The market is crazy here AGAIN!

kaismomFebruary 27, 2013

I live in Seattle WA

I am always looking for an investment property. We are starting to look again this season. Nearly everything has a pending offer. Even the houses that had not sold for 2 or 3 years now have pending offers. What gives!

The tiny first time homes have offers for more than the asking.

How is your market?

The inventory is low but there is a frenzied activity for those few houses being sold.

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LOTO

In my area of Missouri the overall sales volume is considerably higher and it looks like prices are gradually starting to rise.

    Bookmark   February 27, 2013 at 9:22PM
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LuAnn_in_PA

Our market never tanked... so it's doing well.

LuAnn - in PA (the western side)

This post was edited by LuAnn_in_PA on Thu, Feb 28, 13 at 12:37

    Bookmark   February 27, 2013 at 9:59PM
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writersblock

Like whiplash. Places that were selling in the low 200s in 2008 went down to about 50 last summer and are back up over 100K in less than 6 months.

What's bad is that it is ALL investment buying, mostly from overseas. It's terrible for renters--the average rental price is up more than 40% from last year, and rental prices never went down during the crash. They say that now 80% of renters in this area are paying (or owing) more than 60% of their income for housing.

EDIT I'm in FL, east coast north of Palm Beach

This post was edited by writersblock on Thu, Feb 28, 13 at 12:20

    Bookmark   February 27, 2013 at 11:42PM
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ncrealestateguy

In order for this thread to have ay value at all, posters need to tell us their locaton, down to city and state.

    Bookmark   February 28, 2013 at 7:07AM
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suz1023

let's hope vermont gets a bit of that craziness.
though we didn't suffer nearly as much as others there's still a lot of inventory around here.

    Bookmark   February 28, 2013 at 8:59AM
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kellienoelle

I live in a Kansas City suburb, moving to a desired area closer to the city. I have detailed my experience with the real estate market in another thread. But to summarize. the market is HOT. My house sold before it was listed at the price I was planning on listing. A house on my street that was originally FSBO finally was listed with a REA. Sold first week, but unsure of price. The houses that I was looking at were getting full price contracts the same day they were listed, plus tons of houses sold as pocket listings (like mine was). I ended up losing a house I had a contract on because a full price back up offer was made. In the end, I put an offer on a house that I think was priced a little bit too high, but I realized that in a hot market I needed to play the game or end up homeless. I still feel like I overpayed by probably aobut 10K (probably mostly based on my expectations being behind the market trends), but I am glad I did. I still watch the listings, and houses within my parameters are few and far between and being snatched up immediately!

    Bookmark   February 28, 2013 at 10:43AM
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writersblock

Sorry, ncrealestateguy, I thought I had included location. Edited to add it. You're right, of course.

    Bookmark   February 28, 2013 at 12:21PM
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ncrealestateguy

I will run some #s soon and report back here...
Charlotte area.

    Bookmark   February 28, 2013 at 7:14PM
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Tony2Toes

St Louis market here. Inventory of homes in $400-$500k range is extremely small, most homes in this range selling within days of listing. We have a great agent and he actually marketed us as motivated buyers to 3 neighborhoods we specifically targeted to purchase a new home. We ended up buying one that wasn't even on the market yet. Paid full price but it is still a deal.

Not sure market is hot as much as too many sellers still underwater and/or waiting for higher returns before they are willing to list. Either way.....low inventory.

    Bookmark   February 28, 2013 at 10:26PM
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lazy_gardens

I talked with the neighborhood real estate lady - she's been doing it for 30 years. In Phoenix, inventory is down because of all the underwater and barely breaking even mortgages. People are hanging on if they can, hoping the market recovers so they can lose less or maybe take some equity with them.

Our neighborhood went briefly berserk in the early 2000s ... there were several ludicrously high sales prices nearby just before that peak started going down again.

    Bookmark   March 1, 2013 at 6:47AM
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ncrealestateguy

Lazygardens... I feel for you guys out there... looks like about a 50% decline since the meltdown. WOW! It's amazing that any homeowners are able to sell in a non distressed situation.

    Bookmark   March 1, 2013 at 7:35AM
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kirkhall

But, for Lazy gardens--it is really only people who bought in 2005-2007 who will distressed. Hopefully, you didn't have a lot of people moving around during that time, and a relatively small market share is in that 2005-07 range.

    Bookmark   March 1, 2013 at 11:10AM
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kaismom

Seattle, WA
This is a typical starter home in central core of the city. There is 1 bed/bath on the main floor and 1 bed/3/4 bath in the basement. There is no where you can put the third bedroom. The lot is essentially the pavers that you see on the picture, about 2500sq ft. This is a tiny 1 bedroom house with finished basement. There was a bit of bidding on this house. Will see what it closes at.

