Author Archives: Dustin Luther

About Dustin Luther

Founder and original blogger on Rain City Guide, Dustin has since started #InterestedIn Marketing where his team provides content and social media services that helps industry experts earn recognition as thought leaders. You can find me on Twitter (@tyr) and LinkedIn (/DustinLuther)

Winning isn’t everything…

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Rollin Sand SailingI know it is no good to laugh at the misfortune of others, but some people make it really hard…

The Seattle Times highlights the troubles of a group of people who bought land “sight-unseen” at an auction only to find out that the land they bought was not what they expected… Some highlights include:

  • The guy who bought 640 acres of desert land in Nevada for $75,000 only to find out later that it is about a mile from the nearest road, and there is no easement across adjoining land for access.
  • The guy (with photo) who bought land for his retirement home near the Skagit River, only to find out that the the town officials won’t let him build on the land because it is in a major flood plain.

I remember when the story of this action first made the press it was obvious to the casual reader that the land they were selling was not necessarily of the highest quality.

While we’re on off-beat real estate stories, check out this story on how NOT to handle an eviction notice from Behind the Mortgage…

“If you can email, you can blog”

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The first thing that struck me about this article from Inman the title of the article: “If you can email, you can blog”. I must have written and/or said a variant of that phrase about 10 times this past week in conversations and emails! (I’ve been evangelizing the wonders of blogging to all kinds of people!). While it IS very easy to blog, it is actually quite difficult to consistently write stuff that others find interesting. The Inman article I mentioned above describes the editor of Curbed, a real estate blog out of New York that consistently finds great off-the-wall stories to compliment their more serious posts. Curbed’s editor, Lockhart Steele, describes his site as: “It’s a blog about New York City, and everything in New York comes back to real estate.”).

Are you a food person? Curbed also puts out a blog that covers all things food in New York.

One good faith estimate isn’t good enough…

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[photopress:Cats.JPG,thumb,alignright]In reading Elizabeth Rhodes response to an interest-only loan question, I realized that it has been a while since I talked about my uncomfort with interest only mortgages… I think way too many people are using them as a last resort to get into a house. When interest rates start rising, a lot of people could find out that they have bitten off more than they can chew.

The particular question Elizabeth was answering was in regards to whether or not someone should stick with a mortgage broker that made them feel uncomfortable… She gave an appropriate response (concluding that the client should walk away from this broker) but missed out on giving some truly useful advice that could really minimize this issue. What she could have said: “Get more than one quote!” or “You’re making a mistake by using only one broker anyway.”

In practical terms, “getting more than one quote” means getting at least two good faith estimates. At a minimum, you should get an estimate from at least one on-line banks and one local broker. If I ever create my own set of top 10 rules for a home buyer, getting two good faith estimates would be at the very top. No one has to tell you that you’re making a huge investment when you buy your home. By making loan brokers compete, it is entirely possible to get a much lower rate. Even saving just two-tenths of a percent on your loan can add up to thousands of dollars in the long run.

If you want some more detail, I wrote a bunch more on getting a home loan last March that stills seems relevant.

Catching up…

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I haven’t blogged in a little while, but that is not because there is a lack of interesting things to talk about. All kinds of interesting things have been happening on the real estate front, so I’m going to attempt to catch up all in one huge post.

First off, I joined up with the Real Estate Blog Squad. The idea behind this group is that lots of real estate agents would team together to blog about topics related to the National Assn. of REALTORS® annual convention and exposition that will be going on October 28-31, 2005. In reality, I have no idea what will come out of this group, but I’m happy to take part in the experiment.

Redwood TreeNext I wanted to talk about a local news items from this previous week… Seattle Times: Seattle market: Distorted prices — or room to grow? The Seattle Times ran an article about a story I covered about the riskiest cities to live in… The only reason I mention it is that the article says: “The word went out on CNN. It ran in The Christian Science Monitor. A Seattle real-estate blog reported it, and it earned the cover-story spot on msn.com’s money page.” I’m pretty sure that I’m the only Seattle blogger that covered this story, so I’m going to hazard a guess that the Seattle Times real estate writer is now reading my blog! Welcome Elizabeth Rhodes! I definitely read just about everything you write!

