September Stats Preview: The Last Gasp of Inventory in 2017

Let’s take a look at regular monthly “preview” charts. Now that September is in the past let’s take a look at the local housing market stats for the month. Short story: Inventory hit the highest point since a year ago in King County and were just slightly below last month’s high in Snohomish. Sales are still strong, and foreclosures are nearly non-existent.

Here’s the snapshot of all the data as far back as my historical information goes, with the latest, high, and low values highlighted for each series:

King & Snohomish County Stats Preview

Sadly I have nothing particularly new or interesting to share about what happened in the market in September. It’s more of the same cruddy market for buyers: Listings are scarce and sales are still strong.

Next, let’s look at total home sales as measured by the number of “Warranty Deeds” filed with King County:

King County Warranty Deeds

Sales in King County decreased fourteen percent between August and September (a year ago they fell eleven percent over the same period), and were down five percent year-over-year.

Here’s a look at Snohomish County Deeds, but keep in mind that Snohomish County files Warranty Deeds (regular sales) and Trustee Deeds (bank foreclosure repossessions) together under the category of “Deeds (except QCDS),” so this chart is not as good a measure of plain vanilla sales as the Warranty Deed only data we have in King County.

Snohomish County Deeds

Deeds in Snohomish decreased thirteen percent month-over-month (vs. a seven percent decrease in the same period last year) and were down two percent from August.

Next, here’s Notices of Trustee Sale, which are an indication of the number of homes currently in the foreclosure process:

King County Notices of Trustee Sale

Snohomish County Notices of Trustee Sale

Foreclosure notices in King County were down 34 percent from a year ago and Snohomish County foreclosure notices were down 49 percent from last year. Both counties are still basically at their historic low levels for foreclosures.

Here’s another measure of foreclosures for King County, looking at Trustee Deeds, which is the type of document filed with the county when the bank actually repossesses a house through the trustee auction process. Note that there are other ways for the bank to repossess a house that result in different documents being filed, such as when a borrower “turns in the keys” and files a “Deed in Lieu of Foreclosure.”

King County Trustee Deeds

Trustee Deeds were down 42 percent from a year ago.

Lastly, here’s an update of the inventory charts, updated with previous months’ inventory data from the NWMLS.

King County SFH Active Listings

Snohomish County SFH Active Listings

Inventory rose nine percent between August and September in King County, but was still down 17 percent from a year earlier.

In Snohomish County listings were down just barely month-over-month and down 14 percent year-over-year.

Note that most of the charts above are based on broad county-wide data that is available through a simple search of King County and Snohomish County public records. If you have additional stats you’d like to see in the preview, drop a line in the comments and I’ll see what I can do.

Stay tuned later this month a for more detailed look at each of these metrics as the “official” data is released from various sources.


About 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.

106 comments:

  1. 1

    With Seattle Home Prices So High and Inventory So Low

    The American Dream is dead for most Seattle area families to afford or qualify.

    Why is this a good thing?

  2. 2
    Justme says:

    No to worry, the active inventory will spike radically when every debtowner starts running for the exit at the same time. Sell now or get trampled by the herd.

  3. 3
    Erik says:

    RE: Justme @ 2
    Thanks for the tip. Now why does your statement contradict all of the data?

  4. 4
    Doug says:

    RE: Justme @ 2 – Yes, because every Seattle homeowner only thinks about their house as a speculative investment and therefore must lock in profits right now!

  5. 5
    Erik says:

    RE: softwarengineer @ 1
    This is my prediction… More will start saying we can no longer afford the American Dream and credit will open up for minority’s followed by everyone else. This is called credit expansion. After we bring back the negative amortization and NINJA loans, we’ll hit a full on bubble. I’m looking forward to it because I know what to do this time.

  6. 6
    Erik says:

    RE: Doug @ 4
    Is this the same Doug that was super afraid in 2013 and 2014 that the market was exploding and the world was crashing down? I hope you are no longer paralyzed by fear.

  7. 7
    Doug says:

    RE: Erik @ 6 – Not sure, but doesn’t sound right.

  8. 8
    PrettyGood says:

    People that sold their homes in 2017 did so at record low inventory levels. The bidding wars that took place created a scenario where they essentially locked in 3-4 years of future appreciation at 6-8 percent per year. Sure, maybe the market keeps going up, but locking in years of appreciation that may or may not occur seems like a pretty good deal to me (this on top of a 100% price appreciation since 2012 – sound sustainable????). My feeling is that inventory will keep slowly rising and as interest rates creep up the market will become a lot more balanced by 2019. There will be a few more steady years after that and then hold on. I’m just going to sit back and watch from my new rental.

  9. 9
    Anonymous Coward says:

    By softwarengineer @ 1:

    With Seattle Home Prices So High and Inventory So Low

    The American Dream is dead for most Seattle area families to afford or qualify.

    Why is this a good thing?

    Because it means the growth management act is working

  10. 10
  11. 11
    Deerhawke says:

    RE: Justme @ 2

    Justme, this is an incredibly important message and you need to do a better job of getting it out to the public. Think about radio and TV spots, ads in the newspaper, and mass public meetings. You need to tell homeowners that now, now, now is the time to sell while the selling is good. “Sell now or get trampled by the herd ” is a brilliant tag line.

    Please pay no attention to those who would point out to you that I have just sold out all my inventory and need to buy more land to redevelop. Such people are nothing but cynics.

  12. 12
    Deerhawke says:

    “Inventory rose nine percent between August and September in King County, but was still down 17 percent from a year earlier.”

    I guess there is some comfort that we are not seeing figures like in April when inventory dropped 27.3 percent. The question for me is whether we are seeing some tapering off of the inventory problem or it is just a seasonal variation where we see more contraction in inventory in the hot spring market and less in the fall.

    From my own narrow perspective, I think the inventory problem is potentially worse than the numbers make it seem.

    Here’s why. Three of the last 4 houses I sold were PSP (pre-sold with a premium). So in fact, only 1 of the 4 was truly available for sale on the MLS.

    One sold direct builder-to-consumer. The other two deals had MLS registered agents involved and there is a new MLS rule that even off-market deals must be listed on the MLS, so those transactions were listed on the MLS.

    A listing was created for each of those properties even though they were already pre-sold. A few minutes later it showed on the MLS as pending.

    Of course, this creates a bit of confusion. Buyers see the house go up for sale on Redfin and then see it just as quickly has gone pending. They call their agents to ask what just happened. Those agents then call the agent who created the listing and ask in essence, “Hey WTF just happened here?”

    It seems this new MLS rule would also cover dirt deals that traditionally were not listed on the MLS, so this may be another reason that there is less actual inventory than is shown on the MLS.

    RE agents out there– what do you think? Does this seem plausible?

  13. 13

    By Deerhawke @ 11:

    The other two deals had MLS registered agents involved and there is a new MLS rule that even off-market deals must be listed on the MLS, so those transactions were listed on the MLS.

    A listing was created for each of those properties even though they were already pre-sold. A few minutes later it showed on the MLS as pending.

    Of course, this creates a bit of confusion. Buyers see the house go up for sale on Redfin and then see it just as quickly has gone pending. They call their agents to ask what just happened. Those agents then call the agent who created the listing and ask in essence, “Hey WTF just happened here?”

