Seattle Foreclosures: How do we stack up?

A recent report from Property Shark shows that Seattle has the lowest number of foreclosures between New York, Miami, and Los Angeles. Seattle comes in second for lowest rate of foreclosures.

According to the report, the Seattle Area (King County) reported 293 foreclosures during the third quarter. This was well below the 1533 foreclosures which took place in Los Angeles. When the number of foreclosures is compared to the number of households, New York City far and and away boasted the lowest rate of foreclosures, with only .01% of homes going to Trustee Sale.
By studying King County in depth, we find that Auburn and Federal Way, two of the least expensive places to live in King County, experienced the highest number of foreclosures.





Many feel that foreclosure rates will rise in 2007, as tens of thousands of Adjustable Rate Mortgage's fixed terms expire.

Now the stage is set. The nation’s foreclosure total already broke the 1 million glass ceiling in October, and just how high foreclosure levels will go in 2007 is open to
debate depending on how steep one believes the downturn will be.

“When I got into this business, back in 2000, defaults were about 1percent of all first mortgages. Today we’re at 1.5 percent. While it’s not a large number, it’s still a significant move. Do I think the economy is going to crumble? No! Will (the foreclosure rate) go to 2 percent? We’ll have to wait and see,” Saccacio told Doti, an economist and president of Chapman University.

For Esmael Adibi, executive director of the A. Gary Anderson Center for Economic Research at Chapman University, the key concern is all those people who signed up for those “exotic” adjustable-rate mortgages in 2005 and thereafter. In California, for example, 27 percent of all mortgages were so-called “option ARMs,” where the buyer pays 1 percent interest and the underpaid amount gets added to the loan’s principal. (Foreclosure Pulse, 2006, Para. 2-4)

Despite these nationwide scares, Seattle has remained fairly resiliant to busts in the housing market. Will this be able to continue into next year or will next year bring a housing market disaster? I suppose I'll leave it to my friends over at Seattle Bubble to debate that.

New Homes LLC: Poor Product, Poor Service

I recently took one of my home buyers through Rainier Vista, a new community in Covington. As we drove in the community, we began to look for a model home. However, there was none to be found. As we pulled around the corner, we saw a small trailer sitting back in a corner. Hmmm, I thought, I guess that's the sales center.

My Client and I walked into the trailer, and began talking to a very sweet woman, who turned out to be the sales representative for New Homes LLC. Now, I have to admit, after seeing New Homes LLC homes before, I was instantly turned off. New Homes, despite offering fantastic prices, constructs perhaps the lowest quality homes in Western Washington. But, like I said, the price was right, so we continued to listen as the sales rep gave her pitch.

As the representative continued her pitch, I began to notice that she wouldn't even speak to me anymore; she only addressed my client. She showed my clients floor plans (which turned out to be wrong) and photos. She then told my client that she could take a leisurely 1 hour drive to Bonney Lake to view a model home. At that time, I could tell my client was getting the same vibe I was... something is shady about this operation.

I politely excused myself and my client, and we began to leave. As we began to walk out the door, the sales rep asked for my clients contact information. She did this, despite the fact that I introduced myself as a REALTOR, as we entered the trailer. I stepped in, and gave the sales rep my information, and quickly helped my client out of the trailer. Phew, I thought, we made it out of there.

A few weeks went by after that unpleasant experience. Then, yesterday, I received a phone call from the New Homes LLC Sales Manager. He asked if my client had purchased a home yet. I politely said, "No, She has decided to buy closer over to I-5, in the Kent, Sea-Tac, Burien, areas." That didn't phase him. "Well, what if I told you that we are offering a $10,000 discount on our homes?" "Thanks for the information," I replied, "But my client is out of town for a few weeks, and I think she is pretty set on further West." He still didn't get the hint. He kept pressing. Finally, I broke down and told him that I didn't feel that New Homes provided a good product, and that I had had bad experiences in the past. He responded, "Well, New Homes, are no frill homes but they are very quality." And so the story went. He didn't get a clue. Finally, I told him I had to go. "Can I call you tomorrow?" he asked. "No!" I told him emphatically. "Well, lets sit down and meet in person, " he said. "No! No! No!" I said, " I have to go pick up my wife, I have to go!" He finally let me off the phone.

You see, this person was in sales. I know all the sales tricks. I wouldn't bite. My client wasn't interested and I knew it. However, by being a pushy salesman, this sales manager lost me for life as a potential help in selling his product. I now not only passively dislike New Homes LLC, I vehemently dislike and distrust them. Poor Craftsmanship. Poor Salespeople. Just plain a poor company.

