Hair Raising Fears of a Housing Bubble!!!

Posted on May 1, 2006 by ARDELL

[photopress:hair.JPG,thumb,alignright]It is very difficult for young people today to buy with confidence. There are some very real fears, and justifiably so, that housing prices can not and will not continue to rise at the levels they have in recent years. Some ask if they should wait until they have saved 20% down. Historically, most people have bought their first homes with less than 20% down for good reason. There are no guarantees that interest rates will not rise. Interest rates are still, historically very low. How would you feel if you waited to purchase only to find that prices were still high and interest rates were 9.5%?

Renting when you are a family with children has its risks. What do you do when one day the landlord knocks on the door and says “I’ve decided to sell the house and you all have to move out in 30 says”?

Anyone who can qualify for the first time buyer program at First Tech, should consider that option. It is an excellent program, with almost no loan costs and a very low interest rate. Take the time to find the very best loan program that you can and work on your credit score to insure you can get the best possible rate available.

When selecting property, try to convince yourself to buy that diamond in the rough. This way if values do not increase, you will still be able to sell at a profit. Buy the house that needs a lot of cosmetic fixes, but has good curb appeal and is in a decent area. Consider all of those areas that have only increased by 10% or 15% but border on areas that have increased by 30%. Buy that “old people” house in a great neighborhood that everyone else is turning their nose up at because it has sculptured carpet and pinch pleated avocado drapes.

The one sure way to buy with confidence is to ignore the cosmetic issues and don’t be fooled by heavy “staging” that might lure you into paying too much for the house. It has never been more important to buy wisely. It has never been more important to avoid making choices based on creature comforts like “needs nothing”, totally remodeled or brand new, less than 15 minutes to work. Don’t get tangled up in these creature comfort premiums, unless you are willing to face the fact that the tradeoff may be having to sell for less than you paid when you need to move.

There are still plenty of values and many of them require a little TLC like paint and landscaping. Be the smart buyer who isn’t crying the blues in a year or two if prices level out or take a dip.

Am I better off renting?

Posted on May 1, 2006 by Galen

The last bubble discussion got me thinking – is it really so bad to rent? Well, here is a cold and calculated answer: The Motley Fool has a great calculator to determine whether you are better off renting or owning (financials only, you supply the emotional). Even the bubble hand-wringers amongst us might find some buy-friendly scenarios. Unfortunately, if owning is better for you, the calculator does not help you save up a downpayment.

They also have a how much house you can afford calculator, although it seems to have low-balled my estimate.

-Galen

Meeting of the Mind Camp

Posted on April 30, 2006 by Dustin Luther

Wow!

I just returned from MindCamp2.0… and am now just getting mentally back on my feet enough to write a quick story of my adventure.

What is MindCamp?

MindCamp is an “unconference” organized by self-proclaimed geeks… I view it is a great place to learn about cutting edge computer stuff by the people who are most interested in teaching.

The idea is that you bring together 200 people and let them quickly hash out a schedule of sessions with about 6 of them running at any given time. Add plenty of coffee (thank you Starbucks), keep the conference running for 24-hour straight, and it definitely makes for a memorable event. And yes, people did stay up all night attending event, hashing out computer stuff and playing games.

[photopress:social_networking.jpg,thumb,alignright]I attended sessions on SEO, AJAX (these guys are developing some very interesting software for enterprise deployment), Social Networking (led by a co-founder of Biznik, a great Seattle-based business networking tool), Mash-ups, geo-location tools, solving transportation problems, and coffee brewing! I learned all kinds of interesting things.

In addition, Galen and I teamed up to host a session on “Social Networking in Real Estate” which turned out to be a lot of fun and give some great feedback about some interesting uses for social networking tools in developing real estate search sites. Just as Rain City Guide was getting bombarded with the “Bubble Faithful”, our session was temporarily overtaken by someone who wanted to focus the entire conversation on why housing in Seattle is a horrible investment. I did my best to keep us focused on potential users for social technologies in online real estate tools and I hope others who participated learned a little something.

If you’re curious what an “unconference” looks like, there are a bunch of photos available on Flickr, including this classic shot of Galen.