    That is not how it is supposed to work–unless maybe new construction is different and you’re talking about an agent with an agreement with the contractor covering the whole project.

    But normally the way it is supposed to work is that the unlisted transaction gets reported to the NWMLS after the transaction closes. These are basically transactions where the agent represents one or the other party to the transaction where the parties met without the property being listing. Before the new rule there was no record of the agent being involved in the sale. These transactions do not show up in the monthly stats, but the record of the sale does exist for agents to access. FWIW, there have been about 750 such SFR sales in King County YTD. (Number from NWMLS sources, but not compiled by or guaranteed by the NWMLS.)

  14. 14
    Deerhawke says:

    Thanks Kary. That is helpful information.

    This makes sense.

    But from the builder’s perspective, there are pluses and minuses to having the house listed even if it is sold. In these cases, we had already done the staging, the photography, and had written up the listing details and comments, so there was no extra work.

    The minus is that it is possible that the house will have problems with financing and then the sale could fail. (That almost happened here because one of the buyers moved from one employer to another during the pendency period.) Then if you have to re-list the house, it has accrued market time on it and it could project the idea that there were problems, etc.

    On the plus side, if you have a few houses that show 1 day of market time before being sold, that always looks good. Also if someone wants to look at what you build, you can send them to look at actual listings on Redfin or another site.

  15. 15

    RE: Deerhawke @ 13

    Long story short…agents and appraisers (who are affiliate members of the mls) need the comps.

    Long story:

    Back in 2004 when I first moved here there was an opposite rule. You couldn’t enter a property in the mls if it was already pending.

    You can’t enter it as pending, which is simply the mechanics, as the input field gives you two options “Active” or “Incomplete”, so you have to enter it as active and then switch the status to Pending.

    As to the “on market” time, our system stops the clock when it goes pending. Inside the mls this listing shows DOM (Days on Market) as 6 days. On Redfin it says “on Redfin for 34 days” but the detail says Listed 8/31 and Pending 9/6. https://www.redfin.com/WA/Kirkland/11416-NE-112th-St-98033/home/461670

    The NEWER rule is that a member of the mls is not allowed to sell the house off market, basically, and must enter all of their inventory into the mls system. We used to have to list a property within 10 days of a listing contract being signed, and then within 72 hours of a listing being signed and then within 24 hours of a listing being signed…basically the system and conditions of membership in the system have always moved in the direction of the listing agent NOT selling the property without it being available to all members first. Only 24 hours from listing contract to IN mls doesn’t work well, so they changed the rule to “within 30 days” BUT ADDED the rule that you couldn’t Pre-Market the property and try to sell it yourself in that 30 days. Many agents are being fined for advertising the listing before it goes on market.

    So essentially your properties are supposed to be listed as “Pre-Sale” long before they go Pending. If the agent is complicit in trying to sell it off market, they will likely be fined. But I think what you are doing is selling it yourself and adding the agent because he was the “dirt” agent.

    Basically the mls system is an “I’ll show you mine if you show me yours” system. An agent isn’t supposed to sell everyone else’s listings and keep theirs in their pocket and sell them by themselves. Of course the official reason is the seller deserves maximum exposure, but only putting the houses in that you can’t sell yourself and need help with has been frowned upon for decades.

    You are seeing it from your side, but all of the agents who had no chance to make that house available to their buyers can file a complaint against your agent for keeping it in his pocket until the property was sold. Pocket Listings aren’t allowed in our mls these days for members of the mls. A builder can get around that as they are not an mls member, but the agent you tack on to the listing can get a fine for not listing it before it was sold.

  16. 16
    mark e mark says:

    The sky is not falling. Prices will keep going up until housing supply meets demand. Job growth, population growth, good paying software engineering jobs and the fact that very little undeveloped land exists in the Seattle area and much of it is land locked by water means higher prices. Furthermore, Seattle is a very desirable place to live. How high can prices go? Probably as high as San Francisco which may be about 20-25% higher based on 2015 or 2016 median house price data. If you think Seattle cant go higher ask yourself how in the world Portland housing prices are so high and previously led the country in year over year in price increases. If you want affordable move to the Midwest. If you want to know how expensive housing can get check out New York City.

  17. 17
    Kmac says:

    RE: Deerhawke @ 12
    I’ve noticed the same thing with lots showing pending as soon as they are listed and was wondering what was going on.

  18. 18
    N says:

    By mark e mark @ 16:

    The sky is not falling. Prices will keep going up until housing supply meets demand. Job growth, population growth, good paying software engineering jobs and the fact that very little undeveloped land exists in the Seattle area and much of it is land locked by water means higher prices. Furthermore, Seattle is a very desirable place to live. How high can prices go? Probably as high as San Francisco which may be about 20-25% higher based on 2015 or 2016 median house price data. If you think Seattle cant go higher ask yourself how in the world Portland housing prices are so high and previously led the country in year over year in price increases. If you want affordable move to the Midwest. If you want to know how expensive housing can get check out New York City.

    Probably so, but its interesting to note that you mentioned the two most expensive markets, and on the rental side rents are DOWN 5% and 10% year over year in those markets.

    https://www.zumper.com/blog/2017/10/zumper-national-rent-report-october-2017/

  19. 19
    mark e mark says:

    In Seattle change in condo law a couple of years ago requiring Developers to insure (and not self insure) for their construction defect liability was increased to perhaps a 4 years period from occupancy from 2 years. I believe this has stopped almost all construction of Condos by all developers except for the major ones who are still building condo high rises in downtown Seattle. Given that condos are entry level housing I would believe this would limit the supply of housing to some degree and act to increase overall housing prices. I suppose a decrease in rents would also mean somewhat less demand for condos/housing.

  20. 20
    Deerhawke says:

    RE: Ardell DellaLoggia @ 15

    Thanks Ardell. This is instructive.

    The agent was definitely not at fault here. Basically I found the dirt myself so the listback was not “owed” to an agent. I had several agents who specialize in pre-sales come through in the month or six weeks before we were complete. There were no solid bites. I gave the listing to an agent who had been working hard for me. We went ahead and got ready to put it on the market. We had the house staged, photographed and even made up a cool video. Right about then, we got a call from one of the pre-sale agents who wanted to show it to their clients. There was a flurry of activity and we got an offer 12 hours before we were supposed to go live on the MLS. We got it all signed around with 3 hours to spare.

    But basically you are right. I sold it myself and added the agent not because he was the “dirt” agent but because he had helped price it and prep it. He had invested time into the deal and was ready to put it on the market.

    We had been prepared to have a really nice broker’s open lunch and since that wasn’t necessary, we had a big party for the neighborhood so they could see the house.

