KIRKLAND, Wash. (Nov. 5, 2009) – Credit the tax credit and its impending expiration deadline for a surge in home sales last month. Members of Northwest Multiple Listing Service reported a 63 percent jump in pending sales during October compared to the same month a year ago, a gain many brokers attribute to a tax credit that is set to expire at midnight on Nov. 30.
Every county except Okanogan reported double-digit gains in pending sales (mutual acceptance of an offer). Collectively, NWMLS brokers notched 7,235 pending sales during October. A year ago, they reported 4,445 pending transactions.

“As anticipated, October saw a surge in home sales thanks to the federal tax credit. The hope of the real estate industry is that the credit will be extended until there is more equilibrium within the economy and the housing market can stand on its own two feet,” said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate.

The new figures from Northwest MLS show continued signs of some stability in the market and improving consumer confidence. Inventory is at its lowest level since December 2008, and the year-over-year price decline, at 7.2 percent area-wide, is the smallest drop since June 2008.

Brokers added 9,344 new listings of single family homes and condominiums to inventory during October, the fewest number since December 2008 when the area was experiencing record snow accumulations. At month end, there were 38,159 active listings in the NWMLS database, a drop of 17.4 percent from the same month a year ago. At that time, the inventory included 46,189 residences.

For the four-county Puget Sound area (King, Snohomish, Pierce and Kitsap), inventory has shrunk 20 percent since twelve months ago. The selection of single family homes (excluding condominiums) in the four-county area is down 22 percent.

Despite a smaller selection than a year ago, there are plenty of choices across the price spectrum. The inventory includes two dozen listings priced under $30,000 and a dozen properties with asking prices of $10 million or more.

The median price on the 5,512 homes and condos that sold and closed during October throughout the NWMLS market area was $269,995, about 7.2 percent less than the year-ago figure of $291,000.
Prices vary widely across the MLS counties, both in dollar amounts and changes measured by percentages. The lowest median selling price, at $136,000 for single family homes and condos (combined) is found in Grays Harbor County. At the other end of the spectrum is San Juan County, where the median sales price for last month’s completed sales was $454,250.

NWMLS News Release: Oct. 2009 activity Nov. 5, 2009
A comparison of price changes measured by percentages shows a range from a decline of nearly 17 percent in Jefferson County to a gain of 15 percent in San Juan County.

The median sales price in King County for last month’s completed transactions was $349,950, down about 2.4 percent from twelve months ago when the median price was $358,500. For single family homes, the median price on last month’s closed sales in King County was $377,500.

Northwest MLS directors who commented on October activity support extension of the tax credit that allows first-time home buyers who purchase a principal residence between Jan. 1, 2009 and Dec. 1, 2009 a credit of up to $8,000.

“I believe the $8,000 homebuyer credit set off a great chain reaction. The first-time homebuyer creates a move-up buyer,” explained MLS director Meribeth Hutchings, the broker/owner of Windermere Real Estate/Lake Stevens. “The tax credit was the engine that started driving the market again,” she remarked, adding, “It was a great October; hopefully the tax credit extension will be approved and the market will stay strong through the winter.”

NWMLS director Kathy Estey, managing broker at John L. Scott’s Bellevue office, cites a combination of factors for boosting activity, including the tax credit, stabilizing prices for entry level homes and diminished inventory. “Sales are not just fueled by the first-time buyer stimulus,” she said, noting it prompted procrastinators to jump into the market and others to bail out of short sales that had not yet been accepted by lenders, opting instead to purchase homes that are not in the “distressed” categories.

“The fourth quarter is one of the best times for buyers, so we expect the positive activity to continue,” Estey remarked, noting sales in her office were up again in October, “a month when we expect to see a slight decline.”

Estey credits soft prices for contributing to the uptick in sales for homes priced at a million dollars or more. Her office participated in 10 sales priced at over a million dollars last month, calling that volume a “great improvement” from earlier in the year. In King County, 86 homes and condos fetched prices of $1 million or more, up from the year-ago total of 62 such transactions, according to NWMLS data.

