Interest rates will rise but should not detour buyers from buying in 2016!   Lower inventory of homes will make home prices rise making the housing market a seller's market.

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Analysis of the Western Washington Real Estate Market says home sales are up from a year ago by 14%, there has been no annual decrease in home sales, still a lack of inventory, prices are up 6.3% from a year ago and it is a Seller's Market!

See the link above to The Gardner Report – for the 3rd Quarter update of Western Washington's Real Estate Market.

General  Guide for Non-Permitted Additions/Improvements, ADUs, Swimming Pools,  and  Garage Conversions
 
The following should act as a guide for properties that have additions and/or improvements for which permits cannot be provided.   It is important to note that before applying these guidelines there must be a thorough search to determine whether or not a permit exists for the additions/improvements and, if a permit exists, it covers the improvements/additions made to the subject property.   These guidelines are from FNMA, FHA and VA.
 
The following should cover most situations however; there may be unique circumstances that may require more detailed documentation.
 
Conventional loans
 
Non-permitted additions/improvements may be allowed if the appraiser explains the steps taken to attempt verification and they meet the following criteria:
 
·          The improvements/additions were constructed in a workmanlike manner
 
·         The addition does not increase the footprint (i.e. foundation) of the original structure or does not result in a change in the number of units, (e.g. a 1 unit property is converted to 2 units). If the footprint has been expanded and the appraiser is unable to verify permits, the appraisal should be completed subject to verification of permits.
 
·         The appraiser can state that the non-permitted additions/improvements are typical for the market area
 
·         The appraisal demonstrates that the non-permitted additions/improvements are legal per zoning requirements.
 
·         Illegal or Non-permitted Accessory Dwelling Unit (ADU) – For a one- or two unit property that includes an illegal (or unpermitted) additional unit or accessory apartment (sometimes referred to as a mother-in-law, mother-daughter, granny unit) the following  will apply to determine  eligibility:
 
·          The illegal use conforms to the subject neighborhood  and to the market
·          The property  is appraised based upon its current  use
·          The borrower  qualifies for the mortgage  without  considering  any rental income from the illegal unit
 
·          The appraisal must report that the improvements represent an illegal use.
 
·          The appraisal report must demonstrate that the improvements are typical for the market through an analysis of at least 3 comparable properties that have the same illegal use.  The 3 comparable  sales used to support the improvements may be in addition  to the 3 primary  comparable  sales and the appraiser may explain the comparable  search to include contact sales versus closed sales, and may consider older sales as additional  comps with an explanation  to assist meeting  this requirement.
 
·   There is evidence of adequate hazard insurance in place that will not be jeopardized by the existence of the non-permitted addition/improvements. This will require documentation from the insurance company directly to verify this.
 
Note:   if the above documentation cannot be provided, permits will be required for the additions/improvements.

FHA Loans
 
Non-permitted additions/improvements may be allowed if the appraiser explains the steps taken to attempt verification and they meet the following criteria:
 
·         The appraiser can state that the non-permitted additions/improvements are legal per zoning requirements and comply with applicable building codes of the local jurisdiction.
 
·         The appraiser can state that the improvements were completed in a workmanlike manner and represent no health or safety issues.
 
·         There is evidence of adequate hazard insurance in place that will not be jeopardized by the existence of the non-permitted addition/improvements.  This will require documentation from the insurance company directly to verify this.
 
·          A non-permitted addition generally should not be considered in the Gross Living Area (GLA); rather,  it should be considered in a separate line item and given value based in its contributory value.
 
HUD  Specific- Garage Conversions:
 
Unpermitted garage conversions are acceptable to HUD as long as the conversion was done in a workmanlike manner and poses no health and safety issues.  Value should be reflected on the appraisal as a line item and not included in the GLA. Appraiser to verify subject property is still legal without having covered parking (some areas of the Country require all properties have adequate, covered parking).
 
NOTE – If the above documentation cannot be provided, permits will be required for the additions/improvements.
 
PERMITTED ADDITIONS/IMPROVEMENT
 
·         If there is a permitted addition/improvement and it conforms to the subject's design and appeal, qualify of construction, etc., has direct access from the interior of the dwelling, and has a permanent heat source it should be considered in the GLA section of the appraisal.
 
·         If there is a permitted additions and it does not conform to the subject's design and appeal, quality of construction, etc. and/or does not have direct access from the main dwelling, it should not be considered in the GLA section of the appraisal, however, it should be considered in a separate line item and given value per the market reaction.
 
