Case-Shiller: Home Prices Finish 2015 on a Strong Note

Let’s have a look at the latest data from the Case-Shiller Home Price Index. According to August data that was released today, Seattle-area home prices were:

Up 0.3 percent November to December
Up 9.9 percent YOY.
Down 2.9 percent from the July 2007 peak

Over the same period in 2014 prices were up 0.1 percent month-over-month and year-over-year prices were up 6.5 percent.

The Seattle area’s month-over-month home price change was positive in December, but not quite as high as it was in November. The year-over-year price change is inching back up almost into double digits, as well. The only possible sign of relief for home buyers is that the increase in year-over-year price gains is slowing just slightly.

Here’s a Tableau Public interactive graph of the year-over-year change for all twenty Case-Shiller-tracked cities. Check and un-check the boxes on the right to modify which cities are showing:

Seattle’s rank for month-over-month changes fell from #3 in November to #9 in December.

Case-Shiller HPI: Month-to-Month

Hit the jump for the rest of our monthly Case-Shiller charts, including the interactive chart of raw index data for all 20 cities.

In December, just three of the twenty Case-Shiller-tracked cities gained more year-over-year than Seattle (one fewer than in October):

  • Portland at +11.4%
  • San Francisco at +10.3%
  • Denver at +10.2%

Portland, and Dallas both hit new all-time highs in December.

Sixteen cities gained less than Seattle as of December: Dallas, San Diego, Miami, Detroit, Tampa, Phoenix, Los Angeles, Las Vegas, Atlanta, Charlotte, Minneapolis, Boston, New York, Cleveland, Chicago, and Washington.

Here’s the interactive chart of the raw HPI for all twenty cities through December.

Here’s an update to the peak-decline graph, inspired by a graph created by reader CrystalBall. This chart takes the twelve cities whose peak index was greater than 175, and tracks how far they have fallen so far from their peak. The horizontal axis shows the total number of months since each individual city peaked.

Case-Shiller HPI: Decline From Peak

In the 101 months since the price peak in Seattle prices are down 2.9 percent.

Lastly, let’s see what month in the past Seattle’s current prices most compare to. As of December 2015, Seattle prices are approximately where they were in March 2007.

Case-Shiller: Seattle Home Price Index

Check back tomorrow for our monthly look at Case-Shiller data for Seattle’s price tiers.

(Home Price Indices, Standard & Poor’s, 2016-02-23)

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

102 comments:

  1. 1
    GoHawks says:

    The last chart is interesting. Prices are right back up near the 2007 peak, but rates are significantly lower than then. Does that mean we have another 12-15% to go?

  2. 2
    Erik says:

    Homeowners should not sell right now. This ride isn’t close to over. Homeowners, the longer we can keep inventory low, the more money we can make off buyers. If you have to sell, price your home 20% over asking price. You’ll probably get it. I think 2016 will be double digit appreciation in Seattle. Seattle is a bubbly city and there is money to be had.

  3. 3

    RE: GoHawks @ 1 – Keep in mind that S-C is three counties. The NWMLS SFR median for King County is above the prior peak.

    But in any case, these charts tell you about the past, not the future.

  4. 4
    uwp says:

    Hi folks.
    Long time reader (since 06/07 I think), haven’t commented in probably 3 or 4 years, but I thought I should let everyone know I just bought a house with the wife in Seattle. Yay! Also the market sucks for buyers. The lack of inventory is pretty nuts. Everything we had watched was going for ~10% over. (Basically anything West of I5 and under 600k). We snagged a nice place near Greenlake, but I am still kicking myself over not acting a year ago, we just didn’t have the finances. And now that we do, it seems everyone else does too!

    Anyway, with these low rates and the white-hot rental market I don’t think buying was a bad move – our PITI is the same as renting a similar place. I’m just a little sad we weren’t able to take advantage of the bottom of the market a few years ago, even when we saw it clearly here at the SeattleBubble.

    Thanks for running the site Tim.

  5. 5
    ESS says:

    By GoHawks @ 1:

    The last chart is interesting. Prices are right back up near the 2007 peak, but rates are significantly lower than then. Does that mean we have another 12-15% to go?

    Also rents are much lower in 2007 then they are now. I assume the rental market is driving the sales market to some degree, as well as lack of inventory

  6. 6
  7. 7

    RE: ESS @ 6

    More homes sell outside of the mls than in the past as well. It’s hard to get a good handle on that aside from what I see, which is anectodal. i.e. The other day I was ready to pick up keys to start staging a listing and a nearby property came on and had a broker’s open. The owner of the one I was going to list popped into the open house and an agent (not the open house agent) and their clients followed her home and made her an offer she couldn’t refuse, with no commissions at all. Not even for the buyer’s agent. :)

    I’m thinking there’s a way to track if the number of warranty deeds is increasing as the number sold via the mls is shrinking. Couldn’t “low inventory” mean more people are selling without the mls? If usage of the mls is on the decline, wouldn’t that “read” as low inventory?

  8. 8
    Cap''n says:

    RE: Ardell DellaLoggia @ 7

    So you say these type of deals are happening, and more so than in the past. I believe you. But I can’t believe that there is an appreciable amount of inventory going unaccountable because it’s not MLS listed. People are desperate because ALL inventory is so low, that they are willing to make offers sellers cannot refuse, MLS listed or otherwise. If there were enough of these off-the-MLS-books transactions to matter, sufficient demand would be satisfied to make it appear that MLS sales are more balanced. That is not what I am seeing. I am seeing 950 sq ft 2 bed 1 bath homes on 3k sq ft lots being MLS listed for 450k, pending in days, and selling for 25 percent over asking.

  9. 9
    Eastsider says:

    RE: Ardell DellaLoggia @ 7

    Homeowners in desirable neighborhoods are receiving unsolicited offers (from agents) nowadays. This shows how competitive the housing market has become. I am sure many of these sales don’t show up in the MLS.

  10. 10
    Stefan says:

    Why do most of you think inventory here is so low? Why is it so difficult to build more homes to keep up with the population growth and demand in King County?

  11. 11

    RE: Cap”n @ 8

    Where are you? I’d like to do a quick check on whether that is happening because they are being underpriced. 25% over asking is a bit abnormal, to say the least. We get a warning when we post a sale that is more than 5% over asking. I do get that warning a lot, but 25% over asking should not be a common event. Can you give me a zip code? I’d like to dig into that.

  12. 12

    FYI, the NWMLS is going to start requiring agents to report unlisted sales where a NWMLS agent is representing a party. Apparently they will still report the listed sales separately.

  13. 13
    Cap''n says:

    RE: Ardell DellaLoggia @ 11

    You can find these type of sales in 98103, 98117, 98105.

    Here is a prime example:

    https://www.redfin.com/WA/Seattle/7513-Fremont-Ave-N-98103/home/301709

  14. 14
    greg says:

    RE: Kary L. Krismer @ 12

    No doubt if the numbers get too high NWMLS will bring in some rule change that makes it harder to work outside the MLS and sell it as “protecting” consumers… Got to protect that super fat 6% fee!

    I have to hand it to NWMLS and their cohorts; they have carved up the national market for retail RE and protected margins for decades. they have done a brilliant job creating the pretense of competition, through carefully crafted rules .

    Until we regulate lobbying in a meaningful way the public will continue to pay these extremely high fees. ( if you think 6% is good try 0.25% the rate I was charged to sell my first house in the EU)

  15. 15
    ess says:

    RE: Cap”n @ 13

    The price of that house, as well as the recent sales in that area do take one’s breath away, especially for those of us who have been around this area for a while. It will be interesting to determine if they paid too much, or they were in the vanguard of a continuation of an upward movement of prices. We will all know the answer to that in the not too distant future. Any guesses which way it is going to go?

  16. 16

    By greg @ 14:

    ( if you think 6% is good try 0.25% the rate I was charged to sell my first house in the EU)

    I know people like to quote lower rates elsewhere, but no way could that be anywhere near the same type of service or duties. So it’s apples and oranges.

    The real problem is that there are some agents out there charging X% who don’t have a clue what they are doing and shouldn’t be getting anywhere near that level of commission (or not rebating more of the SOC). But that’s what happens when people pick their agent from advertising.

  17. 17
    greg says:

    RE: Kary L. Krismer @ 16

    There is also no way that those so called “extra” services are worth tens of thousands of dollars.

    while 0.25% is low, they don’t have to split it, and some agencies charge as high a 1%.

    Just like the USA there are also title fees, escrow etc and they amount to about 1% sometimes as high as 1.5%

    So for a total cost of 1.5%-3% you can sell a home .

    The real difference is The USA has a hugely rich and powerful cartel of monopolies that out spend almost every other commercial group in lobbying.

    There is no powerful successful competitor to any MLS in the USA. Not even the hugely powerful and wealthy banks have been able to break into the market. They have tried but they are rebuffed time and again by the massive lobbying power of the varies MLS cartels and RE associations.

