If you've been keeping your eye on the Seattle real estate market, you're likely well aware that the inventory of available homes has been extremely tight for the last several months – creating a market that heavily favors sellers – and providing a profitable climate for owners currently listing their homes for sale. So if you've been sitting on the fence about selling your home – or have been contemplating making a move – here are four reasons why you may want to sell sooner rather than later.
This article published in CNN Money discusses the four trends on a national level – but I think they are all applicable to the current market in Seattle. So if you've been on the fence, maybe it's time you hop over it?
Coffee improving equity?
Starbucks is a brand synonymous with Seattle. And new data published by Zillow indicates how Starbuck's addicts hefty spending at the coffee chain might help homewoners in a suprising way – improving your home's equity.
According to the Zillow study, homes that are located near a Starbucks coffee shop appreciate at a faster rate than homes not located near the coffee giant. Zillow reports that since 1997, homes located near a Starbucks appreciated 96% – whereas homes located farther away appreciated at a much lower rate – only 65%.
In my opinion, the Starbucks study is quite interesting – but would I ever encourage a buyer to purchase a home simply because it is located near a Starbucks – or believe the home is a good investment because of its proximity to the coffee chain? Likely not. I take the study's findings with a grain of salt – but it is interesting nonetheless – and at the least, the added equity can help offset a homeowner's expensive latte habit…
Here's the link to the report in the Huffington Post:
Ever hear of the old saying, "Your first impression is your last impression"?
Curb appeal is one factor that can really make or break your experience as a home seller. When your home is listed for sale on the multpile listing sevice ("MLS"), a front exterior shot of your home is usually the first primary photo that is seen online by buyers and agents (if an exterior photo is not used for the primary photo – many agents will assume that the exterior of the home is less than appealing). And when buyers arrive at the front door for a tour with their agent – or for an open house – an attractive exterior appearance is crucial for making a strong first impression (if a home doesn't look promising on the outside – many buyers will decide to just 'drive-by' and will never even make it inside for a tour).
The better your home's curb appeal = the better your home's first impression on potential buyers. If buyers are welcomed by a well-kept landscaped yard, a freshly painted exterior, clean windows, and an attractive front door – they will walk in with the assumption that the homeowner takes good care of the home. On the other hand, if potential buyers are welcomed by an overgrown front lawn, weeds sprouting from the driveway, chipped paint, and a shabby exterior – they will walk in with the assumption that the homeowner has failed to maintain the rest of the home, just like the exterior.
Houzz recently posted an article, with some basic tips for freshening up your home's curb appeal. And if you're seriously considering selling your home soon – ask your agent if he/she has any suggestions on how to improve your home's exterior to make it even more appealing to potential buyers….
The Houzz article can be found here:
Ah, summer in Seattle: Greenlake’s weekend walking traffic is at its peak, finding an outdoor table at an after-work happy hour is near impossible, Seattleites are proudly donning shorts once the temperature hits 60°…..and Seattle’s real estate market is in full swing.
If you’re considering listing your house for sale this summer, there’s no time like the present to start getting your home camera ready. So whether you’re preparing your home to put on the market – or you just have spring cleaning fever – here’s an article with some tips on how to give your home a fresh makeover – and all of these improvements can be done for $500 or less.
Newly published data indicates that Seattle rental prices are expected to increase in 2015 – and for anyone currently renting or searching for a rental in Seattle, these numbers might not come as much of a surprise.¹
Seattle rents have risen 21.5% in the past five years; with a reported increase of 8.6% in 2014 alone – and new data from Zillow forecasts that rental prices should continue to rise in 2015.
Due to the rapid increase in rent prices, on average, Seattle renters are now paying more than 30% of their monthly income on housing – which is a particularly discouraging number, considering that means over 30% of a Seattle renter’s monthly income is being spent on housing expenses, but without the benefit of building any equity.
In contrast, buying a home has become much more affordable in recent years, particularly when it comes to mortgage costs: on average, homeowners pay about 15% of their monthly income to mortgage costs, including interest. And homeowners can thank the continued trend of low interest rates for the reduced mortgage costs – interest rates are still near all-time lows, with rates right around 3.66% at the end of January 2015.
