King County Real Estate Blog

It may not be a dramatic and fast rebound, but real estate continues to move in a positive direction.  Newly released statistics showed an increase in pending sales for December; this was the 9th monthly increase in the last 10 months.

Additionally, D.R. Horton, one of the nation's biggest homebuilders just posted its first profit since 2007.  This is particularly good news because new home sales have been a bit of a sore spot on the overall recovery watch.  More info on both can be found in this Seattle Times article.

As I've always mentioned, stats can be very specific to particular areas and even streets.  If you have questions about your own home or an area you are interested in buying in, just contact us and we'll be happy to get you specific statistics and pricing information.

I recently attended a workshop geared around new building techniques designed to maximize and conserve energy. It was really interesting to see the simple techniques now being taught that can save homeowners tons of money.

A representative from Seattle Jobs Initiative, a nonprofit organization that creates opportunities for people to support themselves, was also in attendance. Part of their mission is to improve access to training which explains their involvement with the workshop. I found it really positive that SJI is working to help people find jobs in a manner that will improve our local housing and energy conservation.

I also met a few "green" professionals, both of which can perform an audit for your property to let you know what you can do to save on your monthly bills.  Feel free to contact them or visit their websites if finding out where you can save some money is of interest to you.

• Residential: Aaron Campbell - (206)898-8337 | www.campbell-energy.com
• Commercial: Kevin Dingle - (206)659-0509 | www.sustainingstructures.com

Statistics compiled for sold homes in the month of December continue to show major improvements to the local real estate market. 

Here are a few telling stats for SOLD King County single family residential homes compiled from the Northwest Multiple Listing Service:

• The median sale price for Dec '09 was $380,000
• The median sale price for Mar ' 09 was $363,850
• That's UP 4.4%
• The average sale price for Dec '09 was $440,700
• The average sale price for Mar '09 was $421,315
• That's UP 4.6%

Additionally, pending sales took a huge jump compared to the same month a year prior:

• The amount of pending sales in Dec '09 was 1,413
• The amount of pending sales in Dec '08 was 911
• That's UP 55.1% from December last year

So, things are looking much better starting off the New Year! These stats are for King County residential homes as a whole, so feel free to contact us if you want stats more specific to a particular city/area.

I noticed some interesting tidbits looking over statistics of closed sales in King County compiled by the Northwest Multiple Listing Service. Some of the stats that jump out at me are telling of how important accurately analyzing statistical information is.

For instance, the overall median price of sold listings for November 2009 in King County was $370,000, down 6.3% from the same month a year prior. Based on this info you would be likely to see a negative newspaper headline reading something along the lines of “Home Values Drop 6.3%.” It is true that prices are down from a year ago, but there is more to it than that. I’ve been telling people for months that prices have been really flat for seven or eight months… and as it turns out:

MEDIAN PRICES HAVE RISEN SINCE MARCH 2009!!!!

Yep, the median price of King County closed residential sales rose 1.7% from March’s $363,850 median sale price. However, even this number is relative, because there are neighborhoods that have appreciated while some have depreciated to make things mostly flat. As an example, neighborhoods in North, Central and West Seattle have shown price increases, while neighborhoods in Renton have been hit harder over the last year.

The moral of the story is to get educated on the trends of a particular neighborhood you are interested in. Feel free to call us at 425-289-1099 with all of your real estate questions.

Senators agreed to extend the $8,000 first time buyer tax credit, and they have also agreed to create a tax credit for repeat buyers.  This is great news for both buyers and sellers and all of the professions that depend on real estate.

For the past few months I had been beginning to worry about what would happen to real estate when the tax credit expires at the end of November and the traditionally slow winter/holiday months hit.  I certainly felt a sense of relief when the news broke; I want to see the progress the real estate market has made continue. 

The added tax credit for repeat buyers will likely play a more significant role on homes priced $400,000 and above.  That portion of the market has recently begun improving as people with secure jobs and income gained confidence in our economy.  This tax credit should further that improvement.

Here's the article: http://seattletimes.nwsource.com/html/nationworld/2010156829_credit29.html

Before I get into some ideas on ways to save money around your house, make sure to consider the cost of making changes to the benefit you will get. As in, if you think you may move in a year, then adding/upgrading insulation in the attic and basement would cost more then the savings you would get over the course of a year.

Beyond that, I hope you enjoy these easy ideas that you can implement on your own:

1. As noted above, upgrading your insulation to a higher R-value can have a dramatic effect on your heating. I don’t recommend ripping down any walls, so stick to easy to access areas like your attic or crawl space / basement. Heating efficiency is often lost through exterior doors, so weather stripping around your doors also helps.

2. Help keep your water bill low by using a shower head that reduces water flow, some of which can be quite inexpensive. Additionally, many people crank the water to the fullest in the shower when only half pressure may do the trick. Older toilets generally flush more water than newer toilets, so look into replacing your toilet if you plan to be in your home long enough to enjoy the cost saving benefits.