    Even cable companies with state backing and protection have to compete at a high level. But RE avoids any and all competition due to its treacherously deep and wide moat. Much like MSFT’s failure to achieve critical mass in mobile no 2nd competitor has been able to establish themselves as a viable competitor to our nations MLS’s . This is not because the model is competitive or better, but because the barriers are so high.

    Access and control of listing is the key that allows our RE industry to siphon off that etc 2-3% in fees, the structure is designed to hide those extra monies from view by dividing it amongst their own members. Any one member can claim that they only get xyz amount of monies. But the total prize remains in cartel members pockets. Not a single dime is lost.

    25K- 50K to sell a house is far too much monies. There is so much fat on that fee that it gets split and split again so that many people profit from each and every house sale.

    But worse than that, the size of the RE fees reduces the total number of transactions, limits supply and restricts mobility.

    Breaking the strangle hold would provide very real and lasting benrfits to consumers and to our economy as a whole. Forcing MSFT to open its platform helped usher in a slew of competitors and made it possible for google to provide its huge selection of free tools. It was the courts decision to force msft to provide documented access to APIs that forced down prices of products such as Office and Windows .

    NWMLS and every other member of the national RE cartel should be forced to provide low cost unfettered access to all comers. The MLS would make monies selling access and Agencies , agents etc would be free to compete fully and at all levels.

    I don’t blame the agents, they are just making a living. I blame our government for failing to protect the public and for protecting the RE industry from potential competitors.

  18. 18
    TJ98370 says:

    I think this is related – Posted is an an article from Forbes magazine:

    America’s Most Overpriced Cities In 2015 (Seattle was listed at #16)

    To find the Most Overpriced cities, we started with America’s 100 largest Metropolitan Statistical Areas (MSAs) and Metropolitan Divisions (MDs), all with populations of 600,000 or more. MSAs and MDs are cities and their surrounding suburbs as defined by the Office of Management and Budget. First we looked at housing affordability, using the latest (Q4 2014) Housing Opportunity Index from the National Association of Home Builders and Wells Fargo. The quarterly index weighs median prices for homes sold against median income levels to determine the percentage of homes that are affordable to residents making the median income.

    Due to a lack of sufficient data, Baton Rouge and New Orleans, La., as well as Columbia, S.C.; Gary, Ind.; Kansas City, Mo.; Little Rock, Ark.; Nashville, Tenn.; and Omaha, Neb. had to be excluded from our results.

    16. Seattle, Wash.MSA: Seattle-Bellevue-Everett, WA
    Median Income: $86,027
    Q4 2014 median sales price: $360,000
    Housing affordable at median family income: 51.2%
    Cost Above National Average: Groceries: 5.8%; Utilities: -4.1%; Transportation: 9.8%; Health: 18.7%; Misc.: 8.9%

  19. 19

    By greg @ 17:

    RE: Kary L. Krismer @ 16 – There is also no way that those so called “extra” services are worth tens of thousands of dollars.

    Well, avoiding a mistake that could cost tens of thousands of dollars is worth something. I don’t want to get into specific situations, but there are some houses that after looking at them I can’t believe anyone would buy them, and people selling houses where they clearly didn’t get the best advice going in.

    But again, that goes more to the quality of the agent.

  20. 20
    greg says:

    RE: Kary L. Krismer @ 19

    there are good and bad agents everywhere, that has zero to do with the high fees charged here in the USA.

    The facts are plain and simple, Real estate transactions cost vastly more in the USA because of the strangle hold maintained by the various MLS groups across the nation. The USA has been chopped up into districts control by various MLS cartels. each one made up of local companies working together to control prices.

    Please don’t pretend there is some magical secret sauce that is lacking in other fully developed and industrialized countries. The truth is super easy. In the USA cartels enforce pricing and spend many millions of dollars a year protecting those inflated fees.

    repeat there is NO justification to charge 25K -50K in order to sell home. Unfettered competition would bring those number down by at least 50% and you agents would still make a good living because all the marginal agents would be driven out of business in no time at all.

  21. 21
    Anonymous says:

    RE: greg @ 20

    Yeah, real mafia style. Charging that much % to sell a house just boggles my mind!

  22. 22
    SFraz says:

    “But in 2016, there is some uneasiness. New home construction took a small, 3.8% slip in January, due to the stock market uncertainty and wintry weather. According to an analysis of economic and housing data by Fitch Ratings, there are some areas in the U.S. where housing prices are getting way too high.”
    http://fortune.com/2016/02/23/cities-housing-bubble-real-estate/

  23. 23
    SFraz says:

    Euphoria! Hurry and buy before it gets higher and higher! Let’s pop the bubbly.
    Wait. What is that? A wall? A brick wall? We’re going so fast! Hold on! Are those seat belts buckled?

  24. 24
    Eastsider says:

    By Kary L. Krismer @ 19:

    By greg @ 17:

    RE: Kary L. Krismer @ 16 – There is also no way that those so called “extra” services are worth tens of thousands of dollars.

    Well, avoiding a mistake that could cost tens of thousands of dollars is worth something. I don’t want to get into specific situations, but there are some houses that after looking at them I can’t believe anyone would buy them, and people selling houses where they clearly didn’t get the best advice going in.

    But again, that goes more to the quality of the agent.

    I have to agree with @greg. You could have used the same reasoning to justify the same exorbitant fee on stock purchases. Yes, stock purchases and sales were expensive 30 years ago. The cost of transactions was easily 1-3% of total purchase/sale price then. Today it costs very little to buy and sell your stocks. If real estate commissions had gone on the same path, it would have cost .5% to sell your house today!

  25. 25

    RE: greg @ 20 – If you had even the slightest idea how much work agents in the United States spend dealing with their clients and getting transactions done, you wouldn’t say it was too much money–at least for the median and below properties. And yes, you can do it yourself and skip a lot of steps because you don’t know what the steps are, and that can save some money–assuming you don’t make a huge mistake and end up costing yourself more money than what a commission would have been.

    My point though has been that some agents are so bad that they sometimes cost their client more money than what their fee is.

  26. 26
    Eastsider says:

    RE: Kary L. Krismer @ 22

    The cost of transaction in other trades has gone down steadily over the past few decades. For example, it used to cost 1-3% to trade stocks about 30 years ago. Today it costs you under $10 (or equivalent to 0.2% in a $5,000 trade). Same thing happened in mutual funds – expense ratios has dropped from 3% to 0.03% today. Yes, anyone can make mistakes trading stocks then and now, even “sometimes cost their client more money than their fee is”. But that is not a justification for the exorbitant fee!

    I hope a new President not beholden to big businesses will bring an antitrust or RICO lawsuit against the real estate industry (and healthcare too.) There is no reason why people in other developed countries are paying 0.5% to sell their houses while we are forced to pay 6% to our agents.

  27. 27
    redmondjp says:

    By Kary L. Krismer @ 22:

    RE: greg @ 20 – If you had even the slightest idea how much work agents in the United States spend dealing with their clients and getting transactions done, you wouldn’t say it was too much money–at least for the median and below properties. And yes, you can do it yourself and skip a lot of steps because you don’t know what the steps are, and that can save some money–assuming you don’t make a huge mistake and end up costing yourself more money than what a commission would have been.

    My point though has been that some agents are so bad that they sometimes cost their client more money than what their fee is.

    So what is the solution to this? I’d like to see some sort of rating system myself.

    This topic deserves further attention – we keep coming back to this issue and I’d like to see it discussed in a dedicated post.

  28. 28
    Macro Investor says:

    By redmondjp @ 23:

    So what is the solution to this? I’d like to see some sort of rating system myself.

    Yes, this has been discussed many, many times — and there is no solution. There is no way to know which agents know what they are doing, and which do not. Any rating system would be polluted by the same things that make restaurant ratings mostly useless.

    I have been reading this site since the early days, and NOT ONCE have I seen an agent comment any useful information that would suggest expert knowledge. All they do is bicker amongst themselves. Or repeat worn out marketing bullet points.

    If you don’t like the high fees, learn how to do it yourself. Oh wait, but you don’t know how to do that, and you’re TOO LAZY to read a free book at the library. So pay the darn fee and quit whining.

    Think the MLS is a mean and cruel monopoly. Start your own. It’s just a database.

  29. 29
    Bingo says:

    Residential real estate Brokers should be paid like many other purported professionals…by the hour. That way the market can determine how much a particular agent is worth paying rather than cartels establishing the going rate. It works in other areas of real estate. One of the top land use attorneys in Seattle, Jack McCullough, charges $550/hr and you would be hard pressed to be able to get in to see him. If you have a tricky project you’re going to be willing to pay up because he has a proven record of avoiding huge mistakes as well as maximizing use. If you have a simple issue, you’re going to find a less expensive attorney.

    Why wouldn’t that work for residential real estate brokers?

  30. 30

    By redmondjp @ 23:

    By Kary L. Krismer @ 22:

    RE: greg @ 20 – If you had even the slightest idea how much work agents in the United States spend dealing with their clients and getting transactions done, you wouldn’t say it was too much money–at least for the median and below properties. And yes, you can do it yourself and skip a lot of steps because you don’t know what the steps are, and that can save some money–assuming you don’t make a huge mistake and end up costing yourself more money than what a commission would have been.

