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Weekly Score Card 6-22-09
Here we go again. Interesting week. Antidotally in talking to other agents it seems the market has quieted down a little bit and that traffic was down at the open houses. East Bellevue had a pretty good week. The number of listings were up slightly from 289 to 295. Inventories have been increasing in other areas at a much greater rate. However there only appeared to be five sales this week as opposed to 9 last week. Also in this batch of sales was one bank owned home and two short sales. The per sq. ft. averages were awful with the average per sq. ft. price at $185.33 versus $220 per sq. ft. last week. The averages were pulled down by the bank owned home and two short sales. The bank owned home went for $118 per sq. ft. However this week there were 10 pending sales versus four last week and only one listed short sale in that group. The interesting number was the per sq. ft. average sale price was $237.09 versus $241 dollars. Again this is the second week that the average pending per sq. ft. price was above the sold price. In addition at only one short sale it makes wonder if the distressed inventory is getting cleared out. I should probably do some research and start getting a handle on that question. The average sale price was higher at $536,685 vs. $498,566.
It is really interesting to see more short sales and bank owned homes in the sold homes as opposed to the pending sales. Usually it is the other way around since many short sales get signed and posted as pending but never close. The other number again this week is that the sold per sq. ft. number was lower than the pending sale number. Again this is usually the opposite of what happens since many pendings again are short sales and get thrown in at a low price.
It will be interesting to see what happens in the weeks ahead as rates look to be heading up and other areas are seeing increasing inventories and decreasing sales volume.
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New Homes
In the recent sales spurt new home sales have been popular. Short term builder loans which come due in a year put a lot of pressure on builders to sell. In some cases, particularly in West Bellevue, we have seen per sq. ft. sale prices go under or about at the production cost, WITHOUT LAND. In essence you are getting the land for free. I have been asked by some why there are not more new homes being built if the finished ones have sold.
The main reason is there is no commercial credit for either building or land development. Even if a builder sells a house and is able to buy a lot at a reduced price and potentially build a profitable house there is not a bank to loan the money. Yes you will see a few being built in neighborhoods that have lots finished but even those builders are having a very difficult time finding commercial credit and are relying more on outside equity to help build a home. In addition once they have sold their standing inventory most are then only selling on a “presale” basis only. In even the most dire market circumstances, the Bellevue infill product should be cleaned out by the end of this year. This means if you want a new home in 2010 you will have to buy the lot and custom build the home.
This lack of commercial credit is creating a “perfect storm” regarding new land development and lot formation on the Eastside. For the last 15 years most of the lot supply on the Eastside was created in the three master plan communities: Redmond Ridge, Snoqualmie Ridge and Issaquah Highlands. These master plan communities are nearing build out. With nothing to replace them and lack of credit to start any new neighborhoods, even infill, Todd Britsch at www.newhometrends.com predicts that commencing in 2011 there will be a severe lot shortage even if market conditions remain tepid. In the meantime there will be some bank owned inventory to work out of but the days of going to open houses and buying the new home that is finished and ready to move into will be a thing of the past after the present new inventory is cleared out. There are some exceptions but mainly in the lower end under $300,000 where publicly held companies like DR Horton do not need local bank credit are buying lots from banks who have reposed them at a lower basis and building more affordable homes but once this supply of bank owned property runs out there is nothing in the pipeline. Even if credit returns starting a new subdivision from the time the developer negotiates with the land owner, get appprovals from the municipality and then install the improvements takes a minimum of three years and can take four to five years. In addition property owners have owned their land a long time and they need a big incentive to sell and many I know will not sell at prices where the market is at or where I think it will be in the next two to three years.
If you are looking for a new home this market presents one of your best entry opportunities.
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Weekly Score Card
Each week, hopefully on Monday evening, I will post the total listings, the number of sold and pending homes. So here goes for this week.
