I was reading Men's Health magazine the other day and in their advice section, there was a question from someone wanting to know how long they had to be in their home before they could get out of it. I thought the answer was pretty ambiguous, so I thought I'd give my input here.
Men's Health responded by saying something like "The general rule of thumb is 3 years, but with the current housing market we recommend 5 years, but you should be OK after 2." HUH? So is it 3, 2 or 5? Seriously . . .
So here's John's take on it:
I generally tell my clients that they should plan to be in their home at LEAST two years regardless of how they purchased the home, but ESPECIALLY if they purchased their home with 100% financing. If we look back over the past 50 years, Real Estate has on average appreciated about 8.6% per year. If we reduce that to a more conservative 5% and understand that on average it costs about 8 - 9% to sell your home, two years should be enough to get you back out of the home without having to come to the table with money to close. Two years is a magical number for another reason. Capital Gains Tax. Currently the good ol' IRS stipulates that you must have occupied your home for two of the last five years to be exempt from capital gains tax on your profits (up to $250K for an individual and $500K for a married couple). So why pay the IRS more money than you have to. Stay in your home for at least two years and you should be able to get back out without losing any money. Of course your individual mileage may vary.
I can only speak for the puget sound region of Washington, so if you're outside this area, your market conditions may be different than ours. Currently we're still seeing homes appreciate while in some areas of the country they are actually seeing a pull back in pricing. But for you guys, remember, if you never sell, you never lose. Real Estate continues to be one of the safest, best places to put your money. And guess what? It always will be. The longer you hold on to your home, the better. You'll be less affected by any drastic changes in the market and you'll see steady appreciation year after year as long as you maintain your home in good working order.
Archives
Sunday, October 21, 2007
Thursday, October 18, 2007
OK, anyone that knows me, knows I'm a fan of food . . . and especially a fan of good pizza! Way back in 1996 a little restaurant opened in downtown Tacoma called "The Rock Wood Fired Pizza and Pasta". I was attending Tacoma Community College at the time and our class ended up there after our final. I was hooked! By far the BEST pizza in Tacoma was and still is in my opinion at The Rock.
I rarely went simply because The Rock was so far away from my house, it was simply easier to just order pizza. Then a couple years ago, The Rock opened in Lakeland. So now a few times a year, I get to enjoy The Rock for lunch as it's only about 10 minutes from my office.
Well, the pizza gods have shined on John this year . . . The Rock just opened on South Hill Puyallup! Now it's conveniently located right between my office and home! (OK, so this is NOT going to help John lose weight, but he's thrilled none the less!) If you've never eaten at The Rock, you're in for a real treat! The Rock is a "theme" restaurant in that they have a Rock and Roll theme. I put the word theme in quotes because I don't want you thinking you're going to get served pizza by Elvis or Tom Petty. No, rather The Rock plays good ol' classic Rock & Roll in the restaurant. Their menu covers are old album covers like Pink Floyd's Dark Side of the Moon, The Beatles White Album, etc. Some of their pizza's are named after classic rock songs like "Sweet Emotions" (Aerosmith) and "Bad to the Bone" (George Thorogood) which are two of my favorite pies.
Also, being wood fired pizza, they have a flame theme as well. So don't be surprised to see a Hummer H2 with the coolest fire looking flames on it parked out front. The atmosphere is great, but don't expect to have a quiet dinner for two here. The music is loud and the staff is upbeat. Plan to wait on Friday and Saturday night . . . for a LONG time for a table. They don't do reservations, first come first served. The food is fantastic! Their Calzones are to die for and their pasta is great too. If you want to try a sampling of their pizzas, head over for lunch where they have an all you can eat buffet of pizza, pasta and salad. You won't be disappointed and you'll make this one of your favorite spots for lunch or dinner!
Welcome to South Hill Jay and Don!
I rarely went simply because The Rock was so far away from my house, it was simply easier to just order pizza. Then a couple years ago, The Rock opened in Lakeland. So now a few times a year, I get to enjoy The Rock for lunch as it's only about 10 minutes from my office.
Well, the pizza gods have shined on John this year . . . The Rock just opened on South Hill Puyallup! Now it's conveniently located right between my office and home! (OK, so this is NOT going to help John lose weight, but he's thrilled none the less!) If you've never eaten at The Rock, you're in for a real treat! The Rock is a "theme" restaurant in that they have a Rock and Roll theme. I put the word theme in quotes because I don't want you thinking you're going to get served pizza by Elvis or Tom Petty. No, rather The Rock plays good ol' classic Rock & Roll in the restaurant. Their menu covers are old album covers like Pink Floyd's Dark Side of the Moon, The Beatles White Album, etc. Some of their pizza's are named after classic rock songs like "Sweet Emotions" (Aerosmith) and "Bad to the Bone" (George Thorogood) which are two of my favorite pies.
