Keeping Real Estate Entertaining… September 29, 2005
David A. Smith, founder of the Affordable Housing Institute, has a great blog that is loaded with articles that are both interesting and informative (is that possible?). In terms of readability, his posts are up there with grow-a-brain except David keeps more focused on real estate.
He posts on a wide variety of topics. Today he gives some lessons on how home owners can learn from haggling in third world contries in the Economics of Haggling. A few days ago he had an article (What destroyed your home first) where he relates the killing of Rasputin to whether or not insurance companies will pay to rebuild homes in New Orleans (read the article and it will make sense!).
All in all, David is a great writer, and if you’re interested in real estate, I highly recommend adding him to your reading list.
Sphere: Related ContentTrulia better real estate search September 28, 2005
Just as the pun is obvious, the implementation by Pete Flint and his crew at RealWide of a new real estate search engine is obviously awesome… Their new real estate search engine available and can be found at: Trulia.com
If you’ve been reading my posts for a while, then you know I’ve been following the development of new mapping technologies pretty darn closely and this is far-and-away the best implementation yet. Pete and his crew didn’t take anything for granted and put together a whole new real estate search engine! I mentioned that this site was coming out a few weeks ago, and the implementation lives up to everything Pete told me it would be.
So here’s some features I like love:
- The search interface is as simple as entering a city name or a zip code! The UI is beautiful.
- The filtering by other features like Price, Bedrooms, Bathrooms and Price is fast and very intuitive!
- When click on more detail for a listing, you get the VERY useful information like the price per square foot, the days on the market, as well as details for other recently sold homes and similar homes in the area!
- The color coded recently sold homes is awesome!
- I really like the the location of your search is stored in the url. This allows me to easily save and or send an area of interest. For example, here are the homes for sale in the part of Los Angeles where I grew up: http://www.trulia.com/CA/Eagle_Rock/90041/. (Also notice that it has neighborhood facts on this page.)
- It has RSS feeds so that I can subscribe to my zip code and be updated each time a listing comes on the market.
- And the best part is that I’m sure there’s more I’m going to like, but I’ve only had a few minutes to play!
I really liked the site when I first saw it, but the more I play the more my opinion of the site improves. The best part is that I’m pretty darn sure that if I keep playing with the site, I’m going to find more gems! This site is a true work of art! Thank you Pete!
The only problem I see with it is that it is not available for Seattle (yet!). THIS IS A HUGE DRAWBACK. I want Trulia! And Pete, I’ll wait for a little while, but I’m not a very patient person! 
UPDATE: I just got an email from Pete and he says “You’ll be pleased to hear our primary focus is building out coverage to other states. No promises when Seattle is live, but we’re working hard on it.” I’ll try to be patient!
Sphere: Related ContentThe Reservations of Greenspan
It’s no surprise that Alan Greenspan remains highly skeptical of the housing market, and considering he has access to a lot more data (and a lot better researchers!), I’m going to defer to him on the national issues.
Greenspan continued to register concern about soaring house prices and risky mortgages on expensive homes.
He also repeated his warning about signs of “froth” developing in some local markets that may be driving house prices to “unsustainable levels.”
Here’s are two quotes I found interesting:
- “The vast majority of homeowners have a sizable equity cushion with which to absorb a potential decline in house prices”
- “Speculative activity may have had a greater role in generating the recent price increases than it customarily had had in the past”
I think these quotes explain why the Seattle market is going to be fine despite his reservations. The employment market is healthy and I haven’t seen the type of speculation that is occurring in the SouthWest. Here’s a link I wrote a few weeks ago on the riskiness of the Seattle market.
Sphere: Related ContentRising tide lifts all ships…
Who benefits when housing prices rise? The sellers, of course… But also the local governments though increased property tax revenue. The Seattle PI has an article on how the mayor of Seattle has $15 million to spread around thanks to rising home prices:
In 2000 the average value of a residence in Seattle was $232,800, on which the property tax paid to state and local government was just under $2,832, according to the King County Department of Assessments. In 2005 the average home value had gone up to $368,700 with a property tax bill of just over $3,765.19.
The Seattle general fund budget proposed by Nickels for 2006 is $760 million, up from $717 million last year. It includes more money for street resurfacing and more money for sidewalks, police and firefighters.
