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Home buyers and sellers

Your home might be less of an asset than you're led to believe

Debt is one person's liability, but another person's asset -  Paul Krugman.

Is my home an asset or a liability?The US real estate market is currently booming and  Seattle real estate is top of the heap.  At the time of writing this, Seattle home prices are up close to 13% year-over-year and a whopping  47% above the previous highs of 2007.

If you own a home, you might be gleefully looking at those newspaper headlines detailing the latest market surges, dwindling inventories and desperate buyers fighting it out trying to buy a home while driving prices upward. While sipping your morning coffee, you'll be silently pondering "I wonder how much my home is worth now?'

Yes indeed, times are great and homeownership is a great investment!

Or is it?

No, this is not an article about whether we are in the midst of another real estate bubble, but rather a look at how the biggest purchase of your life can be an asset or a liability, or neither.  Also, even if you walk away with $200,000 in your checking account after the sale of your home, was your home really an asset / good investment in the strict sense of the word?

A home can be a potential asset or quickly spiral into a financial albatross around your neck. Alternatively, your "investment" can just sit there and do nothing. Some things, like sudden economic changes, are out of your control, but others like taking too much equity out of your home to buy a speedboat are within the realm of human stupidity.

Historically, home prices have gone up in value but it's not a smooth, linear upward trend. Here's the Case-Shiller US home price index, adjusted for inflation, starting way back in 1890. Note that the index measures the changes in the sale price of single family...

What percentage of homes in Ballard, Seattle are purchased with cash?

The Ballard neighborhood Seattle is a great place to live and is a sought after area by many Seattle home buyers. Currently, the Seattle real estate market is ranked as the hottest in the country, overtaking Portland, Oregon late 2016. Seattle home prices went up up 12.7% over 2016.

Many buyers looking to buy a Ballard home and who may have lost out on a home already, are probably wondering what percentage of the homes for sale in Ballard are likely to be purchased by an all-cash offer. Also how do Ballard condos and single family homes compare. Finally, how does the Ballard neighborhood compare with other areas.

To answer this question, I looked at statistics for the following:

  • The 100 most recent sales for each of Ballard and Capitol Hill (Seattle neighborhoods) and Bellevue (city on the other side of Lake Washington, for those of you who are newer to the area).
  • Looked at both condos and single family homes (houses and townhomes) of all sizes and prices.
  • Data was taken from the NWMLS on February 2nd 2017.

When you compare the percentage of cash buyers for each of these 3 areas, you see the following:

What percentage of homes in Ballard Seattle sell for cash

For Ballard, about one in ten single family homes sell for cash and about 1 in 5 condos (11 and 19% respectively). For the Capital Hill neighborhood in Seattle, twice as many houses sell for cash compared to Ballard but slightly fewer condos (22 and 15% respectively).

When you pop over to Bellevue, it jumps up again with about one third...

How to read between the lines of online real estate listings

We almost take it for granted now, but it’s incredible that someone can now sit in a Starbucks, open an app and search for online real estate listings to their heart's content. They get to see a detailed description and photos of the home, schools ratings, a street and aerial view and lots of more details in the palm of their hand. As the much touted statistic goes, 90% of buyers  now look for homes through the internet. The Sunday edition of your local newspaper doesn’t stand a chance anymore.

How to interpret online real estate listingsHow buyers find homes for sale has changed a lot over the years. Not so long ago, buyers were completely reliant on their agents to find out what homes were for sale. Now the masses are truly empowered and can be notified of a new listing just as quickly as their agent. The other day I was texting a listing to a buyer who at the same time he was sending me the very same listing. I beat him by a whole 5 seconds.

Having all this unfettered access to information on homes is great for buyers and sellers. However, do you know based on what you see online whether a particular home is worth speed dialing your Realtor about or gulping down your coffee and dashing out to the door to do a drive-by?

Obviously nothing beats going to see a home in person, but you can tell a lot from reading between the lines of online listings as to whether a home is a gem or an over-hyped dud.  Conversely, some homes can be a lot better than the online listing portrays because the listing agent skimped on a professional photographer or advised the seller that staging was a waste of time.

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Buying and selling a home and the joys of waiting. How to stay sane.

Estragon: “I can’t go on like this.”

Vladimir: “that’s what you think.”

      - Samuel Beckett, Waiting for Godot

 Whatever side of the home sale transaction you are on, either as the buyer or the seller, the whole process is undeniably a bit stressful. Even the Dalai Lama probably gets a little stressed out buying a home, and you know how relaxed he looks all the time.

The most excruciating aspect of the whole process can be the WAITING! Waiting for this to happen, waiting for that to happen. HURRY UP already!

It will seem like the laws of quantum physics and the space / time continuum are being violated.  Just ask Stephen Hawking about when he bought his first home! There are periods of rush, rush, go, go…rush to go see a new listing, rush to make a decision whether to make an offer, rush to get an offer submitted, followed by....periods of deafening silence which feel like they drag on forever. Whoever said patience is a virtue obviously never bought or sold a home before.

When it comes to buying or selling a home there are several periods of waiting, some longer than others and some potentially more excruciating than others. Allegedly, all good things come to those who wait, but first you have to, um, wait!

Real estate waiting periods: The Classics!

The wait between submitting your offer and waiting to hear back if it has been accepted. This is probably the most stressful wait of all. You finally find THE HOME, it meets all your criteria and you really, really want that home! Unfortunately, so do four other buyers. You put your best foot...