Posted by: Timothy Ellis (The Tim)

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.

64 responses to “Reader Question: Current Challenges for Sellers?”

  1. domo

    so what about this one?

    http://www.redfin.com/WA/Kirkland/12430-NE-103rd-Pl-98033/home/511411

    It has been sitting for a while. Though I have not seen it myself, it don’t understand what this one has been sitting for over 3 months. Homes in this area have been selling rather quickly! Seems to be appropriately priced… running to take shelter from the rocks after I say this….

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  2. Roger

    May because this house is priced $100K above neighbors sold.
    It might justified cost but it is always hard sell the most expensive house in neighborhood

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  3. SB

    This advice is spot on. I’ve also heard not to price too high because you might run into trouble with appraisal down the road. We put a lot of work into our home, priced reasonably and got 6 offers within a week. There was no crazy bidding war, but there is a lot to be said for getting the hell out of the real estate market before your listing goes stale.

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  4. softwarengineer

    Welcome to the Seattle Real Estate Twilight Zone

    Rod Serling comes out in his suit wearing a suit and tie and smoking a cigarrette….stating,

    “Tonight’s episode is about the man who was transported in a time warp from the 2006 heydays to the “what-ever-ya-want-to-call-it” 2012 era. He used to read the newspapers and get direction on TV news, but he quickly learns the strange forces suddenly out there, make even his comfortable zones a mesmerizing confusion in this strange new world…..”

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  5. Ira Sacharoff

    I’d also suggest that you not assume that because nice homes are attracting multiple offers , your home will be among them. Don’t count your chickens. Don’t do a high end remodel if your house is in Skyway or White Center. Nice houses are not selling quickly everywhere.

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  6. krs

    When I sold my last house, I asked the realtor for a selling price not a listing price. I didn’t want to have to come back in a month and lower the price. It sold within a week. I think the reason the press release from the MLS regarding sales and prices was so tempered is because they don’t want sellers to have unreasonable expectations about what they might get for their homes. I agree that a seller should not assume her/his house will get multiple offers. It may get none. I have a friend who really thought she would get multiple offers on her house in Shoreline. I have no idea why except for maybe the recent press about some multiple offer situations. Two weeks later, no offers at all.

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  7. E

    We are in a similar situation. Trying to get the house cleaned up and ready for sale is hard enough. We’ve decided to go with what we think is realistic pricing with the thought that if we’ve priced too low in our suddenly “hot” West Seattle neighborhood we will either sell super-fast or have the price bid up. We’re not investors, just people who like living in a home we own.

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  8. WannaBuy2012

    RE: domo @ 1

    That house is really close to 124th, one of the most congested roads in the state. Have a drive down that road at 5:30 pm on a weekday and you will understand why that house has not sold at that price. Last week it took me 30 minutes to go about 2 miles on that road, two days in a row.

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  9. StillRenting

    Take a look at your neighboring properties and see if there are any major eyesores. It may be worth your while to offer to have their lawn serviced or pay for towing & storage of unused vehicles when you list your house. There have been a couple of places we looked at that we put in the “definite no” column because of next-door neighbor problems. One place had two adjacent properties with twelve cars between them in the driveways and on the street (each property had one car on cinderblocks). It was on a cul-de-sac, too, so the driveways were fairly close together. Another house had a neighbor directly across the street with a yard that was so unkempt there were small trees growing through the driveway cracks. The house itself and the rest of the neighborhood were great, but when we asked about what was going on over there (thinking it might be bank-owned or in foreclosure) we were told that an eccentric recluse had been living there for years and basically did nothing to keep up his property. I have no idea if the guy would have been open to somebody else fixing up his yard and driveway, but it would have been worth a shot because the house was priced well, all other things considered, and yet had been on the market for almost three months with no takers.

    I have no idea if cleaning up a neighbor’s problem would be something that you would have to disclose to a buyer, but I’m sure some of the realtors here could provide an opinion on that.

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  10. Eastsider

    RE: domo @ 1 – According to county record, it has power lines under the nuisances category. Total living area is 2,680 sq ft. Last sale was $434,372 on 7/1/2002. You’ll have to visit the property to judge for yourself.