VA Loans
 
VA has no specific requirements for non-permitted additions/improvements.  The property must meet VA's minimum property requirements as verified by the appraiser.  VA relies on the appraiser to make the determination as to whether permits are required for any additions/improvements made to the subject and would then make the appraisal "subject to" verification of permits.
 
For nonconforming or specific non-agency investor loans – guidelines for that specific investor will apply and must be followed.
 
FHA Swimming Pools
 
If the  subject property is a bank  owned property:
 
Empty pool must have a hard-cover capable of hold the weight of a child or adult.  Pool must be secured so the pool cannot be used for other purposes, such as kids using the pool for skate boarding, or riding bikes.

Appraiser must comment on the covered pool, with pictures.   Appraiser to make the comment that it is assumed the pool is in working order, but will be up to the buyer to accept the pool in as-is condition.  The Buyer will need to sign certification that the pool is being accepted in as-is condition with no warranties from the Bank, the Lender or HUD.
 
If the  property is NOT  a bank Owner Property;
 
HUD will want the pool filled, to prove the pool is in proper working condition.   HUD will also want to have a LOE from the owner explaining why the pool is empty.
 
If the  Buyer  wants to fill  the  pool in with dirt:
 
They must contact their local permitting municipality, and permit the work as required.   In most cases, the local regs will require the bottom of the pool be busted out before the pool can be filled with any material, (other than water).   If the bottom of the pool is not busted out, it poses a danger of
Become a muddy pit, or bog, and a health and safety danger, since there is no place for water to drain off naturally.
 
FNMA  also has  specific guidelines for dealing with Swimming Pools;
 
Pool securing is defined as the confirmations that all fences, lanai, and gates are intact, secured with a padlock, and are a minimum of four feet high.   When the pool cannot be satisfactorily secured, the servicer must provide a bid to repair or replace the fence/lanai/gate.
 
When a fence/lanai/gate is not present, bids to cover the pool may be submitted with photo documentation showing that the fence, lanai, or gate is not present.   In addition, the servicer must 1) provide a bid to tarp the above ground pools, or 2) provide a bid to cover with a polypropylene safety cover anchored to the pool deck for below ground pools with a deck, or 3) provide a bid to board for below ground pools without a deck.
 

