2012 Greater Seattle Real Estate Sales in Review

I haven't posted in a few months as I have been busy helping clients buy and sell homes.  All of this has contributed to my best year ever in real estate.  Even though we have low inventory, the buyers and sellers in our market are serious and understand this is an ideal time to buy or sell a home. Low ball offers are a thing of the past.  Buyers understand they must be pre-approved and ready to step up with a very good offer when they find the home they want to purchase.  Sellers know they have the upper hand, but Realtors are wise to insist sellers have their homes sparkling clean and staged if they want to garner the best offers.
 
Having witnessed the purchase of homes with mortgage rates in the high teens back in the 1980's, it is wonderful to see rates as low as 2.75% for 15 year mortgages and near 3.5% for 30 year fixed mortgages.  Those low rates buy you more house for your money.  How long this golden opportunity to buy and sell will last is, of course, the million dollar question I wish we had the answer to.  With the "fiscal cliff" looming and all the talk about our economy, unemployment rates, etc. we can't begin to guess what 2013 will bring.  What we do know is that this year was a very good year for many buyers and sellers. 
 
Besides  being a good year for buyers and sellers, it's been a very good year for my office in Bellevue, Coldwell Banker Bain.  According to Coldwell Banker Bain-Bellevue's Marking Director, Christopher King, over the past 12 months, Coldwell Banker Bain-Bellevue has been the region's top-selling real estate office:

• We've sold over $850 million in homes, the most in Washington and 12% more than our closest competitor;
• In King County, our total sales are 18% more than our closest competitor;
• On the Eastside, our total sales are 21% more than our closest competitor and we've had the most units (homes sold) in Buyer Sales of any office;
• Our average List-Sold price of $845,400 is 66% higher than the Eastside average

All this is to say, I'm proud to be working for an exceptional real estate company and I am happy to share with you all our vast resources at my disposal.

As we see 2012 come to a close, we look back and see progress made in the world of real estate.  The market has unquestionably turned around and is headed in the right direction. I am looking forward to 2013 as I hope you are as well.   Whom do you know who likely will be next to buy or sell a home?  It would be my pleasure to be of assistance to them in this process; please have them give me a call.

 

Market update from my Monday morning meeting

 

Every Monday morning I attend a meeting with Realtors from Coldwell Banker Bain in Bellevue.  We discuss our new listings, talk about the market, then pile into cars and view homes that our agents have recently listed in the greater Seattle/Eastside area.  It is a highlight of my week. One of my favorite portions of our meeting is when one of the Managing Brokers explains the market statistics showing what is happening in our current market .  Here is what the board looked like this morning. 

 

 

As you can see, there is a huge difference between our market in 2008 and now, four years later. On the Eastside, September 1, 2008, there were 3322 active listings, with 581 homes pending.  If you divide the active listings by the pending listings, you get a ratio that tells us that for every active listing, how many homes are pending.  This ratio helps us understand if we have a market that is more favorable for buyers or sellers or is a balanced/neutral market. 

 

A ratio of 2.5 or less is generally thought of as a seller's market. 

A ratio of 4.5 is a neutral market.

A ratio of 6.5 or more is considered a buyer's market. 

For homes in the luxury market over $1M, add 2 to the ratios. 

 

So let's look at the Eastside market again.  In 2008 the ratio was 5.7:1, which tells us the market favored the buyers.  In 2012, we see less than half the active listings and more than double the pending sales, so we know there has been a big shift in our market.  In fact, currently, pending sales in the Eastside market are nearly equal to the active sales.  The ratio shows this with a very low score of 1.17:1.  That means for every 1.17 homes that enter the market, we see 1 home go pending.  This clearly demonstrates that we have a strong seller's market (seller's market being 2.5 or less). 

 

Remember, just four years ago, it was almost six homes active on the market for every home that went pending.  That meant five of the six homes were not selling, so according to the law of supply and demand, prices had to go down in order to move inventory. 