Seattle and Snow... Not a Good Mix

Seattleites do a lot of things well. Seattle is the most educated city in the United States. Seattle is also one of the richest cities in the United States. Seattleites can build you a mean computer program. And you can darn well bet that you'll get the best latte you ever had here in Seattle.

Despite being a town of geniuses and entrepreneurs, we Seattleites are complete idiots when it comes to driving in the snow. The last few days we have gotten a rare snow storm here in the Puget Sound, leaving Seattle drivers helpless. Now, I understand that many Seattleites do not have snow tires, and that's OK, given that it almost never snows. I also understand that many folks are driving rear wheel drive cars, and that can be tough. However, there are few common sense things we can do in order to not turn 1-5 and I-405 into an ice-capades show:

1. Slow down. You can not go 70 on ice. It just doesn't work.


2. Don't stop on hills. You can't get started again.


3. Leave the person in front of you allot of room.


4. Be patient, we'll all get there eventually

So, Seattleites, we're smart, heck we're geniuses, lets beat this winter weather together. Besides, I'm tired of getting made fun of by my friends in Spokane and North Idaho, who think city folk can't drive on snow. Lets prove them wrong.

Photo taken from Monday Night Football coverage of the Green Bay - Seattle Game on Seahawks.com

My Interview at Redfin

I recently interviewed for a Real Estate Agent position at Redfin, an Internet based discount brokerage here in Seattle. I met with Allie Howard, Manager of Washington Operations and Rob McGarty, Manager of West Coast Operations. My already high opinion of Redfin has gone up another notch after meeting these two wonderful people.

Allie and Rob were relaxed, positive, and sharp people. They interviewed me by truly getting to know me - allowing me to express my passions and experiences freely. They shared their vision and passion for Redfin and helping real estate consumers as well. As I left our meeting, I knew that despite if I get hired or not, I had found an ally in the real estate industry.

It wasn't just Allie and Rob that impressed me either. Aime Cook, Redfin's Recruiting Director was incredibly responsive in communicating with me and giving me feedback on the interview. Another Redfin employee (please forgive me I forgot her name) even recognized me from my blogging. The whole company truly felt like a community.

I am hopeful of receiving this position. I know they have some more interviews to complete, and it will be at least a week before I hear back.

Redfin has the feeling like "Something big is going to happen." I wonder if this is what Google felt like in 1998, or Microsoft in 1988? I am hoping to be on the ground level of this amazing company.

If you are one of my clients reading this, rest assured, you're needs will not forgotten in any transition I make. If you have any questions or concerns regarding this post please email me at trevors@johnlscott.com.

Remember the Homeless this Thanksgiving

Happy Thanksgiving to the visitors of the Seattle-Tacoma Real Estate Blog.

Over the holiday weekend, please take a moment to pray for the homeless of Western Washington. According to a 2004 statistic from the Committee to End Homelessness in King County, on any given night there are an estimated 8300 people homeless in King County. The committee feels King County's homeless rate is strongly tied to the high cost of living in certain areas of King County.

It is difficult, if not impossible, for low-income individuals and families to find affordable housing in King County. In the spring of 2004, average rents for a one-bedroom apartment ranged from $577 in Auburn to $944 in Bellevue and more than $1,100 in downtown Seattle. For a disabled person living on Supplemental Security income (SSI) of $564 per month, the lowest average rent for a one-bedroom apartment is more than his or her monthly income. A worker earning minimum wage ($7.16 per hour) would need to work 80 hours per week to afford a one-bedroom apartment at the Fair Market Rent of $729. Thehousing wage in King County; the hourly wage that a worker would need to earn in a forty-hour workweek in order to afford a one-bedroom apartment; is $14.02 per hour or $29,162 per year.

Remember this was 2004. Housing costs have skyrocketed much higher since then, making the problem even more potent.

Lets put our heads together and think about what we can do to help this Thanksgiving. At the very least there is someone ringing a bell at your local department store... I think that's a good start.

Happy Thanksgiving Bloggers.

The Salvation Army now offers an "online red kettle" as well if you are interested in donating right now.

As Real Estate Slows Rentals Heat Up

Consumers only put up with so much. There comes a time when Joe Seattle the Real Estate Buyer says, "$300,000 for a Studio Condo is too much." "What about an interest only loan, or a Pay Option ARM?" says the Jim Desperate the REALTOR or Jane Needy the Loan Officer, "Then your payment would only be around $1700 a month."