A Trip Back to the 1980’s: Put on your Wayfarers & Pay High Interest Rates
For many Millennials who grew up in the 1980’s – the low interest rates of today are in stark contrast to what their parents had to pay in the 80’s to own a home. Due to the high interest rates during the 1980’s, the cost of renting was far less expensive than the cost of homeownership. In the 80’s, Seattle renters spent about 23% of their monthly income on rent. Whereas homeowners paid over 40% of their monthly income on mortgage costs, due to the astoundingly high interest rates – which hovered between 10%-15% throughout much of the 1980’s.
Seeing these figures, reminded me of a recent conversation I was having with my Mom about the current real estate market – and the low interest rates that Seattle homebuyers are trying to use to their advantage. During our conversation, my Mom recalled what a difficult & long process it was for my parents to sell our family home in the early 1980’s – as interest rates were sky high and few buyers were able to afford to the cost of home ownership.
Putting into perspective the high interest rates of the 80’s and the cost of homeownership back then – buying a home today seems like a screaming deal in comparison. And with Seattle rental rates expected to continue to rise in 2015, buying a home seems more practical than ever.
So What’s a Renter (Buyer?) to Do?
The current lack of available inventory in Seattle’s real estate market, combined with increasing demand from interested buyers, can make finding the right house, in a location you like, and at a price you can afford no easy feat. And the competition can be discouraging to many first-time buyers or people who’d like to buy – but just don’t think they can.
However, several loan programs were introduced at the beginning of this year that allow for lower down payments – which can help make buying a home a more feasible goal for some potential buyers. And while bidding wars are still occurring in the most popular neighborhoods at certain price points, buying a home in the current market is not an impossible feat. Depending on the location and price of the home you are interested in – it might take a lot of diligent searching and several offers before you can get the right home under contract. Yet, when taking into account today’s interest rates and the forecast of continued rent increases – if you are in a position to buy and can afford it – it might well be worth the effort.
If you are serious about buying, start by talking to a lender and getting pre-approved for a home loan – so you can start your home search confident about your finances and what you can afford. Secondly, enlist the help of a real estate professional that you trust to help you with your search and purchase. As much as you might know about the market and all the research you can do on your own on the internet – at the end of the day, having a skilled broker who will go to bat for you as a buyer can make a world of difference in getting you the house you want – particularly in Seattle's competitive market.
¹ The Puget Sound Business Journal articles, which provide the statistics discussed in this blog entry can be found here:
Zillow: Seattle Rents Jump 21 percent in 5 Years, Could Spark Home-Buying Binge
Seattle Renters Paid 8.6% More This Year; Higher Rents Expected in 2015
An article recently appeared on GoBankingRates.com titled “7 Mistakes to Avoid When Shopping for a New Home”, – and the article provides several helpful tips for first-time buyers. The article can be found here: http://www.gobankingrates.com/mortgage-rates/7-mistakes-avoid-shopping-new-home
According to the article, the common mistakes first-time buyers make (and tips for avoiding those mistakes) are: 1) treating your home like a short-term investment, 2) comparing your rent to a mortgage payment, 3) maxing out your loan, 4) not planning ahead, 5) taking too long to make a decision, 6) failing to shop multiple mortgage brokers, & 7) trusting online home values.
I found items 5), 6) & 7) particularly relevant for Seattle area buyers – and I think are worthy of additional discussion:
A Little Creative Vision Can Go a Long Way & Help You Make a Better Investment:
With the low inventory of available homes for sale in the Seattle area & the market not able to keep up with the demand from interested buyers, it is crucial that buyers tour homes quickly after being listed – as many homes are selling in just a few days, or less than one week's time. But in addition to being quick, buyers who are able to have a some creative vision & who are willing to make a few simple improvements after purchasing just might have a few more options when it comes to buying. Further, those buyers with creative vision might be able to purchase a property at a better price than shoppers only considering homes that are fully updated & 'move-in ready'.
