Kenmore Undressed

Hi, Meet Crybaby (American) Capitalism

Have you ever lost your job and had a hard time paying your credit card bills, or got behind on your mortgage, or had medical bills or your spouse left you with a mountain of debt? Have you ever listened to people talk about “those folks” who should take personal responsibility for paying their debts! If so, then you need to meet Crybaby Capitalism. He has a solution to your financial problems. See if this works for you next time you need help:

Hi, I’m Crybaby Capitalism. You’ve been hearing a lot about me over the last several months. Things have been going really well for me the last 30 years. I’ve been able to make a LOT of money by wrapping up debt in security instruments (that no one, not even the smartest analysts can figure out) and selling them to greedy investors. After all, everyone knows that GREED IS GOOD. Wasn’t that the famous line in the film “Wall Street?” It didn’t matter that the paper we were pushing wasn’t worth as much as we said it was. It didn’t matter that what we were doing was borderline fraud. After all, no one was really looking that carefully, especially Uncle Sam, who has been demasculated by years of deregulatory legislation by both political parties.

Now that a lot of my friends: Banks, Security Companies and large corporations have gone bankrupt, they aren’t happy!!! They don’t think it’s FAIR that they lost money. After all, they were all practicing FREE MARKET ECONOMICS. Milton Friedman said that no regulation is a good thing. Keep the bureaucrats out of business. It’s all about supply and demand. It’s all about efficiency. It’s all about a rising tide lifting all boats. It’s all about creating wealth that will TRICKLE DOWN from the wealthy to the rest of you poor dumb losers.

But look, how can you ignore my friends:

This is AIG.

This is Lehman Brothers.

This is my other friend WALL STREET.

BUT WAIT, we found a solution to losing so much money. We just cried loudly enough that THE GOVERNMENT is bailing us out. It was so nice for President Bush to announce today that the taxpayers will be contributing billions and billions of dollars to help us out. We promise to pay you back!!! Really! 

Puget Sound: Heading Toward a Recession?

Local Economist Dick Conway, co-author of the Puget Sound Economic Forecaster, was interviewed on KUOW (our local National Public Radio station) this morning. He had grim news: after 10 years of huge growth in our region both in jobs and real estate values, we have finally come to a screeching halt. According to Mr. Conway, the turmoil in international credit markets and on-going problems in the housing markets have finally affected Puget Sound. He predicts a disappointing 1% growth rate from 2007 - 2009. Even though there are job opportunities at Boeing and Microsoft, our unemployment rates are increasing: not good news.

No More Cheese! It’s Time for the Real Estate Industry to Grow Up

Spencer Johnson’s wonderful little book entitled “Who Moved My Cheese” should be required reading for EVERYONE in the Real Estate Business. This includes, but is not limited to: real estate agents, the brokers, the sellers, the buyers, the lenders, the title companies, the appraisers…………………..well, you get the picture. Johnson’s fable is a cautionary tale of what happens when we become complacent; when we quit paying attention to what’s going on around us. Most importantly, it warns us against self deception. Our industry has been plagued with a lack of candor and honesty for some time now. I my town, Kenmore, WA there has been a huge inventory of homes for sale and it’s only now, after many months, that sellers have begun to lower asking prices. This should have happened sooner.

As I write this, the real estate industry is being transformed. You can hear the cries and complaints of the agents and lenders leaving the business; you can see long-held beliefs regarding commissions and agency relationships disintegrating. The pieces are being examined carefully. Owners no longer have the luxury of spending unearned equity to sell their homes like chips at the card table. On the other hand, buyers are being forced to prove their financial worthiness to purchase a home. Aubrey Cohen’ssobering article in the Seattle-PI illustrates the current state of affairs. Ironically, the changes are forcing us to be more honest with our clients and ourselves. Time for us to grow up.

Mr. Freeze, The Financial Curmedgeon - Why Did I Come Back to the United States?

