Just received a press release that Costco is leasing 176,656 sf of space from Vulcan (Paul Allen) Real Estate at Sammamish Park Place in Issaquah. Sammamish Park Place is a 3 building complex totalling 586,823 sf with the other two buildings being occupied by Microsoft.
This complex was built in or around 2000, so I am wondering who left that Costco is replacing. I don’t see any stories on this move yet, but will post a link if and when someone else picks it up with more info.
Whether I am helping a client sell a house or a condo, my thought process is generally the same.
Start at “buyer profiling”. Who is likely to buy this property? Then make a list of the top 3 to 5 reasons why THAT person, whom you have targeted as the likely buyer, will choose THIS property over others that are for sale.
The first part, “buyer profiling” is an old method I learned when I was a Certified Corporate Property Specialist for Coldwell Banker back in the 90s selling vacant properties where the owner was relocated for job reasons. There is less of an emotional pull from the owner, and the process is more of a business effort to sell, with little to no accommodations for the seller’s emotional “triggers”.
For this condo, which was sold about a month ago, I determined the individual would likely be a single professional person…or at least that would be the person who might pay the highest price for it. I also determined that the person (or possibly couple) would likely be younger vs older because there were a lot of steps up to the front door. Not likely an “empty nester”, as might be the case for a ground floor unit with no steps.
Next I listed the reasons why someone would choose THIS condo over the other 65 or so condos for sale in Kirkland at the time priced at $250,000 or less.
1) View of Lake Washington (only 6 of 65 have a view of Lake Washington)
2) 1,000+ square feet (only 11 of 65 are over 1,000 sf)
3) Super high ceilings on the inside interior walls of the main living space
4) Clerestory Windows at the top of the high ceilings
5) Travertine and “wood” floors vs carpet
It is very important that you match your staging and photos to the main selling features of the property. NICE is not good enough. This particular condo is a great example of that because the owner hired a professional stager and I had the photographer take photos…but…
I just wasn’t happy. I didn’t feel the property would sell at its highest possible price based on that in person and online presentation. It was nice, the photos were “good” and better than most if not ALL other properties for sale. But they just didn’t tell the STORY of THIS condo well.
full set of before photos and the full set of after photos click on those links from the photographers site at HD Estates.
I use Brooke at HD Estates for my listing photos, and it was funny that when she first came she knew immediately that I had not staged the condo. She had done several of my properties this year, all of which I had staged myself, and she just knew. The tired old floor lamp with the fern…the granny orange shaw vs the red throw…the weeds on the table vs the art deco glass bowl…even in the bedrooms and bathrooms she just knew something wasn’t quite right. 🙂
I’m glad I went to the extra time, trouble and cost. The owner paid $92,700 for this condo just two years ago and we were able to sell it in less than a week with five offers at $233,000 with no home inspection contingency and no must appraise clause.
Might that same result have happened if I did not re-stage it myself and have the photos redone? I don’t really know for sure. What do you think?
The new Zillow predictions for the 2014 housing market show Seattle as the second hottest market in 2014.
They also predict only 3% increase in prices overall, so “hottest” could be kind of cool. 🙂
Personally I think it all depends on how many sellers come out to play this year. You will have your same average turnover for must sell reasons. Relocations as example. But with most sources predicting a slower increase in home prices and possibly a slight turn down, perhaps those sellers waiting for a better housing market will succumb to the fear that it might not get any better than this.
No one knows how “hot” the market will be, but the more sellers there are the “better” it will be whether there is growth or not. Zillow is also predicting rates will get to 5% by year end, but that looks more like someone trying to create a sense of urgency where
there really isn’t one.
Selling a home in King County has been fairly easy to do for most people since early 2012 when the market started taking off again. We don’t have the same momentum in first quarter 2014 as we did in first quarter 2013. There are still many more home buyers than home sellers, so supply and demand hasn’t changed much. What has changed is there is not the same sense of urgency to beat out interest rate increases.