Total Listings – 289
Total Sales – 9; average sales price $498,466, average per sq. ft. sales price $220, average square footage 2,421
Total Pendings – 4; average sale price $498,566, average price per sq. ft. $241, average square footage 2,131
A couple of comments. The data is taken from the MLS for homes sale and pending from 6/8 tp 6/14. It includes both days for a full week. The pendings come from the pending category and no other category such as “pending back up”, pending inspection, etc. In general for a sale to be pending all conditions such as inspections, lien holder approval are to have been satisfied and the sale is waiting to close. The sure sign of a short sale is a “pending back up”. While imperpect by limiting this number just to the pendings it does help to get a better picture of the which homes are truly pending. As I get more techinically proficient we will start putting these in a spreadsheet and graphs.
The big issue in the numbers above is the number of sales is higher than the number of pendings. Usually it is the other way around mainly due to short sales being signed and then taking forever for lien holder approval. I don’t know if this means sales are slowing or there are less short sales. In general East Bellevue has one of the lowest ratios of bank owned and short sale to its general inventory. It could mean some of this inventory is getting depleted but I would need to do a lot more analysis. agents now have boxes to check on their listings to indicate if it is a short sale or bank owned but they are not being used on a reliable basis. The only real way is to check the tax records that are part of the listing to see the status.
The other number that really hops out is the fact the pending per sq. ft. price has usually been below the sold home per sq. ft. price. Again these are short sales being thrown into escrow just to get the negotiation process started with the lender. Also in markets that are graadually declining in the pending number is usually lower than the sold number and in markets appreciating the pending number for both average home sale price and average per sq. ft. price move up. This will be one to keep an eye on. I suspect there may have been some mild uptick in values for homes under $400,000 since that is where the action is.
Tags: average price per sq. ft., weekly pendingss, weekly sales
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REO/SHORT SALES
I run into many purchasers who “want a deal”, who doesn’t? They think the way to that deal is to look solely at bank owned or short sales. This is a good way to find a good home at a good price but many purchasers have no idea of the time, effort and persistence needed to buy these properties. Also once they get out into the market they also find these properties will take a lot of maintenance and in some cases major repair. Think of purchasing a “distressed” sale property as a full time second job. Short sales in particular can be frustrating since in many cases the seller thinks they can just potentially walk away from the deficiency, which generally is not the case. The seller will just sign any transaction and send it in to see if they can get out from under the obligation. In the meantime the purchaser thinks they have a transaction and they are floored when the bank request more money and the seller goes running when they find out in order to obtain short sale approval they need to acknowledge the deficiency and in some cases start a payment plan. This purchaser has probably lost at least 90 days and has seen rates go up and their selection of inventory go down.
However not all short sales and REOs are the same. Here are a few guide lines:
- The longer the property has been on the market the better a chance of coming to terms. Many banks have no idea what the property is worth so they put a property on the market and begin turning down low offers. In some cases they trun down full price offers afraid they have under priced and want to wait for more offers. After they have flogged the listing agent and frustrated a number of legitimate buyers at some point in time they decide they have worked it hard enough and sell to the buyer who might pay the highest price on offers received during some predetermined period. Some times this purchaser is just luck of the draw. If you have interest in a particular home keep making offers. Send in a new purchase and sale agreement with each offer if it has been over a month since your last offer. Don’t keep amending an old offer. I guarantee it is at the bottom of the pile. If it is a short sale often the lender will not respond until the “Notice of Trustee’s Sale” has been filed.
- See if the bank is a State Chartered insitution or well known local bank. These institutions generally have much quicker response times. In many cases the person making the decision is located in the Puget Sound region and has a much higher set of skills than those working in the call centers of the servicers for the major lenders. They still are overworked but they do seem to have a quicker response time and seem more in tune with the local market. However there is a downside, many will not come down much off of the price. The reason is that many of these banks are unwilling to take the write off for the sale from what they have the seet on the books at.
- Try to keep an eye on two or three houses. This increases your chances of being one of the lucky ones who walks in and gets the transaction signed in a timely manner at a good price.
- If you have a fixed move in date or are up against a timeline you might not want to look at any of the REO or short sale property. The last thing the lender will consider in the transaction is your personal issues as buyer.
