It’s called a “directed thread,” and it goes like this:

• I’ll pose a question for discussion.
• Everyone hashes it out in the comments.
• Later this week I’ll parse the discussion.
• The most useful or interesting posts will be mixed into a post of their own sometime next week, hopefully harnessing the collective knowledge of the community for the betterment of the whole.

So, here’s today’s discussion topic: How do you find properties that are the best value in today’s market?

Do you mostly look at specific neighborhoods? Are there certain property characteristics that often signal good value? What tools do you use, etc… Anything and everything related to finding the best value is fair game. Let’s hear it.

As something of a consolation prize for the lack of a more meaty post (and because I just think it’s cool and I want to share it), here’s a picture I shot last night of Times Square from the Empire State Building. See you all tomorrow.

In commemoration of this geeky occasion, here are a few statistics relating to the comments on Seattle Bubble.

As of the 0×10000th comment, 65,536 comments had been posted across a total of 1,852 posts, for an average of 35 comments per post. Seattle Bubble was launched on August 5, 2005, so that’s an average of 42 comments per day.

Stupid spam robots have attempted (and failed) to post 89,069 (0×15BED) spam comments, outnumbering comments by real people 1.4 to 1. And that’s just since Seattle Bubble’s move to its own domain in May 2007, meaning that the spambots (failed to) post an average of 99 comments per day. Yikes!

Top 10 most-commented posts:

1. 2008.06 – May Reporting Roundup (330 comments)
2. 2009.06 – May Foreclosures Up 69% from 2008 in King County (295 comments)
3. 2008.08 – House Valuation Workshop (232 comments)
4. 2009.01 – Official Word on Microsoft Layoffs: 1,400 Now, 5,000 Total (218 comments)
5. 2009.07 – Are Home Price Drops Around Seattle Mostly Over? (218 comments)
6. 2008.07 – June Reporting Roundup (206 comments)
7. 2009.08 – Comment of the Week: Impulsive Behavior Disorder (198 comments)
8. 2008.01 – Predictions: 2007 Revisited, 2008 Prognosticated (186 comments)
9. 2008.09 – Breaking: House Votes Down $700B Bailout (179 comments)
10. 2009.07 – NWMLS: Sales Edge Above ‘08, Median Up 5% MOM, Down 12% YOY (177 comments)

Top 10 12 most prolific commenters:

1. Kary L. Krismer (2,548 comments)
2. The Tim (2,085 comments)
3. david losh (1,596 comments)
4. deejayoh (1,504 comments)
5. Scotsman (1,472 comments)
6. patient (1,190 comments)
7. Eleua (1,177 comments)
8. softwarengineer (1,150 comments)
9. meshugy (929 comments)
10. Matthew (925 comments)
11. Ray Pepper (869 comments)
12. Jon (782 comments)

[Update: There was a glitch in the auto-generated top ten that caused some commenters' count to be split. I have updated the list to correct for this error.]

Technically, “Anonymous” was #1 with 2,651 comments (a throwback to Seattle Bubble’s old days at Blogger.com), but since that’s not really a single person, it doesn’t count. What’s really impressive about Kary’s spot at #1 is that he only just started commenting on Seattle Bubble in July of last year, so in less than 16 months he has managed to rack up nearly twice as many comments as the next-closest competitor (not counting myself), averaging 5.4 comments per day.

And let’s not leave out the forum!

Top 10 forum posters:

1. rose-colored-coolaid (1,976 posts)
2. deejayoh (1,154 posts)
3. TJ_98370 (837 posts)
4. The Tim (790 posts)
5. Alan (780 posts)
6. Robroy (681 posts)
7. sniglet (679 posts)
8. Markor (602 posts)
9. biliruben (573 posts)
10. WestSideBilly (550 posts)

A giant THANK YOU goes out to everyone that participates in the discussion here at Seattle Bubble. I have learned a lot from you, and I think on the whole we have made a positive contribution to the understanding and demystifying of real estate and related economic issues in the Seattle area. I hope that we can continue the conversation for many 0×1000s of comments to come. ;^)

The Real Estate Heat Index (a proprietary index I created that uses supply, demand, and home prices to calculate the general “heat” of the housing market) rose in all seven Puget Sound Counties in the third quarter, but still remains below pre-bubble levels.

Meanwhile, affordability dropped in every county but Snohomish, despite interest rates in the 5s.

The full version of Sound Housing Quarterly includes detailed data and analysis for King, Snohomish, Pierce, Kitsap, Thurston, Island, and Skagit counties.

Head over to HousingQuarterly.com to subscribe to Sound Housing Quarterly. You can also download a free single-page summary of this quarter’s report, or head over to the free archive to check out last year’s Q3 report in full.

Note from The Tim: The following is a guest post from Charlie Walsh, the Founder and CEO of ValueAppeal, a new startup based in Seattle. ValueAppeal is a simple online tool that homeowners can use to help them appeal their property tax assessments.

King County Property Tax Appeal Deadline Is Soon!

Each year counties around the country send out notices in the mail letting homeowners know what the new assessed value of their home is for property tax purposes. Unlike most counties around the country, King County doesn’t send out all of their assessment notices at the same time. Over the course of the summer, the King County Assessor sends out assessment notices for a different neighborhood each week. Homeowners have sixty (60) days from the postmark date on their mailing notice to file their appeal (a.k.a. Real Property Petition Form) with the King County Board of Equalization. That means each neighborhood’s appeal deadline is a little different.

When homeowners receive their notice in the mail that their property tax assessment has gone up above the market value of the home, the gut reaction is “there’s no way I could sell my house for that much.” That’s exactly what happened recently to the Thompson family in Seattle. They received a notice in the mail that their four bedroom, 3 bathroom home was assessed for over $675,000, way more than they could possibly sell it for on the open market.

Unfortunately, most homeowners leave it at that. They pay their bill grudgingly and try to forget about it. A lot of homeowners may not even realize how much they’re overpaying because their mortgage company pays the property taxes on their behalf and then adds it to their statement each month. Fortunately the Thompsons didn’t just accept their unfair assessment, they figured out the rules for filing and appeal and lowered their assessment by just over $110,000, saving them over $1,300 on their property tax bill.

The first thing the Thompson’s did correctly was to make sure they filed their Real Property Petition Form before the end of their 60 day appeal window. (The Real Property Petition Form is available on the King County Assessor’s website, or by calling 206-296-7300) All King County homeowners receive an assessment notice in the mail between April and September of each year. The mailings are intentionally staggered over the course of the summer and homeowners have 60 days from the date of their mailing notice to file a notice of intent to appeal their assessment. The Thompsons received their assessment notice in the mail on September 10th so they had to file their appeal by November 9th at the latest.

In their research, the Thompsons learned that in order to prove their case for a lower assessment to the Board of Equalization, they needed to present 3-5 comparables homes “comps” along with the Real Property Petition Form they downloaded from the assessor’s website. This meant finding nearby homes similar in square feet, lot size, bedrooms, bathrooms, etc, that sold for less than their home was assessed for. This was the Thompson’s first big hurdle; where were they going to get the comps?

Finding the correct comps is harder than you might think.

Many homeowners will start by typing their address into a service like Zillow to get a long list of about 40 comps and picking the ones that seem best at first glance. Unfortunately, this often leads to their comps being disqualified and their appeal case being unceremoniously thrown out.

Why? There are a number of reasons comps are disqualified during an appeal hearing. For starters, the King County Assessor evaluates your home’s value as of the January 1st assessment date each year by looking at comps that sold PRIOR to that assessment date. Therefore, in order to successfully appeal, the homeowner must also submit comps that sold PRIOR to the assessment date as well. Zillow’s data is constantly updated to attempt to determine a real time market value, so most of the comps you see displayed for your property sold AFTER January 1st, 2009 and would be disqualified by the assessor.

And that’s not all. Homeowners are not allowed to submit comps that sold as part of a foreclosure, short sale, inheritance or divorce transaction, donation to charity, or any other non arm’s length transaction. Yet all of these transactions are technically “sales” and show up in official records. Unfortunately if you look up comps on Zillow, many of these important details get lost.

As you can see there are some hurdles that homeowners have to deal with when appealing their property taxes. Finding the correct comps to use in a property tax appeal is difficult. Fortunately for the Thompsons, today there are online property tax appeal resources available to help homeowners select the correct comps that didn’t even exist as recently as 2008.

On August 27th, 2009 the King County Assessor mailed assessment notices for the following neighborhoods: Queen Anne, Western West Seattle, Rainier Beach, Broadview, Blue Ridge, and Shilshole. That means the sixty (60) day window for these neighborhoods closes on Monday October 26th, 2009. If you’re only a week or two late filing your Real Property Petition Form they’ll usually let it slide, but don’t push it. If you never received your assessment notice in the mail you can sign an affidavit saying you never received it and they’ll allow you to file your petition after the deadline.

Click below for the remaining upcoming appeal King County property tax appeal deadlines.

Neighborhood	Mailing Date	Appeal Deadline
Laurelhurst / Windermere	9/3/09	11/2/09
Mercer Island	9/3/09	11/2/09
Enumclaw Plateau	9/3/09	11/2/09
Ravenna / University District	9/3/09	11/2/09
Blk Diamond / E Maple Valley	9/3/09	11/2/09
East Auburn / SE Kent	9/3/09	11/2/09
Kennydale / Newport Shores	9/3/09	11/2/09
Kingsgate & Queensgate	9/3/09	11/2/09
Fall City/Preston / Issaquah Highlands / Snoqualmie Ridge	9/3/09	11/2/09
West Kent	9/17/09	11/16/09
Issaquah to May Valley	9/17/09	11/16/09
Covington	9/17/09	11/16/09
Lake Youngs	9/17/09	11/16/09
Kent & Renton Suburbs	9/17/09	11/16/09
Vashon Island	9/17/09	11/16/09

]]> http://seattlebubble.com/blog/2009/10/29/avoid-pitfalls-when-appealing-your-property-tax-valuation/feed/ 15 http://seattlebubble.com/blog/2009/10/26/the-rain-returns-and-with-it-the-perfect-house-shopping-season/ http://seattlebubble.com/blog/2009/10/26/the-rain-returns-and-with-it-the-perfect-house-shopping-season/#comments Mon, 26 Oct 2009 15:42:21 +0000 The Tim http://seattlebubble.com/blog/?p=7671 There’s no doubt that the gloomy, dark, wet weather has returned to Seattle. While everyone around Seattle retreats into the warm confines of their living rooms and local coffee shops, I’d like to offer a bit of contrarian advice for the house-shoppers out there. Seize the winter.

Winter is hands down the best time to go house hunting in Seattle, for three major reasons.

1. Less Competition

If home sales were spread evenly throughout the year, each month would see roughly 8.3% of the yearly total. Of course, anyone who has spent even a little bit of time following the real estate market knows that this is not the case. Over the last nine years, four months have consistently accounted for less than their fair share of closed sales each year: November, December, January, and February.

Keep in mind that we’re talking about closed sales, so these represent people who were house-hunting roughly a month or so earlier. In other words, if you want the least amount of competition, you should be out there looking for your next home in December or January. October and November are also good, though not quite to the same degree.

It is true that inventory also tends to decline in the winter months, giving you less selection to choose from, but sales usually decline more, as winter almost always sees the yearly highs for “months of supply” (inventory divided by sales). And less inventory isn’t necessarily a bad thing anyway, as that leads us to the second point…

2. More Motivated Sellers

How many times have you heard a hopeful seller declare as winter approaches: “I’ll just pull my house off the market for the winter and try again in the spring.” These are the kinds of houses you don’t want to buy, because the sellers are obviously not very motivated.

Typically, sellers who leave their homes on the market through the long, dark winter are those that need to sell for some reason or another, and will therefore be more likely to be willing to bargain with you.

Look for homes that have been on the market for 4-5 months in the middle of December, and you’ll probably find a highly motivated seller.

3. Easier to Spot Major Problems

In the summer, Seattle homes look great with a fresh coat of paint, the blue sky in the background providing a delightful contrast to the gleaming reflection of the sun on the bright white trim. But what you don’t see is the host of problems that may be lurking under the surface, ready to spring out the first time the rains return.

When it’s wet and rainy outside, it is far easier to spot lots of common Seattle-area house problems:

• leaky roof
• leaky basement / crawl space
• mold
• flooding / muddy yard
• poor insulation
• bad window or door seals

Buying a house is a major financial commitment beyond the mortgage, and it’s best to go into it knowing about these kinds of issues before they rear their ugly heads. House shopping in the pouring rain is a great way to help make sure you don’t miss something.

Seize the winter.
Obviously if everyone took this advice, some of the benefits of house-hunting in the winter would be lost. Fortunately for you, most people will continue to let things like school schedules and sunny skies dictate their house shopping plans, making the winter the perfect time for you to get the best house for the least amount of money.

