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By Tara-Nicholle Nelson Americans waited with bated breath on our congressional leadership to resolve the debt ceiling crisis. At the 11th hour, a deal was struck to cut spending and raise the nation’s debt ceiling, avoiding the potential that the U.S. would default on at least some of its obligations. But the deal didn’t provide new tax revenue, and the spending cuts it identified fell short of what analysts with the ratings agency Standard & Poor’s thought was needed for the country to begin getting a handle on the national debt. On Aug. 5, Standard & Poor’s downgraded the U.S.’s AAA long-term credit rating to AA+ – a historic first. Paradoxically, Treasury yields and mortgage rates plummeted in the wake of the decision, as panicked investors moved money out of global stock markets and into the relative safety of U.S. government bonds and securities that fund most mortgage lending. But in the long run, the government’s borrowing costs — and everyone else’s — may very well increase. If investors share the view of analysts at Standard & Poor’s — that achieving a government spending plan that not only contains growth in public spending but also raises revenue “will remain a contentious and fitful process” — Treasurys could fall out of favor with investors. That would push Treasury yields up, and rates on mortgages, credit cards and other loans would be likely to follow. Hopefully, one bright side of this debt drama will be to shock the nation into deficit-reducing action. Another silver lining? There are three key lessons we can all take away from the nation’s credit downgrade and apply to our own personal finances: 1. Don’t flirt with late payments. America did not actually default on any of its debt — not even a single payment was missed or late — and it still took a credit hit. Many individual consumers also flirt with late payments on their accounts, trying to take advantage of the 30 days after a payment is due that a creditor must wait to report the account delinquent to the credit bureaus, or otherwise missing a payment here or there. You’re only human, right? And how much harm could a day or two do, you might wonder? Credit card companies have been on a contract-revising tear lately, and some credit card companies now have the right to jack up your 6 percent interest rate to nearly 30 percent if you make your payment even one day late. Also, without a system for paying things on time, every time, it becomes much easier for a bill to slip through the cracks, resulting in an actual 30-day-late mark on your credit report. While neither of these outcomes is $100 billion bad, they are both undesirable. 2. Credit isn’t everything — unless you need it. Through having challenged credit or just finding credit difficult to get these last few years, many consumers have discovered that their lives and their financial decision-making fundamentally improve when they can’t use credit. I know I personally have stopped using credit altogether since the recession hit, and have, as a result, saved tens of thousands of dollars I would have spent otherwise. One way I’ve done this is by simply saving and paying for things in cash, like my car, at much lower prices than I would have spent if I were going to finance them. I’ve also simply paid many accounts entirely off, out of a conscious decision to eliminate all debt, rather than trying to keep accounts going the way I would have if I were really concerned about maxing my credit score out. However, if you’re gearing up to make a large purchase on credit — like a home — the difference between a good credit score and an OK one can be the difference of many thousands of dollars in increased interest rates. And that can be the difference between being able to afford a home with the square feet or in the neighborhood you like, and not. So, if you even think you’ll be buying a home or a car in the near future, be conscious about all your financial moves and get educated about their likely impact on your credit score before you make them. Sometimes, things you think would bring your score up have a surprising effect — your best bet is to connect with a mortgage broker as early as possible so you can have months or years to polish up your credit score, and an adviser on tap to consult before you pay something off or close out any accounts. If you’ve decided to forgo credit purchases for the foreseeable future, shift your focus to setting and achieving financial goals such as getting out of debt, stuffing your cash cushion with more financial feathers or investing for retirement. 