Kenmore Undressed

Foreclosure: A Sad Reality

I’ve avoided using the “F” word because it’s one of the most devastating situations for anyone to go through. It symbolizes the anxiety and fear that many home owners face even in good markets. Even one of my neighbors here in Kenmore went into foreclosure recently. Fortunately (so far), the Seattle Area has not seen the huge numbers of foreclosures that CA, NV and numerous other states have experienced. Nationwide, foreclosures are up 115% as compared to Washington State at 20%. See more about this in the September 19th Seattle PI article entitled:  “Foreclosure rate here below U.S. Average”.Also, I’ve attached a powerful 12 minute film clip from http://mortgagenewsdaily.com   that shows the sad reality of foreclosure in an area of the country that has been hard-hit. It’s worth watching. Just click on the pictures below:

Insatiable Curosity: A Realtors Biggest Headache!!!

Ouch! Being curious can be very interesting but it can also hurt my brain. At the beginning of each month I like to ponder local real estate statistics. Because my practice focuses on North King and South Snohomish Counties, I spend time thin-slicing some of the general numbers to try and find out what’s really going on out there in the marketplace. Today I wanted to look at the September sales figures for King County. I think you’ll find this interesting:

Of the 1283 single family homes that sold in September, it’s interesting to note that the average days-on-market is 72 days. Frankly, I find this quite positive in very difficult times. If I were a betting man, I’d say these sellers and their agents did a good job of gaging the market. In order to examine this more closely, I chose to focus-in on those homes that sold from $400,000 - $449,999. I did this because the price is close to average for King County. This particular price-point sold in 64 days which, even in a good market, is a respectable number. So what happened? Here are some details:

1) Only 57% of the homes in this category actually sold in the 64-day time period. 84% of the remaining 43% took well over 100 days to sell.

2) Only 6% (25) of the 1283 sales sold for 100% of the list price. On average, homes sold for 94% of list price. 25 of the homes sold for under 90% of list price.

3) A surprising 95% of the sold homes were re-sale.

Based on these findings, I believe it’s more important than ever for homeowners to think carefully about selling their homes in the current market. There is obviously a group of buyers out there who have money to purchase a home. How you go about pricing and marketing your home are extremely important. Also, if you choose a real estate agent to help you sell your home, make sure he/she knows your local market. Make sure he/she has a concrete plan to “correctly” market your home. Finally, make sure the potential agent has your best interests in mind.

Insatiable Curosity: A Realtor’s Most Important Asset

 I’m one of those guys who is curious about almost everything. When it comes to my reading list I’m usually plowing through 3 or 4 non-fiction books, several magazines and a huge number of publications from my Google Reader. I like to stay informed. It’s a big part of my job as a real estate agent and, believe me, one can never keep up with the mountain of information out there. I thought it might be fun to show you how I go about the process of formulating some of my professional opinions about the real estate market. Let’s take the current financial meltdown as an example. There are a lot of economists claiming that the one commodity most needed in the market today is ”confidence.” I don’t disagree with this idea, but how do I articulate the notion with some facts my clients can understand? Here’s how I research subjects like this:1) I first went to Inman News which is an excellent source of information. There I found an article entitled “ Divided views on homeownership benefits” which points out that a large percentage of both home owners and non-homeowners intend to stay in their current residences for the next 12 months because of the turmoil in the marketplace. If you want to read the whole, fascinating article click on the picture below:You’ll notice that this article has a link to a survey (highlighted). This survey is entitled ”Financial Mortgage Fallout Creating ’Crisis of Confidence’ Among Home Buyers“ and was compiled by Trulia which is one of the most comprehensive, well-respected real estate websites today. The article is an enlightening and somewhat disturbing assessment of homeowner confidence in the current market. Click on the picture to read the whole article. Once I read these articles, I can then pass on relevant information to my neighbors here in Kenmore, WA. As it turns out, most Americans still believe in home ownership but many buyers are putting their home search on hold until the economy settles down. I believe that knowing these facts makes me a better realtor and helps me serve my clients in an intelligent way. 

Kenmore Statistics: Sales Figures from September

It’s October 1st and we are quickly coming to the end of a tumultuous year in real estate. September wasn’t exactly an active month for the sale of single family homes in Kenmore. I ran reports for the sales from this year and September of 2007. Sales were down -55%: 18 homes sales in 2007 and 10 this year.

Here are the sales from last month:

Several key statistics are of note: 1) even though the report showas a 100.14 Sale Price/List Price ratio, the actual number is more like 94% and, 2) days-on-market are 138. Compare this to last year:

You’ll note that the days-on-market were only 49 last September. The Sale Price vs List Price ratio was slightly higher at 97%. One bright spot is the fact that the median prices rose slightly from last year.

The real challenge facing the market today is the inability of buyers to obtain financing due to the severe tightening of credit. We may see this trend continue until Congress passes the current bailout legislation.