This would be a difficult house to raise a family in. It is a house for a couple/single with no kids or a couple that knows that they will be moving on to a more reasonable house.

In order to buy this house, you have to make about 80K to 100K. The median income in the city is around 60K. I think the housing price is still crazy in the city. Granted that this is a very close-in neighborhood with parks, near-by lake front, and amenities. This is an above average neighborhood in the city. I know that the price in the neighborhood does not reflect the typical household in the city and the metropolitan area.

But even so, how could houses like this get snapped up so quickly! What gives. Amazon must be hiring a lot of kids and paying them a good salary.

I put the link for the the zillow estimate. We did not have the same kind of drop that Phoenix had. The median for the neighborhood is about 550K. So this is one of the smallest and cheapest in the neighborhood.

http://www.zillow.com/homedetails/3209-E-Cherry-St-Seattle-WA-98122/48667966_zpid/

Here is a link that might be useful: Example

    Bookmark   March 1, 2013 at 6:27PM
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LOTO

Below is approximately the first 7 weeks of market activity for the previous 3 years at the Lake of the Ozarks in Missouri. I believe that the key to our market recovery is that bare land is starting to sell again and there are custom homes and spec homes starting to come on the market.

Life is gooder :)

Here is a link that might be useful: MLS Stats

    Bookmark   March 1, 2013 at 6:49PM
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kirkhall

To be fair (I'm "eastside" seattle), that house is in great shape. It is turn key and ready to go. It will be easy to rent out.

    Bookmark   March 1, 2013 at 7:27PM
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lazy_gardens

ncrealestateguy .... Of the people in the neighborhood, most were here before 2004, so they lost nothing. That peak is paper dreams, not a real loss.

Because this neighborhood has been very stable, there were only the average number of sales during the run-up, and very few signs of bank-owned repos.

The peak estimate at $600,000 was due to a few extremely overpriced houses selling at prices way over the comps in the neighborhood. I think (as does the neighborhood real estate lady) that they were those funky things where the seller is in cahoots with the buyer.

A few flippers got badly burned, but that's the risk they take.

    Bookmark   March 2, 2013 at 2:52PM
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chispa

Let's not forget, that due to easy lending during the bubble, many homeowners are underwater because they refinanced and cashed out equity at the height of the bubble and not because the house is worth less than what they paid. When you look at these homes, you can also see that the money they took out was not used for any home improvements.

It was really more of a financing bubble and not a real estate bubble.

    Bookmark   March 2, 2013 at 8:27PM
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ncrealestateguy

Chispa... exactly. Even of the persons who bought pre 2004, I can bet that half of them pulled cash out with a refi. I scan tax records almost daily. I see this in at least half of the records I am looking at.
In your chart, the avg. home in Paradise Valley peaked at $370,000, and is now worth about $220,000. For the neighbors that pulled cash out to the max of what the home was worth, that is not "paper money".
Your point is well taken...but only for the neighbors that did not pull cash out. It is nice to see the trend on the upswing though.

    Bookmark   March 2, 2013 at 9:21PM
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olivesmom

I'm in a far out Seattle suburb as well and I have noticed the increased activity. In my neighborhood, entry level newer construction from 2005, the three short sales that were listed just after the holidays all went pending within a day or two of each other this week. One that was just listed was on the market for less than 24 hours and went pending.

Maybe it's just a post-holiday rebound. I wouldn't say prices are up, just properties moving.

    Bookmark   March 3, 2013 at 1:59AM
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kirkhall

Olivesmom, watch those shortsales. I've been watching for about 3 years. They come in priced at x and sell for x+. So, while they might not appear to be up in price when listed, they are closing up.

    Bookmark   March 3, 2013 at 11:55AM
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lazy_gardens

ncrealestateguy and chispa ...

Ah yes, the re-fi group. I forgot about those.

    Bookmark   March 3, 2013 at 3:51PM
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chispa

Nothing wrong with refinancing ... except when it was used to supplement a lifestyle people thought they were entitled to have.

I've seen it in my area. House bought before the bubble for $500k. During the bubble value shot up to $1.2 mill. Owners cashed out paper equity. Now the house is worth around $900k and it is a short sale!!

No one seems to care about the $700k that was cashed out and spent/hidden. The owners and banks are rewarded with all the government programs to help/protect these "victims" of a bad market. The rest of us who followed the rules and lived within our means end up paying for all the programs. Who could have known we could cash out and we really didn't have to pay it back!!!