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  11. ray pepper

    I’m selling and I can’t wait! I smell 99k and a quick close…http://www.redfin.com/WA/Tacoma/6417-S-J-St-98408/home/2609617

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  12. John Bailo

    You know sometimes it seems like this blog is the classic Platonic scenario of people staring at shadows on a cave wall trying to determine what’s going on in the outside world.

    Let me guess…it’s about 95% potential buyers who are waiting for the bottom to fall so they can swoop in and get that house at 1958 prices.

    I almost never hear any experiences from man in the street sellers.

    Like we hear about the buyer who gets closed out by 40 other bidders…but we never hear from the seller who got 40…or who didn’t and can tell us it was just her RE agent playing games.

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  13. Joe

    Are you kidding? This is a ridiculously BAD time to sell. Prices are lower than they’ve been since 1990, and everyone’s out of work. Just hold it if you can. You can always count on a realtor to give you self-serving advice.

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  14. Jeff K

    I recently sold my condo in Bothell, and bought one in West Seattle. For selling my condo, my strategy was simple: price it higher than I knew people would offer, but set a limit to what you would accept at lower. It worked–I sold within a month, and got what I expected I would get. For the purchase, I passed on more expensive places, knowing the sellers would not come down to what I wanted to pay, and bought a place much less expensive than what I could afford, in order to allow myself some extra money for fixing it up the way I want it to look. It worked–now I am in a great neighborhood, in a great location, in a home much larger than my Bothell place, and am now having work done to make the place look amazing.

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  15. mukoh

    RE: ray pepper @ 11 – All the work for what 10%?

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  16. Kary L. Krismer

    By Joe @ 13:

    Are you kidding? This is a ridiculously BAD time to sell. Prices are lower than they’ve been since 1990, and everyone’s out of work. Just hold it if you can. You can always count on a realtor to give you self-serving advice.

    And you can count on anonymous web posters to give out incorrect information, leading to advice that is questionable at best.

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  17. StillRenting

    By John Bailo @ 12:

    Let me guess…it’s about 95% potential buyers who are waiting for the bottom to fall so they can swoop in and get that house at 1958 prices.

    I’m pretty sure the majority of the comments come from realtors or homeowners, not buyers.

    I can only speak for myself as one of those potential buyers you mention. My family isn’t waiting for the bottom to fall out; at this point our wait is for purely personal reasons. I do think we are at or near the bottom right now, but I’m not in any hurry to buy because I also think we will bounce around at the bottom for a while.

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  18. Eden

    Well, I’m one of your person on the street buyers/sellers and I have to admit it can be a little intimidating to post here because of the high likelihood of being called out for being a chump to buy or sell at the wrong time.

    But here I am posting anyway. Yes we bought in 2006 during the bubble because it was our personal time to buy. We thought we did everything right — put down 20%, we didn’t spend as much as the bank was willing to lend us, only what we thought we could afford, planned to stay for a long time. But then along came two kids and our 1100 sq/ft home no longer seems so spacious. So now we’re sellers just hoping not to lose too much money.

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  19. T. Y. Lee

    As a run of the mill buyer, I think the best thing a seller can do is simply CLEAN THE HOUSE, REMOVE CLUTTER, and CUT THE GRASS. (I shouldn’t need a machete and the guidance of a local native to find my way to the front door, nor should I fear the creatures that might be lurking in your yard).

    It’s the cheapest way to enhance your property and make it more appealing.

    And obviously be realistic about your pricing. Just because you put in $60K to upgrade the kitchen doesn’t mean the house is automatically worth $60K more. Also, as a buyer, I really don’t care what you paid for it in 2005. (though I’ll probably google it)

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  20. T. Y. Lee

    RE: Eden @ 18 – Eden, that sucks. I think being broke in 2006 was one of the better things to happen to me, because I could easily have been a “chump” too, because I idealized home ownership, just got married, had a kid, all that jazz (and apparently that’s when I’m “supposed to” buy a house, because there’s some sort of unspoken order of operations).

