Tag Archives: Seattle

Are sales really “failing” to sell?

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(From near the end of this post: “Looks like of the 1,081 combined pendings since 6/1/09, at least 21% are short sales. But of the 1,379 closed in 30 days, less than 2% were closed short sales.”) Read full post for more info. That indicates a HUGE failure rate on Short Sales, though some of the variance could be attributed to other factors.

It seems that since the mls removed STI (subject to inspection) as a status, more pendings are failing.  Is this partly because we are now counting the same property twice, and so only 1 closing for 2 pendings in many cases?

1) IF it is first “Pending Inspection” or “Pending Feasibility” study – Every house that is put into “pending subject to inspection” will “fall out” into “pending”, before it goes to “Closed”.

2) Likewise a large number of bank-owned sales are previous listings that may have been pending as short sales.  They DO sell, but by the bank seller vs the owner occupant seller. The house IS sold at the end of the day. We are just showing two pendings for that one sale, with one closing and the other one “failing”, due to the change of seller name from owner to bank.

The only way for us to know this is to track them differently going forward. There is no way to get prior stats of the switch out from Pending Inspection to Pending or failed short sale = closed bank-owned sale, without looking inside each transaction by hand.  Too cumbersome.  But in recent history I believe these are clearly marked and can be identified for individual study, so if we begin now, we should have some really good data as time moves forward.

Today is the first day of the rest of our…research. Let’s begin on the “right foot”.

I’m going to go to the beginning of June, assuming anything that “went Pending” on June 1 hasn’t closed yet.  We can turn it into graphs after several weeks of raw data are obtained. Sticking to “Residential Only” (which in Seattle includes townhomes and on the Eastside does not, by and large). Most stats available are for SFH, such as on Seattle Bubble, so I will exclude “condo” and other types of property. I will also exclude manufactured/mobile homes and houseboats, which may have different #fail as to finance issues.  There is also a status called “Pending BU Requested” which indicates the agent is thinking the buyer in escrow may not close and is looking for BU offers.  I am going to show them separately as they don’t “fall out” into another Pending status before going to Closed…but should indicate a higher expectancy that the sale will fail.

In future posts containing these Pending stats, I will link to this post and not repeat the parameters each time. If anyone disagrees with the parameters, speak up so we can make the changes at the beginning together.

King County: Went Pending since June 1:

Pending = 456  (PI – 499, PF – 6, PBU – 120)

Note: a property can’t have two statuses at the same time.  So the 456 “true” pendings, are not also contained in the other categories.  PI used to be STI-subject to inspection. PBU is generally reserved for properties expected not to close with the current buyer who is in escrow. PF always had a high fail rate as the buyer is saying I only want to buy it IF…”. PI and PF should eventually move to “Pending” and only counted there. PBU we will try to break down further:

89 of the 120 PBU (Pending BackUps) are noted as “Short Sales”

7 more appear to be short sales, but some with prior lienholder approval

Many of the remaining properties in PBU are also short sales, but the field is new and some are not yet using it properly, especially if the property went pending since 6/1/09 BUT was listed long before the SS field was implemented. This data should improve over time. For now note that MOST of the 120 PBUs are Short Sales.

In addition, at least 135 of the 499 Pending Inspections are Short Sales.

Closed in the last 30 days – 1,379

Best I can tell, given pendings are closing in longer and undertermined timeframes, we can’t study a relationship between recent pendings and closed sales. Unless someone has some ideas here.

But at least we can track and see if the “true and full” Pendings are increasing or decreasing, if the short sales are increasing or decreasing.

Let me check for one more thing.  How many of those closed sales were noted as Short Sales. WOW! only about 24.  There you go…as I’ve said before, A Short Sale is not necessarily for sale!

Looks like of the 1,081 of combined pendings since 6/1/09, at least 21% are short sales. But of the 1,379 closed in 30 days, less than 2% were closed short sales. I’m going to leave this here, but also bring it up to the first paragraph.

Now that you can see how we will be able to break down the stats into the future, your thoughts on meaningful arrangement of data much appreciated.

