2017 Home Prices in Kirkland

I have jumped ahead from near the end to post this at the top. Notice that the movement in 98033 pushes the prices in 98034 with a one year lag. The huge movement in the 2014-2015 period in 98033 caused the same movement in 98034 in 2015-2016. We saw this before in the last bubble, especially in the condo market. When Downtown became too expensive the Juanita Beach area started pushing up to a greater degree. But I’m jumping ahead…back to the beginning.

Here is a map and description of all of the neighborhoods of Kirkland from the Kirkland City site. I find “by Elementary School” in Lake Washington School District to be more relevant to prices than “Neighborhoods”, so I will be using “by Elementary School” for price stats near the end. The links above give you the Neighborhood Maps, the School Boundary Maps and the School Rankings in case you need a little help relating the data to the specific price areas.

We’ll start with the broadest area, all of Kirkland, pulling the data by the two Kirkland Zip Codes of 98033 and 98034 separately. Generally speaking one would expect 98033 homes to cost more than 98034 homes when looking at the area median home price. That has more to do with proximity to Downtown and more land area with views and access to Lake Washington than most anything else. Let’s see if that continues to hold true in 2017, while at the same time calculating rate of price growth over the last 5 years. For consistency I will use a 12 month rolling basis from 9/16 to 9/15 but will call the year by it’s end date.

For 98033 the current 12 month rolling median price in Kirkland 98033 is $1,050,000, up from $650,000 5 years ago.

In addition to knowing the median price (half sold for more and half sold for less) I find it more relevant to know the price at which MOST people purchased and for how much. Doing this for 9/16/2016 to 9/15/2017 – 12 month period – and not for all five years. Here is where we have been in the last 12 months as to who bought and for how much in 98033.

To break the above pie down even further, 23 of the 31 “up to $600,000” were between $500,000 and $600,000 and only one was $400,000 or less. 69 were between $700,000 and $800,000 and 74 were between $800,000 and $900,000. About 45% were between $600,000 and a million.

NOTE: Median Condo Price for 98033 for the same period was $625,000.

Running the same numbers for 98034. …the results are pretty astounding so I’ll post those before the commentary. I am calculating the data as I type this and I adjusted the visual a bit as to coloring on the pie graph so that you can see more clearly the part I find pretty astounding. Showing the results side by side.

Restating the 5 year growth for Kirkland by Zip Code on the same chart vs separately so that the visual is more relevant with the end amount being consistent for both. For kicks I added the 2002 median price as the start point so we can compare the last 5 years with 15 years ago.

I moved that graph to the top as well for people who just like to glance and go.

I want to move on to Bellevue and Redmond to compare to Kirkland, but I promised prices by Elementary School back at the beginning. I did this one back in March by Average Price vs Median Price and will try to come back and update it. But for now it gives you a rough idea of the variance from one Elementary School Boundary Area to another. As you can see from the dot to dot, 9/16 to 9/17 had a 19% push up in both Zip Codes equally. So I’d say add 10% to those March 2017 Average Prices in the bar graph for now.

Here is the key. To see where these fall geographically go to the Lake Washington School District Boundary Map though for some reason the “new” map seems to be a lot harder to follow than the one I’ve used for many years which was interactive. For now I’ll just throw the Zip Code on for you.

Fro = Robert Frost Elementary 98034, Kel = Helen Keller Elementary 98034, Tho is Henry David Thoreau Elementary 98034, Jua is Juanita Elementary 98034, RH = Rose Hill Elementary 98033, Mui = John Muir Elementary 98034, San = Carl Sandburg Elementary 98034, Fra = Benjamin Franklin Elementary 98033, Twa – Mark Twain 98033, Bel = Alexander Graham Bell 98033,Kir = Peter Kirk Elementary 98033, LV = Lakeview Elementary 98033

The large marjority of homebuyers are choosing by Elementary School and Elementary School rank with an overlay of commute considerations. So breaking down price by Elementary School becomes important so a buyer can readily see that the price tag of Lakeview Elementary is much higher than the price tag of Sandburg Elementary, as example. But calculating the median price by school boundary is extremely tedious, so here is March 2017 and I’ll try to do all of the polygon search fields by year end.

