Real Estate Information

Over the weekend we had the opportunity to attend graduation at the Medical College of Vanderbilt University in Nashville TN.   Our youngest niece graduated with a Doctor of Audiology.   The keynote speaker indicated the field of medicine has changed with the advent of the Internet.   Apparently patients are diagnosing their own ailments on the internet and surprising are correct 2 of 3 times.

The internet has equally changed the field of real estate.  When I started the business 22 years ago, we had the “book” that contained all listings and under no circumstances was it to be released to the public.   Today the public has access to much of the same information as real estate agents.  We just have more detailed information and are able to sort the information in greater detail.  Now clients inform us what listings they desire to view.

Some information on the net like Zillow really provides misleading indication of value.   Knowledgeable real estates are still required to interpret data and arrive at sound conclusions.   For this reason among many, it is critical home buyers have representation to have their rights protected. 

When it’s time to buy or sell real estate, give us a call.  We’ll make sure you find the home meeting your needs and your rights are protected.  

Have an awesome week! - Don

Are housing values still a good value in Benton and Franklin Counties?   To answer the question, I checked with the Washington State University Real Estate Center.   Benton and Franklin have Housing Affordability Indexes of 202.6 per the 4^th QTR of 2012.   The index is based upon a typical family being able to make payments on a median priced house, assuming a down payment of 20%.

Washington State has 39 counties.  Of these, 26 have lower affordability indexes (means more expensive housing) than Benton and Franklin Counties.   In  the immediate area, Yakima and Walla Walla Counties are more expensive than our community; however, Spokane County is  slightly more affordable.

The most expensive county for housing continues to be San Juan and the most inexpensive is Pacific County (SW Washington area).  

The outlook for the Tri-Cities development looks good!  The City of Richland has committed to supporting a community of 5000 homes south of Badger Mountain.   Kadlec Hospital intends to build a new medical facility once the community becomes established.  At the same time, the City of Kennewick continues to expand south and west of the Southridge High School.   The construction of the new Kennewick Hospital is rapidly being completed.

 The Red Mountain irrigation project and associated future construction is moving forward.  This should provide added stimulus to the West Richland area.   The City of Pasco announced an extension of a rail line to support a new industrial complex.   The new Pasco library opened last weekend.   The City of Richland is attempting to purchase federal land north of the city limits for a proposed energy park.

The  communities  continue  to  support  the area’s schools for renovation and new facilities.     Ten years from now, we will be saying I remember when the area was………

Frequently Sellers ask me if they should accept a contingent offer based upon the sale of another home.  My short reply is “it depends upon which home is likely to sell first”.    While many areas in the US were experiencing a housing recession, it made little sense to accept an offer based upon finding a buyer for a house with limited demand.

According to the Standard Washington State Addendum, buyers who are considering placing on offer based upon a contingent property sale have many responsibilities.  Among them are the Buyer (1) must list the contingent property with a licensed real estate agent, (2) must make loan application, including application fees, (3) be prepared to respond if the subject property receives another offer which is more favorable than the contingent offer, (4) obtain the Sellers consent in some cases prior to accepting an offer on the contingent property and (5) be prepared to waive all contingencies (including financing) if a bump notice is received.

This entire process can be complicated and it is extremely important that both sellers and buyers understand the terms and conditions of contingent offers.   If necessary, legal counsel should be sought.

For recent years, the Tri-Cities has been the economic bright spot in the State.  Our employment rates traditionally being low, contribute to a strong housing market.   Recently that picture seems to be changing.  As of the February, the national unemployment rate was 8.3% and the State rate was 8.4%.

During  the same period, Benton County reported an unemployment rate of 10.1% and Franklin County was 12.5%.   Both counties had higher rates than both the State and National figures.     The State Security Department indicates that both counties have higher unemployment rates than a year ago.  According to the Department, “There has already been a slowdown by Hanford subcontractors facing federal budget cuts called sequestration, but there yet to be major layoffs.”

Estimates range from 1,000 to 4,700 to be laid off or furloughed.   I believe 1000 will have little impact upon our housing market.  A  higher figure will likely result in downward pressure on housing prices.

We’ll monitor the  absorption rates and keep you informed.

