Kenmore Undressed

Weekend America: Answering the Question about the Meaning of Home

One of the most interesting programs on Radio today is Weekend America (American Public Media & National Public Radio). The program’s topic today is about the “meaning of home” and it’s an incredibly interesting and timely program. Coincidentally, yesterday I wrote a brief post about how the current financial challenges in America may change our perspectives about the true value of our homes. Are they merely an “investment” or are they more than that? Seems like a simple question but, as you’ll find, the concept of home is amazingly complex. Just click on the picture below and you will be linked to this program:

A couple of my favorite sections of the program are highlighted below. The first is “Your Stories of Home” which includes short essays by many different people around the U.S. Click on it to see more:

As a real estate agent, “The Tragedy of Stuff” strikes a particularly deep cord. In the course of doing my job, I have seen how the human tendency to accumulate things holds a deep psychological grip on our lives. Click on the picture to listen to this story.

I hope you enjoy the variety of stories told in this episode of Weekend America.

Readjusting Our Priorities: What’s a House For?

According to Steve Kerch, the award winning real estate journalist of Market Watch, the current drop in home values should remind us that house aren’t really “investments.” In his article, entitled Core Values, Mr. Kerch asks us to consider the following:

“At its core, a house is a shelter. Unless the roof caves in, there is always some economic value in that. But most people when they dream about a house or start looking for a house or actually buy one think about value in a whole different way: they think about the fireplace they can gather around with their families, the kitchen where they can show off their culinary skills, the bathroom that they won’t have to share, the schools they will be able to send their kids to, the neighbors they will be able to entertain in the backyard, the parks they can bike and hike and the community events they will be able to attend.”

The current financial turmoil has forced lots of Americans to do some important soul-searching about their lifestyles and spending habits. Many now know that they can’t use their house as a piggy bank. They can’t continue to carry balances on 10 credit cards. They also know that we are all living a little closer to….well…..home.

Recently, one of my neighbors approached me, worried a bit about the softening housing prices. “I’m afraid I’m losing value in my house.” I asked him if he was moving anytime soon and he said no. I asked him if he liked living in our neighborhood. He said absolutely, yes. I then asked him if he liked his home. He said: “I love my house.” I then told him what I’ve always told my clients: unless you’re planning on moving, houses are where you raise your children, where you cultivate joy and togetherness and celebrate life. In general they do increase in value over a long period of time, but they have a much deeper value, a value I hope Americans can rediscover.

Why Thanksgiving Matters

Two years ago, my wife and I were visiting my family in Italy during Thanksgiving. We had never been out of the U.S. during Thanksgiving, so we didn’t know what to expect. It is known as giorno del ringraziamento (day of thanks) in Italy. Not surprisingly, most Italians know little about our celebration except that turkey is involved. My family did try to accommodate us and my cousin, Caterina made rotello di tacchino, which is a filet of turkey rolled up around cheese and prosciutto pan fried and served in a light sauce. It was heavenly. BUT it wasn’t Thanksgiving……

The interesting thing is, Americans carry Thanksgiving in our collective DNA. It’s an idea that many cultures find odd. For many people around the world, every day is a constant struggle, so taking time off to be “thankful” is a luxury they can’t afford. This simple fact didn’t occur to me until we came back home.

It wasn’t long after we returned from that trip, that the U.S economy began to show signs of weakness. The real estate market was deteriorating and business got tough. As a real estate agent I have had to change brokerages and offices several times since returning. I have watched many agents leave the business and some have even had to file for bankruptcy due to the current economic situation. Here in Kenmore, WA, home sales are at a virtual standstill. Every day, more grim news comes out regarding bank failures, huge government bailouts and turmoil in the Middle East. We are, indeed, living in interesting times.

And you know what? This is why Thanksgiving matters. It matters because it’s simple. It matters because it doesn’t require advertising, corporate marketing or a religious affiliation. It matters because it’s uniquely American. It represents our deepest sense of generosity, unity and hope. And, yes, it’s the turkey, stuffing, ham, sweet potatoes, pumpkin pie and those delicious leftovers……Have a wonderful Thanksgiving.