“Thanks to a strong local economy, we can expect significantly more sales and business tax revenue,” Nickels said in his budget address Monday. “Strong real estate sales will also provide much more revenue for the city than initially forecast.”
I find the similarities interesting between this article and my post from Monday, where I note that the Federal government (IRS) benefits when flippers don’t pay attention to tax laws.
Sphere: Related ContentMore In-depth Sale Price vs List Price Analysis
If you were following the comments from my post from yesterday, I said I would follow up with another stab at diving into how the sales prices versus listing price changes over time. Seeing as how it is already getting late (and I’m tired!), I’m going to stop trying to make sense out of the numbers and present what I’ve found so far.
However, before I go any further, I’m going to rant at my fellow real estate agents! For the sake of all of us who actually care about data, please learn to double check your work before submitting listing information to the MLS! I spent more time cleaning up the database due to lazy real estate agents then I did actually creating the charts! Here are some things to look out for (but this list is by no means exhaustive): (1) Spelling: Fremont is spelled with only one “e”, (2) Location: South Lake Union is not a neighborhood located within Ballard and (3)Price: your home that sold for $345,000 probably should not have been listed for $34,500,000.
With that rant out of the way, I thought I would also mention that I’m not the only one surprised by housing numbers today… Hot Property had an article where Amey Stone says reading NAR’s press releases on sales levels “is starting to be a bit of a yawn — sales weren’t quite at record levels, but darn near close to it.” Unless you get tickled by trends and statistics, expect to sleep through the rest of this post…
When I look at the entire Ballard Area as defined by the MLS (this is a huge area that includes places like Greenlake, Blue Ridge, Wallingford, Fremont, Sunset Hill etc). We see the same seasonal trends over the past two years that I identified yesterday. But when we go back another season, the trend becomes much less pronounced.
Here are the things I found most interesting about the chart:
- The seasonal variation is much less pronounced in previous years
- There has been a steady trend up wards where the sale price is greater than the listing price
- In terms of trends, it didn’t really matter whether I used the original list price or the adjusted list price.
- The huge drop in 08/03 is due to some homes in Broadview that were listed way to high!
My speculation is that the patterns identified the above chart have a lot to do with evolving sales tactics by agents. It seems like it has become more and more common for agents to list a home below the value that they think it will sell for… This does two things: (1) It assures a quick sale and therefore a quick commission for the agent. (2) It has the potential to bring in more buyers and thereby raise the final sale price of the home.
When I went to analyze the data at a more local level, things got much messier… Rather than seeing clear seasonal patterns as I did in Loyal Heights, things simply got fuzzy. They got so fuzzy that I’m hesitant to even provide the next chart because it simply looks like an ugly mess…
My goal in creating the chart was to see if the same trend that held up in my analysis yesterday for Loyal Heights, would hold up for other neighborhoods. As the chart above demonstrates, it roughly holds up for all of Ballard, but as the chart below demonstrates, it does not hold up at the neighborhood level. I’ve done enough regression analysis for transportation planning studies to know that a chart like this is going to give meaningless trends.
By the way, if you’re interested in the raw data that I used to create these statistics, just email me, and I can send you the Excel file that has all the wonderful (?) pivot tables and charts I used in creating this post.
Also, please feel free to comment on other ideas you might have for exploring the wealth of information that is locked up behind the MLS database. Anna has the key that opens that door!
Real Estate Geekiness… September 27, 2005
Tonight, I’ve been playing engaging the inner real estate geekiness along the likes of Tom Dozier’s Seattle Property News blog… I’ve been following (from a distance) Tom’s “Home Tracking” posts and not exactly sure where he was going until today. When he said “since one of the signs of the strength of a market is whether high demand is causing people to bid prices above the original amount the seller seeks,” I decided to test out his theory with a larger sample size…
So here is my method. I took all the homes that sold in my neighborhood (Loyal Heights) over the past year and calculated the “Net (Sale minus List Price) as a Percent of List Price”, or this calculation:
(Average Sale Price - Average List Price)/Average List Price- Average((Sale Price - List Price)/List Price)
The result is summarized in this chart:
(Click on the chart to see a larger version!)
The first thing I found interesting is the extent to which the “Gross Net as a Percent of List Price” varied seasonally… For two years running the % of List Price bottomed out around Feb/Mar and then quickly picked up to peak around May (with homes selling for 4% and 8% over the list price!). Note that February (the bottom) is also when the number of sales bottomed out over both of the last two years.
