By The Tim on December 14, 2011
Here is your open thread for the mid-week on December 14th, 2011. 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!
Posted in Open Thread | Tagged open_thread
Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.
I think this first listing says it all in terms of the state of the market.
“Shy 8 acre parcel nestled in the the trees. Approx. 300 Ft of Nuakum Creek frontage to watch the Salmon in the fall. the right builder could finish this & make this an instant equity property, comparables in the area should put this between 600-700k+ finished. Shop is nearly done, seller is a GC/builder and lic. Broker. Completed home, see MLS # 244956. BLDG permits and plans avail for review, permit renewal fees paid by seller at closing. Sellers loss is your gain. Pwr/wtr in.”
http://www.redfin.com/WA/ENUMCLAW/36535-218TH-AVE-SE-98022/home/22391231
It serves to only make real estate less and less appealing to us.
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Seattle OWS Protests Mean One Thing
When the dogs are hungry, they bark. Article:
“…
Hundreds of people had marched from downtown to the Port of Seattle and targeted Terminal 18, which is operated by SSA Marine, a company largely partly owned by international bank Goldman Sachs, organizers said. Protesters swarmed around one entrance at 3:15 p.m. and blocked it, clogging the road to the port and lower Spokane Street bridge with tractor-trailers and cars….”
http://www.seattlepi.com/local/transportation/article/Occupy-protests-lead-to-more-arrests-2398699.php
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I have a question: I’m buying a house that has a 1500 square foot basement that’s listed as unfinished space – although it will only take $10k or $20k to complete. So, it’s MLS-listed at 1800 square feet, but when I finish the basement, it will be 3300 (with two extra bedrooms and an extra bath). I was wondering what doing this work will do to the assessed value of the home (and therefore, how much I will pay in property taxes), and if there’s anything I can do (or avoid doing) that won’t unnecessarily raise my tax bill.
A related question: the last assessed value on the property is currently 30% over what we will be paying for it when we close (and the bank has put a lot of money into it since it was last assessed). Is there any way I can go about arguing down the assessed value on the property? (Again, for tax reasons)
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Need another reason to not buy a condo? Here’s a fascinating story of Las Vegas, well, I won’t call it fraud…
http://www.businessweek.com/printer/magazine/the-king-of-all-vegas-real-estate-scams-12082011.html
“They went to the Las Vegas police, who referred them to the Nevada Real Estate Division, a governmental agency charged, in part, with investigating real estate fraud. The Vistana residents filed a formal complaint and in February 2005, hoping to reclaim control of their board, conducted a recall election. When the votes were counted, their efforts had failed. Suspecting the ballots had been tampered with, Murray organized a second recall election in which the votes were tallied at the neighborhood pool rather than at the association office. This time all the board members connected to Silver Lining Construction lost. Afterward, however, they refused to step down.”
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RE: softwarengineer @ 2 – OWS needs to develop a message, one other than “We’re unemployed!” And they need to get off the greed thing. They by definition are greedy because they are jealous of and want what other people have!
Clearly there are things they could come up with, but they’re completely failing at doing it. They go to the docks to somehow protect the Longshoremen? ROTFLMAO.
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RE: The Other Ben @ 3 – Other than doing all the work without permits, which I would advise against for many reasons, I don’t think there’s anything you can do. Keep in mind though even with permits it might not affect your valuation. We did a to the studs remodel on our old house, adding a full bathroom, with permits, and it didn’t seem to have much impact.
You do have the right to contest your valuation within the time allowed each year after they send you the new valuation. Check out valueappeal.com. If you’re going to contest it after adding to the space, obviously your comps would need to be of larger houses.
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RE: The Other Ben @ 3 –
So Few Actually Do It, It’s Most Likely a Piece of Cake Your Way
1. Get an independent property assessor that averages in all the highs and lows [doesn't throw out foreclosed lows] of your neighborhood’s like sales.
2. Include the independent assessor report lowering your home’s value drastically to your complaint to the property tax appeal agency [instructions and address on back of bogus valuation statement, for King County we get this Valentines Day].