There’s Kirkland at a glance. I find all this ridiculously fascinating though I think many would be bored by now. I run these numbers for myself to keep my perception in line. Even though I do this all day, every day, out in the field, it still amazes me when I line up the data.

It’s always good to check and correct your perspective…as often as possible. I do it for myself…but hopefully you enjoyed at least some of it. ūüôā

Required Disclosure: Stats used in this post and graphs are hand calculated by Ardell and not compiled, verified or published by The Northwest Multiple Listing Service.

Faira: Beware the Free Lunch (Unfaira?)

This is Craig’s¬†blog series¬†(see¬†Part 1 and Part 2) exploring why and how¬†most realtors don’t talk openly and frankly about the fees they charge. The third and final¬†installment:

Startup Real Estate Firm Faira Promises More than it Delivers

Seattle is Ground Zero for innovation in the real estate industry. WaLaw Realty, Redfin, and of course Added Equity all offer consumers an improvement on the traditional experience (whether cost, or service, or both). And many other alternative models have come and gone over the last decade or two (such as Quill Realty and Rebls).

The most promising model today seems to be Faira. With ads on buses and in the media, Faira is getting some traction. It is also getting¬†news coverage, most recently this piece from KIRO 7¬†last month.¬†And why not? Faira’s¬†marketing pitch is remarkable:

Faira Home Page

Yep. Free. F-R-E-E. Nada. Zilch. Nothin’. You pay them zero and Faira¬†helps you sell your home. Wow. That is a really good deal. Honestly,¬†it sounds like a deal too good to be true.

Which is exactly right. There is no such thing as a free lunch. Sellers pay for Faira’s services, and they aren’t “free.” Faira doesn’t give away its “secret sauce recipe” easily, though.¬†The Faira Listing Agreement¬†is convoluted and confusing, but two parts really stand out.

Faira Services are FREE to the Seller

Paragraph 2: “Fees: Free.”

OK, simple enough. Not to wordy, gets the message across nicely.

Except They Aren’t. Seller Pays .5%

Paragraph 8: “There can be two separate list prices on the Faira platform, one for the buyers who are not represented by the agents, therefore saving the Sellers from paying the buyer’s agent fees, and the other for the buyers who utilize the buyer’s agents. Sellers understand that this can be perceived that the buyers are effectively paying for their own agent. Further, Sellers agree to include Faira fees in both the list prices. The actual purchase price of the property is 99.5% of the agreed offer between the Buyers and the Sellers.”

Whoa. Wait. What was that last part again???

“The actual purchase price of the property is 99.5% of the agreed offer between the Buyers and the Sellers.”

So the buyer and the seller agree on the price, and then .5% of that amount is paid to Faira. That isn’t “free” to the seller. Obviously Faira charges the seller a half percent. A fact that isn’t changed by¬†a poorly written paragraph of “legalese.”

Or more accurately, if this¬†is free, then EVERY SINGLE REAL ESTATE BROKER is free to the seller. Hire Windermere? It’s FREE – you get 94% of the sale price. Redfin? Yup, it’s free too, you get 96% of the sale price. Amazing what can be achieved with rhetorical gymnastics. Something is reduced to nothing….

Added Equity was built on the notion that real estate could be much, much simpler. Are we concerned about Faira’s success as a competitor? Not in the least. Quite simply, Faira takes a very different approach towards being successful in real estate – ultimately an approach that doesn’t differ much from the traditional model. And we have that beat hands down.

Added Equity charges a real estate agent commission of 1% to list and sell a home. Total. Sellers save a ton of money Рfollow that link to find out exactly how much.

Real Estate Agent Commissions: The Industry Is Purposefully Vague

Craig is the founder and Managing Broker of Added Equity Real Estate.  Added Equity is different than any other firm. It charges a real estate agent commission of 1% to list and sell a home. Total.

This is Craig’s¬†blog series exploring why and how¬†most realtors don’t talk openly and frankly about the actual fees they charge. This keeps real estate agent commissions at their longstanding high level (and makes it harder for Added Equity to compete on price). The second installment:

Real estate agents don’t do a very good job of telling consumers what they charge.

