King County Home Prices 2010

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King County Home prices in 2010 will have to escape two mega foreseeable dip factors, in order to keep in the 2005 – 2006 price range. Early last year I called bottom and the end of the downward spiral, when median home price for King County was at $362,700. The year ended at at a median price of $380,000, and early closings for 2010 are running at an unsustainable high of $196 mppsf.

What to watch for in 2010:

1) Prices should stay in the 5% this way or that range of $380,000. Expect a low of $361,000 to a high of $400,000. We reached that point in June of 2009 when it hit $399,000, and then backed off from there toward year end.

King County median home prices should stay within 5% of $380,000. If they move out of that range on the up or down side, it will be time to “take notice” of which way it is going out of the expected zone and why.
graph (31)

2) Even more important than staying in the 5% this way or that of $380,000 above, would be falling into 2004 price levels. Several times I have been quoted as saying that prices will maintain at 2005 levels, and so far that has been correct. We have a considerable cushion between current home prices and 2004 levels here in King County. For this graph I used median price per square foot, noting 2004 pricing as RED, the danger zone.
graph (29)

While I am still fairly confident that we will stay in 2005 – 2006 levels for the foreseeable future, I have a couple of concerns for 2010. The first, of course, is the end of the Tax Credit for Homebuyers. If we are high enough in that above $380,000 range as to median price by the time that happens, we should stay in the safe range when we take the post credit dip. If we trend down in the first quarter toward bottom, then the end of the credit will be a more worrisome event.

I am more concerned with how 2010 Assessed Values will impact home prices next year and beyond. While I agree that the County needed to back down those prices to cut back on the expensive appeal process, I see a dark cloud on the horizon. Many people have come to use County Assessed Values in some form or another when determining value and fair offer prices. The huge dip in Assessed Values from 2009 to 2010 could trigger a reaction from home buyers forcing prices into another downward spiral. We can only hope that people will look at Automated Valuation Models or “the comps”, instead of County Assessed Values. Dramatically reduced assessed values could have an unwarranted, unexpected and negative impact on home prices in the coming year. Only time will tell. That cloud may come and rain on us…or blow out to sea.

Barring a new event, look for home prices to be in the 2006 range for the strongest of neighborhoods and early 2005 range for the weakest of neighborhoods. Weakest being those with the most foreclosures and strongest being those with the least foreclosures.

East Home Prices by Style and Age of Home

North Seattle Townhome Prices by Zip Code

A Decade of Green Lake Home Prices and Sales Volume

(Required Disclosure – Stats are not compiled, verified or posted by The Northwest Multiple Listing Service)

Home Buyer says dealing with the new Good Faith Estimate is “Close to Living Hell”

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We’ve heard plenty of rants from mortgage originators about the HUD’s Good Faith Estimate.   Because the new HUD required GFE is so new, most consumers and real estate agents have not had a chance to witness one first hand beyond  sample on a website.   Right now I’m dealing with a buyer where we began the preapproval process late 2009 and wouldn’t you know it, they bought a house this week.  Yesterday I prepared my first “official” HUD Good Faith Estimate since this is a bona fide transaction (we are using a detailed form for pre-GFE clients).    The comment I received from one of our readers is so timely, I had to share it as a post.

I am a home buyer caught in the transition between the old and new GFE and it has made the last three days something close to a living hell. We started the loan process the last week in December and will close the end of January. These new forms damaged the very good relationship I had with a good and reputable lender but reading some of the blogs has confirmed that the seeming crazy things my lender was telling me are in fact true.