I have $50k in the bank, no debt, make 50k per year and am confident in a position that will pay 75k per year starting 06/10. Let’s assume that if the position doesn’t happen, I will take a second job to make up the difference.

I’ve never owned a home. Rent for me is one room in a house and just $400/mo. A place I buy would need to be on the eastside.

I’ve lived well below my means for years (and also been a Seattle Bubble reader for that amount of time). But in my current situation I’m seriously considering a first home. Your opinion on my situation would be appreciated.

- “Seattle Bill”

Here’s my advice for Bill:

1) Structure your budget around what you already have today, not what you might have sometime in the near future.

You’re making $50,000 today. That’s what you have to work with, not $75,000. If you buy today, setting your budget based on a future expectation of a massive increase in salary, you’re setting yourself up for failure.

Here’s what I recommend to anyone that is considering buying, in any market. First, go to your preferred mortgage broker, bank, or credit union and find out what kind of loans you are qualified for, how much you can borrow, and what your monthly payment would be. Getting a pre-qualification does not require you to commit to a lender or a loan, but will tell you for sure how much you can borrow.

For example, let’s say you were pre-qualified for a $250,000 loan, with a monthly principal + interest payment of $1,100. Add in probable taxes and insurance (we’ll say another $350 / month), and you’ve got a total monthly PITI obligation of $1,450. With a yearly salary of $50,000, that comes out to 34% of your gross income.

Here’s a simple affordability calculator I posted earlier this year to help you quickly calculate your own personal affordability situation.

Personally, my absolute upper limit would be 30%, but even that would come out to $1,250 a month for you, which is over three times what you’re paying right now. Figure out what you think you’d be comfortable with, and then force yourself to live with that budget for six months, saving the difference between your current rent and your expected monthly house payment.

If you succeed in living within that budget for six months, you’ll have a pretty good idea of what other sacrifices you’ll have to make to buy the house, and you’ll have another $5,000+ in the bank to help pay for closing costs or your down payment. If your salary does end up rising by 50%, either stick to what you could afford with $50k, or get pre-qualified again with the new salary, and “test drive” your budget again with the new salary.

2) If you decide to buy, pay a price that you think is fair for the house today (assume that it may stagnate or decrease in value in the future).

One surefire way to set yourself up for financial problems in the future is to rationalize your decision to buy a house by convincing yourself that it is a great financial investment.

There are plenty of great reasons to buy a house. Buy a house because you want a place that you have control over. Buy a house because you want stability. Buy a house because you want to plant a garden. Buy a house because you want to breed Irish Wolfhounds. Just don’t buy a house because you think it will make you money. Maybe it will, maybe it won’t, but that factor should not be a part of your decision-making process.

3) Keep your eye on bank-owned houses, and look for homes that need a little work.

There are definitely some good deals to be found out there today, but they’re not in the owner-occupied homes that have been “upgraded” with hardwood floors, granite countertops, and a fresh coat of paint on the outside. High curb appeal may sell a house fast, but it doesn’t sell a house at a good bargain. If you’re willing to put in a little bit of work, look for bank-owned fixers.

The Bottom Line: Know what you’re getting into.

Nobody can tell you what you should do, since no two people have the same financial situation. My recommendation is just that you do the research, critically evaluate your finances, and should you decide to buy, do so with realistic expectations.

So what’s your advice for Seattle Bill? Let’s hear from the commenters.

Methodology
The prices quoted below are for a 3-bed, 2-bath single-family homes with 1,750 to 2,000 square feet. For the rentals, these are based on actual houses I found currently on the rental market. For the sales, I used sale records of actual prices that people have paid in the last three months. Where possible, I have located multiple samples that match the description above and taken the average price.

To calculate the monthly payment (principal + interest only), I’ll be using a 5.15% interest rate (roughly the average over the last three months), (generously) assuming 20% down on a 30-year mortgage. Keep in mind that the true cost of buying also includes insurance, taxes, maintenance, and a host of other costs generally not paid by a renter. For a more detailed breakdown of the total costs (and tax benefits) of buying, hit up this 2007 post.

I have also indicated the price to rent ratio, which is simply the home price divided by the total rent paid in a year.

According to a table of data from Fortune Magazine, Seattle’s price-to-rent ratio just before the local peak in prices was at 38.0, compared to a 15-year average of 23.3. In our table above, the average price-to-rent ratio for a 3-bed, 2-bath home in a handful of Seattle-area neighborhoods comes out to 24.3. Unfortunately, the two are not directly comparable since Forbes’ calculation included houses, condos, and apartments all among the rentals (which would drive the rental prices lower and the long-term average price-to-rent ratio higher), while my data was drawn only from single-family homes.

While home prices have come down some since I first researched the rent vs. buy discussion in detail back in 2007, a growing oversupply of repartmenting condos and accidental landlords is also pushing down rents recently, so the price-to-rent ratio hasn’t actually changed as much as one might expect.

Overall, price-to-rent ratios in the low-to-mid 20s still seems a bit high. Not crazy out of control bubble high, but it still looks like there is room for a bit more correction. Especially when you consider that the current prices are being artificially propped up by unnaturally low interest rates and the $8,000 tax credit in the midst of nearly 10% unemployment and a local economic scene that has yet to show any clear signs of turning the corner.

* [Updated, see comment #71 below.]

There is basically this enormous teeming horde of potential home buyers out there lurking on the sidelines for no good reason. All we need to do is come up with the right concoction of incentives to get these pent-up buyers off the fence and the housing market will recover!

Here’s just one example of that kind of reasoning from an article yesterday’s Tacoma News Tribune:

According to Dick Beeson, a Windermere broker and a director of Northwest MLS, the latest numbers reflect “a lot of pent-up demand. A lot more people are realizing closed sales.”

As regular readers of these pages will recall, I do not buy the claim that there is a large mass of “pent-up demand.” In fact, I believe quite the opposite is true: that during the bubble (thanks to virtually non-existant lending standards and a mass get-rich-quick hysteria) and now post-bubble (thanks to various bailouts, tax incentives, and artificially low interest rates) a significant amount of demand has been borrowed from the future.

Let’s take a few moments to visualize the concept of borrowed demand using data on closed sales and population. Here are our working assumptions:

• The number of closed sales in the year 2000 is a reasonable baseline for a healthy market.
• In a normal market, closed sales will grow linearly as a function of households.
• Household size since the 2000 Census has remained steady at 2.39 people per household.
• For 2009, fourth quarter closed sales will come in 10% above 2008.

Based on these assumptions, here’s a view of the cumulative “borrowed demand” by year since 2000.

While sales in 2001 and 2002 were fairly close to what our assumptions would have predicted (slightly lower, probably due to the dot-com bubble fallout), as the housing bubble began to inflate in 2003 the number of borrowed sales started to pile up at an alarming pace, peaking at over 23,000 in 2006.

Since 2005 when closed sales peaked at 31,939 (vs. a forecast “normal” level of 24,118), the number of closed sales has dropped significantly, falling to roughly half the peak level in 2008 at 15,991. To real estate agents, these declining sales numbers indicate that there must be a building volume of “pent-up demand.” However, as the chart above demonstrates, this is merely what it looks like when the market is forced to pay back the demand that was borrowed from the future.

If sales had been allowed to continue correcting at the natural rate we were seeing in the first few months of the year, the entire borrowed demand debt would likely have been paid in full in 2009, allowing sales volumes to begin to recover to a more normal level in 2010. Instead, the market has been innundated with misguided attempts to bring out the non-existant “pent-up demand,” and the way things are shaping up right now it looks like last-ditch borrowing of future demand will leave us with a few thousand sales still to be paid back sometime in the future, likely resulting in a continued drag on demand in 2010 and 2011.

“Pent-up demand” is a myth. That’s not to say that there aren’t some legitimate potential buyers out there with the ability to purchase who are sitting on the sidelines waiting for a better market opportunity. However, they are most certainly far outnumbered by the buyers who purchased prematurely in 2003-2006 that would otherwise have waited a few years to buy once their finances were more in order.

I’d like to thank The Tim for inviting me to create occasional guest posts for Seattle Bubble readers. SB’s bloggers and commenters have taught me how to critically analyze local real estate statistics. SB was a safe place I could go on a Friday night when my kids were elsewhere and I was craving an understanding of what was happening during the 2007-08 meltdown. I am honored to give back to the SB community.

The rising default rate on FHA loans is concerning but I’m not terribly surprised. It’s really no secret that the government is using Fannie, Freddie and FHA to help keep the banks afloat by allowing zombie banks to pawn off their toxic crap to the agencies. Ultimately the taxpayer is paying the price as we see Fannie and Freddie continuing to run a red balance sheet and FHA headed down the same path.

FHA originations were all but dead during the real estate bubble because so many LOs favored subprime lending where underwriting guidelines were non-existent. But long ago, in a land far, far away, when we were rocking out to Duran Duran, Echo and the Bunnyman, and Joy Division, I was processing FHA loans for a mortgage banker in Seattle. When rates came down to a low of 13% I had about 100 files in process. I was trained to pre-underwrite my files so underwriting recruited me and I became a young underwriter at age 23, just old enough to go drinking after work with the crew. I’ll never forget Barbie Owens who had the entire FHA underwriting manual embedded into her brain Matrix-style (I know Jujitsu!) She could recite entire paragraphs from the manual verbatim. Imagine 20 female underwriters, all of us smoked, and none of the windows opened. That was mortgage banking in the 80s. But I digress.

Back in the 1980s, underwriting was serious business. We were treated like gods by the loan originators who worked in fear of us declining their deal. Only David Korch knew how to play it. He brought us ice cream bars on hot, sunny days. New underwriters were given bunny files; easy conventional refinances, to cut our teeth. Then we were sent to FHA training. FHA had a field office in Seattle with real humans who would actually answer the phone and our questions. At least once a year a representative from FHA would take new underwriters through a six week FHA underwriting course called Direct Endorsement 101. After we finished we could underwrite FHA credit only (on all FHA loans the appraisal goes through a separate underwriting process) as long as a senior FHA underwriter signed our files.

If an FHA loan went into default, it was presented as a case study in meetings so that all of us could learn from our mistakes. If an FHA underwriter had too many defaults against her identifying number, she was put on probation.

This all changed during the subprime days when FHA’s business went down to literally nothing. Today, FHA allows the FHA-approved lenders to appoint and train their own underwriters! Does anyone see the problem with that policy?

Let’s revisit early 2008. Wholesale lenders are dropping like flies, and six figure income mortgage brokers are sweating bullets trying to figure out how to make their next boat, BMW, second home, first home, and condo-in-Hawaii payment month after month. They see the writing on the wall and the future, as far as they could see, was FHA. Thousands of mortgage brokers rushed to become approved to originate FHA loans and hundreds of wholesale lenders and banks had to quick beef up their underwriting departments to handle the onslaught of FHA loans being hurriedly thrown at them.

Many of those underwriters only knew subprime loans and had never seen an FHA file, never read the FHA Single Family Mortgage Insurance Manual for 203b loans and suddenly lenders were making folks FHA underwriters overnight.

And now we’re wondering why default rates are so high.

FHA doesn’t make subprime loans. They will allow loans to people with less than perfect credit but this is definitely not subprime territory.

We have three main problems leading to this dramatic rise in FHA defaults:

1. Pressure from government to use FHA for purposes of taking toxic loans off the bank’s balance sheets;
2. Lack of education, training, and mentoring of new underwriters during the recent, dramatic rise in FHA originations; and,
3. Lack of a large enough down payment from the homeowner to insure against falling home prices.

Negative equity combined with job loss, business failure, or other financial distress means higher FHA defaults are in our future as long as home values continue to drop, we allow banks to put underwriters into service with no training, and we let the politicians use FHA as a toxic waste dump.

Seattle has suddenly become a hotbed of real estate apps for the iPhone, now with four major competitors: Zillow, John L Scott, Coldwell Banker, and the newest entrant, Redfin. Since The Tim doesn’t have an iPhone, I offered to jump in and and provide a head-to-head SMACKDOWN between these four heavyweights of the Seattle real estate world. (Full Disclosure: I run findwell, a competitor to all of these companies and an advertiser on Seattle Bubble. We don’t have our own iPhone app at the moment, so I can be objective in this comparison.)

Click below to read the full SMACKDOWN.

Zillow

Zillow is the current king of the real estate app for the iPhone with over 700k downloads to date. The app is designed to provide mobile access to property data on Zillow and to take advantage of the GPS capabilities of the iPhone to instantly locate where you are.

