It's getting a bit harder for first time buyers to get a real deal on Seattle homes these days. If my personal anecdotes relate at all to the general real estate market in Seattle, there's a real floor being created in prices for entry-level homes. My first time buyer clients are finding that buying a home isn't as easy as making a low-ball offer and waiting for the transaction to close. In the last few weeks:

Buyer 1 tried to purchase 2 new construction condos in University District ($200k) and lost out on both to full price offers the same weekend. This developer doesn't need to negotiate, as sales are coming fast and all at the list price. This same buyer then purchased a new construction condo in Capitol Hill ($270k) at about an 8% discount from list price.

Buyer 2 made a nearly-full price offer on a house in Mt Baker ($250k), only to have another buyer pay full list price (after 4 months on the market) the same weekend.

Buyer 3 purchased a new construction condo in South Lake Union ($400k) at the list price with some financing concessions, as four other lofts in the building sold that same weekend, all at the full listing price.

Buyer 4 found 2 bank-owned condos in Edmonds and Lynnwood ($150k), was too busy with work to write an offer that day, and they were both gone the next day to full-price buyers. Currently has a full-price offer out on a bank-owned condo.

Buyer 5 made an offer of 2% below list price on a small home in Tukwila ($250k), while a competing offer was written above the list price. This home was on the market for 4 months, with no previous price reductions. Some buyers are getting the bidding war mentality.

Buyer 6 just got a contract signed around on a bank-owned home in SeaTac with a nice lake view ($250k). It took a month of negotiation, but this buyer is getting a 10% discount off the list price when we first made contact with the bank.

There are still some deals to be had, so there's no reason to be frenzied about buying a home. First time buyers should get serious, though, if they're trying to meet the November 30 deadline for the tax credit. Short sales will likely not happen in that time frame. Bank-owned homes are still possible, but they need to be under contract in the next few weeks. There will be a surge of home sales in the next month if the tax credit isn't extended, so get ready to make a strong offer and get a transaction moving.

Jumping into the real estate world can be daunting for a first-time home buyer. You've never owned a home before, and now you're supposed to learn about mortgages, down payments, credit scores, contracts, title, escrow, inspections, foreclosures, and many other topics all at once.

A great way to start is by attending a first-time home buyer class. Many brokers, loan officers, title companies, etc. will put on short, informative classes to give home buyers a head start on the learning process. These classes are almost always free, and really pack in a ton of real estate knowledge, as much as you might learn in a few months researching on your own.

Of course, first time home buyer classes are free for a reason. The Realtors, mortgage pros, and title officers who put on these classes are hoping you'll use their services when you decide to buy. The class gives you a great chance to see if you're comfortable with their personalities and style of interaction. The folks who run the classes must be hard-working, up-to-date on current trends, and organized - probably a good set of skills to start with if you're trying to choose a real estate professional.

First Time Buyer Class in Seattle

Schedule of Seattle First Time Home Buyer Classes

Seattle area home sales up 25% in April - First Time Buyers Increase

Home sales in King County, WA surged in April, mostly fueled by a large number of first time home buyers. Total Seattle area home sales were up 25% from March to April 2009, and up 15% compared to the same month in 2008. Low prices, low interest rates, and buyer incentives like tax credits are creating a favorable atmosphere for buyers.

There was a clear majority of home sales in the lower end of the price spectrum, influenced by bank-owned homes, short sales, and first-time buyers. The overall numbers show a still-settling market, but a better-than-expected movement of inventory.

Seattle Home for Sale - Real Estate

Washington moves to make First Time Buyer Loans

First-time home buyers in Seattle and the state of Washington may be able to get that $8,000 tax credit earlier than expected. The WA Legislature has approved a plan to fund short-term loans to buyers and advance them the $8,000 at the time of their home purchase's closing. The loan would be repayable after receiving the tax credit at the end of the year.

From the Washington Realtors' press release:

The program authorizes the state treasurer to deposit $25 million in a financial institution, which would then open a line of credit for the Washington State Housing Finance Commission (HFC). The HFC would use that credit line to pay for down payment loans to first-time buyers. Buyers repay the advance loan after filing for and receiving the tax credit.

First time buyer - time to move

The Seattle Times had a great report this weekend on the advantages of buying for first time home buyers. The market conditions are perfect in Seattle for a first time buyer to get a great deal on a home.

• Interest Rates are Historically low
• Mortgage payments will therefore be more affordable
• Lower payments make it easier for a buyer to qualify for a mortgage
• Income Tax Credit of $8,000 is available to first time buyers
• Prices in Seattle and King County are down a bit, and it's still a buyer's market to negotiate
• The job market and real estate market in Seattle are still among the strongest in the country
  

If a buyer is waiting for the right time, it may make sense to jump off the fence now. No one can predict where prices will be next year, but historically, we know these rates probably won't be lower any time soon. An increase of 1% in interest rates can erase a 15% savings on price in today's market. The $8,000 tax credit is only good through November 30 of this year. If it's a good investment, an affordable payment, and fits your desired lifestyle, now is the time to buy.

New Construction for First Time Buyers?

One bright spot in real estate news: Apparently, new construction of homes has taken a big jump in February. Although the market is still tough for builders, it looks like the numbers are starting to turn around a bit.

New home construction rose 22% from January to February, and applications for building permits increased by 3%. Many builders still see a tough road ahead, but housing inventories have started to fall in many major metropolitan areas recently, making it a better time to bring new construction homes to market.

For buyers, new construction homes are a great way to take advantage of the real estate market right now. Builders need to move inventory and get onto their next projects. Many new construction homes are listed a large discounts right now, and may offer more value relative to resale homes.

With the $8,000 tax credit available to first time buyers and historically-low interest rates, it's really a "perfect storm" for first time buyers to buy a new construction home that they could not have afforded one or two years ago.