Seattle Housing Buzz

Nothing new this week, but I did post an article on pre-construction investing at the Seattle Condos and Lofts blog. Take a look at it and let me know what you think.

Vulcan and John L. Scott finally issued their official press release this week about John L. Scott handling sales for Vulcan’s current projects - Veer Lofts, Enso, The Martin and Rollin Street Flats. Not quite sure why it took so long considering it was included in the information packets Vulcan handed out at their preview event back on June 17th.

Coldwell Banker Bain introduced a near indentical search function as John L. Scott (same developer). One thing I like about theirs it that users can filter by # of cars and # of stories.

Been playing the points game at ActiveRain and I’ve fallen to third featured agent in Washington. Another JLS agent is listed as the #1 featured agent in Washington, mostly because of some fluffy blog postings.

This past weekend was the annual Seattle LGBT Pride Parade. For the first time in the event’s history, it was moved to downtown Seattle. The route on 4th Avenue went from the Westlake Center to the Seattle Center, passing right in front our office on 4th Avenue where we threw a party for clients and neighbors. An estimated 200,000 people lined the streets and attended the festival at the Seattle Center. This was also the first year that John L. Scott hosted a booth at the festival, joining Prudential, C21 & Wells Fargo.

Most of us know about Google. And, most of us who know about Google know about Google Labs. Some of the programs they’re working on are nifty such as Google Maps. But, most are gimmicky and aren’t really useful. To be fare, these are side projects for many of the developers who work on the programs on their spare time.

Zillow has now entered the playground with Zillow Labs. The Lab has three toys to play with - a Zillow Search button for the Google Toolbar, a search add-on for Firefox, and Zillow search box to plop into websites. I’m not so sure these are quite the “cutting-edge projects” that Zillow Labs say they are.

The first two, to me, fall into the gimmick category and just clutters the Google Toolbar and Firefox. I’m wondering who would actually use it and when. Sellers don’t sell homes regularly so I’m wondering if they would even install these programs. It’s not like their home’s value is going to change daily. Internet-savvy buyers would find more value in that they can look at what the Zestimates are for the properties they’re interested in. But once they make their purchase, I’m guessing many won’t uninstall it leaving another application cluttering their browser.

The third, well, I’m not sure who it’s intended for. As an agent, I wouldn’t incorporate it. Nevermind that Zestimates are often criticized, but why would I send my clients to Zillow? Besides, I think I can perform a much more thorough analysis. True, Zillow’s info is immediate, generally within range and people do need to wait for me to complete my analysis, but I tend to think my results are more credible and comes with a personal touch to boot.

Oops, I just tried it…

We could not find the home you requested. The map is showing the general area you requested.

In a previous post I wrote a post about a study which Texas A&M University undertook regarding the net effect of utilizing a discounter or limited service company. Their findings indicate there was no net dollar advantage to using a discounter.

I wanted to follow that up with case in point. I recently competed against a 4% listing company for a single family home listing. The owners ultimately selected the discounter because they were saving 2% off the commission (4% instead of 6%). The discounter listed the price at $420,000, considerably below market value by $20,000 - $30,000 when analyzing comparable sales, neighborhood market activity, like size and finishes, and lack of inventory in the neighborhood. It was not the best decision for the seller.

* Assumption: I would have listed at or close to market value based on seller’s requirements. Example uses the low-end of the market value range.

Based on this comparison, by trying to save 2% off the commission, it actually cost the seller $10,400 in gross proceeds.

I’m not privy the the information shared between the seller and the listing company for why the listing was priced so low below market. The seller is relocating but that itself is not sufficient reason for the lower price.

At the time of the sale, the neighborhood was sought after and inventory was very low. I had just listed and sold a home in the neighborhood that was comparably priced and received multiple offers. I had done my market analysis so I knew the market and neighborhood well. Had it been listed at $440,000 and with full-service marketing and promotional activities, the property would have sold at the higher price, possibly with multiple offers as well.

An independent study by Texas A&M University revealed there is little, if any, savings for sellers who utilize discounters or limited service companies. The study of 55,000 residential transactions found that discount companies sold their listings for 1.7% less than full-service companies and took 17.1% longer to sell.

The 1.7% reduction is sale price offsets the average 2% commission savings of most discount companies (i.e. 4% vs 6%), resulting in a negligible net dollar gain for the seller.

Most of the study results were statistically significant, indicating valid relationships exist between limited service representation and agent experience and marketing performance (time to sale and sales price). Licensing type did not demonstrate such a clear relationship.

Interestingly, the empirical results from the models show that limited service listings sold for 1.7 percent less than typical exclusive-right-to-sell listings and took 17.1 percent longer to sell. Given that the typical discount offered by limited service brokers is approximately 2 percent, there does not appear to be any net gain to sellers using limited service representation.