It’s a fact that real estate commissions have remained largely immune to the downward price pressure exerted by the internet in other industries. This is obviously in the best interests of real estate brokers, and not consumers. How do they do it?

Real Estate Broker Commission Kept High with Ambiguity

The real estate agent¬†commission will go down¬†only when prices are effectively communicated to consumers so that they can make informed decisions. By keeping commissions ambiguous, real estate agents keep them artificially high. How will consumers know of a better deal? They won‚Äôt. Real estate agents have a strong personal incentive to ‚Äúgo along‚ÄĚ with the system, charge the same high commission as anyone else, and keep it all from the public‚Äôs view.

Continue reading

Free WA Real Estate Contract Forms

That blog post title isn’t a typo – I’m giving away free forms! When my real estate firm left the NWMLS, I had to find an alternative to the forms that it provides to its members. So I got to work! And now I’m happy to share them with anyone who needs them. If you’re interested, go to the Added Equity blog post about Free WA Real Estate Contract Forms, download the license agreement, and you’ll be off and running!

Real Estate Agent Commissions: Why They Aren’t Discussed, and the Sherman Antitrust Act

Craig is the founder and Managing Broker of Added Equity Real Estate.¬†¬†Added Equity charges a 1% fee to list and sell a home, total. Not 1% plus another 3%. Added Equity is different than any other firm. This is Craig’s¬†blog series exploring why and how¬†most realtors don’t talk openly and frankly about the actual fees they charge, keeping real estate agent commissions at their longstanding level.

First Installment: Real estate agents Рintentionally or not Рhide behind the law to avoid revealing their commissions.

Real Estate Broker Commissions Kept High with Secrecy

It goes without saying that real estate brokers benefit by high commissions. It also need not be said that¬†those commissions¬†will go down¬†only when the prices are effectively communicated to consumers so that they can make informed decisions. By keeping commissions secret, real estate agents can keep them artificially high. How will consumers know of a better deal? They won’t. As a result, real estate agents have a strong personal incentive to “go along” with the system, charge the same high commission as anyone else, and keep it all from the public’s view.

Continue reading

Seattle City Council preparing to regulate Vacation Rentals

It’s no big surprise that the Seattle City Council has been preparing to set regulations on vacation rentals, such as homes you find on AirBnb or Home Away/VRBO. ¬†Typically, vacation rentals allow home owners to rent out all or a portion of a home for short periods of time. Vacation rentals have become very popular with guests in search of a different experience than what you find staying in a hotel. ¬†Inside Airbnb states there are approximate 3,818 homes are being used as a vacation rental in Seattle¬†that are rented, on average 110 nights out of the year. According to Inside Airbnb, 35.8% of the “hosts” or owners have more than one active vacation rental. ¬†People who I know who operate vacation rentals do so to help cover their housing expenses or because they plan to eventually retire in the vacation/second home.

Daniel Beekman of The Seattle Times wrote an article yesterday, “Seattle may slap new rules on Airbnb to ease the rental crunch“. ¬†The article fails to mention that Tim Burgess, who is the council member leading the charge on this issue, received a large contribution from hotel lobbyist.

The council is proposing to limit the number of days that can be rented as a vacation rental to 90 in a 12 month period. Burgess assumes that the other 9 months out of the year, these properties will be available to rent for periods of 30 days or more. This theory is flawed.

Often times with vacation rentals, an entire month is not “booked”. You might have someone staying one week and someone else staying a weekend in a month – not allowing a month to be available for a full 30 day rental period.

In addition, Mr. Burgess assumes that when a home is not booked for a vacation rental, that it will become available for longer term (30 days or more) rentals. Vacation rentals are furnished properties and, if rented for long term, will most likely not help those who are looking for “affordable housing”.

I do agree that vacation rentals should be regulated. Especially with some of the extreme examples that the Burgess used, citing:

‚ÄúWe have whole floors of apartment buildings that have been taken off the housing market,‚ÄĚ he said. ‚ÄúWe have entire buildings that essentially have become hotels.‚ÄĚ

The “hosts” or owners who are gobbling up condos and essentially creating a hotel are a real minority and, in my opinion, should be treated more as a hotel and subject to zoning. However, folks who own just one property should be allowed to do so as a vacation rental without the 90 day limit restriction.