    Bookmark   March 3, 2013 at 11:10PM
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oklahomarose

Hi, OP. Hometown = Gig Harbor. College in Seattle. Four of my eight siblings still live around the Sound. Your post really caught my eye because it has seemed to me for the last several decades that Seattle would be a tough market for a mom and pop real estate investor. Your post only confirms that. It just seems to me to be a difficult market for good cash flow. I now live in Tulsa, Oklahoma, a place with no mountains or ocean, but in the old part of town, especially, where the oil workers lived during the 20s boom, there are some amazing deals to be had for small-time investors like me (who aren't afraid to hustle and work hard). I own several absolutely stunning 1920s brick duplexes, all purchased under $100K. I tell my family back home, and they are pretty agog at how cheap that is. And you know what? I'm getting good rent out of them! My own house is a dead ringer for the one you posted. I bought it ten years ago for $92K. I have put a lot of sweat equity into it, and I would imagine that it would sell now for about $140K. I miss the PNW like crazy, but now that I'm acquiring more and more good real estate, I don't mind being away so much. The midwest is still rich with opportunities like this. (My good friend lives in Springfield, MO, and her town has great old lofts and houses for sale for reasonable prices.) It is just the midwest thing. Real estate is (for the most part) fairly reasonable in the great swath that comprises the middle part of the country. And many of us make salaries almost to the equal of our west coast counterparts. We can do a lot with our money. My Oklahoma and midwest friends don't have the perspective that I do. They just take what they have for granted. Seattle's my favorite city in the country. Don't get me wrong! But every time I return there I am sort of wowed by the lack of investment opportunities. There are so many smart hustlers there that it's tougher for a small-time-y individual to find overlooked opportunities. I know most of the readers here are probably averse to being a landlord, but I have found it to be rewarding. The cash flow is more than worth the effort involved.

    Bookmark   April 9, 2013 at 1:25AM
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kaismom

FWIW
the house that I initially posted was on the market for 350K and sold for 420K on a bidding war. Go figure!

thanks for your post. we have a few real estate for investment. As long as it does slightly better than the average bond/mutual funds, we keep it as a diversity in our portfolio . No more, no less. We do not make much money at it. It does a bit better than our mutual funds at this point. We don't mind the work that goes with it. Most of the people I know are 'afraid' of the work involved in RE or becoming landlords.

My own brother uses a property management company for his 2 rentals where he has negative cash flow. He can't sell one house without losing money and the other he does not want to sell. Egad... (I gave him some books to read so that at least he can understand the cash flow!)

Our real estate prices are high but our rents are also high. A typical house rents for $2500 and up in a desirable area. (one of our boring 3 bedroom house that we rent out.)

There is a lot of people with deep pockets in Seattle. So the $ exchanged are also more. You are right in that you need to have some money to get started in real estate in places like Seattle.

Folks here make a lot of money. The 20 something kids that we rent to work for high tech companies make 6 figures easily. Granted that these are the best and the brightest, but the salary is there for those kids that have the credentials and the skills.

    Bookmark   April 9, 2013 at 8:40PM
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sheilajoyce_gw

My son is looking for a first house in west Los Angeles, and those with a sensible floor plan sell within the week with back up offers and a price higher than the list price.

    Bookmark   April 10, 2013 at 12:01PM
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marie_ndcal

You talk about crazy--try ND with the oil boom. Houses out of sight!! taxes up and jobs all over the place, but try to get a decent house at a decent price you really have to go some. Just in our little town north of Minot houses that were below 100 thousand are well above it . New houses and apts and hotels all over. But being from another state and seeing these booms happen we just wonder when and where!! It has happened once here and with the flooding 2 years ago and possibly going to again --it will be interesting. Just google ND and see what is going on.

    Bookmark   April 10, 2013 at 10:14PM
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marie_ndcal

You talk about crazy--try ND with the oil boom. Houses out of sight!! taxes up and jobs all over the place, but try to get a decent house at a decent price you really have to go some. Just in our little town north of Minot houses that were below 100 thousand are well above it . New houses and apts and hotels all over. But being from another state and seeing these booms happen we just wonder when and where!! It has happened once here and with the flooding 2 years ago and possibly going to again --it will be interesting. Just google ND and see what is going on.

    Bookmark   April 10, 2013 at 10:15PM
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texas_cajun

Houston, TX is "hot" too, especially close to the city ("within the loop" is inside the I-610 loop if you look at a map) and in the Woodlands, as Exxon is building a new campus very close to I-45 near the Woodlands. Our inventory is at a 13-year low.

    Bookmark   April 10, 2013 at 10:24PM
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