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Should You Buy a Home on Seattle's Eastside Now or Wait?
Should you buy a home now on Seattle’s eastside now or wait until after the tax credit expires at the end of April?
People were talking on the Wall Street Journal site and on Zillow about this very issue. Today people don’t just ask, “How’s the real estate market?” They ask, “What do you think will happen to the real estate market after the tax credit?”
Here are some of the things people are wondering:
- Do I buy now?
- Do I wait?
- Will I get a better deal now or if I wait?
- Is it worth passing on the tax credit and waiting to see if prices come down after April 30th?
- Is it better to buy now because there is a healthy number of homes for sale and good interest rates?
- Will there be more homes to choose from later?
- Will interest rates go up and cancel out any possible decline in prices?
I got my crystal ball out as did many others. Money Magazine made a strong case for buying now. Warren Buffett, on the other hand, thought the real estate market would pick up in 2011. Luke Mullins of US News and World Report presented the positive aspects of home ownership, even in today’s real estate market. Truthfully, no one knows what will happen and we can only speculate about what may happen with prices, the number of homes on the market and interest rates. But all these variables should be considered when making a decision about whether to purchase a home now or later.
I believe there are good deals on a home now and will be after the tax credit, but it’s on a case by case basis. Here’s why I say this:
Right now…
$6500-8000 home buyer tax credit available for most buyers.
Historically low interest rates.
Good selection of homes, many with very realistic home sellers and prices.
Having the tax credit of $6500-8000 and terrific interest rates, increases buying power. Typically, your loan payment is amortized over 15 or 30 years, a lower interest rate means more dollars per month in your pocket.
Later…
Will prices drop after the tax credit goes away on April 30th? No one really knows. There may be more homes on the market, which we typically see in the summer months in the Seattle area. If so, the law of supply and demand will kick in. More homes + less demand= lower prices. But we really don’t know if this will happen. We don’t know if there will be less demand. We can only guess. We can only gamble on what may be.
However, there’s a good chance interest rates will go up, which means purchasing power will go down. If rates go up 1%, then purchasing power goes down by about 10%. This means if you could afford a home for $330,000, if rates do go up by 1%, you would then qualify for a home at $300,000.
The impact of interest rates on buying power
Buying a home will, obviously, be less expensive if prices drop (but we don’t know if they will), and mortgage rates could also be a higher ( again, just a guess, but looking pretty certain), which could more than cancel out any savings in the price of the home. Remember, I’m not just talking about your initial investment, I’m talking about spreading the total cost out over the time you own your home.
The location factor:
Real estate is hyperlocal. There is no one size fits all real estate locales, individual buyers or individual sellers. Some areas of the Seattle- eastside real estate market will remain stronger than others. Within each city on the Eastside, Bellevue, Redmond, Kirkland, it will vary. The East of Market neighborhood in Kirkland may be vastly different than Kirkland’s Rose Hill real estate market. We see that today with a difference in real estate sales performance in different areas on Seattle’s eastside. So no one should make a “one size fits all” about the real estate market. It will depend on how hot the area is, how many homes are on the market, and how hot the house may be. ( The Queen Anne neighborhood in Seattle seems to remain hot through most real estate markets, as an example.)
Some neighborhoods will be full of homes for sale and the homes in these areas will need to be priced more competitively. Other areas will have fewer homes to buy. These areas will have stiff competition among the sellers to grab the buyers. Buyers will be looking harder at the overall value each home brings them.
The home factor:
In every real estate market, you’ll find fabulous homes. These homes will be perfect, priced right, and terrific values. Homes that shine will be the ones to sell in any market.
The emotional factor…
For most people, it’s a huge personal decision when to buy and what home to buy. If you find a great house and are able to get it for a reasonable price for the real estate market at the time, it may make sense to you to buy. There are the financial aspects of buying a home and the emotional aspects. You might find the home you can’t live without and it’ll be worth it to you to buy now rather later. You may not find a home now and miss using the home buyer tax credit, but you may not want to buy a home now just to get the tax credit.
There are going to be great homes now and in the future. There are also going to be great deals now and in the future. The difference in today’s market is you’re dealing with a known quantity. You have to decide what works for you.
What do you think will happen with the Seattle-eastside real estate market later this year?
Latest Cost Effective New Products for Your Home Remodel
A big part of my job as a Realtor is to help home sellers prepare their homes for the market by giving people ways to add value to their home so they’ll get the highest sales price. I’m constantly looking for different and cost effective ways to give sellers options for updating a home. I also encourage past clients to contact me when thinking of remodeling, so I like to keep up with the latest home remodeling ideas.