I, Mr. Freeze was on vacation in August.  Mr. Freeze was visiting a very famous Eurpoean country (whose name shall remain anonymous to protect the innocent) where the people spend a lot of time eating really good food and drinking coffee; where the cities have places for people to hang out without being run down by cars; where they have Art. He didn’t even need a car to get around because, good golly, they actually have trains, light rail, trams, subways and buses (transportation that the public uses!).   

Mr. Freeze needed a break from real estate. My wife (Mrs. Freeze is one tough gal) put me on a “MEDIA FAST.” She knows Mr. Freeze is a media junky. Mr. Freeze is usually very grumpy about things because he spends a lot of time thinking about all the problems in the U.S. “You will not listen to the news……..especially news in English!” THE RESULT: Mr. Freeze was in a happy place for five weeks.

But then…………………………………………………………….MR. FREEZE CAME BACK HOME and Mr. Freeze was shocked: Hurricane Ike was having his way with Texas; our financial institutions continue to go bankrupt; Fannie Mae and Freddie Mac have a hang-over; the local and national real estate markets have fallen flat on their (collective) face; the national election continues to drag on and on; and the most difficult thing for Mr. Freeze to deal with is the fact that one cannot escape from the media in this country. It’s part of the fabric of American Life and it sucks. Blah, blah, blah……..The final straw was news of Lehman Brothers declaring bankruptcy. Is it any wonder that Americans don’t trust their institutions?

Mr. Freeze is taking a deep breath right now and is heading home to cook a nice dinner for Mrs. Freeze. He learned a thing or two about cooking pasta in that Eurpoean country! Yummy!

Isn’t it Cold in the Seattle Area? You’re so far North!

Isn’t it cold in Seattle? We were asked this a lot in Italy. My realtives had a hard time believing that the weather in Seattle is temperate and relatively mild. Because we lie so far north, even most people in the United States think of Seattle as a cold place like Maine or Upstate NY. The fact is, the weather in Puget Sound is unique. Even though Seattle is further north than all other major US cities, we have an oceanic climate. As a realtor, I’ve worked with a lot of relocation clients and it’s always fun to see their faces when I mention that Seattle is a place where the grass is brown in the summer and green in the winter. We are famous for the rain, but most people don’t realize that we have virtually no rain from mid-July to late September. 

Some of my friends told me that last month wasn’t a typical August and, since we were in Italy, I wanted to check back to see what happened. Well, I did some poking around and found a wonderful website called Beautiful Seattle that offers a huge amount of information about Seattle. One section of the site deals specifically with our climate. Below are several pages from the site. Just click on them if you want to visit the site:

In the top left of the site, click on the “select destination” menu which will take you to a whole array of topics. If you select climate you get this page:

From here you can select any number of reports regarding the weather in Seattle. So, for those of you who lived through the August weather and those who don’t live in the area, here’s what happened:

This is a very nice chart as it gives me a good idea of what the weather was like last month. It was a fairly cloudy August (unusual) and the temperatures were fairly mixed. Mid-month got really hot. I will tell you that Italy was downright brutal: mid to upper 90’s, sunny and humid. One similarity to Seattle is that most Italians don’t have air conditioning……………………..ouch!

Kenmore, WA - Home Sale Statistics for August

August was a slow month for home sales this year in King County. The good news is that there wasn’t much of a change in Kenmore from last August. Take a look at the chart below:

There were only 17 sold homes in Kenmore last month, but one year ago there were 18 sales. This is only a 6% drop as compared to an overall drop of 43% in King County. Median prices have dropped a bit since the beginning of the year. In King Co., they have dropped 7% (the median price having dropped from $460,000 to $410,000. Kenmore faired slightly better with at drop of only 5% (from $453, 450 to $430,000). 

In the Seattle Times article from September 10th entitled, “King County home prices in August slide back to April 2006” we have seen a significant erosion of home prices in the area. It’s important for home sellers to understand that the market has been very tough this year. We may not see positive movement until 2009 as we are fast approaching the national election and we will not see significant changes in the capital markets until the Fannie Mae/Freddie Mac bailout actually produces some results.