New Construction Numbers in Kenmore, WA - Resale Is Doing Much Better

It should be no surprise that new homes (those built in 2008) have not been selling at the brisk pace of several years ago. Far from it. Since January 1, 2008, twenty-five (25) newly constructed homes have sold in Kenmore.  Resale has been doing much better at 101 sales. 50% of these homes sold for under $500,000. All of the new homes sold for over $500,000. I believe that the current market trumoil is taking its toll on home sales in general; however, I also think that new construction is facing some tough competitioin from the resale market. There are almost 2-times as many resale properties on the market right now. They are selling for about 8% less than original list price which means those sellers are being more flexible in their negotiations.

Overall, sales of new homes has been lethargic. Please turn your attention to the charts below:

As the turmoil in Wall Street unfolds and we move into the 4th quarter and Presidential elections, I wonder how the real estate market will fair? Properties are selling in Kenmore in the face of some fairly scary economic times, so it’s not the end of the world…yet. The important thing to recognize is that you should do your homework before jumping into (or out of) the real estate market.

Open Houses: Are They Effective? Are They Necessary?

I recently conducted a market analysis for a family who wants to sell their home. They asked me whether or not open houses are effective or necessary. Real estate agents get this question from potential clients all the time. It’s a good question, yet,  I’m not sure it’s the right question. The right question is: If you conduct open houses, what will happen? It’s a Steven Covey thing: “Begin with the end in mind.” The answer should be: “They help sell your house.” Well do they? Check out the video below for one possible outcome: 

Funny, huh! Look, I have years of experience listing homes and holding open houses and I’ve drawn my own conclusions about their effectiveness (purpose) . I’ve also asked colleagues with decades of experience what they think about open houses. Here’s the concensus:

In today’s marketplace, open houses do not help sell a home. The last decade has brought technological changes to the marketplace that have essentially eliminated the need for open houses. When my wife and I were looking for our first house (in the late 80’s) open houses were the only way one could approach a neighborhood.  Realtors had to spend time at broker’s opens and regular Sunday open houses to examine the inventory. Today, the Internet has transformed this experience with on-line photos, virtual tours (in HD photography!), personalized home websites, etc.. The average buyer has access to a tremendous amount of information regarding  particular homes, neighborhood/city statistics and demographics. Certainly, 99.99% of consumers will visit homes to touch and feel the inventory; however, the fundamental mechanics for doing this have changed. 

So what does help sell a house? I believe that sellers and their agents need to spend more time discussing and implementing the right marketing campaign for a home. This should include but is not limited to: print media, addition to the Multiple Listing Service, yard sign and directional signs (if they are permitted………they aren’t legal in Kenmore), flyers, etc.. The real important marketing occurs in a whole new array of Internet/cyberspace arenas, especially through Internet Syndication. In the future, I’ll explain more about Syndication. Think of it as blasting your home out on the Internet to a huge number of potential customers. Unfortunately, many agents have no idea (or money) to accomplish this.

Ultimately, most agents like to hold open houses to meet new clients rather than actually sell the house they are holding open. The bottom line is that very few homes are actually sold because the agent held an open house. And a final thought: Today, fewer and fewer homes are being held open. In my community, Kenmore, WA, very few agents hold open houses on the weekends with the exception of the new-construction sites.  

Real Estate Statistics: September is Ending Soon

It’s always sobering to take a look at things going on in your own neighborhood, especially when so much attention has been focused on the “big picture” market challenges. Let’s take a moment observe what’s going on here in Kenmore:

There are a lot of active listings in Kenmore today. The majority of these homes are selling at the  $450,000 - $600,000 price point. Of the 214 active listings, over 70% have reduced the list price. The average days-on-market don’t look terribly bad; however, since the beginning of September there have only been 5 closed sales. Some good news is that there are 26 pending sales; however, most of these homes have only gone pending after well over 5 months on the market. Let’s hope some of them close at the end of this month.

The charts below are sobering:

I’ve expanded the report below so you can see the details.

The numbers speak for themselves. Almost 36% of the homes for sale in Kenmore are new construction. The average days-on-market are running close to 200. As I mentioned above, very few of the pending sales right now received offers quickly. It’s taking a long time to sell a house in Kenmore.

Kenmore Newsletter: An Excellent Publication

I received the Kenmore Newsletter Fall 2008 edition. It’s an excellent publication. As a resident there are interesting articles in the newsletter regarding topics such as the Northshore Fire Department, the King Co. Library System and the Utility District. Also, as a real estate agent, it helps me understand some of the “big picture” happenings in Kenmore. One other benefit of the newsletter is that it reminds me to visit the City of Kenmore’s website, which contains a huge amount of information about our community. The web address is http://www.cityofkenmore.com/. For those of you who don’t live in Kenmore, you can see the whole newsletter by going to the website, click on the “About Kenmore” icon which takes you to the next page. Click on “News” at the top. This brings you to a page of events. Scroll down to publications where you will find an on-line copy of the newsletter. I hope this helps give you some insight into our community. Kenmore, WA is my home and I really like it here.  

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.

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.