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Scott@SmacRae.com

Hi everyone! Welcome to my 2nd quarter newsletter! many thanks for taking the time to read the news stories and information I have compiled for you. This quarter I am going to be looking at some year on year statistics: Inventory, Days on Market (DOM) for houses that are just listed, and what home prices are doing in the area. This is followed with some informative articles and opinions on housing and mortgage money, but first some great facts about the greater Seattle area and our state. I also have launched my new website at www.SMacRae.com and would love to hear your impressions on it! Facts about Seattle & our state: ﷯Interesting Tidbits: 
1. Washington State is number 6 of the top ten states with the best business tax climate. I must admit this surprised me a bit. The top five are, Wyoming, South Dakota, Nevada, Florida. Source, The Tax Foundation: http://taxfoundation.org/blog/fiscal-times-features-best-and-worst-states-taxes 2. Bellevue is the number two city in the US for New College Graduates to move to. Cambridge, Mass was number one then Bellevue, Austin, Bethesda, and Minneapolis. Source, Livability.com: http://livability.com/top-10/top-10-best-cities-new-college-grads-2014 3. Seattle ranks #4 for best cities for an active retirement. Number 1 is Madison, Wis. #2 is Boulder 
Colorado. #3 is Portland Or. #5 is Billings, Mont. Source, Forbes: http://www.forbes.com/sites williampbarrett/2014/01/16/the-best-places-to-retire-in-2014/ 4. Seattle is # 2 among most literate cities. Wash. D. C. is #1, Minneapolis is #3, Atlanta and Pittsburgh are tied for 4th. Source, Central Connecticut State University: http://www.ccsu.edu/page.cfm?p=11107 5. Washington ranks #11 for job growth by state. The top ten are Nevada, North Dakota, Colorado, Florida, Oregon, Texas, Utah, Delaware, California, Arizona. Source, NAR Economists' Outlook Blog: 
http://economistsoutlook.blogs.realtor.org/2014/04/10/job-additions-state-by-state/ 6. King County ranks third among all U.S. counties for 2013 population growth. Harris, Texas (Houston) again had the largest numeric population increase between July 1, 2012, and July 1, 2013, adding almost 83,000 people. Following Harris were Maricopa, Ariz. (Phoenix), which added 69,000, Los Angeles, Calif. (65,000), King, Wash. (Seattle), which added 37,000; and San Diego, Calif. (35,000). Source, US census bureau: http://www.census.gov/newsroom/releases/archives/population/cb14-51.html My Observations on the Market: ﷯The information below is as reported from the NW Multiple Listing Service Inventory of homes for sale: We have seen a very slow pick up in the number of houses available on the market compared to January 2013 when we say the lowest inventory in recent memory. We are just now starting to get above that 10 year low of houses available which Jan. 2013 was 2,957 compared to 4,213 currently in King Co. While still a market favoring the seller, things are not quite as one sided with more inventory coming onto the market. While there are lots of active buyers, the frenetic pace of everyone beating on your door to present an offer has quieted down to more polite knocks on the door. Average days on the market for newly listed homes: May saw the lowest number of days for newly listed homes on the market before being sold. Average days on market (DOM) for the first quarter of 2014 were almost 78 days, which has come down to 42 DOM in May, with the average DOM for 2013 being 51. This in my opinion is a growing pool of buyers in the area who have taken the financial stability as a positive sign and are feeling strong about the national economy. This along with very positive high tech job growth in the area will bode well for a strong real estate market in the great Seattle area well into the later part of the year. Median sales prices of sold listings: May 2014 saw the highest average sales price in King County of $449,125 which we have not seen since September of 2007 when we were slightly better at $450,000. This is a great number considering in the previous 3 years we saw a low of $310,000 in January of 2012. In my opinion things are looking very positive for the local real estate market. In the last 10 years our highest point for King Co. was July 2007 of $485,000, but we know what happened then. This very slow and progressive increase is great news for our local economy and market, and will hopefully mean a very small price correction when historically the market hits it’s cyclical dip about every 5th to 6th year. Housing Prices: From Trulia chief economist Jed Kolko: “Asking House Prices up 9.0% year-over-year in April, smallest 
