Bill's Blog

Case Shiller Index Points to Stable Housing Market

Bill Blanchard (Windermere) — Fri, 02 Oct 2009 10:16:21 -0500

Seattle Case-Shiller Numbers:

You all know I love the Case SHiller index. The numbers reported Tuesday are pointing once again to a recovery in the Seattle housing market. Thou prices are down about 12% over the last year; they have only dropped about 2% since February and have remained flat since March.

Nationally, the index points to a 3% increase since March.

For over a year the housing market locally has be dominated by people who ‘need' to sell or buy because of job or life change. People who ‘want' to move have remained on the sidelines. Most have been hoping their values will climb back to peak levels.

We have just started to see people who ‘want ‘to move coming back into the market. Some are motivated by the low interest rates but all have them have come to terms with the perceived loss in their home value.

But they have found great values available in the market.

Last year I predicted that home values would level off in May and I'm pleased to see that they have.

Baring any major event, I see the Seattle hocusing market continue to rebound with homes in the upper price ranges starting to move as attitudes change and money for jumbo loans mimics conventional loans.

Months of Inventory for the Eastside Based on Pending sales:

Good news as U.S. mortgage applications surged last week

Bill Blanchard (Windermere) — Wed, 09 Sep 2009 07:55:14 -0500

Good news as U.S. mortgage applications surged last week. Demand rose to its highest level since late-May. Consumers take advantage of the lowest interest rates in months, data from an industry group showed on Wednesday.

Home refinancing loans still dominated demand, the trend for applications to buy a home, a tentative early indicator of sales, hit its highest level since early January.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended Sept 4 increased 17.0 percent to 648.3, the highest level since the week ended May 29.

Also the Bellevue, Kirkland, Redmond Markets remain strong as sales continue to climb and prices remain low with short sales and foreclosures setting the bar very low.

Months of inventory for Bellevue, Kirkland Redmond:

Market Trends: New Construction Continues to Shrink

Bill Blanchard (Windermere) — Fri, 07 Aug 2009 13:56:16 -0500

NEW NWMLS NUMBERS CAME OUT TODAY

This graph shows the reduction of all new construction inventory on the Eastside. As you can see the trend continues to level off. The analysis predict this shortage will put a new type of pressure on the housing market:

A third or more of home buyers want new. With fewer new homes, slightly used homes or recently renovated homes will demand a higher asking price.

However, if you look at this chart (New Construction Eastside under $500K) you see the trend moving up slightly. This reflects the fact that builders are creating a lower price product to meet the demand of market place.

And finally, when we look at New Construction Eastside over $500K you see even the higher priced inventory is being absorbed.

Market Trends

Bill Blanchard (Windermere) — Thu, 06 Aug 2009 13:16:14 -0500

This graph shows the reduction of new construction inventory on the Eastside. As you can see the trend is leveling off at about eights months of inventory based on pending sales. Just about every trend is showing a leveling off over the last three months.

Even the Case Shiller index has leveled off over the last three months. This takes us back to prices around June of 2005: (Index over last 12 months)

There was a dramatic increase in the prices of homes sold vs the for sale price. This probably reflects the increase sales in higher price ranges finally selling.

All these trends point to the fact the market has corrected itself. Baring any major incident, it is safe to jump into the market without the fear of loosing value like you would when you buy a new car.

Every buyer I work with today wants a deal. I think the entire market is a deal. We still see that most of the inventory is created by people who need to sell. The foreclosures, short sales, and relocations are setting the price bar very low.

First Google… Now Yahoo... Here come the Relos?

Bill Blanchard (Windermere) — Thu, 06 Aug 2009 11:30:37 -0500

Rumors where flying and people where making plans for years anticipating the wave of new Google employees. Hundreds would move into town and into the corporate center in Kirkland. (See my blog from earlier) When the economic climate changed so did Goggle's plans. The migration of high tech, high paid new home buyers fizzled.

Now Microsoft to the rescue. Enter the partnership with Yahoo, 400 Yahoo employees will be hired by Microsoft. No one is sure where these people will move to... but we d know that Microsoft has reworked its relocation department.

The real estate company that had an exclusive relocation arrangement with Microsoft for years is now out and new agents at new companies have been selected to help with the new migration.

