Here we are nearly 1/2 way through the year and so far, the Puget Sound region has not been rocked by the housing collapse seen in other parts of the country. For example, an article I read in the Puget Sound Business Journal last week compared the housing market in Seattle with that of San Diego. In Seattle, there were just over 5,000 homes in foreclosure. In San Diego however, there were just over 56,000. More than 10 times the number in Seattle. It will take San Diego YEARS to recover from the mess they're in. Thankfully while we saw double digit appreciation in recent years here, it was not nearly the frenzied housing market that California, Nevada and Florida saw. Indications in Las Vegas however are good that they are beginning to come out of their slump too. I expect prices to remain flat for the rest of this year and into next year before we really start seeing the appreciation come back. Hang on just a little longer folks, I can see the light at the end of the tunnel and I'm pretty sure it's not a train!
Here then without further ado are some housing statistics for you for the local Puyallup area. I'm going to include some new stuff here that I think is interesting to note. I'm going to show Average Days on Market like I normally do, but then I'm also going to show Average CUMULATIVE Days on Market too. This takes into account homes that were re-listed. AND in addition to my normal Sales Price to List price ratio, I'm going to include Sales Price to ORIGINAL list price ratio. This gives a much better picture of homes that have taken multiple price reductions to get to their final selling price. By the way, homes are still selling at a pretty good percentage of list price.
Total Active Residential Listings
Average Time On Market
Average Sales Price
County
05/07
05/08
05/07
05/08
05/07
05/08
Pierce
7,108
7,627
77
99
$325,300
$298,451
King
8,689
12,310
52
73
$589,623
$558,123
Thurston
2,210
2,152
81
100
$315,112
$297,201
Puyallup
875
947
62
90
$320,000
$298,000
Total Closed
Total Closed YTD
Months of Inventory Based on Closed Sales
County
05/07
05/08
05/07
05/08
Pierce
1,195
689
4,866
3,218
11.2
King
2,537
1,533
10,126
6,772
8.2
Thurston
412
284
1,613
1,222
8
Puyallup
122
95
N/A
400
10
Cumulative Days On Market
Original List Price to Sales Price Ratio
Months of Inventory Based on Pended Sales
County
05/07
05/08
05/07
05/08
Pierce
100
145
99%
94%
9.7
King
64
106
99%
95%
7.5
Thurston
102
132
98%
96%
7.1
Puyallup
89
142
98%
95%
9.1
Data Courtesy of the Northwest Multiple Listing Service (NWMLS) Through May of 2008
While average prices are down compared to the same time last year, you're not seeing 20 - 30% price drops as the media would have you believe. Overall we're down about 10% over last year. Looking at the months of inventory based on closed sales and months of inventory based on pended sales, the trend is downward which is typical this time of year. My hope is that we'll see inventory levels down around 8 months by the end of the year and by next summer be down to around 7 months. As I've mentioned in the past, the National Association of Realtors (NAR) reports a balanced market as one that has 6 months of inventory. Any less than 6 months and we're in a seller's market and more than 6 months and we're in a buyer's market. We're definitely in a buyer's market now! But I think the overall trend is down towards a balanced and eventually a Seller's market again. Don't hesitate to call me if you'd like more interpretation of these numbers.
Charming Craftsman in Rebecca Ridge by Luxury Pacific Homes! Walking up to the soaring entry, you're greeted by bay windows, extensive stone work and a nice covered porch to keep you dry. Walk into gleaming hardwoods, soaring ceilings and outstanding craftsmanship that just can't be beat! The Chef in the family will love the spacious gourmet kitchen with granite tile countertops and full height tile backsplash. Spacious open floor plan with 4 bedrooms, 2.5 bathrooms a den and a bonus room (which also has a closet and could be 5th bedroom) gives you space for everyone! Large level fully fenced yard is great for summer bbq's and keeping Fido safe! Don't miss the opportunity of a lifetime! Over $60K less than the last time this home sold!