    My point though has been that some agents are so bad that they sometimes cost their client more money than what their fee is.

    So what is the solution to this? I’d like to see some sort of rating system myself.

    This topic deserves further attention – we keep coming back to this issue and I’d like to see it discussed in a dedicated post.

    The problem with rating systems is people often have no idea how good of service they received, they only know whether or not they liked their agent. Also, in the attorney world services like Avvo have ratings based on participating in Avvo.

    I don’t know what the solution really is, but it’s a problem in almost every profession. Attorneys, doctors, vets, a lot of them are not worth what they manage to charge. If I were to make one change, it would be to tighten up what qualifies for continuing education in real estate. Currently classes on how to market yourself and even how to pick paint colors qualify.

  31. 31

    By Bingo @ 25:

    Residential real estate Brokers should be paid like many other purported professionals…by the hour.

    Why wouldn’t that work for residential real estate brokers?

    Mainly because consumers don’t want to do that (or can’t afford to do that). They’d rather pay a contingent percentage even though the resulting contingent fee will be higher.

    Also, don’t forget the MLS is setup to benefit sellers, and they set the commission on the buyer side.

  32. 32

    One more thing–the same problems exist with loan originators. Competency is not necessarily their strong suit when viewed as a group. And I’d note some of them are back to pushing second and even third mortgages.

  33. 33
    greg says:

    RE: Kary L. Krismer @ 25

    umm Kary, I know you like to think us mere mortals don’t have the “slightest idea” but sorry mate, many of us do .

    In fact much of your “work” is competing with other members of your cartel to secure clients. Its the old “Find and Bind”.

    It is the super fat margins that draws in so much internal competition, but the key is the fact that almost all the competition is “in house”. Your members don’t compete on price , that is the whole point of the structure. )

    what we have is a highly competitive industry that competes on various levels all of which exclude price competition.

    if the costs and complexity are real then providing unfettered access to listings would not result in a meaningful decline in fees. Markets would sort that out pretty fast, within a year or so it would become clear whether or not you guys have been misleading the public or have been correct all along.

    As it stands the RE industry is spending tens of millions a year to prevent exactly that. Which means they must believe fees would end up lower if they drain the moat.

    One has to hand it do the RE machine, they have built a model that appears to be competitive but manages to enforce a strict pricing regime. part of the brilliance of the scheme it that it allows huge numbers of people to join as long as the monies get funneled to the agencies that own the MLS….

    The breadth and depth of the industry protects it, no sane career politician wants to be on the wrong side a of a 2 million member organization. Especially one that out spends almost every other industry lobby group.

  34. 34

    By greg @ 33:

    RE: Kary L. Krismer @ 25

    umm Kary, I know you like to think us mere mortals don’t have the “slightest idea” but sorry mate, many of us do ..

    umm, in my experience, the fact that you think that makes it very unlikely it’s true. The worst clients by far are the ones who think that they know things about real estate because they have researched it on the Internet, or sold a couple of houses before.

    Well, not quite. The worst ones are sellers who used to be agents many years ago, particularly if they got out because they weren’t very good at it.

  35. 35
    js says:

    By Kary L. Krismer @ 34:

    By greg @ 33:

    umm Kary, I know you like to think us mere mortals don’t have the “slightest idea” but sorry mate, many of us do ..

    umm, in my experience, the fact that you think that makes it very unlikely it’s true. The worst clients by far are the ones who think that they know things about real estate because they have researched it on the Internet, or sold a couple of houses before.

    So the monster price tag on a transaction is because the agents know so much more than us normal people about real estate (if we happen to get lucky enough to find a competent one). How is that different than other industries, and why does it preclude you from charging an hourly rate or at least tracking your time and showing us where the money is going?

  36. 36

    RE: js @ 35 – I have an hourly rate–$175. Little of my work is hourly and almost none of it for consumers.

    I don’t know that it is different than other industries. In my prior profession as a bankruptcy attorney there were attorneys charging 2-3 times as much as other attorneys, despite having much less skill than those other attorneys.

  37. 37
    David B. says:

    RE: TJ98370 @ 18 – There’s some useful information in there[1], but where to live is such an intensely personal decision that any blanket proclamation of what areas are or are not “overpriced” is basically BS. In the 25+ years I’ve been familiar with this area, it has always had a cost of living that is above national norms. Yet for a variety of reasons it’s still worth it to me to live here.

    [1] Basically, if you find this area overly expensive, and there’s really no unique advantage to your being here that’s worth the price being asked, you should consider leaving for someplace less expensive and/or someplace which suits you better.

  38. 38
    js says:

    By Kary L. Krismer @ 36:

    I have an hourly rate–$175.

    Sweet, now we’re talking! An actual number! Can I hire you to track your time and sell my house at that rate? And get it on the MLS? And only spend time on what I want, like the lawyer-y contract stuff?

  39. 39
    ess says:

    By Eastsider @ 26:

    RE: Kary L. Krismer @ 22

    The cost of transaction in other trades has gone down steadily over the past few decades. For example, it used to cost 1-3% to trade stocks about 30 years ago. Today it costs you under $10 (or equivalent to 0.2% in a $5,000 trade). Same thing happened in mutual funds – expense ratios has dropped from 3% to 0.03% today. Yes, anyone can make mistakes trading stocks then and now, even “sometimes cost their client more money than their fee is”. But that is not a justification for the exorbitant fee!

    I hope a new President not beholden to big businesses will bring an antitrust or RICO lawsuit against the real estate industry (and healthcare too.) There is no reason why people in other developed countries are paying 0.5% to sell their houses while we are forced to pay 6% to our agents.

    As per mutual funds – we can thank one person for driving the costs of transaction fees ( as well as other fees such as 12b1) down -John Bogle of Vanguard Mutual Funds – hero to many investors. Bogle did two things that drove fees down. He established a mutual fund company where the mutual fund owners are the owners of the company, and the employees are there to service the investors. Thus the costs are related to operation of the business, not how much profit can be gleaned. More importantly, he invented and promoted the index fund concept which costs less to operate than a actively managed fund. At the time – active managers actually accused Bogle and his index funds of being “UnAmerican”. These days index funds and EFTs are the choice of more and more investors.
    The lesson at least as per mutual funds is that it takes someone with a bold vision with the investors in mind to create a system that is superior over time (as index funds are as compared to managed funds) and the ability to implement that system. We shall see what happens in the real estate business, if anything at all.

  40. 40

    By js @ 38:

    By Kary L. Krismer @ 36:

    I have an hourly rate–$175.

    Sweet, now we’re talking! An actual number! Can I hire you to track your time and sell my house at that rate? And get it on the MLS? And only spend time on what I want, like the lawyer-y contract stuff?

    I was thinking of this from the buyer’s side (and other brokerage services), not the listing side. I have in the past done a variable rate on the listing where the commission was dependent on a time/effort factor, but it wasn’t technically hourly and it was still contingent on a sale. The main difference I see is that the listing side would require costs be included, primarily the photographer.

    The concern though is only wanting to pay for “what you want” particularly the “lawyerly stuff.” Those are sort of red flag issues, the former because I wouldn’t want to have an issue where I thought something was necessary but you didn’t want to pay for it, and the latter because I am rendering “real estate brokerage services” not practicing law. Being a lawyer I can spot and understand issues better than most other agents, but I will still make a written recommendation to consult an attorney when necessary.

    It would also depend of course on the property and what you had in mind for the listing. Call or email me tomorrow if you are really interested. I’d like to think about the listing side further.

    And BTW, just in case this comes up, if someone has already identified a property to buy (or a seller has identified a buyer) and they just want my services to negotiate the contract, I’ve refused that sort of work in the past because I consider it to be too close to practicing law and not close enough to traditional brokerage services (even though I know some agents do that). In those cases I refer people to an attorney.

  41. 41

    RE: ESS @ 6
    Yes ESS

    Low Listings Mean Sucked Up Supply at Any Cost for Desperate Buyers

    Be careful where you buy for too much money now in Seattle though.

    Oil prices at around $33/bbl and projected into the teens later this year got another blow, now they’re [financial analysts for oil commodities] alleging recently now that any possible upturn in price won’t occur until the 2nd half of 2017. Competing GLUT shale oil can be produced at a profit for around $30/bbl in America….so we’re far from out of the woods with oil’s presumption, “its gotta go back to $100/bbl” mentality. Even OPEC pundits agree on one thing, shale production is an unknown wild card disrupting the old establishment thinking in the Middle East. Its time to change our planning.

    Add this rattle snake tossed into the “old” establishment Seattle Real Estate chicken coup:

    Soil samples as far as West Kent contain toxic levels of lead and arsenic according to King County officials today on TV…..they recommend children wash their hands, home owners vacuum frequently and “take off” your lead/arsenic contaminated muddy shoes before entering the house.