Seems to me we need to note closed since 6/1 here (451) as Pendings will drop as they are Closed.

The primary purpose of this post is to show you what data is available, so that you can request a customized format in the comments below this post. (I am going to tag this “Sunday Night Stats”, just so that tag will pull up the full year and a half of my data related posts. You can get more data in this link of Tracking the Market.)

Required disclosure Stats are not compiled, verified or posted by NWMLS

UPDATE: I am compiling median prices and price per square foot of “normal” sales vs. short sales and bank owned.  I just found a drop down vs. check box for identifying bank owned properties.  … link HERE to the additional data . Breaking it down to North King vs. South King. There is a huge variance in pricing and the distressed sales are not dragging down other property sales “to their level”. Though I do think as time goes forward, identification of distressed sales will be more and more accurate as the new required field is used often and properly from here forward.

The Third Bubble …

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It has often been said that we have even more of a bubble in real estate agents than we have in real estate prices. In fact we have had three concurrent bubbles – house prices, number of purchases, and number of agents. Unfortunately for the members of the residential real estate sales profession, we are making a lot more ‘progress’ on reducing the first two bubbles than we are on the third bubble.

Last week I went through an exercise of trying to track the growth and reported decline of the number of licensed agents in King County, including metro Seattle and Bellevue, who are members of the Northwest Multiple Listing Service. I had heard that the NWMLS had expected about 25% fallout in 2008. As I got into it, it looked like taking the transaction volumes and median prices at the same time might produce some interesting insights into agent incomes and the desirability of the profession. ( I admit that I considered an alternate title for this post: ‘The Grass Is Not Always Greener…’)

So here’s what I found, using year-end data from published NWMLS statistical reports, but doing my own analysis (and making my own errors – please let me know if you find some or think I missed a point of interpretation).

First are three charts to show the Three Bubbles of King County Real Estate:
bubble-triptych

Second is to show how the growth in number of agents has affected the average number of transactions per agent. A couple of notes on methodology here. For transactions per agent, I split each transaction into two sides, and then just divided the total transaction sides by the number of agents. For the 2009 estimate, I took the business volume for the first four months, through April, and factored it up by the same ratio as the last 8 month of 2008 were to the first 4 months of that year. We’ll get another check on it shortly with the May 2009 data.

(Required disclaimer: Statistics not compiled or published by the Northwest multiple Listing Service)

agents-vs-transactions1

Note how the average number of transactions per agent have been dropping dramatically as the total number of agents rises and the total number of transactions falls. Total number of agents is only down about 10% so far. Some people expected a far faster fallout rate, including NWMLS in one talk I heard, but the inhibiting question is probably ‘Where would they go for an alternate job in this economy?’ A related article from Inman News appeared in the Times last Sunday – Less Experienced Hands Leaving the Business.

And third is to show how the combination of all three factors plays out in average agent earnings. For nominal earnings, I assumed 2.5% commission on each transaction side – we don’t always get 3%, and we often have to give up a bit here or there to keep everyone happy and on track. The data behind the charts is stored here.

agent-earnings1

So for the average agent (and I recognize that most clients would prefer to deal with an above average agent), earnings have dropped from a decent professional income to a pretty marginal income. Last year (2008) it was a little over $30,000 – about $15/hr if you work full time, and this year looks worse. How about $10/hr?

I guess the grass really isn’t always greener…

Don’t Forget 8:30 – 9:30 today – Earth Hour

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From the Seattle Times article:

Lights illuminating the Space Needle, downtown high-rises and neighborhood homes could largely go dark from 8:30 to 9:30 p.m. on Saturday, March 28, as part of Earth Hour, an international campaign against global warming. Cities around the globe are expected to take part, and landmarks such as the Empire State Building and the Golden Gate Bridge will go dark.

Remember When There Was No Bubble?

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It’s been 4 years – let’s reminisce for a moment, shall we?

I remember. I also remember incurring the wrath of the bubble blogger set with a slightly too subtle dig at the no bubble stance. For the record I said that saying there is no bubble was a “crazy statement.”