Our market pattern continues to resemble last year.  Total sales are slightly ahead of last year and the median sales price increased slightly.  Forty eight percent (48%) of our sales were below $175,000.  The lower end continues to be in strong demand.  Homes priced above $500,000 presently have over three year's supply.   Older homes above $500,000 are likely to be on the market for years.  The absorption rate for February was 7.2 months of supply or a "Buyer's Market".  The graph below indicates that this situation is not unusaul for the early months of the year.

Southridge in Kennewick

If you have not visited the Southridge Area in South Kennewick lately, you will be surprised.   In addition to the new sports complex, you will find newly constructed apartments and city streets.  Heavy equipment is busy on the south side of Thompson Hill preparing 286 acres for 414 building lots.

The framing for the new Kennewick Hospital is standing tall.  New retail shops and a vet clinic are near Highway 395.

When you view the cities of Kennewick and Richland from the air, it is apparent that both cities are forced to expand to the south.   In twenty years, many will no longer recognize areas where sagebrush once found its home.

For a community to be healthy, jobs and infrastructure must be present.  Since the North Richland area is the primary employment center for many professionals, I wonder if office parks will soon be added to the Southridge area?  Commuting to North Richland from Southridge area will be an extended commute by Tri-Cities standards.

Remember when it’s time to buy or sell real estate, give us a call.  

Pricing  homes correctly is critical especially in a flat to trending down market.    In a rising market, the market will eventually “catch up” with overprice properties.  

 If there are no good comparables to determine value, what can one do?  This situation is becoming more commonplace in our market today.

We prefer to evaluate “like” properties in the same general area.   If good comparables simply do not exist, I use three techniques to determine value.

The first is the “comparable approach” used by appraisers.  I will take whatever comps I can find and make adjustments.  For instance if the subject property is a one level (rambler) , I may have to consider a rambler with basement and make an adjustment for the basement.  In doing so, I have to consider a walk-out basement vs. a basement without windows.   Wherever there are differences, between the subject and comparable properties, objective and subjective adjustments must be made.   The more adjustments, the more suspect the final value becomes.

Secondly, I use Market Predictor Approach.  This approach is simply considering all sales in the general vicinity of the subject and determining assessed values (by the county) and actual sales prices.  I compare the assessed value with actual sales price and determine a factor.    For instance, the factor could be 1.3.  With an assessed value of $100,000 the subject value using this technique would be $103,000.

Finally I also consider the Realtor Property Resource (RPR) program. This program is owned by the National Assoc. of Realtors and leased to lending institutions.   The program provides a base value that can be modified based upon existing conditions.

If all three approaches  provide  a close value range,  market value can be estimated with greater accuracy. 

If you need assistance in determining value, give me a call.  Not all agents understand these techniques.

The government or letter homes built during the 40’s in Richland have long been desired by those seeking the charm of an older home.  The letter-houses were  designed by Albin Pherson of Spokane.   He planned the entire community in less than 90 days and the first home was built April 28, 1943.  The homes were built for workers who were employed on the “secret Hanford project”.

Normally as communities age, they become less attractive to potential buyers who generally prefer new or newer homes.  I did an analysis of all homes built in Richland between 1940 and 1950.  This age bracket covers many of the government homes. 

The chart indicates that that the median sales price of Richland homes built between 1940 and 1950 declined by about 8%.  Reasons for the decline include the functional absolesce associated with older designs.  Among  these are: 1  Small kitchen, 2  Lack of master baths, 3 less energy efficiency, 4 small closets, 5 small closets and 6 frequently no garages. 

Potential buyers must ask themselves if charm is a higher priority than resale.

As you may recall, the residential real estate year 2012 was nearly identical to 2011.   Will 2013 be more of the same?   The chart shows absorption rates (months of inventory) by month for last year and January 2013.   There are many ways to calculate absorption rates and the method used here is to count sales for a three month period and divide by three;  thereby, providing an average number of sales per month.  This figure is divided into the homes “for sale” figure.  The result is the absorption rate.   An average market is 5-6 months of inventory.

As the chart shows, most of 2012 was an average market for Tri-Cities Washington.  Last year in January we had 6.2 months of inventory with a seller’s market in the lowest price ranges.  During January of 2013, we had 6.6 months of inventory with a neutral market in the lowest price ranges. 

If 2013 is similar to 2012, it’s time for homeowners to prepare their homes for market.   Catching the Spring buyers’ market may result in a higher sales price.  If you have a swimming  pool, I recommend May as the best month to list a home.