Tag Archives: National-News

The Reservations of Greenspan

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Church Scene It’s no surprise that Alan Greenspan remains highly skeptical of the housing market, and considering he has access to a lot more data (and a lot better researchers!), I’m going to defer to him on the national issues.

Greenspan continued to register concern about soaring house prices and risky mortgages on expensive homes.

He also repeated his warning about signs of “froth” developing in some local markets that may be driving house prices to “unsustainable levels.”

Here’s are two quotes I found interesting:

  • “The vast majority of homeowners have a sizable equity cushion with which to absorb a potential decline in house prices”
  • “Speculative activity may have had a greater role in generating the recent price increases than it customarily had had in the past”

I think these quotes explain why the Seattle market is going to be fine despite his reservations. The employment market is healthy and I haven’t seen the type of speculation that is occurring in the SouthWest. Here’s a link I wrote a few weeks ago on the riskiness of the Seattle market.

More In-depth Sale Price vs List Price Analysis

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Me and my sistersIf you were following the comments from my post from yesterday, I said I would follow up with another stab at diving into how the sales prices versus listing price changes over time. Seeing as how it is already getting late (and I’m tired!), I’m going to stop trying to make sense out of the numbers and present what I’ve found so far.

However, before I go any further, I’m going to rant at my fellow real estate agents! For the sake of all of us who actually care about data, please learn to double check your work before submitting listing information to the MLS! I spent more time cleaning up the database due to lazy real estate agents then I did actually creating the charts! Here are some things to look out for (but this list is by no means exhaustive): (1) Spelling: Fremont is spelled with only one “e”, (2) Location: South Lake Union is not a neighborhood located within Ballard and (3)Price: your home that sold for $345,000 probably should not have been listed for $34,500,000.

With that rant out of the way, I thought I would also mention that I’m not the only one surprised by housing numbers today… Hot Property had an article where Amey Stone says reading NAR’s press releases on sales levels “is starting to be a bit of a yawn — sales weren’t quite at record levels, but darn near close to it.” Unless you get tickled by trends and statistics, expect to sleep through the rest of this post…

When I look at the entire Ballard Area as defined by the MLS (this is a huge area that includes places like Greenlake, Blue Ridge, Wallingford, Fremont, Sunset Hill etc). We see the same seasonal trends over the past two years that I identified yesterday. But when we go back another season, the trend becomes much less pronounced.

Adjusted vs Original List Price Chart

Here are the things I found most interesting about the chart:

  1. The seasonal variation is much less pronounced in previous years
  2. There has been a steady trend up wards where the sale price is greater than the listing price
  3. In terms of trends, it didn’t really matter whether I used the original list price or the adjusted list price.
  4. The huge drop in 08/03 is due to some homes in Broadview that were listed way to high!

My speculation is that the patterns identified the above chart have a lot to do with evolving sales tactics by agents. It seems like it has become more and more common for agents to list a home below the value that they think it will sell for… This does two things: (1) It assures a quick sale and therefore a quick commission for the agent. (2) It has the potential to bring in more buyers and thereby raise the final sale price of the home.

When I went to analyze the data at a more local level, things got much messier… Rather than seeing clear seasonal patterns as I did in Loyal Heights, things simply got fuzzy. They got so fuzzy that I’m hesitant to even provide the next chart because it simply looks like an ugly mess…

My goal in creating the chart was to see if the same trend that held up in my analysis yesterday for Loyal Heights, would hold up for other neighborhoods. As the chart above demonstrates, it roughly holds up for all of Ballard, but as the chart below demonstrates, it does not hold up at the neighborhood level. I’ve done enough regression analysis for transportation planning studies to know that a chart like this is going to give meaningless trends.

Sale Price as a Percent of Listing Price for Ballard Neighborhoods

By the way, if you’re interested in the raw data that I used to create these statistics, just email me, and I can send you the Excel file that has all the wonderful (?) pivot tables and charts I used in creating this post.

Also, please feel free to comment on other ideas you might have for exploring the wealth of information that is locked up behind the MLS database. Anna has the key that opens that door! 🙂

Skyping for Real Estate

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Skype The New York Times reports that EBay bought Skype for $2.6 billion yesterday.

Are you familiar with Skype? It is a great service that I’ve been using extensively in the last few months to talk with people all over the world (and in particular my family in Russia!). The sound quality is at least as good as a land-line and definitely better than a cell phone!. And the best part is that it is free to talk to another Skype user! If you are interested in skyping me, just send me an email and I’ll happily pass along my Skype name!

One of the ways that I think Skype could be useful would be in connecting me to people thinking of moving to Seattle. If you are interested in learning more about Seattle real estate, then definitely consider connecting with me via Skype!

I know I’m not the only one thinking of using Skype for business purposes. According to NY Times their revenue is expected to grow from an estimate of $60M this year to about $ 200M in 2006. E-Bay sees this communication technology making on-line trading easier “particularly with transactions involving real estate, big-ticket purchases and services that require detailed conversations.”

“I’m a big believer in focusing brands and businesses that are in very large markets,” Ms. Whitman said by phone from London. EBay is “absolutely not” interested in developing a portal, she said. “You can be sure we’re going to focus on e-commerce.”
In addition to the basic service, about two million Skype customers have signed up for a pay service that allows them to use their computers to make calls to regular phone numbers as well as receive calls from landlines and cell phones. To complete these calls, Skype pays phone companies small per-minute fees.