And if you’re wondering what it takes to run an event like this, look no farther than this great group of event volunteers and a lot of caffeine. My thanks goes out to all the great people who put together this fun event. I look forward to attending more of these in the future!

Bubble blog roundup

Posted on April 29, 2006 by Galen

Good news for people who like bad news:

The Housing Bubble Blog (formerly housingbubble2)
Bubble Track (blog)
Bubble Meter (blog)
Housing Bubble (blog) – Apparently Housing Bubble’s last entry in September was so exhausting that they gave up or they declared victory – you decide.
Seattle bubble (blog) – a much longer list of bubble sites here

And a couple of articles:

Speaking Truth or Crying Wolf? (article)
The bubble bellwether index (article)

And if those aren’t enough, I suggest the tongue-in-cheek There is no Housing bubble!

It sure is easy to be a hater, isn’t it?

I think both sides are taking a foolish black-and-white approach to the bubble question; clearly there are some indicators that there is a real estate bubble, but the consensus seems to be that the risk of home prices plummeting is low. Home prices will probably be flat until inflation brings prices back to “normal” levels. My concern is that if house prices do pop precipitously, there are going to be serious consequences for home owners and non-homeowners alike.

A similar scenario, different context: A few years ago, the Fed found itself with a small risk of Very Bad Thing happening. That Very Bad Thing was deflation (remember that?). Few economists were convinced that actual Japan-style deflation would occur, but because of the potentially devastating effect of deflation on the economy, the Fed moved aggressively to combat it (giving us the cheap money we used to buy expensive homes) even though the solution could cause other problems. Why? Here is the economist (login required) in 2002 (slightly out of context):

… however small the risk of deflation, the economic cost would be so high that policymakers should respond as if it were a central risk.

Someone who is looking at a home today or who has a sizeable mortgage on their home today should look at all this bubble talk in the same way; the risk is low that your property value will decline 25% or even 10%, but the risk is certainly there. Specifically:

Do you have enough savings or equity to stay above water if your house loses 10% in value?
Is the risk of falling property values worth the potential upside?
If it isn’t a bubble now, what metrics or signs will you use to tell you if or when it is a bubble? (A corollary: Will those metrics tell you when it is a bubble or when the bubble is popping?)

Perhaps house valuations have fundamentally changed over the last 5-10 years and we there is no risk of house price declines. The one argument I do not buy is that our land use laws are making property more expensive; builders are cranking out hundreds units and making loads of money on each unit, meaning they could continue profiting even at lower price levels.

Galen

Are We Brewing A Bubble In Seattle?

Posted on April 28, 2006 by Chuck

Probably the most frequent single question I get as a realtor from my friends and clients and contacts is “Are we in a real estate bubble?

Posted on April 27, 2006 by ARDELL

[photopress:heathbillboard_1.jpg,thumb,alignright] Russ and my exchange regarding whether or not Broker’s will ultimately have to deal with complaints about an agent’s blog, reminded my of this “Got Real Estate” Billboard.

It had mixed reviews nationally. Given Wendy works in Belmont Shores where lots of people have seen her with her husband and children, and dog of course, in her bikini, it really wasn’t a big deal. But it made national news when she was fired because of the billboard. Another broker picked her up immediately (no pun intended) and she actually got a lot of business in support of her, when people heard she was fired.

In agent forums, a lot of people from those landlocked states thought it was indecent and unprofessional. But in Belmont Shores CA, someone walking around in a business suit and pumps would actually look weirder than someone walking around in a bikini. When I worked in Manhattan Beach, I had to change my whole wardrobe. I actually stopped traffic when I walked around in my East Coast business attire, pinstriped business suit and white sneakers, like Melanie Griffith in Working Girl. My broker told me I had to ditch my Philly digs if I was going to “work the beach”. I compromised and bought some really cool black Sketchers.

What do you think about Wendy’s billboard ad?

Instant Real Estate Gratification

Posted on April 26, 2006 by Dustin Luther

[photopress:sasha_skyping.JPG,thumb,alignright]Our operators are standing by ready to take your call!

Here at Rain City Guide, we do our best to answer your questions before you ask them (at least that is a major part of good blogging!).

