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.

15 responses to “Reporting Roundup: Spiking Prices Edition”

  1. mike

    A map showing where the all cash deals, along with average down payments are happening would be very informative. Along with concentrations of FHA/low down loans, if possible.

    The neighborhood level analysis on RedFin is interesting, but some of the statistics are so far from what I’d expect, it’s hard to know if it’s correct – or whether the other statistics shown on the same chart are really from the same data set as the % down figures.

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  2. softwarengineer

    One Thing We Learned in 2007

    Predictions of loose [or recently low inventory, mathematically inaccurate statistics] real estate statistics can be dead wrong.

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  3. Erik

    Data can easily be skewed to yield opposite results by messing with scale, shortening/lengthening the time frame, making assumptions tailored to get a specific result, etc. That’s why I like this site. It seems to make more fair assumptions and then points out those assumptions.

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  4. Ron

    I’m just glad to see the economy moving again. When everyone is sitting around afraid to buy or afraid to sell it has a chilling effect on pretty much everything. What’s wrong with volatility and a shortage of inventory? It makes people think and do something. Seattle is and will be for quite awhile a place where people want to live….nothing wrong with that. Copious amounts of jobs in Seattle right now. Seattle is an expensive place to live.

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  5. wreckingbull

    RE: Ron @ 4 – An inventory shortage means the market is not operating efficiently, usually the result of outside forces. Why don’t you ask someone with a down payment saved, ready to buy his first home what is wrong with an inventory shortage. Yes, for those of use that own homes, it is easy to feel smug, but this is not a very healthy situation right now.

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  6. doug

    Your house price in Relation to Gold Prices

    if you own a house that today is valued at $300,000.00
    in 2004 that house was $75,000.00 gold which at the time was $400.00 today gold is $1600.00. Or you could say why did my house not go up to 1,200,000.00 cash. The reason is because at the time house prices in relation to gold were topping and now have flatlined for almost ten years.
    So you ask what are the very best investments in todays financial markets. The two things that are way down and have flatlined for many years and they are the US DOLLAR and WELL LOCATED REAL ESTATE

    these are not dumb buyers buying real estate they are well financed instituions

    MAKE NO MISTAKE
    RENTS are going higher Interest rates are going higher
    and so is WELL LOCATED REAL ESTATE

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  7. Chris

    OK, I bought in Nov 2011, for low FHA low-down payment, and I’m looking to re-fi into conventional 20%-down, and figure I need about 15% valuation increase to re-fi (from a personal finances perspective). Case Schiller through Jan-13 has Seattle up 6.52% (from my specific buy-month). But I’m reading these super-rosy Seattle times articles that were up “10.1% from February” — um, houses are up 10% in a month? — somehow I doubt that. The cooler, more collective experts at SB can weigh in — can a house sold at Index 100 in Nov-11 command an appraisal of 115 today? I could always get it appraised, but I want to have a realistic chance of getting the valuation needed before throwing away $500. But even so, appraisals are all about the NOW. If we can get a rosy appraisal because inventory is at 1.5 mo’s supply and the articles are indicating super rosy valuations, that’s all I really care about.

    Also, feel free to recommend a good lender (referrals welcome, lenders and appraisers).

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  8. Chris

    RE: Chris @ 7

    15% seems like a stretch in that amount of time, even in the best areas like Green Lake or Downtown Kirkland – seems like Kent or Bothell would have less chance at that appreciation. If I were you I would watch closed sales closely via Redfin or Zillow for your neighborhood and see what comparable home sales are looking like, that’s probably going to give you a better idea than C-S will since comparable sales are what will mostly drive the appraisal.

    I re-fi’d recently at Sterling Bank via Costco and was very happy! http://www.costcofinance.com/

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  9. Plymster

    To everyone who foresees rent inflation expanding (in the teeth of another 10k layoffs from Boeing due to the sequester and nightmare-liner), consider this article:

    Developers are planning to open more than 34,000 units between 2013 and 2017. Right now, almost 15,000 units are under construction or completed, and developers plan to start another 5,000 units by the end of June. Developers are set to open more units this year than our market has seen in more than 20 years. And they plan to do it again next year and again in 2015.

    Putting that in perspective, there are currently ~247k units in the Puget Sound Region, with ~9400 vacant (~3.8% vacancy rate). There are currently 15k apartments under construction or completed for the year, with another 5k to start in June. That means ~29k vacant units out of a total of ~267k units (~11%).

    Unless there is a massive influx of people to the region thanks to an unexpected hiring spree from Boeing, the Army, The Navy, Microsoft, or UW (the 5 largest employers in the region), that puts us at the highest apartment vacancy rate in over 30 years.

    If this graph is any indication, we’ll soon be looking at a 4-6% price cut as vacancy rates hit the ceiling at the end of 2013.

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  10. Jonness

    By Chris @ 7:

    Also, feel free to recommend a good lender (referrals welcome, lenders and appraisers).

