal, Eastside Real Estate Blog, Fall Changes, Garden Trends, Homeownership, Larry and Kathy Reichle, Things To Do, What's Trending Tagged With: Gardens, Issaquah Real Estate, Lawn Care, Trending Topics

Halloween Decorating and Marketing Tips For Selling Your House

October 12, 2018 by Kathy Reichle Leave a Comment

Planning to deck your house out with ghosts and skeletons and every last one of the pumpkins and gourds in your supermarket’s produce department? If you’re also planning to sell your home, you might want to rethink that strategy.

There are mixed opinions on how much to decorate for Halloween—or if you should at all—when selling your home. Can it actually help you sell a home if you turn the holiday into a marketing opportunity? Possibly. We took the temperate of the industry for some guidance.

When should you put up your decorations?

You may want to keep an eye on your neighbors for this one. If you’re the first house on the block to decorate, your home may stand out for the wrong reasons. If you’re still worried that your Halloween décor may distract from the home, follow Mass Realty’s advice. “Overall, you won’t want to put up spooky Halloween decorations until the night of Halloween and make sure to take them down the next morning,” they said. “Instead, it’s alright to put up seasonal decorations, such as pumpkins, bright leaves, or colorful corn cobs. That way, no one gets offended and you can keep them up for weeks to feel the spirit of the season.”

Should you continue your annual spooky theme?

You may be known for your elaborate displays that have a different theme (Friday the 13th, Carrie) each year, but perhaps it’s best to forgo that when trying to sell your home. “If Halloween is your holiday, it is best to take a break this year,” said Shorewest Realtors. “Over decorating will hide your home and turn off potential buyers. Instead think of how you will decorate your new home!”

If you do want to add some Halloween-specific decorations, use common sense. “Experts say keep Halloween decorations neutral,” said Lyst House. “So what Halloween decorations should you avoid? Well for starters…clowns, dead children, blood and gore, and rotten pumpkins.”

Time your listing photos right

Be careful with your listing photos if you do decorate for Halloween. If your home is still for sale come Thanksgiving and Christmas and New Year’s and even Valentine’s Day, your photos will look extremely dated. This will likely turn off buyers, who may wonder what’s wrong with you home because it’s been on the market a while. A good tip is to use spring photos, if possible, said Fortune Builders. “If you can, try to take property photos when the sun is shining and you can take advantage of all the great natural light that spring has to offer. It will help your property stand out in a cold (and gloomy) market.”

Don’t miss a marketing opportunity

“If you must decorate for the holiday, hold a Halloween open house to attract buyers with children or those young at heart,” said Mass Realty. “Set the date for the weekend before the spooky holiday to bring in more potential buyers. Offer homemade cookies and a $10 gift certificate to an ice cream shop for the adult with the best costume who registers at the door. Take photos to compare costumes after the open house. Have your real estate agent contact the winner to pick up the prize, giving the agent time to discuss the home with all who registered.”

Turn it into a party

We love this idea from Opendoor, who threw Halloween Open Houses in three Arizona cities on Halloween night last year. “We greeted trick-or-treaters at three Opendoor houses in Glendale, Gilbert, and in North Central Phoenix,” they said. “We gave out more than 1,000 candy bars…as well as other tasty treats. We had games and activities for the whole family, including a fun real estate trivia game. The big hit, though, was the haunted GIF photo booth to capture the fabulous costumes of our visitors—we had lines at every house! The event was a huge success. We saw more than 1,200 guests across all three homes and, more importantly, we brought our neighbors across the valley together on Halloween night.”

WRITTEN BY JAYMI NACIRI

 

Filed Under: A Positive life, Decorating, Home Decor for Fall, Issaquah Real Estate, Larry and Kathy Reichle, Open House, Selling your home Tagged With: Decorating, Issaquah Real Estate, Open House, Selling your home, Trending Topics

Four Ways Real Estate Can Boost Retirement Income

October 9, 2018 by Kathy Reichle Leave a Comment

Even if you manage to sock away a fair amount in your 401(k) every year, it’s not unusual to worry that inflation may eat away at the value of your retirement portfolio. To reduce the likelihood of that happening, you can boost retirement income by investing in real estate.You’ll gain the added benefit of increased asset diversity and balance in your portfolio. And depending on which real estate investment option you pick, you could also create a retirement income stream that rises in tandem with inflation.