3. The less debt, the better. The ultimate reason behind the U.S. credit downgrade was that the rating agency closely watched what happened in the debt ceiling debate. The debt ceiling compromise will cut about $2 trillion in spending over 10 years. But without additional spending cuts (opposed by Democrats) and tax increases (opposed by Republicans), Standard & Poor’s estimates that government debt will still continue to rise, from an estimated 74 percent of gross domestic product at the end of 2011 to 79 percent in 2015 and 85 percent by 2021. Apparently, the days when the name of the game was to take as much debt as you can pay for month to month are long gone. Fundamentals like reducing debt, it would seem, are back in style. Now, the average consumer certainly didn’t have the opportunity to run up a few trillion in debt before they got cut off or their credit was dinged. But FICO and other credit-scoring algorithms do reward consumers who have a low credit utilization ratio, meaning that they responsibly use credit, but have a large amount of unused credit. Under FICO’s system, the ideal scenario is for 70 percent of available credit to be free. Living in a constant state of maxed-out credit balances is penalized in consumer credit, just as it was in the federal credit debacle. In a crisis or pinch, borrowers with maxed-out bills are much more likely to default. And maxed-out bills are also a signal of poor financial management, waving a red flag that you live above your means, and might even be using credit cards to live off of (sort of like our government does). If you are the type who has a dozen credit cards that stay at or near their limits at all times, you should take that as a warning sign that you need to realign your spending with your income or otherwise work on healing your relationship with money. Start a program of tracking what you spend every month, as a jumpstart to a debt reduction plan and a commitment to live within your income, after your savings and investments come off the top. Tara-Nicholle Nelson is author of “The Savvy Woman’s Homebuying Handbook” and “Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions.” Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com. |
Home prices up a tad, but road remains ‘bumpy’
U.S. home values posted the smallest quarterly decline in more than four years in the second quarter, while Seattle-area prices actually rose, according to a new report from Seattle-based real estate company Zillow.
But the price of a typical home was still down 6.2 percent nationwide and 8 percent in King, Pierce and Snohomish counties from a year earlier, reaching $171,600 and $262,400, respectively. Values have fallen 28.8 percent nationwide and 31.2 in the Seattle area since their respective peaks in June 2006 and June 2007.
“While there are many positive signs in the second quarter, and it is clear the post-tax credit free-fall of home values is over, we’re not out of the woods yet,” Zillow Chief Economist Dr. Stan Humphries said in the report.
It is very encouraging that two-thirds of markets in our report experienced home value appreciation, but we have to remember that this is coming on the heels of one of the worst quarters since the housing recession began.
We expect a bumpy road ahead. There will be many ups and downs in home values before this is over, and we continue to expect a true bottom in 2012, at the earliest. There are still hazards in the form of a full foreclosure pipeline, high negative equity and fluctuations in demand.
Zillow noted that just 25 of the 154 metro areas in its reports have shown appreciation for two consecutive quarters.
Seattle itself fared better than the area and nation, with the typical price, $348,800, up 1.1 percent from the prior quarter and down 4.4 percent from the second quarter of 2010.
These numbers show more strength than sales price data from the Northwest Multiple Listing Service. One reason is that Zillow looks at all homes, rather than just those that happen to sell in a given period.
Commenting on the most-recent listing service report earlier this month, Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University, said sales prices are being dragged down by a concentration of sales up to $350,000 and a “fairly absent high end.”
Foreclosure homes also have brought down median sales prices. Zillow reported that foreclosures accounted for 23.5 percent of second-quarter sales in the Seattle area and 19.7 percent nationwide.
In June, 31.4 percent of homes sold in the Seattle area and 34.1 sold nationwide sold for a loss. Last quarter, 33.9 percent of area houses and 34.4 percent nationwide had mortgages for more than their value.
The foreclosure shares, homes sold for a loss and negative equity figures were improved from the prior quarter.
Posted by Aubrey Cohen
Source: seattlepi.com
Mortgage Rates Hit Record Lows Amid Signs of Weakening Economy
CLEAN, Va., – Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing mortgage rates dropping sharply amid falling bond yields and signs of a weaker than expected economy. The 30-year fixed averaged 4.39 percent, its lowest level for 2011. The 15-year fixed and 5-year ARM set new historical record lows averaging 3.54 percent and 3.18 percent, respectively.
