Marie Hagman
Recent posts
October 6, 2008
Recent posts on Sweet Digs Seattle:
Stock prices around the world tumble despite bank bail-outs in the US and abroad. Fears of slower global economic growth are creating a crisis and investors don’t seem to have high confidence in the ability of legislators to stem the tide. Currently the Dow is hovering around where it was in 2004. From BBC News:
This was despite a $700bn (£398bn) US bank bail-out being passed late last week, and efforts by several European countries including Germany and Denmark to boost confidence in their banks.
“The fact is people are scared and the only thing they’re doing is selling,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research.
“Investors are cleaning out portfolios and getting rid of everything because nothing seems to be working.”
- London’s FTSE 100 index down 7.85%
- Germany’s Dax index down 7.39%
- France’s Cac-40 index down 9.04%
- Wall Street’s Dow Jones index down 4.05%
- Japan’s Nikkei index down 4.3%
- Indonesian market down 10%
- Brazil market down 10%
- Russia market down 15%. Russia’s RTS index down 19.1%
With home prices down and stock prices down, the only upshot is that oil prices are down too! Hurray!
October 1, 2008
The Senate just approved the bail out that the House of Representatives rejected earlier this week.
A friend of mine believes that “instead of giving money to the banks, our government should use that money to enable the banks to refinance the loans at a more reasonable rate so that people can afford the payments and not default.” I’m not sure if that’s the right thing to do but the $700 billion bail doesn’t sit well with me. My guess is Wall Street will be happy tomorrow.
Seattle Bubble points out :
… it’s not enough that we throw hundreds of billions of dollars we don’t have at buying our own banks’ bad debt—if this version of the bailout passes, we’ll be pouring our children’s children’s children’s tax dollars into bad debt held all around the world.
September 5, 2008
Recent posts on Sweet Digs Seattle:
Are you a do-it-yourselfer or just plain curious about how all the appliances, technology, and doodads you have in your house work? The HowStuffWorks site has a plethora of great information on pretty much everything you could ever dream of in your house… including how to repair some of them. Whether it’s your fridge that’s on the fritz or your lawn mower had a fight with the overgrown lawn and lost, you’ll get the tips you need to make it all better.
If you just bought a new house or are planning to sell, the first thing you want to do is clean clean clean. Learn to clean just about anything with the cleaning tips on HowStuffWorks. Here’s an easy and eco-friendly recipe for cleaning your shower - who knew vinegar was for more than just salad dressing? Evidently white vinegar is great for removing hard-water deposits.
A Shower-Stall Cleaning MixtureHere’s a homemade solution that can help you when cleaning your shower stall:
- Mix 1/2 cup vinegar, 1 cup ammonia, 1/4 cup baking soda, and 1 gallon hot water. Caution: Wear rubber gloves and work in a well-ventilated area when using this powerful solution.
- Apply it to the walls of the shower with a sponge, scrubbing with a brush, if necessary, to remove all the scum.
- Rinse well with clear water, and wipe dry.
August 25, 2008
Recent posts on Sweet Digs Seattle:
If you think you’re having trouble selling your house, check out this home in Detroit that took 19 days to sell for $1. It was a foreclosure that the bank was trying to unload fast so they listed it for a buck. The home sold for $65,000 almost two years ago and was the “nicest house on the block” at the time. Since the foreclosure, the vacant house has been ransacked – first the siding was stolen, then plumbing, copper wiring, hot water tank, furnace, light fixtures, and even the kitchen sink! When the house was boarded up, the boards were stolen and used to board up another abandoned home in the neighborhood.
So desperate was the bank owner of 8111 Traverse Street to unload the property that it agreed to pay $2,500 in sales commission and another $1,000 bonus for closing the $1 sale; the bank also will pay $500 of the buyer’s closing costs. Throw in back taxes and a water bill, and unloading the house will cost the bank about $10,000.
“It doesn’t make sense in some neighborhoods to keep paying costs and costs,” Colpaert said. “It can make more financial sense to give it away.”
For anyone who thinks they’ve got it bad in the Seattle market, this is a little reminder that it could be much worse.
photo credit: Detroit News
August 8, 2008
Recent posts on Sweet Digs Seattle:
Open Houses this weekend:
Forbes sure does love their top ten lists and here’s the latest that features Seattle in 3rd place. Forbes determined the most overpriced places in America by looking at the price to earnings spread or P/E ratio of homes in neighborhoods around the country “comparing rental costs with buying costs for similar properties, based on number of bedrooms, location and price per square foot.”