Difficult Times for the Financial and Housing Markets

There hasn’t been a lot of encouraging news regarding the financial and housing markets these days. An Associated Press article in today’s Seattle Times entitled: U.S. home prices tumble by record in third quarter reports:

“Two widely watched indexes released today showed home prices dropping by the sharpest annual rate on record in the third quarter. But the worst may be yet to come as the full force of Wall Street’s collapse hits the economy in the fourth quarter.”

The report references the closely-watched Case-Shiller price index which  measures the residential housing market, tracking changes in the value of the residential real estate market in 20 metropolitan regions across the United States. According to the the numbers from September, home prices are off a record 17.4% in the past year. Here’s a summary of the top 20 cities:

Phoenix, down 31.9%; Las Vegas, down 31.3%; Miami, down 28.4%; San Francisco, down 29.5%; Los Angeles, down 27.6%; San Diego, down 26.3%; Detroit, down 18.6%; Tampa, down 18.5%, Washington, down 17.2%; Minneapolis, down 14.4%; Chicago, down 10.1%; Seattle, down 9.8%; Atlanta, down 9.5%; Portland, down 8.6%; New York, down 7.3%; Cleveland, down 6.4%; Boston, down 5.7%; Denver, down 5.4%; Charlotte, down 3.5%; Dallas, down 2.7%.

More bad news: The Times also reported that personal bankruptcies are up 40% in Washington State over last year. That’s over 18,000 households so far this year.

Overall, we have some difficult times ahead of us.

Picture by http://www.flickr.com/photos/frankikuka/

Are Real Estate Agents Really Working Harder? A Complicated Question

The Real Estate section of yesterday’s Seattle Times tackles one of the most fundamental and important topics in the real estate industry today: what value does a real estate agent bring to the purchase or selling of a home. The article entitled “Slow housing market means more hours, more expenses for agents,” focuses-in on the increased effort and cost agents incur in today’s tough marketplace in order to be successful.

What I find most revealing about this particular article is the following confession:

“The days of just taking the listing and putting it into the [Multiple Listing Service] and letting the MLS sell the property are gone,” said Brigitte Pascutoi, managing broker at John L. Scott Real Estate’s Bellevue North office. (quote from the article)

This may be over-stating the simplicity of a real estate transaction; however, it should be no surprise to the public or, more importantly, the real estate agents themselves that times have changed. In 2004-2007 our local market was overheated to the point of third-degree sun burn. Almost 70% of listed homes were selling each month and prices were increasing at double-digit levels. Lending was, let’s say, more liberal (this is a whole other subject) and it was truly the case that merely putting one’s home in the multiple service was enough to bring a buyer through the front door and sell the house.

Fast forward to today:

• Only 9%-11% of homes are selling each month
• There are almost 50,000 homes for sale in the multiple service
• Buyers, even willing buyers, are having difficulty obtaining a loan
• Credit markets have been frozen
• Home prices are contracting
• There is a vacuum of confidence in the marketplace
• Technology has revolutionized the relationship between consumers and the marketplace
• Owners must now pay with real money (not fake equity) to sell their home

These trends, among many others, have forced the Real Estate Industry to make huge changes in its business model. It has also revealed many of the weaknesses of agents, brokerages and business practices. I won’t go into the subject of commissions in this post, but I will say this: I’m not sure that agents are, indeed, working harder nor am I convinced that “working harder” is what they should be doing. Let me explain:

• We would not have almost 50,000 homes for sale in this marketplace if agents were advising clients to take their homes off the market UNLESS THEY MUST SELL! This isn’t hard work, it’s professional representation (something that became less valuable when the market was humming along).
• The article points out that some agents are helping owners by doing yard work, putting in crown molding, etc.. I would submit to you that this is hard work, BUT, real estate agents are rarely qualified to do this work. More importantly, they should not be expected to. An agent may recommend a landscaper or contractor to do these chores, but an agent runs the risk of taking on a mantle of expertise that he/she may be held liable for.
• Many agents have been offering FREE staging services or any number of other benefits to sellers to better market the property. Here’s something all you sellers need to know. NOTHING IS FREE IN THE REAL ESTATE BUSINESS. The article rightly points out that proper staging and preparation of a home can run into thousands of dollars. In the old paradigm, when the marketplace allowed sellers an easy sale, non of this was as important. Sellers would gladly (or maybe not-so-gladly) pay a high commission to an agent with an expectation that marketing was happening. We all know this was not the case and this lack of integrity on the part of the industry led to a consumer backlash that continues to this day.
• Finally, sellers need to start putting skin into the game. Indeed, there’s a lot of blame we can heap on agents, NAR, and a lot of other players in this industry, but ultimately sellers must realize that agents should not be expected to take on all the costs of selling YOUR home. Put another way: Don’t expect agents to take your listing at a reduced commission and then demand the agent to overprice your house, pay for staging, marketing, open houses, professional photography, landscaping, your title report………and carry these costs for the average three to 8 months it’s taking to sell a home in this market. On the flip side, if you are willing to pay an appropriate commission, demand that the agent use professional services and hold the agent accountable for these activities.

I know I’ve gone on a bit here; however, I believe we all need to be more up-front about the current state of the real estate market. There are no magic bullets. There is no amount of hard work that will make this process easier. As the article correctly points out, this is a business based on trust and relationships. I have been in this business going on eight years now and I can tell you, after helping a huge number of families buy and sell homes, real estate can be complicated, emotional and difficult. When the time comes, choose your real estate agent wisely.

Picture by mrsdalloway

Mid-November Home Sale Statistics for Kenmore

At the risk of sound like a broken record, mid-month home sales in Kenmore look like a flat-line emergency room patient. As you will see from the charts below, the inventory has dropped over the last two months. In the early autumn, Kenmore had an active  inventory hovering slightly above 200 homes. We’re down to 175. Most of the drop is due to sellers taking their homes off the market. I’m actually happy to see a smaller inventory as this gives qualified buyers a chance to purchase homes from motivated sellers:

On the flip side, there aren’t many pending sales (19) and only three homes have closed this month (so far):

Mr. Freeze the Financial Curmudgeon: Something for Everyone to Be Angry About!

Mr. Freeze the Financial Curmudgeon has been trying to avoid having an apoplectic seizure. Let Mr. Freeze tell you why…..I promise to be brief:

It was recently revealed that the Federal Reserve handed out $2 Trillion in emergency loans to a number of corporations. Gosh if it’s not one ”bailout, it’s another.” The problem is the Fed will not reveal which corporation received the loans or the terms under which the loans were given. This is in addition to the $700 Billion bailout (rescue) that was shoved  down the throat of Congress. Henry Paulson can’t seem to get his story straight on that money.

DO YOU TRUST THIS MAN?

Standard operating procedure for the current administration is to conceal facts from the American people. If it’s not energy policy, then it’s economic policy. What’s truly disturbing about this most recent lack of honesty by Henry Paulson and the Fed is that it all seems to be intended to help corporate interests without any accountability. At the same time there are a lot of hard working Americans wondering why a growing army of banks, car companies, insurance companies and many other institutions are asking for government money to bail them out. Simply put, it’s a travesty and it’s criminal.

Mr. Freeze the Financial Curmudgeon looks forward to the Obama administration. It will be nice to see adults in charge of things again.

A Lot Happened this Week: Jury Duty, Statistics, the Weather & More

This week was very interesting for me. As I’ve mentioned on numerous occasions, I’m curious about EVERYTHING…..to a fault. Sometimes I can hardly go to bed because something might happen that I’ll miss. Do you know what I mean? Perhaps I suffer from a form of mega-adult-uber-ADD. What happened?