 

We see the converse in effect as well. Take a look at the right side of the white board above:  In the past year in King County, with low inventory, active listings averaged 21% higher price than they did a year ago.  The year to date average price of an active listing in King County is $696,436.  Now let's look at pendings: The average price of a pending home in King County, YTD is $445,617., which is 9% higher than pendings were last year.  Finally, note the trend in sales:  the average King county home, YTD sold for $455,429. which is 5% higher than last year's average.  For homeowners in King County, this is very good news.

 

If you look at the left side of the white board above, you can see that the Eastside luxury market and the Seattle market have similar stories to tell.  In fact, the current Seattle market is white hot with only 908 active listings, but 1512 pendings.  The ratio of .83:1 reveals that now is an excellent time to sell your Seattle home!

 

If you or someone you know is interested in selling a home and wondering if now really is the best time to sell, give me a call for a private and confidential consultation:  (206) 383-3119.  I would be happy to go over statistics for your area and provide a complimentary market analysis.

You call this a bedroom?

Sometimes when I am showing homes to buyers, they are surprised at what sellers will call a bedroom.  Of course if a room can be called a bedroom, it increases the value of a home, since four bedroom homes generally are more appealing to buyers than three bedroom homes.  But can any room or closet be called a bedroom?  Are there any standards?  Well, yes, it turns out there are! 

1. According to  SRC 2009 R.304-305 & R.310 and the Client Assistant Memo prepared by the Seattle Department of Planning and Development, the bedroom code requires 70 square feet as a minimum  for a bedroom.  The width of a room cannot be less than 7', so a 6'x12' room really cannot be called a bedroom.  Height of a room must also be a minimum of 7'.

2.  A bedroom must also have an egress window that fully opens and is no more than 44" off the ground with a minimum of 5.0 square feet net clear open area with 24" minimum clear opening height and 20" minimum clear opening width. 

3.  In the greater Seattle area, there is no requirement for a bedroom to have a closet, but real estate standards say there should be a closet as well as a door than can close.

In addition, Statutory law requires that all homes sold after April 1, 2012 must be equipped with carbon monoxide alarms at each floor and audible to sleeping areas, so sellers should get these installed prior to listing a home for sale.

 

 

 

 

How much should I offer?

You've finally found the home and with pre-approval in hand ask your Realtor to help you write an offer. Good for you! In the greater Seattle area, now is such a great time to buy with low interest rates and prices that are depressed from the height of the market in 2007. So what do you need to know? What comes next?

When my clients tell me they are ready to write an offer on a home, I ask the following questions:

1. What are your full legal names?

2. What is your address?

3. When would you like to close and move into this home (typically 45 days from the day we write the offer)?

4. How much will you be putting down on this home (generally we write a percentage,i.e.,  20% down)?

5. How much will you be putting into earnest money (while typical is 3%, we see from 2% to 5% with higher percentages for competitive bidding situations)?

6. How much would you like to offer for this home?

Often my buyer-clients can answer the first five questions, but they need help on the sixth. "How much do you think we should offer?" they ask. That's when a good Realtor turns to the comparative market analysis and sees what other homes of a similar style, age and location are selling for. While active listings are helpful in determining price, the most accurate information comes from sold comparables. We try to look for homes that have sold within the last few months, especially since our market changed significantly this year from a somewhat balanced market to a seller's market with rising prices. Low inventory can make it a challenge to find comparable sales. Sometimes we need to go back to sales that occurred a year or more ago, then look at how the market has changed from that point forward, using sales data from Trendgraphix or the Northwest multiple listing service. It can be challenging to pin down an exact number, but an experienced agent has the benefit of working their market for years and having looked at a multitude of homes in the area. I can suggest a range for a reasonable offer, but I always point out that we can prove the home is only worth so much, but the seller can still refuse their offer.

