Market Watch

Residential Housing Statistics in King County December 2009

I was just asked this week how is the Real Estate Market in King County since I mentioned earlier about Snohomish County. Well here is information which was requested about King County. Northwest Multiple Listing Service (MLS) reported as following statistics for Dec 2009. Jan 2010 stats will be published in the coming weeks. We still got 21 months of inventory in King County while Snohomish County got 19 months of inventory of homes for sale.

UNITS	ACTIVE		PENDING		SOLD
DEC 09 UNITS	6,918		1,413		1462
DEC 08 UNITS	8,707		911		929
Total Unit +/-	-1789		502		533
Difference DEC %	-20.55%		55.10%		57.37%
YTD 09 UNITS	33,744		23,019		16,022
YTD 08 UNITS	38,889		18,895		15,991
Total Unit +/-	-5145		4124		31
Difference YTD %	-13.23%		21.83%		0.19%

As seen above chart, Residential active listings units dropped 20.55% from 8707 units in 2008 to 6918 units in December 2009 while Pending Residential units increased 55.10%, as Dec 09 pending listings were 1413 units compare to 911 units in December 2008.  There is a huge increase in sold units at 57.37%, 1462 units closed in 2009 vs 929 units in 2008.  Snohomish County Sold Residential unit increase is at 89.02% when compared to 2008.

MEDIAN PRICE	ACTIVE		PENDING		SOLD
DEC 09 MEDIAN	$425,000		$349,000		$380,000
DEC 08 MEDIAN	$495,000		$374,900		$403,500
Price +/-	-$70,000		-$25,900		-$23,500
Difference DEC %	-14%		-7%		-6%
YTD 09 MEDIAN	$479,950		$370,000		$380,000
YTD 08 MEDIAN	$509,950		$424,950		$429,950
Price +/-	-$30,000		-$54,950		-$49,950
Difference YTD %	-5.88%		-12.93%		-12.0%

As seen above chart, Median Price declined all across for Active, Pending and Sold Listings.  For December 09 sold median price was $380,000, dropped 6% compare to Dec 2008 while year to date Median price dropped further to 11.62%.

DAYS ON MARKET	ACTIVE		PENDING		SOLD
DEC 09 DOM	131		89		83
DEC 08 DOM	128		87		84
Days +/-	3		2		-1
Difference DEC %	2.34%		2.30%		-1.19%
09 YTD DOM	109		77		78
08 YTD DOM	93		75		73
Days +/-	16		2		5
Difference YTD %	17.20%		2.67%		6.85%

As seen above chart, the other important indicator to watch is “Days on the market” (DOM). There isn’t a significant difference, as little as 1.19% for Dec 09 and 6.85% for the year.

Over all, Inventory of homes dropping while sold home units are increasing. December 2009 Market Trend is showing a promising future for buyers and sellers. Yes, values are declining as there is activity out there…..

If you would like more personalized information for your area, please contact me via emailSebnem.oden@exprealty.com or visiting my website www.ProKeyRE.com

Wishing you a prosperous real estate future….

Market Watch

Real Estate Investing in the Current Market

The state of the real estate market has been hammered in the news for the past couple of years as extremely negative.  Blame was being passed out to nearly everybody and in reality, it was greed, greed, greed.  People were buying outside of their ability to pay, and too many lenders were allowing them to do so.  But, the government was also promoting home ownership and providing ways for everyone to own a home.  Well, we can see the end result, but how does that affect the investors?  Over the past couple of years and projecting into next year, real estate values will have lost approx. 16% of their value from the top of the market in 2007.  At that time, compared to the values in 2000, real estate in Washington gained in excess of 80%, so losing 16% now means your gain is approx. 64%.  Not a bad return for 9 years.  So what about now?  Everyone knows that buying low and selling high has always been the way to make money.  Well, after the market runoff since 2007 and the possible runoff through early 2010, real estate will be at its proverbial low.  Once the economy improves, and it will, real estate will begin climbing again.  Will it be at the same rate as the 2000-2007  period?  Probably not, so investment properties will need to be held a little longer if you’re looking for a specific rate of return.  Now which properties should you concentrate on?  

Single family residences, including condominiums and 1-4 multi-family,  are good buys as you are buying at the low end.  Especially when you throw in the foreclosures.  They can still be financed with lower down payments, usually 10%-15%, with a 30-year fixed rate at historically low rates.  Add to that a soft economy where people can’t purchase a house for a variety of reasons and need to rent.  Therefore, you are paying at the low end of the market, financing at the low end of the investment rate scale, and  in a market where people need to rent rather than purchase.  Where’s the downside?  Really it’s not having enough cash to purchase the houses in the market. 

