How Does Inflation Impact Interest Rates?

If you have seen the news lately, you know that inflation is a very serious issue that will likely be on the rise as the year proceeds.

But What Does This Really Mean to You?

The bottom line is that as inflation increases, home loan rates will rise too. That is because lenders know that a rise in inflation actually diminishes the value of the money they receive over the life of a loan, as the money they receive for payment simply will not go as far. So when lenders see changes in inflation or even anticipate a rise, they increase their interest rates to make up for the loss in future buying power that will happen as a result of inflation.

What Should You Do?

Work with a home loan professional who pays close attention to what is going on with inflation–not only with the reports that come out, but also with the concerns that legislators and lenders express. After all, lenders may raise rates to protect their money as soon as they feel the tide turning.

More importantly, if you or any of your family, friends, neighbors or co-workers have been considering a purchase or refinance, this is a great time to act because home loan rates could be on the rise.

Information Provided by Toby Wonder
Mortgage Consultant
Office: 425-274-9524
Cell: 206-910-4766
License #: 510-LO-32290

70 DAYS and counting!!! -- The Countdown is On....

The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009.

The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

The income limit: for single taxpayers is $75,000; the limit is $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The phase-out range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.
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This information provided by Robert Wolverton with Mortgage Advisory Group

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If you are a buyer and would like to get pre-qualified contact Robert Wolverton - 425.418.3233 www.robertwolverton.com

"I can close most transactions in 10 business days when needed" - Robert

Pricey areas see big growth in home sales

August home-sales figures show two higher-priced King County neighborhoods saw the biggest increases in sales.
By Eric Pryne, Seattle Times business reporter

King County home sales continued their summer surge in August. And the latest numbers suggest the buyers aren't all cash-starved first-timers.

Buyers closed on 5 percent more houses last month than in August 2008, the Northwest Multiple Listing Service reported Friday. It was the third consecutive monthly year-over-year increase, a bump many attribute to the new $8,000 federal tax credit for first-time buyers.
But the neighborhood that saw the biggest jump in sales in August was West Bellevue/Medina, far beyond the means of most folks making their first forays into homeownership.

The runner-up for the month, Queen Anne/Magnolia, also is no mecca for real-estate rookies.
Brokers who work in those two neighborhoods say people with money, who held back when the economy was on the brink, are starting to buy houses again.

"Americans forget very quickly," said Sam Konswa, owner of Queen Anne Real Estate. "The confidence level has just gone crazy on the up side."

Single-family home closings in Queen Anne and Magnolia were up 74 percent in August from the same month in 2008, from 31 to 54, the listing service said. In West Bellevue/Medina — the priciest of the 30 areas into which the service divides the county — the increase was a whopping 169 percent, from 13 to 35.

Together, the two high-end areas accounted for more than half the countywide increase.

Pending sales — offers sellers have accepted that haven't yet closed — also were up both in those neighborhoods and countywide for the fifth consecutive month.

But the median price of a King County house that closed in August was $375,000, down 11.6 percent year over year.

Median fluctuated

The median has fluctuated between $364,000 and $395,000 since January. Some real-estate professionals say it could drop further as banks put more foreclosed homes on the market.

In Queen Anne and Magnolia, the median price of a house that sold in August was $573,000 — the highest in Seattle — but down from $599,000 a year earlier. In West Bellevue and Medina the drop was more dramatic, from $1.6 million to $915,000, the listing service said.

Lower prices are one reason buyers are returning to the luxury-home market, said Ron Sparks, managing vice president of Coldwell Banker Bain, whose firm lists many high-priced homes.

"The million-and-up market has really dramatically improved in the last 60 to 90 days," he said.

Fewer sellers

Prospective buyers in that price range aren't as concerned about job security as they were earlier this year, Sparks said. Their stock portfolios have bounced back from the depths of March. And it's easier for them to get financing at a low interest rate now.

Inventory in West Bellevue/Medina has dropped from a five-year supply early this year to a 10-month supply now, Sparks said.

On Queen Anne, Konswa said the market has an overabundance of buyers and not enough sellers. His small firm had 26 listings in January, he said; now it has just three.