    Where is the lead/arsenic coming into our Seattle area soil? The non-compliant “broke-down” diesel shipping ships from China from Port of Seattle…..the closer to Puget Sound the worse the lead/arsenic levels in the air get. I(ts old establishment to ignore this HORRIFYING ecological FACT because of the political pressures from the Port of Seattle).

    But as a home owner with children at risk, adults too [especially breathing air daily outside near the waterfront] without glassed in sealed outdoor decks and lack of local health county level coding requirements for air conditioner filters safe guarding on port contaminants of outside air. We’re run by big money even if it threatens our lives?

  42. 42

    RE: softwarengineer @ 41
    Now You Understand Another Reason [Besides Financial]

    Why SWE is living in the East Kent Covington area. I knew about the ecological hazards of the Puget Sound Arsenic decades ago [can’t fool an old Earthday anti-establishment Democrat]. The soils out in my end of the woods are fairly clean from Port contaminants. Cheaper too.

    I’d venture the MSFT Samamish real estate is too. No cost savings there though, the houses are gouge leveled priced too….but if you’re rich enough and this is where ya gotta buy, at least arsenic isn’t one of your worries.

  43. 43

    RE: js @ 38

    You can get that via

    http://www.mysecretagent.com/

    and a couple of other places. Basically you are a FSBO in the mls with some support. The Agent for the Buyer picks up some of the slack, or at least I do when one of my buyer clients wants one of those listings.

    The market has added “alternative business models” to cover a variety of needs.

    I don’t think it gets any cheaper than the service above or mls4owners or a few other similar services that are available.

  44. 44

    RE: Ardell DellaLoggia @ 43 – To be clear, I wasn’t proposing something that would be limited service. If that’s what he wants, that site might be okay (I’ve seen a few of their listings but never had a client make an offer on one).

  45. 45

    RE: Cap”n @ 13

    That was a fun trip down the rabbit hole. :) I only did the 49 SFH properties in 98103 closed YTD as I have to cross reference between the mls and the county records one by one. Basically I’m looking at List Price, Sold Price, Tax Value, Lot size, Zoning, building footprint, and year built.

    I’m not seeing anything different than I saw 2013 to 2015. The agents aren’t under pricing them. Some of it is a lot of them are LR2 and the agent is pricing it on a “where is as is basis” vs “highest and best use”. They are pricing the house for what it is, but the builders are bidding them up to what they will do with the lot, as in tear down the house and put in more than one “house” where there is now one.

    Some agents are pricing up to where they think the builders will bid it, but the builders are exceeding expectations by bidding each other out.

    The SF 5,000 houses are a mixed bag. Some are going for a song because the builders don’t want it because it isn’t in a location where they think they can sell a pricey home, while others are like the LR2’s that are bidding out to highest and best use. Sometimes it’s hard to guess whether or not the builders are going to want it, so on the SF 5,000 lots agents are mostly listing at “where is as is” price and some are selling there and some are bidding out as tear downs. Hard for the listing agent to guess at that.

    But none as far as I can see were under priced. A few the buyers paid too much, but not many. My “most notable” wasn’t the same as yours…but yours was in the top 3. :)

    That doesn’t mean builders are always getting them, but the owner occupant buyer has to pay more than the builders because the builders are establishing the value of the land. It is the land prices rising that is throwing everyone off, especially on the LR2’s.

    It was too tedious of a project for me to do all 3 zip codes, but knowing the area as I do I think it would be more of the same. On the ones with good land value you are seeing roughly 1.3 give or take as the factor. The ones with weak land value are at a low 1.05 or so factor and my most notable was a whopping 1.75 as the factor. Your most notable was a bit high at 1.35 as the factor, but not completely out of range like the 1.75. Yours was a hair underpriced, but with good reason. I would have done the same.

    Some buyer error, not much, and no agent error from what I can see studying each and every sale.

    What Seattle is allowing to be built on the LR2’s these days is playing out differently in 2015-2016, but the net result is pretty much the same as 2013 and 2014, just for different reasons.

    For those wondering what “agent error” looks like, it looks like the one that had 46 offers and sold for 56% over asking where the agent priced it at significantly less than the tax value. At least 25% less than tax value.

    I see no agents pricing at tax value or less than tax value, so no big errors. It’s just that as agents we usually try to price at “where is as is” price unless we can guess really well that it will rather go for “highest and best use”. Sometimes it does and sometimes it doesn’t. So the safer bet is “where is as is” most of the time.

  46. 46
    Colorado Mountains says:

    I bought a house last summer and paid my buyer’s agent an initial retainer ($500), then $125/hour after that. We saved over 10k from what normal fees would have been. We love the house, and we managed to get such a good price on it that we are now finishing a refi that will let us take back out all our down payment, all our rehab costs, and several percent more. With a full price agent, we wouldn’t have had a better outcome.

    If you don’t want to pay commission, find an independent agent and make your arrangement.

  47. 47
    ARDELL says:

    RE: Kary L. Krismer @ 44

    The linked one you can build in the service you need and has agent support. I think they have what he’s looking for.

  48. 48

    By ARDELL @ 46:

    RE: Kary L. Krismer @ 44

    The linked one you can build in the service you need and has agent support. I think they have what he’s looking for.

    Unless I’m missing something, that is a limited service broker. That means, for one thing, that buyer and buyer’s agent contact will be with the seller. Anyone looking for that doesn’t know what the risks are of having seller contact with the buyer. There are reasons we ask seller clients to leave the house, and it isn’t only so that the buyers will feel more comfortable.

    But you might be right–his comment about the services he wanted wasn’t exactly clear as to what he wanted.

    Full service for hourly is an interesting idea, but it’s an idea that would only work in this market and then only in limited areas. And you would probably need a price of $350k or $400k and over for it to make sense. And there are a ton of other issues, but it is an interesting idea.

  49. 49
    Cap"n says:

    RE: Ardell DellaLoggia @ 45

    Glad you enjoyed the trip ;)

    https://www.youtube.com/watch?v=qF93ipZ9QZs

    My qualitative assessment of “the way the wind is blowing” is that LR2s/builders are in the mix along with the pricing dynamics you mentioned, but I still think owner-occupied and flips are dominating in the 450-550k list price range for those zips. Most importantly, I am stoked that my link landed in your top 3.

    RE: ess@13, my guess is that in those three zips we see an additional 10 percent increase over the next two years, then a period of stagnant to 2 percent annual price increases, on average, for the following 5 years. That home that sold for 560k could be yours for 625k in the near future.

  50. 50

    RE: Colorado Mountains @ 46

    Agree somewhat. My most recent client saved $17,850. But I won’t do hourly.

    What was the price of your purchase?

  51. 51

    RE: Kary L. Krismer @ 48

    The one I did most recently, the house was already vacated. So seller being there was not an issue. The service provided lockbox and forms and agent assist. He didn’t use the agent assist much and I did that for him just because they are not always immediately available. So it was easier for my buyer client for me to help with the seller with the process stuff like ordering Title for him, etc.

    It’s not a big deal. Everything works out in the end. There need to be a lot of options in the marketplace for people to choose from and there are more now than there were 15 years ago.

    It’s all good.

  52. 52
    Colorado Mountains says:

    RE: Ardell DellaLoggia @ 49

    Our home was $490k.

    I’m not surprised you don’t do hourly arrangements. I expect many won’t… And further that many can’t. If an agent is part of a larger office, they may not have the flexibility for unusual arrangements. Plus, if they split earnings with the agency, the economics are harder because either the split hourly fee can become too low for the agent, or the doubled fee is too high for the buyer .

    To find the agent that helped me, I reviewed dozens of agent profiles online, and found a former attorney who runs a small company that buys, sells, and manages properties. It is affiliated with no larger brand. I expected he would be open to a custom deal, and I knew he could choose it, and I knew the fee would be all his.

  53. 53
    D. no longer in Ballard says:

    I haven’t been here in years. If you hired Kary you’d just need to keep track of all his posts on Seattle Bubble to know all the time he’s spending doing that hard real estate stuff that we don’t understand.

  54. 54
    ARDELL says:

    RE: Colorado Mountains @ 51

    I have that flexibility and have done many things. Frankly I haven’t had anyone ask me to do hourly. I don’t think it would be of benefit to my clients because I double and triple check everything and likely spend way more time than I need to on most everything. After 25+ years at age 61 I don’t think I want to try to stop being so OCD about my work. My clients and I always come to good terms . I see no reason why it has to be hourly.

    My price isn’t always low. I donbase my fees on what I know. I base them on what the client needs me to know for them.

  55. 55
    tina says:

    what do you think about these sales:
    start with 870K and sold at 945K
    https://www.redfin.com/WA/Redmond/15762-NE-120th-Way-98052/home/8186346
    start with 865K and sold at 920K
    https://www.redfin.com/WA/Redmond/16569-NE-119th-Way-98052/home/2085525

    It is only feb and price has gone up by 10% already. Is this normal?? Look at this:
    https://www.redfin.com/WA/Redmond/10446-155th-Ave-NE-98052/home/2116689
    It is priced at 940K.
    The market is crazy now.

