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$8000 Tax Credit for downpayment…….. May 26, 2009

Posted by kimberleylynn in Uncategorized.
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Well, there has been a lot of talk in the last week about HUD approving an “advance” on the tax credit, allowing first time home buyers to use it as their down payment.  There is a lot of controversy out there on the benefits of this plan.  They just did away with the seller paid down payment assistance in the last year, with the thought that buyers would be more “vested” in their purchase if they had to save the down payment.  The flip side, is that how many of those first time buyers, are really that disciplined to save up  nearly $10,000 for down payment.  This “advance”  of the tax credit could potentially get a lot of people out there buying and in turn stimulating not just the housing market but the agents and lenders incomes as well.  More income means we are spending more, saving more, paying  off debts, etc.    Unfortunately, it was announced this morning that have reversed their decision


Anyone have any thoughts?


This is only the worst time to buy real estate if you are broke May 26, 2009

Posted by mstand in Uncategorized.
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Every time some sliver of positive news about housing is broadcast, I think back to an article I read last February by a well known “financial adviser” stating the 5 reasons this is the worst time to buy real-estate. At the time my first reaction was, we don’t need an article like this… and then I thought could she be right??? For some, but not all. Three months later I still believe that. Actually this may be a once in decade or maybe a century (well maybe that is too bold a statement) to purchase real estate at these prices.  The caveat for the buyers is each must do his/her due diligence and home work and have the wherewithal to make it through the financing portion.

If you are a first time home buyer with nothing to sell or an investor looking for rentals what a bonanza! Both have the opportunity to purchase under 2005 market prices or lower and reap good equity gains. Pick a neighborhood and house in your price range. My clients are continually surprised by what is on the market! Especially the number of houses under $250K—albeit most are bank owned or foreclosures. Mortgage rates are under 5% for conventional loans and rumblings have begun that maybe Jumbo rates will be more attractive. Outside of FHA, Financing can be problematic and without a credit score of 740 or above more expensive. But what the heck! Rates are the lowest in 30 years and many can still qualify within his/her budget. Just plan to keep the property for little a longer than the months to payback the fees and points (if you pay them) and one will come out a head. Add the First Time Home Buyer Credit (incentive, sweetened by the Washington State Realtor Association program to allow the $8K credit to be at time of closing (go to http://www.realtor.org for details) and the door is open to those have the financial profile but were held at bay by higher home prices.

From the “advisors” perspective, buying a house in 2009 was not a good idea because the prices would continue to be plummeting to earth. Well in King County at least, falling home prices seem to be reaching the ground. Maybe not next year, but I would go out on a limb and say 5 years from now pricing will be a lot different. And those who purchased during this recession/depression/credit adjustment era will have accumulated satisfactory equity in their houses. I suspect in typical fashion the government will be slow (not this year or maybe next) to put their arm around the huge plies of money and pull it back from the table. The justification will be lenders now have more “prudent” lending practices and the housing sector is recovering Inventory will be reduced and prices will very slowly nudge slightly up.

With that said here are my 5 reasons to Buy Now:

1- Price
2- Inventory of properties
3- Mortgage Rates
4- First Time Home Buyer Credits
5- Housing market show signs of stabilizing

Yes now is the worst time to buy real estate if you are broke!

PS- Look for my next Blog – Now is the Best Time to Buy Furniture For Your Home!!

First Time April 2, 2009

Posted by mstand in market conditions, real estate, Uncategorized.
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First Time
This is my first time blogging. Though I have spent more hours than are productive reading other peoples opinions.  My first career was in high tech sales and marketing. After riding that horse through the glory days of the rise of Microsoft and the dot com bubble, things suddenly came to a screeching halt. The unthinkable had happened. There was not any more investor cash to burn on great ideas like Home Grocer.com. I learned two concepts from the dot com era–”the next big thing” and “underwater.” And what was the next big thing after the dot.com bust? Real Estate of course. So here I am again, at the end of another bubble. I look back at the dot coms, Enron and WorldCom as just a warm up for what faces us now. The tech boom was mostly about spending large sums of money trying to create “the next big thing” Welcome to the future digital world .Even our Government tried to take credit for the internet phenomenon. Who could forget Al Gore running around the Microsoft campus with a PDA holster strapped to his side? But the “next big thing” does not have the same connotation in 09 that it did in 00. In 2000 people were betting on the “next big thing” now they are betting against it. “Underwater” certainly has the same connotation. One could be even more dramatic and refer to it as drowning. Government solutions to problems that do not include common sense and practicality always amaze me. I am sure you have had the same thought. Take overspending for example. We all admit most of us have too much debt. What are the conventional methods for dealing with loans? Either pay it off, restructure, refinance– most popular option– or take a loss, write off, declare bankruptcy. Why does this seem too complicated for our politicians to do? There always is a different agenda that appears to trump commonsense. Natural disasters occur. Things burn down and are rebuilt. How many small businesses could be spurred from the breaking apart of a large bank? Maybe our society will go back to the model of having many smaller business serving people instead of large conglomerates. But the real barometer of recovery will be when all of us start to reduce or eliminate our debt to the level that we feel comfortable making investments and taking on payments again. Then the economy will begin to grow-albeit at a more cautious pace. Don’t wait until 2010! Let’s start now to rebuild. Eliminate your debt. Then we can all pursue the “next big thing”. If you want to comment on ways you are accomplishing eliminating debt or restructuring, I would love to hear it.

