Category Archives: General

Sunday Night Stats – King County

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In January of 2007, 455 people were able to sell their homes in 30 days or less at 99.84% of asking price.

In January of 2008 only 261 people were able to sell their homes in 30 days or less and they sold at 98.93% of asking price.

42% fewer people sold their homes within 30 days of listing the home for sale in January 2008 vs. January 2007

In January of 2007, 13.25% of all homes sold had been on market for over 120 days and sold for 97.52% of asking price at time of sale.

In January of 2008, 21.67% of all homes sold had been on market for over 120 days and sold for 95.60% of asking price.

And yet…they sold for a little more.  Volume down by 30%, days on market longer, but median sold prices up from $430,000 to $431,375.  Median asking prices up from $430,014 to $439,000.

That was January…let’s jump to April (I don’t know the answers before I type this BTW.  I figure I can’t introduce my agent bias if I post in real time.)

In April of 2007, 1,184 people were able to sell their homes in 30 days or less for 100.62% of the asking price.

In April of 2008, only 561 people were able to sell their homes in 30 days or less and they sold at 99.25% of asking price.

53% fewer people sold their homes within 30 days of listing the home for sale in April 2008 vs. April 2007

In April of 2007, 13% of all homes sold had been on market for over 120 days and sold for 97.8% of asking price at time of sale.

In April of 2008, 20% of all homes sold had been on market for over 120 days and sold for 95.97% of asking price.

But in April, no more volume down; prices up.

Median sold price in April of 2007 was $474,950 ($50 less than median asking price)

Median sold price in April of 2008 was $451,250 and median asking price at time of sale was $459,925

 Volume Down 32% 2008 YTD vs. 2007 YTD

By Request: Stats for “Curious” in Redmond 98052 pretty strong relative to King County as a whole.  Also for Curious – Woodinville 98072; not a pretty picture.  For Aiboh here’s 98074 Sammamish – not bad.  A lot better than Woodinville.  I have to put the special request stats on my blog for space purposes.  But keep the requests coming and if I can’t do them on Sunday night, I’ll squeeze them in during the week somewhere. 

Regular weekly stats:

King County Residential

Actively For Sale: 11,231 – UP 268

In Escrow: 2,813 – UP 63 – MPPSF $210 (dropped $2.00 again – and that’s asking price

Closed YTD 5,414 – UP 305 – MPPSF $220 YTD (April MPPSF $224)

Not sure why closed sales keep running high while the properties in escrow are running low as to median price per square foot.  You would expect the closings to be affected eventually as these close, but so far not.

MAYBE a lot of the ones staying in escrow are short sales, and they are not closing at all.  That would be the only explanation I can come up with for “in escrow” MPPSF running lower and lower and closings not being lower. 

King County Condos

Actively For Sale: 3,890 – UP 106 MPPSF $320 Down $3.00

In Escrow: 940 -UP 40 – MPPSF $303.50, Down $1.50 but close to where they were the week before last.

Closed YTD: 1,776 – UP 101 – MPPSF $288 – asking prices still running high relative to closed prices.  Especially considering April closed sales are running at $270 MPPSF compared to April 2007 at $300 MPPSF.

Volume down 52% April YOY in condos and prices are starting to see more signs of weakening.   But again, given the sold properties in both residential and condo were on market for a long time, we could be seeing some old inventory selling off at drastically reduced prices.  Some old stale inventory is runing scared from “new on market” and dropping prices accordingly.  

Stats not compiled or published by NWMLS. (Required disclosure)

Mortgage Broker Commission Meeting Tomorrow

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There’s a Washington State Mortgage Broker Commission meeting tomorrow, May 7th at the Renton Community Center to discuss the impact of State Senate Bill 6471. This legislation ammends the Consumer Loan Act and Mortgage Broker Practices Act requiring all lenders to become licensed under the Consumer Loan Act (except those licensed under RCW 63.14)

This change in the state law was put in place to close a loophole. Some mortgage brokers were issued an exemption certificate by their regulator, DFI, because they had received approval as a Fannie Mae/Freddie Mac direct lender. Though still subject to the MBPA, these lenders, an estimated 300, were operating with no state regulatory oversight. This loophole is now closed.

Mortgage brokers are complaining loudly that this change will cost their firm lots of money. I would like to see the raw numbers on their estimates.

I will be attending tomorrow’s meeting, and if I can catch a wifi signal, I will blog live.

This does not appear to be a “closed” meeting since DFI is indicating that the room capacity is 100. I received no notice about this meeting, which is odd, since DFI is always very good about notifying all of us via their listserve.

