Vintage Hilltop Home on a Corner Lot

drizell November 16, 2007

THIS is the reason so many young Seattlites are moving down here. Nice home in an up and coming neighborhood. Despite the nice exterior photo, this looks like a bit of a fixer. Everything on the inside looks dated. Gimme some help with the down payment and I’d buy it.

CJ November 16, 2007

Your still living in the past. No down payment is what got everyone in trouble and fearful of the market. This is a great buy, but with fewer buyers in the market a tough area to sell. Also the perdiction of Seattlites running down here to buy is an illusion or the inventory would be flying out the door at the prices that are available today both resale and new construction. There is so much leverage in the market a buyer can make a great deal for the next few months but they just are not out their buying. Winter, Spring always picks up, its just a matter of being able to hold on to your inventory till then. Seattlites are taking advantage of some really good buys in their area rather than struggling to make the commute everyday. We all know there are great options but not realistic for alot of people who do not work in the down town core of Seattle. I could not sit on I5, 405, I90, just to take that Bellevue job at $5000.00 more a year. With the lack of good rentals due to all the conversions and selling off of investments before the sky falls, the existing inventory you would think would be a great time to buy with all the incentives available for investors, but of course investors want intrest only and that does not exist with a lack of proven escalation. So tell me what is going on in this Tacoma market. How can we fix this to keep the market moving. Recently I had a conversation with a prominant city employee struggling to find a new home. (Struggling) Not because of the pricing, they acknowledged that Tacoma’s pricing is great compared to alot of other areas. Their struggle was with the condition of the available properties in the limited areas that they are looking to live. They do not want to buy someone elses lack of attention at a finished home value. Meaning buy it at $400k, it needs $150K of updating and with the market the way it is they cannot count on a sale in 3 to 5 years with a return on their investment. Also the time and work is not worth the effort. Sorry to go on but it is frustrating to feel this trickle down effect and not know how to fix it.

Jim November 16, 2007

CJ, thanks for “going on” – you summed up the situation very concisely, I think. You sure explained some things to me.

Erik B. November 16, 2007

It’s two blocks from the Tempest Lounge. One more block and you’re at the Monsoon Room. What do you think?

This house would go for $450,000 in the North End (with no view) and likely $600,000 or $700,000 in Seattle depending on the nighborhood.

Anyone willing to take a bit of a risk and bet the neighborhood will improve and jump in?

Mouse November 16, 2007

CJ says a lot of the things others aren’t willing to say. The market may be in an opportunistic state, but that doesn’t mean squat unless people take advantage of it. I used the math equation from an article in the Tribune a couple weeks ago to see how long it’s taking to sell a home in Pierce County right now. I added up the number of single family residences for sale in the county currently and then divided that by the number of homes that sold in the last thirty days. By that equation, which has it’s flaws but still shows a rough average, it’s taking 10 to 11 months for listings to sell in Pierce.
If there was ever a time for listing agents to get REALLY creative (and I’m not talking about more balloons and Starbucks cards) it’s now.
Does anyone have some suggestions on how you’re overcoming the slow times and also getting more people to look at your listings?

Brotha E November 16, 2007

Great take CJ. Thats exactly what’s going on. I know your supposed to stay upbeat but I just can’t get myself to tell somone to buy today. We are in a very different RE market than ever before (i.e.mortgage crisis, forclosures,inflation pressure). Anyone heard this rumor? There are 7 potential large developers in the Tacoma area that could be going bankrupt. Any guesses?

Erik S November 16, 2007

Hmm…I wrote a pretty long post but mishandled it somehow so that it didn’t “stick”. Perhaps it’s just as well. To be (relatively) brief:

The current (newstand) issue of Fortune Magazine contains an interesting article (titled “How Low Will It Go?” or something like that) in which housing prices in the Seattle MSA are forecast to decline 19.5% over the next five years. It’s just a forecast, of course, but that’s sort of in line with the magnitude of unusual/unexplained gains experienced recently. Add in the cost of selling a house (mostly commissions and excise taxes) and a buyer might not reach the break even point for 8-9 years. Who can blame buyers for not being excited by a modest discounts from asking prices that nobody is interested in paying?