The Good:

1. Zillow’s database lists all properties that they find in tax records. You can see property data for every home on the street, including its size, configuration, year built, and Zillow’s estimate of the current value. Zillow will also identify recent comparable sales nearby.
2. Homes that are for sale on Zillow have added data, such as photos of the property and direct contact information for the listing agent or owner. You will also see homes where the owners have set a “Make Me Move” price, even though the home isn’t officially on the market.
3. Built in GPS capabilities quickly locate and follow you on the map, plus you can save your favorite searches and homes. It would be nice if the favorites and searches synchronized directly with your account on Zillow.

The Not So Good:

1. In most of the US, Zillow for sale listings are not provided by feeds from local Multiple Listing Service (MLS) systems. They are reliant on individual agents and brokerages to send them listings, which is an extra step that not all agents do these days. While their property database is complete from tax records, their sale listings are incomplete without feeds from the local MLS.
2. Zillow allows you to enter open house times, but these do not appear on the iPhone app.
3. I actually came across a few bugs with list prices displaying incorrectly on their map interface.

John L Scott

John L Scott is a recent entrant in the iPhone market, but rather than create an actual application, they have created a custom mobile website available that automatically detects when you visit www.johnlscott.com from an iPhone or other smartphones and renders search capabilities in a mobile-friendly format.

The Good:

1. John L Scott is a brokerage and member of the Northwest MLS, so their listing database is up to date with all local agent listings.
2. Their mobile website uses the same “Property Tracker” system to access your saved searches and favorites. It was pretty seamless to share favorites back and forth between your mobile phone and their regular website, however I couldn’t figure out how to actually save a search on the mobile device. I could only view searches that I created on my desktop on the phone.
3. Because it is a web app and lacked maps, it did perform relatively quickly, even at the lowest Edge network speeds.

The Not So Good:

1. No map views – It is fairly easy to search by address, city or using the GPS, but the results window produces a list with 20-30 listings per screen. My search for nearby properties with the GPS resulted in 100+ properties. There is no way to see where they are on the map and having to tab through 5 consecutive screens to see them all is a major drag.
2. No map searches – Their text-based search is crude at best. When searching large numbers of listings, it seems a critical omission to not be able to use a map to display and search.
3. Their site shows open houses when they are in your list, but there is no way to search for open houses.

Coldwell Banker

Coldwell Banker is not actually a Seattle company, rather an arm of the large national franchise company Realogy. They do have a substantial number of agents in Seattle, so we’ll include them in this competition.

The Good:

1. Visually this app is fairly appealing and they did spend some time on graphic design. I’m not hugely fond of the page flip transitions, but overall it looks quite nice.

The Not So Good:

1. This app only shows listings from Coldwell Banker and other Realogy franchises. I don’t have the exact figures, but that means that something like 90+% of listings in our area don’t show up, rendering this app pretty much useless. Why wouldn’t they show all of the MLS listings like they do on their website?
2. The very first screen makes you register or sign in with a Coldwell Banker account. Forced logons are never a great idea, though if you look closely, there is a “skip this” choice in tiny text at the bottom.
3. The Coldwell Banker franchise in Seattle is Coldwell Banker Bain. Apparently Coldwell Banker Bain and the national Coldwell Banker site use totally different user databases and search technology. I can’t synchronize my favorites and searches with their iPhone app.
4. The app claims that it uses GPS to “find properties near me”. I have GPS and the best it can do is display a 15-mile radius of Seattle. When I click the GPS button again, it zooms out on Seattle to a 30-mile radius. If it is truly using GPS, finding properties near me means 1/4 mile or less!
5. Navigating around on the map does not automatically refresh properties. It looks like there are no listings until you hit the refresh button up top.

Redfin

The latest entrant to the iPhone real estate melee is Redfin. Like Zillow and Coldwell Banker, Redfin created an application for the iPhone that integrates listings with Google Maps.

The Good:

1. Integration between the iPhone app and the main Redfin site is good. The ability to upload photos and notes for each property and have them also appear on the main website it quite useful.
2. Data quality – Because Redfin is a broker member of the Northwest MLS, you can be assured that you are looking at the latest listings from local agents.
3. Easy to search nearby – Using the GPS quickly locates both listings and open houses in the nearby vicinity. Very handy when you are out and about on a Sunday afternoon looking at homes.
4. Most of the listing data you would find online is also available from the iPhone, including things like HOA dues and property tax amount. Unfortunately they omitted the listing history for each property, which certainly seems valuable info when you are evaluating each house.
5. User interface – Out of the four, navigation and data display seems the most elegant and well thought out.

The Not So Good:

1. Curiously your can save your favorites back and forth to the main Redfin website, but not your searches. Seems like a fairly common thing that home buyers would want on their mobile phone, particularly those waiting for immediate updates to the favorite searches.
2. The app does a good job at finding properties near you or ones where you specify specific search criteria. However, it does not allow free form searching on the map. If you are looking at search results on the map, you can swipe to new areas on the map, and nothing appears. Zillow seems to already have solved this.
3. Unlike Zillow, there is zero data available for properties that are not actively listed on the MLS. While this sort of makes sense when focusing on home buyers, there are many buyers who want quick info on surrounding properties when they are out house hunting.
4. For the moment, uploaded photos remain private, but Redfin has openly suggested that these could be made publicly viewable, even after the sale. I can see how fellow home buyers would love this sort of interactivity from the community, but it ignores two basic restrictions. First, as members of the MLS, Redfin does not own the vast majority of listings that appear on its site. Those listings are owned and controlled by listing agents from other brokerages and the sellers that they represent. I’m quite positive that making user-captured photos public flies in the face of the basic rules of the MLS and seller representation. Say what you will about MLS rules and regulations, but listing data is ultimately the property of the homeowner, not a third-party like Redfin. Sellers and their agents get to control how their listing appears on MLS sites, not random individuals. More concerning is a desire to make these photos public after sale. That feels like a major invasion of privacy for a new homeowner. Once a home is sold, the homeowner needs to control what, if any, photos from inside their home appear to the general public.

Verdict

Who is the winner in our first Seattle iPhone SMACKDOWN? All of them have some work to do, but I’m going to give a tie to Zillow and Redfin for searching properties in Seattle. Zillow is interesting because it contains data for all properties in the tax records, including configuration and previous sale information. Redfin is better at searching active listings because they are based on MLS data. Redfin also has better interactivity with saving favorites, notes and photos back to their main website. John L Scott made a valiant first attempt with their mobile website, but the lack of maps and text-heavy interface make it clunky and hard to use. The Coldwell Banker app is a non-starter until the local Coldwell Banker Bain decides to integrate their search website with the national website. Until then, it is horribly incomplete.

Let’s check in again on the cheapest homes around Seattle proper. For methodology and a brief explanation of the reasoning behind this series, hit the April post.

Please note: These posts should not be construed to be an advertisement or endorsement of any specific home for sale. We are merely taking a brief snapshot of the market at a given time. Also, just because a home makes it onto the “cheapest” list, that does not indicate that it is a good value.

Here are this month’s three cheapest single-family homes in the city limits of Seattle (according to Redfin):

The #1 home from July’s post retained its top spot, with another $6,000 reduction in price. July’s #2 home went off the market, while #3 is still on the market at the same price ($160k).

Stats snapshot for Seattle Single-Family Homes Under $200,000
Total on market: 48
Average number of beds: 2.3
Average number of baths: 1.2
Average square footage: 1,042
Average days on market: 73

Here are the three cheapest homes in terms of dollars per square foot:

July’s #3 in terms of $/sqft is still on the market, but for some reason the listing now does not mention the structure, so I removed it from the list. Also, the Eastwood Dr listing seems to have mysteriously gained 310 sqft since we last noticed it. Hmm…

Here’s the last bonus: The lowest dollars per square foot on a house priced above $500,000: 9457 10th Ave SW at $137 $/sqft. $549,888, 7 beds, 4 baths, 4,000 square feet. New construction, first listed in August of last year.

…if home buying is like a savings plan, it’s probably the worst savings plan on Earth. Would you voluntarily sign up for a savings plan where well over half of the money you deposit in the first 20 years simply vanishes, and from which you can only withdraw money by relocating and paying a 6-9% fee (not on the amount you have “saved” mind you, but on the total sale price of the home)? Of course not. That doesn’t sound anything like a savings plan.

If your goal is to build wealth, you will be much better off investing your money in the stock market than buying a home.

In the post, I described a pair of examples using real-world homes that I had located on both the rental and for sale markets at the time: comparable 3-bed, 2.5-bath, 1,800 sqft houses in nearby neighborhoods in the Kirkland / Juanita area. The rental was $1,495 a month, and the home for sale had an asking price of $425,000.

It just so happens that I wrote this post in July 2007, the peak month for Seattle home prices according to both the Case-Shiller home price index and the NWMLS King County SFH median. As such, I thought it might be instructive to run a little comparison of how things would have turned out for the hypothetical buyer and renter / stock investor described in the original post. With home prices off over 20% from their peak, and stocks down 34%, who would currently have more equity?

Following is a chart that shows the monthly equity in each scenario. Note that the buyer adds to their equity by paying $322-$367 in principal each month (it increases slightly each month), while the renter / stock investor increases their equity is assumed to be adding the $1,161-$964 (it decreases slightly due to rent increases) they are saving each month to their investment. The value of the home is based on Seattle’s Case-Shiller index, with a slight increase in value assumed for July and August. The value of the stock investment is based on the S&P 500 index, and rent increases are based on the “rent of primary residence” portion of the CPI for the Seattle area.

As of the end of August, just over two years into their respective “investments,” our hypothetical homebuyer is left with $537, while the renter / stock investor currently has $84,690 in equity. Here’s a visual of the total amount of money each would have put into their respective investments, and the total amount they have lost in the crash:

At 25%, the stock investor’s loss is nothing to sneeze at for sure, but it pales in comparison to the 99% loss suffered by the peak homebuyer. Ouch.

But what if we tweak the scenario slightly, in order to stack the deck as much as we can against the renter / stock buyer? Let’s say we set the start date to October 2007, the peak of the stock market, and only run the numbers through February 2009, the low point when stocks were over 50% off their peak. The stock buyer’s losses double to 50%, but as it turns out, the home buyer is still far worse off with a 93% loss.

Of course, the $85,000 down scenario isn’t really very realistic compared to what most people were really doing in 2007. Let’s modify the situation a bit into something more reflective of reality.

Instead of comparing 20% down on a $425,000 house, let’s say the hypothetical potential buyer and renter had just $8,750, which would be a 3.5% down payment on a $250,000 house. Again, to stack the deck against the renter / stock buyer in this scenario, we’ll assume they’re still paying $1,495 a month in rent, even though that would rent a far nicer house in 2007 than $250k would buy.

Here’s the equity matchup for our more realistic scenario:

Wow. The homebuyer in this scenario presently has negative $39,847 in equity, while the stock buyer has $12,820. Take a look at the invested / lost chart:

The homebuyer has lost 364% of what they have put in, vs. 22% for the stock buyer.

I think this is an appropriate time to repeat the point I quoted at the beginning of this post. If home buying is like a savings plan, it’s probably the worst savings plan on Earth.

When you actually look at the present equity situation for the people who jumped into the housing market near the peak, stretching their budgets to buy a house that they didn’t even intend to live in long-term, the current record foreclosures start to make some sense.

If you bought a house near the peak thinking that it would be a great “forced savings plan,” you would probably be pretty tempted to hand over the keys, walk away, get yourself into a nice affordable rental, and get yourself started on an actual savings plan—like actually saving money every month. And who could blame you, really.

P.S. – I should add that at this particular moment, I don’t think the stock market is a very good place to put your money. With a P/E ratio on the S&P 500 somewhere in the ballpark of 150, I think stocks are primed to drop back down in the not-too-distant future, possibly by a considerable amount. That’s not investment advice, just my personal opinion.

All’s I know is my household income is 6 figures, I have no kids, I have 20% down, and I still don’t feel like I can afford a house priced $400K. How people are pulling the FHA trigger with 3.5% down and $70K in household income is beyond me. I mean, what happens if a spouse loses a job or a family member gets ill? Don’t people care about long-term stability in their lives? It appears to me, a lot of people borrow as much as they possibly can at every new moment in time.

IMO, no houses are affordable right now, because buyers like me have to compete with 10 flaky families overstretching themselves to get a dump on a 6K sq. ft. lot. They do this purely out of ignorance and an inability to control their impulsive behavior disorder. Then when they default, I pay taxes to bail their irresponsible arses out. Meanwhile, the govt. floods the market with borrowed dollars in order to artificially inflate the price of the foreclosed home so that the crazy banker who made the outrageously risky loan can continue to live in a house that I cannot afford to buy.

This game is crazy.

