Friday, October 27, 2017

It is autumn again...

Well Halloween is just around the corner. Holy Toledo where the heck did 2017 go? Buying and selling homes in the autumn is a completely different affair. For sellers the flow of would be buyers seems to soften as the cooler weather arrives. This is not just because of weather, but a whole plethora of life events that change the "mood" and availability of buyers.

Halloween can be a great time to connect with neighbors as parents escort their children through the neighborhood. Sellers with active listings have an opportunity to chat with neighbors at the door or on the curbside while the kiddies get their treats. This could be an opportunity for sellers to remind neighbors of that realty sign in the front yard and ask if they know anyone that wants to live in the neighborhood. Sound corny? Well, it isn't neighbors often do know people they like that are looking for a house.

As for the rest of the autumn / holiday period, I have a few tips and ideas that I have published in the past that I will bring to light again today.

Originally published October 7th, 2016 by Rod Sager

OK sellers, the leaves are starting to turn color and some trees are dropping already. Yes my friends it is in fact October and that is what happens this time of year. Sellers need to keep the gutters clear as overflowing gutters are an easy fix yet manage to suck the curb appeal away.

It seems like a simple thing but buyers need to have a positive experience when they pull up and then walk up to the house. Getting a soaking at the hands of a clogged gutter sets a negative tone before they even set foot in the home. We never want a negative tone now do we?

The further we march into the cooler, wetter autumn and ultimately the colder and icy winter the more serious buyers braving the elements are. Buyers need to look past the little stuff, but sometimes they don't. Sellers need to pay attention to details to maximize value and bring the highest offer.

Autumn is a truly magnificent time of year and real estate can be quite robust during this period. although the volume drops a little, buyers are more serious and inventory is a little tighter so it is about equal in as far as supply and demand is concerned.

I mentioned in previous posts that the market is still climbing but the steep price appreciation has moderated substantially. I believe this is a healthy condition.

Interest rates have been very low over the last several weeks even by recent standards but they seem to be yo-yo-ing up and down in the threes. Loan officers have to pay attention so as to lock buyers in on one of those fabulous lows in the cycle. In general this is still a great opportunity for buyers. Although buyers may wax nostalgic for the low prices of 3-5 years ago these low rates are amazing and that will ultimately save buyers tens of thousands of dollars over the life of the loan.

Friday, October 20, 2017

Sewer Scopes can save some Heartache

Yes my friends today we are getting down in the gutter filthy and talking some sewer line smack. The sewer line that links a house to the main sewer service is typically buried underground and quietly doers its thing ridding your home of the nasty necessity of life. We all take it fro granted; there it lies out of sight and nearly always out of mind. Seriously, who wants to think about sewage?

Many people that are looking at buying an older home do think about getting the sewer line inspected and this of course is a wise idea. After all a sewer scope is often price well under $150. Sometimes complicated setups in the home connection may cause the price to go up a bit, but 90% of scope jobs are quick and reasonably priced.

Often however people only think to do it on really old houses. The logic is sound, and old sewer line laid in 1945 is indeed more likely to have issues than one laid ten years ago, right? Well, maybe. Sometimes the underground work on new home developments is rushed, sometimes back fill is not exactly proper and sometimes a big old fast growing tree can disrupt an otherwise sound sewer install.

The primary concern is a blockage or serious leak in the line. A blockage often is the result of plant root intrusion. The roots can break into the line through a seam in the pipe fitting. often that is caused by a large root pushing on the pipe or normal decades of ground settling. Below is a video from a sewer line company on you tube that shows a root intrusion on the sewer cam. I am not affiliated with this firm and this video was taken in another area of the country, but still provides a good idea of how the sewer line camera inspections look. This shows a severe intrusion and you can see how this might lead to a backup. It is also important to note that one should never flush any solid objects other than toilet tissue and what comes out of our bodies as those "foreign" objects will log jam against even much smaller root intrusions than this one. Foreign objects includes feminine hygiene products which are the number one cause of self inflicted sewer backs ups.

Another issue is what plumbers refer to as a "belly". This is where do to settling over time or a less than adequate install job the sewer pipe has a dip between the house and the main line in the street. Understand that the vast majority of sewer lines are gravity based. The house sits up high on a foundation and there is a slope from the house to the main buried in the street. When you flush the toilet or run water in the bath or sink that water runs down a pipe and picks up speed as it heads down towards the main line. A belly in the line means that the "water" dips and then has to rise back up. Sewer line slops are often very gentle slope. A standard 4 inch line should have a minimum slope of about 1/8" drop for every 12" of length. A belly in the line at the minimum slope can cause enough of a slowdown to create problems. Sewer problems are not pleasant.

A belly in the line is not always a deal killing event and in some cases the combination of pipe size and actual slope may be enough that it is not a concern. This is best left to the pros who understand the basic mechanics and physic of gravity sewer lines.

I would recommend that sellers do a sewer scope test in advance so they know going in whether there is an issue to address. Of course here in Washington State and probably every other state, once the seller is aware of a problem they have to disclose it, so there is that issue. I personally would rather know what potential issues I may have as a seller before a list my home.

Buyers should always consider having the sewer line checked out, even on newer homes because installers can make mistakes in the installation that can slip by the government inspections. Spending an extra $125-$150 on your inspection to get a potentially $2000-$10,000 dollar repair item checked before you buy is sound advice.

