INSIDE
This Issue
WHY RENTAL RATES ARE INCREASING AND WHAT TO DO ABOUT IT PAGE 5 HIGHER RATES CARRY A POSSIBLE TAX PERK PAGE 7
JULY 22, 2022
TABLE OF CONTENTS Why rental rates are increasing and what to do about it..................................................................................P5 Q&A Ask Our Broker.......................................................................P6
Higher rates carry a possible tax perk..............P7
INSIDE PAGE
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July 22, 2022
STAT Real Estate Stat
1.16 million The inventory of unsold existing homes rose to 1.16 million by the end of May 2022. Source: National Association of Realtors
NORTH PUGET SOUND ASSOCIATION of REALTORS® Mount Vernon, WA 98273 (360) 416-4902
www.npsar.realtor
WHY USE A REALTOR®?
Buying or selling a home can be one of the most exciting, and most stressful things you will ever do. The terminology, the paperwork and the amount of investment you make can seem overwhelming. When you make the decision to use a REALTOR®, you can be sure that they will be looking after your best interests. The term REALTOR® is a registered trademark, the use of which is earned by your real estate agent or broker through ongoing training and membership in the largest trade organization in the country, The National Association of REALTORS®. Every member of the National Association of REALTORS® makes a commitment to adhere to a strict Code of Ethics, which is based on professionalism and protection of the public. The Code of Ethics is a promise - as a customer of a REALTOR®, you can expect honest and ethical treatment in all transaction-related matters. If you want to be sure that you are dealing with a REALTOR® member, visit our website at www.npsar.realtor to see a listing of current local member offices, or look for an office that has earned the distinction of displaying the Source: www.realtor.org REALTOR® logo.
583 WALLA WALLA WAY, LA CONNER
WINDERMERE RE/ANACORTES PROPERTIES 3018 COMMERCIAL AVE. 360-293-8008 www.AnacortesRealEstate.com
Mission Statement: The Nor th Puget Sound Association of Realtor s advocates for Realtor s and their clients, and promotes the protection of property rights.
July 22, 2022
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$1,050,000
JACKIE STONE 360-661-2247
Outstanding Panoramic Water, Mountain & Valley Views! One-level living in your custom Earl Estenson home. Enjoy privacy and seclusion with sunrises over Mt Baker, views of historic La Conner, Rainbow Bridge, Marina, Swinomish Channel & tulip fields with eagles soaring above. Easy entertaining in spacious great room, including dining & gourmet kitchen. Private lower level suite with separate entrance. Large garage plus attached shop & greenhouse and just 6 steps down to main level living with views from all rooms. Shelter Bay amenities including swimming pool, club house, private beach, golf, tennis & moorage possible. Just over the Rainbow Bridge to the picturesque town of La Conner. MLS# 1971196
247990-1
525 East College Way, Suite J
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Now could be the time to sell a new home and earn a slice of the real estate pie. Record-low interest rates is renewing interest in the housing market for many people. “When sellers are interviewing real estate agents to market their homes, their primary focus is usually on the advertising that the agent will offer them,” says Jessica Goodbody of Weichert Realtors. Let us help you meet your marketing goals by advertising your listings in Real Estate Weekly.
