Here is your open thread for the weekend beginning Friday April 3rd, 2009. You may post random links and off-topic discussions here. Also, if you have an idea or a topic you’d like to see covered in an article, please make it known.
Be sure to also check out the forums, and get your word in the user-driven discussions there!
Mak » Apr 3, 2009 at 10:38 am
Anybody know the catch in builder’s teaser rates they offer for new constructions? For example http://www.elementredmond.com is offering 1.8 % !! That deal sounds too good to be true. How does this work for builder ?
DaveyDave » Apr 3, 2009 at 11:03 am
Guess what. Another article. This one from the NYT illuminates some of the current situation with getting a mortgage loan and working with a mortgage broker (or not…). Not being in the RE biz, I’ve always been a bit unclear on this and found the article helpful.
http://www.nytimes.com/2009/04/04/your-money/mortgages/04money.html?_r=1&ref=business
cheapseats » Apr 3, 2009 at 11:16 am
I love it here, but reading these stories does make me think about moving somewhere more affordable.
http://www.cnn.com/2009/LIVING/04/02/foreclosure.dream.homes/index.html
bob » Apr 3, 2009 at 1:14 pm
Scotsman / Sniglet / Eluea / et al,
You fellas have the 30k ft view.
I have my eye on a land parcel I like which is currently offered at 200k. I can see myself raising my family there and staying put a long time.
There currently isn’t any risk management products for property owners (homeowner CDSs or the like) so I’m left trying to measure the risk by what I gather, price it into my offer, and then … hope (?) pricing doesn’t change significantly as the larger macros become evident. Even my state school B- brain understands these are extraordinary times.
Re risk management: is the consensus HIGHLY LIKELY we will see continued macro perturbations for years to come? Sniglet talks about deflation likening what’s up ahead to Japan’s lost decade. Eluea talks about bond market disintegration. And I think Scotsman talks about the unknown unknowns, black swans with big turds.
Is it HIGHLY LIKELY this 200k parcel will look like a bargain at 75k? I have a hard time grasping folks sitting idle while this potential unfolds.
Scotsman » Apr 3, 2009 at 1:37 pm
RE: bob @ 4 –
Bob- in my own planning I look as far ahead as I can with certainty- and stop there. At this time I figure the end of the year is about as far out as one can go. I seriously doubt your land will be worth more at the end of the year, and there’s a great chance it will be worth less. So why not use that as your window for expectations?
The PTB just got approval for a market listing based on the Case-Shiller index, so soon you’ll be able to hedge your real estate purchase or future purchases just like the big guys! Maybe that’s the answer you’re looking for.
In other news, the 10 year treasury closed out the week at 2.9%, back up from 2.4% earlier in the week. Looks like the Fed’s attempt at market rate manipulations has failed, at a cost of only tens of billions of now wasted dollars.
Scotsman » Apr 3, 2009 at 2:06 pm
http://seekingalpha.com/article/95326-macroshares-to-launch-case-shiller-etfs
DrShort » Apr 3, 2009 at 2:22 pm
ruby condos got some big price cuts today
http://www.redfin.com/WA/Seattle/2960-Eastlake-Ave-E-98102/unit-103/home/18970774
20% cut
You may not think that’s significant (or enough) but Williams Marketing has been very slow/reluctant to cut prices recently.
Sniglet » Apr 3, 2009 at 5:03 pm
When the value of this property drops to $75k you can be sure that it will not seem like a bargain. Ironically, the property would likely look like a real bargain when it was selling for $350K in a rising market.
When prices do hit bottom, very few people will be interested in real-estate anymore. We will have went for YEARS with nothing but depreciation, and most people (investors included) will just want to stay away.
Just look at other markets where prices drop by huge amounts. Prices can stay depressed for LONG periods of time (just look at Japan).
All this is not to say you shouldn’t buy this property. Just make sure that an additional 50% price drop won’t cause you undue pain, hardship, or suffering. If such a price decline would constitute hardship, then you likely should re-examine whether you should be buying right now.
David Losh » Apr 3, 2009 at 6:51 pm
RE: bob @ 4 –
How big is the parcel or more to the point how many lots.
RE: Sniglet @ 8 –
Land is different from development. The land value is a percentage. The core value of land remains kind of constsnt once you get outside of municipal zoning.
Kary L. Krismer » Apr 3, 2009 at 7:13 pm
RE: bob @ 4 – The question is not what the parcel is worth. The question is what you can buy it for. That will depend on who owns it and what their financial situation is, including what if anything they owe against the property.
Think of it this way. Last year the state legislature didn’t target people buying property within 20 days of a foreclosure because they thought those people were buying property for what it was worth. They targeted such transactions because the buyers were getting the property for much less than it was worth.
Kary L. Krismer » Apr 3, 2009 at 7:18 pm
On the change of valuations for banks’ holdings of thinly traded transactions, it occurred to me that the situation with mortgage backed securities is somewhat similar to auction rate securities. Those things didn’t suddenly become worthless, but they did suddenly become illiquid. That didn’t mean they were without value, however.
