Fall 2008 and My Experiences with the Seattle Suburb Housing Market
2008 Hasn't been a great year for most in Real Estate
This is a follow up to the hub I wrote in the Spring on The Economy and the Seattle Area Housing Market, and yes, I'm still in business. Everybody knows this year started out not so hot and things have gone from bad to worse. Although I desire to remain optimistic and positive - continuing to hope and keep the faith - I also consider myself a realist and I do tell it like it is. Unlike some of my competition who will paint a picture to appear much prettier than it really is. Let me share with you some of what I've encountered.
There are people in this industry who last year had six digit incomes, but this year so far, sold only 2-3 properties. I count myself among them regarding the second part of this statement only. The condo listing featured on my The Economy and the Seattle Area Housing Market hub is still available. We received an offer back in the spring and were supposed to close the end of June but then it fell apart due to financing (couldn't get FHA approval and Conventional appeared very unattractive). In almost four months since then, showing activity equates to three. The hub I wrote on An Overview of the Home Purchase Process features a listing of mine which has been under contract since February.....the buyer has a condo in Bellevue she owns outright so the buyer and her agent figured once it sold, she'd pay cash, thus no financing contingency (understand a contingency states that something has to occur prior to moving forward to closing. In essence it is designed to protect a buyer). They received two offers, the second only $6,000 away from mutual acceptance, resulting in the parties walking away....today, the condo is listed for less than this second offer. The buyer vacated her condo and is living in the home (my listing) with a rental agreement in place for $500 - $600 more than the home would typically rent for. Every month beginning in May, I deliver a check to my clients, Mr. and Mrs. Seller, dabbling now in property management also.
In the town where I reside, there is a Harbour Homes site where three days a week for the past couple of months, I'm present as the onsite buyers agent. People still want new construction. Traffic through HH on the weekdays is pretty quiet. It's ok, I have a luxurious office in the model all to myself I can do the things I'd normally do such as internet research, respond and write emails, (or like this very moment - write and publish a hub), make calls etc. To be honest, I've been a little reluctant however to make calls to people with properties where the listing status is either expired or canceled. I'm thinking the majority of the responses I'd get in an attempt to prospect them is, "YOU'VE GOT TO BE KIDDING".
Part of the reason I say this is as follows: Weekend traffic here at Harbour Homes is decent (considering this town has less than 10,000 people) so I'll see up to four parties in a day. Many people do really like these homes and the opportunity to buy "presale" and utilize available options to customize some of the interior as well as exterior finishes. We offer six different floor plans to choose from and some of these also have different exterior elevations to choose from also. Of the three days I'm here, I'm only here one weekend day a week (another onsite agent covers the 3 days I'm not present and we are closed one day during the week). Out of four different parties I've connected with so far, they all own properties which must be sold prior to making a move on one of the homesites here. Two parties were responsive to my initial efforts for following up, informing me they see putting an offer together with a contingency in place stating their existing home needs to sell first, is pointless at this time. Of the two, one lives in a good location.
The third party, we actually submitted a contingent offer. Understand here in our state, when a buyer submitts a contingent offer and it is accepted, the buyer has 5 days to get their existing property listed on the active market, and a buyer must be really motivated to go this route, particularly if he/she possess pack rat tendencies (need to declutter) or intend to do some minor updating to be competitive and or procure a higher sales price. Just a heads up if you are thinking of selling or getting into this business, it's common knowledge some people tend to stress or more easily feel overwhelmed than others. This can lead to paralysis and someone else may need to step in and take charge, to perhaps include the Realtor. I've helped sellers paint walls, clean mildew off of exterior surfaces, etc! (I am a RE/MAX agent after all and our motto is "Above the Crowd!" or how about another translation, "going the extra mile."). Anyway, when the counter offer came back, I compiled an updated competitive market analysis (or "CMA") and discovered another unit in her Bellevue condo complex did a price reduction, from $385,000 to $365,000 (and three units in this complex last year sold for between $425,000 and $475,000!). We intended to be at or below the next lowest list price, yet with needing to price below $375,000, she decided to hold off as well. (The price just reduced again by another $10,000, now listed at $355,000). This buyer, even with all that's happened with Freddie, Fannie, Wall Street etc, can qualify for more. Between paying a slightly higher price for the Harbour Home (remember we were still in the negotiation phase) and receiving less in proceeds from the sale of her condo, however she is uncomfortable with the higher mortgage payment.
The fourth party at least does already have their home listed. They relocated ("relos") to the area from Toronto and are Microsoft employees. However, until they receive an acceptable offer on their existing home, they feel it's pointless to move forward with an offer on another home here or elsewhere (and the potential exists, for me to help them buy something else if they are interested in seeing other homes).
This plat or developmet started with 30 homesites. Three finished homes and five presale lots, and of course eventually, the model , is what is left. Two homes have sold in this plat or development since the end of August when I started on here....I and the other onsite agent were not however the selling agent on either one - outside agents were. We still get something - not much - but better than nothing.
Of course part of the reason people are coming through here is they realize if they are willing to drive another 10 - 20 minutes, they get much more for the money. Everyone knows it's a buyers market and ironically in contrast to what prices look like in places such as Bellevue in contrast to here, our sales volume has decreased by approximately 50% compared to last year yet the prices are closing at only 5 -7% less compared to a year or so ago. The next town over is a different story...prices are down there by approximately 30% and this is true for much of Snohomish county as well (next county over, I reside in King county).
I must say, "Thank God for Microsoft and Boeing." If not for them, this region truly would be depressed. Boeing's Machinists are currently on strike, it's been more than a month and a half without resolution yet Boeing people have paid me a visit...although not part of the Machinists union, and also recent relo's, this time from upstate New York. Hopefully the Boeing strike will end soon. A woman from the Machinists Union I came to know during the summer of 07 is a single mom and wants to buy a house. She's not happy about using her savings to pay her living expenses since initially this money was intended to be designated for a down payment. In all my efforts to remain in contact with her, the message I received was "not ready until after next September because we will probably strike." Just before the strike, she found a house in a neighborhood she felt excited about and wanted to make a move on.
So much is in limbo.
I did have a couple from China a few weeks back who wanted to buy the model, mentioning the ability to pay cash. The model is not available unless someone is willing to do an extended closing several months out. This couple will be back in December, Lord willing, and hopefully I can continue to help them at that time. We did connect and are in communication. I tend to get my hopes up and count on things that sometimes turn out not to be. As another hubber stated, you have to kiss a lot of frogs in this business before you get a prince.