-My first shock was how much higher the settlement charge total compared to the closing costs total. After three days of call and emails I see that my costs have risen a little due to increases from my lenders service providers but at least not the $1,500.00 that I originally thought.
-I still have not been able to determine my “Estimated Cash Required at Closing

A National Realtors® database is coming soon – RPR™

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RPR - logo-low res
There has been a lot of buzz about the formation of a national database that NAR (National Association of Realtors®) announced last November called the Realtors® Property Resource. NAR acquired the technology to create RPR including a database of licensed data and secured data aggregation services from LPS Real Estate Group in November of last year. Everyone has been asking if it’s going to make the MLS obsolete or if it intends to be a Zillow-killer. Well, yesterday a blog was launched to help explain and educate agents and the public about what it will feature, and how it will be used. RPRBlog has some great demo videos and FAQs that detail what’s under the hood and how NAR envisions it will be used.

The amount of data RPR™ intends to incorporate is massive and the tools they are developing to assist Realtors® in utilizing this information are amazing. If it lives up to the hype, it could be the single most important tool that has been developed for real estate agents since the development of MLS boards around the country. This will be a massive online real estate library and archive that will provide real estate professionals with data on every property in the United States.

RPR will include in-depth information on every parcel of real property including public record information, details of prior transactions, MLS information (when provided), zoning info, tax data, and a variety other relevant information that has never been correlated in one place before.

Zestimate on Steroids
Many homeowners and agents have used Zillow’s Zestimator to refine the AVM (automated value model) that Zillow uses to come up with and estimated market value. While this was a clever and advanced tool when it was introduced, it is far from perfect. Zillow still recommends getting a real estate professional to help fine-tune the results. RPR’s valuation method, called RVM (Realtors® valuation model) takes it much further. It draws on the Realtors® own market knowledge to take into consideration local market factors.

One data source that is being integrated into the database to help with home evaluations is the Realtor® and Remodeling magazine’s annual Cost vs. Value Report. This report has been compiled for a number of years by a variety of industry experts for a number of the main national real estate markets to see how different improvements affect value based on location and value of the  home. This shows, for example, how a deck in Miami overlooking the ocean will add more value than a deck in an inner-city location with no view. This helps dial in more accurate valuations.

Localized Marked Updates
Agents will log on to a localized homepage that is customizable with scrolling news bar to keep up to date on both national and local news. They will also see maps of all the changes in listings in their area, including price changes and foreclosure properties. All NAR agents will have access to the website, regardless of whether the local MLS participates or not. I’ve not heard from the NWMLS and there is no information on their website that says if they will be among the MLS organizations participating nationally. Obviously most Realtors® would love to have these tools and be a part of this. But NWMLS is broker owned so they may have a different perspective.

The estimated launch of the site is 2nd quarter of 2010, so I am sure we will be hearing much more about this.

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Home Buyers: Please Be Aware of the Owners Policy on the GFE

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HUD had dramatically revised the Good Faith Estimate to a uniform document with summary of fees.  If you compare a GFE issued prior to 2010, one big difference is that buyers will not see a charge for the owners title policy–why? Because they generally do not pay for the owners title policy–the seller does!  Please don’t ask me why this is on the new GFE and why, if it’s not charged in our market LO’s must disclose it…I don’t have an answer…and don’t have the answer for why mortgage originators are held to the 10% tolerance when quoting this fee when it has nothing to do with mortgage origination.

The fee for an owners title insurance policy is much more than that of a buyer’s policy. Typically the Seller pays for the owners policy and the buyer pays for the lenders policy which has a reduced rate (simultaneous issue). There are also various coverages available with an owners policy and the coverage that is required should be specified in the purchase and sales agreement.

Here’s an example of title fees for the owners (seller) and lenders (buyer) policies based on a $500,000 sales price (FYI LO’s: the owners policy is based on the sales price not the loan amount) and a loan amount of $400,000. Examples below do not include sales tax.

FEES BELOW NOT SHOWN ON GFE PRE-2010

Homeowners Policy (1998 ALTA): $1,192
2006 Standard Owners Policy: $1,053
Extended Coverage Owners Policy: $1,937 (not commonly requested)

 ALWAYS SHOWN ON GFE (because the buyer pays for it)

Lenders Policy (simultaneous issue): $647

So with a purchase price of $500,000 and a loan amount of $400,000; I would disclose $647 plus tax for my estimated title insurance fee for the borrower on my GFE–both now and before 2010.  Now I need to add over $1000 to this scenario on my good faith estimate even though the buyer isn’t paying for it…my closing costs on a purchase appear $1000 higher!  