  21. 21
    GoHawks says:

    For those that think Amazon will no longer be bringing in top tech talent here:

    Amazon still growing in Seattle, taking over what will be the city’s 2nd-tallest skyscraper
    https://www.seattletimes.com/business/real-estate/amazon-still-growing-in-seattle-taking-over-what-will-be-the-citys-2nd-tallest-skyscraper/

  22. 22
    StupidLifeDecisions says:

    By mark e mark @ 16:

    The sky is not falling. Prices will keep going up until housing supply meets demand. Job growth, population growth, good paying software engineering jobs and the fact that very little undeveloped land exists in the Seattle area and much of it is land locked by water means higher prices. Furthermore, Seattle is a very desirable place to live. How high can prices go? Probably as high as San Francisco which may be about 20-25% higher based on 2015 or 2016 median house price data. If you think Seattle cant go higher ask yourself how in the world Portland housing prices are so high and previously led the country in year over year in price increases. If you want affordable move to the Midwest. If you want to know how expensive housing can get check out New York City.

    Notice how pretty much your whole post is making it very clear that seattle real estate prices rely on software engineering jobs. You and every other seattle real estate bull should probably think about that.

  23. 23

    RE: Deerhawke @ 20

    Some day you will put a link to one of your houses here so we can find out who you are and see your work. :)

  24. 24
    justme says:

    RE: Doug @ 4

    Fallacy. Not *all* Seattle debtowners need to get into panic mode for prices to drop sharply. I’d say 5% of homeowners deciding it was time to get the hell out would be more than enough to unravel the whole thing quite quickly.

  25. 25
    justme says:

    RE: Deerhawke @ 11

    So we are on the same team after all? Who would have thunk.

  26. 26

    By mark e mark @ 19:

    In Seattle change in condo law a couple of years ago requiring Developers to insure (and not self insure) for their construction defect liability was increased to perhaps a 4 years period from occupancy from 2 years. I believe this has stopped almost all construction of Condos by all developers except for the major ones who are still building condo high rises in downtown Seattle. Given that condos are entry level housing I would believe this would limit the supply of housing to some degree and act to increase overall housing prices. I suppose a decrease in rents would also mean somewhat less demand for condos/housing.

    I don’t think that is quite right, but liability for construction defects is a concern. Question though–whose problem is that? If builders suck so bad at building structures that insurance costs are high, what’s the problem? Is the loss supposed to fall on the innocent buyer of the property? One way or another the builder should pay, but through insurance all builders would pay–not just the bad ones. The advantage of insurance is there should be a solvent entity to go after. A bad builder might very well be insolvent.

    Personally I’m still not convinced that this isn’t a builder industry propaganda issue, because I can’t see how their liability would be any less selling to a single owner (an apartment landlord) than multiple owners (a condo association). That said, I also can’t explain the lack of condo development, unless maybe the rental market is just so attractive.

  27. 27
    GoHawks says:

    RE: StupidLifeDecisions @ 22 – Yes, those pesky $100k a year jobs that Amazon is hiring right and left.

  28. 28
    Deerhawke says:

    RE: StupidLifeDecisions @ 22

    No question there are a lot of software engineering jobs coming into the city.

    But when I am at a friend’s cocktail party and meet people who are new to the area, it is amazing to me how many of them are not strictly software tech types. I am having conversations with epidemiologists and doctors working for PATH and the Gates Foundation, agricultural investors, marketing and branding people, finance types, vintners, venture capital types, real estate developers, IP lawyers, 3d prototype designers, set designers, agricultural exporters, UW professors, biotech researchers, actuaries, non-profit managers, fisheries managers, people reinventing the trucking industry, etc.

    Maybe you could make the case that software is the sine qua non of all the other growth that you see. But this economy feels totally different to me from when I first got here in the early 90’s and those parties were predominantly Microsoft and Boeing people or people whose businesses were indirectly reliant on those two companies.

    I think you can be long-term bullish on Seattle real estate not just because of software engineering but because of all the other industries and specialties that are coming here. I think the industrial and intellectual capital base of this city has diversified about as much as the restaurant scene has.

    Trust me, nobody in the early 90’s was talking about fusion poke, Tex-Mex pizza or Korean tacos.

  29. 29
    Doug says:

    RE: justme @ 24 – Maybe. I honestly don’t know what that percent would need to be to create critical mass.

    I do recall that earlier this year you made the claim that this summer would be the top. While it doesn’t look to be the case per CS data through July, I suppose we still might rollover. Regardless of what happens this winter, my guess is that spring ’18 prices will be higher than spring ’17.

  30. 30

    Here’s a story about malls being converted to residential as they die off due to Amazon, etc.

    http://realtormag.realtor.org/daily-news/2017/10/02/dying-malls-could-give-birth-new-inventory#sf118322743

    I saw a headline of another story where such space might be offered to Amazon as their second headquarters. How ironic would that be?

  31. 31
    wreckingbull says:

    RE: Kary L. Krismer @ 26 – I expect the crushing load of apartments which came online in 2016-2018 will fuel a massive condo conversion wave in the future. I was constantly amused by the absolute dumps which ‘went condo’ with new fuzzy carpet and a paint jobs in 2006.

  32. 32
    Doug says:

    RE: Deerhawke @ 28 – wait, are you claiming not everyone in Seattle works at Amazon? Reading this board for the last 3 years has lead me to believe that the only job in Seattle is in fact at Amazon, despite the fact that I personally don’t work there and actually only know 2 people who do. Very shocking indeed.

  33. 33
    wreckingbull says:

    RE: Kary L. Krismer @ 30 – For some, dead malls are a literal hobby!

    http://deadmalls.com/

  34. 34

    RE: wreckingbull @ 31 – I agree–including the part about dumps converted in 2006.

    Conversion might even be the plan when building them today, but at least though should probably be higher quality than the conversions of the past. As a bit of trivia, the condo I bought in 1978 was built as a hotel for the World’s Fair, with a planned conversion to apartments after. The condo conversion came much later (about 77-78.)

  35. 35
    Deerhawke says:

    By Ardell DellaLoggia @ 23:

    RE: Deerhawke @ 20

    Some day you will put a link to one of your houses here so we can find out who you are and see your work. :)

    OK Ardell, here you go. This closes today.

    https://player.vimeo.com/video/232133201?color=ffffff

  36. 36

    RE: Deerhawke @ 35 – Now you’re in trouble. That fire better not be photo-shopped! ;-)

  37. 37
    Deerhawke says:

    RE: wreckingbull @ 31

    I think many of the small-mid size buildings will get converted. The larger ones (generally over 100 units) have been sold to pension funds, REITs, TIAA-CREF etc.

    But I think that since most of these were not being built until 2012 and after and since there is a six-year construction liability rule, most will not start to come on the market until 2018 with the bulk of conversions after 2020.

  38. 38
    justme says:

    RE: Doug @ 29

    >>I do recall that earlier this year you made the claim that this summer would be the top.

    You really should be more careful not to misrepresent what I said. Details matter. Here is a partial quote of what I said, verbatim:

    QUOTE: I’m making the call: The housing price peak in Seattle (as per Case-Shiller) will happen in 2017, unless FRB changes its policies again. (Indeed, prices may already have peaked, we don’t have the data yet.)

    Even better, refer back to the original post and read ALL of it.