Let's hope that more people search for homes locally with Yahoo than did with Google.

Shrinking new construction inventory on the Eastside.

Bill Blanchard (Windermere) — Sun, 05 Jul 2009 13:45:22 -0500

This graph illustrates the dramatic decline of new inventory on the eastside. Because of the lack of new permits being issued and builders concentrating on selling current inventory, this lack of new construction will put pressure on the overall market.

Other Market indicators:

We will continue to see prices stabilizing erasing concerns about buying a home only to see the value drop the new month.

About 20 -30% of buyers are looking for new or like new homes, this will create higher demand for homes built after 2005 or 2006 and/or homes that have be recently updated.

The market took a huge turn in April. On the eastside, I see homes under $500,000 continue to be to the hot sellers this summer. The $8,000 tax credit, lower home prices, and record low interest rates have pushed the buyers on the side lines into the market. The optimist are buying now, the pessimists will start buying in the fall. But to get the tax credit the home must close by 12/1/09.

I also see about half the available inventory is junk and/or over priced. The good homes, priced right are selling. It's just that the media has not talked about this yet.

Many sellers have finally gone through the grieving process. They watched the real estate market prices, hoping values would rise sharply, justifying their desire to hang on to pricing their homes well above market value. It's not going to happen. Now these sellers will be lowering their prices to market value and some good homes will be selling. Don't use days on market as an indictor of quality.

Short sales and foreclosures continue to set the bar low for overall values. Buyers that are willing to wait out the longer process of buying one of these homes will feel they got a deal. However, most of these homes are sold ‘as is' and may require a lot of work.

Short sales may have long term consequences for the sellers. The debt may not be completely forgiving and in the future a debt collector may come after them. Check with a lawyer or financial advisor that understands this issue.

Appraisers are getting a bad rap in the press. The May 1^st rule changes have everyone on guard. I see many sales requiring two appraisals from the lender. This causes a longer time in escrow and in some case prevents the deal from closing because the offer is higher than the apprized price.

After searching for a week, I had an out of country client who has been watching the Seattle market for two years, decide not to buy because they felt there were no deals to be made. The good deals are now gone or some sellers owe too much to be able to sell at market value.

Right now it is competitive buying. Recently, I've had five sellers who wanted to make an offer only to find the house they wanted had just got an offer or we ended up in a multiple offer situation. Think market value instead of finding a deal.

Six months ago I thought prices would stabilize this quarter and now there is evidence that this is true. The next six months will be harder to predict. But like a mentioned earlier, I feel the optimists are buying now, the pessimists will start buying in the fall. For the rest of this year and into next year there will be a high demand for quality homes that are market priced.

Two things are clear. For sellers: Gone are the days of putting up a sign and waiting for the buyers to show up. For Buyers: It's competitive again. You need to be qualified and ready to move at a moments notice.

Good News Seattle!

Bill Blanchard (Windermere) — Tue, 30 Jun 2009 09:48:36 -0500

The new Case Shiller numbers came out today

The index for the Seattle Tacoma area rose in April, 2009 just under .25%.

This is the first increase since August of 2007.

A few other cites showed an increase but the national composite index continued to show price declines. However, it slowed from March to April.

More More

A Reason For Optimism

Bill Blanchard (Windermere) — Tue, 28 Apr 2009 14:31:59 -0500

HEADLINE: Baltimore Sun: Shortage Of New Homes Seen -- Credit Crunch Means Fewer Units Will Be Ready When Recession Eases

Analysts have been predicting a shortage on new homes in the Puget Sound area will start in September due to the lack of new construction permits being issued.

Looking at this chart ... (Eastside - New Construction - Based on Pending sales)

...You can see that the months of inventory are shrinking. And at this rate, we will get to a balanced market after September. If it continues we will be in a Seller's market by early next year for new construction. This, some believe, will put pressure on the overall market and push prices higher in 2010. A year from now, concerns about buying a home only to see it loose value will be behind us.

And the headline- That's from the Baltimore Sun - 1991. When you read it you get a different perspective about today's news.