Another factor to consider is the absorption rates of homes in King Co. Remember, absorption rate means the percentage of homes absorbed (sold) as compared to the number of homes available in a given time period. The charts below show, clearly, that home sales are stagnant. Even with a high inventory and dropping prices, buyers are holding on to their money and the lenders continue to be ultra-conservative. As a realtor, I think those of you thinking about buying a home in the near future are going to have a huge opportunity. The most important thing for you to do right now is consult with your lender to ensure that you can get a loan, then start looking now. Home owners, unless you must move right now, take a deep breath, enjoy your home and exercise some common sense.

When to Take a Vacation: When Nothing is Going On!

We met a very nice couple from Richland, WA in Santa Margherita, Italy in the park.

Now that my jet-lag has melted away and I’m thinking about real estate again (a little), I have a confession to make: I DIDN’T THINK ABOUT WORK AT ALL FOR THE LAST FIVE WEEKS. This really hit me when we bumped into a couple from Richland, WAin Santa Margherita. We met them in the town plaza and after we talked about Italy, they asked what we do. When I said I am a realtor they asked how the market was in Seattle and, half jokingly, asked how I can take such a long vacation? The questions hit me hard because 1) I wasn’t paying attention to the market and, more importantly, 2)  a feeling of guilt washed over me….gosh James you should be home working hard, making money, being productive (Mr. Freeze, The Financial Curmudgeon reared his ugly head). I simply told them that nothing was going on back home so it was the perfect time to take a vacation. We finished up the conversation, said goodbye, and we went on to spend another fantastic week in Italy.

Now that I’m back, was it really a good time to go on vacation? As it turns out, the answer is an unequivocal YES. Check out these stastics from King & Snohomish Counties for August:

KING COUNTY SINGLE FAMILY HOME SALES

Total sales of single family homes in King Co. were down 41% from last August. Kenmore didn’t fair too badly. 18 homes sold last August and 17 sold this year (-6%).

KING COUNTY CONDO SALE REPORT

Condo sales in King Co. were down a disturbing 65% from last year. Kenmore faired even worse with only 3 condos selling as opposed to the 21 in August of 2007 (-86%).

SNOHOMISH COUNTY SINGLE FAMILY HOME SALES

Single family homes dropped 52% in Snohomish Co. with only 429 homes selling (885 in 2007).

SNOHOMISH CO. CONDO SALES

Snohomish Co. condo sales faired slightly better than King Co. dropping 55% from 264 in August 2007 to 120 this year.

Built to Last: A House in Sardenia

Yesterday I asked the question: How Long Should a House Last? Most of my colleagues and friends thought houses generally last about 50-100 years. I thought you might find it interesting to see how homes are constructed in Italy. I was fortunate to meet friends of my family on the island of Sardegna who are currently building a new home. They were quite gracious in allowing me to take some pictures of the work-in-progress. I’m not familiar with the way homes are built throughtout the US, but I have seen enough construction over the years to know that most homes are not built like this:

All the homes are built with these terra cotta-like blocks. They have a honeycomb structure in the inside. You can see this in the picture below:

One of the things I wondered about was how plumbing and electrical systems were placed in the walls and floors. In a stick-built home the electrical & plumbing is added before the walls are completed. Well, the Italians put the wall up and then chistle grooves right into the block, then cover the wiring or pipes with a cement grout.

The hot and cold lines run on the floor. Ultimately, these pipes will be covered with a cement product and over that, the tile floor will be installed. I was amazed by the quality of this work.

Homes in Sardegna have beautiful facades. Here in the northwest many of the ornamental rockwork is a resin product.

As you can tell, this is going to be a beautiful home. I suspect this home will last for several generations.

How Long Should a House Last?

Europe is a continent of homes and buildings that are (or seem to be) ancient by American standards. It’s what makes visiting countries such as Italy and Spain so fascinating. Not many homes in the US are more than a century old. In the Seattle area, the oldest structures date back to the 1880’s and, frankly, many older homes in this area don’t hold up that well. Let me be bold and suggest that most homes in the Seattle area are destined to look like this beauty in Kenmore:

Of course, the longevity of a structure is a function of the materials used to build it and the care and maintenance it receives. An engineer once told me that homes are constructed with the materials available in a give area. In some places, they’re built with brick, some places use rock and here in the Northwest we use a lot of wood. Nevertheless, I can’t help but think that the 300 year-old Rustico below was destined to last a lot longer than the average new construction house in Seattle.