  56. 56
    ChiefObserverOfficer says:

    Can you folks stay on topic? Ugh…stop being so self absorbed and having so much insecurity about your jobs.

    Please do not use this forum to discuss politics, job insecurities, unrelated chatter. Seriously.

  57. 57
    SFraz says:

    Looking mighty frothy…..
    “Some analysts are predicting a major crash is on its way later this year. But others are optimistic that lessons were learned during the dot-com bust in 2001.

    KRON Tech Trends reporter Gabe Slate learned tech stocks are down, layoffs are happening, and there will be more to come.”
    http://wsls.com/2016/02/25/tech-trends-are-we-headed-toward-a-tech-bubble-burst-in-silicon-valley/

  58. 58
    SFraz says:

    Seattle Housing Market Craters; Prices Fall 5% YoY As Job Market Stumbles

    http://www.zillow.com/seattle-wa-98199/home-values/

  59. 59
    Erik says:

    RE: SFraz @ 57
    The fruits and nuts in California are leaving to Washington because they ruined their state. Our prices in Seattle will continue to sky rocket because we have super low inventory and it’s a nice state. California is not a nice state and I think their future will be more gloomy.

  60. 60
    ess says:

    RE: Cap”n @ 49

    RE: ess@13, my guess is that in those three zips we see an additional 10 percent increase over the next two years, then a period of stagnant to 2 percent annual price increases, on average, for the following 5 years. That home that sold for 560k could be yours for 625k in the near future.

    Cap – I think you are correct – especially about the next two years. When I go to Seattle for business and pleasure, I always try to visit open houses. They are few and far between, and overrun with potential buyers. And from what I hear, multiple offers in the popular areas of Seattle are the norm. I don’t see many new single family housing areas being developed in Seattle. Thus the supply will not meet the demand in the near future.
    I also anticipate that prices will increase in the close in suburbs. At one open house, a real estate agent described Shoreline as the “New Ballard”. Which makes sense, as people are either priced out of the Seattle market, or constantly lose out in bidding wars to other offers.

  61. 61
    SFraz says:

    RE: Erik @ 59 – We are very connected to Silly Valley. I am not sure how we can escape the tsunami.

  62. 62
    Erik says:

    RE: SFraz @ 61
    I think Boeing will probably launch the 757 this year and it will probably be done in Washington state. That may help add some people to the area.

    You high tech people better have a good new idea soon so you can stick around. Fly those drones around. That seems like it will serve Washington state well since we do aerospace and programming.

  63. 63

    RE: ess @ 60

    I was working on a new listing in Woodinville a couple of days ago and that owner was given approval to do the old split up the middle on his Seattle property. I was surprised. Taking one 50 by 100 and turning it into two 25 by 100 lots. They outlawed that for quite a while but “tall and skinnies” seem to be back.

    Those selling new at $700,000 to $800,000 may take some pressure off the old house prices. An “affordable” option that isn’t a brand new million plus house and not an attached townhome either.

    More options in newer construction will help with supply and demand issues in those areas. His was in Greenwood on the Ballard side.

  64. 64
    TJ98370 says:

    RE: David B. @ 37

    I totally agree with you David B. My take-away from the article is simply that Seattle is an expensive place to live, relative to most of the rest of the country. I would guess living in a trailer park in Omak would not be “overpriced”, but I personally would not want to do that. Also, I believe people tend to live near where they can find employment. If your job skills are in demand mostly in the Seattle area, that is where you are going to live, regardless of cost-of-living.

  65. 65

    RE: tina @ 55

    My clients passed on the Kensington and I’ve never been a fan of Northstar. In fact Kensington and Northstar and Mondavio were not the best sellers of the pack of new housing back when they were all being built as I recall.

    BUT if you are only looking at newer houses with an elementary school ranking of 8, 9 or 10, then the influence of supply and demand is even stronger. That means the area % increase will be about double for those specific kind of houses, if you are only looking at newer housing under a million dollars. Might be different in the Einstein section where most of the new houses are built. But if you wouldn’t buy an Einstein and only want new, those prices are skyrocketing due to very limited inventory. If what you want doesn’t exist in large numbers, then inventory really can’t get much better given those parameters.

    There is still pressure in the older houses and my clients bought this one instead of the Kensington and there were 6 offers, so still not easy. But the push on price was not as bad.

    https://www.redfin.com/WA/Bellevue/15561-SE-67th-Pl-98006/home/236249

    If you paint yourself into the corner of under a million, must have elementary school rank of 8, 9 or 10 and must be built since 2004, there will be considerable pressure unless Redmond passes the school bond issue in April. It’s approved to be on the ballot and the “Pope Plat” is the one to watch for final approvals. It could change the balance of pricing on existing homes.

    RedmondJP knows more about the school bond issue than I do. Maybe he’ll weigh in here.

  66. 66
    tina says:

    RE: Ardell DellaLoggia @ 65

    Thank you for the detailed information Ardell! We went to the one that you mentioned and it was a lovely house.

  67. 67

    RE: tina @ 66

    A good value play might be to go for the next Einstein as it will be newer and have less competition. If you have no children yet or a baby, the Pope Plat will likely get built out. It’s a good plan for buying low and selling high. Buy when and where the rank is low if there is a back story. Better plan for after April when and if the school bond is approved and before the school is built.

    We passed on the Kensington as we were not really looking in Redmond. More Houghton or Issaquah School District with a Bellevue address.

  68. 68
    Eile says:

    Housing economy is not that simple. Sometimes it can keep going up for a long time because buyers are desperate to get that house. Also, the wa state regulations make it difficult to get more housing permits. Housing price can’t go up forever, some of you who want to buy a house just need to wait it out. If nobody wants to buy, they will have to lower the price. We need some trigger, I don’t know when and what is that trigger to stop people from over betting those houses.

  69. 69
    ESS says:

    RE: Ardell DellaLoggia @ 63
    Those selling new at $700,000 to $800,000 may take some pressure off the old house prices. An “affordable” option that isn’t a brand new million plus house and not an attached townhome either.

    It is changed world out there with prices such as those!!

  70. 70

    RE: ESS @ 69

    It’s all relative. If this is $200,000 then a brand new 1,800 sf not attached house on a 2,500 sf lot can’t be less than $700,000 to $800,000.

    http://seattle.curbed.com/2016/2/26/11116952/tiny-199k-capitol-hill-condo-bike-micro-housing

    Attached on a 1,250 lot is less and an option.

    Valuation is the process of substitution. For a decade on and off I’ve heard people complaining about having to pay $500,000 to $650,000 for “a crapbox”. A brand new option at $700,000 will reduce the price of the crapbox.

    It’s all relative value, and more the value of the land than the structure.

  71. 71
    Blurtman says:

    By Ardell DellaLoggia @ 70:

    RE: ESS @ 69

    It’s all relative.

    Human dignity is “all relative.” There are no absolutes when there is money to be made.

  72. 72

    RE: Blurtman @ 71

    Human dignity is not relative. But sometimes you have to be somewhere else. People do get “displaced” and often.

    I spent the better part of the last couple of days helping a person in distress who has been displaced by the rise in prices and property taxes. Over the last decade I have seen many people in Kirkland specifically who have been displaced. Apartments turned into condo conversions back in 2005 and 2006 displaced many all at the same time. There were paying $800 a month rent for a two bedroom apartment. They couldn’t buy the now condo converted same apartment. Add to that…they couldn’t afford to live near where they were. They had to leave their homes and their neighborhood both.

    Seeing that again first hand with a person who has lived in the same rental house for half her life and all of her adult life. Raised her child there. Now she has a grandchild. The dirt under her is now worth almost a million dollars and the RE Taxes alone are now sucking up 72% of what she is paying in rent. She is naively looking to live very close by to where she has always lived. The dirt value under her is about a million dollars. Once the land gets to be worth a million dollars, you can’t continue to rent anything on it, no matter how small and/or decrepit a crapbox it may be.

    When you pay a lot of money for a crapbox, it’s about the value of the dirt under it and not “house prices going up”.

    Human dignity does not equate to having the right to stay where you are forever. If you live in a really great place, the prices will rise the most. Just is. If your personal where-with-all doesn’t increase at the same pace as the land under you, then you will be displaced. If you grow to the same degree as the land under you, then you can stay.

    Many people grow at a faster pace than the land under them, and they move themselves to a better place. Conversely when the land under them grows at a faster pace than the humans on it, then the humans have to move somewhere else.

    The answer has to be that if the land value doubled or tripled, then to keep it “affordable” at the same rate, the structures have to be built on 1/2 to 1/3 of the land they once were. That is how even keel is achieved.

    If lot value doubles, then you need to be on a half lot to stay in the same pricing.
    If lot value triples, then you need to be on a 1/3rd lot to stay in the same pricing.

    Not greed or devaluing people’s dignity. Just simple math and why density has to be the answer to the problem.