Basically, prospective homeowners shouldn’t be looking at houses as cash cows anymore. Instead, I expect that the old idea of a house as a place to live (with some LONG-TERM financial benefits) is going to come back in a big way.

snoopy November 17, 2007

I am a potential buyer who is willing to wait. It is a good time to be a renter might I add. The amount it would cost to own the home I am living in (even with at least 10 percent down) would result in a monthly mortgage payment nearly 2.5 times more than what I pay for rent. I’ll wait another 10 months and see if it is truly a “buyers market” where I can actually afford what is on the market.

CJ November 17, 2007

Snooze you loose! You will be in the game instead of ahead of the game. Just like the rest of Tacomas procrastinators. This is exactly why this town continually follows the leader instead of being the leader.

Erik S November 18, 2007

Buying high and selling low is not a way to be a leader. Spending more than one can afford is not the way to be a leader. Some people are willing to gamble and leave their families and/or creditors holding the bag if the dice aren’t friendly in this era of instant gratification but it’s hardly laudable behavior.

Crenshaw Sepulveda November 18, 2007

Unless you are the lead dog the view never changes.

CJ November 18, 2007

It is all just a matter of simple economics isn’t it? We made our own mess by flooding the market with inventory which will drive the pricing down to compete and when the dust settles and the inventory is liquidated then the values will do what they do. Economics 101. I know that if you are looking for the best deal to make then this is the time of year to make it when sellers know they have to compete with 50+ other sellers and any offer is worth negotiating with. If you do not have a new roof, new kitchen, updated bath and fresh paint and a fluffed up yard they didn’t even stop to get out of the car unless you were the best deal per sq ft in town. They went down the street to the other 50 that do. So the seller who wants to sell will sell at a really good price today or they do not really need to sell and a lot of people are wasting their time and money hanging signs to promote them.

Brotha E November 19, 2007

CJ,
Normally I would agree that its simple Economics 101 but these are not normal times. Those that are selling now are not wanting to sell they have to sell, and those that are buying really should wait (Snoopy). This isn’t just a cyclical thing that we are experiencing this was created by greed. You are correct though that we made this mess. 100% financing, relaxed lending standards! With the amount of arm’s that will be reseting through 08-09 do you really think its wise to be telling people to buy? I understand that we have a pretty good economy here but when the market is flooded with homes people couldn’t afford in the first place prices have to fall. Sure owning has always been better than throwing your money away on rent but if you over pay isn’t that the same thing? Yes, it will work its way out but not for a couple of years.

Mouse November 19, 2007

Interesting thing about this particular home… I called to take a look at it and was told that the owners require a signed purchase and sale agreement (contingent on viewing) before scheduling a walk thru of the home.
Now… there’s a way to get no one to look at your listing in a tight market!

Jake November 19, 2007

Probably has an uncooperative tenant.

CJ November 19, 2007

I disagree with the not wanting to sell they have to sell. A lot of the inventory is people who are in denial of the market adjustment and wanting to ride the wave of last years pricing before the sky falls. The people who are waiting for those adjustments are not all going to fall off the face of the earth and loose their homes. A lot of them knew exactly what they were paying for and are working to live within the constraints of the mortgage. I agree there will be a lot of forclosers in the next few years, the new twist on them will be all the principal that was thrown on the back end of the interest only’s creating an unrealistic dollar value today. We always have had forclosers. People always assume the banks are going to have to sell them at lower prices. I have yet to see a bank give any money owed away. I am unclear about why readjusting arms would affect a potential buyer in todays market. Rates are great and as long as you have good credit this is the perfect time to buy. You can make a better deal, buy with a lower rate and not be throwing your rent dollars at someone elses mortgage, not to mention your closing cost will help with your tax deductions and your interest with soften your tax burden. I could go on and on with why this is the best time but if you’re trying to teach a rock to roll, pray for an earth quake.