By the way, this home is called Il Mulino di Torrigiani and is currently a rental villa in the hills above Lucca, Italy. My wife and I know the owners who recently did some remodeling to the interior. I was amazed by the fact that many of the key beams and other infrastructural features  of the rustico are original. This home was built to last.

There are a couple of other homes in my neighborhood that raise the question of how long a house should last. Take for example this house which was clobbered by a tree last year in a wind storm. The owners have chosen to keep part of the original home which is brick, and add on using modern building products: 

This house will probably look really nice when the renovation is completed. Then there’s this house which is will have eight new neighbors in the next year. A builder is reconfiguring the land around the house and the poor little thing looks as if it’s going to plummet into an abyss:

So consider this: will this home (built in the 1960’s) last longer than the new homes that will soon surround it? I did some poking around on the internet and spoke with a couple of builders who point out that an average home should last around 70 years. If one breaks the home down into its component parts, some will naturally wear out more quickly than others. One of the best sites I found that addresses this topic is This Old House.  The article is entitled: “How long things last.” It’s a great reference guide for any homeowner who ever wondered when the hot water tank should be replaced or how long the furnace should last.

There’s More to Italy than Tuscany: Varese in Lombardy

As we drove through the lush, green roads north of Milan our hosts, Fabio Zerini and his wife Laura, pointed out that “this definitely isn’t Toscana!” In fact, our last two days in Italy were spent in a region north of Milan better know as the Province of Varese in Lombardy. We were fortunate to meet Fabio, Laura and a number of other “Lombards” in Sardegna. They are good friends of my cousins in Lucca. When they found out that we were spending our last two days close to their home in a town called Vergiate, they insisted on giving us a tour of the area. I’ve got to say: no, this region is definitely not Tuscany. It’s more modern and spread out. It lacks the cypress trees, vineyards and old rustico homes; nevertheless, we were charmed by the warmth of our hosts and impressed by this unique part of Italy. As always there were some wonderful surprises along the way:

Varese is truly beautiful. Modern and stylish, it is a unique blend of the old and the new. We were there on a Saturday evening and I was amazed at the number of younger people who filled the streets and plazas.

This building dating back to the 1500’s is now home to a number of small shops. This was a stunning example of how Italy blends the old and the new.

The city is full of deliciously stylish clothing stores, cafes and beautiful architecture. We were amazed at how beautiful Varese is. It is also close to a number of beautiful lakes (Lake Cuomo among them). Although we didn’t have time to explore more of the lakes, I did manage to take a couple of pictures of Lake Comabbio:

I did want to say a few words about Vergiate, where we spent our last two days in Italy. First, there’s not much to say. It’s a very small town with some small shops and restaurants. If you drove through it, you’d hardly notice it exists……………..but here’s why Italy is so compelling and wonderful: there’s always a surprise lurking out there to charm and warm your heart. On Sunday we got up rather late after spending the evening with Fabio, Laura and friends. We were hoping to catch a train over to Lake Maggiore and do more sightseeing. Unfortunately, we missed our train and had to stay in Vergiate. At first this did not seem promising but we decided to go for a walk and investigate the town. As usual we were pleasantly surprised. The town has a beautiful little church:

But, the best adventure was in a local restaurant. We had seen this restaurant when we first arrived and thought it looked good. Inside the restaurant was small. There was one waitress and a couple of locals having lunch. We were  hungry so we ordered risotto with mushrooms, grilled vegetables and some wine. Nothing special………………….until the owner brought out the risotto. Check this out:

She served the risotto from the middle of this huge round of cheese! By the way, the risotto was delicious. It just goes to show you that no matter how ordinary things seem to be in Italy, there’s always something special around the next bend.