In early 2013 interest rates were as low as 3.25% in many cases and there was a lot of talk about them going up to over 4%. They in fact did go up to 4.5% – 4.625% by mid 2013 and no one is talking seriously about them going up further from here to over 5%. So same supply and demand factors…decreased sense of urgency. (chuckling as I just got an email while typing this that rates went down from 4.5% to 4.375% confirming no worries that rates will increase much if at all from 4.5% or at least that worry is not being factored into the market.)
There has been a LOT of confusing talk about “low inventory” for quite some time now and even some recent talk that inventory is improving for home buyers. Not really the case IMO and as you can see from the arguing going on in the comments on that post. Most people are not buying that there are or will be a better selection anytime soon for most home buyers. That is continued good news for sellers and more frustration for home buyers. New on market if priced right…IF PRICED RIGHT the key phrase here, will still sell quickly in multiple offers. So not a lot of change in 2014…just a little less chaos.
Now let’s talk about how inventory can be UP a bit on an overall basis and still be non-existent for MOST home buyers. The graph below illustrates this fairly well. Until you get to a million dollars, EVERY segment is running at less than 2 months of inventory. I would venture to say that probably 80% of those are homes no one wants…or someone would have bought them, except for the 20% or so that are very new on market and some of those are coming out the gate overpriced as well. Most sellers can still sell their homes in a week or less if they really put the right effort into selling their home, and keep the price at no more than 5% over the comps. So it goes without saying that for most buyers…there is nothing to buy.
As soon as something good that is priced right comes on market…still multiple offers after the interest rate increase to 4.5%. I haven’t witnessed it first hand so far in 2014 given it is early in the year, but that was the case throughout the 4th quarter of 2013, so no reason to expect that to change now. With less than 2 mos of inventory starting out the year, not likely we will get to any type of equilibrium as to sellers and buyers at all in 2014 except in the highest of prices. Even then…not so much in places like Clyde Hill where highest of prices still sells very well. More on that in the third price graph.
To better understand the absorption rate bar chart and why the price breakpoints appear to be “odd”, see the pie charts below. First using 2013 sold homes I broke the market into 5 pieces. So the first column above represents 20% of King County buyers. Each of the second, third and fourth columns also represent 20% of home buyers.
That puts 80% of buyers in the 1.25 to 1.63 months of inventory range. 80% of people looking to buy a home are looking at less than a two month supply of inventory and in many cases a 2 week to 5 week supply of inventory. Subtract the houses that no one wants…and you basically have NO inventory for 80% of the people looking for homes.
ALL of the last FIVE columns represent a breakdown of only the top 20% of the market. This in an effort to see where the inventory actually starts moving up.
It is not until you get to TWO MILLION and up that you actually see a buyer’s market. Everything up to $2 Million is a Seller’s Market at less than 4 months of inventory and for more than 80% of buyers less than a 2 months supply of inventory. Now let’s drop down to the last graph and check on home prices.
One of the reasons I check the stats at the beginning of each year is to test both my perception and also things I have been hearing and reading.
My perception was that Bellevue 98004 and 98005 were taking off like a rocket last year! To check that I added stats for just those two zip codes to my King County median price line graph. It is the purple line at the top with the light blue squares, and yes, my perception was correct. Up way out of proportion to the rest of the market. But the earlier part of the graph also showed a steeper decline which looked like “the bigger they are the harder they fall”. Still…almost back to peak pricing in 98004 and 98005.
The County as a whole also way up toward all time highs. Not quite there, but looking pretty “recovered” for now. As usual I am not really just “writing a blog post”, I am doing my own early work for my business. So in that regard I have to see how Kirkland, Bellevue and Redmond are generally faring compared to the County as a whole.
I need to study what is going on with Kirkland stats. For the Eastside line (green with pink squares) I combined 98033, 98034, 98011, 98052, 98004 and 98005. Not all of “The Eastside”, but a good balance of representation. It might make more sense to throw in more of the Bellevue Zip Codes instead of one of the three Bothell Zip Codes, but you can’t do that if you are going to track prices back to 2007. Kirkland, the blue line with the light blue squares, starts running under the main Eastside line. This because most of the large land mass annexed by Kirkland in 2011 was lower priced than the Kirkland before annexation. You see that dip between first quarter 2011 and first quarter 2012 when the median price went all the way down to $401k.