An increasing number of Seattle area homes are now being professionally staged prior to hitting the market – and while shopping, it can be easy for some buyers to focus on the staged & more attractive listings – and ignore another house of comparable quality, particularly when the comparable home lacks attractive décor & has less than flattering listing photos. Yet, as a buyer, if you’re able to have some creative vision & are willing to make some simple, inexpensive updates after purchasing, such as new paint, new carpet & possibly new fixtures or cabinets – you might have a few more options & you might be able to get the less competitive home for a much better price (rather than competing with several other buyers in a bidding war for the attractively staged home). If you’re open to the idea of making a few improvements, but need some help seeing a potential diamond in the rough, your broker should be able to help you sort through which homes merit your attention – and your broker can even go preview some of the less attractive listings for you, so you don’t waste any time touring unworthy candidates.
Shop Around for a Lender:
Since interest rates are still near all-time lows, it’s a great time to get a home loan & maximize your purchasing power. But to fully take advantage of the low interest rates and select the loan that best suits your needs, you should should shop around before selecting one lender.
Some of the larger, national banks can provide the most competitive rates – but can also have more red tape during the loan process, might need more time to issue the loan & complete the closing process. Some mortgage brokers or smaller, local lenders might have higher loan fees, or might not be able to give you the lowest rate, but they may be quite reliable, have an excellent reputation & they might be able to close on the loan much quicker – which can be critically important if you are competing with other buyers for a certain home. When reviewing multiple offers & selecting the winning offer, many sellers will look at the reputation of the lender you are using & the length of the closing date on the contract – so even the lender you select can impact your chances of getting a home, not just the price you are offering. Thus, depending on your finances, what area you shopping in & at what price point, it might be more beneficial to go with a local lender as opposed to a larger, national lender.
Your real estate agent can be a great resource for recommending a lender that might best suit your needs – and of course, ask your friends, colleagues, or relatives for any recommendations, particularly if they recently purchased or refinanced their home loan.
Get an Expert’s Opinion on Price Before Making an Offer:
Online real estate sites can be an excellent resource for home shoppers & interested buyers. And many of these real estate websites will provide an ‘estimate’ or ‘valuation’ for a particular property’s worth – however, buyers shouldn’t rely on the accuracy of the estimates on these websites as being fool proof – and more importantly, buyers shouldn’t base their offer price solely based on the data provided on these online websites.
These online sites will use a variety of different data sets & different mathematical equations to determine a home's 'value', but these statistics & equations do not take into consideration any specifics of the particular home – and these online values can fluctuate quickly & dramatically. For example, I know one homeowner who saw an online site show a $40,000 drop in his home's value overnight – and the following week that value had inched up by $15,000. Thus, buyers using an online website as their sole resource for determining a home's value – might see one property being valued as $20,000, $30,000 or $40,000 higher on any particular given day, week, or month – but unexpectedly, that website might have the home’s valuation taking a sudden dip. Thus, if you were purchasing a home based on a website’s determination of value – you might not find much comfort waking up to find your home was now 'estimated' at $30,000 less than what you had paid for it just one week prior.
Before making an offer, ask your real estate agent to complete a market analysis for the home you are interested in buying – and have your agent provide an explanation of the analysis, along with examples of the recent & comparable sales. If working with a skilled agent, your agent should have a solid understanding of the market, will have toured the previous comparable sales in the area, and your agent will also understand the other specific factors that will impact the home's value (such as recent improvements & additions to the home, demand in the area, reputation of the school district where the home is located, etc.) Basically, online real estate sites can be a great tool for buyers – but when submitting an offer – online valuations should never be used as the only guidance, or determining factor, on price.
Freshly back from Miami, I had an amazing time getting to spend a week working on a design & staging project for Condé Nast. The team was tasked with styling & staging a striking modern waterfront property – our color palate for the rooms was to primarily focus on red, black & white colors, with some rich chocolate & taupe colors for other areas. I had a fantastic experience shopping throughout Miami, picking out beautiful sofas, rugs, chairs, vintage pieces & accessories – and had the pleasure of working with some awesome, fun, & very hard working people! I was able to snap some photos of our work in progress (unfortunately, a camera phone just doesn't do the project justice!) (And another example of why listing agents should always hire a professional photographer to take the listing photos, rather than do it themselves….)