3. Request a new valuation based on actuals not Pink Pony lies, BTW, it won’t affect your sales price one cent either.
Remodeling a basement shouldn’t affect the property tax bill, if the assessor can’t see it from the outside [keep the window shades up and lights off most of the time....hide it].
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Not a good day for the gold and silver bugs again. $1575 and $28.85.
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By The Other Ben @ 3:
1. You’re going to be doing renovations that don’t necessarily require a building permit, so the county assessor’s office may not find out that you’ve added value and usable space. The assessor doesn’t go inside the house. Is there anything you can do to avoid a higher tax bill? Not much. The assessed value is determined by comparable sales of similar nearby properties, so while your house is currently assessed higher than what you paid, if nearby similar homes have sold for lower amounts, it should result in a lower assessed amount for your house in a year or two. But not necessarily a lower tax bill. They can change the rateable to raise the revenue they say they need. For example, let’s say they currently tax you twelve dollars per thousand dollars of assessed value. If the value of properties countywide drop 20%, they’re not going to cut county services 20%. They’ll find a way to make it fourteen dollars per thousand of assessed value. Which is not to say that property taxes can’t or won’t go down. Mine have gone down about 7% from the 2007 price peak. If the assessed value doesn’t go down in the next couple of years, you can appeal, and some people win, if they can provide compelling evidence to do so.
Also, part of how they assess is based on how the exterior of the property looks. So be sure to leave peeling paint. Park the cars on the lawn .And use old toilets as planters.
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By softwarengineer @ 7:
They may likely pick it up from the permitting information. But you’re right though in one sense. They may not actually come inside the house–my guess it it’s unlikely they would. You could make the entire basement marble and gold and they might never know.
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RE: Ira Sacharoff @ 9 – I think it would be tough to add two bedrooms and a bath without permits. Maybe if all the electrical and plumbing was already in place????
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By Kary L. Krismer @ 6:
One tricky thing is that it’s hard to find comps, because the house is kind of unique – the property goes all the way up to the cement sound barrier for 405 and has a lot of highway noise. We weren’t even sure when we bought the house how to tell what a fair price is because of that. I doubt I would be able to find comparables that have sold in the same area next to a highway in the last year or two. I know being next to a highway is a disadvantage, I’m just not sure how to argue that, other than saying “Look, this is what we bought it for. Mark-to-market, dummies!”
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By Kary L. Krismer @ 11:
Use skilled handymen instead of licensed plumbers and electricians. There are tons of people who have done this. Or do the work yourself if you have the skills. I don’t have the skills. I’m sure I’d cause flooding and would electrocute myself. And I’m not sayin’ whether I’ve used skilled handymen.
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RE: The Other Ben @ 12 – What someone paid for the house is not a comp for determining the value of the house.
If I had to guess, most of the comps for your house are probably distressed sales. I’ve commented in the past on how many of the REOs seem to be fairly close to freeways (although not necessarily right up against it like you are). That does affect value.
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RE: The Other Ben @ 12 –
What you may have to do is find another area that has houses up against the freeway and compare the value of that house with houses near it…Example: Your house is in Renton and you can’t find comparables. So find a house in Kirkland next to the freeway then look at houses in Kirkland similar in style and size but not next to the freeway, and look at the percentage difference. Say the house in Kirkland next to the freeway sold for 400k, and nearby homes of similar style and size not next to the freeways sold for 500k, a 20% difference.
Go back to your house in Renton. Let’s say you paid 300. See if you can find recent sales of nearby homes not next to the freeway of similar style and size, and subtract that same percentage difference you found in Kirkland to help you arrive at a value. Or use the services of a place like valueappeal or hire an appraiser.
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RE: Ira Sacharoff @ 13 – I was talking about doing the work legally! ;-)
I’m putting in a generator transfer switch, and I’m perfectly capable of doing such a thing. But King County requires a permit for that, and they will inspect it. Given that’s the case, I’m going to pay an electrician to do it, thinking that it will probably get a bit less scrutiny that way.