One Eyed Man » Apr 3, 2009 at 7:38 pm
RE: bob @ 4 –
Bob, You’re question seems to be directed solely to local market risks and this site is a good place to get a broad range of advice on the subject. But if you haven’t already, make sure you’ve got a good handle on the process and risks invovled in purchasing, financing and building on raw land. I’m not going to try to give you the short course. But if you haven’t been through the process before, and don’t have close friends, relatives or other advisors who have been through it and who you can rely on to provide substantial assistance, then you’ve got a lot of reseach you should do before you buy.
If nothing else, be sure to budget a substantial reserve fund because there are almost always additional costs you didn’t expect and budget for. Raw land can be especially fun if the property is in unincorporated King County. If you like bureaucracies that charge you $150 per hour so they can spend dozens of hours promoting what they believe to be the County’s land use agenda, then you’ll love DDES.
Sniglet » Apr 3, 2009 at 9:47 pm
I am not so sure… Prices of farm land have been known to fluctuate quite a bit. Vacant land can be particularly volatile. The Federal Government has seen prices for land they try to auction off in Nevada and Arizona plummet.
bob » Apr 3, 2009 at 10:11 pm
Excellent points, thank you.
zipzippygc » Apr 4, 2009 at 12:33 am
Anybody want to weigh in on an opinion of this house, as a micro evaluation, rather than 10,000 foot macro view? 15% price drop to 350K, after not budging since Sept 2008 — does not list sq ft, high res pictures are perhaps making it look better than it is. This is the kind of healthy swoop in price that does get the blood moving just a bit. Sold for 330K in 2004, and they want ‘offers’, so the rollback is five years. No garage, sigh
http://www.redfin.com/WA/Seattle/6777-Murray-Ave-SW-98136/home/153292?utm_source=myredfin&utm_medium=email&utm_campaign=listings_update&utm_nooverride=1
cheapseats » Apr 4, 2009 at 12:45 am
Not sure if others posted this elsewhere, but here is a home auction list for Seattle (area), 4 April 0930. I wish I had seen it earlier.
http://www.auction.com/auction-details.php?auctionID=H-074&chkVenue=557#;
Kary L. Krismer » Apr 4, 2009 at 6:46 am
RE: zipzippygc @ 15 – I’m not going to comment on what I think a specific listing is worth, but that property has only been at $350,000 for a few days. Prior to that it was priced at a much higher price, one at which point I doubt it was a short sale, as is now indicated at the $350,000 price.
I saw another property (new construction) that had a similar price drop, and it went pending within a week or two of the price drop. You can’t expect them to go pending immediately.
Kary L. Krismer » Apr 4, 2009 at 8:31 am
In the strange news reports area, here is a report of a pink dolphin and a pink elephant. The elephant isn’t that pink.
http://www.findingdulcinea.com/news/environment/2009/march/Pink-Elephant-Steals-Pink-Dolphin-s-15-Minutes-of-Fame.html
David Losh » Apr 4, 2009 at 4:18 pm
RE: zipzippygc @ 15 –
Another house within a quarter mile sold for about $350K that’s probably why the price drop.
It’s Lincoln Park. I would expect properties in the next few years to decline in pricing in that area. My reasoning is that it is a long way from anywhere and everywhere. Second is the amount of view property. View property sells at a higher price. The numbers become incorrect for the non view properties. Price per square foot or core value changes. The amount of value given for a view depends on how good it is. So, like in Ballard, non view properties become less desirable.
David Losh » Apr 4, 2009 at 4:24 pm
RE: Sniglet @ 13 –
Core value is different from value changed by future use. Agricultural lands went up in price for future development, government lands went down because they don’t stand a chance of having value again for many, many years.
I just went through this with some property in Pinedale Wyoming. It’s 200 acres that has wildly fluctuated in price opinion. At one time there was oil speculation, this last time it was a housing development, and today it is still in the middle of nowhere.
The core value is a stream that runs through it. It is a pretty place for horses and cows. The core value remains the same until something is proven.
Ira sacharoff » Apr 4, 2009 at 5:26 pm
RE: zipzippygc @ 15 –
I’ll weigh in on this. I happen to love the neighborhood, and the house looks nice, but:
1. It’s a short sale. It says that sellers will look at all offers, but we have no idea how low an offer the lender is willing to call good enough.
2. MLS Agent remarks note that the basement has water leaks under heavy rains.
3. The county lists the house as 1600 square feet, 800 main floor, and 800 finished basement.
Herman » Apr 4, 2009 at 5:38 pm
RE: zipzippygc @ 15 – Lincoln Park is great. That house looks like it’s priced right, in my opinion.
elig » Apr 4, 2009 at 6:59 pm
Hey, everyone –
It’s been 3 months since the “big” meetup. Anyone up for another one? If so, seeking your suggestions for a great venue on the East Side.
Last meetup feedback was:
1. TRY THE EAST SIDE NEXT: Uh, ok! ;-)
2. LESS NOISE: No loud bars (but we still want to freely move around and mingle – no ‘big restaurant table’ venue)
3. BETTER TIMING: Anyone want to suggest a few dates? I’m thinking April 16th or 17th, but that’s arbitrary.
Anyone got ideas?