So what’s the cure for impulsive behavior disorder? Is there one? Surely there must be a way out of this self-destructive cycle, right?

Checking in on Localism a year later reveals that not much has changed. The four local pages we reviewed are nearly as empty as they were, with none of the so-called “hyperlocal” blogs even managing to average more than about two posts per month. The contributors are all still all real estate salespeople, and the registration page still says “we’re not taking new accounts right now.”

With the rousing success of Localism in their first year, it’s no wonder that other corporations would be dying to jump onto the “let’s create a bunch of ‘hyperlocal’ blogs on templates” bandwagon—wait, what? No, that doesn’t make any sense. And yet, that’s exactly what KOMO News decided to do this week, launching their very own “community” pages.

KOMO’s new pages are definitely a few steps above the bland failure that is Localism. From day one they are allowing and encouraging people to register and contribute. The layout is more inviting and looks like it has more going on. Plus, at least as at the corporate level KOMO is local to the “hyperlocal” markets they are attempting to attract.

I do notice that advertising takes up quite a bit of “above the fold” space, and their right sidebar has a dedicated section for “Local Real Estate Agents,” so it is fairly obvious what KOMO’s motivation is here. I certainly don’t begrudge them the chance to try to make money, but I still don’t see what they’re offering that local blogs are not.

Just like Localism, many of the communities with shiny new KOMO pages already have popular, well-established blogs, run by dedicated locals. KOMO says they’re not attempting to compete with these sites, but in reality I doubt there are really two separate markets in the neighborhood blogging scene—one for authentic, community-driven blogs, and another for template-ized, corporate profit vehicles.

[Update: See an (official?) response from KOMO below, describing their perspective.]

Lately the local real estate news scene has been changing quite a bit…

Back in November of last year the Seattle Times’ dedicated real estate reporter Elizabeth Rhodes was voluntarily downsized. Yesterday SeattlePI.com real estate reporter Aubrey Cohen announced that he is moving to the aerospace beat, with no mention of anyone moving into the dedicated real estate position.

Over at the Times, business reporter Eric Pryne has been doing a good job with the occasional real estate story, and Aubrey says that he will “continue to help guide” the real estate reporting at the P-I. I don’t doubt that both news outlets will continue to cover real estate issues, but neither seems to have a dedicated reporter for the subject.

Meanwhile, the P-I “reader blog” Seattle Real Estate Professionals is all but dead, averaging about one post every other week. Rain City Guide has evolved itself into some sort of real estate search / general industry discussion site with Seattle-specific stories having become quite rare.

It would seem that after four years, Seattle Bubble is now Seattle’s only source for dedicated local real estate reporting.

With that in mind, I’d like to open up a conversation with you, the readers, about what you would like to get out of the local real estate reporting provided here at Seattle Bubble. Rather than kicking back and using the lack of competition as an excuse to be lazy, I’d prefer to take this opportunity to improve the site even more.

So what would you like to get out of Seattle Bubble? More personal interest stories? More interactive maps and interactive charts? Additional community-driven features? Coverage of specific neighborhood issues? Let’s hear your ideas.

In the month and a half since the launch of the map, readers have contributed 76 stalled and/or slowed residential developments in the greater Seattle area. The Bothell area still has the largest representation, and even months after starting the map, I still spot a new one that hasn’t been mapped yet every week or two.

Again, anyone can contribute to this map, just load it up in Google and add the stalled / slowed residential construction sites (SFH or condo) near you. Below is the current stalled development map. Please feel free to continue contributing new locations and improving the data, especially if you live in an area with currently spotty coverage.

View Stalled/Slow Seattle Construction in a larger map

What amuses me is that there are still people out there claiming that we will be facing a housing shortage in just a year or two. I wonder if Todd Britsch (of Bothell-based New Home Trends) is still holding to his 2008 prediction that “Seattle is headed for a serious shortage that could bring a return to double-digit price appreciation starting in 2012.”

As of last Wednesday, the latest edition of Sound Housing Quarterly has been published. As the name implies, Sound Housing Quarterly is journal of the Puget Sound residential real estate market, published four times a year.

Benefits of Sound Housing Quarterly:

• Broad geographic coverage (7 Puget Sound counties).
• Provides a concise picture of overall market conditions.
• Cleaner, more printable charts.
• All the recent data compiled in a single package.

If that sounds like something you or someone you know would benefit from, head over to the website at HousingQuarterly.com to download a free preview of the current issue and to learn more about what Sound Housing Quarterly is and how to subscribe or purchase a single issue.

Here’s a brief preview of the type of charts that are included in Sound Housing Quarterly:

If you are involved in the Puget Sound housing market as a home buyer, a home seller, a real estate agent, or a real estate investor—Sound Housing Quarterly is written with you in mind.

This 42-page publication provides an overview of a variety of factors affecting the Puget Sound housing market, as well as a detailed look at county-by-county conditions, and a forecast for where the market is headed in the coming months.

Please take a few minutes to check out Sound Housing Quarterly and consider subscribing. Thanks!

Six new months of Case-Shiller data have been released since that series and two potential bottom dates are now in the rear-view mirror. It seems like good time for a little checkup.

First up, Method 0: Blind Optimism. Our “Blind Optimism” forecast method was based on a mere gut feeling that January was the peak for year-over-year drops. This method predicted a bottom in February at 16.9% off the peak. Let’s see how that turned out:

I guess we can put that one to bed. February was definitely not the bottom.

Next, let’s check in on Bottom-Calling: Inventory-Based Forecast, which was based on the relationship between standing inventory (”active listings”) and home prices that Deejayoh explored in his post Why Inventory Matters, and predicted a bottom in April at 20.1% off the peak.

Looks like April wasn’t the bottom either. Although, in fairness, in the time since we made this forecast, we discovered that the NWMLS changed the definition of “active listing” back in July 2008 a way that resulted in lower inventory being reported at the end of the month. So it’s no real surprise that this method turned out not to be very reliable.

Lastly, let’s check in on a summary of where we’re at so far with respect to all six of our bottom-calling methods:

Our official February 2009 call was for 36% off the peak in December 2010. Six months later, I’m still comfortable sticking with that guess.

Regular readers may recall past mentions on these pages of Northshore Townhomes, an 86-unit townhome complex in my north Kenmore neighborhood.

The story of Northshore Townhomes is a classic tale of bubble mania. The 6-acre parcel was purchased in 2002 for $1 million by well-known local developer Mike Mastro (via an LLC), but development did not begin in earnest until 2006, breaking ground in the midst of the real estate frenzy (condo prices were up over 24% year-over-year in November that year).

Now, Kenmore is nice, but it’s not exactly near the top of most people’s lists when they are thinking about where they want to live around Seattle. Is Kenmore really the best market in which to build 86 new townhomes priced $280,000 to $400,000, with a feature list that includes “the finest finishes throughout” and “chic cabanas with table, bar, and rollout lounges”? And even if Kenmore is a good place for such a development, does it make sense to put it half a block from a major auction house? Obviously not, but during the bubble everything was being snatched up with bidding wars as soon as it came on the market, so in the mind of the developer it was probably a no-lose proposition.

As construction on Northshore neared completion in early 2008, the marketing began to ramp up. A flashy website came online, sandwich boards were strewn about the neighborhood, billboards were placed all along Bothell / Lake City Way, and promotions were launched. Everything looked great, except for one thing… There were no buyers.

As 2008 wound to a close, not a single unit had sold. Signs and online offers advertising units for rent began to pop up along side the still-listed units that were for sale. Of course, this simply provided an even greater disincentive to any possible buyers.

By early 2009, the days of speculators gobbling up properties in hopes unloading on a greater fool for a massive profit were long gone, and Northshore had been left in the lurch. Mastro finally completely gave up trying to sell the townhomes, and the entire complex became rentals. According to a May deed of trust (pdf) filed with King County, Mastro’s company owes $23.6 million on the property. With rents at the complex averaging around $1,700, it will take at least 30 years to pay off the construction (assuming 100% occupancy and ignoring maintenance costs and taxes).

Today, the ridiculous marketing website has gone dark, the sandwich boards that used to proclaim “NEW TOWNHOMES FROM $279K” have new “NOW LEASING” labels taped over them, and the front door of the former sales center has a slot cut into it for the rent drop. Renters are moving in, but with rents that average 16% higher (in terms of $/sqft) than other nearby apartments, it’s no surprise that the complex is slow to fill up.

We recently posted a link to a Puget Sound Business Journal story about Mike Mastro’s mounting financial troubles. Kenmore’s Northshore Townhomes is just one example of Mastro’s major market miscalculation. $24 million here, $10 million there, pretty soon you’re talking about some real money.

Let’s check in again on the cheapest homes around Seattle proper. For methodology and a brief explanation of the reasoning behind this series, hit the April post.

Please note: These posts should not be construed to be an advertisement or endorsement of any specific home for sale. We are merely taking a brief snapshot of the market at a given time. Also, just because a home makes it onto the “cheapest” list, does not indicate that it is a good value.

Here are this month’s three cheapest single-family homes in the city limits of Seattle (according to Redfin):

June’s #2 home moved up to #1 this month with $30,000 in price cuts since it was last featured on these pages. I don’t understand why nobody has snatched this place up yet, especially with such an amazing view:

View Larger Map

But I digress.

April’s cheapest home apparently sold in June for $140,000. June’s #3 home also sold, for $15,000 off the $155,000 listing price when it was featured here.

Stats snapshot for Seattle Single-Family Homes Under $200,000
Total on market: 44
Average number of beds: 2.1
Average number of baths: 1.2
Average square footage: 999
Average days on market: 78

Here are the three cheapest homes in terms of dollars per square foot:

One more bonus for you this month. Here’s the lowest dollars per square foot on a house priced above $500,000: 2307 17th Ave S at just $109 $/sqft. $549,500, 6 beds, 4 baths, 5,020 square feet. I love the Christmas decorations in the listing photos.

Good news everyone!

The latest population estimates for King County have been released by the Census Bureau, and at the present rate of population growth, we’ll be able to use up all of our excess housing inventory by July of next year…

…if all residential construction across the county completely ceased after July 2008, that is.

Our previous excursions into this data have been based on Census Bureau estimates, which are unfortunately not very timely. However, the Washington State Office of Financial Management keeps its own sets of estimates which are much more current. In fact, their latest release a few weeks ago provides data through April of this year.

Here’s an updated chart of housing supply (total housing units) and demand (total households) for the 3-county Puget Sound region, indexed to 2000:

Across King, Snohomish, and Pierce counties, a total of 147,591 new households have been added since 2000. During the same time, 184,378 new housing units have been built, amounting to an oversupply of 36,787 housing units.

Here’s a look at the raw number of housing units and households that were added to the region each year:

Only 2004 and 2005 had people moving here faster than new housing stock was coming online, and 2006 more than made up for the discrepancy in short order.

Here’s the indexed chart for King County only:

In King County, we’ve added 65,443 households and 90,157 housing units over the past nine years, for a total oversupply of 24,714 housing units.

Here’s the year-by-year chart for King County:

Here in King, only 2005 saw a larger addition of households than housing units. Even between 2008 and 2009, 3,304 more housing units were added than new households.

So it would seem that rather than working through our local housing oversupply, we’re still adding to it.

Everyday for well over a year I drive by this development hovering over Hwy 2 as you head eastbound to Lake Stevens or Snohomish.   I noticed this one lonely house (with paint all over it) with a tree surrounded by vacant lots.  Late this afternoon on my way home from the office in Everett I decided to drive by (pics below).  I had no idea what was painted on this house until I drove right next to it.   While a few may find humor in this, I do not.  Sign of the times.

This morning I attended the Snohomish Co. foreclosure auction at the county courthouse and spoke with Kathy, an older woman who is a seasoned investor of these auctions.   She indicated to me that about 90% of the sales are going back to the lender and will come back on the market as REO at a future date.   I left at 11:30 am and I only witnessed one home (of scores on the dockets) being sold.  All the other sales up to that point were delayed, postponed or went back to the Beneficiary (lender) if the bid start price was too high for any investor to bid on—generally the bank buys it back for what is owed on the first mortgage.

I think purchasing an REO (bank owned) property could be more appealing to a buyer looking to get a good buy vs. a foreclosure.  There are a lot of risks in buying a foreclosure.  For example, it is rare to be able to inspect the interior.  The home could also be trashed by the owner just hours or days prior to the sale.

On the gable over the windows is writing that says, “Model Home.”   You can barely see it.

So far readers have contributed 48 stalled and/or slowed residential developments in the greater Seattle area. The greatest concentration by far is in the Bothell area, which may be due primarily to the fact that that’s where a few especially prolific contributors live (including myself).

Again, anyone can contribute to this map, just load it up in Google and add the stalled / slowed residential construction sites (SFH or condo) near you.