But my predictions (which I’m having trouble finding) were imperfect. I predicted a 10-25% decline in home values at the worst and thought the likely bursting of the bubble (which I fully acknowledged!) would actually be a persistent leak – that we would have flat prices for 10-15 years while inflation ate away values.

I thought the government would be so averse to home prices dropping that they would do everything to keep them stable – even at the expense of the economy. Apparently I underestimated the size of the problem. Or I overestimated the powers of the government. By a lot.

And we aren’t out of it yet. This crazy prediction is already true for parts of California (from this post):

>How much do you expect the $400,000 to $500,000 market to drop?

If we have a “soft landing

The “White Trim Syndrome”all over Rain City- There’s a whole lot more to designing homes

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Mercer Island and a lot of other nice places are being overrun by “Spec Builders” madly producing these oversize boxes with their wide white trim. Other tell-tale touches of their indifferent computer-driven drafting (don’t call it “design”) are the tapered posts with pasted on faux river rock.

While fronts are abundantly and ineptly adorned, both sides and the back are usually left plain- except for perhaps some lumber yard non-wood wide white trim. Here are some examples:
white trim

wt1-largejpg

wt2-largejpg

Twas the Night Before March 4: Mortgage Eve

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Twas the night before

more information to follow

about the new refinances and cram downs

…almost too much  to swallow. 

Okay…I’ll stop with the rhyme simply because I can’t keep it going!   There are a lot of Mortgage Professionals and Homeowners waiting to hear if they will be helped tomorrow. 

According to the White House Blog, responsible upside down home owners with good credit may qualify to refinance with a loan to value up to 105% with a conventional 30 or 15 year amortized mortgage.  (I’m guessing most would and should opt for a 30 year amortized mortgage)…tomorrow:

  • When can I apply?

Mortgage lenders will begin accepting applications after the details of the program are announced on March 4, 2009. 

I’ve heard nothing as of yet…    I have a lot of questions that I hope will be answered soon.

This from Kenneth Harney’s article on Sunday:

In a letter to private mortgage insurers Feb. 20, Fannie and Freddie’s top regulator confirmed that there would be no requirement for refinancers to buy new mortgage insurance, despite exceeding the 80 percent LTV threshold.

James B. Lockhart III, director of the Federal Housing Finance Agency, described the new refinancing opportunity as “akin to a loan modification” that creates “an avenue for the borrower to reap the benefit of lower mortgage rates in the market.” Lockhart spelled out several key restrictions on those refinancings:

• No “cash outs” will be permitted. This means the new loan balance can only total the previous balance, plus settlement costs, insurance, property taxes and association fees.

• Loans that already had mortgage insurance will likely continue to have coverage under the existing amounts and terms, thereby limiting Fannie and Freddie’s exposure to loss. But loans where borrowers originally made down payments of 20 percent or higher will not require new insurance for the refi, despite current LTVs over the 80 percent limit.

• The cutoff date for the entire program is June 10, 2010.

The “no cash out” factor is concerning.  Refinances where a second mortgage and/or HELOC is included (being paid off) that was not obtained when the home was purchased, is classified as “cash out”.  Even if the second mortgage was refinanced as a rate-term (only to reduce or fix the rate–the home owner never saw a dime of equity from their home in the form of cash).    It appears as those home owners with second mortgages will only be able to subordinate the second mortgage…and good luck with that!  

Banks have yet to adapt the higher conforming loan limitseven though it’s been announced by HUD and FHFA…I’m hoping we’ll see this tomorrow as well “in concert” with the unveiling of Obama’s mortgage plan.

Obama’s plan promises lower mortgage rates…butthese rates are fighting Fannie Mae and Freddie Mac’s LLPAs (huge price hits, such as the 0.75% hit to fee with condos over 75% loan to value).   Why not just get rid of some of these adds that are making rates unactracting…or atleast consolidate some of the brackets.  Is there really a difference between a home owner with a 739 and 740 middle credit score?

We’ll know tomorrow if there is a Mortgage Santa Claus and if he left any goodies under the tree.

