Do you ever feel like everything you hear on the news or read on-line or in a newspaper is bad news these days? You know, oil prices are skyrocketing, food prices are close behind, the US economy is going into a recession, the stock market looses 400 points, US Foreclosures top the 1 million mark, the financial markets are in disarray, and we need to save the world from global warming before it burns up into a smoldering ball of gas, fueled by all those Listings that aren't selling. Add to that a couple of wars, a few other possible wars, a political system that in our opinion is 50% dysfunctional. The Left won't do it if the Right wants it and visa verse. And nothing ever really gets done...or does it? We think it does but it could be so much easier. Someone told us a long time ago that success breeds success and we found that to be true. But the opposite is true as well. If you hear too much bad stuff you think it's all bad stuff after awhile. We are paying $4.50 a gallon for gas and the oil companies are getting rich, but Federal and Local Government makes more money on a gallon of gas than the oil companies do. Simple economics 101 teaches the laws of supply and demand, but we don't want to increase supply, yet, world wide, it's impossible to decrease demand for many many years until we develop other sources of energy, and we will in time. And now in the Real Estate business, things are looking pretty bleak all over the country, but are they actually that bleak everywhere? You would sure think so if you looked at a headlines today. All this bad news we are bombarded with 24 hours a day has to have some effect, wouldn't you think. The US economy is depending on consumer confidence and their ability to spend. The recent stimulus package this administration did had a profound positive effect on spending but the stock market went the other way. Go figure! People are scared. People are scared to buy a home today because they think the bottom is still a year away...well that's what one article said that we read yesterday. Problem with that is you never know when you hit the bottom until you are well passed it, but if you go on-line you'll read how bad it is. And that has effected some markets that should other wise be just fine, like Seattle because of a strong local economy and a buyers market that is the best its been for a long long time.
My grandfather came to the US from Norway in 1895. He was 17 years old, came from a very remote area above the Arctic Circle and didn't speak English and was only "kind of" homed schooled. Now talk to us about being scared. He made it however. Started a new life and lived in Tacoma for about 75 years, owned a house and had a small retirement that got him and my grandmother by. He was a gardener and loved what he did. We live in the best country in the world. Our living standards are at the very top, and people here have more opportunities today than ever. US business is more creative and progressive than ever, and the American people are the most generous people anywhere. We can go on and on about how lucky we are to be living in America. Yet all we see are the bad things, the problems. Will we always have problems, yes we will, will we do some things wrong, you bet, will we learn from our mistakes, most certainly. So why do we have to hear how bad everything is all the time?
I think we need a Good News TV Channel, and a Good News Web Site and a Good News Newspapers. A place where we can go to feel good about who we all are. Where we can read and hear about all the good things that are taking place every day. We should all be proud of what we have accomplished and what we have had to endure to get where we are today. Can we do better, absolutely, and most of us want to always find a way to do better. The News Media needs to stop sensationalizing everything that happens around the US and the world. They are looking for every angle they can to make a story bigger than it is so their ratings are better. Come on people, our glass is not half empty it's way more than half full!
Will there be an unraveling of the housing market in the suburban fringes of Seattle? That is what is happening in other parts of the country according to a recent article in BusinessWeek. The article says that most of the overbuilding took place in the outer suburbs around the country in the last few years and now that the market has turned down, these areas are being hit the hardest.
We have been advising our clients for years to buy as close in to the city as possible. The idea of "drive until you can afford what you want" didn't make any sense to us. For the home buyer that was only going to be in their home for only a few years and they worked in or close to the city, going out to the suburbs didn't make any sense for them. Instead, we advised them to "buy what you need as close in as possible." They had to make compromises in what they got but you know what they say about real estate, location, location, location. With gas prices now well over $4.00 a gallon those 30 minute commutes with no traffic turn into a 1 hour commutes in normal rush hour traffic, and the impact on family budget is quite difficult. It's happening all over the country. During the housing boom, many suburban areas were overbuilt and are now suffering. Some areas around the country have seen home prices go down by as much as 32% in the last year. Add to that the huge number of Foreclosures and some of those areas could be in free fall for the next year. Fortunately Seattle is not one of these hard hit areas, but it has been effected. However, while the number of sales have decreased greatly over the past several months, in some areas prices have actually stayed pretty stable and even in some neighborhoods increased slightly.