Investing in real estate as a group July 9, 2008

Posted by W. Keoki McCarthy in Invest, real estate, real estate investing, Uncategorized.

One of the things I advise investors that are going to partner up and purchase a property together to do is to put some rules about how to fairly deal with work done by one party on the property.  Who has to do what and when and what do they get for doing it.  Otherwise, both parties will wonder if the other person is pulling their fair share. 


My first example:

Two investors purchase a property together.  They put up 50% of the money each so they own the property equally.  Investor A is very handy – he was a carpenter in a past life.  Investor B is not handy at all – he is a CPA by day and a couch potato by night.  Some work needs to be done to the property.  What if A decides to do some of the work himself instead of hiring a contractor?  As an owner, should he be expected to work for free for the good of the partnership?  Or, should he track his hours and then expect that B will put in as many hours?  What if B, being lazy, never puts in the same amount of hours?  Isn’t that unfair to A?  It can get even more complex.  Picture this; A spends 14 hours doing yard work in a month.  B did the books for the property at year end in about 4 hours.  In this scenario, it appears that B did not work as hard as A.  However, A and B could have hired out a yard person at $10/hour to do yard work costing $140.  They could also have hired a CPA to do the books at $90 an hour costing $360.  In this case it looks like B got the short end of the stick.


Here is another problem.  What if both partners don’t have an equal share of ownership?  If it is a 60/40 split do you want to count hours trying to figure out if A has done 60% of the work? 


I also see investors saying, I’ll do all the work and run the show for a larger percentage of ownership.  That can be dangerous to both sides.  If A must do all of the work and they get an extra 10% ownership, the danger is that huge problems could arise and A will need to spend a lot of time and effort to mitigate them, but, when the time comes to sell the property, there is minimal gain.  A will go uncompensated.  Or, conversely, there is a huge gain and A is unjustifiably rewarded 2, 3, even 10 times more than their effort.  This is one of the least effective methods as it is impossible to foresee the future value of a property.  Therefore, someone is most likely going to lose with this method.


How do investors deal with these problems?  The simple solution is to pay the investor that does the work the wage it would cost to hire a third party.  If this is written into your operating agreement it will save you a lot of headaches in the long run. 


A question I get frequently is this.  Does the investor doing the work make the same hourly wage that a professional makes?  Yes, if the investor is as good as a professional.  If the investor is not, then pay the total cost saved by not hiring a pro.  Example paying a rookie $90/hour to do plumbing because a plumber makes that amount is probably not fair.  I may be able to fix a leak but it might take me all day whereas a plumber may take 15 minutes.  Try to pay the partner the cost it should have been, not by the hour.  Or, for bigger projects get bids and let the partner that wants to do the work be a bidder.  If his/her bid is lower, they get the job, if higher go with the pro.


This is not the only way to go.  You can be creative.  However, this is the way that I’ve seen work the best.  You still have to trust the other party as they are going to have to use their best judgment to determine how much they saved the partnership to know how much to get paid.


One last bit of advice.  Don’t partner with investor B.  While having a CPA around is nice, non handy couch potatoes tend to make bad real estate partners.

Year in review from the NWMLS January 23, 2008

Posted by W. Keoki McCarthy in Uncategorized.
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News from NW Multiple Listing Service


Northwest MLS Brokers Report $33.3 Billion in Home Sales During 2007

KIRKLAND, Wash. (Jan. 22, 2008) – Members of Northwest Multiple Listing Service tallied more than $33.3 billion in sales of single family homes and condominiums during 2007.  The MLS also reported 18 of the 19 counties in its market area experienced increases in median prices compared to 2006, with one county matching the 2006 price.

In its year-end summary report, Northwest MLS, whose service area covers about 80 percent of the state’s population, logged more than 82,000 closed sales during 2007.  Single family homes accounted for nearly 82 percent of the number of sales and about 86 percent of the dollar volume, with condominiums making up the balance.