3. Ceiling fans can be relatively cost effective and easy to instill. Fans are an excellent way to keep things cool in the summer and reduce your air conditioning costs. Ceiling fans at their lowest speed can even help circulate the heat coming from your floor heaters in the cold months, letting you enjoy more of the warm air.

4. Appliances these days are getting more and more energy efficient. If you plan to be in your home for years to come then replacing appliances will likely make sense for you (and it’s a great excuse to upgrade!). Just check out the energy savings tag at your local home improvement store to get an idea of the cost savings you may see. We have also recently seen utility companies giving rebates to people who purchase energy efficient appliances.

5. Replacing light bulbs to energy efficient bulbs is one of the easiest ways to cut costs. Puget Sound utility companies have even participated in exchange programs allowing you to replace your light bulbs in a very cost effective manner. Ultimately, energy efficient light bulbs are a no brainer over the course of their lifetime.

6. A programmable thermostat can drastically save heating costs by only heating your home during appropriate times. For instance, if you are at work and the kids are at school… basically if there are times of the day when your home is empty, then program your thermostat to be off during those time period. You can program the thermostat to start pumping warm air an hour before you get home. By doing so you come home to a warm house but didn’t have to pay to heat the home when unnecessary. Many people also turn off the heat over night and program it to come on shortly before waking up.

7. Monitor and replace your air filters as necessary. Dirty air filters reduce air flow and result in increased energy to heat the home the same way a clean filter allows.

8. When doing laundry be sure you are only doing full loads as opposed to multiple smaller loads. Also, consider washing all of your loads with cold water… there are detergents available that are designed to maximize cleaning in cold water.

9. Unplug your small electronics when not in use. Electrical items suck power even when they are not turned on and many of these items are easy to unplug. For instance the toaster or blender on your kitchen counter can easily be plugged in when needed and unplugged when not in use.

10. Lastly, the best way to reduce costs around your home is to be aware and conscious of things you can do. Most of us waste money on heating, water, etc simply because we haven’t trained our minds to think about it. The more aware of the possibilities you are around your own home, the more likely you will be proactive about finding ways to reduce costs.

The $8,000 first time buyer tax credit will expire at the end of November, meaning buyers must close by November 30th to capture the tax credit.

It will be interesting to see how the real estate market reacts after the deadline, but ultimately the deadline falls at a time when real estate generally slows going into the holiday season.  Regardless, the first time buyer tax credit has been a success as home sales have picked up which affects a multitude of professions; mortgage, title/escrow, inspectors, contractors, etc, etc.

There has been talk of extending the tax credit, but for now buyers are preparing to close by the end of November.  Normal transactions typically take 30-40 days once under contract, so buyers are moving quickly to find the perfect home by the middle of October.

If you are a first time home buyer then now is the time to start looking for homes to ensure you find the right home and can close in time. 

More information about our first time buyer services can be found at www.prosperarealestate.com/firsttimebuyers

By now you’ve likely begun hearing news that the real estate market is showing signs of improvement. You’ve probably also heard that prices are still dropping. As I’ve discussed in an earlier blog, making sense of the different statistics and news headlines takes some interpretation. Let’s use the following two headlines as examples and interpret exactly what’s going on:

“Pending home sales rise 6.7 percent in April”

“U.S. Home Price Declines Slowed in First Quarter”

So, pending sales are up but prices are still dropping. Why is this? From my vantage point it’s simple… first time home buyers and investors are starting to take advantage of the abundance of good deals. Short sales and bank owned listings are excellent examples of homes that are selling undervalued which are dragging the overall numbers down. Side note: instead of getting into a lengthy discussion about depreciation statistics, please refer to my previous blog talking about interpreting the actual depreciation statistics.

I have personally been seeing increased activity from first time buyers and new investors in my day to day activities running Prospera and working with my agents and clients. It seemed clear to me that first timers and investors buying undervalued and low priced properties were leading to these results, but I grabbed some information from the Northwest Multiple Listing Service’s statistics to illustrate the point.

- The median price of actively listed homes in April, 2009 for King County was $499,950.

- The median price of pending homes (homes in which a buyer has agreed to purchase the home from the seller) in April, 2009 for King County was $365,000.

The pricing disparity in the homes selling and the homes sitting is astonishing, but goes to show that lower priced properties are the ones selling. Another interesting tidbit is that the total volume of active listings (homes listed on the MLS not under contract to sell) in King County has dropped 16% to 9,608 in April, 2009 from 11,424 in April, 2008. Not many people are talking about the drop in inventory of listed homes, but it is a positive sign that things are on their way back to a more normal, healthy market. However, I do believe there will continue to be plenty of short sales and foreclosures affecting the overall pricing for the next year as we feel the repercussions of all the layoffs. Meaning, sellers will likely continue to have difficulty as a whole if similar homes up the street are listed for less as a short sale.