The BusinessWeek article went on to say that they asked Zillow to do a analysis of how home prices have been doing in the city verses the suburbs and the results seem to support what we are saying here. Zillow looked at New York, Los Angeles, Chicago, Miami, San Francisco, and Seattle, and found that home prices have been more stable within a 10 mile radius of the center of the city, and have generally worsened with each 10 mile radius ring moving out from the center of the city. There were some cities where this didn't apply but Seattle is one where it has been the case.
We recently received a sales analysis from one of the Title Companies we work with here in Seattle and the following numbers are very interesting. These are resale numbers for homes in different locations and neighborhoods around and in Seattle. These are sales figures from May of 2007 through May of 2008
Area...................................# of Sales YTD...................................................Average Price YTD
Interesting numbers aren't they? While the number of sales in each area has fallen, there are areas where prices have not fallen much at all or have slightly increased. Interesting as well is that some of the areas with higher average prices went down like Issaquah, and some areas actually when up like Magnolia and Mt Baker and Green Lake. We all have to be very careful when we look at statistics and especially housing numbers at this time. There are so many headlines painting gloom and doom but those are usually in other parts of the country. You shouldn't use a wide brush to paint the Seattle Real Estate Market. Seattle has been effected but no where near like other areas but peoples fears that are created from all these negative headlines artificially add to a slumping market here in our opinion. If you want to read the perfect example of this read our Blog: #mce_temp_url#
The Seattle Real Estate Market holds some really good opportunities at this time for the smart buyer. Over the last couple of years for example, there have been a very large number of Town Homes built in close-in neighborhoods. Some of these Town Homes are in good locations and some are not, but what they all have in common is that you now have a very motivated seller and good inventories to choose from. The same is true for many condo buildings so there are some very good deals to be had, but you have to understand pricing in this market and know how to get the best property at the best price. There are great opportunities but you have know what you are doing. And because of the traffic and now the cost of fuel, the close in neighborhoods will experience even more demand over the next several years.
It was reported last week that home foreclosures have exceeded the 1 million mark nation wide. Most of those however are located in other states. Washington State accounts for less than 1% of all foreclosures nationally. Most of these foreclosures nation wide have been blamed on adjustable rate mortgages, when the buyer was offered a "teaser" rate then saw their house payment increase significantly over the next couple of years while their income only went up slightly. We believe that some of the foreclosures in the Seattle area have and will be the result of buyers paying too much for the home when they bought it over the last couple of years as well.
Seattle saw years of biding wars. 1995 to 1997, then again in 2001 and 2002, and most recently from 2005 through most of 2007. In the fall of 2007, we started to see our real estate market change and prices have fallen and inventories have increased since then. Depending on the area of Seattle, prices have adjusted down between 5% to 12% in the $400,000 to $1,000,000 ranges mostly. But because many people paid $500,000 for a $450,000 home in 2006, that home is worth about $450,000 today, most likely.
Seattle has been one of the last areas in the US to see a downturn in our real estate market. There is still good activity out there however, and there are buyers ready to buy but sellers have to go about selling their homes much differently now than from years past. Pricing and condition is the key and overpriced properties just will not sell. The seller has to then reduce the price until it's below what it should have been and then it will most likely sell for even less than that because buyers expect a good deal and there so so much inventory now they have many many options and are willing to be patient.