If the limited service broker charges a total 4 percent commission, then the commission plus the 1.7 percent lower price is approximately equivalent to a 6 percent commission from the seller’s perspective. If this result holds up in additional studies, it would indicate that limited service brokerage offers no dollar advantages to the seller over typical brokerage when using the exclusive right to sell contract.

One observation is that discounters work on volume and may not be able to fully represent, promote and conduct a thorough analysis of the market, neighborhood and pricing of the listings they are taking, and thus, detrimential to the seller’s best interest.

Article was originally posted on 6/19 and re-created on 6/22.

An article in CNNMoney.com describes what we’re seeing in Seattle, people moving back to the city core after decades of migration to the suburbs.

Young professionals make up a big part of the trend. “It’s carefree living,” says Caparo. “Young professionals just want to put the key in the door and go to bed at night and lock it up again in the morning.” It’s also where the action is, professionally and socially. “For them, there’s lots of DNA to hook up with,” says McIlwain.

Retirees love the museums, restaurants and, most important, access to the best health care. Empty nesters get to live near work.

“For years people traded a commute for affordable housing,” says Jim Gillespie, CEO of Coldwell Banker. The further out in the suburbs, the more affordable the homes. But as suburbs expanded and got more crowded, road construction did not, could not, keep up. Congestion grew worse.

Of course this movement bodes well for Seattle’s exploding condominium renaissance. Fueled partially by the Growth Management Act, rising commute times and fuel costs, and lifesytle choices, urban centers are both practical and necessary to accomodate long-term growth.

And, I may become part of the statistic. Three years ago I left the city core to purchase an affordable home in North Seattle. From my apartment on Capitol Hill I lived a very pedestrian lifestyle - walking to the grocery store, movie theaters, restaurants, bars, Pacific Place and to the Pike Place Market every weekend to buy fresh fruits and vegetables. It was the epitome of urban lifestyle.

Now, I drive everywhere.

So I’ve been thinking about cashing out my nearly 40% appreciation and moving back to the city core and becoming pedestrian, again. Guess I’ll pull out my rabbit’s foot because I’ll need luck to get one of Vulcan’s lottery spots.

Last night at the Benaroya Hall was the inaugural Downtown Seattle Realtor Symposium + New Construction Condo Showcase. Sponsored/organized primarily by Urban Condominiums and Realogics, the event featured presentations & panel discussions by representatives the Seattle Times, Windermere Onsite, HomeStone Mortgage, Weber+Thomson, Downtown Seattle Association, The Justen Company, Gardner-Johnson and a few others. The Seattle-PI wrote an article about the event titled Booming development set to change Seattle’s look.

The reception featuring free wine and appetizers by Wolfgang Puck, provided Realtors, investors, developers and media an opportunity to mingle and view models of the various downtown projects including a 3-D model of downtown showing where the new projects will be located (similar to Vulcan’s South Lake Union model).

The Condo Showcase presentation was a bit bland in that very little information about the new projects were provided. Mainly, they just mentioned the expected construction and occupancy dates, location and number of units. Some of the speakers detailed design and building features. Most were tight-lipped or simply stated…”go to our website”. For such a hyped event, it was a bit anti-climactic.

There were bright spots and I found some of the speakers and topics about the future housing market for the downtown area fascinating. Keep in mind, the presenters are from the real estate, building, financing and marketing industries so naturally the view points may be a tad biased.

Where to Build?

A vast majority of the future projects will be constucted in the Midtown and Denny Triangle areas north of the downtown core. Available land and changes to the city’s zoning make the northend attractive to developers. Realogics and Weber+Thomson presented a nifty 3-D animation of the area and the Seattle-PI posted it on their website (note, it’s a large PDF file).

In the Year 2010

One speaker I found to be the most objective and knowledgeable was Matthew Gardner of Gardner-Johnson. Mr. Gardner whose background is economics, discussed the future housing outlook for the downtown areas and interest rates. By 2010 most development experts are asserting nearly 10,000 new housing units will be built in the downtown, Midtown, Belltown and Denny Triangle areas. Gardner provided a more realistic number of approximately 6,500 to 6,800 units will be added, noting there are forces that may constrict construction. These forces include rising labor and land costs, consumption of building materials (post-Katrina rebuilding and China’s rise) and lack of available labor and cranes. Apparently, there is a finite number of cranes and Seattle is in short supply.

Gardner touched on the “bubble” topic as well. He mentioned that Seattle should be able to absorb about 2,000 to 2,400 new units per year, but with the external factors noted above, housing supply will be constrained with only about 1,500 units available per year for the next 4-5 years. This combined with job growth and decrease of short term interest rates that’ll reduce rates on 3 and 5 year ARMS, Gardner predicts the downtown housing market will remain strong.

