Tag Archives: Seattle

Rising tide lifts all ships…

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revenueWho benefits when housing prices rise? The sellers, of course… But also the local governments though increased property tax revenue. The Seattle PI has an article on how the mayor of Seattle has $15 million to spread around thanks to rising home prices:

In 2000 the average value of a residence in Seattle was $232,800, on which the property tax paid to state and local government was just under $2,832, according to the King County Department of Assessments. In 2005 the average home value had gone up to $368,700 with a property tax bill of just over $3,765.19.

The Seattle general fund budget proposed by Nickels for 2006 is $760 million, up from $717 million last year. It includes more money for street resurfacing and more money for sidewalks, police and firefighters.

“Thanks to a strong local economy, we can expect significantly more sales and business tax revenue,” Nickels said in his budget address Monday. “Strong real estate sales will also provide much more revenue for the city than initially forecast.”

I find the similarities interesting between this article and my post from Monday, where I note that the Federal government (IRS) benefits when flippers don’t pay attention to tax laws.

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! 🙂

Real Estate Geekiness…

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Tonight, I’ve been playing engaging the inner real estate geekiness along the likes of Tom Dozier’s Seattle Property News blog… I’ve been following (from a distance) Tom’s “Home Tracking” posts and not exactly sure where he was going until today. When he said “since one of the signs of the strength of a market is whether high demand is causing people to bid prices above the original amount the seller seeks,” I decided to test out his theory with a larger sample size…

So here is my method. I took all the homes that sold in my neighborhood (Loyal Heights) over the past year and calculated the “Net (Sale minus List Price) as a Percent of List Price”, or this calculation:

  • (Average Sale Price – Average List Price)/Average List Price
  • Average((Sale Price – List Price)/List Price)

The result is summarized in this chart:
% of List Price
(Click on the chart to see a larger version!)

The first thing I found interesting is the extent to which the “Gross Net as a Percent of List Price” varied seasonally… For two years running the % of List Price bottomed out around Feb/Mar and then quickly picked up to peak around May (with homes selling for 4% and 8% over the list price!). Note that February (the bottom) is also when the number of sales bottomed out over both of the last two years.

For reference, there were 182 homes sold between October ’03 and August ’04 in Loyal Heights with the average home selling for 1.2% over asking price. (I threw out September 03 and September ’05 data since I only downloaded data for the partial months…)

My conclusion is that Tom is wasting his time if he expect to see the health of the market by looking at whether or not homes are selling above or below the market price. As my chart demonstrates, there is way too much seasonal variation for a one or two home snapshot to be valuable. Even in the last two years where the value of homes in my neighborhood have consistently risen (quite substantially), there have been long periods (up to six months) where the average home has sold for less than the asking price. However, with that said, I want to say thanks to Tom for raising this intersting issue because you’ve given me an opportunity to learn about (and demonstrate) the huge seasonal variation in the local market!

I welcome anyones comments on my method if you have ideas on improving things (including the obvious improvement of adding more neighborhoods).

Update: I realized this morning in the shower that I was calculating the net (sale price minus list price) as a percent of list price, so I’ve corrected the text in the post (but not the chart!).

In the market for a condo?

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New York, New York in VegasNew condos are sprouting up like weeds in Seattle for a variety of reasons… The Seattle Times has an article worth reading if you are considering buying a condo. Keep in mind that owning a condo is legally very similar to owning a home:

“Most people see condo living as somewhere between owning your own home and renting an apartment, but it’s more like owning your own home. There’s a responsibility that each homeowner has, whether they accept it or not,” said Craig, a board member of the state chapter of the Community Associations Institute, a group that provides educational information about homeowners associations.

“The best advice I can give to anyone buying a condo,” she said, “is to educate themselves as to what they’re buying and to be involved in the maintenance and operation of the condominium.”

If you are in the market for a condo, do your research and try to think of all the potential issues that might arise. Here’s a summary of the advice given in the article:

  • Ask for the key data on the condo, such as the number of units and number of parking spaces.
  • Ask the board for copies of the association’s bylaws, rules and regulations to learn the rules that govern the association.
  • Ask for the Builders public offering statement, which includes valuable information such as a list of the builder’s five most-recent condominium projects, restrictions regarding renting, a list of common amenities and known assessments.
  • Ask the unit owners to provide resale certificates to potential buyers, which should include valuable information such as expected special assessments, ongoing litigation and the amount of reserves available for repairs.
  • Ask for minutes and agendas from past meetings.
  • Ask for a “reserve study” that can give clues on potential structural defects (note that this might not be available.

With a little help from Flexcar

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Driving the ViperWith gas prices seeming to rise on a daily basis it seems like a good time to mention a little bit about Flexcar.

The Seattle Times describes the idea behind the organization pretty well in this article: Fueled by Flexcar. In short, Flexcar provides cars at specified locations throughout the City of Seattle and the Eastside that members can rent by the hour. For people who don’t drive a lot, these cars could provide their sole form of auto transportation. For the rest of us who need at least one car in the house, we can use these cars as our “second” or “backup” cars.

If you are a Seattle resident and you are seriously considering getting rid of a car, then consider taking the One Less Car challenge. It is a program where the City offers some pretty substantial rewards to families willing to give up at least one of their cars!

Inbox: What’s the best neighborhood for same-sex couples with children?

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roses
Continuing on the theme of opening up some of the questions I get via email to my readers, I’ve listed another question and my response below. I’m definitely interested in hearing from anyone in the community who feels they can add something to my response.

Question: My partner and I are thinking of moving to Seattle. We both have professional jobs and would like to be somewhere with good schools for our two children. What neighborhoods do you recommend for families where both parents are the same-sex?