And to add insult to injury, the title owners policy is included in HUD’s 10% tolerance bucket of charges.

The Talon Group offers this tip to mortgage originators quoting an owners title insurance rate (when you don’t know what the specified coverage will be on the purchase and sales agreement):

Lenders should quote the 1998 ALTA Homeowner’s Policy rather than the less costly Standard Owner’s Policy in block 5 of the GFE. The local Purchase and Sale Agreement defaults to the Homeowner’s Policy because of it’s superior title coverage. There is as much as a 12.5% difference in price between the two policies.

The lender’s policy (and escrow/settlement charges) are included in Block 4 of the Good Faith Estimate and the owners policy is included on Block 5.

According to HUD’s RESPA FAQ’s last updated December 30, 2009:

Q&A #3 page 27:

If the borrower requests an enhanced owner’s title insurance policy or an endorsement to an owner’s title insurance policy after the loan originator issues the GFE, the loan originator may choose to treat such a request by the borrower as a changed circumstance.  The loan originator may then choose to provide a revised GFE to the borrower to disclose the increased charges.  If the increased charges do not exceed tolerances, the loan originator may opt not to issue a revised GFE.

I take this as saying that if the borrower decides they want more expensive coverage after I have issued a GFE and I do not re-disclose the cost difference and it exceeds the 10% tolerance, I just paid for the difference…even though it’s a seller cost!

With a purchase transaction, if the borrower accepts the title insurance company as selected by the real estate agent or seller (assuming the company is not on my “list of providers”), then there is no tolerance as HUD views this as the borrower selecting the service provider (same is true with escrow companies).    Regardless, even quoting from my preferred provider, the fees on my good faith estimate look $1000 higher based on this scenario. 

At least until consumers and mortgage originators are accustomed to using the new GFE (and unless HUD makes additional changes) this is going to take some getting used to!

For the record, this post all of my posts are my interpretation and my opinions–this is not a substitute for your legal staff or your compliance department!

“New on Market”? Maybe not.

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The new listing numbers started out in 2010 with 3 digits vs 8 digits of the last decade and beyond. It would be awesome if we could track how many new homes are coming on market by these numbers. Unfortunately I am seeing many “new” listings on market for hundreds of days.

There is a rule against, and fine for, “trading up” your mls # from a 2009 or even 2008 listing number to a fresh 2010 one. But I am seeing many that “expired” vs. cancelled on 12/31/09 and then re-listed (often with the same agent) since 1/1/2010.

These listings are also coming up with the “n” symbol as being “new” on market. They are also showing as “on Redfin 1 day” so be sure to look at CUMULATIVE DAYS ON MARKET before determining whether or not it is really a “new” listing. You can do this on Redfin by clicking the property detail. Cumulative Days on Market seems to be “one click away” as in “on Redfin 1 day” but Cumulative days on market 455 days.

Maybe some day there will be only one mls # allowed per home address…on a 12 month rolling basis. But for now, there really are not over 3,000 “new” listings since 1/1/10, even though over 3,500 have been “newly listed” since 1/1/2010 as of today.

It’s possible that the mls will take away their “new” number, and give them back their old one. It would be great if they did, so we can track how many really new listings there are coming on market this year. So far I have not seen a way to search by “cumulative days on market”. I’ll have to ask Matt Goyer over at Redfin if they have an internal system that will do that. But if they did, I would think they would not be showing those “on Redfin 1 day” houses that have been on market for over a year.

Getting Hired in 2010

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Many small business owners in Washington State receive numerous resume’s over the last couple years and our office is no different.    With the economic issues surrounding us and the slow slog of the real estate market trying to find some equilibrium without “intervention,” scores of real estate related jobs have been shed over the last three  years.