Crenshaw Sepulveda November 20, 2007

Probably has an uncooperative tenant.

15 | Posted by Jake | Nov 19, 01:37 PM

Or maybe a tenant that knows his rights under Washington State law.

Jake November 20, 2007

I beleive 24-48 hour notice to the tenant is sufficient under Washington State Law to show the property to an potential purchaser.

Crenshaw Sepulveda November 20, 2007

Indeed, the landlord must give proper notice before entering the tenants home. Put a key box on a house and every agent in town is showing the house willy nilly and how can proper notice be given to a tenant. I’ve been with agents that have taken me into houses that we’ve seen just driving through a neighborhood. Who knows, maybe some of them were rented. If this is a matter of proper notice I don’t think the tenant is being uncooperative. You pay rent, you sign an agreement, you’ve got some rights in the State of Washington. Doesn’t make you uncooperative. Some one wants me to give up my rights, they are available, for a price.

CJ November 20, 2007

Crenshaw
Do the realestate profession a favor and call this agents broker. As a seller with a home listed I would be furious if an agent went into my home when clearly I have a contract with a broker that says “call first” “appointment only”. If the home is vacant it will say “vacant show any time”. Agents out driving around usually have cell phones and better be making the call first to check on the status of any home before they open any door. Run as fast as you can from who ever you chose to get in the car with and drive around just opening doors. I just sold my rental and the tenant had no idea that I was considering selling. It was a fast decision to complete a 1031 exchange. She was the contact; she was given 24 hr notice. She chose to ignore the calls and also not allow showings unless I was contacted and made the call myself to say “here is your notice”.

Jake November 20, 2007

This is from the Tenants Union of Washington State:

Except in cases of emergency, the RLTA (RCW 59.18.150) requires landlords to receive a tenant’s consent before the landlord, manager, maintenance or other workers can enter a tenant’s apartment or house. A tenant cannot unreasonably deny access to the landlord. The required notice periods:

A landlord must give 24 hours advance notice to the tenant if the landlord wants to show the rental to a prospective tenant or purchaser.
A landlord must give 48 hours advance notice to a tenant if the landlord wants to enter to do work or an inspection.
The landlord does not have to give advance notice if they must enter in an emergency.
If the landlord leaves a note on the door or a message on the tenant’s answering machine this is adequate notice to enter. If the tenant doesn’t contact the landlord and say “no”, it means “yes”. The tenant may reschedule at their convenience if necessary. Remember, though, that a tenant cannot “unreasonably deny access” to the landlord, so don’t reschedule for next year. It’s also always a good idea to communicate with the landlord in writing when rescheduling.

There is also a feature on the keyboxes that I have never seen used. It is a CBS code (Call Before Show). You have to call the agent, owner, or tenant to get the code to unlock the keybox. You can also program the times and days the keybox can be open.

DavidS November 21, 2007

Just a thought on the cost of buying v. renting. There is a rental property for sale that is very similar to another home that was purchased a year ago. The monthly cost to purchase the property for sale would cost about 2.5 times the current rental rate.

On place purchased a year ago, the interest alone is about 1.5 times the rental rate of the place for sale. This additional 50% mark-up would be the price to have the opportunity to invest in a home. That’s a lot of losses each month to make up for at the time of sale.

If I wanted a place to live for 3-7 years rather than a long term home, renting certainly seems to be the right choice – today.

CJ November 21, 2007

Please sit down with a lender who can give you the benefits and pitfalls of rent vs own.

Jake November 21, 2007

Lenders usaully don’t even go into the tax benefits of owning. That is where you get a “*” and a disclosure stating you should talk to a tax professional

Erik S November 21, 2007

Fortunately, at prices that make interest payments alone almost double the cost of renting, there is a much higher chance that your itemized deductions will exceed your standard deduction….

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