Seattle Bubble

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I just happen to look up at the ticker when I was in Times Square about a week or so ago (8/17) after a quick subway train ride up from Wall Street. Then shortly after, the following message in the picture below showed and I quickly took a shot of it. This was on Friday after the Fed injected another round of Billions into the market. These photos pretty much sums up the market over the last couple weeks.

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After arriving home at 2:30AM Wednesday last week I had but a few hours of shut eye and then promptly drove all the way to Idaho. On the way back home this past weekend I felt the urge to take it slow and go HWY 2 and visit the Grand Coulee Dam and then onward to the North Cascades Highway via the beautiful Methow Valley and Okanogan countryside. I told my kids that one of the trips this summer had to include some historical background for a bit of education. The Grand Coulee Dam was it.

Well, during the visit I came away absolutely awestruck. We all went upstairs to the visitors center Theater and watched a 50 minute documentary on why the Grand Coulee Dam was built: It was part of the New Deal by President Franklin D. Roosevelt to put people back to work after the devastation created by the Stock Market Crash of October, 1929. The documentary spent several minutes discussing, with actual 1929 footage of the floor in a frenzy at the NYSE, the events leading to the New Deal by FDR and subsequent Federal backing of building the Grand Coulee Dam.

While only a handful of people were in the Theater, I noticed an old couple sitting two rows down from us and I could not help but notice they were knodding there heads up and down (presumably in agreement with what was being said) and from side to side (presumably in agreement and disbelief that they or people they knew went through that period) during some intense footage of the desperation across America.

During the documentary I could not help but think, my gosh, I was at ground zero (Wall Street) just a few days ago where it all began, and then to see this monumental icon of American engineering, ingenuity, brutal work and symbol of both the dark days of America and at the same time the symbol of what is great about this country. Some of the quotes in the documentary by the financial elite are eerily similar to what we hear today about the economy and health of the banking system. There was even mention of how the FDIC was created back then to guarantee deposits and thus reduce the possibility of there ever being a run on banks.

The Grand Coulee Dam took many years to build and 12 Million Cubic Yards of concrete. It produces the most electrical power in North America and it currently is the largest concrete structure in America and the third largest Hydroelectic plant on earth. Excavation began in 1933 and it was essentially complete in 1941. Subsequent upgrades and pumping stations followed and now irrigates roughly a half million acres of farmland in what is today the Columbia Basin. It is a must see if you ever get a chance.

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Photo of the Grand Coulee Dam (a mile long) this past Saturday. A symbol of both the dark and bright periods in American history. Sorry this post too long, but I hope some find the symbolism, as I did, very educational.

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Speaking of small business creating jobs: Snohomish Co. office space is currently showing vacancy at about 18%. In Lynnwood, the office vacancy rate is approximately 25-30%. Industrial space (read: Boeing & suppliers) appears firm.

Office space, meanwhile, remains harder to fill. Cushman & Wakefield and Colliers International commercial property firms reported that 17 to 18 percent of the county’s premier office space was empty last quarter.

“The cause and effect of this is that tightening in King County tends to push people up I-5 to Snohomish County,” Hoban said, though he said there are also a few new businesses sprouting up locally that have leased offices in Everett.

I suppose one could argue that just because there is a good chunk of office space available for small business (who typically drive the economy with job creation), that does not mean that hiring is slowing. Mixed signals?

Doing business in Edmonds recently, I noticed the sign-carrying-day-workers holding large signs on the corner of 205th & Hwy 99. “Comp USA Closing: everything 30-50% off.” I also recently read that Circuit City is laying off staff. If consumer products are flying off shelves at these stores, why are these stores closing and laying off staff? What businesses will be taking over these large stores once they vacate?

Side note: What in the heck is up with the FLU bug. I just got over it after my daughter (out of school for 3 days last week) planted one on me and passed it to me. Now my son has been in bed with it. What a great weekend! I understand Blanchet H.S was shut down recently due to the flu–this is nasty. Moving on….