Let’s look at the pros and cons of common ways to invest in real estate:

1. Purchase shares in private lending pools.

2. Invest directly by purchasing rental property.

3. Buy shares in real estate investment trusts (REITs).

4. Cash out home equity.

1. Investing In Private Mortgage Funds: Pros And Cons

Private mortgage funds lend money to real estate flippers who buy, improve and resell properties. (Full disclosure: I am the CEO of one such lending organization.) Since the pool lends money to hundreds of flippers, risk is diversified across many deals.

As a borrower, you can also avoid risks you’d face if you tried to flip a single property yourself, like buying high and selling low, not knowing enough about renovations to do a good job or taking so long to finish the renovations that holding costs eat your profit.

Private mortgage funds are long-term, fixed-rate investments that aren’t as liquid as stocks and bonds. You typically need to commit to the investment for a set number of years and provide many months’ notice if you want to redeem your investment early. They’re also not traded on an exchange, so it’s important to vet the company offering the investment.

2. Direct Investment In Real Estate: Pros And Cons

Direct investment has many upsides. You can buy with relatively little cash, so it potentially has one of the highest returns on investment (ROI) of the three options. Independent home lenders offer investment property home loans with as little as 15% down, so you could buy a $200,000 property with $30,000 cash down. Let’s say home prices rise 5% next year. Your rental property is now worth $210,000, a 33% gain on your $30,000 investment.

Real estate also tends to move with inflation. As consumer prices rise, so do rents, making direct investment in real estate a solid hedge against inflation. Timing your rental property mortgages to pay off by the time you retire creates an inflation-hedged income stream.

Purchasing rental properties is a long-term investment with much less volatility than stocks. Home values change over years, not hours, like equities. After the real estate crisis, median home sale prices hit a low point of $148,000 in 2012. Six years later in mid-2018, the median home price was $231,000, according to Zillow data.

If you buy with a 15- to 30-year mortgage and don’t sell your rental property, home price changes won’t influence you. But if you do need to sell, it can take months, especially in a down market. And when home prices fall, rents may follow suit. The investment that was paying for itself can suddenly start costing money every month. When rents don’t generate enough income to cover taxes, insurance, repairs and the like, you’ll have to pay for those costs out-of-pocket.

Real estate also carries big transaction fees, like sales commissions and transfer taxes, that make it a costly investment to sell. A 6% sales commission on your $200,000 investment property will run you $12,000, quite a bit more than selling shares in a private loan fund or REIT.

3. Real Estate Investment Trusts (REITs) Pros And Cons

Real estate investment trusts (REITS) take money from shareholders to invest in real estate, such as residential or commercial properties, or mortgage-backed securities.

There are hundreds of REITs to choose from and since many are publicly traded, they’re as easy to buy and sell as stocks. The average return for all REITS since 1972 was about 9.7%, according to data from the National Association of Real Estate Investment Trusts.

Since REITs are fixed-income investments, their value may fall when interest rates rise. A REIT that invests heavily in a single class of real estate — say, strip shopping centers or retail malls — can be hurt when that property type falls out of favor. REITs that invest primarily in mortgage-backed securities can see their prices drop when interest rates rise because they hold securities with interest rates below current rates.

4. Cashing In Home Equity Pros And Cons

Since a whopping 78% of Americans own a home by age 65, according to Census Data, home equity may be one of the most consistent sources of retirement income opportunities. To cash out home equity, you have to either sell a home you’ve built equity in, refinance or take out a reverse mortgage.

Selling and moving to a less-expensive home would allow you to pocket up to $500,000 in profits tax-free (married, filing jointly). However, since millennials are postponing homeownership to a later point in life than prior generations, they may be less likely to own homes free and clear by the time they retire.

To do a cash-out refinance, you generally need to have income from investments or employment to show you can afford monthly payments. Reverse mortgages pay you either monthly or as a lump sum. The lender bases your payment on your current home value. You don’t have to repay a reverse mortgage until you sell your home, move out or pass away.

The fees on reverse mortgages can be significant and those seeking income early in retirement will find they typically don’t receive monthly reverse mortgage payments that are as high as those an older borrower can receive.

WRITTEN BY

Bobby Montagne

 

Filed Under: A little bit of Trivia, Housing Market, Investing, Investing in Real Estate, Issaquah Real Estate, Larry and Kathy Reichle, Retirement Income Tagged With: Home Trends, Real Estate Investment, Trending Topics

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