    Wanting everyone to be in not attached homes on 5,000 lots at the same price for long periods of time instead of attached homes or semi detached homes on 1,500 sf lots just doesn’t make sense.

    Wanting things to never change rarely makes any sense.

  73. 73
    ess says:

    By Ardell DellaLoggia @ 70:

    RE: ESS @ 69

    It’s all relative. If this is $200,000 then a brand new 1,800 sf not attached house on a 2,500 sf lot can’t be less than $700,000 to $800,000.

    http://seattle.curbed.com/2016/2/26/11116952/tiny-199k-capitol-hill-condo-bike-micro-housing

    Attached on a 1,250 lot is less and an option.

    Valuation is the process of substitution. For a decade on and off I’ve heard people complaining about having to pay $500,000 to $650,000 for “a crapbox”. A brand new option at $700,000 will reduce the price of the crapbox.

    It’s all relative value, and more the value of the land than the structure.

    Ardell – thank you for that interesting link to the micro housing for sale. I find those new units very interesting indeed, and would love to tour one just to see how they actually work.

    A couple of thoughts on your post

    Some of us “old timers” remember artists and others that derided and ridiculed “ticky tacky” houses. In popular west coast communities such as Seattle, SF, Vancouver BC,Portland, SD and LA, many people now wish they could ever afford these “ticky tacky” “crapboxes”. Funny how times have changed!

    And as an old timer, the first real single family house I ever lived in and owned (other than rooming houses at the UW when I was a poor undergraduate student) was a tiny house on a good size lot in a close in Seattle suburb. When we purchased that house, the tiny house itself was assessed at twice the value of the lot. These days the lot is assessed at five times the value of the house. Or for another perspective, over the years, the house as doubled in value, and the land has increased over 17 times the initial assessed value at purchase. And if this small nothing house was located in one of the more toney areas of Seattle, the difference would be even greater.

    I believe the lack of reasonably priced buildable lots in the Seattle area is a result of many factors including but not limited to geographic limitations of the Puget Sound area, tremendous population growth, as well as limitations placed on development by the Urban Growth Management Act. Add the issues of lack of available freeways and decent public transportation options, fees and costs associated with bringing land to the development stage and (not so) suddenly, the price of the buildable dirt become dear indeed, especially in the more desirable areas.

    As to the cost of regular housing decreasing as a result of these skinny houses – I am not so sure. There is much opposition to those houses that crowd out neighbors, restrict light on adjoining properties and just look terrible. And if the pace of new migrants continues over the next few years, there is no way the construction of “skinny houses” will meet the housing demand of all these new folks pouring into this area.

    Furthermore, I do not understand why people are enamored with single family houses with no appreciable surrounding property as these skinny houses are designed. I have heard some politicians declare that many homeowners are just not interested in caring for a garden. Might as well live in an air condo or town house and even an apartment in a well designed apartment building will afford more privacy. If real estate taxes weren’t escalating so much, some of the savings could go to hiring a gardener to care for the yard if the owner was not so inclined to care for it him or herself. But with every new “need” that is discovered by our concerned politicians, and real estate the vehicle to fund all these “needs”, that is a pipe dream at best.

  74. 74

    RE: ess @ 73

    The reality is everyone doesn’t want the same thing. Never did; never will.

    One day I’m helping a “big lot” buyer who has to drive everywhere https://www.redfin.com/WA/Woodinville/14720-NE-164th-St-98072/home/449136 31,500 sf lot

    At the same time a different “view” buyer who likes to ride their bikes everywhere https://www.redfin.com/WA/Seattle/5750-E-Green-Lake-Way-N-98103/home/304405

    and then you still have the tiny-ish house with a decent sized yard close-in (my seller not buyer) http://www.zillow.com/homedetails/228-NW-41st-St-Seattle-WA-98107/48760101_zpid/

    It’s all there at varying prices. It’s just that what people want isn’t always where they want it to be. But there are many layers of options and rarely is it not possible to do whatever you want if your wants are based on reality.

    I passed a man this morning talking to his “coming of age” son and overheard this tidbit of their conversation. “Son, that’s a great idea and yes, if that were an option, you should do that. But it’s not an option. When what you want is not an option, you can’t just say ‘then I won’t do anything’. You have to face life from the standpoint of what your options are.”

    All one option is not good. Some people want a lot of land and some don’t. Those that do can readily find it. Those that don’t can readily find it. If they are paying the same price for a house, they likely won’t end up living in the same neighborhood. :)

    It’s not so much that they are “enamored with single family houses with no appreciable surrounding property”. It’s just that given the choice between a two bedroom “crapbox” with a third bedroom in the attic or the basement…and a yard and a beautiful, new 3 bedroom home with every modern amenity and no yard…well, different people make different choices.

    Generally people don’t understand the concept of “land value”. When they “look at homes to buy” they are looking at HOMES to buy. The value of the dirt under it is a bit of a mystery and they think, not their concern. But the land is the be-all-end all of it.

    Yes…a house starts at 1/3rd lot value to 2/3rds house value as you said and I have said a zillion times stated as “3 times lot for a new house”. It gravitates to 50/50 pretty quickly as the new house premium erodes and hopefully the land is going up at the same time the house is eroding in value. If and when the structure becomes obsolete because it does not resemble what the builders are building these days, then in the best of areas you will see the tax value go to $1,000 for house and all the rest land.

    That’s just the cycle of housing and always has been. Why they don’t teach kids all this in school is what puzzles me the most. Why don’t they teach anything about mortgages or land value or house “stuff” in school? Nothing? Nada? What’s up with that?

  75. 75
    ess says:

    RE: Ardell DellaLoggia @ 74

    Why they don’t teach kids all this in school is what puzzles me the most. Why don’t they teach anything about mortgages or land value or house “stuff” in school? Nothing? Nada? What’s up with that?

    I ask myself why they don’t teach kids many things in school.

  76. 76

    RE: ess @ 75

    There is always talk about hiring a “good” agent and how to find someone who knows more vs less. The reality is that the fees are higher based on what the clients know and not what the agent does or doesn’t know.

    If you could change your own faucet or put in your own new windows (as example), you might want to hire someone to do it. But when the cost becomes too high you could do it yourself.

    Same would happen with real estate commissions. If people knew a lot more about how to do it and the basics of valuation involved and the legalities and potential pitfalls, they still might hire someone. But they would have a price point that is different from where it is and has been.

    Since most people aspire to own a house (not all but most at some point in their life) it would be wise to teach this topic at least lightly throughout the school years. The more people know by their early 20’s on the topic, the less they would feel totally lost at the point where they need that service. It’s pretty ludicrous that so many people need to tell them how much a lender would lend them to buy a house. It’s simple math that hasn’t changed much for 50 years or more. Could have been taught in school.

    It doesn’t matter how much I know, and I know a lot. It matters how much they need me to know if they don’t. Prices are higher based on what they don’t know.

    The remaining quandry at the moment becomes who should reap the benefit of the savings. The seller or the buyer. Buyers and Sellers don’t always agree about that because historically it was the Seller. If that equated to lower home prices that might be ok, but it doesn’t.

    All the lobbying of the industry makes it much more difficult for a buyer to reap the benefits of the savings than the seller. In fact all the powers that be work in unison to make it more difficult for a buyer to pay, say 1% , than for a seller to pay 1%.

    It’s a fixed game.

  77. 77

    RE: ess @ 75 – Some school systems offer economics courses, which is about as close to “value” as you can get. I don’t think any school is going to teach students how to select and adjust comps.

    I think some schools may have some basics on budgeting.

    Then there’s history. I wonder how many school systems teach about tulips?

    In general, most schools could do a lot more.

  78. 78
    m-s says:

    RE: Kary L. Krismer @ 77
    Hi-
    I remember that by eighth grade, we had learned about net proceeds, entire cost, bond yields, commissions and even how to calculate compound interest, taught to us by the NUNS! Because back then (1961), it was not a given that kids would go on even to finish high school, let alone college, thus we were trained to be competent to be clerks, secretaries, bank tellers, stock people and middle managers right out of grade school. Extended adolescence has made educators kick this can way down the road. Of course those jobs don’t exist anymore, so its a moot point. It would be interesting to discuss what are the “core competencies” today.

  79. 79
    Dave says:

    This is a great conversation, thank you all. I’ll throw in my story as I am one of those CA imports.

    I come from a neighborhood called Santa Monica, CA where a 90s geek like me could NOT possibly buy a house near where I lived and worked. Let’s not talk about the parking lot they call a freeway system in LA. A condo was a possibility but after living next to the heavy metal neighbor from hell, my NO SHARED WALL became mandatory. My personal top three requirements were, 1. Quiet (no shared walls), 2. Safe, 3. Schools 4. Commute. My former Santa Monica neighborhood housing prices spiked in the 1980’s and never quite returned to earth.

    https://www.redfin.com/city/17882/CA/Santa-Monica/filter/property-type=house

    My plan was simple, like many here I saw the 2008 crash as an opportunity and,
    1. 2009, Visit the area and explore favorite neighborhoods, schools, and companies.
    2. 2010, Find and secure work in commutable distance from #1.
    3. 2011, Secure financing with 20% down and a 30 year, find and purchase the house.