However, I know that we’re barely touching the surface of answering all your Seattle real estate questions and I doubt you want to wait around until we write a blog post about what’s on your mind right now. So, today, I’m releasing an “instant gratification” feature!

Notice how a few of the contributors (on the right panel) have a button under their name that tells you if they are online… Every time you reload a page on Rain City Guide, my server goes out and checks the status of these contributors. If they are online, then making contact with these contributors is simple, using free software called Skype.

So far, I have four RCG contributors who have agreed to take part in this experiment:

A Real Estate Agent (Anna Luther)
A Real Estate Lawyer (Russ Cofano)
A Mortgage Broker (Russ Shulman)
A Real Estate Tech Guy (myself)

I’m not sure what I have to offer via this medium, but if you want to talk with an agent, a mortgage broker, and/or a real estate lawyer, they are available to talk with you any time they are online. (By the way, we’re not going to stop here as more RCG contributors should be coming online soon…)

Contacting any of us is very simple and if you already have Skype, you can skip the first step:

Download and Install the Free Skype tool
Return to Rain City Guide and click on the button under anyone whose status says “I’m Online” and/or “I’m not telling”.

This will bring up a pop-up menu that starts the process of calling us over the internet.

Why Skype?

It’s free! Anna has been using it for almost a year to talk with her friends and family in Russia (Here is an article she wrote about Skype last September.)
The quality of the calls are awesome! They are much better than a cell phone and akin to a land-line.
No fancy equipment is needed. Assuming you have speakers and a mic on your computer, it just works. Honestly. I’ve set it up for friends and family on five or ten different computers, and assuming they have a mic (every computer has speakers nowadays), it has worked immediately after installation. Note that even if you don’t have a mic, you can still use Skype to send instant messages, so still consider using Skype to contact us…
Did I mention it is free? Skype will cost you nothing and there is no spyware or anything nasty in the software, so go ahead, download the software and start making calls to friends and family around the world.

One last note… The status of some of the people is displayed as “I’m not telling” which is just no fun. The reason is that the status of Skype users can only be displayed on a website if they are connected to Skype through a PC. Anna and I are using a Mac. Nonetheless, I’ve included these buttons because you can still use them to contact us. Assuming I’m online, I’ll definitely answer your calls. Assuming I’m not online, I pay Skype a few dollars a year for voicemail service, so you can always just leave me a message.

[photopress:little_skyper.jpg,full,centered]
(this is a photo of our daughter using Skype to talk with her grandparents in Russia!)

UPDATE:

I added both Ardell and Galen (and two more contributors said they were hoping to join up soon)!

I also had some great questions from people about how Skype works. The system is essentially the same as a telephone conversation except it is over the internet. If you call up one of the contributors, you will be talking with them and only them. You are not entering a group conversation, a group chat, or anything like that… It will really just be you talking with them. Simple, but powerful!

Duvall – Single Family Home – $350,000

Posted on April 26, 2006 by ARDELL

WOW! Robbie’s new super duper Zearch site is very, very COOL! But let’s put it to the test. I checked my listing in Duvall and I didn’t have a light blue dot. Seems to me a single family home for $350,000 should have a light blue dot, no? Now I’ll do a post on it and see if the post link shows.

[photopress:1.jpg,thumb,alignright] First error is that the photo that shows in Zearch is not the photo that shows in the mls as the main photo. This is a glitch in the mls system and not in Robbie’s search tool, so I have to go into the mls and erase all of the photos and reload them to correct it. Even though when I pull up the mls, I see the photo shown here of the actual house, downloads, including Robbie’s, pick up the OLD photo number one. The only way I know to fix this is to empty the entire photo cue and start from scratch. Let’s see if that works.

[photopress:2.jpg,thumb,alignleft] One of the problems with all of the available public sites is that people who are looking for reasonably priced single family homes think they do not exist. If you are not familiar with Duvall, for example, and do not realize that it is within “target range” of Microsoft and other densely populated areas, they might never search Duvall. All search engines should allow you to put in a radius of where you WORK!