One suggestion Tim offered is Third Place Books in Kenmore/Lake Forest Park:
http://www.yelp.com/biz/third-place-books-lake-forest-park
It has a central food court and lots of open space. It’s equidistant to both the Eastside and Seattle – so it’s equally accessible (or on the other hand, perhaps ‘equally inconvenient’ ;-) to both sides.
Angie » Apr 4, 2009 at 7:56 pm
Eli, good for you for taking the initiative. It was great to meet you at the “unofficial” southend meetup. :)
Third Place Books is a fantastic suggestion, a really good venue for this kind of thing. I’m going to be out of town over that weekend, so I won’t be able to make it those days. This may be a plus for attracting other attendees, however.
jonasb » Apr 5, 2009 at 7:17 am
dr. horton is holding a “new home foreclosure sale” in their Bothell community. I am seriously contemplating on offering $325000 for a home that has a suggested “foreclosure” price of 474,999. Do you think I have a chance of getting that house, and is my offer low enough to cover me until prices level off in the next few years? Or is this still too high? The house is located in Bothell, Snohomish County, Northshore Schools, approx 2700 sqft, brand new, (considered high-end community compared to other new home communities in the area). There are 9 homes that are “on sale”, but there are still a lot of unsold homes and empty lots in that community.
What do you think of the Bothell area in general? There are a lot of new home communities there, with many unsold homes & empty lots yet the asking prices are still too high. I am looking at the area served by the Northshore School District.
David Losh » Apr 5, 2009 at 10:29 am
RE: Herman @ 22 –
I was thinking about this and looking at prices in other areas.
I also like Lincoln Park for a wide variety of reasons, but should that home be priced closer to $225K is the question. In my opinion, without seeing it, It should be. In looking at a lot of good areas the prices seem to fluctuate at the $300K level when $200K has been the norm in the not so distant past.
In the coming years, rather than a massive price reduction across the board, I see certain areas shaking out prices to reflect smaller nuances of the location, square footage, and condition. I really think once town houses and condos nose dive in price that the “condo alternative” feature of smaller homes will go away.
JJL » Apr 5, 2009 at 10:53 am
jonasb,
DR Horton builds a good house. You will not be able to negotiate down to $325,000 on a $474,000 house. DR Horton has big pockets and are not desperate to sell. The current “foreclosure price sale” is a marketing tool.
On the 50 homes they’ve sold in the last 18 months, on average their homes were discounted around $37,000 off the original asking price. That number is derived only on counting homes that have had discounts.
It’s not about what you are willing to pay, but what they are willing to sell it to you for.
Bothell is the area I work and I study the numbers.
Ira sacharoff » Apr 5, 2009 at 12:25 pm
RE: David Losh @ 26 –
Gotta disagree with my esteemed colleague Mr. Losh here. That house is a block or two from Puget sound. It’s in a part of West Seattle considered desirable. A number of the nearby homes are for sale for quite a bit more, and this house has 3 bedrooms and 2.5 baths.
I don’t disagree at all that certain areas within the Seattle area have and will continue to decline more than others, but…
I predict that this house will sell, within a month or so, and for pretty close to it’s 350 asking price.
If, at the bottom, it’s worth 225 as David suggests, then it will see something like a 35% decline from hereon.
Do I think that some parts of the Seattle area could see an additional 35% decline? Yeah, it’s possible.
But is it likely that a pretty, safe, bucolic, stable area where you can take a walk on the beach by walking from your house in a couple of minutes is going to decline that much?
No.
David Losh » Apr 5, 2009 at 1:52 pm
Two blocks from the beach may be a draw, but the square footage is small. The value in that case would be in the land or future expansion of the home. That drops the price by at least $60K for a remodeling, in cash this time because there will be no more second mortgage money for that.
This has happened in many areas where there is a recreational draw. A beach cottage should have a beach cottage price.
Dave » Apr 5, 2009 at 2:41 pm
RE: David Losh @ 29 – This looks like a small, neat house. However, it is quite small, with a small lot. The listing notes a “territorial view”, yet not one picture of it. If it has one, I would expect it to be a selling point, with a picture or two front and center. Signs of water damage in a finished basement is not a good thing.
This house seems over-remodeled and overpriced for the size. The price may be reasonable if in fact the lot has a territorial view. I suspect a flip gone bad!
jonasb » Apr 5, 2009 at 6:11 pm
RE: JJL @ 27 –
After thinking more abt it, we decided against putting an offer. It would be interesting to see how many of those homes are still in the market this fall.
http://www.cnn.com/2009/LIVING/04/02/foreclosure.dream.homes/index.html
JJL » Apr 6, 2009 at 8:45 am
jonasb,
Current Bothell new construction inventory suggests that there is about a 28 month supply, not counting any vacant lots that the builders are sitting on. With new inventory coming at about 30 homes per month and factoring in the current Bothell inventory of 229 homes. The net absorbtion rate is appx. 8 homes per month.
Pending sales are Jan=33, Feb=23, Mar=39
I will continue to watch the numbers and see how it plays out.