    I’m under contract on a house. I have four kids in an 1100 sq ft apartment. It has a nice layout, so it feels much larger than that, but it’s not super spacious. It’s big enough though, and I’ve managed fine, and if I couldn’t afford to move, then it wouldn’t be too big a deal to me, because it is honestly enough space for us (until the kids become older and start wanting their own rooms… might be too cramped with teenagers!) Anyway, I completely understand needing more space for a growing family!

    They don’t really make apartments larger than 3 bedrooms, and I looked at renting a SFH, but the rent for those are significantly higher than the PITI to just buy a similar SFH. So I decided to buy. I’ve been saving up for 5 years, and my rent increases nearly 20% every year, so I finally bit the bullet. I’m sure a lot of people would say I’m a chump, but I’d really like to have the luxury of a more space, more bedrooms, and a garage, and I’m finally at a point where I can easily afford it.

    If my rent weren’t increasing so rapidly, I might not have purchased, but at this point in time, I’ll actually be saving a few hundred dollars each month by owning instead. (I try to keep my cost of shelter at a minimum)

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  21. Eastsider

    RE: Eden @ 18 – Look at the other side of the coin, you will be getting a great price for a bigger house. Rewind the clock to 2006, you are now getting a discount for a bigger house that you did not buy in 2006!

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  22. Ray pepper

    RE: mukoh @ 15 – Only needs 5 to 7 k worth of work..10%? Should be a 30 k + pull . Not to mention some exercise for me and work for the kids.

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  23. Scotsman

    RE: Joe @ 13

    Unless prices continue to drop- for decades.

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  24. Eden

    RE: Eastsider @ 21

    Yes. That’s true. And honestly, we’re a lot better off than most of our peers. All our friends bought at the same time (or in 2008) had a couple of kids but are underwater and trapped in their now too small homes. We have the luxury of being able to take a bit of a loss to move up.

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  25. patient

    RE: Scotsman @ 23
    What happened? Did you back out of your purchase?

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  26. whee

    Wait, how is 1600-2000/month (rental cost for a 3-4bd, 2-3 ba SFH in Kirkland/Redmond) more expensive than buying, especially with property taxes running what they do?

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  27. Scotsman

    RE: patient @ 25

    No, I’m a happy home-owner, working on permits for a remodel, still think we’ll be flat to up price wise for the next 3-5 years. I’m just disgusted with current politics, lawlessness, and lack of adults in the room as they say. I need to hike more- but it’s still a bit too early in the season.

    The new justification for home ownership- my PITI is less than rent and I can walk away without significant financial impact. But is this any way to run your life- or a country?

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  28. patient

    RE: Scotsman @ 27
    Understandable, we pretty much see the same pattern rolling through the countries of the western world. First the banks creates huge losses, then they can’t lend and we have a financial crisis with huge job losses. Then the government absorbs the banks losses by lending on the tax payers credit. When the countries debt becomes to big to carry austerity is the only option to try to get the finances back on track. Austerity and higher taxes coupled with the job losses caused by the financial crisis generates unhappy citizens and a political crisis where populist leaders are elected and in worse case we can get fascism or communism since extreme wings always get more votes when people want radical changes. We’ll see where we are in the US in November. If the democrats can hold onto either the presidency and senate we are probably not yet in a political crisis. All this could have been avoided if we nationalized the banks instead of bailing them out. Too late now.

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  29. MS

    RE: whee @ 26 – I was looking in Redmond for a 4 bedroom house in good condition, around 2000 sq ft. There is nothing available unless you try in the 2500$ range. I eventually decided against Redmond and decided to take up a bit of a commute.

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  30. David Losh

    “My advice to sellers this year has been simple: Now is a great time to sell, if you can afford to.”

    What would be the economic reason to take on a fresh debt? If you sell are you going to rent? That might make sense, but this move up buyer concept is a Real Estate gimmick.

    A loan is amortized over time. Every time you refinance you start over. Every time you sell, to buy another property you clear one debt, and start a fresh debt.

