In January, sales of existing homes rose 4.3% according to the Seattle Times, and inventories went way down to the lowest point we’ve seen over the past 7 years. The National Association of Realtors said that sales have seasonally adjusted to an annual rate of 4.57 million. Sales have risen in all four major regions, including 8.8% in the Western region. December sales hit a downward slope to 4.38 Million, closing 2011 with a 0.5% decline. This however did not affect annual sales, only seasonal monthly sales. According to the National Association of Realtors, existing home sales are still recovering, and investors account for 23% of homes purchased.
The signature blue domed 2nd and Seneca building in Downtown Seattle, has been sold for 19% less than what it cost five years ago. According to county records, A San Francisco based Real Estate investment company picked up the building from Tishman Speyer of New York for $186 million. Tishman had payed $230 million for the building in 2007, just around the peak of the commercial real estate boom. Washington Mutual had occupied roughly 16% of the building previously, and when they failed to make ends meet, the cost of rent went up and vacancies went way down.
The building’s value was once way lower than Tishman’s $175 mortgage, but they were able to modify the debt in 2010. Despite the low price tag, the sale was actually King county’s biggest real estate transaction since 1918 8th Ave. last August, another downtown office building sold for $350 million. At this time, the Second & Seneca building currently has vacancies available.
The Seattle Times had an article regarding how cash is king in the real estate market. One-third of all U.S. home sales this past December were cash deals. Clean offers – one with limited contingencies – especially those with no financing contingency are in high demand. One would not automatically assumed this is a bad thing, but the issue is these cash deals are putting downward pressure on home values because sellers are accepting lower offers for a sure deal. No where is this more prevalent than with homes owned by banks. Banks are motivated to get real estate off their books and are not emotionally attached to the homes they sell so a sure deal is the deal they prefer. But buyers who need to finance their home purchase do not need to fret. For example, in foreclosures Fannie Mae and Freddie Mac prefer first time home buyers and people who are buying the house to live in it. Also, not all owners are like banks who are willing to take less for a sure sell. So while cash is king, it is not the ultimate determination in real estate transactions.
It is an unusual real estate market, inventory is down, sales are up, but at least in part due to these cash deals there is downward pressure on home prices. To navigate this unusual real estate market, one should contact a local real estate agent for professional advice.
Earlier this month, the $25 Billion mortgage settlement aiming to aid one million homeowners was announced to the public, addressing the concerns of many homeowners. The settlement will force the banks to reduce principal balances, refinance loans and provide billions of dollars across the states for other forms of relief for consumers. Many have raised the concern that the $2,000 offered to roughly 750,000 homeowners just isn’t enough. But the US Department of Housing and Urban Development has addressed these concerns, by stating: That isn’t what these payments are about. These payments are holding lenders and services accountable for the ill treatment of several homeowners.
When HUD initiated a wide spread review, their results showed that some homeowners who were barely 30 days behind on their mortgage, hadn’t received a call from their lender providing alternative options. Many lenders didn’t offer anything in reciprocation when borrowers lost their jobs, or had a medical crisis. In retrospect, HUD came to find that many borrowers who shouldn’t have ran into trouble, and who should have received help early on in the process to avoid this outcome, did not receive the guidance banks were legally obligated to provide them. The $2,000 payments will be given to those who received this kind of service from their bank, were charged for services they shouldn’t have been, or lost paperwork and didn’t receive help with their mortgage. For those who improperly lost their homes in foreclosure, the settlement could come to their aid in additional forms, if eligible. Up to 4.3 Million homeowners have the chance to request an independent review of their foreclosure. For an extended description of their statement, watch Shaun Donovan’s explanation on CNN Money.
If you thought foreclosures were only happening to the lower class citizens; you’d be gravely mistaken. According to CNN Money, In 2011, over 36,000 homes valued at over $1 Million were reported to be foreclosed, or served with a notice. While that’s only 2% of the foreclosures nationwide, its still a much higher percentage than it has been for years. In fact, the percentage of these pricey foreclosures has jumped 115% since 2007, and the foreclosures valued over $2 Million has risen to 273%. In the past, many homeowners on the high end of the market were able to postpone their foreclosures due to other resources, and amenities to fall back on.