After an absence of 5 days, I enjoyed reading this post from Counter Intelligence that described a situation that I’m sure is familiar to many real estate bloggers: “I’ve got to post a new article today or I’m going to lose readers.” I was surprised to hear that counter Intelligence lost 90% of their daily hits after 50 days of not posting. Contrary to the idea you might get by reading this recent article from National Association of Realtors (NAR), real estate blogging is hard work. Let this serve as a warning to real estate agents who are thinking of diving into blogging. Writing an interesting post on a daily basis is tough stuff. Make sure that you enjoy writing. Make sure that you enjoy keeping up on the news. Real estate blogs like Hot Property have an inherent advantage in that it would be so much easier with multiple bloggers all posting to the same site. Ideally, Rain City Guide will someday get about 5 of 6 different real estate agents who post articles on a regular basis. That way, any one of the agents can take a week off when they get burned out without the site suffering a blackout period.

Funny headline of the week… The Ballard News-Tribune (a local paper with a malfunctioning website) had this title for their August 3, 2005 issue: “We could get monorail first.” The article went on to describe how the Ballard segment of the Monorails Greenline would likely get built before other sections. This begs the question: Do the writers of the Ballard News-Tribune read other newspapers? . Do they know that the monorail is much closer to dead than ever being built at this point. The mayor of Seattle has given the monorail an September 15th deadline to come up with a plan or he is going to kill the entire project. The entire organization is in shambles.

Jeremy Zawodny had an interesting analysis of the insane housing market of Silicon Valley. The fact that home prices continue to rise at astronomically fast rates in Seattle, makes me glad to live in Seattle…

I think I bunched enough stuff together for one post, but I there are so many more stories to talk about… I’m just about ready to publish my first podcast for Rain City Guide. I’ve been working late into the night to create an updated MLS home search on top of google maps (nothing is ready to demonstrate yet!). Curbed nominated the “hotest” real estate agents in NY City (do we need something like that for Seattle? 🙂 )

UPDATE: . I imagine Bill Wendel over at Counter Intelligence will get a kick out of learning that even some at Wired News have been getting burned out on technology lately!

Get emotional about the deal, not the house

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dragon over waterBarry Ritholtz offered up 10 common mistakes made by real estate investors based on an article by Bankrate’s Pat Curry. The mistakes pat identifies stem from the idea that “real estate has become the tech stocks of the 2000s, the darling investment that everyone seems to think will be their ticket to easy wealth.”

Barry sums up Pat’s 10 common mistakes made by real estate investors:

1. Falling in love with the property.
2. Not performing your due diligence.
3. Forgetting the rule of home improvements.
4. Thinking you’ll get those low mortgage rates you see on TV.
5. Not pre-screening tenants.
6. Breaking your own rules.
7. Investing long-distance.
8. Paying too much for the property.
9. Not studying the competition.
10. Being underinsured.

There’s a lot more background in Pat’s article, making it well worth reading.

Median house price jumps 14% in King County

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cat in windowThe Seattle Times ran an article that tried to dive into why home prices have continued to increase.

In King County last month, the number of sales fell 6 percent as a quarter fewer properties were listed for sale compared with July 2004, the Northwest Multiple Listing Service said yesterday in its July home-sale report. Strong competition for the best among them — again — sent median prices through the roof, up 14 percent in King and Snohomish counties.

I find it especially interesting that a quarter fewer properties were listed this July over one year ago. Even with the substantial increase in properties people are simple not interested in moving. I think this phenomena really gets to the heart of why home prices have increased so substantially… and makes me more confident that were not experiencing a bubble. With a smaller supply of homes in livable urban communities, I’m convinced that the increase is simply a result of an increased demand.

Some sellers are making the move now to take advantage of low mortgage interest rates. But in general, there’s little research into what propels owners to sell.

“We have a lot of good data on why people buy homes, but in terms of why people sell, we don’t ask the question,” said Walter Molony, spokesman for the National Association of Realtors. “We assume it’s a lifestyle choice. Whether it’s the right time, that’s a very individual evaluation.”

In her classes, Pelascini has noted that sellers usually have a concrete reason to sell, but not necessarily one that prompts them to act immediately. That’s particularly true for empty-nesters.

A conversation between Seattle and NY

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sculptures two headsThe stranger had a fun article this week by Mike Daisey where he compares Seattle to New York… It’s not always flattering for Seattle (or NY), but it is definitely a lot of fun to read… There are a bunch of great lines in the article, but this paragraph is the highlight:

If I could bring New York and Seattle to the table and make them learn from each other, I’d wish that New York could pick up some of Seattle’s table manners, and Seattle’s earnest desire for things to turn out well, which is replaced in New York with snark. And in Seattle I’d point to the subway and say, “Learn from this. Consensus isn’t everything—show some spine, suck it up, and learn how to take a punch.” Then we’d have dinner together. New York would be loud and rude all night, and Seattle would say nothing, but go home and blog about New York’s behavior mercilessly and anonymously.