(On the job market, there are some shifting already going on, that will increase workers in the downtown core. Washington Mutual is completing it’s new office tower (retaining employees in downtown), Starbucks is building a new facility, and Safeco is relocating over 1,000 employees from the U-District & Eastide to downtown. Also, Amgen is adding 550,000 sq ft to it’s Pier 89 site potentially doubling it’s workforce).

Mortgage Rates - Where art thou going?

Another interesting speaker was Keith Tibbles of HomeStone Mortgage. Tibbles mentioned that on June 28th the Federal Reserve Interest Rate is likely to rise another .25% to 5.25%. Which, theoretically doesn’t bode well for housing sales. He did explain that the past 4 Fed cycles lasted 9 months each and at the end of those cycles, mortgage rates were cut. He suggested we are now overdue for a mortgage rate adjustment.

He also spoke about the yield curve inversion, stating that when long-term interest drops below the short-term rate, the economy tends to slow down, thus sparking the Feds to adjust rates to stimulate the economy. This writer doesn’t know very much about yield curve inversion, but a brief tour of Google suggests this is an oft debated topic.

For over a year I’ve been stopping by a website called Real Estate Webmasters. Primarily, Real Estate Webmasters (REW) is a website design and search engine optimization (SEO) firm out of Nanaimo, British Columbia. They design stunning websites; take a look at their design portfolio. They’re not cheap but compare their designs to the numerous agent sites and you can appreciate the quality of their work.

But, what has been invaluable for me is their active webmaster forum. Agents, website developers, SEO consultants and REW staff freely share their knowledge. I’ve learned a lot from the forum and gotten great advice to my website related questions.

If you’re an agent you really need to check them out.

Ok, perhaps a bit more subdued, but John L. Scott has been quietly adding more features on it’s website to empower sellers and buyers alike. Here’s a little break down.

Several months ago, utilizing Real Tech’s search technology, John L. Scott incorporated an interactive map search. This feature allowed buyers to zoom in to a specific area on a map of Washington, Idaho or Oregon. The map would identify all available homes on the map with a little house icon. Buyer’s could zoom into a specific area by using the cursor to draw a box around the area they’re interested in.

About a month ago, John L. Scott upped the ante by being among the first real estate companies to incorporate Microsoft’s Virtual Earth mapping technology. It’s similar to the interactive map but adds multiple angle satellite images, called High-Definition Home Search. Users can look at 45 degree angles of the property from North, South, East and West viewpoints.

There is one major difference in searching, at least from the website user’s perspective. The new mapping search doesn’t enable the cursor to draw a box around an specific area on the map. Instead, viewers need to zoom in using the “+” button and re-centering the map to get to their desired search parameter. A little inconvienient.

About a week after introducing the High-Definition Home Search, John L. Scott then made sold data available. This move empowers buyers and sellers alike to make smart decisions by accessing up-to-date sold data from the Northwest MLS. Unlike other sites that use data from county records (updates months after a home has sold), the NWMLS data is real time.

Finally, John L. Scott provides potential home buyers (seller’s will benefit from this info, too), Community Details. This feature provides information about housing inventory, market stability, weather, population and economic demographics, school information, nearby services and businesses, and home sale activity data. This is a very cool tool.

Community Characteristics:

School Information:

Home Sale Activity Report:

John L. Scott has bucked the trend of the stuffy traditional full-service brokerages by empowering consumers with the information they need to make quality buying and/or selling decisions. And, while these tools are useful, they merely supplement the services of a good real estate agent. Professional agents have added benefits by providing expert knowledge of the market (many specialize in geographic areas or housing types), understanding the nuances of real estate contracts and negotiations, and analyzing buying or selling strategies based on their clients needs and requirements.

Though they’ve been around for awhile, I recently learned of another real estate technology company operating out of the Seattle area called ActiveRain. Unlike the other Seattle area companies (Zillow, Redfin, HouseValues) that are consumer-focused, ActiveRain’s business is aimed at providing lead management solutions for web-based real estate companies, principally Brio and WhyNotOwn.com. From a press release last year:

ActiveRain combines an intelligent CRM designed specifically around how real estate agents work. Powerful communication tools, such as automated form letters, a task management/calendaring system, and a full blown transaction management system to bring all involved parties together.

One of the aspects that make the transactional management system so revolutionary is the ability to ‘invite’ all of the individuals involved into a home purchase transaction. Everyone can then stay up to date on the current status of the purchase, share documents electronically and keep a history of important communications.

Not long ago they launched a directory type website allowing agents and mortgage lenders to create profiles aimed towards potential buyers and sellers. Basically, this benefits agents and lenders who are hoping to acquire internet leads. Of course, I created a profile for myself.

Vulcan is hosting two preview events on June 17th - a Realtor event from 10 am to 12 noon, and a public event from 4 pm to 8 pm. Here’s the schedule for the public event:

Each hour a South Lake Union project will be highlighted, with signature drinks, hors d’oeuvres, music and performance art. Never fear, information on all projects, and the sales process will be available throughout the event.