    I use William Doom in Gig Harbor, WA. Everything can be done online, and he has the lowest rates in the nation. He’s prompt, professional, knowledgeable, and courteous.

    http://myequitypro.com/

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  11. Jonness

    In addition to getting a refund from my lender, I used Nick from 500 Realty as my RE agent and received a $10,000.00 refund from the sales commission. I would have gotten more, but he wrote multiple contracts, which put me in the 60% refund category. I was so impressed with 500 Realty’s business model and level of service, I used them to buy the neighboring property (and got another refund). :)

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  12. David Losh

    RE: Jonness @ 11

    So how did it go with the neighboring property?

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  13. ray pepper

    RE: Jonness @ 11

    Nick is a great guy. Too bad he doesn’t real blogs too often. I will tell him about this plug. He stopped doing Auction buying and just loves helping people. I tell him the BIG DOUGH is with the flips but when you really don’t need the money you do what you want.

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  14. Tim McB

    RE: Chris @ 7

    Chris,

    We did the same, but bought in fall of ’09 with 3.5% down FHA. I made it my mission to get rid of MIP (FHA terms) as soon as possible, and we were successful, so I thought I’d pass some tips we learned along the way. (This might be a good topic piece BTW). As you know if you can pull it off its a big money saver, but you need to have gotten a fairly decent deal on the house in the first place to make it work. Here are a few items to think about.
    First off, use Redfin’s valuation tool which can be found here: http://www.redfin.com/what-is-my-home-worth?src=homepage&estAddress= This was my constant companion most valuable tool for the month’s leading up to our refi/MIP removal. Its way more accurate than looking at Case Shiller for a single home’s value. It will give you comps that have sold in your area and adjust your home’s “value” based on the differences between the sold homes and your home. This is what your appraiser will do as well (look at comps), though his/her adjustments may be slightly different than Redfin’s. But in our case the Redfin calc was only $4,500 off (lower) of the actual appraisal. The key is to be honest with youself about how your home stacks up with the homes listed Remove non-comparables (both high and low) to get the most accurate reading. If you’re in the ballpark, (within 5% or so) keep going. If not, you may want to wait and keep checking back. Depending where you are, this summer might give you the bump you need. If the results look promising keep the addresses of the sold properties to give to the appraiser so you can compare comps with them when they come to appraise. This is the number one best way to show you’re serious and motivated to get a higher valuation. In our case, he agreed with and included in his appraisal 2 of the 3 comps I offered him.

    Secondly, did you do any improvements to the property? If so, make a list of those items and the approximate cost to do them. If you did yourself expect a higher than cost rate of return provided it was done well. If you used a contractor expect to get less “credit” for them than the cost to get it done. Keep this list to give to your appraiser. P.S. don’t think about lying and say you redid the kitchen when you didn’t. They will have photos from the last appraisal when you bought your house and will be able to tell plus they’ll be skeptical of anything else you list as an improvement.

    Thirdly, when you’re ready to get it appraised clean the heck out of your house. Mow the lawn, even touch up paint that may have flaked off inside and out. Basically look at it like the appraiser is a homebuyer and you are selling your house. The appraiser has more technical calcs to determine condition, but if your home is spotless and looks good they will give you a higher rating on overall condition which will in turn help when stacking it up to other comps. There are other methods that they employ to calculate home value (ie cost to replace) but the comp system is by far given the most weight.
    Sorry for the long post but I hope this helps you out a little. I do have more info on our refi to remove MIP if you’re interested. Just let me know and I’ll shoot you my email address and we can chat some more.

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  15. Jonness

    By David Losh @ 12:

    RE: Jonness @ 11

    So how did it go with the neighboring property?

    Nick and I have become pretty good friends, and he always watches my back when I’m buying a place. He does good work, because he relies on repeat customers and word of mouth.

    The property (unimproved waterfront lot) had been for sale since 2008. The seller wanted WAY too much for it. Finally, he capitulated and priced it reasonably, which brought in a flood of Lookie Luos. I had just bought the neighboring house and didn’t want anybody to build next to me, so I bought the neighboring property as well. I don’t really know what I’ll do with it in the future. It has an approved 3-bedroom septic design that will expire in about 3 years. Perhaps in that time frame I’ll do something with it. I’m currently in cash conservation mode and attempting to rebuild my savings, so I’m not too concerned with it at the moment. :)

    500 Realty charges a minimum fee. If they write one contract, you multiply the buyer’s agent commission by 75% and keep anything above the minimum fee. If they write two or more contracts you use a 60% multiplier. Each time you buy a place, the contract resets as if you are buying for the first time again. The thing is, however the refund pencils out, it gets written into the settlement agreement at escrow, and you really do get to keep the money. It’s really a good deal.

    For instance, say you buy a house for $500K, the commission is 3%, and they have only written one contract for you (I.E. you didn’t formally offer on any other houses prior to this one). You would get a refund of $11,200. If they had written, say 2 previous contracts, you would only get a $9,000 refund.

    But if you buy a house that only costs $250K, the entire sales commission is only $7,500. They have a minimum fee (something like $3,800). So you would get to keep everything above the minimum fee. So you would keep $3,700, and they would keep $3,800. You would have to ask Ray or Nick for the exact minimum fee details, as I don’t recall them at the moment.

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