Conversely, the larger 5+ multi-family complexes are not a good buy at this time.  Not because they haven’t seen a drop in value, but because they are evaluated differently and the loans are extremely difficult for a variety of reasons that I’ll cover later.  Larger complexes are considered commercial and their values are determined by a complex calculation / manipulation of the net operating income.  Since people are renting more now, the net operating incomes are higher, therefore the value of the larger complexes have been generally stable if not increasing.  That being said, the financing of these are “horrible”.  As you are aware, banks are in extremely poor financial condition and the federal government has and is forcing them to shed their real estate loans, even the good ones, to lessen the chance of the banks going under.  So if you can find them, the down payments are running in the 25%-30% level and the incomes have to provide a debt service coverage ratio of at least 1.25 : 1.  Loan terms are also prohibitive as they are running at a maximum of 5 years with a fixed rate but more than likely the banks will want to use a 3 year term with a fixed rate or better yet a fully variable rate.  Sound good?  Not in this market. 

So investors should look to the single family or small multi-family to invest in during the next couple of years.  They will be able to more fully utilize their liquid assets to purchase more properties at better interest rates.  With the upside being, every property the investors are purchasing decreases the inventory of houses for sale and over time will bring the market back into stability.  What happens then is, the real estate market begins to increase in value, so the investors are actually creating the change in the market that benefits themselves.  Pretty good, isn’t it?  For those people that have liquidity, this may be your time to increase the eventual value of your holdings for the least cost.  Good hunting!

Dave Sato, ECP
Realtor
dave@seattlepowersearch.com
425-213-6411

Market Watch

Staged Homes Sell Faster

Staging your home for sale makes a huge difference, especially in this difficult market where inventory is high and buyers are a hot commodity.  It is absolutely worth your while as a seller to stage your home.  Staging is the fairly recent real estate term that is a marketing tool.  It is the art of displaying your home in it’s best form by neutralizing, de-personalizing, cleaning, adding street appeal, and enhancing with minimal yet stylish furnishings. 

As a home stager, I have learned first hand that staged homes sell faster and for a better price than un-staged homes.  Recent studies show that a staged home will sell your house in half the amount of time and for 15% more than an unstaged home!  It can give an ordinary house the extra edge as we know that you only have one chance to make a great first impression.

So, whether you go with a professional company such as my very own company,  Staged Home Design, or do it yourself, here are a few very helpful hints that will maximize profits at a minimal investment. 

1.  Street Appeal.  Look at your home from the street,  because if you don’t grab attention from that vantage point, your buyer may not even make it in the door.  Trim trees, weed, mow the lawn, check paint condition, plant flowers or put potted color splashes in entry way, sweep, blow, and de-clutter so that your home shines with wonderful appeal at the street.

2.  De-clutter.  Take out all unnecessary furnishings, clothes, books, pictures, anything that will take away from making your home shine.  Most people have way more furniture and clutter than is needed.  Strip down to the bear basics, a bed and side tables in the bedroom, loveseat, lamp, and artwork in the living room, dining set, bathroom towels, minimize accessories.

3.  De-personalize.  Take away any personal photos,  posters, hobby items, anything that will hinder a buyer to imagine themselves actually living in the home.  Rent a storage unit (don’t push it in the garage, that would be counter productive) until you complete the sale, and keep it simple.

4.  Clean, clean, clean.  Old fashioned, thorough cleaning is your very best friend.  Clean the windows, counter tops, cabinets, appliances, bathrooms, patios,  everything should sparkle and shine.

5.  Make the home warm and inviting.  Warm and neutral colors, on the walls, in the furniture and accessories go a long way to add to the visual and emotional insticts of a buyer.  Bring nature in, plants an flowers are always a welcome addition.  Some people go as far as to make fragrant homemade cookies and spiced cider to fill the house with warm aromatics. 

With these helpful and basic tips, and almost no monetary investment, you will be amazed as to what a difference they will make.  As always, I am happy to assist and advice my clients to all the secrets of a great stage to sell their home.   Happy Open House!