In related news, Eric Pryne over at the Seattle Times has a story up today about one of the larger stalled developments in the Bothell / Kirkland area that has been foreclosed on: Seattle-area homebuilder losing projects to foreclosure .

One of the Seattle area’s most prominent homebuilders has lost most of one new Eastside housing development to foreclosure, and expects to lose another big property.

Most of Conner Homes’ upscale, partly built Bentley subdivision in Bothell was sold at auction last month after the company defaulted on a $24.8 million loan, county records indicate.

Another auction has been scheduled in October for 35 acres Conner owns and once planned to develop in North Bend. The builder hasn’t made loan payments on that land since at least December, according to a foreclosure notice filed with the county last week.

For anyone interested, I pulled the foreclosure notices off the King County Records website. Here’s the foreclosure notice for the Bothell / Kirkland development (pdf), and here’s the one for North Bend (pdf). I guess someone forgot to tell Conner Homes that the bottom was in February.

Below is the current stalled development map. Please feel free to keep adding to it. FYI, I’m planning on doing a bit of a redesign to the site in the not-too-distant future, after which features such as this map will have a more accessible permanent home.

View Stalled/Slow Seattle Construction in a larger map

I won’t go into all the details of the announcement since you can find good coverage of the changes over at the P-I or Rain City Guide. Instead, I thought it would be interesting to see what the long-term financial picture might look like for someone who plans to take advantage of this program.

Let’s take a look at some hypothetical home borrowers who currently owe $400,000 in various mortgages with difficult terms or high rates, and whose home is presently worth $320,000. They jump on the new FHFA Home Affordable Refinance Program and refinance into a single 30-year fixed-rate loan at a 5.75% interest rate with a 125% loan-to-value ratio.

I hope that our hypothetical couple doesn’t want to move any time in the next 13 years, because under a relatively optimistic home value appreciation scenario that’s how long it will take before they will be able to sell without bringing money to the table:

Note that the home sale proceeds line assumes paying 6% of the sale price to real estate agents, as well as an additional 2% to account for excise taxes and other costs of selling. You can also download the spreadsheet I used to create these charts and tweak the values yourself.

With the home value appreciation tweaked to a slightly less rosy scenario, it takes 17 years before our couple can break even selling their house:

According to a 1993 study by the Census Bureau (pdf) only ~10% of home owners stayed in one house for over ten years. A 2001 study (pdf) by the NAR-funded Joint Center for Housing Studies put the median length of home ownership at 8.2 years. Refinancing one’s home into a 30-year loan for 125% of the house’s value will most likely lock the borrower into their present home for a period of time longer than 90% of people usually stay in their homes.

If the goal of this new 125% loan-to-value program is to financially imprison people in their current homes for a decade or more, then it looks like it could be a rousing success. However, I’m not sure how many currently struggling home borrowers would really consider that to be much of a “help.”

It doesn’t take much emotional pull to consider walking away when you see property being purchased across the street for $150,000+ less than what you may have purchased your place for in 2006 and it costing substantially less to cover the monthly payment at today’s market prices. This is more prevalent in newer developments and I would guess can make for interesting neighbor to neighbor discussions.

Well, I spent a little time on Redfin looking at some new construction homes for sale, and it didn’t take long for me to find some examples similar to Tim’s hypothetical scenario:

• Nov. ‘06 @ $395,808
• Feb. ‘07 @ $403,950
• May ‘07 @ $396,975

New units’ current asking price: $319,950 (~20% off)

• Jul. ‘06 @ $563,950
• Oct. ‘06 @ $564,950
• Apr. ‘07 @ $543,000

New units’ current asking price: $459,950 (~19% off)

In the first example above, if we (very generously) assume that the folks that bought in ‘06 and ‘07 had 20% down payments and got 30-year fixed-rate mortgages at the going rates at the time, their payments would presently be around $2,400. Today’s buyer with the same sized down payment would have a monthly payment around $1,700.

That’s a ~30% difference in payments. The ‘06-’07 buyers are spending $8,400 a year more for the same house as their neighbors. I imagine most people can think of lots of things they’d rather do with $8,400 a year than to continuously pay for a poor decision they made years ago.

There are tens of thousands of buyers around Seattle who bought at or near the peak with little to no money down. Many of them even got a mortgage that they can technically afford (got ramen?). At the time they bought, it made sense to them to squeeze their budget, because they bought into the notion that if they didn’t get something right away, they would be priced out forever.

Every month that these peak buyers spend in their peak-purchased house they’re basically “throwing away” hundreds (sometimes thousands) of dollars. Selling isn’t an option, because they owe so much more than the home would sell for. Walking away starts to make sense.

I’m not saying I necessarily recommend walking away as a course of action (or that I don’t), but I can absolutely understand the rationale, especially when you’re in a situation like the above examples, where people buying the exact same house today are paying thousands less per year.

Below you will find the map that I have started. If you’d like to contribute some stalled residential construction sites (SFH or condo) in your area, just sign into your Google account then head to this link, click “Edit” on the left side of the page, and begin adding your markers.

At present, the map is open for anyone with a Google account to edit freely. I only ask that you not modify existing points added by others and that you follow roughly the same format that I have used on the starting points, which includes location, size (# of units), builder, status, and if possible, a picture.

If we all work together, I think we can create something that will be pretty interesting.

View Stalled/Slow Seattle Construction in a larger map

Auctions like this usually have a few things that might be described as “gotchas.” Here are a few things to look out for:

• Minimum prices that may or may not be stated beforehand (e.g. – bidding starts at $50,000, but really they won’t let the unit go for less than $150,000).
• Seller usually reserves the right to end the auction at any time without prior notice, so if you show up and are hoping to bid on a unit near the end of the auction you may not get the chance. I know this happened at the Seventeen07 auction back in October, when they held back the last few units due to low bidding volume.
• They may require financing through a specific bank or the builder.

With respect to the above list, the terms and conditions for the Lumen auction state the following:

• “The Seller has established a minimum selling price (Published Reserve) for each property to be auctioned. No bid below the published reserve will be recognized by the Auctioneer. There are no Buyer’s Premiums or Hidden Reserves.”
• “The Seller has the right to postpone or cancel the Auction in whole or in part in its sole discretion.”
• “All auction bidders are required to be pre-qualified with Seller’s Designated Lender prior to the Auction, including those bidders who wish to use another lender for their purchase, and bidders who will pay cash for their purchase.”

Also important to note is the clause that the seller reserves the right “to modify or add any terms and conditions of sale and to announce such modifications or additional terms and conditions either prior to or at the Auction.”

If you are thinking about buying a home at auction, I suggest attending 2-3 such auctions to get an idea of how things work and whether or not things tend to sell for prices that you think are reasonable.

The firms running these auctions are happy to provide all the fine print details about the auction to you beforehand. If you get them and there are parts you don’t understand, you may consider hiring a real estate attorney to review them and explain them to you.

Furthermore, I received an email today from the Lumen auction folks about a “pre-auction seminar” they will be holding on July 1st:

On Wednesday July 1, 2009 LUMEN will hold a pre-auction seminar for interested buyers of the remaining 19 new condos available in one of Seattle’s most unique developments. Potential homebuyers will have the opportunity to tour available condos, learn techniques for buying at auction, participate in a mock auction, pre-qualify with the seller’s designated lender and pre-register for the LUMEN public auction to be held July 11.

What: LUMEN “How to Buy” pre-auction seminar and registration
When: Wednesday, July 1, 2009 at 7 P.M.
Where: LUMEN Lounge, 501 Roy Street, Seattle, WA 98109

Obviously the underlying purpose of this event is to get buyers interested and excited to buy the condos, but it would probably still be a good idea to attend if you are thinking of going to the auction.

The question of whether or not the Lumen condo auction or any other real estate auction represents a good buying opportunity for you depends entirely on your unique finances, priorities, and tolerance for risk. As with any real estate purchase, the best thing you can do is take your time, do your research, and don’t rush into a decision based on emotion.

Don’t you dare buy a home now. You will lose money.

[Real estate agents complain, insist that real estate is regional, and there are some places where it is a good time to buy. Cramer responds...]

Seattle, and 10005 are the only two. Maybe Montgomery County in Maryland. Three. That’s it.

So, according to Jim Cramer, September 2007 was a good time to buy a home in Seattle. Everywhere else, home buyers were setting themselves up to lose money, but not in Seattle.

Let’s have a quick check on how that’s turning out.

September 2007
King County median SFH price: $450,000
YOY appreciation: +5.9%

May 2009 (20 months later)
King County median SFH price: $375,000
YOY appreciation: -14.8%
Total price change: -16.7%

Whoops. And for those of you keeping score at home, the drop in Seattle’s Case-Shiller HPI was even more steep, falling 22.2% from September 2007 through March 2009 (the latest data available). In other words, if you bought a Seattle-area home in September 2007 with 20% down, your “investment” is now most likely completely gone.

Not that anyone really thought that Jim Cramer had any credibility (anymore/ever) anyway, but it’s certainly entertaining to revisit proclamations like this once in a while.

1. Pricing
2. Marketing
3. Cleaning
4. Extras

Rather than tackling these in the above order of priority, we’re going to hit them in chronological order. Therefore, today we’re going to take a closer look at the first thing you should do when you decide you are serious about selling your house: cleaning.

If you really want to sell your house, you’re going to have to do a lot more than just vacuum the floors and dust the shelves. A proper pre-sale cleaning is a thorough deep-clean of the inside and outside.

Here’s a good starting checklist for your pre-sale cleaning:

• Steam-clean the carpets and/or buff/shine the hardwood floors.
• Take everything off the walls and wash them.
• If it’s been more than a few years since the interior has been painted or if you have any walls that are “bold” colors, put on a fresh coat of paint in a neutral color.
• Pressure-wash the roof (edit: use caution or another method if your roof is asphalt shingles).
• Put on a fresh coat of exterior paint or pressure-wash the siding.
• Manicure the landscaping: pull the weeds, mow the lawn, prune the bushes & trees, kill anything growing in your driveway or sidewalks, put down some fresh mulch around the bushes and flowers.
• Clean every window, inside and out.
• Clean out the gutters.
• Thoroughly clean inside and out any appliances that stay (oven, fridge, etc.)
• Take down and wash any light fixtures with dust / dead bug buildup.
• De-clutter and simplify every room.

You can do these things yourself, or hire a professional. Either way you will probably be spending between a few hundred and a few thousand dollars, but by presenting a high-quality product you will be reducing the buyer’s ability (and desire) to negotiate a lower price.

Pay special attention to maximizing your “curb appeal” through pre-sale cleaning. The first impression your house makes on the potential buyer will set the mood for their entire viewing. You want a house that says “you would be proud to live here” from the moment they drive up.

It is also impossible to over-stress the importance of de-cluttering. A lot has been made recently of “home staging” to improve a home’s chances of selling. Paying a professional home stager is the easiest way to de-clutter your home, but you can accomplish much of the same results by doing a few simple things on your own:

• Take down all personal decorations: family photos, etc.
• Eliminate any furniture that looks old or “eclectic”
• Sparsely furnish each room, making sure that all furniture and decor fits the overall “feel”

If you’re the DIY type, the best way to prepare the interior of your house may be to go through the house one room at a time and completely empty the room, clean the floors, paint the walls, then “stage” it per the suggestions above.

The end result of a thorough inside and out deep-cleaning will be a house that looks great in pictures, and makes potential buyers say “wow” when they see it in person. If you truly want to get the best price possible for your home, do not put it on the market until you have achieved the “wow factor.”

How-To: Sell Your Home in a Down Market

• Introduction: How-To: Sell Your Home in a Down Market
• Deep Clean to Make Your House Shine
• Pricing Your House
• Marketing Your House
• Extras to Sell Your House

In my opinion, it’s no wonder that home prices have gotten so out of whack with true fundamentals, when the first question someone asks in the home buying process is not “Is this house worth $XXX,000?” but rather “Can I afford $X,000 per month (no matter what kind of financing it takes)?” Obviously a monthly payment must be affordable, but should that really be the sole determining factor in whether a house is worth buying?

With interest rates bouncing up in the last few weeks from their artificial lows in the 4s, it’s interesting to consider how this might affect the housing market.

Following is a chart that shows how the monthly payment (principal + interest only) on a $350,000 mortgage grows as interest rates rise:

Since most people are still “monthly payment buyers” when it comes to buying real estate, perhaps more informative is the following chart, which shows how much mortgage a fixed $1,750 payment (principal + interest only) buys as interest rates rise:

A mere 1-point jump in interest rates from 4.5% to 5.5% drops the amount that can be afforded by over 10%. Another 1-point jump up to 6.5%—a rate considered great just a few years ago—knocks another 10% off.