Eastside, Kirkland and Juanita Sales Information

Bill Blanchard (Windermere) — Tue, 28 Apr 2009 13:24:37 -0500

Overall, March data shows the market improving slightly with months of inventory declining to a 10 mouths supply down form 16.5 in January.

Eastside Months of Supply based on Pending sales:

Eastside Overall Sales:

Eastside Cost Per Square foot.

Kirkland

Kirkland (98033) Months of Supply based on Pending Sales

Kirkland (98033) Overall Sales

Kirkland (98033) Cost per Square Foot

Juanita (98034) Months of Supply based on Pending Sales

Juanita (98034) Overall Sales

Juanita (98034) Cost per Square Foot

In Seattle, The S&P/Case-Shiller Home Price Index fell 1.27%

Bill Blanchard (Windermere) — Tue, 28 Apr 2009 12:08:01 -0500

The S&P/Case-Shiller 20 Home Price Composite Index fell 1.9% nationwide during February and the decline lowered prices by 18.6% during the last twelve months and by 29.9% since their peak in May 2006.

In the Puget Sound Region, prices fell 1.27% from January. This decline lowered prices by 19% during the last twelve months locally. It also marks a decline of 31.1% since their peak in June 2006. According to the index, a Seattle area home is now valued at September of 2003 prices.

This stopped a 2-3 % monthly decline and points to what I believe will be the bottom of the market starting in May.

If you would like a simple spreadsheet to calculate home values based on previous sales, just send me an e-mail.

Kirkland Data & West of Market

Bill Blanchard (Windermere) — Thu, 02 Apr 2009 15:08:50 -0500

For all of you who love data, here is some information about Kirkland.

The Case- Sheller index for January (released 3/31) still has values dropping about 3% a month for the Puget Sound area but the annual trend is slowing.

West of Market in Kirkland, WA as of April 2nd has about 56 homes listed for sale. Prices range from about $480,000 to $4.9 million.

WEST OF MARKET DATA:

With nine pendings and solds over the last six months.

Here are the overall trends for South Kirkland:

New data for March will be out soon.

First Time Buyer Tax Credit at a Glance

Bill Blanchard (Windermere) — Thu, 26 Mar 2009 11:05:45 -0500

As agents we are now being asked "What is this tax credit for first time home buyers?" Especially now that there are great deals and low interest rates. Here is some great in formation I got from my Title agent at Commonwealth Tile and Escrow.

Tax Credit at a Glance

• The tax credit is available for first time home buyers only(or for those who have not purchased in the last three years.)

• The tax credit does not have to be repaid.

• The tax credit is equal to 10% of the home's purchase price up to a maximum of $8,000.

• The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.

• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.

Frequently Asked Questions

Who is eligible to claim the tax credit?

First-time home buyers purchasing any kind of home-new or resale-are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.

What is the definition of a first-time home buyer?

The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

Are there any income limits for claiming the tax credit?

The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

How is this home buyer tax credit different from the tax credit that Congress enacted in July of ‘08?

The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous "credit" was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.

How do I claim the tax credit? Do I need to complete a form or application?

Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form

5405 to determine their tax credit amount, and then claim this amount on Line 69 of their 1040 income tax return. No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests.

What types of homes will qualify for the tax credit?

Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats.

The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.

I read that the tax credit is "refundable." What does that mean?

The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even the entire amount of the refundable tax credit. For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000.)

King County Taxes- Did They go up?

Bill Blanchard (Windermere) — Thu, 26 Mar 2009 10:37:41 -0500

As agents we are always asked "what can I do about my taxes?" Especially now that values have fallen in relation to their assessment. Here is some great in formation I got from my Title agent at Commonwealth Tile and Escrow.

The King County Assessor revalues all property in King County each year, notifying property owners of their new value determinations by mail on Official Property Value Notice cards.

The Assessor typically begins sending out these revaluation cards in April, finishing sometime in August. These new valuations will be the basis for the amount of taxes due the following year. Property owners who believe the new assessed value of their property exceeds its fair market value have the opportunity to appeal each year following receipt of the Assessor's revaluation notice by timely filing a petition to the King County Board of Equalization (BOE). Petitions must be received by the Board on or before July 1^st of the assessment year or within sixty (60) calendar days after the date listed on the Assessor's value change notice - whichever date is later. If submitted by mail, petitions must be postmarked by the post office no later than the filing deadline.