But its too late, this buyer is out of the market. He's going to rent instead. And who can blame him? He can probably go rent that same Condo for $1000 - $1500 a month. So Joe Seattle signs a 6 month lease on a charming Ballard Condo. Bill Tacoma, Jimmy Auburn, Fred Renton, Frazzled Homebuyer, and 10,000 of their friends do the same. And so goes the transition from real estate boom to rental boom.

The Puget Sound Business Journal begins their article Apartments are where the action is - for now by saying, "Rents are up. Vacancies are down. In short its good to be a landlord again." The article goes onto explain that a slowing real estate market means a higher demand for renting; and a higher demand for renting means higher rents.

After mirroring the economies decline for four years, the fall 2004 vacancy rate for the Puget Sound region (King, Pierce, Snohomish, Kitsap, and Thurston Counties) was at 7.4 percent, rents were either flat or falling, and landlords were showering tenants with incentives. Ever since the pendulum has been swinging in favor of landlords. (Broberg, 2006, Para. 7-8)

This increase in renters has turned investor's eyes toward apartment complexes. Micheal Derr, managing director for Trammell Crow Residential Real Estate in Seattle says that people are interested in buying complexes before they are even built (as quoted by Broberg, 2006, Para. 6). This is quite a turn around from 2-4 years ago, when it seemed like every other apartment complex was being converted into a condo.

Despite this rental boom, it is important to remember that everything is cyclical. The interest rates will eventually drop and those inexpensive apartments will eventually be comparable to a mortgage on a condo. Right now though REALTORS are out and Landlords are in. However, like bell bottom pants and 80's style shawls, everything comes back in style again.

The Nominations are in...

The NWMLS nominations for Board of Directors are in... and guess who is in the running for Pierce and Thurston Counties? Drum role please..... The Broker of MLS-4-Owners, Chris Nye.

At first I thought I misread the nominations, so I read them again, "Windermere, Windermere, Coldwell Banker, ReMax, Windermere, MLS-4-Owners... WHAT!?!" I nearly fell out of my chair. I would have never in a million years thought that a Discount Broker, let alone a FSBO Discount Broker, could be on the list of nominees.

So, I believe champagne is in order. The Members of the NWMLS may be taking a huge step forward in becoming an open and competitive MLS. (After hearing stories from MLS systems around the country, I think NWMLS is already doing fairly well in this arena.). So Chris, best of luck, if I could vote, you would have my vote. However, since our Broker run oligarchy offers dues without representation, I will simply offer my sincere support.

By the way, if you would like a campaign manager I would be happy to lend you my skills. We could do all sorts of fun ads...

Ever feel like you're spit on by the entire real estate world? Feel like the whole real estate industry is against you? If so then I'm your Candidate for the NWMLS Board of Directors. I've been taking heat for years from traditional Brokers, and I think its time for a change. I believe in fair consumer practices and reasonable real estate fees. I believe in an open MLS that is fair to various real estate service models. So, if you're tired of the same ol same ol up in Kirkland, then vote for me, Chris Nye, for Board of Directors. I'm Chris Nye and I approve this message.

Or we could have campaign bumper stickers. NWMLS: Nye Will Make Life Simple

Anyhow Chris, congratulations on your nomination, and best of luck in the campaign!

(This Blog is my opinion and not that of Chris Nye or MLS-4-Owners)

Rain City Guide: The Standard in Real Estate Blogging

Here in the Seattle and Tacoma area we are extremely lucky to have a multitude of techies and computer geeks. This techiness has bled into the Real Estate Industry leading many REALTORS (Like Myself), Loan Officers, Real Estate Lawyers, and investors to blog about their experiences.

With this in mind, I thought I would take a moment to pay tribute to the Granddaddy of Seattle Real Estate Blogging, The Rain City Guide. Rain City Guide is an upbeat Blog run by eight of Seattle's finest real estate specialists. I have been impressed by Rain City's diversity of views and truly helpful articles. This being said, I have added Rain City Guide to my permanent link list.

Keep up the great work Rain City!

You Tube your Home

You Tube, the incredibly popular amateur video forum (now owned by Google) is becoming an increasingly popular medium for advertising homes. This video, posted by Scott Price, a local Windermere agent does a great job of capturing the home in a way photos just aren't able to. It may not be long before we are looking at videos rather than photos in the MLS listings!

NWMLS October Report

The Following article is October's Report on NWMLS home sales for Western Washington. Data is collected from the NWMLS and the report is written by the NWMLS.

