Friday, October 13, 2006

Rental Market Heating Up WSJ Article

Bidding War May Be Moving to Rental Front

The country's apartment sector is seeing more bidding wars as tenants jockey for available rental units in increasingly tight markets.

Nationwide, rent for a 1,000-square-foot apartment has risen 3.7 percent in the last year to $1,389 a month, says Property & Portfolio Research Inc.

One of the main reasons for climbing rents is the reduced inventory of units, created in part by developers that built condos or converted rental stock into for-sale units during the home sale boom.

In the second quarter of this year, rental vacancy rates fell to 5.3 percent from 6.2 percent in the year-earlier period. This has produced what is known as a "landlord's market," with companies like AvalonBay Communities Inc. raising their asking prices and cutting concessions for incentives like a free month's rent.

Source: Wall Street Journal, Christine Haughney (10/11/06)

Friday, September 22, 2006

An good article outlining the current state of the Tacoma Real Estate Market... article 9/22/06

Check out their 10 year prediction for Seattle, though! I think Seattle / Tacoma is a great place to live and not in the same shape as other metro areas but 60% gains over the next 10 years is a little optimistic, I believe.

Monday, September 18, 2006

Real Estate Market Data

where and who people are getting their data. I just look at the MLS and interpret the data how I feel comfortable with. A realtor can provide you with just about any information you desire, of course it helps if you are a buyer or seller working with them, laugh.

Above are a couple of scans of an Area Market Survery hot from the press (generated from the MLS, you can even see the links at the bottom). I am mainly posting this entry for the prolific debaters from both sides of the argument on the housing forum of Craigslist. For better resolution click on the image then expand it. The first pic is all homes sold in seattle from May 18, 2006 to June 18, 2006. The second is from August 18, 2005 to September 18, 2005. The third is August 18, 2006, to September 18, 2006. Don't ask me why the aren't in order, Blogger put them that way.

Wednesday, September 13, 2006

Tacoma Housing Market sizzle now a simmer..

All the local papers published articles about the cooling Seattle and Tacoma Real Estate Market:

Tacoma News Tribune:
Housing sizzle now a simmer - 09/13/2006

Seattle Times:
Area's home prices idling as buyers take more time - 09/13/2006

Seattle PI
Home buying 'frenzy' may be leveling off - 09/13/2006

Overall I agree with the information published in these articles, they are based on hard numbers that I have confirmed myself through the MLS. We are in a buyer's market, good deals will still move, over priced or undesirable properties will sit - for a very long time.

Tuesday, September 12, 2006

Seattle Home Prices - A Local Market Debate

Pretty good article in the Seattle Times regarding the local Real Estate market. There is a heated debate whether Seattle is a different market. There are good points on each side.

Home prices' long rise: Is the end near? - 09/03/06

But take this advice because it will serve you well in a buyer's or seller's market. It is a proven principle in real estate and you won't go wrong.

If you are looking to buy. Buy a house you love (if is it your home), but most important buy one that you can afford on a fixed rate mortgage. Your payments will stay the same and you will own your home in thirty years.

The housing market has gotten out of hand because of speculation, investing, and new mortgage programs. Variable rate mortgages make up a very large part of the industry, see the chart below:

Eek, watch out Cali.

I am believer of real estate and do believe in investing in the market. Why? Because of leverage.

You can put 20% down on a property and leverage the rest. You can't do that in the stock market, each dollar invested in your own.

The rental market looks good right now because it hasn't corrected itself yet. Dupre and Scott Apartment Advisors interview thousands of property owners and managers in the Puget Sound region. There are predicting a 15% increase in gross rent over the next two years.

Unfortunately, both buying and renting is becoming more expensive.


Thursday, September 07, 2006

Properties are Still Selling in Seattle

You can walk up to any water cooler or any group of people and immediately start a debate on the housing market. I've found, however, this is mostly an emotional debate based loosely on impressions or advice from this guy or that gal. Hardly are hard numbers involved. Now, numbers can be manipulated to show any number of things rarely show the whole picture. However, I like to look at the raw numbers and determine for myself what I think they mean. And I will post these raw numbers on this blog. If you have any market analysis requests in the Tacoma or Seattle area email me and I will see what I can do.

So without further adieu:

Seattle is one of those highly discussed area, partially because it appears the market is not slowing down much. I attribute this to a growing downtown commercial and residential core, a lack of easy expansion due to geography, and the commute.

The following numbers are based on Single Family Homes and Condos.

The number of buyers is constant, which is an indication of a strong market. The inventories, or number of active listings, are rising, doubling actually each month. The next couple of months should be interesting. The rule of thumb is if the inventory is less than 3 months the number of properties sold per month then it is a seller's market. If it is more than 6 months then it is a buyer's market.

Interestingly enough the average days on the market and the price has stayed the same. Homes and Condos are selling in about 30 days and the average price is 475k.

Stay tuned.

Wednesday, August 30, 2006

What is Your Return on Equity?