The most recent Northwest Multiple Listing Service compiled statistics for King County show a year over year deprecation of 12.8% for sold single family listings from February '07 to February '08. Prices have indeed dropped, but not in the manner that a simple percentage reflects. A large percentage of the homes that are selling in King County are short sales (see Short Sale 101 for a definition of short sales), and these short sales are selling at prices far below market value. In addition, we now have a large number of bank owned listings which are priced aggressively to sell quicker than anything else on the market. Finally, we have very motivated sellers who may have lost their jobs or are simply tired of waiting around for the right buyer to walk through their door, which is taking longer due to fewer active buyers. All of these aforementioned transactions result in lower purchase prices which drag the median price of homes down.

What is important to remember about the deprecation in regards to “median” prices is that half sold for more, while half sold for less. Also, the “average” prices of sold single family homes in King County has dropped in that same year over year stretch at the rate of 10.9%. These aforementioned percentages are still an inaccurate reflection of particular areas as they are county wide (and can sometimes be state or nation wide depending on the reporting source); they do not take into consideration particular neighborhoods. For instance, an older home in Burien on a busier street may have depreciated at a rate of 15% while a home in Magnolia with a view may have only depreciated 5%.

Also, headlines are often intentionally deceiving to grab interest.  For instance, the headline of the recent Seattle Times article "March home sales, prices continue to decline compared with a year ago in King County" gives a doom and gloom outlook.  Yes prices dropped, but that same article talks about the positive news that pending sales are way up compared to year ago... how could that have been left out of the headline?

What does all this mean? It means to take each report you hear on TV or read in the newspaper with a grain of salt. I’m not going to say that everything has been peachy, but there are certain factors, or even headlines, that skew the statistics and do not fully represent the big picture.

The bottom line in our current real estate market for me is that there are two major factors to consider:

1) It is a difficult time to sell. Meaning, if as an investor you are pondering a fix and flip strategy, keep in mind that you may have a difficult time selling the property because there are fewer buyers out there than normal. Basically, whether you are a regular home owner or an active investor, just keep in mind that it is a difficult time to sell.

2) Because buyers are scarce and sellers are motivated, there are some killer deals available that have loads of equity in them (short sales and bank owned listings are prime examples) that many investors and first time buyers are taking advantage of. Investors and first time buyers are finding undervalued homes that have instant equity because they can appraise for a higher amount than the low price they negotiated with a desperate seller.

Here is an excerpt from an April 8^th article from the Wall Street Journal talking about how to interpret reported housing statistics:

* “But if you are thinking of buying a home, here's the more positive news: While overall market averages may not be as cheap as you might have expected, you can probably ignore them.

There are plenty of deals taking place far below the official average levels. The indices are masking a huge disparity in prices.

Even the National Association of Realtors concedes distressed sales – including foreclosures and short sales – are closing about 20% below "normal" market rates. (Never mind how to define "normal").”

And here is an excerpt from that same Wall Street Journal article that speaks to why people are finding this a good time to buy:

* “If you can borrow at 4.5% or 5% over 30 years, many purchases start to look appealing. Especially if we get a hefty dose of inflation down the line.

If that happens, your monthly payments will be low and you'd get to repay the principal over time with devalued dollars. That's a double win.

Inflation isn't guaranteed: The bond markets are only predicting about 1.4% inflation over the next 10 years, and BCA Research recently reminded clients that deflation, or falling prices, remains a danger. Unemployment is still rising and recent wages actually fell.

Yet if you had to bet from here, you'd bet on inflation in due course. The government is running massive deficits and has the printing presses at full throttle. That's the classic recipe.

And inflation is the debtors' friend -- which is why it is surely going to prove the politically expedient way out of this mess.

Anyone purchasing hard assets like real estate, with a 5% fixed rate loan, ought to make good money if that happens”

“Aggressive buyers are finding some simply terrific deals. And they're paying with cheap debt, too.

Default rates are rising. Lots of sellers are forced. A buyer with options holds all the cards.”

* "The Case for Buying a Home Right Now" by Brett Arends – April 8^th, 2009 from the Wall Street Journal Online

Attention First Time / New Investors! Prospera Real Estate presents upcoming small group investment seminars designed to get your real estate investing ball rolling in a positive direction toward early retirement. Seats will be limited to just a handful of attendees, giving you a personalized opportunity to learn proven strategies designed to limit risk. More importantly, with fewer people in attendance you will have the opportunity to get your questions answered!

Topics and strategies we will cover include:

• Lease Option Investing
• Buying Undervalued Short Sales
• Buying Undervalued Bank Owned / REOs
• Finding Tenants / Tenant Fulfillment
• The Purchase Process (offer, inspection, closing...)

Plus, we'll even leave you with a free list of low risk investment opportunities that are currently available!

It's no secret that prices are down and sellers are motivated. Adding a large inventory of short sales and bank owned properties means we have even more undervalued homes on the market. Now is a wonderful opportunity to buy homes at a premium and capture built in equity while prices are low and there's an abundance of terrific deals.

All of our seminars are held in Bellevue. Seating is very limited so you can walk away with a clear understanding of these low risk strategies.

Click on the "Investing Seminar" button (http://www.prosperarealestate.com/freeseminar) to the left for upcoming dates/times and to RSVP.