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RE: Ira Sacharoff @ 15 – I had to do something similar acting as an expert witness. The property was a stand alone house built years ago, that had been converted to condo a few years ago. There were no similar properties in the immediate area.
What I did was found an area about 5-10 miles north that had an area of SFR houses and stand alone condos which were very similar except for their title. I determined a discount for being condo, and then applied that discount to the SFR comps in the area of the subject property.
If you get into needing to do something like that, I doubt Valueappeal could handle it as far as getting the comps is concerned.
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RE: The Other Ben @ 12 –
My thinking though is your assessment is based on the lot price rather than comparable properties.
You can make the argument your property is, and was, worth less based on it being an existing structure before the noise barrier went in. In theory the noise barrier would make your property obsolete.
I would check on all of the valuations before dumping money into a property that may well be a liability to the lot.
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RE: Ira Sacharoff @ 9 –
LOL Ira
A friend of mine leaves a plastic sheet on his roof permanently, normally gets $400/yr assessments with his disability and retirement discount….
It may seem greedy not to pay “extra and above fair value” for the hoards of new “insourced students” and other related government excess sucking off property tax, but let’s face it, a lion’s share of ‘em live in Seattle without paying adequate property taxes themselves [i.e., living crowded/packed into apartments]….and don’t give me that Pink Pony lie that their rent is adequate property tax…..their slum landlord may likely be paying $400/yr per apartment and they aren’t retired or disabled either.
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RE: Kary L. Krismer @ 5 –
Yes Kary
The unemployed lot is all their fault?
Go to an unemployment benefit center and tell ‘em that….
I do agree with you though, they’re understandably jealous of those of us lucky enough to have jobs, especially decent ones….normal human behavior, I’m with them on that issue, if I didn’t have a decent job or no job at all.
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RE: softwarengineer @ 20 – I’m not saying it’s their fault. I’m saying that seems to be their only message. They need to work on message.
Alternatively, it very well could be that the press isn’t getting their message out. I watched the last Republican debate on ABC. It was the first one I’d watched. From reading the press reports of the prior debates you’d think that 60% of the candidates were idiots. As it was, the stupidest person on the stage was pretty clearly Diane Sawyer, followed by Rick Perry. The press clearly affects perception of things.
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RE: Pegasus @ 8 –
Its All Bad Pegasus
The rich [???] foreign Europeans that were suppose to be immune from the American downturn are draggin’ us into a deeper depression????
Maybe its like WWII, they’re waiting for the Yankee money to rescue ‘em again…they better find big easy chairs to wait, we’re broke too….
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RE: Kary L. Krismer @ 21 –
Yes Kary
The Tea Party movement started out pretty good IMO, then the Republicans took it over and turned it into a sham….cut your benefits not mine hypocrisy…
The Democrats are trying to ride the OWS [take it over and ruin it too?] wave too for populism….they’re hypocrites too IMO, unless they cut all their campaign contributions and control from the Wall Street Crooks too….that ain’t gonna happen BTW.
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By Kary L. Krismer @ 5:
oh god every thing you said was wrong.
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Yearly deficit falls below $1 trillion for the first time under Obama
http://thehill.com/blogs/on-the-money/budget/198821-budget-deficit-shrinks
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maybe the government made them do it!
FBI Estimates 80% of Mortgage Fraud Involved Industry Insiders
http://www.ritholtz.com/blog/2011/12/fbi-estimates-80-of-mortgage-fraud-involved-industry-insiders/
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By pfft @ 24:
Yet you’re unable to express a single thought as to why.
Why do you waste our time here?
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“Yet you’re unable to express a single thought as to why.”
don’t bet on it.
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obamacare will strengthen the economy. one of the leading causes of bankruptcy is health
expenses.
2.5 Million Young Adults Gain Coverage Under New Health Care Law
http://healthland.time.com/2011/12/14/2-5-million-young-adults-gain-coverage-under-new-health-care-law/#ixzz1gYhDQQzz
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RE: pfft @ 28 –
“don’t bet on it.”
Well, OK. But we’re still waiting for your concise explanation.
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RE: pfft @ 25 –
I’ll wait for the final numbers.