Washington State has seen almost an 18% increase in foreclosure filings compared to the same time in 2007 however, according to RealtyTrac. Now there are buyers really looking for great Foreclosure sale prices, somewhere between 70 to 80 cents on the dollar. That translate into about a 20% or 30% reduction in price, but we believe that is still the exception and not the rule for most buyers. There are far fewer buyers out there, but they are usually willing to make an offer on a home that is priced fairly in our current market conditions. Then, there are those neighborhoods that have held their value pretty darn well even in this downturn. These are usually the very close-in neighborhoods like Queen Anne, Magnolia, Capitol Hill, Madison Park, Bryant and Ravenna. Gas prices, traffic congestion and a strong Seattle economy is keeping home prices in these area stronger than in most other neighborhoods.
The Tacoma area, Pierce County, is #1 in the state for foreclosure filings, according to the report, with one in every 574 households going into foreclosure. Interestingly, though, that number was a 6% decrease from the same time period in 2007. The Seattle area, King County is #2, Clark County is #3, and Snohomish County is #4 in the state, as of April 2008.
Then a new law in Washington State was passed an took effect on June 12, 2008 to protect homeowners that were in the foreclosure process or potentially within 4 months of the process. While this new law has many good parts, many fear that good real estate agents will stay away from helping those that need them the most, the distressed Home Seller. This new law also has a potential impact on the person wanting to buy a home that is in foreclosure. Now as the law requires, if the transaction is set to close 20 day before the foreclosure date then the buyer has fiduciary duties to the seller that are above those to himself. This could cause many buyers to not buy these homes because of unnecessary but very real liabilities.
There will be real estate agents that will see a great opportunity to help distressed home sellers and be willing to take on the extra liabilities and knowledge required. Some of these will do a great job and some won't, so it's real estate business as usual but with more at stake for everyone, the real estate agent, the home sellers, and the buyers.
David & Karen Bell Winners for 2004, 2005, 2006, & 2007
Your Clients Identified You As The Best!”
“David & Karen Bell are among less than 1% of Real Estate agents in the Greater Seattle Area to have been chosen as a FIVE STAR Real Estate Agent “Best in Client Satisfaction” for the first 4 Consecutive Years of this award! In 2003 Seattle Magazine hired a marketing and survey company out of Minneapolis Minnesota to find out which Seattle Real Estate Agents provided the best customer service according to the clients in the Seattle marketplace. How they determined who was chosen was by surveying":
1. Over 33,000 Consumers Surveyed for each year, 2004, 2005, 2006, & 2007 2. 31,000 Home buyers were Surveyed for each year 3. 1,500 Readers of Seattle Magazine were Surveyed each year 4. 1,000 Mortgage and Title Company Offices were Surveyed each year
Then Each Agent Was evaluated and Rated for:
Customer Service Integrity Market Knowledge Communication Negotiation Closing Preparation Finding the Right Home Marketing of Home Overall Satisfaction
We are obviously very proud of this Achievement Award and we believe that the level of service and degree of knowledge we provide to our clients is unique and the Best in the Business. Buying or Selling a home today can be a very complicated thing and people stand to make some serious mistakes if they don't have all the necessary information and insights. While every one of our ranking were high, our highest rankings in these various categories and that averaged well over the national and local averages are in "Market Knowledge" and "Negotiating" with "Integrity" and "Communications" a very close second. We want to make sure that our clients find the best possible home at the very best price and that home will be a good investment. We want to make sure our clients sell their home for the highest possible price with the least amount hassle. We would look forward to discussing any of your real estate goals with you, just call us direct at 206.283.9100, email us at dkbell@dkbell.com. Success is a proven track record not just promises!
It was reported today by CNN Money that Home Foreclosures in the U.S. has toped 1,000,000 with Nevada, Arizona, California, and Florida accounting for 89% of the total of all Foreclosures. California, Nevada, Florida, Arizona and Michigan exhibited the greatest price depreciation in all transactions in the first quarter. While Wyoming, Utah, Montana, Texas and Alabama saw prices for all transactions increase the most. According to the NWMLS the Seattle market also saw a slight increase in sale prices as well over the last two months.