If suddenly everyone in the buying pool can afford 10% less for a home, what effect do you suppose that might have on prices?

On a foreclose property I was watching, here’s my experience:

• Last purchase price (2006) – $550K
• Loan amount – $495K
• Estimated peak pricing – ~$600K.
• Property foreclosed in August 2008 to bank.
• Local broker starts marketing the property in Sept 2008, initial price @ $550K. He specializes in BPO/REO sales.
• I noticed the property, and since I rented on the same street, knew the area. But $550K was too overpriced.
• Price drops approx ~$25K – $50K every month, usually around the 10th of the month.
• By December, price is $425K.
• Jan 09 price is $390K, we offer $300K on Feb 2. Bank rejects the price. We counter @ $325K, bank agains rejects the price with little explanation (’too low’).
• Feb price drops to $375K, we re-offer $325K. Bank rejects.
• March, price drop to $350K, we again re-offer $325K, Bank counters at $340K. We stay firm at $325K and tell them our next offer will be lower (which gets the listing agent really upset and writes a slightly nasty reply that we’re behind the curve and the price is amazing blah blah blah).
• April, price drops to $325K, we again offer $325K and think we’re a shoe-in this time. However, before accepting our offer, bank pulls the listing and sends property to be auctioned at a REDC auction (www.auction.com) taking place in early May.
• We attend auction in early May at the Meydenbauer center, and win the property for 370K [correction: $270k] + 5% premium (going to the auction house), “subject to seller confirmation”. We place 5% non refundable earnest money (cashier’s check) and wait for “confirmation.”
• After approx. 3 weeks, and no response, our buyer’s agent lets us know the property is back on the market at 325K, and apparently this is our auction rejection notice.
• We re-offer 325K for the property and this time get acceptance in principal.
• Now comes the one-sided buyer’s addendum with a whole bunch of gotchas: bank only need supply “insurable title”, rather than “marketable title” (not being familiar with title matters I had to consult 2 attorneys on the difference). $100-per diem fee for later closing. Contract says seller will not pay any transfer or excise taxes. and a whole bunch of other verbiages that generally protect the bank, give them the right to back out and screw over the buyer.
• I bring the addendum to my lawyer who makes several changes. Submit offer and addendum with changes. Bank will not accept any changes (actually, they’ve outsourced the sale to a 3rd party who does not have the authority, supposedly, to accept changes). I ask that the decision be escalated. Reply is that a new addendum can be added and they will consider changes on new addendum, but no changes will be accepted on their addendum.
• Listing agent keeps telling us that he has other backup offers and even rejected one at 10K above asking (yeah right, nevermind his legal fudiciary duty to the seller to take the best price) and that he is doing me favours (yeah right) and generally rushes the process. I am not easily rushed.
• Much back and fourth ensues, and we finally get the legal matters sorted out more or less to my satisfaction (I accept some compromise based on my belief that the bank actually doesn’t want to keep paying carrying costs on the property and wants it to be sold =)
• Inspection and resale cert are acceptable.
• Locked in a mortgage rate of 4.25% on a 30yr fixed /w 1/2 pt & 25% down (lucky timing!)
• Closing date set in mid June and we should make it to close, I hope!

My conclusions (as a first time home-buyer):

• Bank have very poor and slow process.
• Bank actions almost make things seem like they don’t really want to sell their property.
• Their basic strategy appeared to be a Dutch auction: start the price above market value and drop price monthly to find a market clearing price. The problem is that the market was largely dropping with them, and so they could have sold the property much earlier and probably at a higher price if they had simply started the price at a realistic level and had some flexibility to accept lower than asking price. The Dutch auction strategy would work very well in a appreciating market, as each month’s appreciation will probably cover at least carrying costs.
• Auction process was a waste of time, money for the seller and an annoyance to buyers (and kept the property off the market for ~1 month of peak season, (i.e. May)) Side note: properties at the auction where financing was available (read: not in horrendous condition) generally sold for 40-50% off peak market pricing. I’m not sure if they were expecting a miracle, not sure why the bank sent the property to auction if they weren’t serious to sell.
• My wife became very frustrated with this process and was pushing me to just walk away several months ago. She has utter disdain for the seller and takes things personally.
• In the end, I got a property for approx 45% off peak pricing, record low interest rates and I should qualify for the federal tax rebate. I personally expect the overall market to also fall about 40% in the long run, though would not be suprised to see an overshoot in the short run.
• I calculated “fair market value” by averaging out comps from the early 1990s based on county records, adding 3%/yr for inflation and determining a fair price for this property would be around $325K – $375K. So my offer was not based on bubble pricing.
• In the long run, I don’t expect this property to make money, beyond inflation.

What experiences have you had dealing with banks on the buying end? Is Ross’ story a familiar one? Everyone knows that short sales are a pain and take a long time, but are just as many people having difficulties purchasing bank-owned homes as well?

Lets hear your stories.

I would hope that by now most people have realized how ridiculous that concept is, but I thought it might help dispel the notion if we consider a pair of hypothetical (but completely plausible) scenarios.

Couple A is renting a 2-bedroom, 1.5-bath townhouse for $1,000 a month in Ballard. Their $1,000 pays for not only the roof over their heads, but the water/sewer/trash, any necessary maintenance, and access to shared facilities such as a pool, hot tub, and workout room.

Over the past three years Couple A have spent around $35,000 on shelter. If they decide they want to move, it’s as easy as waiting until the lease is up and collecting their security deposit.

Couple B decided in 2006 that they were tired of “throwing away money on rent.” They didn’t have a down payment, but that of course didn’t stop them from qualifying for a $400,000 loan on an adorable 2-bedroom, 1.5-bath Ballard craftsman. With an interest rate of 5.7%, their (PITI) payments are around $3,000. Of course, this doesn’t include any services or maintenance.

Over the past three years Couple B have spent around $67,000 on mortgage interest alone, and their home is now valued at around $340,000—15% less than they paid. If they decide they want to move they have three options: Come up with about $40,000 in cash to cover the difference between their mortgage and the house’s value, convince the bank to accept a short sale, or walk away.

Now, which of these hypothetical couples seems more like they have been “throwing away money” to you?

When I posted that link, some readers complained that Mike’s project was too high-end to be of much use to your more average family. Well, thanks to a heads up from Cheap South in the comments, here’s another local project on the opposite end of the spectrum for you: Mini-Mobile Cottage

Jeff & Arlene are building a cottage with less than 200 square feet, documenting and pricing out the project in a similar manner to Mike’s site. They’re also looking for a place to park their house upon completion in August, so if you’re interested in helping, drop them a line.

Let’s check in again on the cheapest homes around Seattle proper. Ideally this should be a monthly series, but somehow it was overlooked last month. For methodology and a brief explanation of the reasoning behind this series, hit the April post.

Please note: These posts should not be construed to be an advertisement or endorsement of any specific home for sale. We are merely taking a brief snapshot of the market at a given time. Also, just because a home makes it onto the “cheapest” list, does not indicate that it is a good value.

Here are this month’s three cheapest single-family homes in the city limits of Seattle (according to Redfin):

There were a few houseboats that showed up in my SFH search that were cheaper than these three, as well as a couple “fixer-uppers” of the more extreme variety. All three of April’s featured cheapest homes are no longer on the market, but according to Redfin, none of them actually sold, either.

Stats for Seattle Single-Family Homes Under $200,000
Total on market: 42
Average number of beds: 2.0
Average number of baths: 1.2
Average square footage: 979
Average days on market: 72

As an added bonus, here are the three cheapest homes in terms of dollars per square foot:

The analysis in this post are all based on annual data for King County for the period from 1969-2008 – a period that covers five recessions.  For home prices, I used the King County MLS median price for SFH, pulled from The Tim’s long-run home price chart.  Tim’s data in this series shows home values in April and October of each year.  I used the October data.  For income, I pulled the data for King County Personal income per capita (PCI) from www.bea.gov.  This time series runs from 1969-2007.  In order to estimate PCI for 2008, I grossed up the 2007 figure by 1%, which was the estimate of Median HHI income growth for King County by the Washington Office of Financial Management (OFM).

[Note from The Tim: For a more granular look at the short-term price-to-income trend since 1990, hit this post.]

The first analysis is a simple line chart showing the historical ratio of home prices to income.   Here we can see that, up until the turn of the century, home prices bounced around in a fairly narrow range when expressed as a multiple of incomes.  The multiple is closer to 4x in times of economic duress (e.g. the oil crisis and mid-eighties recession) and rises up closer to 6x in better times.  But the average multiple of home prices to incomes between 1969 and 2000 was almost exactly 5x.  Then, as lending rules are eased in 2001 -  we see the multiple grow steadily until it peaks over 8x in 2006, before falling back to 7.1x as of October 2008.

Based on this chart it is pretty clear to me that claims that home prices falling to their “normal state” of 3x income are best discussed on Snopes.com.  There is no historical precedent for the median price for homes in the Seattle area being that low relative to income in most of our lifetimes – and even if it has fallen to that level at some point in the past, I doubt home prices have averaged 3x income for any extended period of time.  Based on the last ~40 years the “bottom” for home prices based on the income multiple appears to be about 4x incomes.

The second analysis uses the same data, but presents the results as a scatterplot.  Here we can see even more clearly the impact of the changes in lending standards in 2001.   From 1969 to 2000, the relationship between home prices and incomes (shown in blue) follows an almost linear path.  The r-square between these two time series is over 97%.  Using a “best fit” line shows that the best predictor for home prices as a multiple of incomes during this time period is 5.35x – slightly higher than the mathematical average from the analysis above – but probably a slightly better estimate of the long run trended value.

The red points clearly show home prices diverging from the long-run trend line in 2001, and moving back toward it beginning in 2007.  I think this is the starkest evidence I have seen showing how the “fundamentals” of income as a driver of home values disappeared in the boom.  After tracking income for 30+ years, home prices set off on their own path just as new financing vehicles and standards were introduced to the market.

This chart also casts doubt on that the claim that the boom “started late” in Seattle.  You can clearly see that home prices were shooting up relative to incomes in 2001 and 2002, before leveling off slightly in 2003.  The perception that we were not “booming” was probably due to  income growth being depressed by the end of the dot com boom and the stock market crash – but the ratio of home prices to incomes was steadily increasing.

I also ran an analysis comparing the annual change in home prices to the annual change in incomes.  This is a “purer” analysis because with two trended series (e.g. home prices and incomes) a large portion of the explanatory value is the result of autocorrelation.  I haven’t clipped the graph in here, but the r-square for this analysis was 0.3 – which is pretty high for a single variable regression using two fairly noisy series.  It was enough to satisfy my curiosity, as I am entirely comfortable with the premise the primary driver of  home prices is income levels, all other things being equal (e.g. financing terms, relative supply)

Based on this comparison, my observations are as follows:

• This is evidence to me that we are clearly still far from the bottom.  Depending on your viewpoint, prices should fall back at least to the long-run income multiple (I’ll use 5.35x) and could drop as low as 4x.  Based on this data series, I see no precedent for a lower multiple.
• King County PCI for 2008 should be about $55k, and given the state of the economy it will probably stay about the same in  2009 .  Applying those income multiples would indicate the King County median would  “bottom”  somewhere between $220k and $295k.
• The April median for King County SFH was $380k, indicating a possibility of 22-42% of additional downside risk

For home prices to fall much further than this (e.g. the super-bear’s $100k prediction), it seems to me that one or more of the following things would have to be true:

1. Home price/income multiples would have to diverge greatly from 30+ years of historical precedence
2. Incomes would have to fall dramatically
3. Lending standards would have to be tightened dramatically from their pre-bubble standards.  (A simple increase in rates should not be a unique condition, as the period of this analysis includes the double digit rates in the early ’80s)
4. Some other extraordinary event would have to take place such as a change in the tax treatment of real estate.

Note that I am not saying any of these things won’t happen. But it does seem to me that conditions would have to change quite dramatically to result in that extreme of a drop in values.  As of today, it appears incomes are relatively stable, lending standards have (for the most part) returned to pre-bubble conditions, and home prices are trending back to the long run income multiple.

My caveat: This analysis is not intended to be predictive.  It is intended as additional information from which you, the reader can generate your own opinions about where the housing market is going and make an informed decision on a housing purchase during a period of great uncertainty.  Hopefully it will generate good discussion in the comments section.

Just a few short years ago, the home-selling process went something like this:

1. Put your home on the market in any condition.
2. Receive multiple offers within a month for 10-20% over asking price.
3. Profit!

Sadly for you (the home seller), it’s not quite that easy any more. Average days on market for sold homes has gone from the mid-30s at the height of the bubble to the upper 80s today. Meanwhile, thousands of homes continue to sit on the market month after month, as the average time on market for unsold homes has climbed to nearly four months.

