Talon Northwest Neighborhoods

Results of our local Puget Sound 2011 real estate market survey

Towards the end of 2010, several of us at the Talon Group decided to survey over 100 local real estate professionals in King, Pierce, and Snohomish County.  We asked specific questions regarding the real estate market, the recession, and their thoughts on 2011 and beyond.  The thoughts and opinions varied a bit when we looked at various local Puget Sound areas, but there were some common themes throughout.

• A majority of those surveyed believe we are at the bottom of the recession.  However, the group was divided on whether or not real estate prices had bottomed out.  The consensus is that it will be 2 years before the market reflects significant improvement.
• Most feel that potential sellers are in a holding pattern waiting for prices to recover.
• A bulk of our sample also predicts that the average homeowner will move every 6-10 years, up from what was on average 3-5 years.
• Half of the group felt that Baby Boomers were the target market for future business, while the other half were focusing on first time homebuyers.
• No one had a success story to tell regarding a loan modification for home retention.

When asked to break down their market area in percentages of who is buying and selling in 2011, here is what we found on average:

 

 

 

We'd love to hear your feedback on our results, and a big thank you to everyone who took the time to participate and share their knowledge and expertise!

 

Crime stats have evolved for the Seattle area!

Crime statistics have been available for quite some time, but a new website available from the Seattle Police Department is bringing this information to a whole new level.  Their new interactive site contains a collection of crime data icons along with links available to view the police reports.  Very interesting stuff! 

The data is even broken down by neighborhood, which makes it very easy to research if I'm an area homeowner.

The Talon Group has the ability to pull crime statistics for your particular address anywhere in the Puget Sound region, but we don't include them in our homebooks unless requested.  Many of our clients expressed that they did not want this included by default.

However, we do have the ability to create one very easily. If you'd like this report just let Customer Service know and we can provide it to you via email.

Thanks everyone,

More Rent vs Buy Ratios for the Puget Sound Region

Thanks to everyone for the feedback on our original Seattle Area Rent vs Buy Ratio post.  I always enjoy hearing from everyone around the Puget Sound who shares my interest in real estate.

I also wanted to thank The Tim from Seattle Bubble, I thought his post generated meaningful discussion on rent vs buy ratios as well.  I agree with him that "running the ratio using the same data sets for price and rent over a long period of time" would be really useful information.  Unfortunately, we don't have access to historical rental prices.  With regards to the fact a big part of the New York  Times article was comparing Seattle to other markets, well, while that's interesting we think readers are just as interested in how our local markets compare with each other.

With that in mind we decided to do some local comparisons.  For King County cities, we're using March average sales prices.  For Tacoma and Puyallup, we're using same type of data from February.  The average rents are pulled from www.rentbits.com as of Friday April 23rd, 2010.  The ratio calculations are taken from the New York Times, where they divide the sales price by the annual rent to come up with what they call the "rent ratio".  According the the Times, "When the ratio is well below 20, the case for buying becomes a lot stronger." 

The surrounding areas, aside from Bellevue, are all below the Seattle ratio of 19.89.  Bellevue is basically on par with Seattle.  Using the rent ratio calculation, these surrounding areas may turn out to be more prime areas to buy vs rent.  That's not surprising considering the higher sales prices for property within the city of Seattle.

We know this data isn't all of the information a consumer would need to make a decision.  Anyone on the fence between renting and buying should take a look at these numbers but also realize it's just a small piece of the picture.  They'll probably also want to take into account historical price trends in that city and in the neighborhood, how much they can put down, the condition of the property, current interest rates, etc. 

If you are looking to purchase in any of these areas, we found  www.rentometer.com to be an informative site for "comparable" rental properties.  Enter in the address, monthly rent, and # of bedrooms, and this site will create a map for you with similar rentals in the area along with analyzing the rent price.  This way you can create your own specific rent vs buy ratio for the home you are thinking about buying or selling. The NY Times has a buy vs rent calculator where you can compare the costs of buying and renting homes.  You may also want to check out The Tim's guest post on getrichslowly.org regarding the value of renting vs buying in Seattle.