And as people were loosing their homes at the highest rate on record for the first three months of this year, there are new scams popping up everywhere to rip off and take advantage of stressed out, non English speaking, and unsuspecting homeowners that are willing to do almost anything to save their home.
To help protect these vulnerable homeowners 17 States have passed new legislation pertaining to foreclosures.The State of Washington passed the new law that took effect yesterday, Thursday June 12, 2008.And while the law has good intentions, many believe that it will end up hurting those it was intended to help.Apparently Washington new law was copied from the State of Wisconsin and there are many contradictions in this new law with our already existing Agency law.There is also so much vague language in the law that it’s impossible to interpret.Also of the 17 states that passed a similar law, Washington is the only state that is holding Realtors responsible if something goes wrong.The law exempts financial institutions, mortgage brokers, mortgage loan servicers, credit counselors, and licensed attorneys, not real estate licensees.The law also awards attorney fees and damages up to $100,000.
Now, I’m sure there are people out there that would say well those blank blank Realtors are a bunch of crooks and make too much money anyway so they deserve huge fines.And I agree…if we do something wrong or take advantage of some unsuspecting seller we should be responsible.And while I think that many Realtors don’t do that great of a job representing their clients, I also don’t believe there are very many Realtors at all that are dishonest or would take advantage of someone or create an Equity Skimming scam of some sort.
But what this new law will do, in my opinion, is force most Realtors to “stay the heck away” from Foreclosures and Short Sales.All a Realtor has to do to become a Distress Property Consultant and be subject to all the new laws and liabilities is to basically try to help sell that property from either side.A Distressed Homeowner is the owner and occupant of a dwelling who is: 1. They are at risk of loosing the home for non-payment of taxes. 2. They are in default under a mortgage. 3. They are 30 days behind on a mortgage or 4. Believes he or she could default on the mortgage within 4 months and tells a lawyer, real estate agent, lender, mortgage or credit counselor.Plus the Distressed Homeowner has NO duty to notify the real estate agent that they are a Distressed Homeowner, there doesn’t need to be a public notice of mortgage default to become Distressed, and the owners may not even know they are a Distressed Homeowner.Yikes!If they don’t know how are we supposed to know?Fortunately the NWMLS has just provided us with a new Listing Agreement that will hopefully cover that somewhat.
Now the new law also defines what a dwelling is.A dwelling is a single, duplex, triplex, or four-unit family residential building.Condominiums in building more that 4 units are not subject to this statue…maybe they don’t have condos in Wisconsin. So if you don’t live in the home or if your unit is in a condo of 5 or more units this statue doesn’t apply to you.
So how does a Realtor become a Distress Home Consultant?It’s pretty easy.They solicit or contact Distressed Homeowners and offer to perform any service that will:
·Stop or delay a foreclosure sale (try to sell the home)
·Assist a Distressed Homeowner to Obtain a loan (try to help refinance)
·Save the home from Foreclosure (sell the home)
·Close the sale within 20 days of the foreclosure
·Systematically contact distressed homeowners (mailings and phone calls)
·Draft a seller lease-back or an option to buy the home back
From what we have been told, one thing an agent should never do under any circumstances is draft or arrange a lease-back or buy-back for a distressed homeowner.
Let’s talk about another huge flaw in this statue.If a transaction to purchase a distressed property closes within 20 days of the foreclosure date then both the selling agent (buyers agent) and the buyer become Distressed Home Consultants and owe fiduciary duties to the seller that are above their own.You have to be kidding me.If a buyer makes an offer on a home that will close within 20 days of the foreclosure date they have to put the sellers interest above their own or they can be held responsible for non-compliance and if found that they “got too good of a deal say” they can be sued for actual damages, double or triple damages up to $100,000 and attorney and court costs.That’s has to be a pretty good home to want to buy it under those circumstances and we certainly wouldn’t want to be that selling agent.