Home Buyers, Sellers Look Beyond Elections

KIRKLAND , Wash. ( Nov. 7, 2006) – Not everyone spent the month of October campaigning. Nearly 12,000 homeowners around western and central Washington state put their homes on the market last month and 8,567 owners accepted offers on their properties, according to the latest figures from Northwest Multiple Listing Service.

October's activity was similar to September when brokers reported rising inventory, higher prices and fewer pending sales compared to a year ago.

MLS members reported 11,910 new listings of single family homes and condominiums during October, about 500 more than twelve months ago.

With those additions, the inventory at month end stood at 36,282 listings. That total encompasses 19 counties and marks a 48 percent increase in active listings from a year ago. (Starting with October, NWMLS is reporting data for Clark and Pacific counties; previously, transactions in those areas appeared in the "Other/Out of area" segment of the monthly report.)

"When it comes to current market conditions, it's important to keep things in perspective," cautioned Lennox Scott, chairman and CEO of John L. Scott Real Estate.

"Housing sales are down, but this has created a greater balance in the market between buyers and sellers," Scott remarked, adding, "Since we've come off of the frenzy market of the past year, buyers have more selection, there's less competition for homes, and interest rates are still low. Home prices continue to appreciate in most areas and we're on track to have the third most productive year in the history of real estate."

System-wide, the median price for a home that closed last month was $315,000. That is $28,000 more than a year ago, an increase of about 9.8 percent. For a single family home (excluding condominiums) the median selling price was about $332,000; for a condominium, the median price was $243,450.

In King County, which accounts for about four of every 10 sales in the MLS service area, the median price of a single family home (excluding condominiums) rose 12.8 percent, increasing from $390,000 a year ago to $440,000 for sales that closed last month. Condo prices jumped 20.8 percent, climbing from a median selling price of $215,000 twelve months ago to last month's figure of $259,700.

For most counties in the Northwest MLS market area, price gains from a year ago tended to be in the range of 9-to-11 percent.

Every county experienced a double-digit buildup in inventory and all but three counties reported dips in pending sales.

"The evidence looks pretty convincing that the market has corrected itself and we are experiencing a tilt to the buyers' side in the arena of negotiations," observed NWMLS director Dick Beeson. This "gentle incline," as he described it, presents some good opportunities for buyers, particularly in areas like Pierce County where the selection is about 50 percent larger than a year ago.

Overall, traffic has been steady at open houses and "perfect" properties still get multiple offers, according to Beeson, the broker/owner at Windermere Real Estate/Commencement Associates in Tacoma.

"Knowing 2005 was the zenith year in real estate sales, having an adjustment this year was to some degree expected," Beeson noted. Nonetheless, he expressed some surprise at the growing ratio of vacant homes that are currently on the market. He believes this could be the result of "natural" vacancies from job transfers and buyers who are moving up or downsizing, as well as some selling by investors.

Another NWMLS director, Ken Bacon, the broker at Windermere's Redmond office, expressed little worry about the slippage from last year's record-shattering sales volume. "The 9 or 10 percent decline in pending sales from the boom year of 2005 illustrates the demand for housing in the Seattle area remains strong," he commented.

Appreciation continues because of this demand, according to Bacon, but he emphasized "Pricing is critical as the market now allows buyers time and options prior to making a commitment."

"We are still seeing some multiple offers in price ranges between $300,000 and $800,000 depending on the neighborhood, house, and location," Bacon said. Contingent sales are also being written, he reported, but said in his experience the first buyer is often bumped by a second buyer within a couple of weeks.

Condominiums continue to fuel demand among entry level buyers and downsizing sellers, according to Bacon. The combination of tight inventory, close-in locations and sought-after amenities is sustaining demand and creating some bidding wars.

In King County, there is slightly more than a two month supply of condominiums (2.3 months) to meet demand at the current pace of sales; for single family homes there's a 3.2-month supply. (Nationwide, there was a 7.3 months supply of existing homes for sale nationwide at the end of September, according to the National Association of Realtors ® .)

Bacon described open house activity as "steady but not strong," pointing to inclement weather, weekend sports activities and growing popularity of computer tours as factors that affect open house visits.

Asked about "hot" neighborhoods for his office in downtown Redmond, he said properties that combine views, acreage and good locations typically draw multiple offers. Close-in communities such as Marymoor Heights (if priced under $800,000) and Bridle Trails (if priced under $1 million) and affordable communities such as Education Hill are experiencing high demand among buyers.