“The compression of prices has created great values in that price range, the stock market has replaced much of what was previously lost, and there is reasonable financing for jumbo loans (20 percent or more down and good credit required),” Estey observed, while voicing hope for an extension of the tax credit. Noting the lending and escrow process takes at least 25-45 days, she said “The window has probably closed for buyers hoping to get in on the [current] tax credit.”

Some builders are offering to pay the stimulus dollars to buyers who will miss the opportunity because the homes will not be completed by the expiration date of the existing tax credit, according to Estey.

When: Aug 19^th - 3pm-6pm
What: RHA Class - The Move-In Process at RHA’s office in lower Queen Anne
Description: A large number of problems with Landlord-Tenant relationships can be avoided by your efforts during the first hours you spend with a tenant. This includes the initial E-mail contacts and phone interviews, the appointment to show the property, your criteria for tenancy, the lease application and tenant screening, the lease signing and the move-in condition report.
Cost: $45

When:  Aug 20^th - 9:30am-1pm
What: Pierce County NARPM/Cascade Real Estate School’s Advanced Landlord-Tenant Law Class at Denny’s South Hill
Description: 3 Clock Hours Continuing Education Class for Real Estate Property Managers.  Topics will cover Current Landlord-Tenant Law Issues and Clarification on Eviction Procedures.
Cost:  $65/NARPM member, $75/Non-NARPM member (lunch included)

When:  Aug 25^th - 11am-1:30pm
What:  NARPM Membership Meeting at the Best Western by the Space Needle
Description:  Statewide meeting with the NARPM National President Fred Thompson in attendance, speaking about new online classes included one called Paperless Offices.   
Cost:  $25/members, $30/non-members (lunch included)

When: Sept 3^rd - 6pm-8pm
What: RHA Membership Meeting in Redmond
Description: How to Evaluate a Property for Purchase, by Chris Benis. This annual fall event is once again sponsored by Contract Furnishings Mart. Now is a great time to be looking into increasing your portfolio. Chris Benis will be presenting on what you should be looking for; due diligence in terms of your legal responsibilities and obligations as well as proper documentation and reporting.
Cost:  $30 (includes dinner by chef Steve Frasier and drinks) 

When:  Sept 8^th & 9^th  
What:  IREM Current Trends at Lake WA Technical College
Description:  “Achieving Real Estate Success in Today’s Market” taught by Kemper Freeman & a bunch of real estate attorneys. Topics include Commercial Core Curriculum, Local Economic Updates, Investment Strategies, Success Secrets, Mixed Use meets Green Building, Successful Development Techniques, Time Management for RE Professionals, and Human Resource Essentials. Receive 7.5 clock hours for one day or 15 clock hours for both days. 
Cost:  $125/one day, $195/two days (lunch included)

When:  Sept 16^th -  5pm-8pm
What:  WMFHA Membership Meeting Dinner at Spirit of WA Event Center in Renton
Description:  Social Media: Speaker Mike Whaling’s work as a brand builder was recognized by BusinessWeek this year when one of his clients — Urbane Apartments — was named as one of four Innovators in Social Media, next to companies like Ford and the Sharing Foundation.  With many clients in the multifamily real estate industry, Mike moderates the weekly #AptChat on Twitter to discuss how apartment companies can use social media and other digital tools for their business. Let his experience light up your social media sidewalk.
Cost:  $35/members, $45/non-members (dinner included)

When: Sept 29^th  
What: Washington Apartment Outlook
Description: This is the 4th annual Economic Forecast hosted by Washington Multi-Family Housing association. At this event, our panel of experts will provide Apartment Industry and Real Estate Professionals, Community Leaders, Owners, Lenders, Executives and Asset Managers information on economic trends in real estate, property forecasting, developing your 2010 budgets and formulating strategies for success. Our panel consists of Real Estate Economic expert Matthew Gardner (Principal, Gardner Economics-Seattle) and Mike Scott (Principal, Dupre & Scott - Seattle) - and will be Moderated by Local Talk Radio Co-Host John Carlson of KOMO AM1000.
Cost: Sold Out