    If you want prices of property to stabalize, we all need to get banks, and mortgages, out of the equation. You can make more by selling with owner financing.

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  31. Eastsider

    RE: MS @ 29 – Yes, rent has gone up a lot in the past few months. The inventory of SFH in good condition is extremely low. The influx of new hires from tech companies, Boeing and Amazon is creating huge demands in the “For-Sale” and “For-Rent” markets in prime locations in Bellevue, Kirkland, and Seattle. Many people in this forum are underestimating the strength of the current market. But I don’t know if it will last. (Take a look at the chart on average listing price / sq ft on Redfin in a zip code and you’ll see what I mean.)

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  32. Jonness

    By domo @ 1:

    so what about this one?

    Come on people; we are not in 2007! There are multiple offers right now for houses in turn key condition with greatly discounted prices. The rest just sit there.

    Don’t for one second think you can list the house you bought for $434,370 in 2002 and make a $200K profit. We spent the last 5 years in a depression. Where have you been?

    Sure, give it a try, and maybe some guy with a really low IQ will come along and make your day. But if it doesn’t happen, lower the price to something at least half-way in the neighborhood of what someone will be willing to pay.

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  33. Macro Investor

    By patient @ 28:

    RE: Scotsman @ 27
    We’ll see where we are in the US in November.

    You are obviously one of the few who understands the situation. However, you make the common mistake of thinking something big is going to happen soon. We are all impatient for this to end. But remember, the great depression lasted from 1929 through the mid 1940s. Japan… still going. Two plus years and Europe can’t even get done with Greece.

    I’m thinking we slog around like this AT LEAST another decade. Europe — each country goes Greece… a few years for each one. Then the UK/Japan. Only then austerity may come to a theater near you.

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  34. patient

    RE: Macro Investor @ 33
    I actually agree with you. We are not yet at the point where we are forced to start implementing unpopular measures as austerity and tax increases. We do have the job losses but not to the extent that they alone has caused a political crisis. There is still a possibiliy, though a very dangerous one for politicians to extend and pretend. This will most likely continue until our creditors forces a change. That’s when things could get ugly and we could see radical elements getting into power.

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  35. whee

    MS@29:

    Shrug, there are plenty of 4bd homes for rent for 2000 or less in kirkland, bellevue, kenmore, just briefly checking craigslist, all very easy and quick commutes to MSFT. People can buy if they want, but again, at the usual 400k+ price points that many consider acceptable, renting is still a pretty good to very good deal from a pure monthly cost standpoint.

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  36. Ira Sacharoff

    If you just look at the statistics, you can conclude that it’s a great time to be a buyer because home prices are at about an eight year low and interest rates are near historical lows. But your conclusion would be wrong, because inventory is terrible, especially for half nice houses in nice areas, and competition for these half nice houses is fierce. So in a lot of ways, it’s not a great time to be a buyer.
    If you just look at the statistics, you could conclude that it’s a great time to be a seller, because inventory is very low and buyers are pouncing on anything half nice. But your conclusion would be wrong, because many people bought their homes in the last five or six years, and are just unable to bring 100,000 dollars or more to the closing table.
    It’s just a really weird real estate market right now.

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  37. whatsmyname

    RE: Ira Sacharoff @ 36
    Now, now. Inventory is not so terrible. There are literally thousands of houses on the market. And that’s without leaving King County. If your resources are at the 60% level, but your tastes run to the 65% level (includes the combination of house and neighborhood), then of course you will be repeatedly unsuccessful in a functioning market. Creating vague and arbitrary distinctions like “half nice” or “terrible inventory” doesn’t change that. If your agent doesn’t get that, you really are in for a not great time.

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  38. ChrisM

    RE: Macro Investor @ 33 – “But remember, the great depression lasted from 1929 through the mid 1940s”

    Amazing how this is not taught in high school, nor really at the college level. Interesting to contemplate how long the Depression would have lasted had Roosevelt not forced us into WW2…

    To preempt posts, please first research how US froze Japanese bank accounts.