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July 22, 2022
l f Th p m f
l u l o 2 u y p o o (
Why rental rates are increasing and what to do about it
California (up 62.0%), Tacoma (up 49.8%), Jersey City (up 48.6%), and New If you’re in the market to York City (up 45.8%). Why can’t renters catch lease a rental, prepare to a break? Experts point to fork over more cabbage. several culprits. That’s because all signs “Rental prices, similar to point to a less-affordable home sale prices, are on market for current and the rise primarily due to future tenants. According to Rent.com’s continued strong demand,” says Robert Smith, latest data, 95% of rental units are up in price versus a Realtor with Brick & Mortar Properties LLC last year, with rents on in Knoxville, Tennessee. one-bedroom units up 25.5% and two-bedroom “With fewer homes on units up 26.8% year-over- the market, not only are landlords able to be more year. The cities with the selective with who they priciest rent increases in one-bedroom rentals year- rent out to, but they are over-year are Austin, Texas also able to rent out at a (up 121.2%), Long Beach, premium. Some areas have By Erik J. Martin CTW Features
July 22, 2022
seen increased home taxes due to the rising cost of homes, with landlords generally passing that expense onto the tenant via rent increases. Additionally, the cost to repair and update homes have increased along with material prices, so landlords are raising rents to spend less out-ofpocket.” Peter Schravemade, managing partner of Second Century Ventures REACH ASEA, explains that rising mortgage interest rates have made it more expensive to be a landlord, too. “The required return on investment for a landlord is accordingly higher, and
that difference will be passed on to tenants,” says Schravemade. Ran Eliasaf, founder and managing partner of Northwind Group, a real estate private equity firm that manages three discretionary debt funds and is headquartered in New York City, points to the lack of home-for-sale inventory as another major contributor, partially because it’s more expensive to construct homes today. “On the supply side, building material price increases, labor shortages, and supply chain disruptions continue to cause delays in new develop-
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ments and deter developers from entering new construction projects,” he says. “Many consumers are also flux with savings they gathered over the last two years when spending was reduced. Many are now willing to spend bigger on housing, which has contributed to a lower supply of homes.” And fewer available homes on the market mean many prospective buyers must turn to leasing, which adds to rental demand. Not all markets are experiencing serious rental price jumps. Per Rent.com, Indianapolis, Las Vegas, Baltimore, and Atlanta
have seen the price to rent one- and two-bedroom units come down lately. “The eight cities with the largest rent declines have seen a 13% average decrease year-over-year of two-bedroom apartments,” Eliasaf notes. To improve your chances of claiming a more affordable rental, pursue recommended best practices. “Be willing to sacrifice convenience and lifestyle to get a more fiscally sound position. This would include looking at renting further away from work or changing cities and/or jobs if needed,” advises Schravemade. “Alternatively, think about sacrificing the size of your rental dwelling for a lower rental price. And consider a shared rental arrangement in which you get one or more roommates to help you split the costs.” Another proven strategy? “Ask the landlord if they would be willing to decrease the monthly rent amount if a longer lease term is signed. It’s common to see a 12-month lease, but a 24- or 36-month lease is an opportunity, especially when the biggest out-of-pocket expense to a landlord are the repairs and updates needed between tenants,” suggests Smith. “Also, see if giving a larger security deposit would result in a break on your rent, if allowed.” Lastly, work on improving your credit score; a lower credit score, caused by things like missed payments, could result in you being charged a higher rent or rejected by a landlord.
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Appraisal values in a crazy home market Question:
We want to sell our home but worry whether it will fully appraise. The problem is that real estate values here are soaring, so comps from even a few months ago can be out of date. We feel that appraisals might be lower than selling prices. How do appraisers value properties in a fast-moving market?
Answer:
In most markets and in most years, worries about low appraisals have been limited. However, during the past two years or so, the story has been different. Bidding wars and final agreements well-above asking prices have been common. According to the National Association of Realtors (NAR), the typical home values increased 12.9% in 2020 and 16.9% in 2021. For 2022 -- even with a fall-off in unit sales -- prices are still going up. In April, according to NAR, the number of home sales fell 5.9% when compared with a year earlier, while home prices rose 14.8% during the same period. If you look at these annual price increases, you can see the valuation problem. Prices can quickly and significantly change. For instance, the average price increase in 2021 was 1.4% per month and 1.95% over six weeks.
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These may seem like small percentages, but they add up. For a $400,000 home, the price difference after six weeks is about $7,800. What buyers and sellers want to avoid is a situation where the sale price is less than the appraised value. “Homebuyers,” says CoreLogic, “can be negatively impacted when the contract sales price is above the appraised value as lenders use the lower of two values to calculate the loan-to-value (LTV) ratio. This scenario can require borrowers to bring more cash to closing to ‘close the gap,’ or they may need to pay for mortgage insurance as their LTV is higher than planned. In the worst-case scenario, the sale falls through as the anticipated financing doesn’t work out.” A rapidly rising market is a challenge for appraisers. They can get comps for the recent sale of similar nearby properties, but what about the time gap between when contracts are accepted and transactions actually close, maybe four to six weeks?