I have heard the argument many a times, I don't want to sell because I own the property free and clear. That is a wonderful position to be in but not for the reasons you might think. One of the great benefits to owning investment property is the tax deductions. Mortgage interest is a large portion of it but many people over look the asset depreciation. You don't fully utilize all the depreciation you could get as properties increase in value.

The example below is the difference between a current property almost paid off and a new property bought through a tax-deferred exchange of the current property. Most investors will not hold a property for more than 5 or 10 years, here's why:

Tuesday, August 29, 2006

Inventories are Jumping through the Roof in Tacoma

I am a big believer in numbers, that is why I went into real estate in the first place.

In the Tacoma Housing Market, inventories have jumped from less than 250 Single Family Homes on the Market in May to over 1300 to date.

Not only that the number of Single Family Homes sold in August in Tacoma was a little over 260, compared to over 520 for the month of August in 2005.

Definitely swinging to a buyer's market. Don't let anyone pressure you into buying. There are plenty of properties available. And yes, while there are some still properties coming under contract in less than a week, that is the anomaly not the norm now.

I am firmly convinced that you should view every property as an investment unless you know for 100% certainty that you are going to live there until you die. Taking the emotional connection out of the picture, take a step back and get the best deal you can in the area you want. If your agent is not providing this kind of service and advice, find another.

I Love the Sixth Avenue District in Tacoma

Great Article about Sixth Avenue in the News Tribune

Sixth Avenue is a growing hotspot in Tacoma, with great restaurants and a strong nightlife. Zoning in the area is robust and there is talk on the city council of increasing the density of the zoning. The majority of my own investments are in this area.

I am a member of the Sixth Avenue Merchant's Association, and we are incredibly involved in Tacoma. Please support Sixth Avenue!

If you need any incentives go grab a pizza from Primo Grill, they have great food.

Saturday, August 26, 2006

Article in the Seattle PI Regarding How the Rental Market is Picking Up

Read the Article

While Seattle is a stronger rental market than Tacoma, the basic underlying factors are the same.

Friday, August 25, 2006

Interest Rates Lowest since April ....

Read the Article

Interest rates lower, making Tacoma Real Estate an attractive investment.

Is the Condo Market in Tacoma in Trouble?

Yes, I believe it is and here is why.

Inventories have tripled in the last six months. There were half as many condos sold in July then there were in both May and June. Why?

Developers are setting high prices (Seattle pricing) and are still building more units. Prium is working on three projects in a half mile radius. The median price for a 2 or 3 bed condo sold in the last six months Tacoma is $239k. The median price for a home is $234k. By the way, the median priced condo on the market right now in is $355k.

The reason why condos are attractive is because in most urban markets, Seattle for example, they are much more reasonably priced than single family homes. In Capital Hill in Seattle, the median priced house sold in the last six months is $669k compared to a 2 or 3 bed condo at $369k. That is a difference of over $300k. This is why the Seattle condo market is still hot. Since most people have a hard time entering a market at $670k, condos are much more viable an option.

This absolutely does not exist in Tacoma. Take my advice, do not buy a condo in Tacoma unless you desire that type of living and are willing to pay a premium for it. Condos in Tacoma are not a good investment.

The Tacoma Real Estate Market is Slowing Down this is True...

Don't let Real Estate Agents try to fool you, the market is slowing down. The market is swinging back towards a buyer's market. However, there are some key issues I would like to address. Properties of all kinds, are selling quickly if priced and marketed correctly.

For example a 3 bed / 1 bath, 2000 sq ft house right off 6th Avenue went for 5k more than asking price and was under contract in less than a week.

Now is a very good time to buy or exchange investment property. Why?

The investment property market is slowing but still healthy. The market is shifting from a strong seller’s market over the last four years to a buyer’s market. Increasing interest rates and home prices in the single family housing market, condo conversions, and a stable economy are contributing to lower rental unit supply and increasing rents. For the first time in years, renting is a much more viable and affordable option than buying, with owners getting greater cash flow as a result.

Why is it the perfect time to buy or exchange rental property?

  • The multi-family property market is still strong with correct pricing and intelligent marketing. Over a quarter of the properties sold in the last two months were on the market for less than three weeks.
  • Multiplex inventories have doubled in Pierce County over the past year.
    A 4% rent increase in the last 12 months with a projected rent increase of 14% of the next two years.
  • A projected net operating income increase of 21% over the next two years.
    In Pierce County, the market vacancy rate is 4.8%. That’s the lowest rate since early 2001 and down from its peak of 8.2% less than two years ago.
  • In 2006, 5,000 rental units in the tri-county region will be converted to condos significantly decreasing the supply of available units, and putting additional upward pressure on rents.
  • "Mortgage rates are down for the fourth straight week and are the lowest they've been since mid-April." Frank Nothaft, Freddie Mac chief economist, Aug. 17th.
  • There is now a difference of $550 between the mortgage payment of an averaged price home in Pierce County and the average rental of an updated 2 bed / 2 bath apartment, making renting an attractive cost-saving option for many people.