Time: 1:00 PM
Location: Renton Community Center
Address: 1715 Maple Valley Highway, Renton 98057
Driving Directions

Free Flushes?

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Our development company has been a certified Built Green builder for several years, and we’re always trying to find economically feasible ways to add “green” features to our new construction.  “Economically feasible” to me means that while we’re willing to pay more to build in a more sustainable fashion, we’d like to be able to recover most of those extra costs in higher resale prices, or shorter market times.   

So when I read about a “greywater recycling” unit, I thought we should try it.  Here’s our first installation, in a stand-along townhome in Crown Hill — North Ballard:

This octopus-looking thing takes water from our two showers (the black pipe) and puts it into this 50 gallon tank.  There is a water supply that fills the tank if the level gets too low.  The city inspector scratched his head at this — first time he’d seen it — as did our plumber.  But now that we’ve gone through it once, hopefully the next ones will be easier to install. 

You can see the level of “grey” water in the picture, at about the 20 gallon level.  This water is pumped back into the toilets to use for flushing.  Flushing constitutes nearly 40% of domestic water usage, so in theory, this will reduce your water (and sewer) bills considerably.  And it’s just “light grey” shower water, which if you avoid shaving, toothbrushing, and any other debris-generating activities (not to get too graphic), should be 98% pure domestic water and a little bit of ivory soap and shampoo.  The feedback that I’ve seen from consumers is that they don’t notice that they’re flushing with anything different than normal “clean” water.  So when you do flush, it’s with water that would have gone down the drain after its first use, but you’re giving it a second life.

The cost, all in, is about $4500 (it would be much more expensive to plumb into an existing house).  This particular townhome is about 1750′, and is priced at $450,000 — not priced any higher than it would have been without this system, but our hope is that this is a feature that will set this unit apart from the competition.  We wouldn’t be able to justify this in a $300,000 townhome (not just b/c of the price point, but the $300k unit wouldn’t have enough physical garage space to fit the tank), but we’re putting them into about a dozen other units right now in Seattle. 

There are lots of green things that just can’t work in our spec houses — $40,000 solar arrays, for one.  But this system gives a lot of bang for the buck, and I think our buyers will really like it.

 

"It's Microsoft's World, Kid…

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I just live in it.”

That was the line in CSI: NY last night, where Microsoft’s Photosynth was used to reconstruct the events prior to and during a crime at a high school prom. They loaded up all of the photos taken on every student’s cell phone ( a big box of them).  Then they used Photosynth to timeline the victim and suspects whereabouts in the moments before the Guidance Counselor was slain.  One of my clients worked on this program, so I was “tuned in” last night. 

Rather than my trying to explain what Microsoft Live Labs Photosynth is, for those who didn’t see the show last night, here’s a video that Robert Scoble put up when Photosynth was the hit of the O’Reilly Web 2.0 Summit in the Fall of 2006.  Here’s another great and even better video called Nasa meets Photosynth. 

Another description from Wikipedia: “from Microsoft Live Labs and the University of Washington that analyzes digital photographs to build a three-dimensional point cloud of a photographed object.[1] Pattern recognition components compare portions of images to create points, which are then compared to convert the image into a model.”

The program last night and the Nasa meets Photosynth video give some great examples of how this technology can be used.  In the comments someone noted that he might be able to “watch his child grow up” by using this technolgy, and someone else referenced a marriage of Flickr and Photosynth for multiple purposes. 

As a side note, I am one of those people who didn’t like Bill Gates too much, until I saw him “honored” in the eyes of a friend from India.  Watching my friend speak from the standpoint of “anything is possible”,  I realized what a huge role model Mr. Gates is for so many young people with dreams. When I see young people striving to become great in their own right, every single day, spurned by the idea that “everyone can be great…just like Bill Gates”, I bless Mr. Gates for his ripple effect.

Someone bought me an Apple computer…I refused to use it for six months and then gave it back.  On the other hand, they are going to have to pry my iPhone from my cold dead hands…until Microsoft comes out with a replacement product 🙂

HELP! Techie Problem! I'm going NUTS!

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I really need this fixed yesterday.  It’s driving me NUTS!

For almost a month our WordPress Blog here has been malfunctioning for me and only me.  Not Rhonda.  Not Dustin.  Just ME!  I am not getting an email when someone posts a comment on one of my posts.  So I have to come here WAY too often to see if someone is “talking to me” and I have to answer quickly and get back to what I am doing.