Q&A
ASK OUR BROKER By Peter G. Miller Florida Real Estate Appraisal Board, “when the market is out of balance, particularly when the inventory is limited and demand is high as it is now, it is extremely important to examine and analyze the current inventory of listings and pending sales.” “Can pending sales be used in an appraisal?” asks Tom Horn, an Alabama appraiser writing on the Birmingham Appraisal Blog. “The short answer is ‘yes’. Appraisers have three options for comparables. They include closed sales, active listings, and pending sales. The appraiser must use a minimum of 3 closed sales in the appraisal report, however if there are more sales that would support the final value estimate then they should also be included. This might occur when the sales that are available exceed recommended guidelines such as time of sale, distance, or adjustment percentages.” For details and more information, speak with local brokers and appraisers. Email your real estate questions to Mr. Miller at peter@ctwfeatures.com.
According to Francois (Frank) K. Gregoire, an appraiser based in St. Petersburg and the four-time chairman of the
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Higher rates carry a possible tax perk By Marilyn Melia Kennedy CTW Features Mortgage rates are climbing to levels not seen in years. Back then, though, higher rates carried a sweetener: Homeowners typically deducted mortgage interest, lowering their federal income tax bill. But since tax reform in 2017, only 11% of filers itemize, and use mortgage interest as well as another homeowner perk – property tax payments – to whittle down their tax bill. That’s because the 2017 tax law significantly boosted the “standard deduction,” which is the amount any filer July 22, 2022
can deduct from their gross income, while also cutting back on the amount of mortgage interest and property taxes that homeowners could deduct by itemizing. Indeed, for tax year 2022, the standard deduction for a single filer has ratcheted up to $12,950 for single filers, and twice that for marrieds.
• Higher Rates Boost Itemizing Benefit Now that rates are in the five percent range, today’s buyers might find they can save on taxes by itemizing. In the first year, the interest portion of a five percent $270,000 mortgage is more than $1,000 monthly. That
interest, combined with property tax, could mean that a single filer would benefit by itemizing. High income home buyers are more likely to benefit by itemizing since they typically purchase more expensive homes, notes Sarah Shannonhouse, manager for tax practice at the American Institute of CPAs. A typical buyer might find some tax savings, but that’s no reason to take on an uncomfortable mortgage payment. “The only thing one should think about is having emergency savings, being able to afford the mortgage payment, taxes, and upkeep, while saving for retirement and other large goals,” says Nadine Ma-
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rie Burns, an Ann Arbor, MI financial planner.
• Interest Could Lower State Tax “States that assess an income tax may allow taxpayers to claim the mortgage interest deduction,” says Shannonhouse, “regardless of whether they itemize on their federal returns.” That’s a sweetener for anyone paying mortgage interest who live a states charging resident an income choice.
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23952 north West VieW rd, Mount Vernon
55’Waterfront
$1,100,000
nookachaMPs hiLLs driVe Lot 133, MountVernon $230,000
View, view, view! This spacious 2260 sq.ft home on the sunny side of Big Lake has spectacular views from almost every room. Features include a multi-level deck, aggregate patio and private dock. So many opportunities for just relaxing or entertaining guests. Home offers 2 beds/ 2 baths, kitchen with pantry, SS appliances, lots of cabinetry, a peninsula, just add a couple stools to enjoy a little chit chat while preparing a meal. Laundry room has multiple cupboards and a sink. Unfinished 936 sq.ft basement affords more room for storage. From the kitchen step down to the living room with large windows to take in the view, then out the French doors to the partially covered deck, yours to Danya Wolf (360) 708-8294 enjoy rain or shine. MLS#1927143
Ready to Build with power, water, sewer and natural gas in the street. Build your dream home in Nookachamp Hills, a desirable community in the foothills near Big Lake. Enjoy walking/biking the trails and swimming/ fishing in the community’s small private lake/pond. Jenkins Carla Fischer MLS#1970439 Suzanne (360) 941-2983 (360) 982-0010
21290 Lafayette rd, sedro-WooLLey
nookachaMPs hiLLs driVe Lot 136, MountVernon $235,000
$575,000