I am currently working with a couple who wanted to buy a unique home. They were willing to wait for just the right place, passing by the suburban cookie-cutter homes for homes that offered some architectural interest. We found just the place: hidden in the woods with a triangular shape, multiple decks and a view of Lake Washington. They couple quickly decided this was their home and asked what they should offer. A market analysis was difficult since this truly was one of a kind. After some research I came up with a range, then asked the listing agent if she would share her comparable data to combine with my research. We learned that the home had been on the market two months with no offers, so we bid below asking price and waited. The sellers came back with a price that was countered again by my buyers. The sellers verbally accepted our offer. I urged the listing agent to get the signatures and come to mutual agreement, but the sellers had a medical emergency and a 12 hour delay ensued. When the listing agent was on her way to get signatures from the owners, another offer came in for full price and now we had to compete for this home. My buyer clients were not happy to have to bid for the home they thought they had below list price, but with the uniqueness of the home, they stepped up an made one final offer. They were happy to have won the bid, but this experience underscores that "time is of the essence" in a bidding situation.

When I have clients who decide to purchase a home, I always urge them to get their questions answered, then write the offer as soon as possible, for this very reason. Even if no other person has viewed the home, you never know when someone can make an appointment and decide, just like you did, that this is the home for them and submit a bid along with yours. When you have a competitive bidding situation, the price always goes up. The days of taking a good percentage off to try to "steal" a home are over in the greater Seattle area. Sellers are back in the driver's seat and for those homes that have a great location and great condition, prices are often going over asking price. How much over? It depends on the home and how many bids. I always ask my buyers to consider how much they want the home and there comes a point at which you think "that's too much." I ask them to imagine the other buyer getting the home for a price that they could say, "that's OK...I would not pay that." With escalation clauses, we can make an offer over a competing bid, up to your comfort range. For example, a buyer could offer $700K with an escalation clause of $2500 more than all offers, up to $755K." So if your competitor bids $725K, you end up getting the home for $727,500. Of course we ask to see the competing bid, so we know there really is someone we are competing against. For privacy reasons, names will be crossed out, but confidentiality does suffer in multiple bid situations.

So circling back to the question at hand: "What do I offer for a home?" The answer is both art and science with a great number of factors coming in to play. After considering location, condition and price in comparison to other homes, one needs to consider the market, if there are other offers, and the seller's motivation. This is where Realtors can be a great asset in analyzing the data, testing the winds and giving their professional opinion so you get the home you want for a price you are comfortable with.

Mom & Dad: Do’s and Don’ts on “Helping” Your Adult Child Buy Their First Home

Buying a home for the first time can be a daunting experience.  Often young people have saved for years to get a down payment together.  After they choose their Realtor, get pre-approved for a mortgage or get a proof of funds letter in hand for a cash purchase, they define their criteria and the fun begins.

Most first time home owners cannot afford to get all the features they would like, so they quickly learn to sort through what is most important.  Is proximity to work a priority?  Making sure you have room for a growing family or your ATV collection?  Is the home’s resale value a consideration?  Many first time homeowners think they will live in this home much longer than they actually do.  People get married, divorced, have children, get new jobs across town or across the country, etc.  When that happens, they need to move. National averages show us we move about every five years, so it is good to look ahead and plan for growth, change and resale.

Often times, I show a client a couple dozen homes and then when they start to be drawn to one property over another, they want affirmation that they are picking the best home for their money.  They call in their parents and they join us to see the top two or three homes.  Here is where problems can begin.  Since the parents have not seen the dozen or more homes we have seen, they have not had the benefit of comparison in the overall market to know these really are the best buys.  They have also not worked through prioritizing the criteria…maybe deciding they can live with a carport instead of a garage if they get the fenced back yard for their dogs.

Another problem I have run into with the relatives is hearing them vent all the negatives about a home that their son or daughter has deemed the best.  They somehow feel that is their job…to point out the soiled carpet or torn wallpaper (things we saw and discussed).  What I see happening here is what I call “stealing their joy.”  Instead of being excited, now the clients are doubting their judgment and consequently want to see dozens more homes, even if they don’t  quite meet their basic criteria….just to please the parents.   When that happens, often I see the really great home they had picked out be snapped up by another buyer, and the buyers are consequently remorseful.