How Risky is the Seattle market?

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Sasha getting ready to jumpA national mortgage company, PMI Group, recently came out with a real interesting study that lists the riskiest housing markets in the US. Interestingly the Seattle market ranked #45 out of 50 largest housing markets and it is the only west coast city that ranks in the bottom 10 riskiest areas. Here’s what they had to say about Seattle:

Seattle, WA has also seen its risk decline considerable. It is now the only West Coast MSA among the ranking’s bottom 10. Employment in the metropolitan division is still down by 80,000, or more than 5%, from its peak in the late 2000, but the labor market is gaining momentum with a growing service sector and information industry. The area’s homes have gained 11% in the market value in the last four quarters, while its Market Risk Index value dropped from 84 to 64.

Digging into the report, it says the risk index uses “information on past house price growth and variables measuring employment and unemployment, as well as local income measures and interest rates.” It’s always good to get some positive numbers on our local market!

Considering how much home prices have gone up recently in the Seattle market, I was surprised at the results of this study… None the less, it is pleasing to read that the area’s economics are so deathly as to dwarf the risk of the higher home prices (at least compared to other cities in the US!).

(via Dean Foust at Hot Property)

UPDATE:
CNN picked the story up today and mentions that Seattle home owners can breathe easy knowing that the Seattle market ranked the safest (least riskiest!) in the West.

housing price equals land price + constructions costs plus reasonable profit + mystery component

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[photopress:fire.jpg,thumb,alignright]Slate commentator Steven E. Landsburg ran a great article today with an economists view of high housing prices… I’m very fond of his equation:

  • housing price equals land price + constructions costs plus reasonable profit + mystery component

From an economist point of view, the housing prices seem unreasonable unless you try to quantify the “mystery component” that causes the value of some locations to be so much greater than others… Steven thinks he’s found this mystery component in the “permitting and zoning process”.

When you buy a house, you’re not just paying for the land and construction costs; you’re also paying for a building permit and other costs of compliance. You’ve got to get the permits, pass the zoning and historic preservation boards, ace the environmental impact statement, win over the neighborhood commission, etc.

Instead of blaming a housing price bubble, “it’s ever-expanding zoning laws that get in the way. If you want to lower prices, that’s the bubble you’ve got to burst.”

I really like this view of things as it gives an interesting insight to the high price of homes in desirable cities. However, it begs for a follow up question that is beyond the scope of an economist. If we could, would we want to change zoning laws to keep the price of homes down?

In reality, these zoning laws are quite useful in helping to attract the right kind of development that keeps many of these urban neighborhoods “livable”. The result is higher prices for homes in desirable urban cities like San Francisco (and to a lesser extent Seattle). Is that so bad?

If you’re interested in some more on this topic, City Comforts had an related discussion of how new development are not causing the high prices in Seattle.

What is Zillow up to?

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beach homeI’ve been following a Seattle-based real estate start-up ever since someone left a comment on my site a month ago… So far the details are very limited, but a recent press release (via Seattle Property News), indicates that Zillow has recently added some very impressive names to their board. These include:

  • The former Chief Executive Officer of Expedia, Inc., Erik Blachford was most recently CEO of IAC/InterActiveCorp’s travel division, including online travel businesses Expedia, Hotels.com, Hotwire, Classic Custom Vacations and Interval International. Erik is a graduate of Princeton University and holds a Masters in Business Administration from Columbia University Graduate School of Business.
  • Currently President and Chief Financial Officer of Oracle, Greg Maffei has also served as CFO of Microsoft Corp. Most recently, Greg was Chairman and Chief Executive Officer of 360networks Corp. He is a graduate of Dartmouth College, and holds a Masters in Business Administration from Harvard Business School, where he was a Baker Scholar.
  • Gordon Stephenson is the co-founder and Managing Broker of Real Property Associates (RPA), one of the largest independent real estate brokerages in the Northwest. He oversees more than 40 agents and brokers in their sales activities, and continues to personally represent buyers and sellers. Prior to founding RPA in 1991, Gordon was a Seattle-based Associate Broker with both Prudential MacPhersons and Windermere Real Estate. He is a graduate of Stanford University, with a Bachelor of Arts (AB) in Economics.

Want more? Here are some of my notes with links:

UPDATE:
David Chase seems pretty impressed with the addition of Gordon Stephenson to the Zillow Board. “The lack of knowledge of the idiosyncrasies of the real estate market was a key issue that I thought would impair them (Zillow) — it looks like they are starting to plug that gap.”