So how does a smart Realtor avoid all this?They don’t get involved with distressed home sales at all.This law was written to help protect the homeowner but instead we believe it will greatly hurt the homeowner because most realtors will not be willing to take on such risks.These Distressed Homeowners really need our help as their best chance of getting out of all this is to sell the home before foreclosure.Maybe the credit counselors or attorneys can market and sell their homes?Do you think we need a revision to this law?Do you think we need a totally new law? But that can’t happen until about this time next year!So instead of getting many of these homes sold the banks will be taking them back and then selling them most likely in bulk, flooding the market and eroding home prices even more. Do you really think it matters whom we vote for?
Some say that lenders may be at fault for our tight Mortgage Credit crunch right now, and for all those people that got loans that were interest only or zero down and are now underwater on the property because prices have fallen and then can’t sell the home for what they bought it for etc. etc. etc.
It’s a lot more completed than that.Let’s take a look at this from the perspective of two Realtors that have been doing business in the Seattle real estate market for about 20 years.
First of all, a little over half of our business is working as Buyers Agents in the Seattle area.On average, we help about 25 buyers a year buy homes in Seattle.We also work with many sellers as well, and that balance helps us understand both the buying side and the listing side of the market.For the past several years the Seattle real estate market has been a very strong sellers market, but that all changed in September of 2007.The interesting thing however, is that Seattle home sales stayed strong despite a turn down in home sales and home prices in just about every other market in the country for the past two years.The Seattle economy is strong, people are moving here, businesses are expanding and hiring, there is a short supply of good homes in the close-in Seattle neighborhoods, but the national news and uncertainty has finally affected our housing market here is Seattle. Home loans are much harder to get these days as well and that has contributed to slowing of demand and consequently an increase in inventories. Recent numbers from the NWMLS however, have stated that prices in the Seattle area have fallen by less than 5% on average, and that the number of new sales has recently increased by about 2.5% over the past couple of months.This is all good news for our market but then why are people unable to sell their homes for what they paid for them?
In the words of our 15 year old daughter, Duh!They paid too much when they bought the home.Here is what we think has happened mainly since 2005 (it happened in 1989, 1995, and 1999 as well) in the Seattle real estate market: The early spring of 2005 Seattle was in another “White Hot” sellers market.Inventories were very low and there were lot of new buyers in the market and some of these buyers were in the market for the first time because on new creative loan programs, others had moved here from other parts of the country and many were being relocated here for a new well paying high-tech job.
We think that about 3 to 4 out of every 20 new listings that come on the market are actually good homes to buy.The rest maybe OK, but only if you can buy them at a really good price.So we would see 7 to 10 offers on a really good home and say it was priced at $500,000.Only one of those buyers would get that home and usually they had an escalation clause saying that they would pay about $1000 over what the highest offer was up to a limit of say $510,000.OK, know you have 6 to 9 buyers that lost out on the house and they would then go after the next best house, but this time someone would increase their limit to $515,000 (because they don’t want to loose another home for just $5000).On and on this would go and then after about 3 or 4 times that "not to exceed price" went form an extra $10,000 to $15,000 to $20,000 to $30,000 to $50,000 and sometime even $75,000 over the asking price.Then to compound the matter the new homes that came on the market were coming on at even higher prices because “the home down the street sold for $540,000, but it was actually only worth $500,000.Buyers just got completely carried away and unfortunately many of their real estate agent didn’t help keep them very realistic about what they were doing.
Then the next thing that happened was that some buyers would not want to get caught up in bidding wars anymore so they would buy homes that came on the market that were not holding offers to a specific date to encourage a bidding war. They would buy these homes the first day on the market for the asking price(which was usually too high) because there wasn't going to be a bidding war. They would buy homes that were in bad locations and they would buy homes that were of poor building quality or poor design.These homes then are usually very hard sell even in an average market.All this leads a huge problem when they try to sell.Some homes only sell during a “white hot sellers market” also if you are not in that “white hot” market condition then you most likely can’t sell the house unless it’s a total bargain...and we're not in a hot sellers market anymore.