Seattle Area Rent vs Buy Ratio

I've long championed the idea that local news and data is more valuable than what the national news gives us.  So when a client of mine sent this New York Times article over to me, it definitely piqued my interest.  The headline , "In Sour Home Market, Buying Often Beats Renting", is a great attention grabber for sure. 

Do they believe that Seattle is a good place to buy?    Here's an excerpt:

"But in a handful of other areas, including San Francisco, Seattle and Portland, Ore., house prices remain significantly higher than they were before the bubble began. People who buy a home in these areas will face higher monthly costs than if they rented, even after taking tax deductions into account."

Ouch.  The premise that rental rates vs sales prices correlate with each other is sound.  But is the data they are reporting true?  Does it hold water with what is happening locally?

They explain how they come up with this data by looking at the rent ratio: the purchase price of a house divided by the annual cost of renting a similar one.  They give the number 20 as a good benchmark to see where the market is at.  Many other places nationwide, like Las Vegas, Miami, San Diego and Phoenix are well below where they were in 2005.  These places are now deemed a good place to buy.

According to the New York Times, Seattle has only gone from 32.4 in 2005 to 28.1 today.  They deem that an environment where renting is a good idea generally speaking.  I actually wasn't sure if this was a good indicator of how our local market is doing currently, so I decided to see what I came up with on my own.

The rent vs buy ratio they use seemed simple enough to calculate.  We just need the average sales prices in an area along with what the annual rents are for the same area.

For March, we found that we had an average sales price in Seattle of $493,971.

Average Rent, according to rentbits.com, were $2069 for all home rentals in Seattle.  On a side note, here's a graph of the rental rates for Seattle as well going back 12 months. 

Using the NY Times model above, lets put in our own calculations:

$493,971/($2069*12) = 19.89.

Thats right, we come in right at the benchmark of where you should think about buying rather than renting. 

It's a far cry for me to promote the benefits of buying a home vs renting.  Each individual has specific circumstances that weighs in on their decision making.  Income, interest rates, job stability, purchase price and home quality seem like better reasons to buy a home than what the rent vs buy ratio is in my humble opinion. This kind of information does seem to be a good benchmark for how the market is generally doing, but be sure to use local sources to find the real story.

Thanks everyone,

Chris Lodge - Property Information Manager at the Talon Group

 

 

 

 

First Time Homebuyers Lead Road to Housing Recovery - October 2009 Resales up 30%

Aided by the federal home buyer tax credit, first time home buyers have breathed new life into the housing industry recently.  According to RISMEDIA,

"first-time buyers accounted for a record 47% share of home sales over the past year, up from 41% in a 2008 survey.  The share has risen steadily since the cyclical low of 36% in 2006". 

The Talon Group is reporting locally*, in King County, the number of resale closings in October 2009 vs October 2008 increased by 30%.  Much of this should be attributed to the tax credit deadline that was Dec. 1st 2009, but has since been pushed back until June 30th 2010, as well as still historically low interest rates.  Look for increased activity throughout the first quarter of 2010 as more first time home buyers are coming off the fence and taking advantage of these opportunities.

If you are not taking advantage of this market, you should be.  The Talon Group can help you target first time home buyer leads in various ways.  Whether you want to target specific renters, or create a farm of rental properties, our customer service department can help.  Email us and let us help you take advantage of this unique opportunity. 

*Unfortunately it is against the OIC regulations for us to either publish these reports on line for the general public or to give them away free of charge.  If you'd like a copy of this report, please contact Customer Service.

Photo Courtesy of wolfpix

Interpreting the Signs - September 2009 King County Resale Statistics Available

Sometimes it's hard to keep up with all the different news stories about the real estate market.  Are we up?  Down? Have we hit bottom?  Are they talking about our local market or the national one?  So many different questions but what most people want to know is what's happening in my neighborhood.   

That's why every month we gather local resale statistics directly from the King County recorders office.  We can account for every transfer of ownership recorded within that time frame.  We compare those statistics (average sales price and number of sales) with those of the same month the prior year and create separate reports for; All King County, the Eastside, Seattle, North, South and Southeast King county.

We recently finished compiling September 2009 Resale Statistics for King County and the number of sales recorded that month was up 20% in comparison with September 2008.  The Average Sales price was down 2% year over year.  These reports are available for $1 each and can be obtained via email request or calling 1-800-497-0123 (ask for Customer Service).