The Styled, Staged, and Sold blog discusses “hot home products for 2010.” Their list of favorite new home products had great ideas for remodeling, safety, energy savings tips, and locks that can’t be bumped.
Did you know most locks on the doors to your home can be “bumped”open?
Not something you want to have happen with your home. I first heard about locks that can’t be bumped open when a client of mine told me about changing the locks on her home. Her home security alarm had gone off 4 times. She thought it was time to upgrade her home’s door locks to the bump proof variety.
After hearing about this situation from my client and reading about unbumpable locks online, I thought I’d pass this information on. In reading about unbumpable locks, I also learned the brand of “bump-proof” lock you buy for your home should be checked out to make sure it’s truly “bump proof.”
The blog post also talls about some other interesting home products. I really like the metal tiles that could be used as a kitchen backsplash. The tiles come in brushed nickel, bronze, and copper finishes. They looked really cool and could dress up a kitchen for not a lot of money.
The inexpensive crown moldings sounded like they could be a great way to dress up a room.
Stainless steel paint? It sounds like it could be a terrific way to go, but I’m having trouble picturing paint looking like smooth, cool stainless steel. I’d love to know if this really works.
Has anyone tried it? If it does work, it would be a great thing.
Check these home products and remodeling tips out. Let me know if you try any of the items. I’d love to be able to tell people about experiences you’ve had with these products or other cost effective remodeling ideas.
And while you are at it, change your locks!
Have You Sent Thank You Notes to Your Buyers and Sellers This Week?
I’ve received about half a dozen thank you notes from stores and services in the two dozen years I’ve been in Seattle. I can tell you who sent me each note. Because there have been so few, I remember who sent them. I got to thinking about personal notes, and the lack thereof, because I just received a hand written note from a Bellevue patio furniture store, Summer House. Not only does the store have great products to sell, they have great customer service with a nice personal touch.
The note reminded me that people, businesses, and the service industry need to combine the personal touch with the online world. When business people, including Realtors, jump on the blogging/Facebook/Twitter/Linked In train, they need to take the traditional marketing tools, the traditional ways to communicate, on board with them.
When was the last time you received a personal note from a business? I bet you remember, simply because they are so few and far between. More importantly for growing your business, when was the last time you sent a personal note to a past, present or future client?
Home buyers and sellers are having a difficult time right now, even though the Seattle area real estate market is so much better than 2009. It’s still a lot of work in today’s market. It can be fun, wonderful, and scary to be either a buyer or seller. So thank your buyers and your sellers for making a move and making that move with you.
I’m giving a talk about blogging at my Windermere office meeting this Monday and I just found one of my key points here. To be a successful business person/Realtor it takes a combination of traditional marketing with its personal handwritten notes, mailings, client parties, or whatever works for you, with an online marketing strategy. Marketing and communication should combine the best of the traditional means with the best of the online avenues to work successfully in today’s real estate market.
Should Cul-De-Sacs Be Banned From Future Development In Washington?
Neighborhood cul-de-sac
There aren’t going to be any more cul-de-sacs in new developments in the State of Virginia. Yes, Virginia will have no more cul-de-sacs. Cul-de-sacs have been banned from new neighborhood developments. Cul-de-sacs are the quintessential icon of the 1980’s-2000’s American suburb.
Here on Seattle’s eastside, new neighborhoods were generally built all over with cul-de-sacs sprinkled throughout. If the neighborhood was a new pocket neighborhood on infill lots in an older part of Kirkland or Redmond, as an example, there might not be room for cul-de-sacs, but if you look everywhere else on the eastside, cul-de-sac neighborhoods were the standard. Woodinville, Sammamish, Issaquah, Snoqualmie, Redmond, and Kirkland all have neighborhoods where cul-de-sacs prevail. Streets with cul-de-sacs were the prized streets to live on, the premium lots, the more expensive lots. Realtors and builders would tout the benefits of living in a cul-de-sac:
- No through traffic
- A place to play
- A place for neighbors to congregate, meet and greet each other at the mailbox.
So why did Viriginia ban cul-de-sacs in future development?
Cul-de-sacs unite the people who live in the cul-de-sac, but separate them from other streets by foot and by car. It’s harder for fire and emergency vehicles to respond quickly when a neighborhood doesn’t consist of through streets. Road maintenance is more expensive with cul-de-sacs instead of through streets.