This weekend I met a potential client at a new condominium community. He and his wife mentioned they were talking about purchasing their first investment property. I congratulated them saying there's never been a better time to do so. As the conversation progressed, I overheard them saying that they could sell stock and buy the condo outright. We continued on our tour of the property, exchanged information and parted company.
Today I sent them an e-mail and mentioned that I had overheard them talking about selling stock to buy the condo outright. I said that unless they were counting on the rental income to finance their lifestyle, that they would be much better off only putting down as much as needed to get the property to cash flow by a hundred or two dollars per month and financing the rest. This was a foreign concept to them, so I went on to explain:
The power of buying real estate is in leverage. Using other people's money to finance your fortune. A stock investor that purchases a stock for $50.00 per share has to put down how much to purchase that stock? Right, $50.00 per share. However, when you buy real estate, you can often buy it for no money down. (Assuming you plan to live there) OR if you want an investment, you can often get away with putting as little as 10% down. So in the example of this particular condo, if the purchase price is $170,000 and say you have to put 20% down to get it to cash flow, you only have to put $34,000 down. That leaves you an additional $136,000 that you could either leave in your stocks, or you could purchase MULTIPLE properties with that same $170,000 LEVERAGING someone elses money to finance your real estate empire.
This is the time that the rich get richer. Imagine, if your stocks return 10% per year. And a home appreciates 5% per year. You would think that you're getting a better deal on the stocks right? Well if you've got $170,000 invested in the stocks, you've actually got $170,000 invested. But if you have a rental property, you've only got in this example $34,000 invested, but you're getting a 5% return on $170,000.
Stocks - 10% return year 1 - $17,000
House - 5% return year 1 - $8,500
Return on Investment (ROI) Stocks - 10%
Return on Investment (ROI) House - 25%
Now imagine if you had parlayed that $170,000 into 4 or 5 homes and you were getting a 25% ROI on each of them! This is how the rich get richer. And if you wanted to hedge your bets, keep half in the stock market and only purchase two or three investment properties. You STILL come out way ahead.
If you'd like to learn more about investing in real estate, don't hesitate to give me a call.
"Whether tis nobler in the mind to suffer the slings and arrows of outrageous fortune, or to take arms against a sea of troubles, And by opposing end them?"
Ahh you didn't know I knew me a little Shakespeare did you? I've taken some liberties to modify this classic line from Hamlet. But if we analyze it, it seems to fit today's mortgage industry. They are certainly suffering right now the slings and arrows of outrageous fortune. But it's us they seem to be taking arms against.
(Seriously, what did John take this morning and where do I get some?)
OK, I'm done pontificating today. But I did want to say this. Interest rates are GOING UP. Everyone that has been waiting for the 5% interest rate to return will be waiting a WHOLE lot longer. Everyday I get a Market update from my lender, Gina Miller at Venture bank, and in the market update it lists tons of economic data for why the day's mortgage rates are doing what they're doing. At the end of the article, for those that don't want to wade through tons of boring financial data, is a little chart saying:
If I were closing my loan in 7 days or less I would: Lock or Float
If I were closing my loan in 8 - 20 days, I would: Lock or Float
If I were closing my loan in 21 - 60 days, I would: Lock or Float
If I were closing my loan in 60 days or more, I would: Lock or Float
What this is meant to tell you is what mortgage rates are predicted to do over the next 2+ months. So for example, if your loan was closing in 30 days and it recommended that you Float the rate, they think there is a good possibility in that time that rates may go down.
For the past few days, EVERY item says LOCK. This is a strong indication that mortgage rates are on the rise for the near future. It's kind of like gas prices. The other day my wife and I were having a conversation about gas prices. She said she never puts more than $60.00 in her tank because that makes her feel like she's not spending any more money. I said, if you know that gas prices are expected to keep climbing, why wouldn't you just fill it up with the "cheap" gas now? So lock in your cheap mortgage now, it's not going to get any better any time soon.