Sometimes I have run into parents imposing their housing desires on their children:  insisting on a 1 story home, or a home that is move in ready, but far from work, or even some superstitions they may have, but their children do not share.  Instead of helping their children, parents can actually confuse and discourage them.
 
So how would I suggest parents help their children?  First, rather than jumping into the driver’s seat, allow your adult child to tell you what they like about the home.  Let them show you around.  Watch their expressions to see where they light up and where they have concerns.  If they are going to pay for the home and live there, they should be allowed to pick what they want.  Of course, if you feel they are making a big mistake in buying a home that is unsafe or in a questionable neighborhood, it would be wise to suggest they investigate by hiring a qualified inspector or calling the local police department to ask for crime statistics.   It would also be wise to consult with the Realtor they have chosen to air your concerns and listen for their perspective in their special area of expertise.
                                                                   
Parents can be a big help in assisting their adult children with the purchase of their first home, but they need to remember that they have given their children roots and wings.  They need to trust that all those years of living with their son or daughter have caused them to pick up on their wisdom.  Now is the time to encourage and listen as they chart their course and begin the new adventure called homeownership.

Top States for Washington In-Migration

The state of Washington continues to enjoy economic growth.  Top employers such as Boeing, Microsoft, Amazon, Starbucks, Nordstroms, University of Washington, and more draw people from all over the world.  In May 2012, 10,269 adults obtained their driver's license in Washington, after leaving their home state or country.  This is 52 more than May 2011. While net migration out of Washington is not as accurate, due to incomplete reporting of surrendered licenses, we see a total of 3127 licenses surrendered.  Where are all these new arrivals coming from?  According to the Department of Licensing, drivers are migrating from all states and many countries, but the top five states are, in order:

1. California: 1832
2. Oregon: 1287
3. Texas: 598
4. Arizona: 517
5. Idaho: 415

Incidentally, California, Oregon and Texas are historically the top three in-migration states. 

Other locations outside the United States that top the in-migration list for May 2012 include:

1. British Columbia: 83
2. Korea: 70
3. India: 51
4. Mexico: 40
5. China: 25

For more information on driver migration, check out Washington's Department of Licensing statistics.

May 2012 Sales Strongest in 7 years!

Our market is constantly changing.  What we are seeing now in the greater Seattle area is a strong seller's market.  Low inventory and record low interest rates along with an increase in hiring in the Puget Sound area has caused quite a stir in our housing market.  Multiple offers are common.  Short sales and foreclosures are down.  Demand remains strong. Sales at Coldwell Banker Bain Bellevue are at levels not seen in the past 7 years.  Sellers are slowly listing homes for sale and buyers are often jockeying for best position to purchase a home.  Pre-inspections, escalation clauses and personal letters to sellers are now part and parcel of the buying process.  Those buyers who think they can find a home and negotiate on their own will soon discover the hard way that a savvy Realtor is their best strategy for finding and purchasing a great home in this competitive market.  If you want great results in buying or selling a home, give me a call:  206.383.3119.  My experience will go a long way in helping you achieve your housing goals.

Carbon Monoxide Alarms Required in Homes for Sale Starting April 1, 2012

According to the Northwest Multiple Listing Service, effective April 1, 2012, RCW 19.27.530 requires the seller of any owner-occupied single-family residence to equip the residence with carbon monoxide alarms in accordance with the state building code before a buyer or any other person may legally occupy the residence following the sale.  This requirement applies to all single family residences, including single family homes, condominiums, and manufactured/mobile homes.
The building code (WAC 51-51-0315) requires that an alarm be installed: (1) outside of each separate sleeping area in the immediate vicinity of each bedroom; (2) on each level of the dwelling; and (3) in accordance with the manufacturer's recommendations. The building code also requires that single station carbon monoxide alarms comply with UL 2034. There are no exceptions for properties that do not have fuel-fired appliances or an attached garage. The alarms may be battery operated and can be purchased for as little as $25 from a variety of sources.