Filing an appeal with the BOE only requires the submission of two sets of the BOE's petition form. You can download this form off of the King County website listed below. While it is recommended that you provide the evidence you will use to support your appeal as early as possible, additional evidence may be submitted up to seven business days before your future hearing, which is typically several months after you file the appeal. There is no charge for filing an appeal.

If you feel a mistake has been made in valuing your property, it is recommended that you contact the Department of Assessments directly. Review your account information with the Assessor's staff to make sure an error has not been made. It's also a good idea to review the characteristics of the Assessor lists for your property to make sure important features such as the property's parcel size, area of the improvements (residence), views, etc., are accurate. If your objection to the assessed value is that you are being valued high relative to assessments of other properties, this may be due to errors in assessment records.

If errors are discovered, the Assessor may be able to correct the data and the assessment without an appeal to the Board. Once you have submitted your petition to the BOE, the staff will process your petition, send you an acknowledgement letter, and forward a copy of your petition to the Assessor's Office for their review and response. You should expect a response from the Assessor in two to six months, depending on the volume of appeals. Based on the evidence included within your petition, the Assessor may choose to recommend an adjustment in the assessed value. If this occurs and you agree to the Assessor's stipulated or recommended value amount, the need for a hearing

End to Slump - Can You Say "Peak-to-Trough"

Bill Blanchard (Windermere) — Thu, 26 Feb 2009 12:34:01 -0600

You are going to hear this phrase more and more as the housing market stabilizes. It means from the top of the market to the point at which we no longer see declining numbers.

Moody's says home prices in the United States will hit their low point in the fourth quarter of 2009, with the Case-Shiller Home Price Index expected to show a 36.2% peak-to-trough decline. The peak was reached nationally in the first quarter of 2006.

The Seattle Case-Shiller Home Price Index from January 1989 until January 2009.

The peak in Seattle was June 2006. If you follow the index, that means a home bought at the peak of the market in Seattle for $350,000 will ‘trough' at $233,009.

Today that home is valued at $257,080.

(A past Trough) Seattle Case-Shiller Home Price Index from November 1989 until December 1997

According to this theory, we will see another 5-6% decline from today before the trough starts. Home values will go back to March of 2003.

That means if you want to buy this home but are waiting for the bottom, it will bottom out for about $24,000 less than if you bought it today. At a 5.5 % interest rate, it's about $135 a month. A move of the rate a one point adds/subtracts about $15 a month.

I believe our market will trough during May of this year and because of a shortage of new construction, starting in September will will experience an inventory shortage.

The Case-Shiller Home Price index will prove me right or wrong but not until July 20, 2009 and we will start see facts pointing to the shortage in, well, September.

Google Where are You?

Bill Blanchard (Windermere) — Thu, 19 Feb 2009 17:38:36 -0600

The Kirkland, WA Google Lakeview Office Complex.

The plan to build the Google offices in Kirkland started years ago. It sounded great for everyone, especially the Eastside Real Estate Market.

The rumor was that Google had grown and matured as a company and now had 100's of middle mangers and directors. They could not all make millions a year but they made good six figure incomes. However, around San Francisco and Mountain View California, six figures doesn't buy much. So the plan was to move some of this group to Kirkland where their salaries could buy nicer homes and schools for their children. All this while being close to the Microsoft brain trust and just a short flight back to the mother ship.

Click ahead to 2009. At a recent Bellevue Chamber business lunch the bad news came from Peter Wilson, Google site manager for its Kirkland offices. Peter said things have changed.

Basically, we are going to have a much scaled down version of the original plan. "As we enter this recession, we need to be prudent about how we manage our costs," Wilson said. "I started to have trouble trying to find work for all of these people."

The Kirkland Reporter can give you the details.

But according to Wilson, Google chose to open an office in Kirkland when two sought-after recruits refused to move to California contradicting the rumor that I talked about earlier. I guess you can't believe all the rumors, especially the ones about real estate.