Considering that dip…for Kirkland to be back up to $510,000 is really quite amazing. I thought maybe the higher priced 98033 was carrying all of the increase similar to the big swing in 98004 and 98005. But not so. I tried to add that line here, but it just made the whole chart too confusing with all of the numbers overlapping. But the amazing part of the increase in Kirkland (which looks like a decrease because of the added properties) is that much of the increase happened in the annexed areas, especially in that part of Kirkland 98034 that used to be Bothell 98011. Back to why I added Bothell 98011 instead of more Bellevue Zip Codes. The later stats for Kirkland would automatically pull in some of what used to be Bothell 98011 prior to 2011, so the best answer was to keep all of 98011 in all the way through.
A little more explanation and graphs including Absorption Rate Data for Kirkland 98033, 98034, Redmond 98052 and Bellevue 98004 and 98005 in these links. Again just stuff I was working on for my own client reasons.
Home prices are beginning to trail down toward year end with an abrupt 5% decline in the last 30 days.
While we are still at 12% increase for the year following the downturn, this is more than merely seasonal change, in my opinion. Every year has a “Spring Bump” that usually does not sustain at peak levels past June-July. A downturn in August is always expected and the market continuing flat to down to year end is also expected.
What’s different this time?
1) We are coming off a bubble created by home buyers vs home sellers. In 2012 it was a Seller’s Market where home prices were primarily driven by sellers asking more for their homes and the buyers complying with the sellers’ desire. 2013 increases were largely driven by buyers aggressively competing for the same homes. The buyers giveth and the buyers taketh away will be the message of 2013 from here to year end.
2) Mortgage interest rates increased by a full 1% immediately prior to this “seasonal” downtown. How much of this decrease is seasonal and how much is interest rate driven? Difficult to separate that out, but if you go back to reason 1 above we can see the market deflating the bubble created by those buyers who were racing to beat the interest rate increase. The race is over. Yes there are some buyers who are still trying to beat the next interest rate increase, but nowhere near the aggressive level of buying while mortgage rates were still under 4%.
3) The stock markets are dipping at the same time. This is not a small factor. Seattle Area Home Prices often if not always emulate the stock markets. When the stock market is going up and there is a slight downturn in home prices created primarily by seasonal factors..well than you can see it’s simply a seasonal correction. But when we are at the same time seeing stories like Dow Jones – Is the Bull Market Over? and S & P Corrective Phase Could Last Until Early October, we know that the Spring Bump correction phase will likely last until every drop of seasonal push is drained, which is usually October 15th.
We can expect a one week or two week robust period in September, because we always have one for usually no good reason. But the season is over…and then some. 2012 was a good year. 2013 was a year that was too good for sellers and not fun for buyers. 2014 should look more like 2012 than 2013.
Don’t expect anything but down from here to year end.
I am teaching two Home Buyer Education Classes this month sponsored by the Washington State Housing Finance Commission. Anyone who is interested in buying a home can attend – our class is not limited to first time home buyers.
Home buyers who are interested in programs offered through the Washington State Housing Finance Commission, such as the Home Advantage Program with down payment assistance, are required to take a WSHFC sponsored class.
If you’re interested in attending a class where I will be teaching, you have two opportunities this month:
Lunch is being provided at both of these classes… however, if you have dietary restrictions (or you’re a picky eater 🙂 you may want to bring your own sack lunch.
Both classes are FREE. If you’d like to attend, you can rsvp here.
I’ve always felt that an important part of a mortgage originators job is to educate their clients and make sure their questions are answered before they get to the signing table. I’m very excited to be a part of the Washington State Housing Finance Commission’s program.
Removing the Must Appraise Clause.
BEFORE you as a buyer of a home agree to “remove the must appraise clause” you need to know that means more cash from you the buyer of an undetermined amount. You also need to know the Finance Contingency does not usually cover not having enough Cash to Close.
Cash bridges the gap between Appraised Value and Sold Price in a Housing Recovery. 2012 not so much. Early 2013 we are seeing “remove must appraise clause” as a condition of acceptance in multiple offers more so than last year. I did see a few last year. Mostly flip houses with a huge change in price from “bought at foreclosure” to 3 months later “sold as flipped house” at almost twice the price as the flipper just paid for it.