Last year’s volume, measured by number of units, amounted to a drop of about 14.5 percent from 2006.  The dollar volume, compared to the previous year, was down about 8.7 percent.  Underscoring the “real estate is local” mantra, median price gains among the counties ranged from zero to nearly 16.1 percent.

Among highlights the broker-owned service noted for 2007:

  • The median price for single family homes that sold last year area-wide was $342,000, up 5.9 percent from the previous year.
  • Among the counties, the median selling price of a single family home (half sold for more, half for less) ranged from $154,500 in Grant County to $563,250 in San Juan County.
  • Five counties reported double-digit price gains for sales of single family homes compared to 2006, topped by Lewis County at 15.9 percent.
  • Condominium prices jumped 10.6 percent from 2006 to 2007. The area-wide median price rose from $235,000 to $260,000.
  • Kitsap County topped the charts in price gains for condos. Last year’s median sales price of $337,400 was 82.4 percent higher than the 2006 figure of $185,000. Several new developments contributed to the price jump.   
  • 2,311 residences fetched more than $1 million, a 10.1 percent jump from the previous year. Of the million-dollar-plus sales, 2,186 were single family residences.
  • The MLS area covering Bellevue/West of 405, including the “Gold Coast” district encompassing Clyde Hill, Hunts Point, Medina, and Yarrow Point, had the highest number of million dollar-plus sales with 240.
  • 1,115 condominiums sold for $500,000 or more (including 125 condos that sold for more than $1 million).  Seattle’s Belltown area claimed the highest number of condos that sold for a half-million dollars or more, with 201.
  • In the four-county Puget Sound region (King, Snohomish, Pierce and Kitsap), less than 5 percent (4.68 percent) of single family homes sold for under $200,000. Nearly three of every 10 homes (28.9 percent) sold for $500,000 or more.
  • Brokers added nearly 153,000 new listings of single family homes and condominiums to the inventory during 2007 (up from 140,449 the previous year).
  • NWMLS members sold more than 15,000 condominiums, about the same number as the previous year (15,038 in 2007 compared to 15,318 in 2006).  About 63 percent of all condos that sold were in King County.
  • Single family homes accounted for about 83 percent of all residential sales. Of these transactions, more than half (52 percent) had three bedrooms.
  • The second quarter was the most active for pending sales, with 31.4 percent of those transactions being written during April, May or June. The last quarter, reflecting the usual seasonal slowdown plus turbulence in the mortgage market, was the slowest, with only 17 percent of pending sales taking place during that timeframe.
  • Counties within the MLS service area have wide variation of prices for 3-bedroom homes. For pre-owned homes (built 2005 or earlier) the median sales price ranged from $145,000 in Grant County to $500,000 in San Juan County. In King County it was $408,000.
  • For new homes (built in 2006 or 2007), the most expensive homes are found in San Juan County, where the median selling price was $685,000.  In Grant County the median price on new homes was $182,059, earning it the distinction of being the only county in the NWMLS service area with a median selling price under $200,000 for a newly built single family home.
  • Mercer Island had the highest priced homes when comparing median prices by school district. Single family homes that sold in that district during 2007 had a median selling price of $1,081,250, followed by the Bellevue School District at $720,000.
  • Measured by “month’s supply” last year’s average was 5.57 months (meaning it would take that long to exhaust inventory at the current sales pace). The national average is 10.3 months, according to the latest report from the National Association of Realtors®,
  • Northwest MLS members maintained a high ratio of cross sales: about eight of every 10 sales (79 percent) were listed by one office and sold by a different office.
  • In King County, the average price of a residence (single family home and condo combined) that sold in 2007 was $497,855, more than twice the price paid a decade ago (1997 – $213,821). For single family homes (excluding condos) that sold in King County last year, the average price was $564,468; in 1997 it was $230,345 and in 1990, the average sales price was $178,187.

Northwest Multiple Listing Service, owned by its member brokers, is the largest full-service MLS in the Northwest. Its membership includes approximately 31,000 brokers and agents. The organization, based in Kirkland, currently serves 19 counties, mostly in western Washington, plus Grant, Kittitas and Okanogan counties in the central part of the state.

Complete Report Cick Here (PDF – 324KB, 35 pages)

©Copyright Northwest Multiple Listing Service, ALL RIGHTS RESERVED. This material may not be published, broadcast, rewritten or redistributed without prior permission.

Market still stronger here than rest of country October 8, 2007

Posted by W. Keoki McCarthy in Uncategorized.
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The Seattle Times wrote an article about our softening residential real estate market.  It goes into detail about how the number of units sold has been declining but appreciation was still up in the past few months.  However,  It appears that even appreciation might be softening in our area.  For more info see the article.