30-year fixed-rate mortgage (FRM) averaged 4.39 percent with an average 0.8 point for the week ending August 4, 2011, down from last week when it averaged 4.55 percent. Last year at this time, the 30-year FRM averaged 4.49 percent.
15-year FRM this week averaged 3.54 percent with an average 0.7 point, down from last week when it also averaged 3.66 percent. A year ago at this time, the 15-year FRM averaged 3.95 percent.
Image courtesy of thegoldguys.blogspot.com.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.18 percent this week, with an average 0.6 point, down from last week when it averaged 3.25 percent. A year ago, the 5-year ARM averaged 3.63 percent.
1-year Treasury-indexed ARM averaged 3.02 percent this week with an average 0.5 point, up from last week when it averaged 2.95 percent. At this time last year, the 1-year ARM averaged 3.55 percent.
Frank Nothaft, vice president and chief economist at Freddie Mac, reports, “Treasury bond yields fell markedly after signs the economy was weaker than what markets had previously thought allowing fixed mortgage rates to follow this week with the 15-year fixed and 5-year ARM setting new historical lows. The economy grew 1.3 percent in the second quarter, which was below the market consensus forecast, and first quarter growth was cut to less than a quarter of what was originally reported. In fact, the first half of this year was the worst six-month period since the economic recovery began in June 2009. Moreover, consumer spending fell 0.2 percent in June, representing the first decline since September 2009.”
“On a positive note, there were indications that the housing market is firming. Real residential fixed investments added growth to the economy in the second quarter after subtracting from growth over the first three months of the year. The CoreLogic® National House Price Index rose for the third straight month in June (not seasonally adjusted) and was the first three-month gain since June 2010. Finally, pending existing home sales rose for a second consecutive month in June and was up nearly 20 percent from June 2010 when the housing tax credits expired.”
Published: August 5, 2011
Seafair Torchlight Saturday 7/29/2011 Schedule of Events
An excellent Schedule of this Saturday’s Seafair events. Have Fun!
SCHEDULE
Taste of Torchlight | 2 p.m.- 6 p.m.
Michelob ULTRA Seafair Torchlight Run | 6:30 p.m.
Scholarship Program for Women Miss Seafair Coronation | 7:30 p.m.
Alaska Airlines Seafair Torchlight Parade Presented by AT&T and LG | 7:30 p.m.
EVENT INFORMATION
Taste of Torchlight
2 p.m. – 6 p.m. | Seattle Center
A Preview of the Parade
Seafair Taste of Torchlight is a lively spread of interactive booths, exhibits, performances and float displays, and is free toattend. Come pet and play with future Iditarod champion Husky puppies at theAlaska Airlines booth. Floats will be on display along Mercer St. Check out thedrill teams and band performances, such as the Alaska Airlines Flight AttendantDrill Team, the Calgary Round Up Band, and the “Get a Life” Marching Band.There will be free give-a-ways, prize wheels, and demonstrations from ourpartners, including: AT&T and LG, BECU, Clear Channel, Clif Bar, WesternWashington Hyundai Dealers, Jamba Juice, Pirate’s Booty, Safeco Insurance, 76,Alaska Airlines, Albert Lee Appliance, Holiday Inn Seattle-Renton, BrooksSports, Competitor Magazine, Group Health, NW Runner, TalkingRain andWashington Athletic Club.
Seafair Commodores Ceremonial Rose Planting at Taste of Torchlight
4:30 p.m. | Seattle Center Grounds
2011 Commandant Joe Gong of the Seattle Seafair Commodores will behonored with a Ceremonial Rose Planting performed by the Royal Rosarians ofPortland, Oregon. The ceremonywill be held at the base of the Space Needle in the Seattle Center CommodoresRose Garden at 4:30 p.m. This ceremony is rich in pageantry and traditionreflecting the Royal Rosarians partnership with the Portland Rose Festivalsince 1912.