    REFERENCE:

    http://seattlebubble.com/blog/2017/06/06/nwmls-may-grand-slam-home-salespeople/comment-page-1/#comment-263302

  39. 39

    I’m surprised there’s been no mention of Trump’s tax plan–particularly by Tim. I haven’t studied it, because I never assume Congress will do anything, but I believe it has double the standard deduction but no state/local tax deduction, including RE taxes. That would be good for those with low or no mortgage amounts, but bad for those with sizable mortgages (because much of their deduction would be eaten up in the higher standard deduction) I believe very high mortgages also have some MID limitations, so the range of house where the MID would be of significant benefit might be somewhat small.

    https://www.washingtonpost.com/realestate/gop-tax-plan-does-not-yet-address-many-real-estate-questions/2017/10/03/d69a6088-a792-11e7-92d1-58c702d2d975_story.html?utm_term=.c7c13b2b9110

  40. 40

    RE: Erik @ 5
    Eric

    Watch the tax plan evolve to completion [a real Thanksgiving for us, I estimate about $4K reduction in my 2017 yearly tax bill of my fixed income retirement] this month, who can really argue against a tax decrease? They’d be committing political suicide. Its gonna happen.

    Now the devils are the details….how high is the 12% bracket cover before doubling to 25%? Mortgage interest deduction is immune from cuts? Mortgage interest deduction may be limited to a maximum amount to end class disparity and deficit causing real estate welfare to the top rich elite 5-10% of household incomes [about $100K per year and higher]. Trump knows real estate loopholes….he also knows how to close ’em too.

    They’re talking a post card to do our 2017 income taxes with no attachments…for all folks addicted to heroine mortgage interest deduction, THIS SOUNDS OMINOUS for big debt rich elite real estate . Obamacare 1040 tracking of mandatory healthcare compliance removed in stealth too?? LOL, you dumb open border progressives are letting Trump lead you to your own failures and you think you won…look how Trump fooled you on DACA….LOL

  41. 41

    RE: Kary L. Krismer @ 39
    The Devils are in the Details Kary

    Read my blog above….

  42. 42
    Deerhawke says:

    RE: Kary L. Krismer @ 36

    Wow, interesting idea. But once you start photoshopping stuff in, where does it stop? We could have put a pool in the backyard!

    BTW, you have written about financing contingency in the past. I have a builder’s addendum that addresses the issue from my perspective, which is that people should really know for sure if they can buy something before they tie it up.

    It starts with this:

    In the event of conflict between this Addendum and any other contract documents, this Addendum shall control unless the other document specifically references this Addendum and the fact that it supersedes the provisions of this Addendum.

    After specifying language about the contract, there is this:

    3. PRE-APPROVAL AND FINANCING CONTINGENCY: Buyer and Seller agree that if a loan is required to complete this sale, Buyer will obtain a pre-approval letter from Seller’s Preferred Lender within three (3) days of the mutual acceptance date of this Purchase and Sale Agreement. Should Buyer fail to provide said pre-approval letter, Seller may elect to terminate this agreement and refund Earnest Money to Buyer.

    If a financing contingency such as NWMLS Form 22A is included as a part of the sale, Buyer and Seller agree that any and all earnest monies shall become completely non-refundable fourteen (14) days after the mutual acceptance date of the Purchase and Sale Agreement and shall be released by closing agent to Seller without any further action or approval by Buyer or Seller on closing date specified herein.

    In the case of Appraisal less than Sale Price, Buyer waives remedies under 22A Section 7 and agrees that it shall be the sole responsibility of Buyer to make up any deficiency, additional down payment or other conditions required by Buyer’s lender.

    Seller agrees to cooperate with Buyer and Buyer’s lender to permit Buyer the opportunity to obtain any loan(s) including, without limitation, permitting inspections and appraisals required by Buyer’s lender.

    Thoughts?

  43. 43
    Doug says:

    RE: justme @ 38 – Ok, how exactly did I misrepresent you? You said the peak would be in 2017 so I think it’s fair to assume that peak would occur in the summer, right? Unless you think the peak won’t occur until December in which case, you’re right, I misrepresented you.

    Re: FRB changing policies, if anything, they have become more hawkish since that posting so you don’t have an out there.

    As for “prices may already have peaked” we now have data from July showing prices have continued to increase since your post on June 14th.

    So again, how did I really misrepresent you?

  44. 44
    justme says:

    RE: Ardell DellaLoggia @ 23

    I already had that house of Deerhawke’s figured out long ago from the info he posted earlier. But since I do myself value my privacy I didn’t think it would be appropriate to “out” him.

    Perhaps you also had that house figured out in short order, but would rather have Deerhawke post it himself (as he did)? Someone with your experience (and tool access) could find the house in less than 5 minutes, as I did.

  45. 45
    justme says:

    RE: Doug @ 43

    >>You said the peak would be in 2017 so I think it’s fair to assume that peak would occur in the summer, right?

    Wrong. You made assumptions for me. Don’t do that.

    >>So again, how did I really misrepresent you?

    You just admitted it yourself.

  46. 46

    RE: Deerhawke @ 42 – I’m really uncomfortable offering your specific legal advice, but one thing that really jumps out is rather than make the earnest money non-refundable, just provide that the financing contingency will be waived. Non-refundable EM is very problematic for a number of reasons.

    Also, I think your low appraisal provisions are ambiguous, similar to how just removing the low appraisal provisions is ambiguous. There I’m not going to suggest a change due to my concern about providing legal advice.

  47. 47

    By justme @ 44:

    Someone with your experience could find the house in less than 5 minutes.

    That doesn’t mean she would have the motivation to do it. I certainly didn’t.

    That said, there is one person here who posted in the past about being the client of a certain agent. There I did check and that was entirely made up.

  48. 48
    mark e mark says:

    google “condo construction liability seattle” and you will see many articles about construction liability stopping condo development in Seattle. Someone in the thread mentioned construction liability period is now 6 years, probably an increase from 4 years…..see following that I copied in.

    What’s stopping Seattle condo development?

    Two major factors contribute to the depression of condominium construction in Seattle. The first is the city’s skyrocketing rental market—as rents continue their upward climb in the city, one that’s been far steeper than the rise in condo value, apartment construction remains a more attractive investment than condominiums. What’s more, rental properties don’t face the same tax burdens in Washington that they do in British Columbia, so there’s no disincentive for investors to go big into the rental market. In addition to, and compounding the apartment market advantages, the condominium market appears risky to homebuilders and their insurers due to the exacting, and sometimes ambiguous, standards of the Washington Condominium Act. This perception of risk, and attendant expenses of the required additional insurance, may be the tipping point which turns many potential condo builders toward the rental market.

  49. 49

    By mark e mark @ 48:

    google “condo construction liability seattle” and you will see many articles about construction liability stopping condo development in Seattle..

    Yes, but those stories are written by reporters who don’t know their butts from a hole in the ground, as is the case with most real estate/legal reporting. That those articles exist doesn’t mean it isn’t builder association propaganda.

  50. 50
    Doug says:

    RE: justme @ 45 – You are right, I made an assumption for you and for that I apologize.

    Can you please clarify for me then when in 2017 the peak will occur? So I don’t make false assumptions again.

  51. 51
    Eastsider says:

    RE: mark e mark @ 48 – A typical new SFH has a builder warranty of one year. The six year condo liability insurance, if a builder can get it at all, will be prohibitive given the number of past lawsuits. If we require all SFH builders to provide six year warranties, we will essentially kill the housing market.