- Don’t count on any commission rebates from your selling agent. Buyers are tough to find and many agents are willing to rebate back a portion of the selling commision as an incentive to work with them. Often times these transactions get approved at the normal selling commission and then when the HUD closing statement is done and they see the commission rebate in favor of the purchaser the transaction is not approved. The lender’s position is they are the ones taking the loss and if there is any rebated money it goes to them. By state law the agent cannot pay money directly to purchaser outside of escrow. Often times the compromise is that the agent agrees to donate to a charity of the purchaser’s choice but even this is being called into question and will probably get looked at.
If you are looking for value you might want to consider looking at homes purchased prior to 2004 these homes seem have the loan balances low enough to clear title in the present market. In addition this time period was prior to the “Sub Prime” mess so the borrowers are generally put some form of down payment and had to be approved with tougher underwrting guidelines. In addition the property is most likely much better maintained.
Tags: commission, frustrated, good deal, REO, Short Sale, State Chartered
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May Statistics
The numbers from Trendgraphix are in for May and overall the market has seen increses in both prices and volumes. West Bellevue saw its average home sale price rise 37% from March to May from $885,000 to $1,212,000. East Bellevue saw its average price rise from $477,000 to $535,000. Traditionally East Bellevue is less prone to the large swings because of the larger volumes and overall more affordable price average. The other significant news was the reduction of inventories. East Bellevue is now approaching less than 6 months of inventory; this is considered a traditionally stable market. However one key statistic appears stuck and that is the average price per sq. ft. In East Bellevue this number has hovered around $220 per sq. ft. since March and about $300 per sq. ft. for West Bellevue. It appeasrs that what has driven the averges up is a higher proportion of more expensive homes, particularly those over $1,000,000. This is due to “Jumbo” financing coming back into the market. As an example now BofA is offering loan amounts to $1,000,000 with 20% down. What the static per sq. ft. number tells me is that buyers have drawn a line in the sand for what they are willing to pay. In markets that are appreciating the averages move with the per sq. ft. prices. In the graphs for May you will see that per sq. ft. averages moved down with the overall home price averages. In King County and the lower price ranges you are seeing mild upticks to the per sq. ft. averages but they are still lagging compared to the price averages. Buyers are reluctant and only will buy if they see opportunity. If rates keep heading up it could crimp volumes.
The good news is that the market has reached a point that is “quantifiable”, sellers know pretty much where they have to be to sell and buyers are given an indication where other buyers are looking to enter the market. Before it was astab in the dark. If you are a seller I would be careful on my pricing and avoid “irrational exuburence”. If you check the weekly Altos Stats you see that listing inventory is swelling as sellers see homes move. This trend plus rising rates will probably keep buyers in their “opportunity” mode. If you are a buyer being overly aggrsive on your offers will probably be counterproductive and you will see the better inventory get picked off while the less desirable inventory will probably keep drifitng downward.
This blog will look to keep you informed and the weekly Altos Stats are a great tool which gives pretty good indiciations of short term trends to base your decisions on.
Tags: Avergae Price, May Stats, price per sq. ft.
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Welcome to East Bellevue Real Estate
Welcome to East Bellevue Real Estate. The purpose of this website and is to provide market specific information for the East Bellevue Residential Real Estate Market regarding home sale trends and pricing. The information is meant to assist both buyers and sellers.
In addition there are sections dealing with community amenities such as parks and schools. Both the recreational and educational amenities in East Bellevue are abundant. Most neighborhoods have a community park with playfields and recreational equipment within walking distance. The educational choices, both public and private, are outstanding. You have one of the best schools in the nation, Bellevue’s International School, located in East Bellevue. The choices for private schooling ranges from faith based institutions to Montessori.
The blog will provide commentary on the market, land use and the different neighborhoods. If you have an interesting story or neighborhood function please contact me.
I feel that East Bellevue is a unique area in the country. Nowhere else have I seen the job, recreation and educational opportunities available to a family supported by a well developed municipal infrastructure of parks, public safety, transportation and services. The fact that the homes are relatively affordable to the median income for Bellevue is even more rare when compared to other communities around the country. I look forward to supporting the East Bellevue community and being a resource regarding the real estate activity, neighborhoods and overall community.
Tags: commentary, neighborhoods, Parks, Schools
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