Now some of these people are really paying the price for making all these poor buying decision.If you paid $550,000 for a home that’s only worth $500,000 in 2006, and the market went up by only 3% in the first half of 2007, and then back down by 5% by mid June 2008, you are underwater, and again, we don’t think it was only these new creative loan programs that caused all our current problems. If you get a mortgage that was "no money down" you are taking a big risk if you need to sell in a few years if the market turns down or even stays flat. But that being said, even if you put 10% down and the market turns coupled with overpaying for the home, you are in the same position as no money down anyway.
Sure people shouldn’t get low introductory loans that will adjust upwards in two years especially when the current interest rates are at all time lows and they only get cost of living increases at work. But if they paid the correct price for the home they would most likely be able to sell it two years later and come out at least close to break even.But if they paid $50,000 or more too much to begin with then Gad Zooks…we have a problem!
Now the lenders made some very bad decision as well, and some were based on greed, but most were based on helping the average person buy the American Dream!Lenders relaxed their standards of debt to income ratios, they opened up a lot of new products for zero down buyers, and to avoid PMI (private mortgage insurance) the came up with second mortgages that would cover the 20% down payment requirements to avoid PMI.Should lenders go back to requiring the same debt to income ratios they had years ago?Yes and No, it depend on the buyer and their situation.
I bought my first home in Madison Park about 37 years ago.To qualify I had to have a total debt to income ratio of 38% and my mortgage had to be 28% of my gross income or less, and they required a 20% down payment.Here is deal though…that great little 2 bed 1 bath bungalow I bought in Madison Park only cost $39,000 back then, so a 20% down payment was only $7,800.Today that very same home in Madison Park would cost $650,000 and 20% down would be $130,000.That’s tough for a young couple or single person buying their first home to come up with.Or maybe they shouldn’t even think of buying anything?We don’t think that’s right either.
Should the lenders require a maximum of 38% total debt to income like I had to have back in 1971?I think I was making about $30,000 a year then so that would be about $950 a month for bills, school loans, taxes and insurance, and a mortgage payment.My mortgage was $473 (I remember thinking I’d never be able to make the payments) a month and boy would I love to have payment amount again today!So it worked, I was able to get into a home, save a little money, and then 4 years later when I sold that home for $92,500 I was happy.Today if a person is making under say $80,000 a year, having a conservative debt to income ratio makes more sense, but if they are making $600,000 a year having a 38% ratio is silly, because they have so much disposable income it may make better financial sense to invest that additional income elsewhere, not in a down payment for a home.So maybe their debt ratio should be 50% or even 60%.Now most all zero down loan programs are gone, kaput, extinct.But what about all those people that have good stable jobs, have been with that job for a longtime and want to use their money for something other than putting it down on a house.Maybe they own their own business and want to invest in their business to grow it, to expand it, to hire new people, you know, the things that help the overall economy grow.If they have excellent credit and have not just changed jobs going from an ice-cream scooper (OK, I’ll get letters on this one) to a Nuclear Physicist they should have the option to buy something they can afford with no money down.Will bad things happen?Sure sometimes they do, and they are out of our control sometimes, but the majority of people I don’t believe buy a home so they be foreclosed on.
Why do we always have to make such drastic swings when something bad happens?Sure the credit industry has been hit hard but it’s partly their fault.They sent out their appraisers to these homes that people paid way too much for, and somehow the appraisals came in on value.So now they are hurting and in some case hurting bad.It’s affected our national and local economies seriously, but why swing to the opposite side?Making those extreme swings in credit policy will also have long term effects in slowing our housing market to the point that the whole economy is negatively effected and so on and so on.Soon, hopefully, the lenders will see that they aren’t making as much money as they “should be” in the home mortgage market and they’ll start to relax the credit standards but how much more harm will they cause in the mean time?
And you, home buyers out there…work with an Agent that’s knows what they are doing and won’t let you make a bad buying decision in any market condition because no loan program can compensate for that!
Will Rogers once said that you only need to buy one newspaper in your life and just keep reading it over and over again because things don't really change. People in Seattle...take his advice!!