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  39. Jonness

    RE: whatsmyname @ 37 – I’ve been adamantly watching the market for 7 years, and I have to agree with Ira on this one. Inventory is (relatively) pure crap, and hardly anybody understands what’s going on. However, IMO, the symptoms he describes are not uncommon in a massive debt deleveraging cycle.

    We’ve seen buyers rush in thinking they are timing the bottom now year after year. So far, most of them are underwater. I think it’s about time people lose this pipe dream of a V-shaped recovery in the United States economy. The macro picture won’t allow for it.

    My guess is, and has been, we continue to cycle through good and bad news while experiencing slow to anemic growth. Politicians and the Fed continue to spend like there’s no tomorrow, and it continues to kick the can down the road.

    Those who bought thinking they were timing the bottom of a V-shaped recovery continue to be disappointed. Those who bought because they needed a place to live, the house was what they wanted, and the payments were very affordable, continue on with their lives and pretty much forget about it all. Those who held off, lived frugally, and continued to save end up financially setting themselves up for life.

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  40. Ira Sacharoff

    By whatsmyname @ 37:

    RE: Ira Sacharoff @ 36
    Now, now. Inventory is not so terrible. There are literally thousands of houses on the market. And that’s without leaving King County. If your resources are at the 60% level, but your tastes run to the 65% level (includes the combination of house and neighborhood), then of course you will be repeatedly unsuccessful in a functioning market. Creating vague and arbitrary distinctions like “half nice” or “terrible inventory” doesn’t change that. If your agent doesn’t get that, you really are in for a not great time.

    Are you out there actively looking for a house to buy? Or are you an agent actively showing buyers homes? Because if you’re not, you are simply looking at statistics and drawing erroneous conclusions.
    Sure, the inventory is more plentiful in places like Skyway or Kent, but most people looking to buy houses are not choosing to look in those places for whatever reason. Too far of a commute, too high a crime rate, not good schools, etc.
    And yes, there are a fair amount of fixer homes on the market, especially in those areas which are less sought after. So, sure..even though you work in Bellevue and have school age children, and have no skills or interest in doing renovations, there are homes for sale that would require fixing up, in areas with schools perceived to be bad, in areas with high crime rates ,and an hour or more away from work.
    Look: I’m a real estate agent who represents home buyers. Why would I be pointing out how difficult is right now for home buyers? Because I’m out there and I’m seeing these things. Besides, just looking at the numbers and seeing “thousands of homes for sale” doesn’t at all take into account how much larger the inventory has been for a very long time, nor the number of people out there looking for houses to buy. I’m not saying it’s a terrible time to buy a house or that you shouldn’t do it, after all I’m a real estate agent who represents buyers. But I think the vast majority of people out there looking for houses to buy agree with me. They are not willing to be, nor should they buy something simply because it’s for sale. It’s much better to rent in a place close to work, or with good schools, or with whatever factors serve your needs. You don’t buy a house simply because you want to own a house. There’s usually a little more going on.

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  41. Kary L. Krismer

    By Ira Sacharoff @ 40:

    By whatsmyname @ 37:
    RE: Ira Sacharoff @ 36
    Now, now. Inventory is not so terrible. There are literally thousands of houses on the market. And that’s without leaving King County. If your resources are at the 60% level, but your tastes run to the 65% level (includes the combination of house and neighborhood), then of course you will be repeatedly unsuccessful in a functioning market. Creating vague and arbitrary distinctions like “half nice” or “terrible inventory” doesn’t change that. If your agent doesn’t get that, you really are in for a not great time.

    Are you out there actively looking for a house to buy? Or are you an agent actively showing buyers homes? Because if you’re not, you are simply looking at statistics and drawing erroneous conclusions. .

    Exactly! Either that or he’s looking at houses priced over $1,000,000.00.

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  42. Kary L. Krismer

    By Ira Sacharoff @ 40:

    Look: I’m a real estate agent who represents home buyers. Why would I be pointing out how difficult is right now for home buyers? Because I’m out there and I’m seeing these things. Besides, just looking at the numbers and seeing “thousands of homes for sale” doesn’t at all take into account how much larger the inventory has been for a very long time, nor the number of people out there looking for houses to buy.