Realtor

Helen@SeattlePowerSearch.com

Direct:

Market Watch

Short Sales and Lost Sheep

Was that lost sheep or lost sleep?  What Little Bo Peep may not have known is that “leaving them alone so they’ll come home” may not always be the best strategy.  By which I mean, that short sales don’t automatically result in a good buy on a house.  In order to understand what they are and how they work, a few facts are in order.

The “short” in short sale refers to the fact that the bank is going to receive a sum “short” of (less than) what they are owed on the sale of the property.  When a mortgage holder’s property value drops below the loan amount (as in a case where they owe the bank $360,000 on their mortgage but due to the fall in the market the property is now competing against similar properties at $325,000, for example) the owner can’t sell the property for enough to pay off the bank.  If they can wait till the market changes and values come back there’s no big problem, but some people for whatever reason need to sell right away.  Perhaps they had one of those notorious “Option ARM” loans where the interest rate becomes variable after an initial period and starts to rise, making the homeowner’s payment go up every six months.  Or perhaps they lost a job, suffered an illness… you name it, we can all think of someone who hit it just wrong and got into a situation where they need to move.  If everyone else with an equal home is selling it around $325,000 they can’t really sell it for more, no matter how much they “hold out.”  Some sellers want to maintain their credit score and luckily have enough cash available to “bring to the table” the difference.  If they owe the bank $360,000 and sell the house for $325,000, they pay the bank $35,000 from their own funds to make up the difference.  But some sellers don’t have that option.

The solution might be to list it for market value, but make that “subject to lienholder approval” and after they get a contract with a Buyer, send that over to the bank (mortgage holder, also known as lienholder) and see if they will approve the sale even though they will lose some money.  There are strict guidelines for this from the bank’s point of view, so it’s not always an option, but sometimes it is.

Why would a bank approve that?  Well, if the owner is behind in his payments, the day will draw closer when the bank will have to make a move to forclose.  If they do that, they are likely to have to spend a lot of money in the process, and end up with an uncertain result, but probably less than they would get by approving the short sale.  So the bank, for good business reasons, might be better off allowing the short sale to go through.

My clients often want to know about what these terms mean, and if they are good deals.  One thing it helps to know is that the approval process is often uncertain, and will take longer than a regular sale.  Two months would be a very short time, in fact it can be two or three times that period.  And after waiting all that time to see if the sale is approved, it is definitely not guaranteed.  In fact, if you ask agents what percentage of short sales close, you could hear that somewhere between under 20% up to 30% actually close after the long wait (after reading a lot of realtor comments on Trulia).  This is partly a factor of how well the Listing Agent understands the process, so one way to improve your chances is to have your agent check and see how many short sales the Listing Agent has managed to close in the last 12 months.  But it also has to do with what kind of investors the bank has sold the investment to, as if there are too many people involved in the approval process it can take longer or just fail. Oh, and another problem that might come up is that sometimes even after one offer goes in and starts to be considered, the bank will still take other offers, so after waiting three months with the highest offer, someone else might still be able to submit a higher offer which would then be considered.  Sometimes the bank will limit that and not allow subsequent offers, so that needs to be checked in advance of making your offer.

Are short sales the same as Bank Owned property?  Absolutely not.  Bank Owned properties have already left the possession of the former owner, so when you are dealing with the bank you are dealing with the responsible party and can be assured of a decision.  It still may take slightly longer than the 30 day closing period that is typical for the traditional purchase / sale, but it will be nothing as long as the length of the short sale process.  There are a couple of down sides.  Most Bank Owned properties have been “winterized” (water and heat turned off) and most often are “as is” sales.  Sometimes you can miss flaws because of this.  In this situation you should still have the property inspected, but this will more serve to tell you if there’s something so negative that you should back off from the purchase rather than providing a chance to get the Seller to repair defects, as the typical negotiation does (especially now in our Buyer’s market).

So whereas I advise my clients to find out exactly what is involved in a short sale and what their chances are of actually closing before they decide if it’s possible or desirable for them, I think Bank Owned properties are well worth considering and can provide a great deal, as long as you are willing to do some fixing up wherever it’s needed.  And yes, you can still negotiate, although they will have a bottom dollar in mind and will reject unreasonably “lowball” offers.  What’s unreasonable?  That’s something to be scoped out by having your agent do CMAs (comparative market analysis) on the home, and finding out what comparable bank owned properties have gone for in the same general area.

Feel free to give me a call or email me with any questions, I’d be glad to talk it all over with you.

Edy Kizaki
Realtor
edy@seattlepowersearch.com
206-402-9155