Growing up in Issaquah, my family spent a lot of time in Wenatchee camping and enjoying other outdoor activities in this area. So, back in 2003 when my wife and I decided to put down roots in a small town, Wenatchee was a natural choice.
After joining Peoples Bank soon thereafter, I came to value the opportunity to provide financial services in a small town. The community-bank model works well in Wenatchee because people truly live and work here. I enjoy the fact that as a family-owned community bank, if a customer comes in with some type of real estate they want to finance — residential or commercial — we can almost always meet their needs or create a plan for financing together.
That said, market conditions are always changing, and the new tax laws in place this year can affect real estate investments. Here are a few things to keep in mind if you’re in the market for real estate.
Consider mortgage insurance. One surprising benefit of the new tax reform bill is the drastic reduction in the cost of most mortgage insurance. In the past, many consumers would never consider buying a house until they had saved up for a 20 percent down payment. However, with the new lower mortgage insurance rates, I have had examples where saving up an additional $10,000 to reach the 20 percent mark would save the homeowner less than $33 a month. For many people, it is easier to pay $33 more per month and buy the house now, instead of hoping that house is still available after they have saved up the additional $10,000. The other part of this is that if you can buy a house with less money down, maybe you don’t have to sell your existing home to buy the new one, and perhaps you can keep it as a rental.
Don’t rule out new construction. The driving force in the real estate market for the past few years has been a lack of supply. The number of new listings has gone down year after year, so many prospective buyers are standing by, waiting for the right house to appear on the market. This has driven a lot of buyers to instead purchase land or a lot, and have a new home built. While available lots are not unlimited, they do at least provide a prospective homebuyer the opportunity to have the house they want instead of just hoping the right one appears on the market at the right price. The cost of new construction can vary drastically depending on location, style and finishes. Many will cost more than an existing home, but some can cost less. Because of the local housing shortage, our area has more custom construction projects going on than many larger markets.
Be prepared. Given the constant fluctuations in the market, loan pre-approval is imperative. I’ve seen an increase in calls in the past year from listing agents with questions about a customer’s finances, because that agent might have several offers they are considering. Getting your financing squared away first, so you can act quickly when needed, is a must in today’s market.
Start building relationships with experts now. I can’t tell you how many times a customer has said, “Oh, I should have talked to you before I did that,” so I always encourage people to consult with experts while they’re still in the planning stage. It’s OK if you’re not ready to buy right away, or if you have work to do to improve your credit score. By consulting with a loan officer early in the process you can make any necessary adjustments — such as reducing debt — so that you are in the best financial shape possible when you are ready to make an offer on a home.
The Wenatchee housing market generally follows the Seattle area, so we should see home prices leveling off in the near future; and with some proposed subdivisions in the area in the next year or two, we may see more affordable housing become available. In the meantime, I encourage potential buyers to be prepared, be patient, and consult with experts early so we can help you navigate the current real estate market.
Darel Ansley has been in the financial service industry for nearly 20 years and is currently Assistant Vice President and Senior Real Estate Loan Officer at the Peoples Bank Wenatchee Financial Center.