Show notes for Podcast #4 Evictions July 10, 2007

Posted by W. Keoki McCarthy in Uncategorized.
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In this episode we interviewed Eviction Attorney Scott Eller.  He was a great guest and had a lot of extremely valuable information.  If you have a rental property or are thinking about having one this is a must listen.  You can get more information from Scott by emailing him at scott@accessevictions.com  His website is www.accessevictions.com and his blog is washingtonevictions.com  He has useful forms for notices and dealing with tenants like 48 hour notice to enter property, A tenant information packet (must be provided to every new tenant in Seattle), and much more at http://accessevictions.com/id3.html

Want to know what’s important in that remodel? May 9, 2007

Posted by W. Keoki McCarthy in Uncategorized.
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Here is an article out of the Northwest Reporter.

Survey Finds Homeowners Favoring Eco-Friendly Materials, Ongoing Desire for Larger, More Upscale Kitchens, Bathrooms

NWREporter June 2007

As kitchens have evolved into the most popular room in the home, consumers are increasingly looking for high-end appliances, additional pantry space, island work stations, wine storage areas and recycling centers. The number of bathrooms in homes is also increasing with radiant floors, multi-head showers, dual sink vanities and towel warming products emerging as the most popular features. These findings are from The American Institute of Architects (AIA) Home Design Trends Survey focused specifically on kitchen and bath trends in the fourth quarter of 2006.

“There is a strong desire to integrate the kitchen with living space that allows for a more open home environment with the ability to converse and access entertainment options while in the kitchen,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “There has also been a sharp rise in demand for renewable materials for countertops and flooring, as well as dedicated areas for recycling.”

“Accessibility and universal design to accommodate an aging population are on the rise in bathrooms,” Baker noted, adding, “From an amenities standpoint heated floors lead the way, followed by multiple showers and towel warming racks, with the popularity of whirlpools dropping for the second consecutive year.”

Despite the national slowdown in the housing market, Baker said architects report continued strong demand for remodeling and renovation projects, with virtually every other residential category in decline.

Popular kitchen products and features*

  • Upper-end appliances: 65.2
  • Increased pantry space: 64.2
  • Renewable flooring material: 53.3
  • Wine refrigerators / wine storage: 53.0
  • Integration with living space: 52.5
  • Recycling center: 48.3
  • Island work areas: 43.0
  • Natural stone countertops: 42.2
  • Drinking water filtration systems: 37.0
  • Duplicate appliances: 34.0

Popular bathroom products and features

  • Radiant heated floors: 62.4
  • Multi-head showers: 61.9
  • Accessibility / universal design: 47.5
  • Doorless showers: 47.3
  • Linen closet / storage: 36.4
  • Hand showers: 35.5
  • Multiple vanities: 26.5
  • Dressing / cosmetic areas: 22.9
  • Towel warming drawers / racks: 22.1
  • Whirlpool baths: -24.3

Specific construction segments (index score computed as % of respondents reporting improving minus those reporting weakening conditions)

  • Additions / alterations: 42.0
  • Kitchen and bath remodeling: 38.5
  • Custom / luxury home market: 5.2
  • Townhouse / condo market: -2.2
  • Second / vacation home market: -7.1
  • Move-up home market: -12.3
  • First-time buyer / affordable home market: -40.8

To the full report: http://www.aia.org/aiarchitect/thisweek07/0223/0223b_res.cfm

About the AIA Home Design Trends Survey
The AIA Home Design Trend Survey is conducted quarterly with a panel of 500 architecture firms that concentrate their practice in the residential sector. Residential architects are design leaders in shaping how homes function, look, and integrate into communities and this survey helps to identify emerging trends in the housing marketplace. Business conditions are also monitored on a quarterly basis.

Flipper Nation May 3, 2007

Posted by W. Keoki McCarthy in Uncategorized.
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 I recently came accross this again.  It is pretty funny.  It originally came out a while back but thought it worth reposting.  Hopefully it doesn’t hit too close to home.

Hello world! January 2, 2007

Posted by W. Keoki McCarthy in Uncategorized.
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Welcome to our forum for investors in the Northwest.  I have been putting off getting this started for some time now and decided to stop procrastinating and start writing.  This blog will serve as a place, for some of the experts I have come accross in my 13 years in the real estate business, to write articles and give advice on investing in real estate.  It will also be a place that we can put notes from our podcast of the same name.  In this podcast we interview these experts and get down to the nitty gritty of making money in the real estate market.  While our focus will be the greater Seattle area, the information will be useful for anyone interested.