With a recovery in the housing market still years away, many high end homeowners have opted to foreclose, even though they can afford their monthly mortgage because they owe more on their properties then they are worth. In comparison, those homeowners in the lower priced brackets are being foreclosed because they can’t afford their payments. It’s a business decision for the high price tickets; personal choice for the lower-to mid range homes.
Last week, the Consumer Protection Financial Bureau sent out a prototype designed to help consumers wrap their heads around the monthly mortgage bill. The prototype clearly states the breakdown of how much money is dedicated to the principal, interest, escrow, as well as the outstanding principal, maturity date, and for adjustable-rate mortgages, the ETA on when the interest rate could change.
There are other agencies that provide similar services to their clientele, but there are currently no industry wide standards in place. With this information, home owners should be able to keep better track of their mortgage payments, and be able to hold their mortgage service company accountable for any errors.
At the recent International Builder’s Show Expo, home-builders and consultants discussed how the influx of foreclosures has drastically affected newly built home sales, and came together to brainstorm ways to agressivley educate current buyers on the market. Foreclosures have been luring home buyers with hugely discounted prices, and thus decreasing the appraisal value in newly built homes. One builder from Fulton Homes in Phoenix presented a foreclosure cost calculator, showcasing hidden costs that many buyers do not initially consider when calculating the overall price. Some of the extra fees include repairs, electrical upgrades, plumbing restoration, and possible legal fees, among many others.
Builders and consultants also expressed the urgency to show buyers that newly built homes on the market come with none of these additional costs, but have extended warranties for construction, appliances, and third party inspections. Some of the arguments expressed for opting for a newly built home include:
- Newly built homes are energy efficient, and Eco-Friendly
- Newly built homes allow home buyers to have the option to choose their own floor plans, amenities, etc.
- Closing Costs and Upgrade incentives
For an expanded comparison on the incentive to buy a foreclosure or a newly built home, click here.
There have been rumors circulating that Amazon is looking into purchasing some of the Clise family’s properties in the Denny Way triangle. The deal has been kept very quiet and few knowledgeable Real Estate sources have even heard explicit details on how much they’re planning on sweeping; if they’re planning to purchase at all. Amazon is quickly growing out of their South Lake Union headquarters, and is said to need an additional 2 million square feet over the next five years. With the company expanding in a tight knit area like SLU, moving into a different neighborhood would make sense, as it can be difficult to purchase connecting properties and prices will have skyrocketed because seller’s know they’re in high demand. The Clise properties are near Amazon’s South Lake Union campus, in areas like Queen Anne, Capitol Hill, and Belltown. Sweeping up larger properties in other neighborhoods would certainly gentrify the area; Amazon has totally changed the vibe of South lake Union, with new swanky restaurants, and high end amenities.
King County recently announced that property tax bills are in, and have been sent out for the first half of 2012. Payments are due April 30th and the 2nd half will be due in the fall no later than October 31st.
The value of homes has dropped in almost every nook of the county, with the exception of the Wallingford & Phinney Ridge areas which actually increased in value. The biggest drops were present in Burien, Redondo, and Algona areas around King County, among others. For information on how the taxes are calculated, and ways to pay your taxes, visit the county website.
The 68th annual Seattle Home Show is coming to town this weekend, kicking off Saturday February 18th, will feature over 500 home & garden displays, various “Meet the Expert” seminars, and wine tastings presented by Lulu Boutique out of Lake Chelan. This year’s theme “We’re Having a House Party” will include model kitchens, and bath vignettes, along with outdoor landscape design & Eco friendly tips and home decorating ideas.
The Seattle Home Show will be held at Century Link Field Event Center Feb 18-26th, Admission is $12.00 Adults, and $8.00 for Seniors. Eticket purchasers will receive free event parking at Century Link Field.