[photopress:3.jpg,thumb,alignright] Here’s a question. I took this great photo of the flowering plum tree on the front lawn before I listed the property. A couple of weeks later when I put it on the market, the flowers were gone. Early spring flowering trees sometimes only bloom for a few weeks. But I love this tree in bloom! Do I have to go take a picture of the way it looks now with all reddish leaves and no flowers?

[photopress:4.jpg,thumb,alignleft] Also, I took a lot of the photos before it became vacant and before I listed the property. Do photos need to show the way it looks today, without that table and chairs?

[photopress:7.jpg,thumb,alignright] This was my “original” photo number 1, which is the view FROM the house, not a picture OF the house. I have since changed that some time ago to photo number 7 or so. But the dowloads, including Robbie’s, show it as photo number 1 as if the mls has some kind of memory bank that doesn’t update when I change the order of the photos in the mls, and only remembers that this is photo number one when doing a download.

When agents pull up this listing they see a completely different photo (the first one above) than the public sites. Again, I think this is a Rappatoni glitch, and not a Zearch glitch. I also think I know how to fix it.

Woohoo…I feel like a techie fixing download problems! Not bad for a “Granny”!

Inman asks – Not Allowed to Blog?

Posted on April 26, 2006 by ARDELL

3/23/06 “Hi Ardell — I was reading the RCG today and noticed a comment of yours under Russ Cofano’s blog entry that I thought was really interesting and something I’d not given much thought before. You mentioned about joining the big brands and said they won’t let you blog so you’re not jumping on board right now.. is that true? Do brands really dictate stuff like that? If so, I think Inman News might look into this more. With all the push for blogging in the industry lately, this seems peculiar..Just wondering.. thanks! Jessica Swesey, Inman News.”

While I told Jessica almost a month ago that I would do a blog post on this topic, I have to admit I thought the question was a little naive. Almost every truly vocal person in the industry is either a designated spokesperson for a company or a “one man show”. The people I know who have been on Good Morning America or quoted in the paper, are usually the owners of the company. This is true in every industry. If you are an employee of a large company, you are told that if anyone from the press contacts you, you have to refer them to the one person in the company who is designated to speak with “the press”. There are exceptions, especially if your are spouting out only GOOD things, like “There has never been a better time to buy a house!”

So the question isn’t can everyone blog, but who can pull your plug? This goes back to blogging being public and in many ways a form of adverstising. Under State Law, in every state in the country, an agent must have the name of the broker/company on every “advertisement”. Consequently an agent either has to have an anonymous blog where the agent’s name does not appear, or a blog with both the agent’s name and the broker’s name. An agent, though an independent contractor, cannot be a “cowboy” and do things on their own without supervision. The broker retains the right to both see anything that the public can see, usually in advance, and also retains the right to veto its printing.

So how do you blog everyday if the broker doesn’t have time to review and OK your content every day? You can have an insipidly bland blog that simply backlinks to other news items. Even then, many companies do not want you to “advertise” their “competition” or “discounters”, by mentioning them by name. So all of the HOT news on Zillow and Redfin and Lending Tree, could be off limits, because they don’t want one of “their own”, boosting the popularity of these other companies by mentioning them at all.

In real estate forums, when agents want to talk about Zillow, they call it “Z”. Theory is that by even whispering their name in private, you send out spiders into the search engines that cause Zillow’s name to be spread and the website’s popularity to be expanded exponentially.

Anyone who wants to truly discuss the future of the industry in a way that does not simply spout out accolades and full service fees, cannot blog via first person in a blog unless they do it anonymously. But is this NEWS? Can an AT&T employee blog about the future in a way that points out that there are improvements to be made by their employer? Can even a Microsoft Employee be quoted in print that they think Google should win the Inman Award for Innovation? Very naive of someone to think that the First Amendment applies to the little guy who has a “BOSS”.

Back around March 23rd, I interviewed with a company that treats their agents as employees. They weren’t sure if I could blog, but they were sure that I couldn’t “talk to the press” ever. Since your blog entries can be lifted and quoted by the press…they felt that it was possible that blogging activities would be limited or possibly even prohibited.

So the question isn’t whether or not you can blog, the questions is what are you allowed to say in the blog? I’m sure even Jessica has to run her content by someone to be approved, before it can be “printed” and available in the public eye.