Should the regulations go through, limiting home owners from being able to use their properties as a vacation rental beyond 90 days, we won’t see these homes becoming long term rentals or helping the housing market. Many vacation rental home owners really enjoy the hosting aspect and meeting guest on vacation or business travel. What I think we will see is frustrated host eventually just sell their vacation homes during this hot market and again, that Seattle home will not be added to the long term rental stock.

Some neighborhoods, like West Seattle, lack hotels (we have one small motel) and actually need short term rentals to serve the neighborhood. Especially considering the alternative of just trying to get out of West Seattle and into a downtown Seattle hotel when West Seattle is where you want to stay.

From the Seattle Times article:

“The 90-day cutoff would affect just 20 percent of listings for entire houses or apartments in Seattle, according to a recent Airbnb report, Burgess says. The December report said almost 80 percent of entire-home listings here are rented for 90 nights or fewer per year…

‚ÄúWe don‚Äôt know how many of those are primary residences,‚ÄĚ Burgess said. ‚ÄúBut imagine if we put 300 homes back on the long-term rental-housing market. That would be worth a lot. To build 300 new units would cost more than $70 million.‚ÄĚ

Burgess is looking at only allowing those who live on the property as their primary residence to be able to rent the homes longer than 90 days. His figures of having this impact only 20 percent of the listings is probably inaccurate.

I sincerely hope the City Council will take some time to do more research before impacting 3800 properties.  And a majority of those homes will not go back on the market as long-term rentals.

If you own a vacation rental in Seattle, I recommend that you reach out to your council member to share your story.

Moving to Seattle from the East Coast

Everyone who is buying a home comes to the marketplace with some preconceptions as to how things will proceed. If someone is selling a house in the area and buying a different house in the same area, there are not as many surprises that cause a lot of confusion. If someone is moving here from California, the process of buying a home is not different and the home styles are often so completely different that the expectation of what they will find is not carved in stone.

When someone is moving here from the East Coast, especially the Northeast, there are a few differences best known before you head out to buy a house.

1) THE HOUSES ARE DIFFERENT

facade

The main difference in the home style is what is called “Craftsman” style. If you are building a house, they often will ask “Traditional or Craftsman?” when asking for the main styling of all of the millwork in the house. While “Traditional” will resemble an East Coast Colonial style a little bit…”traditional” does not mean “colonial”. The floor plan may or may not be different, but the facade will definitely be different.

The four homes in the photo are basically new homes by the same builder with the two on the left being on the East Coast and the two on the right being in The Seattle Area.

Some of the main differences:

1) Wood or wood facsimile products vs Brick A lot of people moving here from other States and other Countries like the more solid look of brick. But know that one of the reasons this area avoided brick for the most part is due to earthquake activity. Wood has some flexibility. Brick and mortar joints do not. There are plenty of old brick tudors still standing that have been through earthquakes. But I have seen many where there are patches over time from the brick cracking in a step pattern. I had some pictures in my phone of a house over in Montlake with this issue recently. If you do buy a brick house, examine it carefully, not just for cracks but for sections where the mortar is wider and often in a step pattern. Do use a structural engineer in addition to or as the home inspector as well. The new homes the brick is just a “facade” and not part of the construction. Still, brick doesn’t move well, even to a small degree.

That said, many of the homes today are built with a wood-like cement product as the siding. More expensive and custom homes still use wood. But most tract homes use the wood-facsimile product that may not have more movement than brick. You just don’t have to deal with the mortar issues.

2) Shutters Most of the time you will feel like the shutters are missing. Often, especially when buying older homes of the exact same style you can find on the East Coast, people will remark that they need to add shutters. Colonial homes had shutters going back centuries of the type shown on the homes in the photos on the left. Once in awhile you will find a form of shutters here that are more of a tudor style shutter. Same with the uneven pitched roof on the bottom photo on the right. There is a tudor influence. But no shutters has been more common for a very long time and because the homes were built that way it may not be easy to add them.