Many former workers that have been laid off from mortgage, title and escrow related fields submit resume’s as a matter of protocol due to unemployment benefit requirements.   Employers understand this but once in a while a gem comes across you as it did us earlier this week.

Here is why the individual caught my attention.

I didn’t receive a resume via fax.  I didn’t receive a resume in the mail, again and again.  I didn’t receive the resume by e-mail.   The individual stared at us face to face by taking the time out of their day and shook my hand and introduced herself  to us in person.   Call me old fashioned, but the impression you leave by being professionally presented and having an authentic conversation, unscripted and raw, going in knowing you will be rejected 9 out of 10 times and still having the COURAGE  to look up a company and personally drive to the office not knowing how you will be received, will always receive high consideration of getting an interview at our office.

All the best to those who are looking for work in 2010.    Keep your chin up and remember this:  as Warren Buffett said in his interview this past November at Columbia University in New York, “betting against America and it’s economic engine is a bet I would never wager.”

Recommendations for a “good” Home Inspector

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inspectorTrulia Voices is an excellent place to ask questions and also a good place for buyers and sellers to read other people’s questions and answers. Zillow has a similar feature, but I am not as familiar with theirs.

Today a Home Buyer in Seattle asked:

Does anyone have recommendation on a good home inspector – competent, reasonable service fee in seattle area?

The answers will likely continue to come in for days, and they are already an excellent resource for anyone looking for inspectors that are highly recommended by those who use them most often. Save the link, as these answers tend to come in for days and weeks forward from the day the question is asked.

Feel free to add your choice of inspector, either on the Trulia Voices linked questions, or the comments here on the blog.

Seattle’s Queen Anne Neighborhood Is Amazing

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Queen Anne has long been one of my favorite Seattle neighborhoods because of its easy proximity to Downtown Seattle while still maintaining a “small town” feel.

Queen Anne Seattle WAThe Queen Anne Neighborhood of Seattle is amazing from all angles – on the North slope there are lovely views of Ballard & Fremont over the canal and the Fremont Sunday Market is practically right there!  To the East is Lake Union with houseboats all along Westlake, the Bigelow Ave portion of Queen Anne Boulevard, Downtown Seattle views, and more.  In the Southeast, the newer QFC is just one of the factors that make this part of the neighborhood score high on WalkScore (my latest Queen Anne contract  in this area has a WalkScore of 94!!!).  In the shadow of the iconic Space Needle, Lower Queen Anne or Uptown is full of restaurants, pubs, and nightlife and has the Seattle Center at its heart.  West Queen Anne is perched high above Puget Sound and offers sweeping views of the sound, city, Space Needle, Mount Rainier, and pretty much anything else you want to see as it is one of Seattle’s highest hills.  Upper Queen Anne is the true heart of the neighborhood and a stroll or drive along Queen Anne Ave North will show you why.  This is the heart of the upper portion of Queen Anne and where you can find all of the offerings from local clubs, restaurants, and merchants. One of my personal favorites is Queen Anne Books.

Historical Queen Anne: Queen Anne

Queen Anne is one of the original Seattle neighborhoods settled and the history of it is quite fascinating!   A stroll around Queen Anne Boulevard is a great place to start.  Old Queen Anne Boulevard is a series of streets that form a loop around the top of Queen Anne – a crown around the top of the hill.  Many people don’t know about the Boulevard, but it has been around in one form or another for about a hundred years thanks to the citizens of Queen Anne at the time who pushed for it.   Queen Anne Boulevard is Queen Anne’s version of the Green Lake path although it is almost a mile longer at roughly 3.7 miles and shares its surfaces with cars.   Look for historical sites on the Boulevard including the Wilcox Wall on the West slope, but also notice that there are some of the city’s best views along the way!