    One point I’ve made in the past is this market has to really be hurting those reduced fee commission offices which are setup to primarily represent buyers. The number of showings (and previews if they do such a thing) necessary to find a property has to be much higher in this market than normal. And then there’s the multiple offer issue. When you’re charging a reduced fee to look at 3x as many houses as normal and getting outbid on 25% of the ones that are good, that’s not a good business model.

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  43. ESS

    RE: WannaBuy2012 @ 8
    This is a great point. One should always visit any house that is a potential purchase at different times of the day, and on different days. We have always done that with the houses that we have bought. As an example, some roads that appear to be quiet and pastoral become very busy as they are designated shortcuts for hundreds of commuters. We live near a road that is exactly that – one would never guess in a million years that the quiet country road becomes a busy speedway in the morning and afternoon.

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  44. ESS

    RE: Eden @ 24

    As per the comment that some people bought at the height of the market, had kids and are now in a house too small for them.
    As landlords of a number of single family residences, we experienced that situation the last time we rented one of our houses. One interested party who visited our open house explained that they had bought a house that was currently too small for their expanding family, but they could not sell as they were now underwater. As a result, they were looking for a bigger place to rent as they also became landlords, renting out their now too small abode.

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  45. whatsmyname

    By Jonness @ 39:

    RE: whatsmyname @ 37 – I’ve been adamantly watching the market for 7 years, .

    Ah, you haven’t been watching for a full cycle then. Seriously, I know what you are saying. But consider looking for houses at a fixed dollar amount, just for grins, say $450,000. Will that get you a less nice house today than it would in 2008 or 2009? By your own “underwater” argument, the answer is no – it will buy a better house now. So inventory is not objectively worse now than it was then. It is better; just smaller and more out of alignment with your current expectations.

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  46. whatsmyname

    By Ira Sacharoff @ 40:

    Are you out there actively looking for a house to buy? Or are you an agent actively showing buyers homes? Because if you’re not, you are simply looking at statistics and drawing erroneous conclusions.
    Sure, the inventory is more plentiful in places like Skyway or Kent, but most people looking to buy houses are not choosing to look in those places for whatever reason. Too far of a commute, too high a crime rate, not good schools, etc.
    And yes, there are a fair amount of fixer homes on the market, especially in those areas which are less sought after. So, sure..even though you work in Bellevue and have school age children, and have no skills or interest in doing renovations, there are homes for sale that would require fixing up, in areas with schools perceived to be bad, in areas with high crime rates ,and an hour or more away from work.
    Look: I’m a real estate agent who represents home buyers. Why would I be pointing out how difficult is right now for home buyers? Because I’m out there and I’m seeing these things. Besides, just looking at the numbers and seeing “thousands of homes for sale” doesn’t at all take into account how much larger the inventory has been for a very long time, nor the number of people out there looking for houses to buy. I’m not saying it’s a terrible time to buy a house or that you shouldn’t do it, after all I’m a real estate agent who represents buyers. But I think the vast majority of people out there looking for houses to buy agree with me. They are not willing to be, nor should they buy something simply because it’s for sale. It’s much better to rent in a place close to work, or with good schools, or with whatever factors serve your needs. You don’t buy a house simply because you want to own a house. There’s usually a little more going on.

    Just because you have been getting used to an outsized inventory level, doesn’t mean it is the right level. And yes, a far commute, bad schools, crime rate, fixer are all tradeoffs. If they make it a negative to buy, then that person should not buy. But if you have a Kent or fixer budget and move-in Bellevue aspirations, the problem is not inventory. This is just the flip side of 2008-09 repricing. This time it’s the dumb and desperate sellers rather than buyers that are disappearing. The houses are still there at the right price.

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  47. Kary L. Krismer

    By whatsmyname @ 45:

    But consider looking for houses at a fixed dollar amount, just for grins, say $450,000. Will that get you a less nice house today than it would in 2008 or 2009? By your own “underwater” argument, the answer is no – it will buy a better house now. So inventory is not objectively worse now than it was then. It is better; just smaller and more out of alignment with your current expectations.