  52. 52
    justme says:

    RE: Doug @ 50

    >>Can you please clarify for me then when in 2017 the peak will occur? So I don’t make false assumptions again.

    Don’t pretend to be stupid. The prediction was **in 2017**. Do you want me to enumerate the months of the year for you? /sarc.

  53. 53
    Eastsider says:

    RE: Doug @ 50 – I’m sure you know that no one can call the market top. I’m also certain that Justme believes the housing market is in a bubble. I’m with justme here although I don’t advise people not to buy houses for their own residence (but not for ‘investing’). I would say that 90% of local homeowners today cannot afford their own homes at current prices. The situation is simply unsustainable. But then a bubble can stay bubbly for a while or even for a prolonged period…

  54. 54
    Eric with a "c" says:

    By Doug @ 50:

    RE: justme @ 45 – You are right, I made an assumption for you and for that I apologize.

    Can you please clarify for me then when in 2017 the peak will occur? So I don’t make false assumptions again.

    You’re giving Justme a break by engaging him on more recent comments, Doug. Way back on 12/26/16, he said, “People planning to sell had better get their house on the market soon after Jan 1, and at a competitive price, or the house will languish all year unsold.” I wrote the comment down at the time because I was so surprised he gave an opinion that could actually be evaluated and shown false over time.

  55. 55
    mark e mark says:

    The longer liability period (and larger future $ payments) makes building smaller condo buildings uneconomical. Its that simple. A little research goes a long way. Anyway no condo material construction means less Seattle housing inventory for sale which is helping to drive the steep increase in prices.

  56. 56
    Kmac says:

    By Eastsider @ 51:

    RE: mark e mark @ 48 – A typical new SFH has a builder warranty of one year. The six year condo liability insurance, if a builder can get it at all, will be prohibitive given the number of past lawsuits. If we require all SFH builders to provide six year warranties, we will essentially kill the housing market.

    I know you are not saying this, and it has been several years since I have verified this, but many people assume that a builder is required to warranty a product for a year.
    I could never find any legislative or administrative requirements enforcing such an action.
    I believe the only recourse a homeowner is entitled to is filing suit against contractor.
    I think this applies to homes sales and any home improvement over a certain threshold.

    In every sale I am involved in, I require the signing of the Right to Cure notice during the P&S agreement paperwork as outlined in RCW 64.50.
    I am amazed that many of my peers are not aware of this option.

    RCW 64.50.050
    Construction professional right to offer to cure defects—Notice to homeowner.

    (1) The construction professional shall provide notice to each homeowner upon entering into a contract for sale, construction, or substantial remodel of a residence, of the construction professional’s right to offer to cure construction defects before a homeowner may commence litigation against the construction professional. Such notice shall be conspicuous and may be included as part of the underlying contract signed by the homeowner. In the sale of a condominium unit, the requirement for delivery of such notice shall be deemed satisfied if contained in a public offering statement delivered in accordance with chapter 64.34 RCW.

    (2) The notice required by this subsection shall be in substantially the following form:

    CHAPTER 64.50 RCW CONTAINS IMPORTANT REQUIREMENTS YOU MUST FOLLOW BEFORE YOU MAY FILE A LAWSUIT FOR DEFECTIVE CONSTRUCTION AGAINST THE SELLER OR BUILDER OF YOUR HOME. FORTY-FIVE DAYS BEFORE YOU FILE YOUR LAWSUIT, YOU MUST DELIVER TO THE SELLER OR BUILDER A WRITTEN NOTICE OF ANY CONSTRUCTION CONDITIONS YOU ALLEGE ARE DEFECTIVE AND PROVIDE YOUR SELLER OR BUILDER THE OPPORTUNITY TO MAKE AN OFFER TO REPAIR OR PAY FOR THE DEFECTS. YOU ARE NOT OBLIGATED TO ACCEPT ANY OFFER MADE BY THE BUILDER OR SELLER. THERE ARE STRICT DEADLINES AND PROCEDURES UNDER STATE LAW, AND FAILURE TO FOLLOW THEM MAY AFFECT YOUR ABILITY TO FILE A LAWSUIT.

    (3) This chapter shall not preclude or bar any action if notice is not given to the homeowner as required by this section.

    The problem lies in the business’s general liability insurance.
    Unless I pay extra for endorsements allowing the extra coverage, I have zero coverage for condo construction, any repair or alteration to a condo unless it is with individual homeowners, and then only in limited numbers. Same applies to work in new construction tracts. 3 or 4 homes MAX allowed in any one tract. Otherwise more $$$$$.
    Same with Lead, asbestos, mold, mildew. No coverage without extra $$$.

    I know of many contractors doing most of the above with zero coverage for them and you.
    Insurance companies are trying to protect themselves from over zealous attorneys.

  57. 57
    Eastsider says:

    RE: Kmac @ 56 – Yes, a reputable builder generally offers some sort of warranty on new homes. One longtime builder I believe offers up to 10 years warranty. YMMV.

  58. 58
    Eastsider says:

    RE: Deerhawke @ 28 – I think you vastly underestimate the presence of Amazon in Seattle and its effect on home prices. Amazon takes up 20% of prime office space in Seattle. No other corporation comes even close to that dominance in a major city. Doesn’t that qualify Seattle as a company town? LOL.

    For every high paying job Amazon brings here, it creates a number of other jobs. The high paying marketing and branding people, finance types, vintners, venture capital types, real estate developers, IP lawyers, 3d prototype designers, doctors etc may not be here if Amazon is not here.

    Btw, Amazon’s job postings in Seattle have been dropping, from about 9,000 in June to under 6,000 now (seasonal?) If the second HQ is an equal, I would assume that all new jobs will be created there. (You can calculate that based on Amazon’s projected job growth pre-2nd HQ announcement.) If real estate market reacts as fast as the stock market, we would likely have experienced a correction, if not a bear market, in home prices by now.

  59. 59
    ess says:

    By GoHawks @ 21:

    For those that think Amazon will no longer be bringing in top tech talent here:

    Amazon still growing in Seattle, taking over what will be the city’s 2nd-tallest skyscraper
    https://www.seattletimes.com/business/real-estate/amazon-still-growing-in-seattle-taking-over-what-will-be-the-citys-2nd-tallest-skyscraper/

    Go Hawks

    When I read that article – my first thought was that the downtown Seattle location really doesn’t have the space to accommodate the physical needs of Amazon. This entire HQ2 thing is just a push to get financial incentives from two states in a situation where two locations were going to be needed anyway.

    The signing of an entire new office building’s office space certainly signals that Amazon is here to stay, for at least the next few years. And that new office building, with its 200 apartments will be perfect for the vertically commuting Amazon employer.

    Sorry doom and gloomers – no fire sale of housing, and no 50% reduction in rents. Things are still going to be pretty tight around here in the lower end single family market for both purchasing and renting.

  60. 60

    By Eastsider @ 57:

    RE: Kmac @ 56 – Yes, a reputable builder generally offers some sort of warranty on new homes. One longtime builder I believe offers up to 10 years warranty. YMMV.

    There is an implied warranty on both houses and condos, but the house warranty is a judicial creation while the condo warranties are statutory. I also have something in the back of my head that the house warranties can be replaced by giving an express warranty.