3) Closing and Closing Day

ALMOST NEVER DO YOU MOVE ON THE DAY OF CLOSING ON THE WEST COAST. NOR DO YOU TAKE OFF ANY TIME FROM WORK ON CLOSING DAY.

This has always been the most significant difference in the process, and one that often confuses people who are buying homes.

DO NOT MAKE ANY ARRANGEMENTS FOR MOVERS OR ANY OTHER SERVICES FOR CLOSING DAY!

This is vastly different from the East Coast where closings happen all day and several times in a day, usually every hour or so.

Whether or not you are moving here from the East Coast, it does seem a bit odd for the seller to be signing over his house to a buyer before it is paid for. It also seems a bit odd to sign all of your closing paperwork as the buyer and even bring your funds to closing, and not get the keys to the house. Even more odd that the day of closing is not the day you can tell your movers to bring your belongings to your new house.

The difference is that on the West Coast (and several other States) “closing” means the County has actually recorded the Deed to the property in the buyers name. On the East Coast that is not the case and the Deed is often recorded “in due course” and sometimes a month or so after closing. HUGE difference. On the East Coast they do a table funding and the buyer and seller are often in the same room with the agents and the closing agent. They buyer brings their money, the lender sent the money early in the day, the seller gets a check and hands over the keys to the buyer. All that within one hour. So if the signing is at 10 you can usually have the movers start moving things in around noon. If your closing is at 1 you can usually have the movers ready to move things in by 3 ish.

NOT so on the West Coast. On the West Coast the seller sometimes signs the new Deed over to the buyer a couple of weeks before closing. The buyer most often signs a few days before closing. Closing Day is too late to do much of anything. If it all wasn’t done before Closing Day, or at least most of it, less likely it will close by end of day. Closing is a phone call saying “we have recording numbers”. That means the new Deed has been recorded in the buyer’s name and that usually happens between 4 and 5 p.m. (not always; but often)

BUT! KEYS ARE NOT DUE UNTIL BY 9 P.M.

Once in awhile the seller is not completely moved out by the time that phone call comes in. Technically they have until 9 p.m. to be vacated and hand over the keys. I have only seen it go all the way to 9 p.m. a couple of times in a dozen years. But neither is it practical to want the keys to the house as soon as you get the phone call that it is closed.

The Seller gives the keys to their agent. Their agent gives the keys to the buyer’s agent. The buyer gets the keys from their agent. Most always the Agent for the Buyer can’t get the keys until after it closes. There are a dozen different ways we arrange this depending on the agents and parties, but do know that having cleaners or movers standing outside the door at 5:30 p.m. can end very badly.

Things are changing a bit because of the new rules that lenders must follow as of October 3rd. We are seeing more table funded loans and more buyers signing the morning of closing. We can’t move to a system where all buyers sign the morning of closing. It just wouldn’t work for the Title Companies.

As a buyer you don’t get much notice as to when you will be signing. More and more people are paying an extra cost for a mobile signer so they can sign after business hours or very early in the morning before work.

Just know that Closing Day on the West Coast is very, very different and once your loan documents get to escrow, there will be a signing appointment scheduled with very little advance notice. It’s a bit chaotic, but, it’s just how it is done here.

If you have moved here from the East Coast and have some other observations as to the differences, do note them in the comments along with where you moved here from.

Is Quill Realty the Only non-MLS Broker in Seattle?

Updated 9/13:¬†Quill Realty is now Added Equity Real Estate – but everything else is as true today as when I wrote it! ūüôā

I am loving life at the forefront of change in the real estate industry. My firm Quill Realty left the Northwest Multiple Listing Service on July 1. Since then, we’ve picked up some listings and sold a few houses – our first non-MLS sale closed Friday. Congratulations to this beautiful family!!!¬†Single Broker Listings in Seattle

So we’re selling houses at a dramatically reduced cost to our seller clients. In other words, the model appears to be working. Exciting times!

But it begs the question: Is Quill the only¬†non-MLS broker in Seattle? Or are there others, such that a synergy might begin to build. To date, I have yet to find one. I even have a friendly wager with a title representative. He knows lots and lots of people in the local industry, and so far he’s struck out.