They also give an interesting statistics as that only 13 percent of Skype’s users are in North America; nearly half are in Europe and another quarter are in Asia.

Some industry specialists said eBay’s purchase of Skype was a sign that voice calls would increasingly become one of many services that Internet companies would provide, rather than a stand-alone business.

“This turns the entire telecom industry picture on its head, and demonstrates that voice, presence, text messaging and other I.P.-based applications will be essential for the company of the future,” said Jeff Pulver, the chairman of pulvermedia, which promotes Internet-based phone services.

Bigger homes and smaller lots?

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The Seattle Times had an interesting article about how the technology changing our life style influence preferences in real estate.

In the past 25 years, the size of homes nationwide has been on the rise, while the size of lots has been shrinking. According to the U.S. Census, the median size of new single-family homes increased almost 29 percent from 1978 to 2003, but median lot size shrank 13 percent. The census does not track this information at the city or county level. Census statistics show that regionally, lots in the West have been the smallest in the country every year since 1992, the first year regional numbers were available.

Local builders and others in the residential-construction industry say declining lot size, in particular, is true for the Puget Sound region. Developers say they’re building homes on 4,500- to 5,500-square-foot lots, but older figures were unavailable for comparison.

“The most significant change we’ve seen is that the lot size is shrinking over time,” says Michael Feuerborn, owner and president of Auburn-based DreamCraft Homes. “They’re getting pretty much the same house we built 10, 15 years ago, but it’s on a smaller lot.”

Dan French, general manager and co-owner of Kirkland-based Austin Royce Design/Build, agrees.

“In the last five years, I don’t think there’s been so much increase in size [of homes] as there has been shrinkage in land,” French said.

And they give an interesting reason for such thing:

“Years ago, there was no such thing as a media room,” said Paul Glosniak, president of Bellevue-based Bennett Homes, which builds about 300 homes a year. “Now we have relatively inexpensive large-screen TVs and surround-sound systems, and people want spaces to put those in.”

With the influence of the Internet, e-mail, fax machines and high-speed Internet access, more people are telecommuting and want home offices. Glosniak sometimes builds his-and-her offices.

Lifestyle changes have made yard space less important than it once was.

“A smaller lot means ease of maintenance,” Glosniak said. “With everyone being so busy and with two people in a household working in order to afford the home, people are not wanting to do a lot of yard work, so people are accepting smaller lots as a convenience.”

Here is a summary of the US Census numbers that show how median homes have grown nearly 29 percent in the U.S. since 1978, while lots have shrunk 13 percent.

Year: Home sq. ft. / Lot sq. ft.
1978: 1,650 / 9,790
1983: 1,580 / 8,375
1988: 1,800 / 9,225
1993: 1,900 / 9,680
1998: 2,000 / 8,992
2003: 2,125 / 8,666

NAR Backs Down…

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cenoteaThe National Association of Realtors (NAR) has been fighting a losing battle to allow real estate agents to restrict where their home listings are shown. In essence, many agents are worried that if discount brokers have access to their listings, then the commissions for all agents will drop. After being officially sued by the Justice Department yesterday, NAR released this press release that all but reversed their policy:

The National Association of Realtors® announced today it has adopted a new policy that ensures that all members of Realtor® multiple listing services will receive exactly the same MLS property listings for display on their Web sites as their competitors.

The policy will bring consumers more points of access to real estate information from multiple listing services than they have ever had before, NAR said.

On a related topic… I’ve been fascinated to watch the growth of a new blog that is put out by a splinter group within NAR called the Center for Realtor Technology (CRT). CRT has been putting out some very interesting open source software products that help agents to develop advanced websites. Reading their blog, it makes me think that NAR has chosen to keep these people inside the tent peeing out rather than outside the tent peeing in… For example, on the same day that NAR made the public release mentioned above, CRT staff wrote a blog entry titled “Does ‘Data want to be free’?” In the post, the author makes some excellent observations on how organizations tend to control data (while carefully not mentioning the NAR press release). The CRT staff seem to be working on technologies (open source, wikis, etc.) that seem way more enlightened than the typical NAR approach to solving problems.

I’m going to continue to closely follow the CRT blog, and once I get a chance to try out some of the software, I’ll definitely follow it up with a blog entry!

Real estate and coffee… It’s so obvious in retrospect

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All Seattle real estate agents should be holding our heads down in shame today as we let a company out of Jackson, Mississippi Michigan open a the world’s first real estate cafe.

It seems so obvious in retrospect! I imagine just about every agent in Seattle has had at least one meeting with a client in a coffee shop (heck, many of us run our entire operations out of coffee shops!), but none of us ever took the initiative to open up a cafe devoted to the real estate arts!

By the way, if there are any Starbuck executives reading my blog, I just thought I’d let you know I’d be willing to discuss ways of teaming on a real estate cafe venture! You guys have been focusing too much on music lately… There’s definitely more money in real estate!

Story via Inman News.

[photopress:starbucks_logo_with_RCG.jpg,full,alignright]

UPDATE: One of my readers has been kind enough to let me know that this is not the world’s first real estate cafe, as as a matter of fact, Bill Wendel out of Cambridge, MA has been hosting a real estate cafe since 1995. None the less, my offer to Starbucks executives still holds!

“If you can email, you can blog”

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

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

Catching up…

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

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

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

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

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

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

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

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

Get emotional about the deal, not the house

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

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

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

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