This year removing the “must appraise clause” in most all upwardly mobile neighborhoods has become a given.
Sellers are not necessarily choosing highest offer in multiple offers, unless that highest offer also is all cash with no must appraise clause OR the buyer is willing to fund the appreciation with cash.
Because this is so very common right now, and will continue to be so through at least this season into August, people need to know what that means.
LENDERS are not supposed to Fund a Housing Recovery.
THAT is WHY we had a Real Estate “Bubble”.
Lenders bridging the gap between Appraised Value based on “comps” and what a buyer is willing to pay for a house, is a lot of stale air…a bubble. Appreciation fueled by cash from the home buyer is a more stable and historically common form of funding home price appreciation.
Agents get mad when a house doesn’t appraise. That’s just crazy thinking. Let’s take a look at an example as to why that is. Let’s assume the homes are equal in all ways in the example below.
Asking Price – $500,000.00
Last home sold in neighborhood – $485,000
House before that sold – $470,000
House before that sold – $460,000
$500,000 Asking Price house goes into multiple offers and sells at $515,000.
Buyer is putting 20% down. 20% down of WHAT? Buyer thinks he is putting down 20% down of the Purchase Price. BUT the lender says they will fund 80% of Appraised Value or Purchase Price…whichever is LESS.
Very important to understand that your 20% down plus The Lender’s 80% does not equal 100% of the Purchase Price when the market is rising.
If the house appraises at $475,000 in the example above, and the Purchase Price is $515,000, then the lender will loan 80% of $475,000 or $380,000. The buyer’s 20% of the purchase price is $103,000.
$380,000 80% of Appraised Value + $103,000 20% of Purchase Price equals $483,000 and not $515,000. The GAP is $32,000. That means the buyer has to bring $135,000 downpayment to the table vs $103,000. He needs to bring 20% of the purchase price PLUS the difference between 80% of appraised value and his 20% of Purchase Price.
That $$$ difference between what the buyer intended to pay as “20% down of $515,000” and the 80% of Appraised Value that the Lender is willing to lend IS “The Housing Recovery”
That “Housing Recovery” needs to be fueled with an additional cash infusion by the buyer of the home, NOT additional loaned funds as part of the mortgage.
People are asking if this is another “Housing Bubble”. All Market Appreciation does not create a “bubble”. Appreciation fueled by lenders is a bubble. Appreciation fueled with hard cash dollars from the buyer is market appreciation. BOTH can be lost when the market goes down.
No one can tell you what prices will be in 5 years or 10 years or 15 years when it is time for you to move on and sell your house. The only issue is IF the market at the time you sell creates a negative result between what you paid and what you sell for, is that lost money your money or the bank’s money?
In the future, based on cash fueling the recovery vs lenders fueling the recovery, the negative result will not create short sales and foreclosures to the same degree that it did after “The Bubble Years”.
Appraisers can take the comps and deduct from the result if they want to cover the lenders better. They can STICK WITH the actual comps. They can be instructed to add x% for a rising market. In the Bubble Years they added x% for a rising market PER HOUSE vs PER YEAR! That is where they went terribly wrong. Instead of adding 5% for a year…they added 5% to every house! Consequently 6 sales in 4 months created appreciation of 6 times 5% or 30% increase in 4 months. THAT was “The Bubble”.
Yes buyers are ticked off when they have to pay more than Appraised Value with cash infusion. BUT historically that is the ONLY way for a market to appreciate…without creating a new Housing Bubble.
Lenders should not fund appreciation of the Housing Market. Lenders should not stretch to “The Sky’s the Limit” appraisals and loans. Hopefully that is a lesson learned in The Bubble Years that will not repeat itself moving forward.
BEFORE in the heat of multiple offers you say YES! to removing the must appraise clause or Bridging the GAP between 80% of Appraised Value and your 20% down, KNOW what that means. It means you need more money…or be willing to lose your Earnest Money if you don’t have enough to bridge that gap.
How much more money do you need? No one knows…until the appraisal comes in. You DON’T know that number on the day you decide to win in multiple offers, by pulling that “must appraise” clause.