year-over-year increase in 11 months, despite Steady Monthly Rise" By Bill McBride Nationally, asking prices rose 0.8% month-over-month and 2.8% quarter-over-quarter in April, seasonally adjusted. Those gains are in line with March increases and show that home prices continue to rapidly climb. However, asking prices rose 9.0% year-over-year, which is the smallest year-over-year increase in 11 months. Why are year-over-year price increases slipping despite month-over-month and quarter-over-quarter increases holding steady? One reason is that the biggest price spike during the housing recovery happened between February and April 2013, and the year-over-year change in April 2014 no longer includes those months. Nationally, rents have increased 4.5% year-over-year and are up more than 10% in San Francisco, Oakland, and Denver. In November 2013, year-over-year asking prices were up 12.2%. In December, the year-over-year increase in asking home prices slowed slightly to 11.9%. In January, the year-over-year increase was 11.4%, in February, the increase was 10.4%, in March the increase was 10.0%, and now 9.0%. This suggests prices are still increasing, but at a slightly slower pace. Note: These asking prices are Seasonally Adjusted - and adjusted for the mix of homes - and this suggests further house price increases, but at a slower rate, over the next few months on a seasonally adjusted basisRead more at http://www.calculatedriskblog.com/2014/05/trulia-asking-house-prices-up-90year.html#kmFJ5UePS57cSpoP.99 Mortgage News:: From housing Wire.com 3 things to know about interest rates for the rest of 2014 Rise or fall, things 
are going to change. Trey Garrison At the start of 2014, most industry experts and insiders
agreed that based on the metrics they had at the time, 
interest rates and therefore mortgage rates would be 
going up in 2014. And yet now five months into the year, mortgage rates 
continue to defy analyst expectations. At the start of 
the year, the Mortgage Bankers Association projected 
interest rates on the 10-year Treasury yield to go from 
3% in the first quarter of 2014 to 3.3% by fourth quarter 
of 2014, averaging 3.2% for the year, and then creeping 
up to 3.5% by the last two quarters 2015, averaging 3.4% for 2015. MBA projected that 30-year fixed mortgage rates will go from 4.7% in the first quarter 2014 to 5.1% by the end of the year, and continuing a slow rise to 5.3% by the end of 2015. Last week, Freddie Mac reported that mortgage rates dropped for the fourth time in five weeks, reaching an all-time low of 4.21% on a 30-year fixed, the lowest its been since November 2013. This is from the high point in January where rates flirted with 4.75%. This is a boon for homebuyers, but what does it mean for the industry, and where will interest rates go? 1) You Can’t Fake a Recovery Everyone likes positive spin, but no amount of Pollyanna press releases can change the fundamentals. Job growth continues to disappoint, affordability remains an issue, and sales of almost all single-family home types are weak. Mortgage applications are slow. Wage stagnation remain challenges for both housing and for the economy in general. Because of this, mortgage bonds in demand, which helps to move mortgage rates lower. 2) Lack of Inflation Rising inflation deflates the demand for mortgage bonds. Prices drop and rates move higher. But since there’s been almost no inflation, demand for bonds means mortgage rates sink. 3) The Taper Will Continue Until Morale Improves Fed Chair Janet Yellen is committed to the taper. Unwinding the Federal Reserve from buying tens of billions of Treasury Bonds every month continues apace. Just last week Yellen told both houses of Congress that the central bank will continue the tapering, with the end of quantitative easing by the fall of 2014, barring any wild changes. Steve Bozick from AXIA home loans: Another take on the Mortgage market After touching levels we haven’t seen since last fall, rates have moved up approximately 1/8% over the last couple weeks. While we may never see rates in the low to mid 3’s again, conventional mortgage rates in the low 4’s and FHA/VA rates under 4% are still available. If your heart is set on a rate in the low 3’s, you’ll have to settle for a 15 year mortgage with the higher payment or an adjustable rate mortgage with its accompanying future interest rate risk. While the general consensus has been that rates must move higher, and I think they will, the real question is when. If you consider that our economy is slowly improving and the Federal Reserve has significantly reduced its bond market stimulus, rates should be moving higher not lower. One of the main reasons is that the world loves American debt, both government debt and mortgage backed securities. As long as we can sell our paper as fast as we can print it, rates will stay low. The events in Europe last week won’t change the outlook either. When the European Central Bank reduced the rates they pay on deposits from its member banks to below zero, it made American debt look that much more attractive. By charging its member banks for deposits, the ECB is trying to induce more investment in a stagnating European economy. The banks won’t deploy those funds immediately, but they will try to find places to put the money where they can earn a little interest. Being good global citizens, the US Government and its borrowing public will be happy to help. Stephen Bozick at Axia Home Loans. Stephen.Bozick@axiahomeloans.com Steve can quickly tell if you can, or should, update your mortgage and he has the tools to help you maximize your credit score if you’re getting ready to consider updating your mortgage. The power of two: Your recommendations to friends and colleagues are always much appreciated. You have my personal guarantee that your referrals will be treated as a privilege by me and you will be thanked by them. If you can think of two people that I could be of service to, please feel free to forward them my contact information. Your help with the Power of Two is greatly appreciated! Best wishes to all for an amazing summer, and please check out my new website and let me know what you think of it! www.SMacRae.com ﷯

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