    But the point is, both types of properties have implied warranties. Condos are a bit broader, I believe last a year longer (four rather than three) and have broader application (apply to both the builder and developer and apply to the original buyer and subsequent buyers).

    But again I will ask what is wrong with any of that? If a building is built such that defects start occurring within three or four years, why should that loss fall on the person who bought the property rather than the builder who built the property or the developer who sold the property? If there’s a problem it may not be with the law, it may be with the builders!

    And finally, I’ve mentioned in the past that Snohomish County seemed to have a lot of condos built in the early 20th century where the vinyl siding was improperly installed an needed to be replaced in fairly short order. Installing vinyl siding isn’t exactly high tech work, and the fact that the builders couldn’t do that right says a lot about the quality of their work. In the world of condo construction the developers need to do a better job selecting their contractors and the contractors need to do a better job supervising their workers.

    Here’s an undated piece on construction defects and the various theories of liability. I think it may be almost 10 years old.

    http://www.mms-seattle.com/wp-content/uploads/2013/06/ATI-JTF-Pub-WA_Construction_09.pdf

  61. 61

    And here is a more technical piece that is eleven years old.

    https://www.stoel.com/getattachment/People/M/Joseph-P-McCarthy/McCarthy-WSBAPresentation-Habitability.pdf

    Also, the edit function isn’t present on my prior post. That should have read early 21st century.

    And finally, not exactly an area I follow, so there may have been changes since either link was published that I’m unaware of.

  62. 62
    Kmac says:

    Great links Kary.
    Saved for future reference.
    I agree that new property should have no major issues for years to come.
    What I understand is the implied warranty of *habitability* only covers major issues and doesn’t really address the nit picky items that many [many more so now than ever] seem to complain about when talking about the “1 year warranty” (unless it is an express warranty that covers those nit picky items).

  63. 63
    Action says:

    Another eastside city enacted a development moratorium this week:

    http://www.issaquahreporter.com/news/sammamish-enacts-emergency-moratorium-on-new-development/

    Sammamish joins Issaquah, Newcastle, and North Bend that currently have moratoriums in place now. Not to mention Snoqualmie, which is basically maxed out on housing units per the King County Comp plan.

    Irregardless of what happens with Amazon or the overall economy, my prediction is that the supply side of the equation is going to cause home prices in King County to continue to increase. There simply are not enough single family homes being built to keep up with demand.

    The policies of the GMA is what is driving the infill construction of apartments. Yes, there will be 10s of thousands of apartment housing units coming online within the next few years which should dampen rent increases and fulfill the demand from the migrant tech workers coming here. But we are seeing that the desire for the single family home, even with the younger millennial generation, is not waning. And this is being combined with the baby boomer generation refusing to sell and deciding to age in place in their home instead of downsizing. Someday a single family home with a yard in Seattle is no longer going to be an affordable option except for the upper echelon.

    Hopefully with the influx of new apartment construction, rent growth will stabilize and we won’t end up in the same situation as San Francisco or Vancouver where the living expense deters newcomers. However, for the single family home market, I see that going nowhere but up just like in both those cities since we have the same geographic and urban growth policy restrictions.

    While it may not necessarily be ” Buy now or be priced out forever.” I do feel that it is “Buy a single family home now or live stacked in a box forever”.

  64. 64
    justme says:

    RE: Action @ 63

    Teardowns and rebuilds still ok? The article does say moratorium on NEW DEVELOPMENT.

  65. 65

    By Action @ 63:

    While it may not necessarily be ” Buy now or be priced out forever.” I do feel that it is “Buy a single family home now or live stacked in a box forever”.

    Clever. There should be plenty of seniors moving out of their SFHs over the years, and into multi-family, so that would be another source of supply.

    But as to your point, I know not everyone wants a large lot/yard, but for those who do the SFH choices are even more limiting. And for those who prefer newer and a large lot/yard, even more limiting.

  66. 66
    redmondjp says:

    RE: Action @ 63 – Action – what you see taking place is by design, and it’s all part of the global agenda for housing in urban areas. Single-family homes are deemed too wasteful (in terms of energy used, resources to develop them, and the space they take up) and thus only the 1%ers will be able to afford one in the future.

    The rest of us are supposed to live in multi-story ratboxes situated along mass-transit corridors. You can read all about this online – it’s part of the U.N’s Agenda 21 growth agenda (now relabled ‘Agenda 2030’). No tinfoil-hat conspiracy here, it’s all public information. Personally, when I see these multi-story apartment buildings going up in our area I immediately think of Soviet Russia. And when these buildings aren’t even made of durable building materials (coughOSBcough), they will likely be in very poor condition in 20-30 years if not sooner. But hey, that’s just me.

    The regional supra-governmental organization implementing this agenda locally is the Puget Sound Regional Council.

    This is not to say that this is all a bad thing – we’ve collectively decided that we don’t want SFH suburban sprawl all the way up to Snoqualmie Pass (WA Growth Management Act), so most space inside the urban growth area is subject to ever-increasing levels of higher-density development. The kicker is, even if you want to live in rural East King County where there is little to no development, you will pay dearly in annual property taxes (for what? You get little to no services for your money compared to those in more urban locations) for the privilege.

    Now, back to ever-increasing property values, where a 1967-built unimproved 1500SF rambler on Education Hill in Redmond is now worth over $500K!!!

  67. 67
    Brian says:

    By Kary L. Krismer @ 60:

    And finally, I’ve mentioned in the past that Snohomish County seemed to have a lot of condos built in the early 20th century where the vinyl siding was improperly installed an needed to be replaced in fairly short order.

    Man, those condos are ancient

  68. 68
    Anonymous Coward says:

    By Kary L. Krismer @ 65:

    Clever. There should be plenty of seniors moving out of their SFHs over the years, and into multi-family, so that would be another source of supply.

    It’s all about the demographics. The problem is that the bulk of the boomers won’t be moving out until AFTER the bulk of the millennials have had their 2 kids.

  69. 69

    By Brian @ 67:

    By Kary L. Krismer @ 60:

    And finally, I’ve mentioned in the past that Snohomish County seemed to have a lot of condos built in the early 20th century where the vinyl siding was improperly installed an needed to be replaced in fairly short order.

    Man, those condos are ancient

    I did catch it in the next post, but for some reason the edit function wasn’t working. Back then it would have been asbestos siding–very durable stuff! ;-)

  70. 70
    Blake says:

    By Action @ 63:

    Someday a single family home with a yard in Seattle is no longer going to be an affordable option except for the upper echelon.

    “Someday?” … haven’t you been reading this blog?

    By Action @ 63: “Hopefully with the influx of new apartment construction, rent growth will stabilize and we won’t end up in the same situation as San Francisco or Vancouver where the living expense deters newcomers. ”

    Over the last few years I’ve been trying to hire statisticians and programmers and we’ve lost most of the recruits because we can’t offer a high enough salary for them to afford to move here!
    That …is …”Now”…

  71. 71
    Blake says:

    By Action @ 63:

    Someday a single family home with a yard in Seattle is no longer going to be an affordable option except for the upper echelon.