And it’s too bad you didn’t read beyond the headline:
“That is not nearly enough to stop the exponential growth of the deficit, which is expected to balloon at a more rapid pace later in the decade due in mainly to the retirement of the baby boomers. The retirements will decrease income tax revenue and increase Medicare costs.
For November, the monthly budget deficit was $137 billion, compared to $150 billion in November of last year. The government took in $152 billion in November and spent $289 billion.”
In other words- so what? Nothing significant has changed.
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RE: Kary L. Krismer @ 5 – Kary, you can be pro law and order for reasons other than envy. Your constant pro-industry, look the other way stance prompts the question: “How do you look in a brown shirt?”
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The bubble is alive and well in Seattle. About every 2 months I check around on redfin. I still see shabby houses going for $400-500k on little useless plots of land. Apparently sellers are still finding suckers at those prices. They’re not even bothering to maintain the place very well either, from what I’ve seen.
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RE: pfft @ 25 –
Math is complicated- how can we have a deficit under $1T yet the debt grows by almost $1.2T?
On Dec 9, 2009 the national debt was 12,079,739,352,131.13.
On Dec 9, 2010 the national debt was 13,846,494,847,569.86.
On Dec 9, 2011 the national debt was 15,052,444,423,722.81.
This meant the debt grew 1,205,949,576,152.95 this past year. It grew 1,766,755,495,438.73 the previous year.
Funny thing- even when Clinton claimed to run a surplus the debt went up. Yup, in fact the debt has gone up EVERY year since the 1950′s. Isn’t accoun ting fun? Where do all those surpluses go?
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By pfft @ 25:
Are you seriously trying to boast about a deficit of almost a trillion dollars?
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By Scotsman @ 34:
ha ha.
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By Scotsman @ 31:
the debt is no going to balloon. source please.
why do you suddenly care about debt now? you were for extending the unfunded bush tax cuts for the rich which would add $3 trillion to the national debt in the next ten years.
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By Hugh Dominic @ 35:
yes. the deficit is falling. that is a good thing as long as if it’s because the economy is growing. it is.
actually considering that we have a $900 billion output gap the deficit should be much higher.
don’t know what I was thinking.
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oh god who could have ever thought that austerity wouldn’t work? oh, paul krugman.
UK’s unemployment increases to highest level in 17 years as austerity measures bite
http://www.washingtonpost.com/business/economy/uk-unemployment-rate-hits-highest-level-for-17-years/2011/12/14/gIQAl4HVtO_story.html
Greece is slipping on reforms, IMF warns
http://www.washingtonpost.com/business/economy/greece-is-slipping-on-reforms-imf-warns/2011/12/13/gIQAnCrSsO_story.html
I guess austerity is not inspiring confidence and leading to higher economic growth and lower unemployment.
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I forgot. the countries with the highest bond yields are wildly uncompetitive. there is no real hope for years for them to become competitive.
according to this report the drachma would fall 50%! greece is not competitive. greece needs massive deflation which it just cannot take.
Here’s An Estimate For The Post-Euro Value Of The Drachma, Lira And Franc
http://www.calculatedriskblog.com/2011/12/ft-alphaville-post-euro-currency-values.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29#ixzz1gaBWlJgV
the countries that are least competitive according to this? the usual suspects.
greece(least competitive) (greek 10 year 34%)
portugal (10 year 13%)
spain (10 year 5.6%)
ireland (10 year 8.2%)
italy (10 year 6.7%)
I wonder why spanish yields aren’t higher?
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RE: pfft @ 39 – Great! The Smith family cuts back on using the credit card and HELOC, and you mock their decreased level of spending.
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By pfft @ 29:
First, did you forget there was a health care thread? You really need to see a doctor to find out the cause of your poor memory. Seriously.
Second, I have no idea why you think bankruptcies caused by health care problems are a threat to the economy. Health care expenses have always been a cause of a large number of bankruptcies, without any impact on the economy. Health care providers might not like them, but it’s not a threat to the economy. The threat to the economy is Obamacare.