    You are right that $450,000 (or virtually any other dollar amount) will get you more than 2008 or 2009. But it would have been better to have been looking for those houses 6 or 12 months ago.

    This market has something in common with the peak and pre-peak. You have to act very quickly on decent houses. For buyers that is not a good thing, even if the prices today are less.

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  48. whatsmyname

    RE: Kary L. Krismer @ 47
    Agreed. The time to buy was 2011.

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  49. David Losh

    RE: whatsmyname @ 48

    The time to buy will be in the future.

    There is no motivation for some one to sell, today, right now.

    Number one, it is an election year, and there is a ton of volitility.

    Second is that there are only lateral moves in the market, this is not the time to trade up. Every home buyer is in the same boat, and will need to settle for less than what they want. This is a time when it may be more cost effective to transform a property you already own into something you can live with.

    Third is that if you sell the family home you do need to live somewhere. Where will you go? What would you down size into? With the amount of new inventory for rent, or condo, coming onto the market wouldn’t it make more sense to wait?

    Last, but not least, these historically low interest rates are giving less insentive to bank your money. Like we have all said you have to live somewhere.

    Buyers will find more inventory, at better prices, when interest rates tick up, and more money begins moving in the system.

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  50. Ira Sacharoff

    RE: whatsmyname @ 46
    I don’t know what the “right” level of inventory is. But I do know there is a difference between getting used to a high level of inventory like we were seeing 4 or 5 years ago and experiencing record low inventory, which we are experiencing now. One old standard of determining whether a market is a buyers or sellers market is the months of supply. More than six was considered a buyer’s market, less than six a seller’s. In March, the supply was something like 1.65 months, a record low, and I don’t think April was much better. Typically more stuff goes on the market in February as more buyers emerge and inventory peaks around June. This year, February came and went, March came and went, and even though there were more people out looking for houses to buy, inventory didn’t increase. It feels now that it’s May11th, there is a little more to look at. Just because a house for sale for 400,000 dollars is a lot more house for the money than what was for sale five years ago doesn’t mean that you can buy that house.

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  51. whatsmyname

    RE: David Losh @ 49
    People marry, divorce, die and relocate in all economies. For many of them, it just makes sense to move on. But certainly there is reduced motivation for others to sell.

    Many victims of the economic crash and their bankers had to sell; much of that is largely worked through the system. With fear leaving the marketplace, there is less need to sell based on avoidance of pain, and yes people do need to live somewhere. I also agree that many of the move-up crowd looked at the moribund market, and created their own move-up in situ.

    And low rates are as good for the newly cautious to finance the devil they know as some new house.

    That’s why the best time to buy was the recent past. When rates tick up, and more money enters the system, we will see inflation. Then, whether you’re underwater or sitting on a fixed rate loan, you will have even less incentive to sell, or rather, you will have more incentive to hold. Meanwhile, we continue to consume lots at less than cost to produce (thank you builder foreclosures), but that means people aren’t developing more lots. Ultimately reduced cheap-lot construction will also stress supply. More money and less supply is good for prices, but not from the buyer’s perspective. It is then that high prices will motivate more people to develop lots and convert their homes to more inventory. That will feel like a better time to buy, but it will be a more expensive time to buy. The cycle goes round again.

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  52. whatsmyname

    RE: Ira Sacharoff @ 50
    I do agree that it is becoming a seller’s market, although pricing and oversupply in some parts of the market say it is less so than is being presented or more likely that people just haven’t adjusted. I think pendings is a bad number to use for months of supply. I think too many new construction presales and short sales hang out there forever. I thought I saw where Julie Lydie had a list of “new” pendings. I think a monthly hybrid of sales closed plus 90% of new pendings would be a better numerator.

    Sure, a $400,000 house is too rich for many people, but pick a number. You can get more house for the money than you could 3 years ago. That is not bad inventory in a relative sense. That is growth in expectations exceeding growth in value.