Also, being wood fired pizza, they have a flame theme as well. So don't be surprised to see a Hummer H2 with the coolest fire looking flames on it parked out front. The atmosphere is great, but don't expect to have a quiet dinner for two here. The music is loud and the staff is upbeat. Plan to wait on Friday and Saturday night . . . for a LONG time for a table. They don't do reservations, first come first served. The food is fantastic! Their Calzones are to die for and their pasta is great too. If you want to try a sampling of their pizzas, head over for lunch where they have an all you can eat buffet of pizza, pasta and salad. You won't be disappointed and you'll make this one of your favorite spots for lunch or dinner!
Welcome to South Hill Jay and Don!
Friday, October 12, 2007
OK, I'm tired of all the media reports saying "Foreclosure rates are up 200% over last year" blah blah blah! Here's a statistic you can be proud of. 97% of all homeowners in the United States are current on their mortgage. NINTY SEVEN PERCENT!
Are there homeowners losing their homes? Yes. Are there more this year than there were last year? Yes. Is it in epidemic proportions? NO!
Why do the media continue to report the bad news? And why do they tend to make the statistics seem so bad? Because you watch, read or listen to it.
In the last 5 years of the housing boom, there were some poor decisions made, absolutely there were. The lenders and yes even the real estate agents helped people get into homes they likely would not be able to afford later when their teaser rate expired, or their ARM adjusted. Despite warnings of "Now you know in 3 years your mortgage payment is going to jump by $400/month right? You're going to HAVE to do something by then, either sell, refinance, or simply make more money. You're comfortable with that?" The buyer's just wanted the home so badly they threw caution to the wind and a lot of them are losing their homes now.
But the reality is that this is a correction. The stock market corrects all the time. We tend to correct every 5 - 10 years in real estate. There is no real estate bubble that's going to burst. Unlike the Dot Com bubble popping a few years ago, there is actually a comodity behind real estate. When someone loses their home, the home does not disappear. It's picked up by someone else. So will we see prices drop around the country? Maybe. The long and the short of it folks is that if you never sell, you never lose. You always have a home to come back to.
Are you in the 97%? Congratulations! You're normal.
Are there homeowners losing their homes? Yes. Are there more this year than there were last year? Yes. Is it in epidemic proportions? NO!
Why do the media continue to report the bad news? And why do they tend to make the statistics seem so bad? Because you watch, read or listen to it.
In the last 5 years of the housing boom, there were some poor decisions made, absolutely there were. The lenders and yes even the real estate agents helped people get into homes they likely would not be able to afford later when their teaser rate expired, or their ARM adjusted. Despite warnings of "Now you know in 3 years your mortgage payment is going to jump by $400/month right? You're going to HAVE to do something by then, either sell, refinance, or simply make more money. You're comfortable with that?" The buyer's just wanted the home so badly they threw caution to the wind and a lot of them are losing their homes now.
But the reality is that this is a correction. The stock market corrects all the time. We tend to correct every 5 - 10 years in real estate. There is no real estate bubble that's going to burst. Unlike the Dot Com bubble popping a few years ago, there is actually a comodity behind real estate. When someone loses their home, the home does not disappear. It's picked up by someone else. So will we see prices drop around the country? Maybe. The long and the short of it folks is that if you never sell, you never lose. You always have a home to come back to.
Are you in the 97%? Congratulations! You're normal.
Monday, October 08, 2007
Well folks, the numbers are in! We are STILL seeing inventory levels creep up around the sound as well as prices increase. All except Pierce county. Pierce county prices were off by forty one dollars over last year. OK, that's probably not even worth mentioning, but in the interest of accuracy, I had to point out that the average sales price in pierce county was off a bit from last year. I'd call it a rounding error really. :-)
Amazingly the price of an avereage home in King county increased almost $50,000 over the same time last year while Pierce and Thurston counties were relatively flat. Snohomish county saw a modest increase over last year.
If you have any questions about the stats, don't hesitate to contact me, I'm here for you!
Total Active Residential Listings | Average Time On Market | Average Sales Price | ||||
| County | 09/06 | 09/07 | 09/06 | 09/07 | 09/06 | 09/07 |
| Pierce | 5,861 | 7,687 | 60 | 88 | $313,201 | $313,159 |
| King | 7,919 | 11,103 | 43 | 58 | $516,928 | $563,645 |
| Thurston | 1,941 | 2,209 | 67 | 83 | $285,763 | $287,406 |
| Snohomish | 4,056 | 5,968 | 50 | 73 | $393,582 | $412,590 |
Total Closed | Total Closed YTD | |||||
| County | 09/06 | 09/07 | 09/06 | 09/07 | % Change YTD | |
| Pierce | 1,289 | 722 | 11,525 | 8,717 | -24% | |
| King | 2,358 | 1,697 | 21,548 | 19,266 | -11% | |
| Thurston | 415 | 330 | 3,679 | 3,142 | -15% | |
| Snohomish | 1,156 | 794 | 10,792 | 8,527 | -21% | |
| Data Courtesy of the Northwest Multiple Listing Service (NWMLS) | ||||||