Kirkland's Goat Hill Neighborhood

Bill Blanchard (Windermere) — Thu, 29 Jan 2009 11:41:11 -0600

Goat Hill is a unique neighborhood in the Juanita area of Kirkland that overlooks Lake Washington. Recently, I took some buyers to see the available homes on the hill. The road is narrow and winds up the hill and is not for everybody. My buyers loved it. Price ranges for the eight homes on the hill are $440,000 to just over a million. There are three new homes being built by Bennett that take full advantage of the view and my clients loved the detail. There are also two homes that where built in the 1930's. Per square foot is around $300 which is typical today for view property. There really is something for everybody.

One of the benefits of ownership on the hill is that most homes are deeded into a small waterfront lot at the bottom of the hill just west of Juanita Beach Park. It's a small beach but you can anchor your boat off shore.

There is colorful history about the area available on line at the Kirkland Heritage Society.

Kirkland and Juanita Housing Markets

Bill Blanchard (Windermere) — Thu, 29 Jan 2009 10:47:21 -0600

There's Kirkland, then Juanita and Finn Hill. The lifestyle is different in each area and so is the housing market.

Here is the difference in inventory between Kirkland and Juanita.

Kirkland is 24 months:

Juanita is 7.8 Months:

Kikrland For Sales, Solds, and Pends:

You can see the Juanita area is performing better than the General Kirkland area.

Ten myths for buyers and sellers

Bill Blanchard (Windermere) — Mon, 26 Jan 2009 10:17:48 -0600

Barbara Corcoran on the Today Show talked about ten myths for buyers and sellers. This is great information everyone.

Myths like:

The longer the house is on the market, the more you can negotiate.
The sellers today are desperate.
You shouldn't buy before prices have bottomed.
And one issue I talk about:

Now's the absolute worst time to sell.
Barbara says "... if you're a homeowner who wants to trade up, the loss you'll take on your current home will be more than offset by the bargain you'll get on the next one."

Hopefully, further information like this will take away more of the uncertainty in the market.

URL: http://today.msnbc.msn.com/id/28818023/?pg=3#TDY_RealEstateMyths

Seattle Area Schools- Find out which school will be yours

Bill Blanchard (Windermere) — Tue, 13 Jan 2009 09:10:32 -0600

I'm a Real Estate Agent at Windermere in Kirkland. When I talk to parents who are thinking about moving they are definitely thinking about the schools their children might attend.

If you are thinking about schools in the Seattle area, here are maps or access to maps that show what school your child will attend. Contact your local school district for specific information. Also, today it seems with a little work on the parent's part (i.e. no transportation,) many children can attend the school of their choice.

For example, my Carnation listing is in the Snoqualmie School District but their son finished high school at Eastlake High School in Redmond.

Here are the links:

Anxiety Jumps as Unemployment Hits 7.2%, 16-Year High

Bill Blanchard (Windermere) — Fri, 09 Jan 2009 09:46:11 -0600

As agents, anxiety is the new reality in our lives. With transactions half of what there where a year ago, our business has downsized but no one sent us an official notice. We've all seen agents make adjustments such as moving back to their home towns, taking on service jobs or just leaving the business. Some need to turn their listings over to associates, their co-workers and friends, who are still working as full time agents. A self induced layoff.

I heard a veteran agent say "I will ride this recession out until things get back to the way they were." Are we ever going back to the way things where?

Unfortunately this is the time we need people in the industry to move ahead, be creative. As a New York Times article points out, with downsizing, people take fewer risks and become less creative. "The irony here is that this risk aversion comes just at a time when creativity is needed in the workplace." They point out that downsizing has been referred to as corporate anorexia; the companies get thin but not healthy.

Today we need agents and their companies to take risks, come up with new more effective and creative ways for our industry to benefit our clients. Tomorrow there will be a new role for the real estate agent. These are the days when we define that role.

Seattle Prices climb- The facts and the truth

Bill Blanchard (Windermere) — Wed, 07 Jan 2009 19:09:36 -0600

Facts and truth really don't have much to do with each other.
-William Faulkner

The truth today is that people who could buy or sell are scared because of the uncertainty in the housing market.

‘Will I pay too much; will I sell for too little?' The voices in your head can rattle forever until you see the facts.

The facts are that in Seattle, housing prices in some areas actually climbed.