The economy in Seattle has been and continues to be strong. It's projected that Seattle will grow by about 1,000,000 people by 2020 and by a mere 100,000 by 2010. Housing inventories while they have increased since October of 2007 are still by all accounts pretty low. Mortgage rates are still at historic lows. Marketing times have increase by about 300% from about 20 days to over 60 days. And, home prices have fallen by about 10%. Where have all the Buyers Gone? Are they sitting at home reading the newspapers and the websites about how bad the housing markets are in California, Nevada and Ohio?
Buyers in Seattle...Get off the couch, turn off your computers...go out and look at houses!! This is perhaps the best buyers market we have had in Seattle since 1990. OK OK loans are harder to get, now you actually have to be qualified to buy a home in a certain price range, and the rumors are that there are still many many qualified people in Seattle bringing home a very good paycheck. So what's the deal? Waiting for the market to bottom out? You know, you never know when something is going to hit the bottom (unless you drop a brick from the roof or something) and when something (financial) is going to hit the top. We believe that we are close to the bottom at his time. We are seeing more activity everyday now. The Title and Escrow companies are actually getting busy again. Spring is traditionally the busiest time of the year in Seattle and there are some great values out there.
If you have or are thinking that you need a bigger home (the move up buyer) this market can be a gold mine. Buyers can actually write "contingent offers" today and sellers are accepting them. If you tried doing that over the past 10 years you would be laughed at...not now. Home that were selling for $900,000 in the Spring of 2007 can most likely be purchased for about $810,000 today. So for the move up buyers you may get about $40,000 less for your $650,000 home but save about $90,000 on your $900,000 home...hummm... a net gain of about $50,000. (A $50,000 saving on a $810,000 investment...that's about a 6% return). Then when all the hysteria ends about the housing market in Seattle (and it will soon) prices will be heading north again at a pretty strong pace. If past history is any indication we could be seeing double digit appreciation again by 2010.
We need to clarify something here...we are talking about "in-city neighborhoods", not suburban areas. In-city neighborhoods like Magnolia, Queen Anne, Capitol Hill, Montlake, Madison & Washington Park, Denny Blaine, Mt Baker, Seward Park, Ballard, Sunset Hill, Wallingford, Greenlake, Ravenna, Bryant, Viewridge etc. etc....in-city areas that are about a 30 minute or less commute to downtown not using the freeways. These areas are fully developed...no more land to build on. While all these areas have there own personality and architectural identities many of these neighborhoods have huge upside potential for substantial remodels some with impressive views. These properties tend to appreciate at an even higher rate and appeal to people that are less affected by cycles in the economy. Even if a home in a great location isn't improved it will still have more value than it's counterpart on the same street if it doesn't have that potential view because of it's up side potential. Little ramblers on Magnolia and Queen Anne where a second floor would open up a city or sound view have much higher values and much higher demand...in other words a great investment on a property that is getting harder and harder to fine.
Seattle, a great place to live, a strong and diverse economy, and huge upside housing potential!! Go buy something!!
For the first time in several years, it looks like the Seattle Real Estate Market is headed for some kind of a downward adjustment. Although well over due by the way, it's still a little too early in the cycle to determine the extent of the downturn. How long will this adjustment last and to what extent will it go? It's anybody's guess right now. For the first 7 months of 2007 the Seattle Real Estate Market has seen some rather interesting trends. Inventories have gone up, number of sales went down, average marketing times increased, yet prices continued to go up by as much as 9% in the city. We analyze the Seattle Market on a regular basis and now we are finally seeing a correction in this market but only in the price ranges between $700,000 and $2,000,000.