Third, the article you linked doesn’t give any information on how much health insurance costs rose because of those added individuals, who are most likely high risk individuals. Omamacare forced employers and others to pay for their health care. It’s a hidden tax, and causes unemployment.
Fourth, given your inability to understand these rather simple issues, I think I’d have a safe bet on your inability to explain why my OWS stance is wrong.
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By Blurtman @ 32:
I’m just saying they don’t have a message, or if they do, the press isn’t letting it out.
They’ve become a homeless camp disguised as a political movement. To be effective, they need a message.
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RE: Kary L. Krismer @ 43 –
Yes Kary
You know me, the John Kennedy, Richard Nixon type of guy on imminent need of American depopulation….I checked the OWS websites, they stayed clear of any environmental population with scientific need planning statements….albeit, I’d love to see a poll of its members on that issue alone.
If they don’t get a centralized statement stand on that issue alone, IMO, they’re just another phony Sierra Club for overpopulation. Hades, they’re too far left for me, but I agree with them at times anyway….Green Peace runs circles around them in clear political voice supporting the environment.
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Did you guys catch this bit of news yet? Tim will be using this as ammunition when he posts local stats and his big yellow Warning box….Nearly 1/2 a million units overstated in one year!?
http://www.calculatedriskblog.com/2011/12/nar-downward-revisions-for-2007-to-2011.html
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RE: Haybaler @ 45 – Yes, it’s been covered a few times. It has nothing to do with local stats.
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How does R Kelly expect to pull off a short sale? Does he no longer have significant income?
http://www.chicagotribune.com/business/breaking/chi-elite-street-r-kellys-olympia-field-mansion-hits-market-for-about-16m-20111213,0,765739.story
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RE: Haybaler @ 45 – The NAR takes stats from hundreds of MLSes across the country, each with their own unique set of bizarre accounting practices deserving of big yellow warning boxes, then just throws them all into a big pot to cook up one “nationwide” number.
Big freakin’ surprise that they discovered errors in that process.
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The Iraq war has officially ended. Mission accomplished? WTF was that war all about?
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RE: Blurtman @ 49 – It was about having a way to channel public funds into politically connected military contractors.
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RE: Blurtman @ 49 –
I don’t think you have any idea what the Iraq war was really about Mr. Blurtman. We won the war because now, after Iraq and Afghanistan, the US has a huge footprint in the Middle East. We have bases everywhere, which puts us in position to fight the real war – against Iran. It’s coming. Trust me, I have studied war.
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RE: Blurtman @ 49 – IMO, it was about this:
https://en.wikipedia.org/wiki/Al_Rasheed_Hotel
“A tile mosaic depicting U.S. President George H.W. Bush with a look of astonishment on his face was installed on the floor of the lobby after the Persian Gulf War. This was intended to force any visitors to walk over his face to enter the hotel (a serious insult in Arab culture). The mosaic was smashed by U.S. soldiers after the invasion, who replaced it with one of Saddam Hussein.”
I would love to ask Someone In Charge what was the military purpose of that “smashing” exercise.
http://www.sptimes.com/2003/04/12/Worldandnation/Changing_Baghdad_s_do.shtml
Why was it necessary to spend US military on this effort? That’s a rhetorical question, BTW.
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RE: Natalia Orinko @ 51 – I agree, and it is disgusting how transparent the push for war against Iran is. Very reminiscent of previous telegraphed US wars. It will be as justified as US involvement in WW1.
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By The Tim @ 48:
That’s pretty much what I’ve been saying, but in addition I’d note that there are areas covered by more than one MLS. It’s probably pretty close to impossible for NAR to back out the duplicates.
Also, this made me realize something else. In the NWMLS you can double list a listing in certain circumstances. For example, if you’re listing is close to the border of two NWMLS areas, you can list it in both. When the property sells, the agent is supposed to deal with it in a certain way so that the second listing disappears. Since that is dependent on an agent doing something right, then it’s possible they do it wrong, and sometimes you see those second listings not disappear. That could have a small impact on inaccurately inflating our sales numbers, and might lead to some of the discrepancies in volume you have questioned in the past.
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