A report out this morning from the Associated press shows that pending home sales in April moved higher, but remained 13% off last years numbers for the same month. The report goes on to say that the National Association of Realtors pending home sales index climbed higher to 88.2 versus 83.0 in March. Industry analysts had expected that number to remain steady at 83.0. Personally I think the number for May will be higher even still. Looking at the numbers in Pierce County anyway, I noticed a sharp increase in the number of pending sales above what they were in April when the MLS released it's data last week.
Furthermore, it states that the median home price nationally is expected to drop 8.4% in the first half of the year before stabilizing and then returning to a more normal 4.4% increase in the median price next year.
Now is the time to buy homes people. This is when the rich make their money, when there are lots of bargains out there to snap up, but when they're gone, they're gone.
Hey everyone, I just wanted to announce that starting Friday of this week (06/13/08) I will be offering a new service to clients of mine. I am now a Notary Public, so if you have any documents that need to be notarized, I'm your guy! Just let me know and we can plan to meet at a convenient time and place for you and I'll get you all taken care of. No charge, just another way I want to bring value to our relationship. And as always, if you need me for anything, please don't hesitate to call!
So anyone that has spent any amount of time driving around South Hill over the past year or so, may have noticed at the back of the old Safeway building, the sign to the right. Yes, FINALLY, South Hill was going to get a Japanese Steak House! First The Rock, now a Japanese Steak House, could life get any better? (OK, when someone opens an Indian restaurant, my life will be complete, but I digress) But it seems like we've been waiting, and waiting and waiting for Iron Chef to open. Well, finally last Thursday, open they did!
Teri and I decided to drop by last night and see how it was. Walking into Iron Chef, you're greeted by a vast room with about 16 Teppanyaki stations, each seating 8 - 10 people, a bar and not much else. The floor is concrete and coated with something similar that you might find at Home Depot. The decor was sparse to say the least. And somewhat cold, both in feel and temperature. But you don't go to a Japanese steak house for the decor, you go for the food and the show. So we were not in the least deterred.
As is customary, we were seated with others who were waiting. They will wait until they have between 6 - 10 people waiting and then seat them all together in a "U" shape around the Teppanyaki grill. Our waitriess was dressed in traditional Japanese garb and very attentive the whole evening. After taking our order, she brought us our salad which was dressed in a sesame dressing. There was a bit too much of it for my tastes, but it was VERY good, so I'll live. I ordered the steak and shrimp and Teri ordered the Chicken and Shrimp.
After eating our salads, the chef rolled the cart in and began by making some jokes and starting his show. Now I've been to a few Japanese steak houses in my day, but this guy was by far the best Teppanyaki chef I've ever seen! His name is "Mike" (Fine Japanese name!) and if you go, you should ask for him. He was flipping all kinds of things (including flaming bowls of who knows what) into the air and catching them in his hat. Spinning lemons and slicing them while they were spinning. And of course, who would miss the traditional flaming onion volcano!
My steak was cooked perfectly (medium rare) and my shrimp were to die for. Teri said her chicken was a tad dry, but enjoyed the shrimp as much as I did. The fried rice and veggies were very good as well. And of course there was sherbert for dessert.
Overall, I'd say our experience with Iron Chef was a positive one. They still have some kinks to work out (that even Mike admitted) but I think once they get them worked out, you're going to have to have reservations for this one! If last nigth (Sunday evening at 7:30) was any indication, you may by this weekend, kinks or not! I would have liked to see a little less industrial decor and Teri would have liked for the temperature to be warmer (as would I) but I think those were really our only complaints. The food was great and the entertainment was AWESOME! I'd give Iron Chef two thumbs up! We will definitely be back!
Iron Chef
4301 South Meridan Street
Suite A
Puyallup, WA 98373
(253) 848-3794
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