This points to prices stabilizing and new facts; we can see the bottom of the Seattle market. Most analysis see the bottom accruing second quarter of 2009. Then a rebound in mid 2010 because of a shortage of new construction brought on by the current financial crisis.

There will always be uncertainty, but some people have confused the facts. A house is an investment... but more importantly it is the place we live, love and spend time with the things and people that matter to us. That's the truth.

Not Seattle-House Prices Plunge Again, Now Down 25 Percent-

Bill Blanchard (Windermere) — Wed, 07 Jan 2009 17:39:40 -0600

What does this mean? The Case Shiller 10-city index looks at home prices by tracking home values not home sales to come up with their index. Some consider it a more accurate measurement of the housing market. The ten cities that make up the 25% loss are some of the most depressed in the country. That's why the bad headline.The Seattle market is down a modest 10.2 percent for the year. Overall, this puts prices back to March of 2004.

I see this index bottoming out mid 2009 which would put prices down another 1-2% before prices level out and later start to rebound.

Neoreaders- The future

Bill Blanchard (Windermere) — Thu, 20 Nov 2008 17:57:40 -0600

I've just seen the future and it is Neoreaders. Basically it is a bar code Real Estate Agents can use in many ways. I call it The Bill-Board

When a smart phone is equipped with a Neoreader you take a picture of the reader (called a Q2 or Data Matrix code):

And you are directed to a web site. This will take you to my site.

Getting a reader is simple and it will direct the smart phones to any web site you choose.

http://www.neoreader.com/code.html

As agents we place one of these readers by our listing. Buyers shoot the reader and zap, the web site for the property is now on their phone.

Here it is on my listing in Redmond.

Some phones have readers' standard now and it's easy to download. Japan has been using it for years. I heard kids have t-shirts printed with a Neoreader that links it to their ‘Myspace.'

In the future, newspaper ads would have Neoreaders so readers would zap the paper to learn everything about the listing. Perhaps newspaper ads would become extremely valuable once again.

This is the future and I'd like to thank Brad Golik at John L Scott in Bellevue WA for telling me about this.

Redfin: The last pop of the Real Estate bubble.

Bill Blanchard (Windermere) — Fri, 17 Oct 2008 10:08:37 -0500

REDFIN RELEASE:

"A Very Tough Day Today Redfin laid off roughly 20% of our employees."

Real Estate Services is not a commodity. It's not like buying stock, booking a flight, buying a book or scheduling a vacation.

It's a personal service. Redfin was created by people who thought they could create a very profitable corporate offering (IPO) using real estate as their vehicle. They used people's hope and greed to generate motivation for employees, investors and customers.

The percentage of people who buy and sell homes without the help of a professional real estate agent has changed very little over the years. (The National Association of Realtors says that independent sellers accounted for 12 percent of all homes sold in 2007, down from 18 percent in 1997.) Some people dispute this number and say it is 20% but the point is Redfin's hope was that they would capture the segment of the market that wanted to save money by doing the work themselves. Redfin planned to benefit from this perceived growth. That perception never turned to reality as the overall market shrank and customers realized the benefit of using a professional agent.

If the internet and commodity trading of real estate where going to replace real estate agents it would have by now. The thinking was because it happened to Travel Agents it will happen to Real Estate Agents.

Travel agents where replaced for the most part because sellers (Airlines, Cruise Lines, Hotels, etc.) squeezed the agents out as the internet made the complicated process of booking and payments rather simple for the buyer. Buyers were motivated to find the best price. Back in the 80s my cousin created the first computer program so travel agents and airlines could talk to each other (Crosstalk.) It made everyone millions until communication became generic and accessible to everyone. Now prices are so tight airlines struggle to survive. Speculators thought real estate would follow the same path.

Buying and selling the space where you live, raise your children, entertain your family and friends, live and die in, is not the same as booking a flight to New York to fit your schedule. There are finances, families, emotions and dreams involved. What was Refin thinking?

Redfin's IPO will never happen. The employees and investors who thought the stock would make them rich now need to rethink their dreams. Redfin is now last pop of the Real Estate bubble.

The End of Google, Yahoo and MSN?

Bill Blanchard (Windermere) — Wed, 08 Oct 2008 10:33:02 -0500

The End of Google, Yahoo and MSN?