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  53. Kary L. Krismer

    RE: whatsmyname @ 52 – I agree pendings are a bad number to use to calculate supply or absorption rate. I’ve always used closed sales. What I’ve started doing though is also backing out short sales, both from the closed sales and the actives. That puts us at less than 3 months supply for King County SFR. Obviously certain markets within King are better or worse than that.

    Looking just at short sales, for actives there is only less than a 5 months supply using closed sales, which seemingly would be a seller’s market, but that ignores the pendings, which are over 9 months of supply. That last number demonstrates why you should not use pendings to determine supply!

    Numbers from NWMLS sources, but not compiled by or guaranteed by the NWMLS.

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  54. Rhonda Porter

    My advice for sellers: consider all types of financing – especially FHA and VA, which have higher loan limits than conforming conventional in the Seattle/tri-county area. FHA and VA do not have all the extra cost for sellers they once did and underwriting guidelines for conventional, FHA or VA loans.

    I think that sellers and listing agents often steer away from FHA and VA buyers because of misconceptions about credit and assuming the loan will be more challenging than a conventional mortgage and this simply is no longer the case.

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  55. corncob

    RE: Rhonda Porter @ 54

    We have missed out on two offers and I think a big contributor was that we are FHA financed. Oh well…

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  56. Kary L. Krismer

    RE: corncob @ 55RE: Rhonda Porter @ 54 – I think the concern is that FHA appraisers are more likely to call out conditions of the house–for example bare wood on the exterior which needs paint. So it’s not the cost, it’s the possibility of repairs.

    I was recently told by my buyer client’s lender that he couldn’t finance FHA where one of the upstairs rooms was unfinished, AND that it couldn’t be done as a streamline rehab either! That room had probably been that way for 50+ years, but the house hadn’t sold for that period either.

    Finally, I’ve noticed a number of banks won’t accept FHA on their REOs. That seems really foolish to do as a matter of course (as opposed to depending on property condition).

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  57. David Losh

    RE: corncob @ 55

    Why would you be making offers now rather than wait until the end of May, and into June, or July?

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  58. Kary L. Krismer

    By David Losh @ 57:

    RE: corncob @ 55

    Why would you be making offers now rather than wait until the end of May, and into June, or July?

    Seriously, you think 15 days is going to make a difference?

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  59. David Losh

    RE: Kary L. Krismer @ 58

    I wasn’t asking you, but yes it makes a huge difference.

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  60. Kary L. Krismer

    RE: David Losh @ 59 – What do you see happening in the next 15 days?

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  61. Peter

    I’ve actually been seriously looking on the eastside for a few weeks now and what I’ve noticed is that every agent at open houses says “inventory is low” and “get in now before prices shoot back up to 2008 levels”. I think next time someone says that I’ll look out the window and see if the last rockets are leaving the Earth…

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  62. Ira Sacharoff

    By Peter @ 61:

    I’ve actually been seriously looking on the eastside for a few weeks now and what I’ve noticed is that every agent at open houses says “inventory is low” and “get in now before prices shoot back up to 2008 levels”. I think next time someone says that I’ll look out the window and see if the last rockets are leaving the Earth…

    Inventory is low, but there’s absolutely no indication that prices are going to shoot back up to 2008 levels.
    Real estate agents often find a way to express that ” Now is the time to buy.” If prices have crashed, they’ll say ” Prices are at historic lows, you better buy now before prices go back up again”, if prices are high, they’ll say ” The days of home prices ever dropping again is over. You better buy now before you’ll be unable to afford a home.” None of what they say is backed up by data, more backed up by the fact that they have a Mercedes payment to make and are underwater 150k on their home.

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  63. Kary L. Krismer

    By Ira Sacharoff @ 62:

    None of what they say is backed up by data, more backed up by the fact that they have a Mercedes payment to make and still owe 150k on the home they did a short sale on.

    Fixed your post. ;-)

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  64. S-crow

    RE: Ira Sacharoff @ 62RE: Kary L. Krismer @ 63 – You guys are mean. ;)

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