The below article is from the Northwest Multiple Listing Service

Mixed Sales Results for March
Mon, Mar 03, 2014
April 3, 2014
Lack of inventory is holding back sales
Current Statistics | Monthly Recaps | Market Update Charts
Northwest Multiple Listing Service brokers reported rising prices on fewer sales during March compared to a year ago, citing inventory shortages as the main reason.
Members of the MLS reported 9,183 pending sales (mutually accepted offers) during the month, about 300 fewer than the same period a year ago for a 3.2 percent drop. Compared to February, pending sales surged 26.7 percent in March, or by 1,936 transactions.
"The only thing holding back sales is the lack of inventory," said John Deely, a member of the Northwest MLS board of directors. He said one recent listing priced at a fair market value drew more than 40 offers. "The depth of buyer demand appears to have no bottom in the most popular price ranges," added Deely, the principal managing broker at Coldwell Banker Bain in Seattle.
Closed sales were about the same as twelve months ago – 5,753 completed transactions last month, which compares to the year-ago total of 5,745 closed sales.
The median price on last month's sales of single family homes and condominiums that sold across the 21 counties in the MLS report increased  6 percent, rising from the year-ago figure of $258,500 to last month's price of $274,000.
Adequate supply to meet demand is a continuing concern, according to Northwest MLS representatives who commented on the latest numbers. Many industry leaders expect the imbalance to persist. 
"Once again we entered the year with a low inventory of homes for sale, and we believe the shortage will persist through this year and into 2015 in price ranges where 90 percent of sales activity is occurring," said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate.
MLS members added 9,598 new listings to the database during March, slightly more than a year ago when they added 9,332 new listings. While last month's additions were about 33 percent more than February when 7,234 new listings were tallied, brisk sales meant supply remained low.
At month end, the Northwest MLS reported 19,736 active listings of single family homes and condos across its service area. That's up about 6.7 percent from twelve months ago.
The MLS said there is about 3.6 months of supply, which is down from the end of February when the service reported about 4.6 months of supply. King County has only about 1.8 months of supply, while Snohomish County was slighter better with 2.2 months of supply.
In general, industry analysts say four-to-six months is the supply needed for a balanced market.  "We need a housing supply of over 6 months to have a generally balanced market between home buyers and sellers," stated Lawrence Yun, chief economist and senior vice president of research at the National Association of Realtors®.
"There are many reasons potential sellers should consider selling now," said Mike Gain, CEO and president of Berkshire Hathaway HomeServices Northwest Real Estate in Seattle. There is less competition now at the beginning of the spring selling season (usually the busiest time of the year) and interest rates are still very low but will likely rise, he noted.
"Now is a great time for move up sellers/buyers who can sell their home quickly and secure another at today's prices and today's lower interest rates," Gain suggested, emphasizing, "Buying a home today is going to prove to be a smart investment in the long run."
Commenting on March activity, OB Jacobi, president of Windermere Real Estate, said he expects market conditions of low inventory, strong competition among buyers, steadily rising prices – and rising rents – will continue in the foreseeable future. "Rents are on the rise, and when this happens, there's often a shift where people get priced out of the rental market and move into home ownership. This leads to more demand for homes and upward pressure on prices," he stated.
Stiff competition among buyers is creating frequent multiple offer situations, according to Gain. "We have way more people wanting to buy than we have appropriate homes to sell in the right locations and at the right prices," he remarked, adding, "Our market is literally starving for good inventory in desirable neighborhoods."
Gain also said there are more first-time buyers than he has seen in many years. "Many are very well qualified for a mortgage and have more than minimum down payments." As an example, he mentioned a resale townhome listing in West Seattle with an asking price of $439,950. Within a few days of it being listed, it had four offers, all with accelerator clauses. The property sold for $459,950, prompting Gain to say, "It's heartbreaking to have so many good purchasers and not enough good inventory to satisfy their needs."
Not all markets in the MLS service area are experiencing the same pressure. 
"Despite low inventory and falling market time, our prices are still flat overall in Kitsap County," said Frank Wilson, Kitsap district manager and branch managing broker at John L. Scott Real Estate Poulsbo.
Wilson noted distressed properties (short sales or bank acquired homes) are still a factor. "Those home owners are now renting and most will not be able to buy again for a few years as they get the credit ding of a short sale or repossession behind them."
As these sidelined buyers reenter the market, Wilson expects inventory will drop lower and prices will rise. Qualified purchasers who are thinking about buying "should take advantage of the stay of rate increases," he suggested, referring to statements by Federal Reserve Chairwoman Janet Yellen, who made assurances earlier in the week that the Fed intends to keep interest rates low for now.
Pending sales in Kitsap County were about even with a year ago, while 12 of the 21 counties in the MLS system reported declines.
The condominium component ended on a positive note during March, with pending sales rising nearly 7.9 percent from a year ago. MLS members reported 1,345 pending sales, up from the year-ago total of 1,247.
Closed sales rose 2.4 percent, but prices on those sales jumped 14.7 percent. The median sales price on last month's condo sales was $220,000, up from twelve months ago when it was $191,750.
Northwest Multiple Listing Service, owned by its member real estate firms, is the largest full-service MLS in the Northwest. Its membership includes more than 21,000 real estate brokers. The organization, based in Kirkland, Wash., currently serves 21 counties in Washington state.
Statistical Summary by Counties: Market Activity Summary – March 2014
Single 
Family
Homes 
+ Condos    LISTINGS    PENDING
SALES    CLOSED SALES    *MONTHS of INVENTORY
New
Listings    Total 
Active    # Pending
Sales    #
Closings    Avg.
Price    Median
Price    This Month    Same 
Month
Year Ago
King    3,475    4,191    3,621    2,297    $462,644    $378,000    1.82    1.62
Snohomish    1,378    2,105    1,481    949    $311,314    $295,000    2.22    1.58
Pierce    1,568    3,200    1,563    919    $240,707    $222,950    3.48    2.96
Kitsap    452    1,170    434    259    $287,163    $225,000    4.52    5.23
Mason    141    579    104    68    $161,860    $134,000    8.51    9.83
Skagit    227    644    200    116    $271,083    $232,975    5.55    6.13
Grays Hbr    148    631    119    85    $122,228    $102,000    7.42    14.94
Lewis    122    576    119    72    $139,201    $129,750    8.00    9.98
Cowlitz    152    447    112    74    $157,019    $142,650    6.04    4.24
Grant    130    424    110    59    $150,344    $135,000    7.19    10.25
Thurston    447    1,092    420    246    $230,026    $222,250    4.44    4.00
San Juan    91    312    41    25    $480,060    $400,000    12.48    20.60
Island    214    616    148    93    $287,363    $243,299    6.62    8.29
Kittitas    104    341    57    42    $238,481    $220,000    8.12    8.02
Jefferson    76    333    47    38    $284,347    $264,500    8.76    8.83
Okanogan    59    348    24    18    $151,989    $147,000    19.33    20.24
Whatcom    396    1,216    311    217    $268,731    $239,950    5.60    6.55
Clark    59    149    78    42    $268,791    $245,000    3.55    2.16
Pacific    95    367    42    26    $164,920    $139,000    14.12    13.48
Ferry    2    50    0    1    $82,500    $82,500    50.00    36.00
Clallam    93    352    58    37    $212,228    $182,000    9.51    8.28
Others    169    593    94    70    $216,926    $177,000    8.47    8.36
MLS TOTAL    9,598    19,736    9,183    5,753    $339,466    $274,000    3.43    3.22
4-County Puget Sound Region Pending Sales (SFH + Condo combined)
(Totals include King, Snohomish, Pierce & Kitsap counties)
     Jan    Feb    Mar    Apr    May    Jun    Jul    Aug    Sep    Oct    Nov    Dec
2007    4869    6239    7192    6974    7311    6876    6371    5580    4153    4447    3896    2975
2008    3291    4167    4520    4624    4526    4765    4580    4584    4445    3346    2841    2432
2009    3250    3407    4262    5372    5498    5963    5551    5764    5825    5702    3829    3440
2010    4381    5211    6821    7368    4058    4239    4306    4520    4350    4376    3938    3474
2011    4272    4767    6049    5732    5963    5868    5657    5944    5299    5384    4814    4197
2012    4921    6069    7386    7015    7295    6733    6489    6341    5871    6453    5188    4181
2013    5548    6095    7400    7462    7743    7374    7264    6916    5951    6222    5083    3957
2014    5406    5587    7099                                             
__________
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This waterfront home in Kingston was just listed!  It is located on Sunrise Beach Drive on 156' of high bank waterfront. It has fabulous views of the Cascades and shipping lanes!  Call me for a showing!

