The Real Estate Blog by Cari McGee

Here’s an interesting little fact that seems to fly in the face of a basic economic law – our average sales price is down, and yet our inventory is low and demand is high. Usually, low supply and high demand translates into increasing prices.

The reason for this is as follows – the low-end of the market dominated the sales at the end of ‘09 and into January of 2010. It wasn’t that most houses sold for less. It was that the majority of homes sold were homes at the lower-end of the market.

Take a look at this chart – 55% of the houses sold in January sold for below $174,900.

Which brings the average sales price for January to $184,400, which is 3.2% drop from the whole of 2009, which experienced only a .6% drop from 2008.

Be sure to download the whole thing (3mb PDF) if you’re a fan of charts and graphs (and I’ve heard from those of you that are – “Where are the facts and figures, Cari?”).

Allow me to present a very cool tool.

This web site allows you to compare and contrast and look at past years’ info and all kinds of things. You can view the “report card” on each school in an area, look at surrounding schools and their ranking, or compare city-to-city, as I have here -

Pasco Schools

Richland Schools

You can also compare high schools and middle schools. I like how all of the state’s public schools are included, so if you’re moving from one section of Washington to another, you can see how the schools in the area you’re considering measure up to the schools in your existing neighborhood.

Call me a copycat, but I so love this answer from the Zillow Advice area re: Short Sales, I’m linking to it and pointing out an extremely interesting part as opposed to writing a post on my own.

The person who wrote the post on Zillow, Rachel Rosen, first of all states that she’s been through a short sale and feels she might be a little biased. Let me take a moment to say, “ouch!” to Rachel. I cannot imagine the emotional affect the extended process of a short sale can have on a person, but I do know it isn’t pleasant or calm. Kudos to her for writing about her experience and helping us all out.

This is the most important part of the information she shares -

Regarding the short sale package, do not send this in piece meal. Keep fax confirmation sheets, emails if electronic, or mail via certified mail. The person who sends this should call as soon as possible to verify the bank has received it. Every time you or your agent call, write down who you spoke with, when you spoke with them, exactly what they said, and what they are/were wearing. Keep a log every time the bank is called. They should be called every week for an update. This seems extreme, but in my own experience they apparently “lost the paperwork”, or told me I was missing an item at least three times. This is important to be on top of, because if your “file” is missing one item, or one T is not crossed, your process starts all over. It was 5 months before my bank even told me if the offer was accepted or not.

You read that correctly – five months! And that was just until she heard about the acceptance. Mutual acceptance just gets the ball rolling, so her ordeal was certainly not over at that point.

The record-keeping is the most crucial portion of a short sale. That cannot be understated. In addition to the reasons she gave, it always seems to me that the person I need to speak with is either a) on vacation or b) on maternity leave or c)has been promoted or d) left the company. If I have the name of the last person I spoke with and a recap of what was discussed, it helps immeasurably.

I’m on floor today.

Read that sentence again.  I did NOT say I was on the floor today, I’m simply on floor.  That means I am available for a couple hours to answer any calls that come in from random people wanting to know more info about a house they drive by, or if someone walks into the office with real estate-related questions.

So someone called and asked about a house he saw in his neighborhood.  I told him it was offered at $119,500 and had 3 bedrooms and 1 bath and no garage.  He asked me how much the same house with another bathroom would be worth.  I told him, depending upon condition and size and other factors, it could bring up to $5,000 more.  The house itself might be worth up to $10,000 more, if it’s in better condition than the house he originally asked about, or larger, and had the two bathrooms.

The caller exclaimed – “How do people live with just one bathroom?  Do they have children? A bathroom’s gotta be worth more than $10,000!”

Note: I actually said a bathroom brings about $5,000 more to the price of a home, but he heard what he wanted to hear – the higher number.

I explained that we add about $500-$1,000 per bathroom fixture when determining the value of a bathroom. A sink and a toilet are givens, and are valued at about $1,000-$2,000 at the beginning.  Then it’s between $500 and $1,000 for a shower and the same for a tub. Floor and counter-top treatments, size of the room, extra-special features, all factor in to the final price figure.

The man started to chuckle and hung up still laughing, saying, “It’s ridiculous.  A bathroom is worth a hell of a lot more than that.”

Now, if I have to GO, then yes, a bathroom is worth a TON of money.  But as far as a house’s value is concerned, it’s a pretty standard number.  Hysterical laughter from someone else notwithstanding.

I read a great stat in a Seattle blog post today. Jon Talton, a Seattle columnist/blogger wrote this -

The federal Bureau of Labor Statistics has compiled metro employment numbers for November, with Kennewick-Pasco-Richland turning in the best jobs performance for the nation: 3,600 jobs added year-over-year.

Three cheers for the Tri-Cities, where stimulus money continues to pour in, and great people live and work (if I do say so myself!)

He also quotes from a post at the cheerfully-entitled Financial Armageddon blog wherein much doom and gloom is predicted for real estate in general, and our nation’s economic future. I can only speak to the real estate picture in my local area, and I can say that here, we have few of the problems cited.

2. One top economist said if you are a developer find another career for the next 3 years-there is nothing to do and it may be 5 years.

Oh my gosh! Please don’t listen to this top econ person if you live near here. We very much need you to develop to your heart’s content!

4. Real estate values are down generally 40% and there is a huge need for value reset to occur.

Our values are increasing. Remember the fable of the Tortoise and the Hare? Slow and steady wins the race. We continue to see small, steady appreciation in our prices, as we have for several years now. I’ll take 2%-5% appreciation every year over a ten year period, instead of a 20% increase on one year. The rapid rise in value creates a bubble. We never had one here to burst, so no “reset” is necessary.

7. Housing in some bad markets is still bad and the first time buyer credit is making it a somewhat phony market. Phoenix has 45,000 housing lots so there is a literal lifetime supply of lots. Land prices in Phoenix, S CA and other markets are 50% of the cost of the infrastructure installed on finished lots. The land has zero or negative value. In most areas it will be at least 5 years before any of this land will get built out in any quantity.

Wow! Those are strong words, and a very scary prophecy. Land has inherent value. It is in limited supply. There will be no more made, until planetary colonization occurs, which I don’t see happening in the near future.

Here, in the Tri-Cities, we still have some land available, but a ton got developed in the last decade, and now we have less develop-able land than we did, which makes what we have more valuable.

As of this writing, there are 939 houses available for sale in the Tri-Cities MLS. Today marks the 6th anniversary of my first day of work in real estate. For my entire career, I have never seen fewer than an average of 1200 listings for sale. It’s been in the 1500’s, sometimes dipped to the 1100’s, but to dip below 1000, and to stay there as it has for the last few months, is amazing to me. You read the stat that opened this post; we have jobs. People who have jobs need a place to live. And currently, we don’t have a large supply of places for them to choose. Therefore, everything that IS available here, has tremendous value, because of the ol’ law of supply and demand.

10. Real estate will once again be an investment and not the trading vehicle it became which is what led to this crisis.

It was never the “trading vehicle” here that it was elsewhere. I had people call me back in 2005 and 2006 who wanted to snap up a fixer-upper, give it some new flooring and a coat of paint or two, and flip it for a small fortune. Our market doesn’t sustain that kind of behavior, which is what I told people when they asked for my help in that enterprise. Seeing a financial gain from your home, from buying real estate, is for people with money and time (ideally a lot of both).