When: Oct 15^th - 9am-4:30pm
What: Advanced Legal Seminar with Joe Puckett at Spirit of Washington Event Center in Renton
Description: Joe Puckett of Puckett & Redford is one of the best known advocates for landlord rights. Joe was instrumental in securing legislation to deal with the thorny issue of storage of tenant’s property after an eviction and secured a victory in the Supreme Court regarding 3-day notices to pay or vacate. This is your best opportunity to learn from the experts and stay current in all developments regarding landlord/tenant law in Washington.
Cost: $99/members, $115/non-members (lunch included)

When:  Dec 4^th - 7:30am-9am
What:  IREM Forecast Breakfast at Hyatt Regency Grand Ballroom in Bellevue
Description:  Popular annual residential and commercial real estate event wrapping up the year’s trends in the real estate, commercial and multifamily industry and predicting goals for the upcoming year.
Cost:  $85 for non-members, $75 for members

Last week I was interviewed by Angela King at Q13 about current rental market conditions and it looks like it surfaced this morning- click here for the entire clip!

I am glad the interview came up when it did because our rental market has been severely impacted by the decrease in sales activity and financial crisis.  Hundreds upon hundreds of owners in the Seattle area have recently taken their condos and homes off the sales market and placed them into the rental pool in hopes of benefiting from our “stellar” rental market…but only to find out they are about 4-5 months too late.

Every Monday morning, SRG agents get together to discuss market trends/experiences and for the past 3 months, we have all been feeling the pressure of an oversupply, decrease in demand, and the dreaded reduction in rental rates.  I personally started to feel this crunch in August when there were a couple properties that just wouldn’t move- properties that would have leased for $2500 months prior (and in mere weeks) were below $2000 and still sitting.

Here are a couple issues that come up during our discussions, please feel free to comment or contact me with questions.

Tightened Pocketbooks: Due to the financial strain and economic state, renters have definitely been paying more attention to their bottomline and planning for the worst.  The most common scenario is that people are trying to consolidate and downsize in order to rent a 1 bedroom + den instead of needing a 2 bedroom or a townhouse instead of a home.  Renters are more price sensitive than ever and in some cases lower rental rates are the motivating factor rather than quality of building or home finishes- could come down to a difference of $50!

Apartments vs Condos/Homes: We have two rental markets- the private market with individually owned condos and homes, and the apartment rental market.

One of the challenges the private market has in competing with the larger apartment buildings is the ability to offer specials like “1-2 Months FREE” or “waived security deposits.”  Private landlords have the flexibility to reduce the rental rates to compensate tenants for such specials but in no way should reduce standard security deposits as they take on more liability when renting their property.

Some advantages the private market has is that the monthly rental amount often includes utilities, parking and additional storage.  These items are covered in HOA dues and therefore passed down to the tenant in a lump sum or included in the monthly rental amount.  This is easily missed by renters when searching so be sure to clarify what is included!

Note: Over 6600 apartment units are supposed to come on the market in 2009 and even more in 2010- just one of the many items discussed at the IREM Forecast Breakfast last Friday.  One of the better Forecast Breakfasts I have attended!

Where Are All the Renters? What we could be experiencing right now is an extreme case of the cyclical blues in combination with all the above.  We are approaching the dead of winter and typically Spring and Summer are the most common months for moving- so lets just hope that activity bursts in March!  We are seeing signs of this and have been getting a lot of inquiries for Feb/March move-ins…just hoping that the properties available NOW, don’t have to wait that long.

So in short, we are advising all of our clients to be market sensitive and price aggressive.  Renters have been starting their searches a lot earlier than in the past (1-3 month prior to their desired move-in) and rental rate negotiations are occurring left and right.

I hate to be a total pessimist so I will depart on this note… although this all may sound grim, relative to other markets, Seattle is still amongst the top in the nation!