    Closing mid 2011, I purchased in the Sherwood / Edmonds neighborhood. Today in 2016, I will soon be priced out of my new neighborhood, good thing I’m a local now.

    https://www.redfin.com/neighborhood/62090/WA/Edmonds/Sherwood-Edmonds-WA/filter/property-type=house

    I’m posting this because my needs were specific like so many opting to move here. Im my case I suppose the 80’s LA housing boom and clogged freeway put the nails in my coffin. To make it personal, my grandfather lived in Kirkland in the 1940’s and migrated south to Los Angeles in the early 1950’s. No, my boomer parents wasted that property inheritance away while I watched Saturday morning cartoons. Yes, that makes me a GenX self made working guy that can only push my family income up so far. The saying comes to mind, history doesn’t repeat but it does occasionally rhyme. Good times.

  80. 80

    To add a little perspective, like I said before, high prices and low inventory is just because people all want the same thing.

    A dose of reality. Kenmore.

    1,930 sf house on a 9,900 sf lot just sold for $345,000. Oooops. Looks like a flipper got it and it’s back on market at $550,000. But in September it could be had for $345,000 which was not under or over the asking price and all high ranked schools of 8 or better rank.

    https://www.redfin.com/WA/Kenmore/8164-NE-155th-St-98028/home/274851

    Over 2,000 sf split entry on an 11,686 sf lot just sold for $345,600

    https://www.redfin.com/WA/Kenmore/20417-63rd-Ave-NE-98028/home/283598

    Kirkland:

    1,280 somewhat remodeled home on a 7,350 sf lot sold for $389,950. At asking price. No more and no less.

    https://www.redfin.com/WA/Kirkland/12915-129th-Ave-NE-98034/home/513157

    1,720 sf split entry on a 9,775 sf lot with a newer kitchen sold for $380,000. Less than the asking price of $399,950.

    https://www.redfin.com/WA/Kirkland/12399-105th-Pl-NE-98034/home/457900

    And then there is my listing in Shoreline, fully remodeled from top to bottom pretty much on an 8,717 sf lot sold at $375,000 at asking price, no more and no less.

    https://www.redfin.com/WA/Shoreline/2006-N-145th-St-98133/home/81917

    It’s not as dire as everyone makes it out to be. It’s just that people can’t get what they want where they want it for a reasonable price. But reasonable clearly exists without going to Mason County or undesirable, high-crime areas.

    Not everything is a bidding war.

  81. 81
    Erik says:

    RE: Dave @ 79
    Good story. Smart to take advantage of the crash. I use to live in north Everett, and now I live on the water in Seattle because I was able to capture some of that money as well. Work smarter, not harder. I’m hoping we get another opportunity to do it again. If it happens again, I know exactly what to do this time and I’ll be able to retire early.

  82. 82
    Erik says:

    RE: Eile @ 68
    Housing prices will most likely not turn downward in Seattle until 2024. Buy a cheap place now, fix it, and then sell it in 2023 or so. You will likely have $60k profit if you buy in a good area. After you sell, you can then go rent. If the market collapses again, you have a nice down payment for your long term home. If the market doesn’t collapse, you have $60k you can apply toward rent for many years. This isn’t a sprint, it’s a marathon. Buy now and have a plan. You can always give the house back if you don’t want it anymore.

  83. 83
    ESS says:

    RE: Dave @ 79
    Closing mid 2011, I purchased in the Sherwood / Edmonds neighborhood. Today in 2016, I will soon be priced out of my new neighborhood, good thing I’m a local now.

    Yep Dave – prices are going up in Edmonds, and there is very little for sale, which should increase prices even more. And I don’t think there will be the push for density and height that has overtaken other cities such as Seattle, so long as one doesn’t reside in the few areas targeted for development such as the Five Corners area and other areas such as some places along Edmonds Way. From what I can tell, the big development push will take place on Highway 99, which is pretty far from most residences in Edmonds.

    Interesting to review the houses for sale in Santa Monica. I assume someone can afford those prices – but who?

  84. 84
    boater says:

    RE: ess @ 75
    You know what’s crazy. When I was in school I had multiple teachers ask me for tax or finance advice including my health teacher. You may recall that is the teacher who hands you the egg, bag of flour, whatever and says draw up a budget and pretend to live a post high school life. It was flattering but you really lose a little respect for your teachers when they ask you for financial planning advice while you’re in their class.

  85. 85
    SFraz says:

    Smoke and Mirrors.
    By year’s end, Blackstone’s Invitation Homes had hoovered up at least 1,585 single-family homes here, according to market researcher RealtyTrac. Nationwide, Blackstone says it has spent $8 billion amassing a portfolio of 43,000 single-family homes.

    The buying spree has
    potentially far-reaching consequences.

    In a market already low on inventory, big investor purchases could artificially pump up home prices, said Yale economist Robert Shiller, whose book “Irrational Exuberance” warned in 2005 of a national housing bubble.
    http://www.seattletimes.com/business/wall-street-buyers-snap-up-thousands-of-local-homes-for-rentals/

  86. 86
    SFraz says:

    “As the market continues to climb, we expect these investors to start to sell off their inventory to capture the gains made in the past couple of years.”

    Counties with highest share of purchases by four largest institutional investors

    The top 25 counties with a population of at least 100,000 and the highest percentage of purchases by the four largest institutional investors included counties in Atlanta, Charlotte, Seattle, Chicago, Nashville, Winston-Salem, N.C., Phoenix, Lakeland, Fla., Tampa, Sarasota, Cincinnati, Raleigh, N.C. and Charleston, S.C.
    http://www.zerohedge.com/news/2015-01-09/do-you-pay-rent-blackstone-where-wall-street-americas-landlord

  87. 87
    SFraz says:

    Liquidation cycle on deck:

    1) Housing’s FOUR UNSTABLE PILLARS atop a sand foundation that drove house prices since 2011 at a greater pace than from 2003 to 2007;

    2) Liquidation Cycle on Deck: Institutional/private buy-to-rent/flip & foreigner tailwinds turn headwinds in 2016

    3) QE for the Homeowner’s…Getting directly to the pocketbook of the primary US consumer demo has never been easier now that the Gov’t owns or controls the mortgage market and most mortgages.
    http://mhanson.com/2-16-hanson-qe-h-qe-for-the-homeowner/

  88. 88
    Blurtman says:

    By SFraz @ 85:

    Smoke and Mirrors.
    By year’s end, Blackstone’s Invitation Homes had hoovered up at least 1,585 single-family homes here, according to market researcher RealtyTrac. Nationwide, Blackstone says it has spent $8 billion amassing a portfolio of 43,000 single-family homes.

    The buying spree has
    potentially far-reaching consequences.

    In a market already low on inventory, big investor purchases could artificially pump up home prices, said Yale economist Robert Shiller, whose book “Irrational Exuberance” warned in 2005 of a national housing bubble.
    http://www.seattletimes.com/business/wall-street-buyers-snap-up-thousands-of-local-homes-for-rentals/

    Most Puget Sounders will be living in the Jungle as single family homes are hoovered up by wealthy ChiComs, Blackstone, the Clinton Foundation and Trump Industries.

  89. 89
    David B. says:

    RE: Ardell DellaLoggia @ 80 – Of the three links in your post I just looked at, one of them definitely is a major fixer (you can’t even get a conventional mortgage on it, by admission of the description), one probably was a fixer before the flippers got their hands on it (and is now over $500K asking), and one is on a street so busy it qualifies as a highway. Which all basically makes the point that it takes $500K or more to get a decent SFH in this area. You’re definitely not going to find such a thing for a mere $350K anymore.

  90. 90

    RE: David B. @ 89

    They are all large lots. My “adding perspective” post goes back to ess at #73 and my #74 reply.

    ess said “I do not understand why people are enamored with single family houses with no appreciable surrounding property as these skinny houses are designed.”

    You don’t get to “have your cake and eat it too” as they say. The discussion was about homes with weakness on a large lot OR new or newer homes on a small lot.

    Your pointing out the weaknesses is the answer to ess’s question. People are just not as interested in the trade offs needed to get a larger lot. They would rather have a newer or more improved home on a small lot, given the choice. Not always, but often. People like nicer houses and locations more than they like big yards. BUT that doesn’t mean getting a big yard is not an option.

    When it comes to bidding wars and low inventory it’s more about people turning their nose up at valid options vs them not being available, is my point and you helped me make that point.

    Too many people want the same thing. So it’s not about not enough people selling…it’s about not enough of CERTAIN options being built in the first place and fewer, if any, being built over the last 3 decades.

