Monthly Archives: August 2008

Watching trends in the daily market watch of the MLS

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I’ve been keeping an eye on some of the daily trends in the MLS and have noticed for several weeks now that price reductions have now outnumbered new listings on an almost daily basis.  In past years, when almost all houses were selling fairly quickly, we noticed that a small percentage of houses required drops and there was usually a decent number increasing their prices.

Now, it seems that as days on market have increased for many sellers we are finally getting that reality check in place that was needed.  Granted, it does seem that the majority of these price drops are in the outlying areas of our MLS region, but the inner-city urban spots are not without their own new reality.

What I like right now is that we’re getting a nice balance of buyer and seller activity, which, for my own personal business/team, means that we’re likely going to be growing our business over the next year or more with some very nice results.

Sold, Sold and Sold again

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One of the best ways to find accurate data as to home prices and appreciation levels is to find homes that have sold a few times recently, that have had no upgrades since the time they were built.

Sold New on 3/30/93 for $210,000

Sold again on 2/27/03 for $349,300

Sold again on 7/8/05 for $466,000

Sold again on 6/25/08 for $540,000

Appreciated by 66% in the first 10 years.

Appreciated an additional 33% from 2/03 to 7/05

Appreciated an additional 15.8% from 7/05 to 6/08

No granite countertops or stainless steel appliances.  No upgrades except maybe some updated paint colors.  A run of the mill 2,300 sf four bedroom 2 1/2 bath home in a good school district.

It was on the market for 75 days or so and had a $50,000 price reduction before it sold for $10,000 to $15,000 less than that.  Would it have been worth closer to the original $600,000 list price if the market hadn’t slowed down?  Probably.

Killer Views and Dog Poop – Short Sale

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Given prices in the Seattle Area have not dropped to the extent of  most of the Country, people wonder why there are some deep discount short sales here.  Mostly those that have a deep discount are in worse shape than when the current owner purchased them.

Remodels gone bad…very, very bad.  If you know the house below, please don’t mention where it is or the address in the comments.  I can’t “advertise” another agent’s listing, but wanted to give you an idea of what a house looks like that will likely sell for $200,000 -$300,000 less than what is currently owed on it.

Often the work being done is substandard, in this case likely because of all of the beer being consumed while doing the work.

Often you will see a lot of new materials, like the travertine above, but partial and poor installation.  I think there were more broken pieces of travertine strewn about than there were full tiles laid.

Still, the view considerations suggest it may be a worthwhile project for someone, especially an owner occupant, if it sells close enough to lot value.

But rarely does anyone but an investor want the house with Killer Views and piles of dog poop.

Twitter is AMAZING

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Over this past week, I’ve had the misfortune dealing with cable (Comcast) being down and just today, my email being out (an issue with Network Solutions).   Both times, I vented with 140 characters (or less) on Twitter.  Of course, I had to use my Treo to whine about Comcast.  But what happened in both cases really surprises me.   Apparently these big corporations have their own “David G’s” out there with their own Twitter profiles and alerts set up to address issues brought up on the internet.

Here’s my Tweet:

pulling out my hair…network solutions email seems to be down…argh! No emails for me.

And the response I received minutes later.

netsolcares @mortgageporter Hi this is Gerry from Network Solutions. I’m sorry your having issues. If you’d like to contact me I’ll see what we can do

I just got off the phone (after holding for over 11 minutes) with Gerry @ Network Solutions and they narrowed down what my issue was (too technical for me to explain) and the good news is, everything is back up and working.   And it’s the weekend.  I’m amazed.

The Comcast response and issue was very similar.   A “tweet” from me saying Comcast is out…no email or internet and this reply from “Comcast Scott” within moments

comcastscott @mortgageporter how often has this been happening? Can we help

Along with this one

comcastcares@mortgageporter Keep us updated

and

comcastscott @mortgageporter glad to help! Keep those tweets coming

By the way, if you have Twitter and you find your Comcast or Network Solutions services not working, you can always tweet these fella’s…they react quickly.  I am impressed and would have never pictured large corporations utilizing social networking this way.

So for all of you who are not utilizing Twitter because you think it’s a fad, I encourage you to check it out.  It is what ever you make it.  I’ve found it to be real useful for communicating what I doing during the day, like providing live rate quotes, in a consultation, writing a blog post, etc.  And I’ll post something “non-business” every once in a while like what I’m cooking up for dinner.

If you do sign up (it’s free and easy to do) please “follow me” or at very least, send me a tweet!

Broken Window Seals

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If anyone has had broken window seals fixed and knows someone in the Redmond/Bellevue/Kirkland area who can fix them, can you please post the info in the comments section of this post, or email me direct?

Thanks!

Seattle Real Estate Market – King County

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To know if the market is getting better or worse, we have to expect something of the market.  That is the only way to know if the market is doing better or worse “than expected”.  Active markets anticipate.  If a company’s earnings are down to the same degree as anticipated and expected, there will be no change in prices.  So we have to expect something to happen, and this post is all about what I expect to happen in the King County – Seattle Area Real Estate Market.