Bacon expects some seasonal leveling will continue during the fourth quarter and predicts election results will have no impact on housing activity. He believes the area's strong economy, good prospects for job growth and stable interest rates will continue to fuel the local market.

Equal Opportunity Housing: Private Eye

The goal of The HUD Office of Fair Housing and Equal Opportunity is to eliminate discrimination based on race, color, sex, national origin, religion, disability, and family status. In an effort to enforce these laws, Fair Housing often sends "undercover agents" to pose as buyers. These "buyers" usually tour model homes at new construction sites, asking the site agent questions like, "what type of neighborhood is this?" or "Do you feel like I would fit in here?" Usually site agents are keenly aware of the posing buyers by their obvious questions. One agent was even tipped off by a video camera peeking out of the "buyer's" purse.

A few days ago I was cased by Fair Housing in a more high tech way. The Fair Housing Officer emailed me from my website with the following message:

What neighborhoods would you suggest for a family with 2 kids (9 and 2), who are liberal and Jewish, and have an adopted Guatemalan daughter? My husband is an attorney and I am a social worker. We want a neighborhood with the best schools, LOTS of kids who play outside, parks, walking areas,etc. Please recommend via e-mail. Thanks!

Now, I have no proof that this was a Fair Housing Agent, however I know very few people who are so forward about religion, politics, and family life in an email to a stranger. So, I politely replied with this:

Thanks for visiting my website. I would be happy to help you find a home that meets your needs. According to State and Federal laws I am not allowed to recommend neighborhoods based on the criteria you gave me (religious, familial status, race, etc.) Perhaps you could give me some other criteria to search for a home.

- What area of Western Washington would you like to live in?
- Do you like newer or older homes?
- What style of homes do you prefer?
- What amenities do you need in a home?

Any of these things would be helpful!
I look forward to working with you! Have a great day!

I have not heard back from this "buyer" and I do not suspect I will.

Despite the obviousness and even absurdity of the Fair Housing Agents I am happy to live in a country where every persons rights are protected.

View Fair Housing Adverstisements

Fair Housing Laws

About FHEO

The First House: The Washington State Governor's Mansion

Yesterday, I had the privilege of joining the 93rd class of the Washington State Patrol for a reception at the Governor's Mansion. The mansion, located adjacent to the Capitol Building and the Temple of Justice, is a magnificent Southern Style home with sprawling grounds. As we walked up the driveway, we were greeted by WSP Cadets who guard the mansion 24/7. We were told that Christine Gregoire sometimes orders them pizza as a gesture of appreciation.



As we entered the mansion our eyes were drawn toward the floor to a giant Washington State Seal mosaic embedded in the entryway. The front stairs leading to the second story were blocked. This is the entrance to Christine Gregoire's personal residence and living quarters.


We then quickly toured the library and living rooms. These rooms were adorned with photos of Salmon, Timber, the Seattle Library and other icons of Washington State. Our tour brought us to the most important room: The dining room. Despite, the gorgeous mural, the dining room's true attraction was the food. Mrs. Gregoire had spent hours making the best appetizers and deserts. Where does she find the time?

After visiting with the graduates and taking in the history (and plenty of brownies) we made our way to the door, leaving with a greater connection to government and our great State.

Gig Harbor: The World's Largest Gated Community?

Yesterday I took a trip over the Narrows Bridge to Gig Harbor. The new bridge project seems to be humming along, with much of the bridge deck now in place. WSDOT estimates that the 12 million pound, $849,000,000 bridge will be completed in Summer 2007. At that time the original bridge will be closed for approximately a year to complete repairs and updating.

Despite the clear need for traffic relief at the Narrows Bridge and all along HWY 16, there are still many unanswered questions as to how the new bridge will effect life on the Peninsula. The new $3.00 toll will clearly have an effect on people who make the daily commute to Tacoma and other East Puget Sound areas. Will low income people from the Peninsula be able to afford $90.00 a month simply to get to their jobs?

One Gig Harbor resident believes that Gig Harbor will quickly become the World's Largest Gated Community. By imposing the toll on low income families, he believes many will be forced to move to Tacoma just to afford their cost of living. This would leave mostly upper and middle class families in the harbor. While this is unlikely to happen overnight, it's not inconceivable that in 20 -30 years, Gig Harbor, Purdy, and even the Key Peninsula will be exclusive havens for the well-to-do.

What are your thoughts on the bridge project, tolls, and its effect on the Peninsula communities?