    A new house on a large lot with no obvious weakness is hard to come by at most any price. I’m looking for one for $1.3 Million or so if anyone sees one. Basically privacy and not seeing the neighbors homes is more important than large or small lot. So a large lot where you can still touch the outside of your neighbor’s house if you reach out the window…not good. New homes tend to be too close together on the street front side, even if they go back and deep forever. So “large lot” doesn’t help if they are building with a 5″ side setback.

  91. 91
    John says:

    By Ardell DellaLoggia @ 67:

    RE: tina @ 66

    A good value play might be to go for the next Einstein as it will be newer and have less competition. If you have no children yet or a baby, the Pope Plat will likely get built out. It’s a good plan for buying low and selling high. Buy when and where the rank is low if there is a back story. Better plan for after April when and if the school bond is approved and before the school is built.

    We passed on the Kensington as we were not really looking in Redmond. More Houghton or Issaquah School District with a Bellevue address.

    Ardell, you seem to have a lot of insight on redmond housing. Can you expand on what “Pope plat” is or where one could find more info and what you allude to as back story ( I am assuming this means Einstien has some back story that has change which might lead to a bump in ratings)

  92. 92
    Green Horn Investor says:

    RE: Kary L. Krismer @ 25

    I always thought it unfair for home buyers and sellers to take so much of the agents’ time in an all or nothing proposition. On the other hand, for the last house I bought, I made my offer the same day it listed as I happened to show up as the listing agent was hammering his sign in the ground; it was the only offer and my buying agent only showed my one house after I did all the research on my own online. That those two guys got x tens of thousands of USD for a few hours of work seems to be out of proportion to the effort. By the same token, it was unfair that the other buyers agents that showed me properties in other areas got no compensation for their time or effort.

    Perhaps charge by the hour for marketing and administrative work?

    But I also never trusted the agent to really work hard to negotiate the best price. When selling a home, what incentive is there for the agent to work extra hard to get that 10 – 30% on the sale price for the seller? It’s much easier just to close the deal.

    I would have welcomed a progressive commission in which the selling agent gets perhaps less than the customary baseline rate below a certain threshold, but with an increasing progressive payout that rewards outstanding presentation and negotiation so that selling agents can look forward to 30% or perhaps 60% of the selling price above a certain level.

  93. 93

    RE: David B. @ 89

    Throughout this thread and some previous ones the basic principle of 1/3rd lot to 2/3rd house at time of construction, also stated as 3 x lot, has been mentioned.

    You say “You’re definitely not going to find such a thing for a mere $350K anymore.”

    To get a new or newer house on a larger lot in a good location for $300,000 you have to go where that lot sells for $100,000. You won’t likely find a diamond in your box of screws in the garage. If you want to live where land is expensive, you have to get an older house on a large lot or a newer house on a small lot and you can’t ever pay less than lot value.

    There are still some places where you can pay $100,000 for the land under the house…but you likely wouldn’t live there. So better place with worse house or higher price or bad place with better house. That has ALWAYS been the choice in housing.

    If the price is too good to be true for that nice house, then something else is amiss.

    These are the basic principals that should be taught in school so that adults aren’t looking in the wrong place or for the wrong thing. There are trade offs in life. Those trade off principals should be taught in school.

    If a lot costs $300,000 you can’t get a great, newer house on a full lot. It would have to be a half lot or less. When I worked in Manhattan Beach CA the lots in the best of areas near the beach were down to 35′ by 45′ for this reason.

    It’s about land value. If you are paying land value for the house, you are getting the house for FREE.

  94. 94
    redmondjp says:

    RE: John @ 91 – The Lake Washington School District (LWSD) owns the parcel at the SW corner of 172nd Avenue NE & NE 122nd Street in North Redmond, which they refer to as the Pope property (name of the former owner I believe).

    If the school bond passes this April, a new elementary school will be built there.

  95. 95
    boater says:

    RE: Ardell DellaLoggia @ 93
    Sadly there is an abundance of evidence that people do not want to be bothered with logic if it goes against what they think is ‘right’.

  96. 96
    Deerhawke says:

    Ardell, you mention finding a house with “an elementary school ranking of 8, 9 or 10”. Who does these rankings? Are they reliable? Where can you find these rankings online?

    Thanks!

  97. 97
    Deerhawke says:

    Ardell, I am a builder and your “three times land” rule of thumb yielded an interesting offer recently.

    About 18 months ago, I tied up a parcel in the city with a completely packed hoarder house and garage on it, mold from top to bottom, asbestos on the inside and outside and a really bad oil tank in the sideyard. It had been full (15+ tons of stuff) but unoccupied since 1997. At the time, lots in the area were about $325K and new houses in the area were in the $925-950K range. I picked up the lot for under $300K, but there was a lot of work to do and real costs to deal with.

    In the interim, teardown lots have gone up to $450K or more in the area (if…if you could find one) and not too surprisingly most of the basic new spec houses are priced at $ I.2M to $1.25M. I built a house (Built Green 5, advanced sustainable systems, custom kitchen, etc. etc). that is far nicer than the standard. Last week, I got a call from an agent who was working for buyers who read this blog. They had driven by the house several times, researched it at DPD and even printed out the floorplans. They had their heart set on it and wanted to make a pre-sale offer.

    Their agent told me the “3-times” rule and offered me just a bit more than 3 times the cost of the land– $799K.

    Since this is now the cost of nicer 1800 sf townhouse in the area, you can imagine it was a short discussion. I was tempted to ask if this agent had taken advantage of recent changes in our cannabis laws, but I didn’t.

    Clearly some people do not understand the concept of a rule of thumb and think it is more akin to laws like…. gravity.

  98. 98
    Kmac says:

    Like I said earlier, I think 4x lot price is a more realistic “rule of thumb”.

    If I were to build a $300k house, I sure wouldn’t be paying $100k for the lot.

  99. 99

    RE: John @ 91

    The Einstein “backstory” is old news but the basis for what exists today. RedmondJP answered the “Pope” plat new school part, and thank you JP. The part that is important for that immediate area is less the “backstory” and more the fact that within reasonable range of the new school, you would logically expect for the school to switch from the existing school to that new school. This is true for all of the future proposed new school areas in all Districts. Often, though not always, new schools start out with high expectations and for a time high rankings as well. That in and of itself will create a re-shuffling of price.

    “Backstory” is called backstory for a reason. What is important is that “used to be” agents could simply say “great school district!”. Courtesy of the internet, the buying public now has fairly precise rankings on a scale of 1 to 10 for each and every school. The lowest ranked elementary school neighborhoods in Bellevue, Redmond, Kirkland and to some extent beyond do not have as many price wars as the 10 ranked schools. 9 and 10 pretty much the same. 8 often the same but some dispute there depending on which City. The “backstory” of each of these is whether that 10 is going to stay a 10 or whether that 7 is going to go to 8 or 6. These are things that can make or break someone banking on price. Especially builders who buy when it is ranked 10 but it is a 7 by the time the house is ready to sell. “Backstory” most often applies to Elementary Schools vs Middle or High Schools. Mainly because you are focusing on small geographic areas in the boundary markers.

    Another consideration is buying a house just on the 10 side of a boundary line across from a 4 school. One tiny modification of boundary can throw you from the 10 into the 4 before you even have a child in school. These are things that everyone buying homes has to be aware of and research with both hindsight and forward projections, and not just say this house is right now in the 10 school.

    RE: Deerhawke @ 96

    Might as well hit Deerhawke’s 96 here at the same time. We post Redfin links often. Scroll down on any property in Redfin and you will see the schools with a rank number in a little red circle to the left of each school. Whether or not these are absolutely valid doesn’t matter anymore, given when buyers pull up a property on Redfin it will say which schools the house “belongs to” and what the rank for each school is.

    Important to note that my opinions, as always, are formed by real work experience. Even my rules of thumb. :) Why 8, 9 or 10? Because virtually every buyer, whether they have a child or not, tells ME they want an 8, 9 or 10 ranked school. That is the search parameter they give me. No one says I want a school of 7 or below. Virtually all say I want a school of 8 or better. I do provide the insight of whether I expect the school to change up or down and why (backstory) and also the probability of the school being changed by boundary line changes. But the “8, 9 or 10” is me repeating what many, many buyers taught me about what many buyers want.

  100. 100
    SellersAreScum says:

    I see this article and plenty of other ones where they say oh prices are just below 2007 peak, etc. I say again ‘bs…stop the myth’. All decent house in $800K – 1.25MM range I see in Eastside are UP 20 – 30% from 2007 peak levels.

    Here’s an example…look at the price history:
    https://www.redfin.com/WA/Redmond/10446-155th-Ave-NE-98052/home/2116689

  101. 101
    PurplePony says:

    Deerhawke check out the non-profit Greatschools.org which I believe Redfin uses.

    K 12 niche is also good for detailed reviews and covers public and private schools.

  102. 102
    Eric says:

    There is no way I would hire an agent in this market – that would be just giving it away. Here in Seattle they’re coming in all cash 20% over asking in a matter of hours not days. The agent is just unnecessary froth and wasted expense – in a huge way. Get a real estate lawyer and and appraiser and save yourself 30-50K!

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