Possible seller financing with large down payment. Shy 20 acres of farmland with deluxe triple-wide 2150 sq.ft. manufactured home. Portion of acreage is leased year to year to local farmer (about $4500 per year). Pole barn/garage w/attached carport and separate shop.There is garden space and fruit trees, several smaller outbuildings, including starter greenhouse and deck.The home offers a large kitchen with island, pantry, and nook with bay window overlooking farmland. High ceilings and open feel floor plan. Free standing wood stove supplements forced air heat. Primary bedroom has walk-in closet and private bath.There are two more bedrooms, a den, and another full bath to complete this home. Lots of parking for Carla Fischer you and your guests. MLS#1905659 (360) 982-0100
18849 cascade ridge court, Mount Vernon
iMProVed Price $775,000
OPENHOUSE•Sunday,July24th,1-3PM Conway schools; extremely well cared for rambler on 2.77 park like acres just ten minutes from I-5. Beautiful country kitchen with adjoining family room plus separate formal dining and living room provide extra options for entertaining. An open floor plan provides a gracious transition from area to area. Primary bedroom offers spacious bath with double sinks and generous sized walk in closet. Heat pump. 3 bedrooms; 2 baths; separate laundry area with deep sink. Space leveled and prepared for future work shop. Meticulously designed for outside entertaining with patio and incredible focal points.Well-appointed greenhouse; and fruit trees. 3 car garage (800 square feet) & RV parking. Patricia Box Danya Wolf Visiting wildlife: deer; eagles; and more. Cul de sac street. MLS#1922531 (360) 941-9186 (360) 708-8294 Buyer’s agent
Ready to Build with power, water, sewer and natural gas in the street. Build your dream home in Nookachamp Hills, a desirable community in the foothills near Big Lake. Enjoy walking/biking the trails and swimming/fishing in the community’s small private lake/ pond. Trail leading to pond/lake next to property. MLS#1970452 Suzanne Jenkins Carla Fischer (360) 941-2983
(360) 982-0010
14903 rustic Lane, concrete $65,000 Two very well maintained, level lots. Bring your camper, fifth wheel, RV or tiny home. Great location for year round residency or weekend /vacation getaways. Shared well, power available at street. Patricia Box MLS# 1951005 (360) 941-9186
360.424.0300
1207 JaMeson st., sW
iMProVed Price $515,000
OPEN HOUSE • Saturday, July 23rd, 11AM-1PM Vintage one level 2440 sq ft, 4 bed/1.75 bath home on quiet dead end street. Home features beautiful hardwood floors, a free-standing pellet stove and a pellet insert. Bonus space/room near bedrooms has built-in desks and storage. Formal living room, dining room and an eat-in kitchen w/window into family room featuring counter space to fit a couple of stools. Primary suite has walk-in closet, private bath and an extra room that offers an option to work from home with an exterior door providing a separate entry for clients/customers. Fully fenced front and back yards w/mature landscape, covered ‘patio’ Carla Fischer Patricia Box (360) 941-9186 (360) 982-0010 space off the family room. There is an outbuilding for hobby or Buyer’s agent workshop. Garage wired for generator, driveway has plenty of extra parking. MLS#1957623
2301 Martin rd, Mount Vernon
$560,000
Great traditional tri-level home in fabulous location; nearby the YMCA, Skagit Valley College, schools, shopping, and parks. Easy commute. Skagit River is close by for fishing too. Home offers 3 bedrooms on upper level, a full bath and the primary bedroom which has an attached ¾ bath and a private deck. Main level has the living room with gas fireplace insert, kitchen with eating space and dining room at opposite end of kitchen. There are sliding doors to the deck, overlooking the backyard, with a view to the North and to the West for enjoying the sunset. Lower level has Laundry with a ½ bath, a very large hall which could provide an extra seating/ office/hobby area and a bonus room with sliding door access to the concrete patio, which could become a 4th bedroom. Interior is freshly painted, roof and gutter system approx. 2 years old, water heater new in Feb 2022, and the north section of the fence is new, white vinyl. Seller offering $10,000 towards Buyer’s closing costs. Patricia Box MLS#1951361 (360) 941-9186
1307, 1309 and 1311 oLyMPic Lane, Mount Vernon
$139,000 ea.
Each Lot is listed at only $139,000 Ready to build your home in beautiful Eaglemont, lots have all city utilities, you just need to bring your plans and permits. Only a few lots left in Eaglemont! 3 lots side by side, great opportunity for a builder. MLS#1953889, 1307 Olympic Lane; MLS# 1953896, Elva Hunter 1309 Olympic Lane; MLS#1953900, 1311 Olympic Lane (360) 202-3086
3780 E. College Way, Mount Vernon www.skagittraditionrealty.com 249787-1
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