I have to check the site mega times a day, instead of simply seeing the question in my email.  And if someone leaves me a comment and it rolls off the sidebar while I’m working, I risk ignoring someone who asked me a question, which I don’t like to do.

The result is that I’m commenting like a madwoman by coming here ALL the time, instead of just working and seeing an email come in when I get a comment on one of my posts.

I’m going NUTS!!!!!  I’m busy up to my eyeballs and I just can’t put up with this one more day!

Dustin and I have tried everything we can think of to fix this problem.

So if you have a WordPress blog, and have ANY suggestions as to why the comments are not causing me to get an email (and yet everyone else still is getting theirs) PLEASE, PLEASE HELP!  Any and all suggestions appreciated.  I’m going out of my mind and it’s starting to be noticeable in my writings.  Please help me.  This must get fixed.

Thank you.

 

Fed Funds Rate cut 0.25% to 2.00%.

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The FOMC cut the Funds Rate another 0.25% to 2.00% based on an 8-2 vote.  Remember, this does not mean that the 30 year fixed rate is now 0.25% lower.   This does mean that if you have a HELOC that is attached to Prime (and it’s not fixed), your rate will go down 0.25%.  Prime will be reduced to 5.00%. 

The FOMC also reduced the Discount Rate 0.25% to 2.25%. 

The Fed Statement regarding today’s rate cuts will have a more dramatic impact mortgage rates (mortgage backed securities).

“Recent information indicates that economic activity remains weak. Household and business spending has been subdued and labor markets have softened further. Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters….

The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices…”

The 0.25% rate cut was highly anticipated and all ready priced into the market.   We’ll see how bonds react once the markets have a chance to absorb the statement and Fed actions today.    This week will remain very volatile with rates…tomorrow is loaded with economic indicators and Friday, we have the big daddy:  The Jobs Report.

Make Sure Your Loan is Locked

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I’ve been communicating with a home owner who thought their loan was locked in at a certain rate only to learn that this is not the case.   Here’s their story:

Their existing ARM reset in March.   In late February, they informed the LO they wanted to lock at  5.5%, no points, 30 year fixed, and close before April 1 and the LO said it was reasonable and doable.  The appraisal was complete in late March with a LTV 79%.  The LO did not lock in at that time.   The LO presented a GFE 55 days after the application was signed and not the program that was agreed on…the LO admits he dropped the ball but cannot fix it with his bank.

Ouch.  Big ouch. 
Part of the problem that I can see by reviewing rates I’ve posted is that in late February (at least on Fridays) rates where in the high 5’s with 1 point.  So a borrower could easily tell a Loan Originator, “this” is the rate I want you to lock me in at…and if that rate does not happen at that time, the LO will most likely not lock the borrower since this is what the borrower has instructed the LO to do.
 Mag2008nominee
For the LO to tell these borrowers “reasonable and doable” was a stretch. Reasonable, maybe but in this current market when we’re averaging two rate sheets/changes a day: almost anything and nothing may be reasonable and who’s to say what’s doable unless you’re the dough fronting the mortgage.  The appraisal should not have been ordered without the borrowers consent.  The LO could have easily told the borrowers, your rate has not become available, should we order the appraisal (worse case, borrower is out a couple hundred dollars) or would you like to wait to see if your rate becomes available?   The Good Faith Estimate being presented almost two months of application is inexcusable.  
Hindsight is so clear and you can see the warning signs about this transaction skidding down the wrong track. So what can you do to try to make sure your loan is actually locked?
 
Obtain a written Lock Confirmation.   Your lock confirmation is not a guarantee.  I’m sorry…I wish it were.  If the information you provided on your application, your credit scores change (expired credit report), the appraisal comes in lower; may impact your interest rate and thus the lock.   Once you request a lock from your LO, or they say your locked, get it in writing!   If you don’t receive a Lock Confirmation by the following day, contact your Loan Originator to find out when you will have one. 
 
I have recommended that this couple contact the LO’s supervisor…but here’s the challenge:
 
If the LO told them they were indeed locked, the bank might try to honor (eat) the lock, as they should.  Based on today’s pricing, buying that rate would cost an additional 2 points.  However, without documentation of any sort (no email or lock confirmation), it will be challenging to prove that the LO promised or committed to this rate.  It’s your word against theirs.   If the borrower stated, I want “x” rate at “y” cost and these factors never happened…the Loan Originator is off the hook.  The LO cannot provide what is not available (specific rate/cost).   It’s an expensive lesson.
 