Price-to-earnings, or P/E, expresses how much one has to pay for each dollar of return. A neighborhood with a high P/E is overvalued because a buyer is getting a low return based on costs–and paying a huge premium to live in area relative to how much it would cost to rent a similar property there. In TriBeCa, for example, which is No. 1 on our list, the P/E of the measured property is 36.3.
A high P/E can be a sign of an investment being overpriced, but a rock bottom P/E doesn’t mean a bargain. In fact, when you get into the single digits, you’re usually buying a weak investment in an area few are interested in. Detroit’s 48235, around 7 Mile Road, for example, has a P/E of 3. It is inundated with foreclosed properties and houses going for as little as $25,000. It’s hard to put an exact epicenter on Detroit’s real estate crash, but this neighborhood is in contention.
Our beloved Emerald City’s Downtown zipcode of 98104 has a purchase-to-rent spread: 30.3. The real estate micro bubble in Pioneer Square condos is noted as “vulnerable to correction?. Rose City Park in Portland’s 97213 takes 9th place on the list with a purchase-to-rent spread of 26.6.
America’s Most Overpriced ZIP Codes:
10. San Jose, CA9. Portland, OR8. Dallas, TX7. Pheonix, AZ
6. San Francisco, CA
5. San Diego, CA
4. Los Angeles, CA
3. Seattle, WA
2. Boston, MA
1. New York, NY
August 2, 2008
Recent posts on Sweet Digs Seattle:
Open Houses this weekend:
Congress passed the “Housing Rescue bill”, and good ol’ GW is about to sign on the dotted line. If you haven’t been keeping up with the hoopla, here’s the CliffsNotes version of what benefits the bill includes courtesy of the Five Cent Nickel blog:
Homeowner benefits
Up to 400,000 homeowners at risk of foreclosure will be allowed to refinance into lower-cost mortgages insured by the Federal Housing Administration. To qualify, borrowers must live in an owner-occupied home, have a relatively high level of debt to income, and agree to share the profits on an eventual resale with the government. Moreover, the lenders must agree to write down the loan principals, meaning that lenders could use this an opportunity to shed bad loans and hang onto better loans.
Homebuyer benefits
Once this bill becomes law, first-time homebuyers can qualify for a tax credit of 10% of their new home’s purchase price, up to $7,500. The income caps for the full benefit are an adjusted gross income (AGI) of $75,000 for single people and $150,000 for couples who file taxes jointly. The thinking here is that the tax credit will help to stimulate a sagging real estate market. The catch is that this “credit” is essentially an interest-free loan that has to be repaid over the following 15 years.
Community benefits
The Housing Rescue bill offers nearly $4 billion to communities to purchase and rehabilitate distressed homes. The homes will then be sold to low- or moderate-income individuals with the profits being use to fund neighborhood development. The thinking here is that foreclosures have downstream effects on neighboring property values. By attempting to stem the tide of foreclosures, the bill seeks to stabilize neighborhoods and reduce this negative impact.
Fannie Mae and Freddie Mac benefits
In hopes of stabilizing the financial markets, the bill also makes explicit the government’s backing of the Federal National Mortgage Association (FNMA, or Fannie Mae) and the Federal Home Loan Mortgage Corporation (FHLMC, or Freddie Mac). Fannie Mae and Freddie Mac own a combined total of $5 trillion in U.S. mortgages, nearly half the nation’s total.
The Treasury now has the power to rescue both companies through loans or cash infusions. The bill also makes permanent an increase in the ceiling of “conforming” loans to $625,500. This measure, which is intended to boost to the high end of the real estate market, was introduced in the original economic stimulus package.
July 28, 2008
Recent posts on Sweet Digs Seattle:
Variety is the spice of life and some people like to express their individuality big. Via the Unusual Life blog I stumbled upon some of the most interesting homes in America courtesy of Realtor Matt Heafey.
There’s got to be a good story behind this one! It looks a little like Cousin Itt with a glass tumor growing off the side of it’s head.
If I were invited as a guest in this house, it would take serious restraint not to stand on the top deck with arms outstretched and yell “I’m king of the world!” Leonardo DiCrapio style.