Sellers Leaving The Mess Behind

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Cleaning up after yourself is in the contract…

Recently, there seems to be some confusion as to item number 5 of the NWMLS form 22D (optional clauses addendum to the purchase and sale agreement).  Maybe the sellers are deciding that the buyer already got a good deal and they shouldn’t leave the home in decent condition?  ARDELL recently mentioned that some sellers are feeling disenchanted with this market and as a result the houses are not being exhibited in their best light.  This is definitely happening and unfortunately is being carried forward to when the sale closes and home ownership is transferred.

Item #5 on the NWMLS Form 22D:

“Items Left By Seller.Any personal property, fixtures or other items remaining on the Property when possession is transferred to Buyer shall thereupon become the property of Buyer, and may be retained or disposed of as Buyer determines. However, Seller agrees to clean the interiors of any structures and remove all trash, debris, and rubbish on the Property prior to Buyer taking possession.“

Plainly stated: Take all your belongings and clean the property prior to handing over the keys. Clear enough? One would think, but what about when you line item #5 up to item #4 in the very same Form 22D and apply it to a seller who never had their home clean to begin with and had trash all over the place while the home was being shown?

Item #4 of 22D addresses the issue of “Property and Grounds Maintained

Seattle Area Open House Information Sources

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Can you tell me where I can find a list of all the Open Houses that are happening in my area this Sunday?

boy-looking-at-toy-houseI’ve been asked this question lots of times and I have always had to answer, “I’m sorry. There is no single, good source. Everyplace is going to list the ones they are promoting.” Sadly, this is still the case. The Seattle Times classifieds was the defacto hub of information for Open Houses during the pre-internet-print-is-king era. Now that the web has taken over as the main source of any information, a “Complete Open House Times and Locations Guide” should be as easy as pulling up a Google Map. But it’s not.

Enter the major Brokerage Firms
Our NWMLS (Northwest Multiple Listing Service) does publish open house information if the agent requests it. However the larger brokerage firms restrict their agents from participating in publishing this information. Why? Because they all want you to come to THEIR websites and just see THEIR listings. God forbid that smaller companies might ride on the coattails of this and reap the benefits of centralized exposure to the public of their listings.

Meanwhile, the consumer looses. They don’t care which brokerage has the open house. All they care about is finding out about ALL of them in their desired price range and location. Until the brokerages figure out that not sharing is a loose-loose proposition, they are going to hold on tightly to one of the few pieces of information that they think they can control, even to the detriment of the industry as a whole.

Enter the free upstart website
Craigslist is generally a good source for open house information and has been devastating to the Seattle Times Classified section as more and more Sellers and agents realize that this is a popular source of information for Buyers to find out about real estate listings and open houses. The problem is that it is hopelessly unorganized and difficult to filter well. Properties scroll off quickly and the average consumer misses a number of worthwhile ads.

For now, here is a list of a few of the various companies Open House sites where you can find Seattle area open house information and then assemble it yourself.

Coldwell Banker Bain Open Houses

Winderemere Open Houses

John L Scott Open Houses

Re/MAX Open Houses

Craigslist Open Houses
(I recommend you search for “open” rather than “open house’ – otherwise you may miss alternate titles eg. “Open Sunday”. Use price and bedrooms to filter further.)

Seattle Times Open Houses
Keep in mind that ads placed in the company-sponsored sections of the The Seattle Times classifieds (often referred to as “block ads”) DO NOT automatically show up when you search on the NWSource website. If available, these ads are often an extra charge to the agents and may or may not be included in the ads they have placed.

nwmls-open-house-mapping

NWMLS Open House mapping feature could be a GREAT tool for agents AND consumers. But because the major brokerages and some of the smaller brokerages refuse to participate, and because it currently doesn’t differentiate between “Brokers Open” and “Public Open” events, consumers are on their own to dig and find the open houses they may want to see. (sources tell me that in the next major update, the NWMLS will be able to break out public vs. brokers open houses) Hopefully the NWMLS will start offering a report of this that can be emailed or subscribed to. That might be the tipping-point that would get other brokerages to participate.