    “Someday?” … haven’t you been reading this blog?

    By Action @ 63: “Hopefully with the influx of new apartment construction, rent growth will stabilize and we won’t end up in the same situation as San Francisco or Vancouver where the living expense deters newcomers. ”

    Over the last few years I’ve been trying to hire statisticians and programmers and I’ve lost most of the recruits because I can’t offer a high enough salary for them to afford to move here!
    That …is …”Now”…

  72. 72
    Action says:

    RE: redmondjp @ 66

    I agree that it is not necessarily a bad thing. Suburban sprawl is not a viable alternative either and I think trading density in order to keep green spaces and natural areas is the way to go.

    But I think people are in denial if they think the cost of single family homes is only inflated due to Amazon and the tech boom and as soon as that ends, the bubble will pop. We are seeing a shift in the type of housing that is being built and not everyone is going to be able to afford to live in single family homes.

  73. 73
    GoHawks says:

    But I thought the sky was falling!

    The median price of a single-family home in King County last month grew 16.1 percent from a year earlier, the most for any September since records began in 2000, new data out Thursday shows. That follows the hottest-ever August for the local housing market, and the hottest-ever July.

  74. 74

    RE: GoHawks @ 72 – The gains seem to be widely disbursed throughout King County this time. Only three areas dropped and two of those are in Seattle! Income tax effect?????

  75. 75
    Erik says:

    RE: Kary L. Krismer @ 73
    Where do you view that data? Link?

  76. 76
    Erik says:

    RE: Action @ 71
    I don’t know much about software, but I know a little about tooling. I can tell you that America is moving toward automated tooling that needs programming. After the initial programming, those tools are going to need many years of software support until they run seemlessly if that is possible. It’s hard to imagine and end to the software bubble, but history would say that it will bust at some point. I don’t see an end in sight.

  77. 77

    RE: Erik @ 74 – You can see it in the Times’ reporting–the map. Note I think the Renton data is off–it is a negative too, but maybe it’s not quite .1%.

    https://www.seattletimes.com/business/real-estate/as-seattle-area-home-prices-soar-some-would-be-buyers-now-giving-up/

    There is also agent-only information on the NWMLS site.

  78. 78
    OA says:

    Hey all,

    What’s the going rate for general contractors in the greater king county area right now? 15% ?20%? If it’s a fixed fee, what’s the general average?

    Maybe guys like deerhawk or other bulilders can pitch in.

    Thanks!

  79. 79
    Erik says:

    RE: Kary L. Krismer @ 76
    Thanks for the link. I’m not part of the mls cartel, so I don’t have access to that information. I’m in West Seattle and Shoreline, so I like the information.

    The investment group I’m part of has been pushing Renton highlands for years. Interesting to see highlands outperform Renton by such a large margin. People want to get out of the hood in good times. That’s what I did when I got out of nasty nasty North Everett.

  80. 80
    Deerhawke says:

    By OA @ 77:

    What’s the going rate for general contractors in the greater king county area right now? 15% ?20%? If it’s a fixed fee, what’s the general average?

    It really depends on what you are trying to do. If you are re-doing a bathroom and need one guy to do most of the work, you will get a guy who will bill you hourly. If you are expanding a house or building a new one and that requires, plans, permits, engineering, etc., then you will need a firm that can manage all of it internally. They will do a fixed bid that includes salaries, materials, sub costs, etc. My guess is that in this market they are including 20-25% profit plus an allowance for cost over-runs.

  81. 81

    RE: Erik @ 78 – I suspect the Renton data is actually largely Kent and unincorporated King County and related to the school district issues there. But that’s just a guess. I haven’t done an overlay of the NWMLS area 340 with the Kent School District, nor have I had a client specifically mention that as an issue. But the Kent School District is in fairly widely publicized serious financial trouble right now, and that can’t help prices. That said, it could also be a mix issue–I really haven’t looked at it closely.

  82. 82

    RE: Deerhawke @ 79 – I hear contractors in England work for only 5%. ;-)

  83. 83
    Kmac says:

    By Deerhawke @ 79:

    My guess is that in this market they are including 20-25% profit plus an allowance for cost over-runs.

    I would agree with that number but not the word profit. Substitute with mark up.
    If the General is just marking up subs, I think this is accurate. Entry level construction is probably around 25% and the higher end may be around 20%.

    Now the subs (or generals on smaller jobs) are probably marking up materials/costs in the 30 to 50 % range. Anything less than 30 makes it hard to keep the lights on longer term when so many other costs are escalating beyond an individuals control.
    This is just what I have witnessed and may differ from others.

    By Kary L. Krismer @ 81:

    RE: Deerhawke @ 79 – I hear contractors in England work for only 5%. ;-)

    Good one

  84. 84
    ESS says:

    By Kary L. Krismer @ 76:

    RE: Erik @ 74 – You can see it in the Times’ reporting–the map. Note I think the Renton data is off–it is a negative too, but maybe it’s not quite .1%.

    https://www.seattletimes.com/business/real-estate/as-seattle-area-home-prices-soar-some-would-be-buyers-now-giving-up/

    There is also agent-only information on the NWMLS site.

    It has been our experience that potential homeowners have generally made the best renters. And from the article – some of the potential homeowners that are hunting for a house are turning into longer term renters as they are unable to purchase a place of their own.

  85. 85
    Dustin says:

    By Kary L. Krismer @ 73:

    RE: GoHawks @ 72 – Only three areas dropped and two of those are in Seattle!

    One of the three areas that dropped is the downtown Seattle condo-only market, which for a while has seemed overpriced to me. Looking at the list prices for 1-2 bedroom condos in downtown Seattle, 1 million is just the floor. Granted, many of these condos are new, have luxury amenities/features and a lot of square footage (for a 1-2 bedroom urban condo), but when the same money can buy a large, private house in a desirable central neighborhood like Montlake or Queen Anne, it wouldn’t surprise me to learn that many of the buyers who can afford such condos are choosing to invest their money in other parts of the housing market.

  86. 86
    OA says:

    RE: Deerhawke @ 79

    Thanks, im talking about building a brand new home, including managing the permitting process as well. I agreed on a fixed fee of $85k with my GC to build a 3,000 sq ft home on the Eastside (for my family). Based on what you said it sounds like a got a decent deal.

  87. 87

    By Dustin @ 84:

    By Kary L. Krismer @ 73:

    RE: GoHawks @ 72 – Only three areas dropped and two of those are in Seattle!

    One of the three areas that dropped is the downtown Seattle condo-only market, which for a while has seemed overpriced to me.

    The stats are not for condos. For condos, area 390 was down–that’s mainly the area north of I-90 and east of I-5. There were some outlying areas down too (Enumclaw, Auburn and Black Diamond).

    Those references to numbers from NWMLS sources, but not guaranteed by the NWMLS.

  88. 88
    Kmac says:

    RE: OA @ 85
    Sounds reasonable for a mid level finish

  89. 89
    Brian says:

    By Kary L. Krismer @ 76:

    RE: Erik @ 74 – You can see it in the Times’ reporting–the map. Note I think the Renton data is off–it is a negative too, but maybe it’s not quite .1%.

    https://www.seattletimes.com/business/real-estate/as-seattle-area-home-prices-soar-some-would-be-buyers-now-giving-up/

    There is also agent-only information on the NWMLS site.