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Confidence Springs Higher

Since last Wednesday's Fed meeting, there has been little market moving news. The economic data released over the past week contained few surprises. One influence on U.S. mortgage rates resulted from a shift in expectations for European Central Bank (ECB) policy, which helped mortgage rates move a little lower this week.

While the Fed is cutting its bond purchases and providing guidance for raising the fed funds rate, the central banks in Europe and Japan remain on the opposite path. The Bank of Japan (BOJ) continues to provide massive amounts of monetary stimulus, with no indications of slowing. Low readings for inflation in the euro zone this week sparked rising expectations that the ECB will increase its monetary stimulus. In the global economy, stimulus from the BOJ and the ECB affects bond yields around the world, including U.S. mortgage-backed securities (MBS).

The housing data released over the past week reflected results for February which remained depressed by unusually severe winter weather. Both New and Existing Home Sales decreased a little from January and were well below last year's levels. As a potential sign that spring will see improving economic activity, Consumer Confidence, which is March data, jumped to the highest level since January 2008. 

The next Employment Report, the most significant economic data each month, will be released on April 4. Before then, Pending Home Sales, Core PCE inflation and ISM Manufacturing will be of interest to investors. Outside the U.S., economic data from China and Europe will have the potential to influence U.S. mortgage rates. Investors also will be keeping an eye on the situation in Ukraine. 

Commentary provided by MBSQuoteline. For live MBS pricing visit www.mbsquoteline.com.

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Forclosure Report for Bainbridge Island and Kitsap County

Above is a link to the Forclosure Report issued by Pacific NW Title on a weekly basis.   It is a great resource for the future home owner or investor that likes to purchase low, remodel and sell.   Properties from Bainbridge Island, Poulsbo, Suquamish, Indianola, Hansville, Kingston, Silverdale, Bremerton and Port Orchard may be listed.  

Please call on me should you like any further information on the properties contained in this report!

The link below contains pending and sold home sales in Kitsap County and on Bainbridge Island.   The DOM column is days on market that the home was on the market before accepting an offer.  

Home Sales Kitsap County and Bainbridge Island for 1st Quarter 2014

My Sister-in-law just made one of these light fixtures for a barn remodel!  She put the mason jars on a medal wheel used for irregation.