If your home is one of those that are sitting on the market unsold, or if you’re thinking about putting your house on the market, don’t just sit on your hands and hope that buyers will want to buy your home. The housing market is a competition, and you need to be proactive to grab the attention of a buyer pool that is much smaller than it was during the bubble.

In order of priority, here are the things you need to focus on and get right when you put your house on the market:

1. Pricing
2. Marketing
3. Cleaning
4. Extras

The first three are critical, and make up the absolute minimum requirements for what any home seller should do if they really want to sell their home for a fair market price. Unfortunately, many sellers only tackle #2 (i.e. – list it on the MLS), and then wonder why their home isn’t selling.

We will go into each of these points in detail with dedicated posts in the coming weeks, giving sellers the tools they need to appropriately price, market, and clean their homes to attract a buyer.

For today, I’d like to hear from anyone who has recently been successful at selling a home. What tips do you have for sellers that are watching their home sit on the market for months? What should a potential seller do before they list their home?

How-To: Sell Your Home in a Down Market

• Introduction: How-To: Sell Your Home in a Down Market
• Deep Clean to Make Your House Shine
• Pricing Your House
• Marketing Your House
• Extras to Sell Your House

So much for Steve Tytler’s famous “stair step” theory (which he was still espousing as recently as July 2008).

Note that in the above chart, each data point represents a 6-month average, and in the chart below, each represents a 12-month average. For 2009 we are using the 4-month average of January – April.

I’d love to provide you with a more substantive post today, but I’m taking my birthday off (this post was pre-written last night). See you tomorrow.

Sources:
(1946-1992 Home Prices: Seattle Real Estate Research Report)
(1993-2009 Home Prices: NWMLS)
(Misc. Price Data: Seattle Times)
(Inflation Data: Bureau of Labor Statistics – Consumer Price Index)
(Household Income: US Census Bureau)
(1950-1970 Interest Rates: Financial Forecast Center)
(1971-2009 Interest Rates: Federal Reserve)

Benefits of Sound Housing Quarterly:

• Broad geographic coverage (7 Puget Sound counties).
• Provides a concise picture of overall market conditions.
• Cleaner, more printable charts.
• All the recent data compiled in a single package.

If that sounds like something you or someone you know would benefit from, head over to the website at HousingQuarterly.com to download a free preview of the current issue and to learn more about what Sound Housing Quarterly is and how to subscribe or purchase a single issue.

Here’s a brief preview of the type of charts that are included in Sound Housing Quarterly:

If you are involved in the Puget Sound housing market in any way, as a home buyer, a home seller, a real estate agent, or a real estate investor—Sound Housing Quarterly is written with you in mind.

This 40-page publication provides an overview of a variety of factors affecting the Puget Sound housing market, as well as a detailed look at county-by-county conditions, and a forecast for where the market is headed in the coming months.

I enjoy providing Seattle Bubble free of charge as a service to the community, but I recognize that the format here can sometimes be intimidating, making it difficult to get a good handle on the overall market picture without reading along every day. That’s why I created Sound Housing Quarterly. Please take a few minutes to check it out, and consider subscribing. Thanks!

The morning session consisted of roughly thirty minutes of prepared remarks given to a crowd of about 1,400 local business leaders and people with ties to SPU. The afternoon session was about an hour long, and was more interactive event at a smaller venue with the capacity to seat only a few hundred. After giving a condensed version of the same presentation from the breakfast, the floor was opened for a question-and-answer session.

Dr. Shiller’s primary thesis is that economic markets are strongly influenced by psychology that seems rational to individuals, but on the whole is “collective madness.”

He referred to the notion that prevailed during the housing bubble that home prices never go down as laughable, and said that the ideas that housing is an “amazing investment” and that you can be “priced out” are not supported by the data.

One amusing part of the afternoon session was a story Dr. Shiller related about a localized Los Angeles housing bubble in 1885. In describing the mentality in 1885 Los Angeles, he said that people thought “Los Angeles is special!” He also quoted from an article in the LA Times which was published during the aftermath of the collapse in 1886:

We Californians have learned something. And that is that home prices can’t just go up forever—they have to be supported by something. Never again will Californians make this mistake.

Regarding government bailouts, Dr. Shiller likened the economy to a sinking ship (specifically the Titanic), saying that “we just have to try something,” and “I give them credit for trying.” [Update: As I understood him, Dr. Shiller was proposing that we “try something” not to re-inflate the bubble, but rather to soften the blow of the bursting bubble, and to prevent the opposite of “irrational exuberance” from driving the nation and the world into a massive over-correction that could last for decades.] He also suggested that more should be done to prevent foreclosures, due to the psychological impact of losing one’s home.

After the afternoon session, Ray Pepper (500 Realty) and I were discussing the psychological implications and the moral hazard inherent in mortgage principal reductions, which Dr. Shiller seemed to be promoting. Ray asked Dr. Shiller about this, and he responded that “I’m not a fan of it in the long run, but maybe in the immediate crisis, because people are in trouble.” His ideal solution would be something he calls a “continuous workout mortgage,” where a workout (principal write-down) is pre-specified and priced into the mortgage from the start (a concept described in more detail in his book The Subprime Solution).

Although he declined to give any specific forecasts, the feeling I got from his comments were that Dr. Shiller believes home prices will return to their long-term, inflation-adjusted historical levels, both nationwide and even here in Seattle.

For anyone interested in hearing the entire afternoon lecture, you can listen to it right here:

[See post to listen to audio]

Feel free to also download a pdf of my barely-legible notes, in which I embarrassingly and inexplicably misspelled Dr. Shiller’s name. Or, for those of you that are really adventurous, you can view an interactive version of my notes indexed to the audio of the event.

If anyone would like to hear the morning lecture, I have a recording of that as well, but the quality is relatively poor due to it being such a large room. Let me know and I will post a link in the comments.

Aubrey Cohen also has a write-up of his take on the morning event here: Put down the instant coffee: Economist warns of depression mindset

In order to address this issue, I have devised a new measure of market vitality: Seasonally Adjusted Active Supply (SAAS). To determine the SAAS, I am dividing the number of new listings in a given month by the number of closed sales, then multiplying by a seasonal factor between 0.7 and 2.1 to smooth out the strong seasonal variations.

Here’s what the SAAS looks like for King County SFH as far back as we have reliable data:

King County’s SAAS has definitely dropped down off the highs we saw through the winter, when it hit values between 3.3 and 3.4, but March’s SAAS of 2.75 was still higher than January through October of last year. We’re also well above the pre-bubble average of 1.85.

With Months of Supply we generally consider a value of 6.0 to be a “balanced market.” For Seasonally Adjusted Active Supply, I would put the “balanced market” point at about 2.0.

Here’s a comparison of SAAS and MOS for the same period as the chart above:

You can see that from 2000 through about midway through 2006, the two tracked fairly close to each other. In mid-2007 as the bubble begain to burst, MOS shot up much faster than SAAS, perhaps due to the rapidly increasing number of “stale listings.” Since last December as the gap between pending and closed sales has continued to widen, MOS has fallen much faster than SAAS.

SAAS seems to me to be a decent way to track the overall market action. I’d love to hear your feedback on this method and the picture that is painted by this data.

[Update:] Hit the jump below for a few more graphs of the SAAS data requested by readers.

Here’s a look at the “Active Supply” without the seasonal adjustment:

Here are the monthly weights that were used to seasonally adjust the data:

Jan: 0.7
Feb: 0.8
Mar: 0.9
Apr: 0.9
May: 0.9
Jun: 1.0
Jul: 1.1
Aug: 1.1
Sep: 1.0
Oct: 1.0
Nov: 1.2
Dec: 2.1

And finally, here are comparisons of MOS (centered on 6.0) vs. YOY median price (centered on 5.0%), and SAAS (centered on 2.0) vs. YOY median price (at 5.0%):

I would say that there seems to be a fairly good relationship between an SAAS around 2.0 and a “healthy,” sustainable 5.0% YOY appreciation.

Real Estate

Real estate scams are easily recognized. There is almost always an element of time pressure, with the victims being convinced they are participating in a “once-in-a-lifetime, now-or-never” deal. The investors are led to believe there is no time to investigate the venture, and that if they hesitate, they will miss the opportunity to make a fortune. Promises of big profits for little or no involvement are the norm in real estate scams.

Oh snap, America… you’ve been scammed.

Here is the money quote:

Local economist Jim Hebert says those prices are going to drop even more. And that’s something people should consider now, when they make an offer.

[Hebert] “…perhaps what you do is you don’t look at today’s price, you look at the price in four to six months. And it’s going to continue to fall—for a while, it will fall. It must.”

Schauffler only interviews one real estate professional in the broadcast, mortgage broker Howard Bono, who forecasts a horizon of “three or four or five years” before the market gets back on its feet.

The overall tone of this most recent piece is a far cry from the November 2007 Up Front in which Lennox Scott, responding to a forecast of home prices dropping 19.5% in five years, made the assertion that “that’s not the projections that we’re seeing.” For the record, King County’s median home price is down 24% from its July 2007 peak, and 18% since Mr. Scott made that claim.

In stark contrast to Sunday’s balanced Up Front report is this piece from KOMO News on Saturday: Home deals: A bright spark amid economic gloom (emphasis mine)

It’s one of the few bright spots amid the economic gloom – a local real estate market that is brimming with deals and incredibly low financing.

But no one knows just how long it will last. So some people aren’t waiting any longer to make the plunge.
…
Coupled with the dropping prices are some jaw-dropping financing offers that are being made by some lenders. Some banks are offering rates as low as 3.875 percent.

“How crazy is that?” says real estate agent Becky Hiller. “I know, it’s incredible. Amazing – it’s just unheard of.”
…
“I think the bottom has hit,” says [builder Mark] Huber. “Supply is going to start diminishing, and the good ones are going to go fast. This is definitely the time to buy.”

Because who knows when real estate prices will skyrocket once again.

Wow.

Props to KING 5 for a balanced and realistic story about the local housing market, and shame on KOMO 4 for running a thinly veiled advertisement for local agents and builders and calling it “news.”

Hat tip to RedmondJP for pointing out the KOMO piece over in the forums.

Here’s a snippet from his About page:

In beginning the process of building a house, I’ve found no singular source of information online which describes the start-to-finish process of creating a new custom home. There are a ton of “Building A Home For Dummies”-style books on Amazon, as well as disparate blog posts and photo galleries about new construction, but nowhere have I found a coherent, first-hand journal of the entire process from the standpoint of someone like me: a guy building his first house with no clue what to do besides putting one foot before the other.

A House By The Park will attempt to be that guide for others looking to do exactly what I’m trying to do: build a great, affordable custom home with no prior experience. If something like this existed before I began my project, I know I’d be a lot more equipped than I currently am.

Mike is detailing the entire process, including the hunt for and acquisition of the perfect plot of land on which to build his home, which happens to be right here in the Seattle area.

One of the greatest features of A House By The Park is that Mike is 100% transparent about how much he is spending on each step of the process. At the end of each post in which he discusses a new cost for the project, he plainly lists all the costs in a simple table, providing those who follow in his footsteps a great data point for comparison to their own project.

A House By The Park would be an awesome resource for anyone considering going through the process of building a custom home. I highly recommend checking it out.

Today we’re going to kick off a new feature here that will (hopefully) provide another, more “down to earth” way to track the Seattle-area housing market. Charts and graphs are great, but I think we can also get a picture of what’s going on in the market by looking at what your money can actually buy.

So here’s the methodology: I’ll search the listings for the cheapest homes currently on the market in the city of Seattle proper. Disregarding any properties that are in obvious states of extreme disrepair (based on listing photos and descriptions), we’ll post the top (bottom) three, along with some overall stats on the low end of the market.

Over time, we should be able to see whether the overall quality of the cheapest homes is getting better (or worse), or whether the cheapest homes are getting cheaper (or more expensive).

Please note: These posts should not be construed to be an advertisement or endorsement of any specific home for sale. We are merely taking a brief snapshot of the market at a given time. Also, just because a home makes it onto the “cheapest” list, does not indicate that it is a good value.

So, let’s get on with it. Here are this month’s three cheapest single-family homes:

Stats for Seattle Single-Family Homes Under $200,000
Total on market: 41
Average number of beds: 2.0
Average number of baths: 1.1
Average square footage: 1,178
Average days on market: 63

Advice Please!

I am a long time resident of Seattle and a renter. I am currently spending $700 / month to live on a tiny boat – I have to move out on June 1. I am 40 years old, I made the mistake of NOT buying in Seattle 15 years ago and now I feel that the bursting bubble has given me another opportunity to buy a home in this city. (where there are still homes and not condos that is)

My questions are: Should I buy? When should I buy?