Then there is the old-fashion way
The one sure method for Buyers: Get in your car and drive around the areas you are interested in. Agents almost always put out a sign to lure you in, even if the collective NWMLS Brokers won’t help them online.

Sunday Night Stats – Best and Worst

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First, it’s been pretty obvious in the last 3 to 4 days that people are reacting to the interest rates being at 4.75% to 4.875% recently.  I can honestly say agents are not instigating this momentum, as all of the calls I have received have been directly from buyers that I’ve never spoken with before.  In fact I have had more calls to see property from buyers than I have had showings from agents.  It’s like a large part of the agent marketlace is MIA.  I’m hearing similar stories of “agents retreating” from Vancouver.  A sign that first quarter 2009 is clearly going to be on the upswing.  But let’s look at some more of the here and now tonight.

The Best:  Townhomes – the under $500,000 variety – net even a Buyer’s Market really – not a Seller’s market either.  A balanced market in Townhomes in Redmond where almost ALL townhomes sell for under $500,000 and North of Downtown in Seattle.  Location issues are more of a concern in Seattle than Redmond, as most townhomes in Redmond are built in larger, well located communites.  In Seattle they are often smack on a main arterial.  So be discriminating as to location and lifestyle and not just space issues.

Only a 5.7 month supply of townhomes in Redmond 98052 – not even a buyer’s market

Hard to believe with all the gloomy news, I know, but yes there is a market segment that is still performing well.  That will clearly improve in 2009 if rates stay this low, so we could even see a Seller’s Market come back in Redmond Townhomes in the not too distant future.  Still, I’ve seen prices taking a beating in the last 60-90 days.  Let’s see if lower rates and low supply pulls that back to stable.  I think that will happen for Townhomes in Redmond.

Now for the Opposite Extreme – The Dark Side – The Scariest Stat of all Sundays

Over FOUR YEARS of Inventory!  Where you ask?

Kirkland 98033 in the $1.2M plus market.  115 for sale and only 7 closed in the last 90 days.  See detail.

Compare Single Family Homes – Kirkland 98033 above to Redmond SFH 98052 below:

They look like Chirstmas Balls 🙂  The more red you see, the less green and blue, the weaker the housing market.  Redmond is doing pretty good until you get over $750,000.

Two story townhomes under $500,000 are definitely the IT segment both in Seattle and the Eastside.  Kirkland just doesn’t have enough of them like Redmond does.  Not sure what happens when you get out to Cougar Mountain and other not “close-in” newer townhomes.  I don’t get out that way very often, and last I looked there was a reason why I don’t go out there very often.  Every time it snows, I get calls from people who want to sell them and move closer to work.

Well, that’s your Sunday Night Stat “Christmas Balls” edition.  Hope you’re enjoying your “White Christmas”.

 

2009 Conforming and Conforming Jumbo Loan Limits for Seattle Metro

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Update April 9, 2009:  On February 23, 2009 FHFA announced that according to the American Recovery and Reinvestment Act, 2009 loan limits will be revised to the 2008 loan limits.  As of this update, we’re anticipating the higher revised limits to take place at any time (1-Unit for this area will return to $567,500).  FHA has all ready implemented the loan limit changes.   This serves as a reminder that any information on the internet regarding mortgages can be out dated in a fairly short amount of time.

This morning, the Federal Housing Finance Agency has announced the 2009 conforming and jumbo conforming loan limits for 2009.  The conforming loan limit will remain at $417,000.  The jumbo conforming was reduced to 115% of median home value from 125%, with the passage of HR 3221.   Based on the new lower estimated home values, the 2009 conforming jumbo limits for King, Snohomish and Pierce Counties are:

  • 1-Unit:  $506,000
  • 2-Unit:  $647,500
  • 3-Unit:  $783,000
  • 4-Unit:  $973,100

Some banks and lenders have all ready began to send notices that they will stop accepting locks for the 2008 conforming jumbo limits ($567,500 for 1-unit) effective later this month.    This is done so that once the loan is sold and closed to Fannie or Freddie, the loan limit is compliant.   (You may not have until the end of the year to take advantage of the $567,500 loan limit).

More to follow…including updated rates this afternoon.