Answer: I’m of the option that just about any neighborhood in Seattle would be very welcoming of you and your partner. I’m aware of only a few gay parents in my neighborhood, but I would not be surprised to learn that there were many more who just blend in with all the other families.

In terms of schools, I would recommend checking out the school guide that is put out by the Seattle Times. Seattle has some really great schools and some schools that probably won’t meet your expectations. While high test scores probably shouldn’t be the only way a school is judged, knowing this information can help weed out the schools that you would find unacceptable.

In addition to finding an appropriate school, a very relevant question is how much you are willing to spend on a house. A starter home in most neighborhoods in the City start at around 350k-400k. If this seems reasonable to you, then you should have no problem finding an appropriate home in a wonderful neighborhood.

Do you have a better answer for this question? Are there any neighborhoods that this family should definitely be considering? Are there some special resources that might make the transition easier for this family should they move to Seattle? Please share your knowledge in the comments section!

Inbox: Where to Live Within Biking Distance of UW?

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Sasha With BikeI had someone email me the other day with an interesting question, and I thought I would share my response… and then see if anyone in the community could improve upon it.

Question: I’m moving to Seattle and interested in finding a neighborhood where I can bike to my work at the University of Washington (UW). Where should I be looking?

My Answer: There are a bunch of great places to live in North Seattle that are within biking distance to the UW. I would stay away from the south part of Seattle because there are not a lot of good north-south bike route through the downtown… (too many hills and not enough dedicated bike lanes).

Seeing as how I live in North Seattle and I bike a lot, I end up referencing the bike map put out by the City of Seattle quite often. Here is a direct link to the bike map of North Seattle (*.pdf), but note that this is a large file (1.5 MB). If you download the map, you’ll notice that the Burke-Gilman trail (a solid red line) goes through the UW campus. The Burke-Gilman is a wonderful commuting trail and has been recently expanded to the north-west all the way to the Golden Gardens Park. If you can find a place to live within a short ride to the Burke-Gilman, then you will have an easy ride to work!

By the way, if you follow this link, you can order a free hard-copy of the bike map: http://www.ci.seattle.wa.us/transportation/bikemapform.htm

Do you have a better answer for this question? Are there any neighborhoods that are particularly attractive for bicyclists? Please share your knowledge in the comments section!

Seattle’s hot summer…

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rising home prices graphThis proved to be another hot summer in Seattle as the median home price rose over 15 percent during the past year. However, the hottest local market was the Eastside where the median sale price rose over 23 percent.

On one side, I’ve talked with a few sellers who are hesitant to sell for the reason of not knowing what will they be able to afford after that sale. And on the other, I’ve noticed a large influx of people relocating to Seattle for technology-related jobs, but maybe I’m just more aware of this subset of people now that I’m running a blog.

Katrina Donations Drop-off in Ballard…

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Diane and Stephen of the Sip and Ship store/cafe in Ballard are organizing a donation drive for Katrina Victims and have offered to ship all appropriate donated items for free through the end of September.

What constitutes an appropriate item was not immediately appearent to me, so I emailed them to find out. Here is the response directly from the source:

We are looking for toiletries, diapers/wipes, baby formula, bottles, baby cereal/food, flashlights, batteries, and first aid kits.
Thank you for your support.
Kind regards,
Diana

Thank you Diana and Stephen for making it particularily easy for people to donate items.

If you don’t have any of these items, you can always donate money directly to the Red Cross.

Minorities paying more for loans in Seattle?

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high-rate mortgagesThe Seattle Times analyzed loan applications for single-family, owner-occupied homes in 2004 from 25 of the nation’s largest lenders and concluded that minorities are paying more for loans in Seattle. The numbers show that black people in Seattle are more than four times likely to carry a high-rate mortgage than white people (13.2% vs 3.1%). However, the data also shows that black people in the rest of the country are even worse off as they are more than twice as likely to carry a high-rate mortgage than in Seattle (26.6% vs. 13.2%).

Also interesting is that the rates are not due to income differences as “low-income whites are far less likely than high-income blacks to wind up with high-interest mortgages (3.9 percent vs. 11.3 percent).” In looking for answers to why, the times speculates that differences “may be due to a variety of factors, ranging from the financial savvy of loan customers with differing backgrounds, to which lenders operate in which parts of town.”

Lyon Garden StatueI’m pretty sure that everyone reading this blog is aware that it is illegal for lenders to discriminate based on race and/or to discriminate against a neighborhood known as “redlining”. And I’m positive that all lenders are aware that this is illegal, so it makes me think that the difference must have something to do with the financial savvy of the loan customers.

What is the solution to this problem? It seems like educating the consumers of high-rate loans. Along those lines, here are some helpful links and organizations that I’m aware of:

  • Fair Loans, Fair Housing (*.pdf) by the City of Seattle that provides some advice on avoiding predatory loans.
  • Community Home Ownership Center (CHOC) (206-587-5641) CHOC provides seminars for first-time home buyers with links to statewide seminars, and also provides training for real estate agents.
  • El Centro de la Raza (206-329-7960) El Centro provides home buyer education classes in English and Spanish.
  • HomeSight (206-723-4355) HomeSight provides purchase assistance and other financial and educational information to home buyers (in Seattle, South King County and Snohomish County).
  • International District Housing Alliance (206-623-0122) Provides home buyer education and housing counseling in Vietnamese, Cambodian, Tagalog and several Chinese dialects including Cantonese, Mandarin and Taiwanese.
  • Urban League of Metropolitan Seattle (206-461-3792) Provides one-on-one counseling and monthly home buyers seminars.

If anyone is aware of any other local programs, I’d definitely be interested in hearing about them. In particular, I’d be interested in hearing about mortgage brokers that are working to educate minorities.

Thanks to Todd at Lendorama for highlighting the Seattle Times article.