This past Sunday, The Times featured a worth-mentioning piece on the stalled condominium and apartment buildings downtown Seattle and Bellevue.  With over 23 projects in Seattle alone, the lack of construction financing is the number one contributing factor for the dead sites. 

1. 151 John Street (17 Apartments, 1st & John)
2. Icon (283 Condominiums, 6th & Denny)
3. Insignia (646 Condominiums, 5th & Battery)
4. 2030 8th Ave (230 Condominiums, 8th & Lenora)
5. Stewart & Minor Lofts (150 Apartments/160-Room Hotel)
6. 7th & Westlake (365 Condominiums/342,000 SF Office)
7. 1800 Terry Ave (261 Retirement Apartments, Terry & Howell)
8. 2nd & Bell (102 Apartments)
9. 2700 Elliott Ave (100 Condominiums, Elliott & Cedar)
10. The Martin (170 Condominiums, 5th & Lenora)
11. AVA (236 Condominiums/190-Room Hotel, 8th & Pine)
12. 1519 Minor Ave (80 Condominiums, Minor & Pine)
13. Art House (140 Condominiums, Elliott & Battery)
14. Western & Blanchard (113 Condominiums)
15. Heron & Pagoda Towers (400 Condominiums/200-Room Hotel/267,000 SF Office, 5th & Virginia)
16. 2000 3rd Ave (441 Apartments/40-Room Hotel, 3rd & Virginia)
17. 1915 2nd Ave (175 Condominiums, 2nd & Virginia)
18. 1 Hotel & Residences (51 Condominiums/44 Suites/192-Room Hotel, 2nd & Stewart)
19. SkyGarden (116 Condominiums, First Hill)
20. 5th & Columbia Tower (760,000 SF Office)
21. Colman Center (170,000 SF Office, Pioneer Square)
22. Smith Tower Condo Conversion (12 Condominiums, 2nd Ave & Yesler)
23. 200 Occidental Ave S (62 Condominiums/130,000 SF Office, Pioneer Square)

The total is close to 4,200 residential dwellings! Click here to read more.

Low vacancies, rising rents and a cooling condo market has made Seattle?s apartment market more appealing to out-of-state investors, according to a report just released by Marcus & Millichap.

- Over 34,000 jobs are expected to open in 2008
- Vacancy rates are expected to be at 4.7% by the end of the year
- The average rental rate is expected to reach $1023 per month- a 6.2% increase from last year

Click here to read more!

Also, check out the National Apartment Association?s Housing Survey on how renter?s feel about our real estate market- 69% of renters plan on continue renting for as long as 5 more years!

In the most recent news, UrbanCondominiums.com shared their optimism in our thriving downtown market and projected that the downtown core will continue to top nationwide trends moving forward.

Agreeing with all they have to say, experts sited that with local job growth, limitations on sprawl, commuter traffic congestion and increasing gas prices makes the condominium lifestyle even more viable than ever before. Click here to watch the May 5th interview!

A colleague of mine passed this article to me this morning- click here! It is a piece on why the housing market has scared off first-time buyers (falling prices, foreclosures, loan approvals, on and on) and also touches on how it has momentarily affected the rental market.

The National Association of Realtors reports that hundreds of thousands of young Americans are just waiting for the clouds to part and are not buying or renting:

“There’s probably 700,000, maybe 800,000 people out there that are not getting into the market either as a renter or as a homebuyer,” said Walter Molony, spokesman for the NAR. “Where are these folks? They’re out there, they’ve got jobs. Some of them are moving back with their parents, never left the house, they’re doubling up with roommates.”

While on of the largest U.S apartment owners, Equity Residential (downtown communities: Centennial Tower & Court, Olympus, Metro on First, 2300 Elliott, Harbor Steps, Summit at Lake Union and 7th & James) have seen fewer people moving out of their apartment buildings in the last year.

The bottom-line is that buyers can no longer make a strong profit in owning a property for just a year or two and even though Seattle?s market is stronger than most, it is still important to plan for the future. If you feel that you can?t commit to staying in Seattle (or in one place) for 3 to 5 years, as an alternative there is always the option of renting your home.