"Those who cannot learn from history are doomed to repeat it." George Hegel

It's 1978, Communications 101 at the University of Washington. The history of communication is all of one chapter in a very large text book. It begins with the first printing press, ends with network Television. The next big technology wave was the coax cable. I can still see my professor pacing the classroom with a two foot section of the flexible black rod, pointing it at us, bellowing "This is the future!" He looked like a nun about to rap our knuckles. But 30 years ago, it was the future, and he wanted to make a point: Think Outside the Box.

The Big Four. You think I'm talking about Google, Yahoo, MSN and what's its name. No, I'm going back in history to the beginning of the technological revolution to the four dominant radio networks. Here is where this history lesson starts.

The history of Radio is complicated but at one time there was NBC, ABC, CBS and the Mutual Broadcasting networks. They were huge in both audiences and cash flow. The Big Four fought it out over the airwaves, in court, and, of course, in advertising, until television took over in the 50's. However, the change to that new Box took decades.

In 1926, Philo T Farnsworth invented television in his small apartment, all the while, his wife complaining about the smell generated by the tubes. She may have been the first one to say "Television Stinks." His grandson is a friend of mine so I like to give Philo some credit. The first 60 line image transmitted was a dollar sign, not Philo's wife.

This is not his wife. I inserted this picture to keep your interest. TV debuted in the United States at the 1939 New York World's Fair. It wasn't until after WW II that the economics of television made sense.

As we race through history, The Big Four Radio Networks became the Big Three in television. Even though the Mutual radio network created some of the most formidable radio shows that later became TV shows, it never became a TV network. As the radio networks fizzled, dozens of smaller radio networks and independents were created. The Box was changing.

In the mid 50s, Network TV was sizzling as radio cooled. The Big Three TV Networks had a "License to Print Money." (A quote from a friend's dad who ran a large corporation while his wife's family owned several TV stations.) It was true. The three networks were the only game in town until the mid 80's.

Network TV changed at the 1986 National Association of Broadcasters convention in San Francisco. I was there, promoting a Gardening show (I'm always a little ahead of my time.) Several blocks down the street, and way off the convention floor, at the elegant Saint Francis hotel was a party launching a new television network: FOX.

The party was packed and the programming was questionable. Everything and everybody was negative about this new start up. FOX promoted the Joan Rivers show. They had the Tracey Ullman show which had a short animated sketch called The Simpson's. Married with Children, and A Current Affair seemed odd against the Big Three favorites such as The Cosby Show, Family Ties, Dallas and Cheers. But, of course, these and other FOX shows would change communications history; change the Box.

At the party, most of the FOX executives used some kind of gel to slick their hair back and I remember thinking they all looked like car salesmen. But the food and drinks were good and I walked away confident my show had a much better chance than this new network. Twenty years later this start up network became a power house. In the 2007-08 season, Fox became the most popular network in America.

But, back to my point, the big change came in the 80's as more and more targeted networks challenged convention, challenged the Box. Slowly, CNN, MTV, ESPN, Nickelodeon, HGTV, etc. captured more and more of the Big Three's audience.

Remember history. There was a time when there were no cable networks. I still see that coax cable pointed in my direction. So, history repeats itself. Radio became TV and now TV becomes the Internet. All had dominate players that shrank, as the economics and media transformed, into other entities.

Google, Yahoo and MSN are called the Big Three search engines today but really they are the Big Three networks (portals.) As ABC, NBC and CBS were in the 50's to the 80's, Google, MSN, and Yahoo are the networks of today. It seems obvious when you see these Big Three in a historical perspective, they will go the way of the radio and TV networks.

Today it seems these Big Three struggle to find themselves. I feel like Google is more interested in selling me something than getting me to the right web site. Tomorrow, established and new search engines will become more accepted and useful for view/users to access the internet, the new Box.

In the future, we will look back on the Big Three like we look back on the Big Three TV Networks and before that the Big Four Radio Networks. Perhaps it will take a perceptual or paradigm shift. Or just a new generation; a new wave.

The New History Book: When the new wave thinks rock and roll, they now go outside the Box to MTV.com to search... instead of Yahooing, Goggling, or just feeling lucky.