But what if the borrowers rate/cost was available and the LO committed to locking in that rate?  Mind you, rates can and do change even while they’re being locked–which is very frustrating.  In that case, the LO should contact the borrower immediately to let them know there’s been a change for better or worse (usually better is no problem).   Again, assuming the rates available and the LO either screws up and doesn’t lock the rate or tells the borrower it’s locked when in reality the LO is “gambling” the market.   What can the consumer do if they discover their rate was never locked?  I contacted fellow RCG contributor and attorney, Craig Blackmon regarding if there’s any recourse for someone with an unhonored written lock confirmation (assuming the program is still available and the other factors I mentioned above that may impact a lock):
 
Here’s Craig’s answer:
 
That would depend on the “written lock confirmation.”  If that document constitutes a binding contract, then yes the borrower would have a breach of contract claim against the party to the contract for the difference between the promised rate and the actual rate.  Even if the document does not constitute a contract, the borrower might still have a negligence claim (i.e. a malpractice claim) against the LO if the LO failed to exercise a reasonable degree of skill and care in attempting to lock in at the promised rate.  In either event, the borrower’s recourse would be against the LO (I think — again, I would need to see the “confirmation” to confirm in regards to the breach of contract claim).  
Bottom line, be sure to get documentation of your lock in writing.   Lenders should provide lock confirmations with an updated Good Faith Estimate if the rate or cost have changed from the last one provided.  If something smells fishy and they’re no cooperating or stalling, it’s probably shark.  Oh…and last but not least, I don’t recommend chasing a rate.  If you like the rate, lock it or be prepared to lose it.

Condos – How much should be in reserves?

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I have written posts in the past about this topic noting my chagrin that WA didn’t have a Law that required Condo Homeowner Association Boards to have a Reserve Study done.  Well I’m pleased to announce that such a law was passed.  Here’s a link to Elizabeth Rhodes of the Seattle Times article on the subject.  The law has no teeth yet, and has everyone confused for a lot of reasons, but it’s a step in the right direction.  Rome wasn’t built in a day.

condosThis is a subject that is near and dear to me, because I have witnessed too many times the long-term affect not having a Reserve Study, or a requirement to have a Reserve Study, has had on Seattle Area condo buyers and sellers.  I am so happy about this new law I could stand on my head and spit nickels.

If you are on a condo Board of Directors, this is a VERY important concept for you to understand and embrace.  Please post any questions you may have about the importance of a Reserve Study (not the law “requiring” it) and I will be more than happy to expound on the topic to the extent of my ability.  I’m a real estate agent, but I had the opportunity to manage several associations and help them with Reserve Study requirements in “a past life”.  I also understand the relationship of Reserve Study to setting accurate monthly dues.  And last but not least, how very important it is to buyers of condos to have a Reserve Study Summary Page in the Resale Certificate.

HOW MUCH SHOULD THERE BE IN RESERVES?

Honestly, no one can answer that question unless there is a Reserve Study done and the ability to review the Reserve Study.  Here’s why.  Condo Reserves are not about HAVING reserves.  In fact, having too much in reserves can be just as harming to an Association and condo values, as having too little.

Putting money in reserves is not like saving X% of your money for “a rainy day”.  Putting money in reserves is like saving for a new bike when you were a kid.  You want a bike.  It costs $100.  You know if you can earn and save $20 a week, it will take you five weeks.  If you buy the bike, but have the foresight to know that you want a new and better one next year, you might set the bogey at $250 for a new bike in 12 months and save $5.00 a week to that end.  When you have the $250, you get a new bike, or you stop saving for that particular item at that point.  Reserve Studies are THAT simple. 

In a Condo Association you are like a kid saving for a new bike for every “major component” of your property.  NOT ANNUAL MAINTENANCE ITEMS, but REPLACEMENT COST items.  So how much is enough and how much is too much to have in reserves?  If you don’t have $250 the day you are scheduled to go get the new bike…not enough.  If you still have $250 in the account the day AFTER you buy the new bike, you saved too much.  The danger of saving too much is that you have falsely created a monthly condo fee that is too high, and your property values may have been damaged as a result.

HOW IS A RESERVE STUDY DONE AND HOW MUCH DOES IT COST?

A FIRST TIME Reserve Study will cost a lot.  About $2,500 depending on the size of your Association.  A 20 unit complex with no amenities Reserve Study will cost less than a 700 unit complex with two pools, an exercise room, two lakes and 8 elevators 🙂  After the first one is done, the updates cost much less and usually no one has to come out and the update is “a computer function” of numbers adjustment.  You tell them you just replaced the mailboxes, and they do a reset of Useful Life for that item and spit out a new page and Reserve Study Summary.  A simplification, but you get my drift.