These New Jersey neighbors clearly have very different taste.
July 21, 2008
Recent posts on Sweet Digs Seattle:
The Seattle Times reported that foreclosures are way up in Washington since this time last year. The good news is that Washington has significantly fewer sub prime mortgages than other troubled states like Navada. Since Washington follows national housing trends, just 18 months later, it looks like this year may be the worst of it for us.
Of the three Central Puget Sound counties, foreclosures again hit Pierce County hardest, with one in 483 households in trouble. In Snohomish County, it was one in every 966.King County fared best, with one household in 1,265 in trouble…In Washington state, 1 percent of outstanding mortgages were subprime in the fourth quarter 2007, according to the Mortgage Bankers Association’s most recent national delinquency survey.
By comparison, 10 percent of mortgages in Nevada, the foreclosure leader, were subprime. Last month, one in 99 Las Vegas homeowners was in foreclosure.
| Here’s a look at the number of foreclosure filings for the past four Junes: |
| June 2005 |
1,077 |
| June 2006 |
1,440 |
| June 2007 |
1,646 |
| June 2008 |
2,742 |
| Source: RealtyTrac |
July 16, 2008
Recent posts on Sweet Digs Seattle:
Most people are a first time home buyer only once. Buying that “starter” home is often a harrowing experience and you figure that it will be easier when you’re ready to trade up because you have so much more knowledge. Well now the complexity doubles because you have to juggle buying the new home while selling the old one. The Get Rich Slowly blog has some advice on Selling Your Existing Home While Buying a New One from a Smart Money article on the topic.
If you sell your home first, she says, you’ll have the cash needed to make the transition, but you’ll be homeless until you’re able to close on the new property.
- In some cases, you may be able to stay in your existing home by renting it back from the new owners.
- If this isn’t an option, you’ll need to find temporary quarters: rent an apartment, stay in a hotel, move in with friends or family.
Neither option is ideal, especially since you’ll likely have to move your stuff twice. But financially, this is by far the smartest choice.
If you buy your new home first, you can end up in a cash crunch, especially in this current market. If you don’t have enough in savings, you’ll need to borrow money until you can sell your existing home. You can tap into your home equity, take out a “bridge loan”, or (as a last resort) borrow from your retirement savings.
When Kris and I bought the house we live in now, a sympathetic banker gave us a home equity loan to provide a temporary cash infusion despite the fact we intended to close the loan in only a month or two. (She wasn’t supposed to allow such a loan if she knew it wouldn’t be long-term because the bank would lose money. We’re grateful she did anyhow.)
Your best option, of course, is to plan your move, and to save up enough cash to be able to buy your new home first. This isn’t always possible. And in the current real estate market, it’s difficult to know just how much you’ll need to save. My youngest brother bought a new home before selling his old house, and has been carrying both mortgage payments for two years. The last I heard, it’s possible that he’ll lose both houses.
[Smart Money: Selling your home while buying a new one]
Most people I know get a home equity loan for the down payment on a new house then sell the old one. While saving up for the down payment is the smartest thing, you might not want to liquidate your investments to put down when you’ll be getting equity out of the house anyway when you sell. It’s also is a huge burden to sell your existing property and have to move your stuff twice - once to a rental or storage unit then to the new house. Most people get in trouble when they can’t sell their old property for as much as they had hoped when they took out the home equity loan. The bank appraisal is a best guess, everything sells for a price - and that price might be a lot lower than you had hoped.
July 7, 2008
Recent posts on Sweet Digs Seattle:
Available inventory and pending sales are the Yin and Yang of a balanced housing market. In June we might just be a little closer to real estate Zen around Seattle as we see a dip in active listings and increase in pending sales. But anyone who thinks the downturn is on an upswing shouldn’t be so quick to judge.
The NWMLS reports that the “Housing Market Becoming More Balanced as Sales Climb to Highest Level in 10 Months”.
Before you get too excited, take a look at the year over year data for a little reality check for June 2008 Single Family Homes:
- Active Listings: up 25% YOY
- Pending Sales: down 27% YOY
- Median Closed Price: $449,700 - down 4.3% YOY
Seattle Bubble’s spreadsheet has more number crunching if you want to dig deeper.
This small upward blip in my opinion does not reflect a turn in the overall market just the seasonal increase for spring/summer.