Michelob ULTRA Seafair Torchlight Run
6:30 p.m. | Seattle Center
Over 5,000 runners will participate in Seattle’s original road race featuring a 5K and 8K course. Both races will journey down the Alaska Airlines Torchlight Parade Presented by AT&T and LG route in front of the fans. It will be televised live on KIROTV. There will be a pirate costume contest with prizes for the top three adultand top three child participants. Online registration has closed. In personregistration is open today at Road Runner Sports – Greenlake from 10 a.m. – 6p.m, and at the race site on Sat. from 2 p.m.- 6 p.m. Those who have already registered can pick up their packets as well.
Scholarship Program for Women Miss Seafair Coronation
7:30 p.m. | Westlake TV Zone (4th Ave. & Pine St.)
The 2011 Coronation will take place prior to the Torchlight Parade live on KIRO 7 in the Westlake TV Zone along the route. Following the coronation and awarding of scholarshipmoney, the new Miss Seafair will begin her reign by riding in the Torchlight Parade.
Alaska Airlines Seafair TorchlightParade Presented by AT&T and LG
7:30 p.m. | Seattle Center, 4th Avenue
Everybody loves a Parade – andnone is more magical, musical and thrilling than the Alaska Airlines SeafairTorchlight Parade Presented by AT&T and LG. The parade willinclude over 100 entries, ranging from giant helium balloons, precision drillteams representing local communities, equestrian units, comical clowns,swashbuckling pirates and heart-pounding bands playing all your favorite tunes.
About Parade Grand Marshal Drew Carey
Seafair is proud tointroduce Drew Carey as this year’s Grand Marshal for the Alaska AirlinesSeafair Torchlight Parade presented by AT&T and LG. Carey is a stand-upcomic turned actor and producer and is now regarded as American soccer’s mostrecognizable supporter. Carey is a minority owner of Seattle Sounders FC andserves as chairman of Sounders FC Alliance, the club’s member association.Carey served on the USA Bid Committee, a non-profit organization created toprepare a successful application to host the FIFA World Cup ™ in 2018 or 2022on behalf of the United States Soccer Federation.
TICKETING & WATCHING THE PARADE
Reserved bleacher seating for the parade is SOLD OUT.
Seating along the parade route/sidewalk is available on a first come,first-served basis. Parade goers arrive downtown as early as 7 a.m. tosecure their favorite curb-side spot. They often bring blankets, chairs andcoolers.
LIVE TELEVISION COVERAGE
Join KIRO 7′s Steve Raible and Angela Russell as they bring the Torchlight Parade into your living room! Starting at 7 p.m. with the pre-parade show, followed by the Scholarship Program from Women MissSeafair Coronation and then the parade. You can also watch live streaming videoof the parade coverage and the Seafair Pirates from the Pirate-Cam on KIRO’s website at www.kirotv.com.
Seafair Torchlight Saturday Sponsors
Alaska Airlines, AT&T, LG Mobile, The Boeing Company, Albert LeeAppliance, KIRO 7 Eyewitness News, 76, Tulalip Resort Casino, BECU, JambaJuice, Holland America Line, Western Washington Hyundai Dealers Association,TalkingRain Beverage Company, American Family Insurance, Seattle Seahawks,Seattle Sounders FC, Wells Fargo, Radio Disney, Seattle Center, Michelob ULTRA,Brooks, Group Health, Washington Athletic Club, Road Runner Sports, Nuun,Budweiser, SeattlePI.com, SportsRadio 950 KJR.
Source: Seafair Official Website
Neighborhood of the week: Covington
Despite rapid growth, the relatively new city of Covington maintains an out-in-country feeling that comes with home prices that appeal to young families and first-time buyers.
By Madeline McKenzie
Special to The Seattle Times
Nearly everything in the retail core of Covington has been built in the last 10 years, and in fast- growing South King County’s newest city, an “older home” was built in the 1960s or 1970s.