The building code also requires that single station carbon monoxide alarms comply with UL 2034. There are no exceptions for properties that do not have fuel-fired appliances or an attached garage. The alarms may be battery operated and can be purchased for as little as $25 from a variety of sources.

In addition, effective April 1st, the building code requires a property owner to install carbon monoxide alarms when alterations, repairs or additions requiring a permit occur, or when one or more sleeping rooms are added or created. There has been a requirement to install carbon monoxide alarms in new construction since January 1, 2011.

Carbon monoxide (CO) is a poisonous gas that kills approximately 500 people in the United States every year. Carbon monoxide killed over 1,000 Washington residents between 1990 and 2005. You cannot hear, taste, see or smell carbon monoxide. In many cases of reported carbon monoxide poisoning, victims were aware they were not well, but became so disoriented that they were unable to save themselves by either exiting the building or calling for assistance. Young children and household pets are typically the first affected.

Carbon monoxide alarms are intended to trigger at carbon monoxide levels below those that cause a loss of ability to react to the danger of carbon monoxide exposure.

Multiple offers

Everything old is new again.  The multiple offer frenzy is back in the greater Seattle area!  I spent time with my local banker today, and we were talking about market trends.  He surprised me by saying, "well, it is  a buyer's market."  I wondered where he's been.  Certainly not following me and my buyers as we rush to a listing, only to see multiple buyers lined up to take a look inside.  What is happening?  The market is changing.  Just this last week, our Coldwell Banker Bain office in Bellevue had more than a dozen multiple offer situations.  The escalator clause is back!  One agent said she backed away from writing an offer for her interested buyers when she learned there were already 24 offers.  Buyer's market?  Not here!  Homeowners, this is the time to list your homes.  We have a buyer looking for your home. Give me a call and I'll help you determine what your home will sell for.  Buyers....beware.  If you find a home you like....be prepared to act quickly and don't be surprised if the home sells for more than asking price.  Oh yes, everything old is new again...multiple offers and bidding wars, here we go!

A Fresh Look at Our Current Market

There seems to be a misunderstanding of what is going on in our Seattle area market.  Buyers still feel in control, citing the volume of short sales and foreclosures.  What they have heard on the national news is not necessarily what is happening in our neck of the woods.  From 2010 to 2011, we have seen a decrease in the number of foreclosure filings as distressed homes have been sold off.  Less than 12% of King County homeowners are underwater on their mortgages.  Since our Eastside sales prices are down about 30% from the glory days of 2006-2007, sellers have not been eager to list their homes.  This has kept our inventories low.  In fact, King County currently is at half of the inventory we had in 2008 and the number of pending single family residences in December 2011 was at the highest level since 2006.  In short:  we are selling off the homes on the market and we are not replacing them with new listings.  The old rules of supply and demand hold true:  if the supply goes down, then prices go up.  Since we have a critical under supply of homes in Seattle and especially on the Eastside, prices should start to creep up. 
Buyers who see a home and think they will take a look at it in a week or so are likely to find they will not have the opportunity to see the inside of that home as it will likely be pending.  I recently listed a home in the Bridle Trails neighborhood in Bellevue and on the third day had three full price offers.  I'm sure many other buyers were looking forward to seeing that home the following weekend, but they missed their opportunity.

Yes folks, we now have less than a three month supply of homes to sell in King County.  A balanced market which favors neither buyers nor sellers is generally considered to be a five month supply. Sellers, this could be your year to see a turnaround.  And buyers, get ready for a fast and furious 2012....we are officially at the bottom of the market:  the bell has rung, the interest rates are fantastic and if you want to buy a home: 2012 is your year to buy!  Call me if you want to start searching for your next home: 206.383.3119.  It would be my pleasure to help you find the home of your dreams.