Unfortunately it is against the OIC regulations* for us to either publish these reports online for the general public or to give them away free of charge.  

Our report uses the following parameters when gathering local (residential) resale statistics;

• Current use code of single family homes
• Sale dates are recorded and reported by the county with the reports time-frame.
• The sales price is greater than 35% of the assessed value (thus eliminating quit claim deeds with no monetary consideration and other transfers of title that appear not to be a sale).

* Title Insurance Companies in Washington State are regulated by the Office of the Insurance Commissioner ("OIC") and have strict regulations regarding title & escrow rates and what can be provided to any person who may direct a title order. 

August 2009 King County Area Reports Available Now

According to our latest Area Reports the King County market is showing signs of stabilization.  For example; in August 2008 the average sales price was down about 6.45% in comparison with the YTD average sales price.  When comparing those two for 2009 the month was down less than 2% in comparison with the YTD figures. Our Seattle Area Report shows that the Average Sales Price for August 2009 ($519,727) was a slight increase over the 2009 YTD Figure of $513,468. 

It is no longer compliant with the Office of the Insurance Commissioner to post resale statistics free of charge.  Please contact us if you would like us to send you a copy.  Keep in mind there is a $1 charge and don't forget to specify which area you are most interested in; All King County, Seattle, East, North, South or Southeast King County.

Every month we go directly to the county when we gather our resale statistics.  This way we can account for every transfer of ownership rather than just those listed via the local multiple listing service.  Our report uses the following criteria for reflecting monthly sales:

• Current use code of single family homes.
• Sale dates are recorded and reported by the county within the reports time-frame.
• The sales price is greater than 35% of the assessed value (thus eliminating quit claim deeds with no monetary consideration and other likely transfers).

Seattle area ranked #1 for large metro areas over five year period

According to the most recent statistics released by the Federal Housing Finance Agency  (FHFA), the Seattle/Bellevue/Everett area has out performed the 25 largest metro areas in the country over a five year period. This long term gain in real estate value becomes even more impressive when you consider how hard hit we've been hit recently. The Seattle area performed near the bottom of the pack when comparing the most recent quarter over quarter results.

Do these statistics (Download Rankings) prove that real estate has been a better long term investment in the surrounding neighborhoods of Seattle or does it mean we have further to fall?  The answer may be tied to how our upper-end housing market performs over the next year.  

 

Photo courtesy of cwPhotography

July 2009 King County Resale Statistics Available

Our July 2009 Residential Resale Report is now ready for purchase and there is some good news to report.  15% of the areas in King county showed an increase in Average Sales Price from last July.  Let's hope August continues with this upward trend!

It is no longer compliant with the Office of the Insurance Commissioner to post resale statistics free of charge.  Please contact us if you would like us to send you a copy.  Keep in mind there is a $1 charge and don't forget to specify which area you are most interested in; All King County, Seattle, East, North, South or Southeast King County.

Every month we go directly to the county when we gather our resale statistics.  This way we can account for every transfer of ownership rather than just those listed via the local multiple listing service.  Our report uses the following criteria for reflecting monthly sales:

• Current use code of single family homes.
• Sale dates are recorded and reported by the county within the reports time-frame.
• The sales price is greater than 35% of the assessed value (thus eliminating quit claim deeds with no monetary consideration and other likely transfers).

Washington State Foreclosure Data for April 2009

Courtesy of First American CoreLogic, here is the April 2009 foreclosure data for Washington State.  King County is fairing better than Pierce and Snohomish County. 

The Seattle Times is reporting that Washington ranks 26th in the nation in the percentage of homes in the foreclosure process, so we're good shape compared to many areas of the country.  1 in every 1,058 King County homes were in foreclosure in April, compared to 1 of 374 nationwide.  The worst hit states are California, Nevada, Arizona, and Florida.  These four states account for 46 percent of the country's foreclosures.

In other interesting news, the SeattlePI has also posted a link from "The Today Show" regarding Seattle being ranked 4th out of 5 markets poised for a housing recovery.  One of the criteria mentioned is "good weather", so it's not clear how much energy they spent in putting this list together.  They do mention that we have a growing, educated populace and less of a problem of overbuilding as other areas as positives.