"I am now soliciting sellers for the first time," Konswa said. "Every time I get a call, it's 'I want to buy a house.' "

Some buyers are finally taking the plunge after looking for more than a year, he said. Others are investing some of their recent stock-market gains in real estate.

Countywide, single-family home inventory — the number of active listings — was down more than 20 percent in August from the same month last year.

King County condos didn't fare as well as single-family homes in August. Buyers closed on 11.4 percent fewer units last month than in August 2008, the broker-owned listing service said. The median price, $252,250, was down 5.9 percent.

In Snohomish County, the median price of a house that sold in August was $299,950, down 11.8 percent year over year.

Closed sales were up 8.1 percent countywide — but in Southeast Snohomish County, the priciest area, the increase topped 30 percent.

July home sales surge more than 7 percent

The U.S. housing market is rebounding faster than expected. The question is, can it last? Home resales in July posted the largest monthly increase in at least 10 years as first-time buyers rushed to take advantage of a tax credit that expires Nov. 30. Sales jumped 7.2 percent and beat expectations, the National Association of Realtors said Friday.

By ALAN ZIBEL

AP Real Estate Writer

WASHINGTON —
The U.S. housing market is rebounding faster than expected. The question is, can it last? Home resales in July posted the largest monthly increase in at least 10 years as first-time buyers rushed to take advantage of a tax credit that expires Nov. 30. Sales jumped 7.2 percent and beat expectations, the National Association of Realtors said Friday.

"We've got tens of thousands of homes perfect for the first-time homebuyer and we've taken advantage of that," said George Hackett, president of Coldwell Banker Real Estate in Pittsburgh.

Sales hit a seasonally adjusted annual rate of 5.24 million in July, from a pace of 4.89 million in June. It was the fourth-straight monthly increase and the strongest month since August 2007. Sales had been expected to rise to an annual pace of 5 million, according to economists surveyed by Thomson Reuters.

The risks to that healthy pace, however, are job cuts, mortgage rates and the looming end to the homebuyer tax credit. And the last one could be a doozy because first-time buyers are snapping up one out of every three homes.

First-time buyers get a credit of 10 percent of the purchase price of a home, up to $8,000. The credit phases out for singles earning more than $75,000 and couples earning more than $150,000. The real estate industry is lobbying to have the credit extended but its unclear if Congress will be swayed.

"I would not be at all surprised to see a dip at the end of the year once the tax credit expires," said Robert Dye, senior economist with PNC Financial Services Group.

The home sales report was another sign that the U.S. economy is on the verge of a long-awaited recovery after enduring a brutal recession and the worst financial crisis since the Great Depression.

Economic activity in both the U.S. and around the world appears to be leveling out and "the prospects for a return to growth in the near term appear good," Federal Reserve Chairman Ben Bernanke said Friday.

But fallout from the recession will linger for some time. Unemployment rose in July in 26 states and fell in 17, the Labor Department said Friday. That is driving up foreclosures, which are not expected to level off until sometime next year.

Sales of foreclosures and other distressed properties made up about a third of all transactions last month, down from nearly half earlier this year. In places like San Diego and Orlando, buyers are snapping up foreclosed properties at deep discounts, and inventories are low.

Those sales helped drag down the national median sales price by 15 percent to $178,400.

Stephen Stoyko hunted off-and-on for two years before he bought a four-bedroom, two-story foreclosure this week for $320,000. The home in Roswell, Ga., north of Atlanta, was initially priced at $335,000.

Stoyko expects to spend about $7,000 to replace missing kitchen appliances and light fixtures - a cost will be at least partially offset by the first-time homebuyer tax credit. "It's bigger than I needed, but the price was right," he said.

The inventory of unsold homes on the market rose to 4.1 million, from 3.8 million a month earlier as buyers who had held their homes off the market in the past decided to list them for sale. That's a 9.4-month supply at the current sales pace, unchanged from June.

PENDING in Mount Vernon - Congratulations Tomas & Carolina!

Rates are so Low!!! Chart of 30 Year Fixed-Rate Mortgages from 1998 thru 2009

RENTED in Downtown Bellevue - Congratulations Lukas!