JURY DUTY

If only my jury duty was like the picture above (Gunman Jury, 1912). I’ve been called to jury duty and, to this day, I’ve never sat on a jury!!!! Apparently, the wheels of justice were moving slowly as the clerk sent a large group of us home early. I would like to tell what I learned this time:

1) King Co. Superior Court’s Jury process is great. The administrators were helpful and had a great attitude about the process. Kudos to them! Also, the preliminary film explaining jury duty was informative.

2) King Co. Superior Court is the 10th busiest Superior Court in the US. 

3) If one is selected for a jury, one goes through ”voir dire” which is when the attorneys question potential jurors. The phrase means “to tell the truth.” I didn’t know that!

4) Finally, THINGS YOU NEED TO KNOW: The Court will pay for your bus fare during your service. They will also reimburse you for mileage if you drive. You’re going to spend your grandchildrens’ inheritance if you park, so try to take the bus. You can bring your laptop as there is a wireless connection in the jury room!!!! Make sure you show up early for duty as it can take a long time to get through security at the courthouse. If you forget to bring a snack, there is a small canteen in the courthouse.

STATISTICS

Kenmore home sales in October were down 31% from a year ago. Prices are down 7% this year. As I mentioned in an earlier post this week, the market has been taking a beating. It’s a good idea to seek the professional help of a Realtor (c) if you’re thinking about purchasing or selling a home.

THE WEATHER OF THE PACIFIC NORTHWEST

This morning on KUOW, the local National Public Radio station, they interviewed Cliff Mass. Know locally as the “atmospheric scientist guru,” Dr. Mass has been giving his pre-weekend forecasts on KUOW for many years (Friday mornings on 94.9 FM). Here’s the thing: He’s almost always right! Now for the good news: Dr. Mass has written book entitled, The Weather of the Pacific Northwest. In it he covers many aspects of our local weather; the why’s of storms, wind, precipitation, etc. This would be a great book for anyone relocating to the area or those of you who spend time outdoors. As you know, if you don’t like the weather here, just wait 10 minutes! Just click on the book picture above to listen to the interview this morning. It’s fascinating. By the way, Dr. Mass worked with Carl Sagan at one time. I’m so impressed!!!!! 

American Consumer News: Lots of Great Advice in These Challenging Times

Here’s a wonderful blog for modern times! As a Realtor (c) my neighbors and clients are always asking me for advice about the value of home improvements or how to economize on repairs, landscaping, purchasing appliances, etc. American Consumer News is an excellent resource for these types of questions. For example, I thought the blog post below “Is It Worth It to Fix What You Already Have” raises some important questions for a home owner. In today’s market, it pays to think carefully about the value of staying put or moving.

Check this blog out, you won’t be disappointed.

King and Snohomish County Home Sale Statistics: October Absorption Rates

Here are the monthly absorption rates for last month. As I’ve mentioned in previous posts, absorption rates give one of the most graphic perspectives of the market. You may want to sit down before you look these over:

KING COUNTY

The number of active listings dropped from 15,438 to 14,555. This drop is long-overdue. Unfortunately, the number of pending sales dropped as well. Last month 2295 homes were pending. This month that number dropped to 1727.

The resulting absorption rate dropped to 11.8% from 14.9%. This is the lowest percentage of pending sales in many years.

SNOHOMISH COUNTY

Snohomish County did not fair any better. Active listings dropped to 6760 from 7070 in September. Pendings also dropped from 813 to 626.

The absorption rate dropped from 11.5% to 9.3%. This also represents the lowest percentage of monthly pending sales in years.

What does this all mean? Please take a look at my post from yesterday. It’s time to confront the brutal reality of the current real estate market. If you are in the market today, make sure you and your agent do your homework. If you’re thinking about putting your house on the market, you will need to spend time and money to ensure your house shows well. If not, be prepared to spend a long time on the market.

If you need help understanding this market, or need the services of a real estate agent, please don’t hesitate to contact me at 206.713.2102 or email me at jlupori@comcast.net.