Industry Extreme Makeover

Our state has recently enacted new rules by our Department of Financial Institutions to have loan originators get licensed, undergo testing and have background checks. Jillayne Schlicke, industry insider and commenter to this blog and Rain City Guide, is tuned in to this segment as her organization provids training, classes and pre-testing for those within the industry. Now, the candidates have to undergo testing (not in place yet, but coming later this year) and background checks ‘a la finger printing. Um, how about including credit checks, like required of escrow ownership? Real estate agent candidates take coursework and have to pass an exam to be licensed by the Dept. of Licensing.

The industry needs an extreme makeover. It has a public relations problem that has been ongoing for years. It truly boggles my mind why many industry insiders do not drop by this blog and others not hosted by insiders. It is a laboratory! Bloggers offer gems of information about frustrations, housing issues, buying issues, etc….the very best cross section of existing homeowners, past homeowners, renters, those looking to buy now or in the future—people of all walks of professional and personal life! I digress. An earlier blogger comment I read really hit home for me:

“in my line of work, the MOST bankruptcy’s I see on credit reports are from loan officers! hahaha, unbelievable. It’s just amazing that people who deal with this amount of money can’t keep their own finances in good standing. How can someone who cannot control their own situation give sound advice to anyone else?” - Matt

Here are some thoughts on what I would encourage to help mend the image of the real estate profession:

1. Minimum of a 4 yr college degree (a far cry from a GED or high school diploma)
2. Institutional training specific to the sub-set industry: financing, escrow, title, agents, etc..
3. Background check on all agents and loan officers INCLUDING meeting minimum credit scores—this would include screening for derogatory lates such as 30-60-90 lates, prior foreclosures/ NOD’s etc…do this ANNUALLY at the licensee’s expense.
4. Passing state licensing exams and annual continuing ‘ed classes.

I agree with Matt’s comment. There is nothing more dishonest and revolting than for those within the industry to market themselves as “trustworthy,” “would help you like I would my own family member,” “integrity filled,” etc…. when their own house is out of order.

How would you like ownership in an escrow company or mortgage brokerage/loan officer to have financial distress or have suspect backgrounds, counseling you on a major transaction? Real estate is not like buying a stereo on credit at Magnolia Hi-Fi or a car at your local dealership. It is a big deal. Can you discern who really needs a commission vs. those that don’t? I think you can. People can read body language, demeanor and professional image.

Now, before my colleagues get ready to write more hate mail to me, please know that not EVERY loan officer or agent has their house out of order. Realtors complain of weeding out the industry with new entry benchmarks, but they seem to be suggesting just softballs—increasing study hours etc….

If the industry wants respect, start giving it to consumers first by making it a profession, not a hobby. I truly believe that if as much time and money was spent on fundamental real estate knowledge and core customer service coursework vs. as much money and time is spent at a sales seminar on overcoming buyer/seller objections, this industry would be better off.

San Francisco has always been a favorite place of mine to visit. I even lived there during a brief time in 1999 when the vacancy rate was less than half a percent!

One thing that always struck me about San Francisco was the homeless. Not simply the sheer volume of homeless but the lengths at which they’d go to siphon a dollar out of you. It wasn’t enough to have a gimmick, but your gimmick had to be different or more creative than those of any other panhandlers in the downtown area.

There were singers, poets, rappers, jugglers, one-man marching bands, balancing and other forms of sidewalk gymnastics as well as some of the most creative signage anywhere (maybe the dot-comers could have hired these guys as marketing executives).

This story from the Seattle PI illustrates to what length some local realtors have gone to attract new clients.

Puck is upfront about his job.

“Let’s face it, I’m a marketing ploy,” the 5-year-old English bulldog writes on his page of Realtor Phoenix Rudner’s Web site, seattlehousehound.com.

The Seattle-King County Association of Realtors has about 8,800 active members — up more than 80 percent from 1999. The state Department of Licensing reports there are 13,747 licensed real estate salespeople in King County.

Many agents carve out a niche by focusing on a location, home type or a group of buyers and sellers. Others wear costumes, serve pie or distribute handy gifts.

“There are so many dog owners who need someone who understands their needs,” he explained.

What the dog is really saying: “Ruff!” (What the next five to ten years of homeownership may be like as equity fades and people struggle to make their ballooning toxic loan mortgage payments)

RE/Max Northwest Realtor Ross Adams aims for a more exclusive group of buyers on his Web site, realestateforcops.com, which touts itself as the No. 1 Web site for law enforcement-friendly real estate services.

