Sales for the least-expensive homes – those priced under $250,000 – declined through mid-November in 16 of the county’s 17 areas more than the overall drops in each area, according to Multiple Listing Service statistics provided by Dick Beeson, a Windermere broker and MLS director. These homes, which are more plentiful this year than last, represent a relative bargain in Pierce County, where the median home price in October was $266,157, according to the Northwest Multiple Listing Service.
Real estate agents say the drop in purchases of the region’s most affordable homes speaks to tougher lending requirements, which make it more difficult to get financing, excluding potential buyers who might previously have stretched beyond their means to buy.
Countywide, sales for under-$250,000 homes dropped by 31 percent through Nov. 13 compared to the same period in 2006. Sales for all county homes declined 24 percent.
A market without qualified buyers for the lowest-priced homes impacts move-up buyers who are unable to sell, Beeson said. At a decline of nearly 23 percent, homes priced $250,000 to $349,999 had the second-biggest drop in sales countywide. By contrast, homes at the next price level, $350,000 to $499,999, saw a 16 percent decline.
“If you can’t unlock the equity of the least expensive homes, you can’t buy the second-price home,” Beeson said.
Parts of the county particularly hard-hit in sales for the under-$250,000 category include North Tacoma (-42 percent), the Lake Tapps-Bonney Lake area (-34 percent) and the Roy-McKenna area (-39 percent).
Re/Max agent Dianna Carol, who specializes in East Pierce County homes, has three listings under $250,000, one that’s been on the market three months and now has three offers. She recommends that sellers offer a one-year home warranty, and she tells them to be sure their home is clean and tidy.
“There are so many homes on the market, and it’s so competitive,” she said.
The multiple-offer manufactured home in Graham, at $156,000, sits on one-quarter of an acre. Buyers, she said, were attracted by the price, the land and a large garage that can hold an RV and a car.
Interest rates that have drifted a bit higher than during the recent boom years also restrict some buyers from the market, said Sharon Benson, an agent for Coldwell Banker.
“With a higher interest rate, you can buy less house,” she said. “If you buy a $1 million house, the impact is higher. However, if you’re buying that kind of house, you can afford it.”
Al Morken, a consultant in Lakewood who compiles real estate statistics, also attributed steeper sales declines for less expensive homes to changes in how mortgages are financed. Lending guidelines in recent months require more documentation and, often, heftier down payments.
And, up until recently, home buyers could get mortgages with low initial rates without qualifying for the higher rate that arrived two years into the loan.
“The money was easy for so long,” Morken said. “For the most part, I think a lot of those people couldn’t have bought a home.”
Adam Stein, president of the Washington Association of Mortgage Brokers, pointed out that some homes below the median price require work or upgrades that don’t interest all buyers, which can make them a tougher sell.
But new restrictions in mortgage lending are definitely impacting the availability of financing, he said.
“The middle ground of what really made sense for first-time home buyers has been tightened down so much they can’t get the credit they deserve and should be getting,” he said.
Stein expects lenders to continue to hold back on more-lenient offerings until at least mid-2008 while they recover from losses expected to last into the spring, when, he said, the biggest batches of adjustable-rate mortgages will see higher interest rates.
“I think as long as companies continue to take the write-offs, we’re not out of the woods yet,” he said.
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source: thenewstribune.com
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