The New York Times magazine finishes each year with an issue highlighting the great ideas from the past year. The most recent great ideas issue had an article about the cul-de-sac ban in Viriginia. The concept fits with the new sensibility rising in many places as highlighted by the popularity of sites such as walkscore. Walkability and connectivity are this decade’s buzz words for living. Planners are looking more for connectivity, walkability, and better traffic flow for neighborhoods. People are now looking for easy commuting, more connectivity, and more places to walk.
What do you think? Should cul-de-sacs be banned from future neighborhoods? What do you see as the advantages and disadvantages?
Top Ten Structural Items to Check When Preparing Your Home For Sale
Since I’ve been busy telling people now is the time to sell a home if planning to sell in 2010, I thought I’d bring up a friendly reminder about some of the top things to do around your home before you go on the market. This is by no means a complete list, but it focuses on some of the most obvious structural items both buyers and building inspectors will notice about a home. This list also is separate from a list of strictly cosmetic suggestions such as updating carpet and flooring or painting walls. Many blog posts could be written about the items you should check when preparing your home for sale, but this list is a good start.
Here’s my top ten list, with an added #11 thrown in because I’m dealing with it right now:
1. The Condition of roof – Does it need to be cleaned? Repaired? Replaced?
2. Earth/wood contact – Be sure all soil is 4 – 6 inches away from siding, planter boxes, decks, skirting, posts, etc.
Pull any dirt or bark away from the siding so you can see the foundation wall
3. Deck material rotted? Railings, steps, deck boards, joists, beams, etc.?
This is not a deck that makes you feel warm and fuzzy. Check all deck boards and supports
4. Electrical – Non professional work? Panel breakers match wire size? Non grounded outlets?
5. Handrails Are they secured to wall? Are they installed where they should be?
Make sure there's s a sturdy railing so no one goes sailing down the stairs
6. Shower tile grout and sealant conditions?
Does the grout look clean and fresh?
7. Condition of the bathroom floors at tub/shower and toilet?
Check the floor for soft spots, clean, regrout, and reseal
8. Smoke detectors? Are they working? Do they need batteries?
9. Furnace Has the furnace been serviced recently? Does the filter need cleaning or replacement?
Your furnace must be a clean machine
10. Crawl space? Is there moisture in crawl space? Is a vapor barrier installed? Ventilation adequate? Wood scraps or debris which needs to be removed?
11. My new personal favorite is to check your chimney and fireplace. Hire a professional if you have not had your chimney checked or serviced. Make sure it is safe to use. (I’m having some fun doing this now and will fill you in at a later date as to what is involved.)
If you want to get more into it, check the home builder’s inspection checklist or the list from the American Home Inspectors Directory
What other things should be checked out before a home goes on the market?
The Clock is Ticking on the Real Estate Trifecta
Who knows where the time goes? (“Who Knows Where the Time Goes”- written by Sandy Denny, but made famous by Judy Collins) Sometimes it seems like the past has gone in the blink of an eye. Ironically, it feels exactly the opposite when we think of the future. It’s human nature to think there’s all the time in the world, whereas the past seemed to happen in the blink of an eye.
We have the real estate trifecta here in the Seattle area right now and it could be gone in the blink of an eye. If you’re someone whose thinking of buying or selling, if you wait too long to act, the trifecta could be a thing of the past. The trifecta is a boon for both buyers and sellers.
So what’s today’s real estate trifecta?
- The home buyer tax credit.
Attention home shoppers! The April 30th deadline for home buyers to find a home, be in contract, and receive the $6500 tax credit is coming fast, and it’s coming faster than you think. There’s less than 100 days to have an accepted offer on a home and obtain the home buyer tax credit.
home buyer tax credit
Remember, the $8000 tax credit still exists for first time home buyers, but many people don’t realize almost all home buyers are eligible for a $6500 tax credit. This is an important deadline for home buyers and home sellers, not just the buyers. Home buyers who are serious are out shopping and buying homes.
- Low interest rates.
The low interest rates, which are low, won’t be here forever. Rates for a 30 year fixed mortgage dropped below 5% last week.
- Good number of homes for sale.
There’s a lower number of homes on the market in King County, but there’s still a healthy amount of good homes to choose from. (Yes, home buyers, there’s a number of great houses out there.) It’s a more evenly balanced real estate market between buyers and sellers, which means some homes will sell right away if they are priced right and stand out from the competition and others will take longer to sell and will sell with more negotiation in price.
Number of King County Properties for Sale, 1-18-10
So home buyers and home sellers get out there now and take advantage of the real estate trifecta. April 30th is not far away.