To keep saying the market is down from peak for 3-5 years is both boring and of no value, and only fun ad nauseum for whiners.  I call that NSS (No Sh_t Sherlock) meaning no kidding the market is down from peak; that news is a year old now.  What’s next?

To those who hate it when an agent sticks their neck out and makes predictions, I say…go away then or get used to it or get over it.  Agents are paid good money to answer the question “Where is the real estate market going?”  If we only got paid to open doors and say “do you like this house”, we’d be paid $15 an hour.  That’s the going rate for a good real estate assistant. 

Sellers need to know if selling next year is better than selling this year.  Sellers need to know when they get an offer today, if that offer is or isn’t likely the best offer they are going to see in their timeframe.  Buyers need to know if they can sell in 1-3 years without taking a loss.  People need agents to have an opinion about the future, both the near term future and the foreseeable future,  They can’t simply rely on personal experience and say “well I’ve never seen that happen” because the future is not about the recent past.

The graphs below show what I expect the market to do as to volume, which will assist us in determining true Absorption Rate and knowing whether the market is getting better or worse (than expected). 

I’m calling Absorption Rate as of now, 10 months. Current inventory is 12,403 and I expect it to take 10 months from today for 12,403 Residential properties to sell in King County.  That also means it will be a Buyer’s Market until and unless we see inventory drop from 12,403 to 7,500.  That can happen by property selling, or sellers deciding to rent or withdraw from the marketplace, at a higher rate than properties are coming on market.  I expect that to start happening on September 1 and continue through year end.  Whether or not prices will continue to decrease into next year and beyond will depend on how close we can get to 7,500 properties on market by December 31st.

The two graphs below are a double check system.  On a month to month basis we would expect to see variance.  Sometimes August sales are higher than September, and sometimes September sales are higher than August.  So the double check is for the Quarterly sales stats to fall into the prescribed ranges within a reasonable variance.

I took the year notations off the monthly stats, as I don’t expect these numbers to change unless there are changes in the mortgage market that create additional buyers.  That could be lower interest rates and.or looser lending standards.  Until then, we have to learn to live with what we can most likely expect to happen.

Sunday Night Stats – More signs of stability

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King County Home Sales

King County Home Sales for the last 8 years, the only time July volume was higher than June homes sold was in 2003. That 2008 is lower than 2007 is old news. The good news is that the relationship of sales month to month is following a predictable pattern and a normal relationship.King County Home Prices

King County Home Prices June and July

King County Home Prices June and July

Same as to prices.  Even in the boom years, the relationship of prices from June to July was pretty much the same as it is now.  Prices are running slightly above where they were this time of year in 2006.

Both of the above graphs are for King County Residential (not condo).  The question isn’t whether or not August will be down, but whether it will be down in a normal relationship to June and July.
The text is centering and I can’t stop it 🙂  Since it’s almost 1 a.m., I will do the regular weekly stats in the morning and post a link here.  I was more interested in end of July stats.  A few more will trickle in for months, so I’d say July was not a bad month overall.
Stats not compiled or published by NWMLS (required disclosure)

Deceptive Advertising Update: Linden Home Loans, Paramount Equity and Assurity Financial

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Linden Home Loans received a “Statement of Charges” back in Dec of 2007  for a deceptive television and radio ad.  The Department of Financial Institutions discovered that Linden promised consumers residential mortgage loans at “1% interest, with no points and no fees,

Do you know where to find info on septic systems and your responsibilities?

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A client of mine is planning on selling a property soon and he’s trying to get his proverbial “ducks in a row” before going on market.  He asked me about what his responsibilities are with regard to his septic system and he also wanted to know if he needed to do an inspection or pumping of the system prior to selling.  If you are not familiar with this process either as a buyer or seller, here is a great website with details about septic systems for you to learn about.  It’s specific to King County so if you live outside this area you’ll want to see if your own county has a similar website with info for you.

If you just want to learn more about septic systems (also called onsite sewage systems) and how to use them properly and care for them you can read through this information, also from King County.

And the FED…does nothing.

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The markets anticipated the FOMC to leave the Fed Funds rate alone at 2% and that’s just what they did.   The markets are reacting accordingly by not swinging drastically either way.   The DOW is enjoying triple digit gains while oil has been under $120.   What does this mean to mortgage interest rates?

As you know, the FOMC does not directly control mortgage interest rates as mortgage interest rates are based on bonds–mortgage backed securities (MBS).  Traders will react to what the FOMC does and does not do and THIS will impact mortgage interest rates.

The FOMC press release states:

“Economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports”.   I’m wondering how much of the growth in consumer spending is from the economic stimulus checks?

This statement is quickly followed with: “…labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters”.

Bonds react negatively to inflation, I’m anticipating that we will see mortgage rates continue to trend higher.   Here’s a bit from the FOMC regarding the “i-word”:  

“Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities, and some indicators of inflation expectations have been elevated. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.”

You can read today’s FOMC statement here.

PS:  As the Prime Rate is tied to the Fed Funds Rate, your HELOC is unchanged for now.