Queen Anne Real Estate:

Homes in Seattle’s Queen Anne neighborhood range from small co-ops and condos for under $200,000 to sweeping historical mansions priced in the millions, but the current median for listed residential (non co-op or condo) Queen Anne homes is $650,000 with a range of $325,000 to $4,890,000.  Although much of Queen Anne hill is made up of historical architecture, there are some really well thought out new construction projects on the hill – many that incorporate greener building products and that have incorporated the character of the surrounding neighborhood as well as the views available into their design.  Queen Anne has a lot to offer and can be surprisingly more affordable than one might initially have thought  in some areas.

Queen Anne Living:

This neighborhood is so livable!  The streets of Queen Anne are connected by a matrix of pedestrian staircases  (check out Thomas Horton’s map of them here) and sidewalks which lead to the wide array of  neighborhood parks, local grocers and shops, eateries, coffee houses, and more.  Transit is thoroughly incorporated into the infrastructure here with bus routes all over the hill.  If you are looking for a good no car option, than Queen Anne is definitely one of my top recommendations in Seattle, but obviously, with or without a car, it is one of my favorite Seattle neighborhoods!

Twitter on a Real Estate Blog?

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Over the slow Christmas weekend, we added a new feature to RCG and it generated so many interesting conversations on Twitter, that I thought I’d bring the conversation to a blog post.

The new feature is the Twitter widget on the sidebar. Here’s a snapshot:

Picture 5

The current implementation shows all the tweets from this Twitter list: @tyr/rain-city-guide, which takes all “original” tweets from current contributors plus “replies” to others on the list.

The type of feedback I *though* I would get from the other contributors was: “awesome! More Seattle people reading my tweets!” but instead, the reactions were somewhat more tame… with initial reactions being along the lines of Ardell’s reaction: “I have lots of fun on twitter and say things inappropriate for RCG.”

However, the contributors were kind to me and seem more than willing to play this out a bit, but now it’s time for feedback from the rest of the community… Here are some of the options I see for including Twitter on RCG going forward:

1. “Do Nothing” option. i.e. keep “as is”

2. Show all replies from contributors. If I add each author individually to the backend of the plugin (instead of use a Twitter list), it should include all their replies so the feed would include more people and not look like “RCG contributors talking to each other.” (However, if you check out my twitter feed, you’ll see that I talk with people from all over the country, so it will add a lot more noise to the list. Ditto for Ardell)

3. Remove the Twitter feed from RCG. (Kevin Tomlinson voted for this option when he said: “@ARDELLd mixing mediums ain’t the way to go. imo“

4. Include larger Seattle community. I could use a much more general list (i.e. more than just RCG contributors).  I’ve created a bunch of “Seattle” lists associated with the Rain City Guide Twitter account. We could modify one of these lists and include the updates from anyone on one of these lists, the benefit being the feed wouldn’t just show RCG contributors talking to each other, but the negative being there’s likely to be a lot more “noise” in the updates as more people are contributing to the feed.   As someone in the RCG community (yes, that’s you if you’re reading this!), would you be interested in being on the list???

Do you have a better option?

I’d love to hear your thoughts on the best way to bring Twitter into a real estate blog!

A Rebuttal to the RESPA Reform Poem

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Over at Mortgage Porter, I posted a poem that one of my coworkers penned for humor about the new Good Faith Estimate.   One of my readers, who wishes to remain anonymous, has submitted a rebuttal which I think is very worthy of sharing here.  

Twas the week before Christmas
When a poem made its rounds
About a change in RESPA
That was about to hit the town

HUD said it was good
It would limit the greed
Protect all consumers
And a nation in need

A nation that was harmed
By the very same practice
They seek to preserve
Though we all pay though our taxes

Nation, wake up! We must awake from our slumber!
The path we were on will take us all under
If we do not learn, and learn today
It can all be gone
Like it almost was Columbus Day

Do you not remember? Can you not see?
What securitization, corruption has done to thee?
The stock market tanked
Foreclosures still run rampant
And they said, even so, you cannot make this happen

Assemble the lobbyists, consumer groups and more
Awake your Congressman, Senator
Or contributions no more
“Kill this thing, kill this thing,