    Should there be concern that downtown, queen anne, and magnolia are down on the year, or did they just overshoot other areas and are leveling out before resuming gains? -6% and -13% aren’t insignificant decreases.

    “Central Seattle” is also only up 1%. So practically all of the most dense parts of Seattle area not doing well for the past year.

  90. 90
    mark e mark says:

    RE: wreckingbull @ 31
    When the apartment building depreciation expense that reduces the tax liability is all used up (20-30 years?) then the apartment buildings are sold by the owner and converted to condos by a developer and the units are sold. Newer apartments are unlikely to be converted into condos before then. Ask a real estate bank lender on how it works. So don’t expect a glut of condos any time soon from the recent new apartment construction.

  91. 91

    RE: Eastsider @ 57
    I’m Glad You Said Reputable Builder

    Many leave for like sunny Venezuela and close business, making the warranty toilet paper.

    Ask my brother in law about the illegal temporary plastic splices on his copper pipes that exploded, destroying the new home’s interior…..contractor disappeared after apparently paying off our “reliable” local code enforcement.

  92. 92

    RE: Eastsider @ 57

    It has been customary for builders to have a 10 year warranty that is strongest in the first year and weakest in the last few years. Usually the builder only covers the first year “himself” and purchases a 2-10 policy for the remaining years.

    This because there are things the builder would address by closing if they could, but can’t because these issues are caused by minor settlement during the first year after the home is built. Nail pops, minor cracking and other cosmetic issues that the builder usually offers a “one time” return visit to fix. If the buyer doesn’t notice the “one time” provision, they may call at the first sign of a nail pop and lose their full benefit. So I generally recommend that buyers do that in the 11th month.

    More often than not the 2nd through 10th years of the warranty is transferred to a 3rd party company via the builder buying a “2-10” warranty like this one. http://www.2-10.com/

    The items covered in year one vs year 8 are very different.

  93. 93

    By mark e mark @ 89:

    RE: wreckingbull @ 31
    When the apartment building depreciation expense that reduces the tax liability is all used up (20-30 years?) then the apartment buildings are sold by the owner and converted to condos by a developer and the units are sold. Newer apartments are unlikely to be converted into condos before then. Ask a real estate bank lender on how it works. So don’t expect a glut of condos any time soon from the recent new apartment construction.

    No. It doesn’t work that way. Any depreciation taken will need to be recaptured as ordinary income (not capital gains), but more to the point, it would be silly to wait that long to do a deal that would otherwise make sense just so you can take depreciation over several years.

    Condo conversions tend to happen more when the market conditions are right and laws don’t unduly interfere. It’s not like all of the apartments converted to condo during 2004-2007 were magically all at the end of their depreciation schedules. And I would be surprised if many buildings are actually held that long before selling them even as apartments.

  94. 94
  95. 95
    Deerhawke says:

    RE: OA @ 85

    It sounds like a good deal. But that really depends on what you are building and how far out on the East Side. I can tell you that nobody would build a house for you in Seattle for that amount of money unless he were new to the game or new to the area.

  96. 96

    RE: uwp @ 93 – I can’t comment on the listing, but as to the article it is a bit misleading. While there is no law that prevents a seller from changing price mid-stream, doing so can expose the seller to paying a commission to the buyer who made a list price offer and was rejected. There can be things in that list price offer that would make it less likely a commission would be earned (e.g. a closing date in one year), but nothing in the article raised any red flags in that regard.

  97. 97
    mark e mark says:

    RE: Kary L. Krismer @ 92
    Yes condo conversions only take place when it is economically feasible which is after they are depreciated. How many condo conversions occur right after they are built as apartments? – None. Too many posters on this site like to leave the impression they have industry knowledge beyond their field of expertise. I guess this commentary section is only for retired people with nothing to do all day long.

  98. 98
    uwp says:

    RE: Kary L. Krismer @ 95 – The sellers referring to how they looked forward to “picking” the buyer then pivoting to reaching for their wallet was especially precious. You have to assume when everyone agreed to the article idea they thought it was going to be a happy story for everyone involved.

    The listing itself is easy enough to find, but I couldn’t figure out which other house they blamed for taking all their potential offers.

  99. 99
    Kmac says:

    RE: Ardell DellaLoggia @ 91

    Great explanation.
    1 rep vote you!

  100. 100
    wreckingbull says:

    RE: mark e mark @ 96 – Your statement is daft, claiming that no entity would sell a piece of commercial real estate before the end of its useful life, just to be able to tell the world that they maxed out depreciation write-offs. If market conditions are favorable, entities will sell – especially when you consider who owns these apartments.

    You also seem a bit bitter. I hope your day gets better, guy.

  101. 101
    OA says:

    RE: Kmac @ 87

    That’s how I see it. The price I pay him doesn’t change even if there are cost overruns (which there will be as any normal build).

  102. 102
    OA says:

    RE: Deerhawke @ 94

    Preston area, 5 minutes east of Issaquah highlands. The house itself will be a modern 3,000 sq ft house with nice finishes.

  103. 103

    By mark e mark @ 96:

    RE: Kary L. Krismer @ 92
    Yes condo conversions only take place when it is economically feasible which is after they are depreciated. How many condo conversions occur right after they are built as apartments? – None. [Remainder of nonsense deleted.}

    Wow. That few buildings are built as an apartment and then immediately convert to condo is your evidence? That type of situation would be extremely unusual, because it would mean that the person who had the building build didn’t have a clue! “Oh, I want an apartment house. Oh, wait, I meant I want to sell condo units.” Most people with money are smarter than that.

    The idea that anything waits for a building to be depreciated, except by sheer coincidence, is extremely laughable, and probably only expressed by people who don’t understand and have never heard of recapture.

  104. 104
    Eastsider says:

    By OA @ 100:

    RE: Kmac @ 87

    That’s how I see it. The price I pay him doesn’t change even if there are cost overruns (which there will be as any normal build).

    I hope there are no cost overruns. No contractor wants to work for ‘free’ or at a loss. Good luck!

  105. 105
    Brian says:

    I’d love to see the inventory chart for Pierce County as well. Thanks.

  106. 106
    Justme says:

    By Deerhawke @ 28:

    RE: StupidLifeDecisions @ 22

    No question there are a lot of software engineering jobs coming into the city.

    But when I am at a friend’s cocktail party and meet people who are new to the area, it is amazing to me how many of them are not strictly software tech types. I am having conversations with epidemiologists and doctors working for PATH and the Gates Foundation, agricultural investors, marketing and branding people, finance types, vintners, venture capital types, real estate developers, IP lawyers, 3d prototype designers, set designers, agricultural exporters, UW professors, biotech researchers, actuaries, non-profit managers, fisheries managers, people reinventing the trucking industry, etc.

    A party where you meet a lot of people who are new to the area? This sounds like you went to a cocktail party thrown by a real-estate agent or other real-estate related profession, where recent or prospective buyers, and speculators are entertained by commercial interests. Can you please clarify? I would point out that in such a party, one might get a rather skewed idea of what is going on in the city.

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