In compiling the numbers from the NWMLS for the year as of October 10, 2007 here is a snap shot of what's happening right now:
Monthly Averages for Home Sales in 2 Real Estate Areas in Seattle, Area's 700 & 705*
Sold/Closed Single family Homes from 1/01/07 - 4/30/07
Price Range # of Sales Area 700 Ave per Month # of Sales Area 705 Ave per Month
$100 - $299 0 0 10 2.5
$300 - $499 41 10.25 341 85.25
$500 - $699 75 18.75 180 45
$700 - $999 54 13.5 58 14.5
$1,000 - $1999 27 6.75 18 4.5
$2,000 - $5,000 3 .75 1 .25
TOTAL 200 50 608 152
Sold/Closed Single family Homes from 5/01/07 - 7/30/07
$100 - $299 0 0 7 2.3
$300 - $499 19 6.3 313 104.3
$500 - $699 68 22.7 191 63.7
$700 - $999 43 14.3 70 23.3
$1,000 - $1999 30 10 25 8.3
$2,000 - $5,000 2 .66 2 .66
TOTAL 162 54 608 202.6
Sold/Closed Single family Homes from 8/01/07 - 8/30/07
$100 - $299 0 0 2 2
$300 - $499 13 13 98 98
$500 - $699 19 19 54 54
$700 - $999 13 13 22 22
$1,000 - $1999 11 11 4 4
$2,000 - $5,000 3 3 0 0
TOTAL 59 59 180 180
Sold/Closed Single family Homes from 9/01/07 - 10/10/07
$100 - $299 0 0 4 4
$300 - $499 5 5 65 65
$500 - $699 15 15 46 46
$700 - $999 19 19 11 11
$1,000 - $1999 7 7 2 2
$2,000 - $5,000 1 1 0 0
TOTAL 47 47 128 128
For the first 4 months of 2007 we averaged a total of 202 homes sold per month. The for the next three months, May ,June, and July we averaged a total of 256 homes sold per month. August 2007 the number dropped to 239 and then from September 1 through October 10, 2007 the average dropped again to 175 homes sold per month. This was a 30% drop from the average high of 256 in May, June and July. Our strongest sales are usually in the spring, April, May and June. Then we see a slow down in July and August but the market historically picks back up in September. A drop in sale of 30% is high, very high. What is happening now is that inventories are growing and marketing times are getting longer, considerably longer. We are seeing the lower price range ($300,000 to $600,000) remaining pretty strong but the $700,000 to $2,000,000 price range is dropping. Properties above $2,000,000 are remaining strong as well with the special ones still getting bid up with multiple offers.
The national wows in the housing markets coupled with the mortgage problems have taken its toll on buyers in the Seattle area finally. The mortgage problems have had the most significant effect on our market however. With the reduction of zero down loan programs, the tightening of stated income programs, and the increase in rates for the jumbo loan programs, we have seen a significant reduction in buyers right now in our market. Add to that seeing and hearing news of the huge price drops in housing prices in other parts of the country, many buyers are now taking a wait and see attitude. Thus the drop in sales and the increase in inventories all equal a downward price adjustment. We see this change in our market only being for the short term however. Seattle's economy is one of the strongest in the country and we are still growing. One source tells us they expect 100,000 new people moving to Seattle in the next 5 years to fill high paying jobs. We saw another forecast today that Seattle will grow by 1 million people by the year 2030. This will keep pressure on the supply side of the housing market in the close-in Seattle neighborhoods for a long time to come. It's our opinion, baring any unforeseen economic disaster, that by late spring of 2008 we will be right back into a strong sellers market again with double digit appreciation again. Things have slowed right now, but that has created other opportunities especially for the move up buyer.
In the past several years it has been almost impossible for the move up buyer to buy another home contingent on selling their current home. Well, this is an opportune time for that move up buyer in the Seattle market. With marketing times getting longer and prices dropping in the $700,000 to $2,000,000 range this is perhaps the best time we have seen for making that contingent offer in several years. Keep in mind that you'll need to be aggressive on your list price for the home to sell, but you'll be saving a lot more money on that higher priced home you would be buying.
*Area 700, Queen Anne and Magnolia. Area 705, Ballard, Fremont, North Beach, Broadview, Wallingford, Green Lake and Phinney Ridge
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