Someone comes out and makes a list of Major Components.  The Board of Directors normally sets the dollar amount of “Major Component”, though the Reserve Study Company will make a suggestion or have a standard you can follow.  If you have 10 units and need a $2,000 item, it costs everyone $200 to get it.  If the cost of those condos is $450,000, then maybe asking everyone to chip in $200 is not a big deal.  But if the cost of those units was $159,000, then asking everyone for $200 IS a big deal.  If you have 700 units, then everyone kicking in $2.87 is no big deal.  Maybe you call that a “minor component” and save for that only if you have all Major Components covered.

THAT IS WHY the definition of Major Component is left to the discretion of the Board of Directors of each Association.  Fees being too high hurts you as much as fees being too low.  There is more than a $15 difference between dues of $295 a month and $310 a month, than $250 and $265 when it comes to property values.  The Board has to be aware of pushing that fee beyond certain “keypoints” without GOOD reason.

New Roof, Exterior Painting, Replacement of Fences, Resurfacing the Pool, new mailboxes, are examples of Major Components for most Associations.  NEW ELEVATOR is a really good example of why one Association with $500,000 in Reserves can be BETTER than another with $750,000 in Reserves.  If the second has 3 elevators, or a very expensive many floor elevator, their Reserve Needs will be higher than an Association with no elevator and other similar Major Components excluding elevator.

(Kim asked about windows – no not windows or sliding glass doors or garage doors.  Almost always they are “owner responsibility” items as to cost.  The Association chooses the contractor to be used and type of product, but since the owner pays, these are not part of the Reserve Study.  Each Association is different, but as a general rule, know that these items are not part of what an Association pays for as to replacement.) 

WHAT DOES ALL THIS HAVE TO DO WITH MONTHLY DUES?

Monthly dues are a combination of two numbers.

1) Monthly amount needed for Operating and ongoing Maintenance.  Landscaper (not replacement cost of trees but the cost of monthly service).  Property Management Fees.  Cost of electricity for lighting the common areas.  Regular pool maintenance and chemicals (not resurfacing or pump costs)

Let’s say Operating Costs are $5,000 a month and there are 50 units.  $5,000 divided by 50 equals $100 in dues for Operating Costs. Many Associations do not divide evenly by number of units, they do it by square footage or value of units, but I’m trying to keep this simple.

2) Reserve Needs.

A Reserve Study will spit out a final number and tell you what you need from each owner, each month, to have enough for replacement items. 

Let’s say they need $30 from everyone for an eventual new roof, $20 for new siding some day, $10 to repaint the place every 10 years to increase the life expectancy of the existing siding and $40 for all other major components combined.  Then the Reserve Study Summary will say you need $100 from everyone, every month, for “Reserves” and you must put that money in Reserves every month FOR THAT EARMARKED PURPOSE! 

IN THE ABOVE EXAMPLE, DUES SHOULD BE $200 A MONTH, NO MORE AND NO LESS.  $100 for monthly operating costs PLUS $100 to put into Reserves.

HOW DO I AS A CONDO BUYER OR OWNER KNOW IF THE AMOUNT IN RESERVES IS ADEQUATE?

There is a RESERVE STUDY SUMMARY that IMNSHO should be in every Resale Certificate and submitted to every owner once a year at the AGM (Annual General Meeting) or Budget Meeting (often the same meeting).  It’s a few pages.  The actual Reserve Study is a big book with photos, and so usually not distributed out to anyone who wants to have it.  Though it is usually available for review and by appointment upon request.  Often every Board Member gets their own copy, but other Association Members do not.

The Reserve Study Summary will list all major components, their useful life, and their Remaining Useful Life. These will be shown in columns for every Major Component.  A quick glance of Remaining Useful Life Column will give you a feel for the health of the Association. If you see items with Remaining Useful Live ZERO, that’s a big red flag!  That means the item should have been replaced, but wasn’t.  Most reserve studies do not go into negative status like -5 years to let you know the item should have been replaced five years ago (I wish they did).  Most often they will say “0”.

This is a long topic, in fact it takes a chapter of a book to really explain it well, but hopefully the above offers some practical information you can use to comply with this new law.  It’s a good law.  Embrace it.  Don’t try to find the loophole to get around it. 

If you walk around an area with a lot of old condo complexes in disrepair, know that was caused by WA not having a Reserve Study Requirement, to some extent.  Know that a healthy Association is not only important to the owners of the condo units, the buyers of the condo units and the sellers of condo units, but everyone impacted by “an eyesore” in the neighborhood.