For reference, there were 182 homes sold between October ‘03 and August ‘04 in Loyal Heights with the average home selling for 1.2% over asking price. (I threw out September 03 and September ‘05 data since I only downloaded data for the partial months…)
My conclusion is that Tom is wasting his time if he expect to see the health of the market by looking at whether or not homes are selling above or below the market price. As my chart demonstrates, there is way too much seasonal variation for a one or two home snapshot to be valuable. Even in the last two years where the value of homes in my neighborhood have consistently risen (quite substantially), there have been long periods (up to six months) where the average home has sold for less than the asking price. However, with that said, I want to say thanks to Tom for raising this intersting issue because you’ve given me an opportunity to learn about (and demonstrate) the huge seasonal variation in the local market!
I welcome anyones comments on my method if you have ideas on improving things (including the obvious improvement of adding more neighborhoods).
Update: I realized this morning in the shower that I was calculating the net (sale price minus list price) as a percent of list price, so I’ve corrected the text in the post (but not the chart!).
Sphere: Related ContentIn the market for a condo? September 26, 2005
New condos are sprouting up like weeds in Seattle for a variety of reasons… The Seattle Times has an article worth reading if you are considering buying a condo. Keep in mind that owning a condo is legally very similar to owning a home:
“Most people see condo living as somewhere between owning your own home and renting an apartment, but it’s more like owning your own home. There’s a responsibility that each homeowner has, whether they accept it or not,” said Craig, a board member of the state chapter of the Community Associations Institute, a group that provides educational information about homeowners associations.
“The best advice I can give to anyone buying a condo,” she said, “is to educate themselves as to what they’re buying and to be involved in the maintenance and operation of the condominium.”
If you are in the market for a condo, do your research and try to think of all the potential issues that might arise. Here’s a summary of the advice given in the article:
- Ask for the key data on the condo, such as the number of units and number of parking spaces.
- Ask the board for copies of the association’s bylaws, rules and regulations to learn the rules that govern the association.
- Ask for the Builders public offering statement, which includes valuable information such as a list of the builder’s five most-recent condominium projects, restrictions regarding renting, a list of common amenities and known assessments.
- Ask the unit owners to provide resale certificates to potential buyers, which should include valuable information such as expected special assessments, ongoing litigation and the amount of reserves available for repairs.
- Ask for minutes and agendas from past meetings.
- Ask for a “reserve study” that can give clues on potential structural defects (note that this might not be available.
With a little help from Flexcar
With gas prices seeming to rise on a daily basis it seems like a good time to mention a little bit about Flexcar.
The Seattle Times describes the idea behind the organization pretty well in this article: Fueled by Flexcar. In short, Flexcar provides cars at specified locations throughout the City of Seattle and the Eastside that members can rent by the hour. For people who don’t drive a lot, these cars could provide their sole form of auto transportation. For the rest of us who need at least one car in the house, we can use these cars as our “second” or “backup” cars.
If you are a Seattle resident and you are seriously considering getting rid of a car, then consider taking the One Less Car challenge. It is a program where the City offers some pretty substantial rewards to families willing to give up at least one of their cars!
Sphere: Related ContentReal estate ‘flips’ can backfire
The PI had an interesting article this weekend about how flipping real estate can backfire for the less experienced… The crux of their argument has been said many times before, but is worth repeating: “if you’re not careful with your real estate flips, your investment strategy could produce a sizable payoff for an unintended partner: the Internal Revenue Service.”
Sphere: Related Contentspam filters, google ads and site statistics, oh my! September 22, 2005
I’ve made a few changes to the site recently and it seems like a good time to give some updates…
- I added a new spam filter that has completely eliminated the amount of comment and trackback spam that I was getting. It worries me somewhat that I’ve not had one comment (besides my own test comments) since I added this filter. If you are trying to leave a comment and it does not work, please let me know via email!
- I took down the google ads off the sidepanel and moved them to the bottom of individual posts. They seem more fitting there and hopefully you’ll find them more useful.
- I added a site stat program, MapStats, that displays where site visitors are coming from via google maps. It is a really slick program and if you’re curious how many visitors that this site is getting (and where they are coming from), you can click on this tag
to find out.
I think I’m done with tweaking the site for a while. Now it is time for me to get back to providing updates on the Seattle real estate market!
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