There’s a picture of Adams, a reserve police officer, in his blue uniform, wearing his badge.

“In my years working as an officer, I’ve had the opportunity to get to know the men and women of law enforcement,” the site says. “In addition to the great experiences I’ve shared, I’ve also grown to understand and appreciate the needs of the people in this profession.”

Is it even possible for someone in law enforcement (or nearly everyone else for that matter) to purchase a home these days in this environment? How many police cars do you see parked outside Ballard 3/2’s these days?

Realtor Melanie Meyer of Century 21 North Homes Realty puts a different slant on the cop angle at her site: specialagentrealtor.com.

Meyer, a former sheriff’s deputy in Charleston County, S.C., also has pictures of herself in uniform. But rather than aim for any particular group of clients, she proclaims on her site that she’s “solving the real estate mystery” for the general public.

Meyer gave up her law-enforcement career and moved to Seattle in 2003 to marry a man she met playing “Dark Age of Camelot” online. She started working in real estate two years ago.

Meyer’s business card shows her wearing a fedora and trench coat and carrying a magnifying glass.

Her Web site also notes that she has a pit bull named Megan and is a freelance writer for “Today’s Astrologer” magazine.

I see a trend developing here. I wonder if King County is struggling to keep deputies that have been lured away by the “lucrative” Seattle real estate market.

Meyer claims to be Seattle’s “first and only Special Agent Realtor.” It seems she didn’t have the scoop on Serena Heslop.

Photos illustrating various sections of her Web site show her in a trench coat, fedora and dark sunglasses; a safari hat (holding binoculars); a hard hat, fake mustache and overalls; and a wetsuit.

Heslop said she’s been a “Special Agent Realtor” for four or five years but just got her Web site up a few months ago. It’s a way to liven up the dry, boring world of real estate advertising and give prospective clients an idea of who they’d be dealing with, she said.

News of a competing special agent Realtor didn’t seem to rattle Heslop or Meyer.

“I’m sure I’ll run into her someday,” Meyer said. “I hope she’s as silly as I am.”

“I’m gonna scratch her eyes out,” Heslop joked.

One thing is for sure - in the coming months and years it’s going to take a real sleuth to find more Greater Fools willing to buy at these prices. Maybe these three are on to something.

When Mary Schile switched to real estate two years ago, the former House of Blues contracts negotiator called herself the “Rock-and-Roll Realtor.”

Schile, of RE/MAX Mutual Realty, now claims the title of “Pie and Coffee Realtor,” as illustrated by the apple and cherry pies she served at a Phinney Ridge open house Sunday, and the espresso cart.

“I love pie,” she said

Mmmmm. Pie.

Does it work?

Dominic Canterbury, owner of the Seattle marketing and public relations firm D/C Strategic, said niche real estate marketing can work, if done right.

“Most agents are awful with their marketing,” he said. “That’s why they’ve sort of become the used car salesmen of our time.”

(Aubrey Cohen, Seattle PI, 12-26-2006)

Associated Grocers is selling a 55-acre plot of land in south Seattle, and apparently the commercial real estate world is all riled up. It’s the biggest slice of Seattle land to come on the market in “recent years,” and it’s coming on the market because the owners want to “cash in on the significant appreciation.”

It may be hard to overstate the significance local real estate professionals put on a 55-acre South Seattle industrial site that hit the market Friday.

“It’s a once-in-a-lifetime opportunity in the city of Seattle,” said John Sullivan, a vice president in the Seattle office of CB Richard Ellis.

“It’s larger than anything else that’s sold in recent years,” said John Vernon, Seattle-based broker with Colliers International.

Associated Grocers Inc. announced Friday that it was selling its site to cash in on the significant appreciation since the company set up its wholesale food distribution operations there in 1952.
…
Sullivan and Vernon expected the site to fetch more than $90 million.

This is probably a good move on Associated Grocers’ part. I imagine there’s nothing going on there that can’t be done just as efficiently in a cheaper location, and I’m sure they can come up with plenty of good ways to invest a cool $90 million that provide a better return than sitting on big piece of land that might well lose value in the coming years.

(Aubrey Cohen, Seattle P-I, 12.19.2006)