Friday, October 13, 2017

Market is settling in

I like a more calm and sensible market. When the market is at one extreme or the other, the greedy side of humanity can sometimes rear its ugly head. 6 years ago when the market was down and sellers were desperate, buyers could kick the sellers in teeth with the swagger of an old west outlaw. Then as the market turned into gold the sellers got revenge as the 20016-17 market was difficult for buyers. Sellers tactics were often skirting the fine line of ethics.

Now we see a market that has settled in a bit. Values are still on the rise, but inventory has also risen bit. The median priced home throughout the Portland-Vancouver metro is now barely affordable by the median income earner. This has led to a more sensible market.

We are not in a declining situation but rather the rate of growth is just a little slower. We will probably experience a modest and more "normal" rate of appreciation this next year, perhaps in the 4-6% range. This represents a very healthy and sustainable market. These jack-rabbit hops in prices due tend to create bubbles when they last too long. I am relieved to see than the run up in values has subsided and we are calming the pace to sustainable levels.

Zillow Graph for Vancouver, WA
Buyers should beware however that strong economic conditions in the future could lead to another 'hop' in a year or two. I am not a modern Nostradamus however so who knows what the near future holds. What we do know is that things have indeed settled in and that is actually good for everyone in real estate.

Friday, October 6, 2017

Crazy Week Ahead!

I have a crazy week ahead my friends so I will be on blogger hiatus till next week. Meanwhile take a look at this:

Although the market is slowing its growth rate just a touch and wages are moving in a better direction, this article still rings true.

The following is an article published nine months ago and based on trending data at that time. The market has softened up a bit, but the rising interest rates coupled with the wage problems discussed in this article could spell trouble if something doesn't give. The President-Elect of the United States is driving at skilled labor jobs and if he is successful that could alleviate the wage to housing slide we have been in for a good long time.

Home prices have returned in most markets to the peaks of 2006-07 but wages have not seen significant increases over that time. Let's hope our economy can start producing real jobs so more Americans can afford a home. In the meantime buyers should pay close attention to rate they perked up in December and appear to have leveled off, for a little while at least.

Fast-Rising Home Prices Plus Slower Wage Growth Could Equal a Problem

By Clare Trapasso | Mar 24, 2016 originally posted here.

As Scooby-Doo would say: Ruh-roh!

Housing prices are rising at a faster pace than wages across the U.S.—and that could spell extra trouble for those looking for a home to call their own, according to a recent RealtyTrac report.

The average worker typically spent about 30.2% of his or her paycheck on the combined mortgages, property taxes, and insurance premiums on a median-price home costing $199,000, according to the report. RealtyTrac looked at housing prices for the first two-and-a-half months of this year as well as U.S. Bureau of Labor Statistics wage data from the third quarter of last year, the most recent available, for the report.

That’s a hefty 26.4% over the first quarter of last year.

Home price growth outpaced earnings in nearly two-thirds, or 61%, of the markets tracked in the report.

“We’re heading in a direction where people are no longer going to be able to afford homes,” says RealtyTrac spokesman Daren Blomquist. “The fear: Is this heading in the direction of a housing bubble?”

The numbers are also a big jump from early 2012 when workers plunked down only about 22.2% of their earnings on their new homes. But it’s a significant drop from the titanic 53.2% that homeowners spent at the peak of the pre-collapse real estate market in 2006.

The report looked at public sales deeds in counties with at least 100,000 residents and average earnings data from the U.S. Bureau of Labor Statistics. Affordability was calculated based on the percent of earnings required to meet a 3% down payment (which, in the world of down payments, is pretty low) as well as make payments on the property taxes, insurance premiums, and a 30-year, fixed-rate mortgage for a median-price home.

Lower interest rates on mortgages have kept home buying still reasonably affordable.

But if those rates, along with home prices, continue to rise—while wages don’t—Blomquist worries only the superwealthy will be able to afford to become homeowners. Or prices could plateau or even plummet.

The worst-hit area tracked by the study: Denver. Buyers in that fast-growing city saw the biggest hikes in the percentage of their wages they shelled out to purchase a new home compared with what buyers had paid in the past.

“Our home values are increasing about 1% a month,” says Denver-area real estate agent Kristal Kraft at the Berkshire Group. “It’s insane. I’ve never seen anything like it.”

The Colorado capital was followed by counties in New York City; Omaha, NE; Austin, TX; San Francisco; and St. Louis.

Brooklyn, NY, was ranked the most populated county where homeowners saw the biggest increase in what they forked over for their personal palaces compared with previous years.

The most affordable market for wannabe homeowners was Boston, when looking historically at how much of home buyers’ paychecks went toward the purchase compared with previous years.

Next up were counties in Baltimore; Birmingham, AL; Providence, RI; and Chicago.

Here’s a surprise: The most populated and more affordable county was Los Angeles.

When housing costs rise faster than salaries, workers will often take a closer look at which jobs they can afford to accept and which parts of the country they can afford to live in, says Daniel Shoag, a public policy professor at Harvard University.

“You basically have a situation where it’s not worth it to move to expensive cities, if you don’t have a high-paying job,” he says. Or they’re just loaded.

However, it isn’t “out of whack” for homeowners nationally to spend about 30% of their paychecks for the roof over their heads, he says.

“But it could put the strain on budgets if [prices] continue to rise,” Shoag says.

Clare Trapasso is the senior news editor of and an adjunct journalism professor. She previously wrote for a Financial Times publication and the New York Daily News. Contact her at Follow @claretrap