There’s no downtown, just a busy shopping area with City Hall sharing space in a modern building — with such tenants as a dental office and massage clinic — that is near a strip mall.
Quiet suburban cul-de-sacs right off the traffic roundabout near Costco and Fred Meyer, horse farms a few minutes up the road from Walmart, Kohl’s and Applebee’s and a background of evergreens and Mount Rainier behind the 272nd Avenue Southeast commercial district are oh-so-Covington.
“It a nice place to be, out of the rat race,” says local resident Kevin Holten, owner of a small, folksy garden-art store across the street from the huge Costco.
“It was more rural when I moved here 25 years ago; there’s been a lot of building the last 10 years or so. I live five minutes away in a house on more than an acre — everything is just a few minutes away.”
Affordable housing is the area’s big draw, with most homes in the $200,000 to mid-$300,000s price range, popular with young families and first-time homebuyers.
Most of the homes are single-family houses, many with large yards. There also are some high-density neighborhoods with houses where “you can stick your arm out the window and touch the house next door,” as one longtime resident said.
Retail expansion and the building of new homes have continued in Covington despite the economic downturn of recent years.
“A lot of people are still hesitant to buy because of economic uncertainty, but there’s properties with multiple offers every week,” says Michelle Constantine, a local Windermere Real Estate agent and resident. .
“Convenience is really a draw, the combination of so many services and a relatively easy commute to Seattle and the Eastside.”
Like many residents, Constantine praises the local schools and convenience to outdoor activities and rural areas.
New home projects include Coho Creek near Kentwood High School that’s sold about half its 117 homes, priced from $255,000 to the $290,000s, since opening late last year.
Most houses in Covington were built in the 1980s or later, mainly in developments, with some large- acreage and high-end properties scattered throughout town.
The median value of all single-family houses in Covington, not just those that recently sold, was $219,700 in April, according to Seattle-based Zillow. That’s down 10.1 percent year-over-year, but up 0.8 percent from March, the Zillow Home Value Index shows.
Houses recently listed for sale in Covington ranged from a small, three-bedroom for $125,000; a three-bedroom, 1,490-square-foot house with a partial view of Mount Rainier for $199,950; a two- level, four-bedroom with large landscaped yard for $230,000; a five-bedroom home on a large lot for $334,900; and a large house on an acre for $599,950.
Vacant lots and tracts are also available. Like most of South King County, the area has become more diverse in recent years, with ethnic eateries in local strip malls offering teriyaki and pho in addition to area’s fast-food restaurants.
Formerly an unincorporated area of Kent, Covington takes its name from an 1880s surveyor who helped logging companies develop a railroad line in the area.
Incorporated in 1997, Covington has its own police, parks department, mayor and city council; public schools are part of the Kent School District.
The city is working on a pedestrian-oriented “Main Street” downtown with a public plaza, still in the planning and zoning stage. City amenities include parks and the popular Covington Aquatic Center indoor pool.
Access to Covington is via Highway 167, accessible from Interstate 405, either through Kent on Southeast 272nd Street or via Highway 18. With the rapid growth in the area, many residents work in Southeast King County, along with those who commute to Seattle or the Eastside.
Besides Metro Transit bus service, Kent Station provides commuter options including the Sounder trains to Seattle, Everett and Tacoma.
“This is a great place,” says resident Troy Lightbody. “It’s small; everything’s so close, all the stores, Lake Sawyer and Lake Meridian,” one of several locals who raves about shopping convenience close to outdoor recreation.
Erika Panzer, a resident and college student, praises Covington’s location “between Seattle and Tacoma, between the SuperMall and Southcenter, with good schools, short commutes to all kinds of stores, restaurants and Green River Community College.”
“I love it here,” Panzer says. “We’re in the middle of everywhere.”
Source: The Seattle Times, Real Estate, Neighborhood of the week