Here is some more information:

I can afford to pay $2k / month – but I would prefer to pay less.

I can put 20% down on a $300K home (let’s say this is my max price)

I can qualify for a 30 yr fixed rate mortgage.

This would be my first home.

I would intend to hold the property for at least 5 – 10 yrs and rent it out it if I am not living in it.

I am in no rush to buy – I do need to live somewhere but I work from “home” and I can find temporary living quarters / sublet / leave town for some time etc…

I would buy the small / dumpy house on the nice street in the nice neighborhood – this is what i am looking for…

So, Do I buy? When do I buy? How will I know when the time is right?

Another question – I saw a beautiful cottage in a fantastic neighborhood that I would love to live in – it was priced at $280K – price lowered 10K from 6 weeks ago when it was first listed. The same property sold for $255K in 2005 and for only $150K in 2000. How can one determine the “real” value of the property?

Any advice would be much appreciated.

At the risk of sounding like a broken record, I’m going to reiterate my five self-examination questions that I think everyone should be able to answer affirmatively before deciding to buy a home:

• Do you like the home well enough to stay there for at least 5-10 years?
• Do you feel that the home is priced fairly?
• Can you afford it using a conventional 30-year fixed-rate loan?
• Do you have a minimum 3-month emergency fund that is not part of your down payment?
• Would you be able to handle it both financially and emotionally if the value of your home dropped considerably after purchase?

If you can answer yes to all of these questions, then I would say the answer to “should I buy” could be yes. Note of course that these are the minimum requirements.

Novice, it sounds like you are already thinking along these lines, so you’re already ahead of the game in that department.

As far as whether an individual home is priced fairly, a good starting point would be the rough pricing calculator we posted here, or a site like EstiMike. You should also compare the asking price to what similar properties in the neighborhood have sold for recently. Redfin is a good tool for this (uncheck all current listings and check only past sales).

In the end, the “real” value of a property is simply what someone is willing to pay for it, right? So if after studying the market you think a property is priced fairly, and you believe it strongly enough to commit $464,000 (the full cost of a $240,000 loan at 5% over 30 years), then I say go for it.

What advice do you, the readers, have for Novice? Have I missed something that needs to be considered? Let’s hear it.

However, the task could be far less intimidating if we split it up. Here’s what I propose we do to get a more complete picture of the local condo inventory: Each reader (that’s you) spends just a few minutes with the King County Parcel Viewer pulling up the records for the nearest condo project to your home or work (both new construction and conversions). Then post the results here, I can compile all the records into a single spreadsheet that will then be freely available to everyone.

Here’s a step-by-step on how to get the data we’re looking for:

1. Head over to the King County Parcel Viewer
2. Pull up the parcel report:
   • If you know the address of the condo building, click “Search by address” then enter the building number and street.
   • If you don’t know the specific address, use the map to zoom in to the general neighborhood, then click the “identify” tool to pull up details on each potential lot.
   • Once you have found the right lot, click the “Get Property Report” link in the lower-left.
3. Click the text “Units in this condominium complex” to expand a list of all the units in the building.
4. Units that are unsold will list the developer (usually an LLC) in the “Taxpayer” column.
5. Post the link to the property report here (or here), along with the name of the complex, its address, and a summary of total units and the number of units sold.

Examples:

Queen’s Court
124 WARREN AVE N 98109
http://www5.kingcounty.gov/kcgisreports/property_report.aspx?PIN=7015800000
34 units, 14 sold

Pittsburgh
117 JOHN ST 98109
http://www5.kingcounty.gov/kcgisreports/property_report.aspx?PIN=6815500000
31 units, 17 sold

So what do you say? If we all put in a little bit of effort, I think we can get a pretty good picture of the overall situation. One caveat is that this method will only work on condo buildings that are fully completed. In-progress construction will not necessarily have the individual units listed in the parcel report, and this method does not give us any information about “pre-sales,” which doesn’t really matter much anyway since so many pre-sale buyers are now forfeiting their earnest money and backing out of deals (see this ongoing comment thread re: Olive8)

I have also created a forum thread for posting results, so that we can continue to easily add to the project even after this post has moved off the front page of the blog. Feel free to post results in either location.

Let’s check in and see how those conversions are doing, two years later…

From the article:

The Pittsburgh, a brick-and-stone building at 125 Warren Ave., dates to 1907. It has plenty of character, including bay windows, stone balconies, high ceilings, wide moldings, fireplaces and built-in cabinets. But the windows are old, the radiator heating system shot and the place generally down at the heels.

Still, Rankin expects to start selling the Pittsburgh’s 31 condos in February or March [2007].

First off, it would appear that the conversion took a little longer than the developer had hoped. The first sales in the Pittsburgh didn’t close until July and August 2007. If July 2007 rings a bell to you, that might be because it was the peak month for home prices in the Seattle area. Whoops.

Two years later, King County Records indicate that 45% of the 31 units in the Pittsburgh remain unsold.

Pioneer already has applied that model across the street from the Pittsburgh, selling 34 condos in the Queen’s Court building, which dates to 1930.
…
J.D. Johnson, 86, has lived in the Queen’s Court for about 30 years and spent the 20 before that in a nearby apartment building.

The developers bought Johnson’s apartment and will continue to rent it to him for $300 a month, Rankin said. … But nearly all the other renters left. Although several expressed interest in buying in the building, just two did. Rankin said only a couple of Pittsburgh renters considered buying. Most just can’t afford the condos.

Queen’s Court got a slight jump on the peak, selling its first units in December 2006. However, to date, King County Records indicate that 20 of the complex’s 34 units (59%) are still held by the developer.

Five units in Queen’s Court are currently on the MLS, (4 by the developer and 1 by a previous buyer), with days on market ranging between 89 and 158 (over 5 months). Three units at the Pittsburgh are on the market (all developer-owned), with days on market ranging between 45 and 157.

Between the two projects on Warren Street, less than half the units have sold. At least one unit in each building is currently listed for rent on Craigslist, however it does not appear that Synthetik’s prediction that “these units will “repartment” themselves less than one year after they’re finished” came true. Of course from the look of things, they may have been financially better of if they had. Now it’s probably too late. Can you even “repartment” a complex where roughly half of the units have already sold?

I found this line from one of the Craigslist rental listings in the Pittsburgh (archive) to be amusing:

MUST WANT TO LIVE IN QUIET BLDG

Yeah, when half the units around you are vacant, I guess that would tend to be pretty quiet.

Given that home prices are finally starting to come back down into semi-reasonable territory for some, I thought it might be a useful tool to share. For more about affordability, spend some time browsing the affordability tag archive.

Enjoy, and please feel free to share any feedback.

Here’s a summary of five major projects in Kenmore that have been built / converted since

Trail Walk Condominiums – 2007 conversion – 180 units – ~69% sold
Northshore Kenmore – 2008 new construction – 86 units – 0 (?) sold – (more in this forum thread)
Coventry Place Condominiums – 2007 conversion – 96 units – ~82% sold
Vermont Condos (website defunct) – 2008 conversion – 54 units – ~6% sold
Copper Lantern Homes (low income) – 2009 new construction – 0 sold

5-Project Total: 449 units, ~57% sold.
Total Unsold Units: ~157

From October through January, there were a grand total of 59 closed sales of all types (SFH, townhome, condo) in all of Kenmore reported by the NWMLS. That’s an average of about fifteen sales per month. In other words, just between these five townhome/condo projects, Kenmore has over ten “months of supply.”

It’s even worse if you only look at condo sales, of which there were a grand total of two in January. Two.

Meanwhile, over in Woodinville, a 2006 condo conversion called Timber Ridge has at least one unit on the market at half of what it sold for in 2006.

2006 sale price: $200,900
Current asking: $99,900

Half off. I shouldn’t be surprised, but somehow I still am.

Here’s a brief excerpt from the piece, titled $1.5M condo on $20K income? Prospective buyers lose $175K in Bellevue.

When Uzbek hot-dog vendor Danil Kasimov thought of America, he thought of the place portrayed in movies — a Land of Plenty where anyone’s dreams could come true.

In 2000, he emigrated to the U.S., settled in Redmond and became a limousine driver, earning little more than minimum wage.

Two years ago, a real-estate agent suggested he consider purchasing a condominium at the luxurious Bellevue Towers. To Kasimov, it seemed his vision of America was unfolding with the ease of the touch-screen showing eventual views from his dream condo on the 32nd floor.

Delighted that he prequalified for a $1.5 million condo on his $20,000-a-year income, he put down more than $75,000 in earnest money he borrowed from a friend.

But that money — and nearly $100,000 from five other prospective condo buyers — soon evaporated. The six filed a lawsuit in King County Superior Court this week against Bellevue Towers and JP Morgan Chase Bank, alleging the lender falsified documents, making it possible for them to prequalify for loans they could never actually get.

Now, before I get into the numerous problems with this article, I want to say up front that I’m not attempting to stick up for the banks, the real estate agent, or anyone else. Far from it. My purpose here is merely to point out the incredible one-sidedness and poor reporting in this Times article. I would also like to point out that most of these facts were brought to light by a number of commenters on the Seattle Times story, including “cocoas” and “Vesta.” I’m just highlighting these issues here because I think the full story should be heard.

All of the information in this post can be found in publicly-available records, accessible to anyone online in a matter of minutes. Links are provided for all sources.

Claim: Danil Kasimov is “a limousine driver, earning little more than minimum wage.”
Reality: Public records show a Danil Kasimov as the owner of a limousine company named Action Towncar.

A simple search of Washington State business licenses reveals that Mr. Kasimov is in fact the owner of Action Towncar, LLC, a Redmond-based limousine company, not merely a “limousine driver,” as stated in the article. Of course, this does not tell us how much Mr. Kasimov is earning, so it is possible that the “little more than minimum wage” part could be true.

Claim: Danil Kasimov was unwittingly duped by a real estate agent and a flashy sales presentation into signing paperwork he had no way of understanding.
Reality: Public records show three different purchases of real estate in the Redmond/Bellevue area by a Danil Kasimov over the last five years, totaling nearly $1.6 million.

July 2004—Danil Kasimov purchases a condo for $240,000. February 2007—Danil Kasimov purchases a 4-bed, 1,800 sqft house for $665,000 and a 3-bed, 3,100 sqft house for $686,000. The address listed on two of the parcels matches the address for the Danil Kasimov that owns Action Towncar, and the signatures on the paperwork of all three home purchases match each other.

Both of the $600k homes were foreclosed on in January of this year. Mr. Kasimov appears to still own the 2004 condo. Should Mr. Kasimov have been given any of these loans? It would appear not. However, it is also evident that Mr. Kasimov was not as naïve about the home buying and financing process as the article makes him out to be.

Claim: “…they were never given a copy of the contract — which was written in English, a language they didn’t understand…” and “Kasimov and the other plaintiffs, Yuri and Dora Aleksandrov and Davud Kasparov, none of whom are fluent in English…” (emphasis mine)
Reality: It is unlikely that any of these individuals are ignorant of the English language.

Danil Kasimov’s LinkedIn profile (the first result on a Google search for his name) reveals that he attended a school in his native Uzbekistan called the Uzbek State World Languages University, and according to the article, he has lived in the United States for nearly 10 years. Davud Kasparov attended the UW school of engineering and is now employed at a local aircraft engineering firm. Yuri & Dora Alexsandrov purchased a $336k home in 2001 which was refinanced six times between 2002 and 2008. None of these people are likely to be the confused and helpless foreigners that the article portrays them as.

I will point out that it is possible that there is another Danil Kasimov unrelated to the individual in the Seattle Times story, who just happens to own a limo company in Redmond and have a penchant for dabbling in real estate with dangerous loans. Possible, but highly unlikely, in my opinion.

The story printed in the Seattle Times portrays a starry-eyed, helpless group of individuals that were taken advantage of by a slimy real estate agent (who is inexplicably not named by the Times), shady lenders, and overzealous salespeople. The “angle” on the Times story is clear: Danil Kasimov and the others listed in the suit against Bellevue Towers are unwitting victims. It would appear that Nancy Bartley, the author of this article, had a story in mind that she wanted to tell, and did not bother to even spend 30 minutes researching the supposed victims online and in public records.

Danil Kasimov and the others involved in the lawsuit against Bellevue Towers may have a valid legal case, or they may not. But when we are given a more complete picture of the individuals involved in this story, it becomes clear that it is not as cut and dry as the Seattle Times has made it out to be. In reality, it would appear that everyone in this story likely attempted to victimize everyone else, and in the end, they all lost.

Update 02/25: The Seattle Times has corrected some of the errors and omissions in the article. See below for details.