King County Real Estate Blog

It's no secret that our Puget Sound real estate market has drastically changed over the past months.  But, unlike the rest of the country, we are lucky enough to have home values still on the rise, though at a more moderate rate.  There are a couple factors at play as to why this happened...

First, much of the major boom our area saw was a result of very lax lending standards, which inevitably led to poorly qualified homeowners defaulting on their mortgage payments.  Enter a flow of listings from homeowners in default and... THE SUB-PRIME MELTDOWN.  Those are scary words aren't they?  Apparently so since what has really slowed our market down is a lack in buyer confidence (not to mention fewer loan programs meaning less buyers). 

Professionals deeply entrenched in the business (as opposed to those looking to make a quick dollar) are taking the slowing in stride as we know the change in lending standards is a cleanup our industry needed.  In other words, things got a little out of hand.  This did work well for experienced investors as they were able to capitalize on easier lending standards and put a lot of money in their accounts.

So what does this change mean for investors needing non-owner occupied loans?  It means more opportunities for the savvy investor due to less opportunities getting snatched up by the person looking to make a quick buck.  However, the days of non-owner occupied 100% financing are over (at least for now), so plan on having to put 10% down.

Now, for the good stuff!  With demand down and many sellers in default needing to pay off their mortgage, we are MOVING TOWARDS A BUYER'S MARKET!!!  Though it depends on individual listings and sellers, it is not uncommon to have sellers buying down mortgage rates or paying homeowner's dues on behalf of the buyer for a year.  Investors got used to waiving contingencies and including price escalation addenda to compete with multiple offers,  but now days it has become less burdensome on the buyer to purchase.  Also, due to the decrease in loan programs, we have had a surge in the rental market and landlords across the nation are taking advantage.  Check out these articles from the Seattle Times and Komo 4 News about an increase in buyer and landlord power... Buyer Power and Landlord Power.

So, this makes me wonder, why aren't more investors buying?  We have the best market in the nation and it's going to have an inevitable upswing in the near future.  The professionals I work with are looking around asking, "shouldn't now be the frenzy of buying?"  So why is this... is it the general lack of confidence in the market?  Are investors unwilling to put 10% down? Thoughts and feedback appreciated!