BUYER BEWARE time.
Gone are the days when you can advertise “must see!” to sell your home, as if people have to come into your house as the first step in the home buying process. You can scream that from the roof top all you want, but unless you have a location that would cause anyone and everyone to come to and into your home, it’s all about the photos.
So where do your start? You start with The Three Basics – Paint -Floorings – Clean
Once you have your walls and floors together (see post linked above) you move to taking your “test photos”. Once you know which angles will end up in the 15 Photo Display, then you stage those “photo areas”. because it’s all about the 15 mls photos!
The cost to stage the above townhome was $2,500 BUT I staged it myself within the cost of Listing the home. I used that $2,500 as follows. $1,500 to refinish those now gleaming, satin finish hardwood floors on the main floor and $1,000 to have the place painted. We also put in all new carpet and the $1,000 to paint was for the main pro painter and did not include the prep-tape-helper. I use a painter who let’s me bring the “helper” myself, to save on cost.
Of course there are whole HGTV shows devoted to ALL of the steps that lead to FIFTEEN GREAT MLS PHOTOS.
I just try to give you a snapshot of the process…one blog post at a time. Both of the above homes are recent. The top one closed in December of 2012. The lower photos are of a Pending townhome over in The U-District. The top one sold in 1 day, the lower one in 2 days. The top one took SEVEN WEEKS to get ready for market. The lower one about THREE WEEKS.
So “SOLD IN ONE DAY” took from September 7th to October 25, 2013 to get it ready to list…and sold on October 26th as to Offer and Acceptance. The lower one “SOLD IN TWO DAYS” took from January 6, 2013 to Jan. 26 to get it ready to list…and sold on Jan. 28 as to Offer and Acceptance.
A few recent real life examples…to give you an idea of what it takes to get your house from Day One to SOLD.
There was so much fear mongering going on about “The Fiscal Cliff” it was starting to feel like being tied to a chair and being forced to watch The Shower Scene from Psycho. The stock market rallied up in response to it just being OVER WITH! But should we just be happy that it’s over with? Did the final agreement impact homeowners?
Doug Tingvall of RE-LAW sent me a quick synopsis of how the deal impacts homeowners “for now”. I asked him to post it publicly as I think it might be of interest to homeowners and homebuyers. I don’t see much in there that is alarming or even much of a change, but maybe I’m missing something. Read Doug Tingvall’s full synopsis HERE
While Doug’s Article does not seem to have a place to ask questions or post a comment, if you have questions you can post them here and I will see if Doug has some time to answer them for you.
The summary is worth a quick read and many thanks to Doug Tingvall for sending it over to us.
I like this first picture of a TV placed in a main floor or lower level bedroom because honestly, here in Seattle, this is often the case. In fact this particular photo reminds me of the house I sold for Dustin Luther, the owner of Rain City Guide, a few years back.
The light streaming in from the left reminds me of the french doors he had leading out to the deck and yard. I sold a similar home with french doors out from the bedroom on the main level over in Phinney back in 2005 or so.
If you are buying a reasonably priced home in Seattle vs on The Eastside, the above photo likely represents what “a family room” will look like, given homes built in the early 1900’s didn’t have real “Family Rooms” or even Formal Living Rooms and Formal Dining Rooms to a large extent.
The next photo cracks me up as it reminds of the time when high ceilings, loads of windows and lots of natural light was first added to “The Family Room” and it was renamed “The GREAT Room”. I remember John Orobono saying to me, “Ardell, we love our new house, but I have to hide in the closet with a TV to watch the football game, because there is too much glare on the TV during the daytime”.
Of course they make “low or no glare” TV screens now to assist with this “problem”.
Over the Thanksgiving Holiday I was playing Just Dance 4 at my daughter Tina’s. This lower placement in the photo below is likely more common for today’s family that plays games on their TV and watches “TV” on their laptops. 🙂
The above picture reminds me of my friend Kevin Tomlinson of South Beach Florida as it has that monochrome austerity with a bold splash of color that he favors as to Interior Design.
So back to the original question “Where Does the TV Go?” Well…builders…NOT over the fireplace!