Is that right? Is Quill the only voice calling for change in the MLS-bound wilderness? If you know of any others – in Seattle, or Western WA, or even the USA – I’d love to hear about them. Please leave a comment, and thanks much.

The Future of Real Estate? It Arrived Today

This is what the future of real estate will look like - no MLS number

This is what the future of real estate will look like – no MLS number

I could not be prouder today. Quill’s first Single Broker Listing is live and looks great! On the Quill¬†Blog, on Zillow, on Redfin – heck, it looks great EVERYWHERE!! By my estimation, this is what the future of real estate will look like: One broker marketing a property directly to buyers via multiple channels, without offering to pay the buyer’s agent’s commission (so no MLS number). Exciting times here at Quill!!

Why I am Withdrawing from the Multiple Listing Service to Offer Single Broker Listings

Today, my real estate firm Quill Realty is announcing its imminent withdrawal from the Northwest Multiple Listing Service [Quill Press Release 5/19/15]. We have some current inventory we need to clear. But by July 1, and likely sooner, Quill will withdraw from the NWMLS.

Why? Because that is where the future of real estate lies. For a long time – 10 years – I have been working on developing a better business model in real estate.¬†It’s been apparent that real estate simply would have to change given the ongoing information and technological revolutions that have changed pretty much everything else.¬†¬†Yet 10 years on, and nothing has changed much at all.

The real estate broker system, with its hallmark of cooperation between brokers, has been around for more than a century. A hundred¬†plus years ago, ¬†the term “marketing” didn’t exist, and the¬†only way to sell a house was to have folks talk it up, literally. So¬†today, just like 100+ years ago, a seller must hire two brokers to sell the house: the listing broker; and the cooperating or selling broker who often represents the buyer.

Notwithstanding the fact that listing¬†brokers today take pride in their marketing abilities and are more than capable of selling the home themselves. Or that the internet ¬†allows for easy and widespread dissemination of market information. Or that nobody – nobody – “brings a buyer” to the sale anymore. Buyers usually find the home themselves, and very few – if any – buyer’s agents¬†today actually “sell” a house to their client. ¬†Buyer’s agents today simply are not, either legally or ethically, “selling” brokers (a fact long recognized by Ardell).

So why do sellers continue to pay a selling office commission? Because it is a requirement of entry into any MLS (understandably so, given their cooperative nature). And for whatever reason – conspiracy theories abound! – sellers today continue to pay¬†at least 2.5% and usually 3% to buyers’ agents. So the price of admission to the MLS is steep.

Meanwhile, the ability to market a property off of the MLS has continued to grow. The FSBO market has been around for a long time, and today there are more opportunities than ever to list a home in places other than the MLS.
This of course allows the seller to skip paying the selling office commission. Today, non-MLS listings appear on Zillow and Redfin, two very large and very popular real estate web search sites, as well as elsewhere across the web. Plus, in this seller’s market, does a seller even need that sort of high tech marketing? A professional yard sign and a couple of open houses are likely enough to get full market value in this historic seller’s market.

So Quill will be withdrawing from the NWMLS. We will be the very first and only broker in Seattle – as far as we know – to offer “single broker listings.” It’s a brand new term to refer to a listing contract with only a single broker. That one listing broker then has the opportunity to sell the house and earn the commission. Until today, sellers only had access to “multiple broker listings,” notwithstanding the fact that there is no longer any actual reason for or benefit to such a listing, other than that is simply how the system works.

Surely we can do better. Ten years on, and I feel like I might finally be making progress. Single broker listings will of course not appear on any MLS. They will, however, appear in many other marketing channels where buyers are looking (like Zillow, and Redfin). Plus the broker has access to every other marketing tool: a yard sign; high quality flyer; open houses and tours. And what about social media? Surely that offers an untapped opportunity for marketing a home. In other words, sellers simply don’t have to pay a cooperating broker commission in order to sell their home for market value, if they get the professional services of a real estate broker. So that is where Quill is headed.

What do you think? Is there a future in single broker listings? Or is Quill doomed to scuffle along like every other alternative brokerage, staying in business but neither getting rich nor changing the world?