Trends

Backyard Cottage Design Challenge

Inspired by Seattle’s new backyard cottage ordinance, Method homes sponsored a design competition for backyard cottage designs that could be built as pre-fabs (to lower costs).

It drew a lot of entries from tiny to big, modern to craftsman, and all were pretty cool , take a look.

Now you can be just like the Kennedys and have your own family compound! Backyard cottages are fantastic solutions for extra living space or a studio, multigenerational housing for returning kids or parents. As years go by, you can even move the kids and their family into the main house, and you can stay in the smaller one out back. And they will have free babysitters!

or for rental income.

Cabins are selling in Washington

Three times in the last two years, I have received calls from clients who are wanting to buy a summer cabin or recreational land. Seems that prices for those have fallen too, and like everywhere else, some sellers are motivated. After showing a few, I realized that there are cabins all over the Puget Sound area.

I researched sales for the past year, and found that 124 cabins had sold in King, Island, Skagit, and San Juan counties only. They ranged from falling-down shacks to original cabins on Lake Washington waterfront property, from very nice traditional log cabins to modern pre-fab structures. Some were in the mountains, others on lakes or Puget Sound. Locations included rural areas, resort areas, and some were in small towns like Langley on Whidbey Island or Port Townsend.  The median sales price was $238,000.

Another option is to buy land  or a lot. There are now very nice prefab structures available that you can have put on your lot, for an almost-instant cabin.  I ran across Backyard Box in Seattle and IdeaBox from Portland in my research.

If you think a water or mountain getaway of your own at a great price may be just what you need, contact me. I enjoy working with rural properties as well as in-city. Tell me what or where you’re thinking of, and I can send you some listings.

Sliding Walls and Sharp Design make this Super-Efficient Apartment.

Here’s a video of Gary Chang’s 330sf  ”Domestic Transformer”. This architect designed 24 combinations of luxury space in his unique Hong Kong apartment.

View video here

Seattle Homes and Accessory MIL Apartments

Accessory units seem to be the theme of the week. I have buyers looking for them, looking at them, and figuring out how to create them. Also, more of my recent listings have had them.

As I show homes, more and more homes seem to have these extra separate living spaces.  Usually it is a finished basement that features a separate kitchen, bathroom, and entrance. Homes with basements seem to lend themselves very well to creating accessory units, although sometimes I see them as an addition onto a main level, or sometimes in a separate building in the lot, often a converted garage structure. (not all cities approve of converting garages to living space, check with your local building dept.)

Many of these units are built for extended family living, older parents come back home, or sometimes children, sometimes with families, moving back home. The separate living quarters allow extended families to live close, but keep some parts of their lives separate. For some people, when children grow up and move way, it is a way for the parents to remain in the home and resist the downsize move. Some rent to college students to keep youthful energy around the house.

Another reason so many have been built is to generate income in a house that is too big, or to pay a mortgage that has become otherwise unaffordable.  Later in life, having an extra unit in the house can allow homeowners to live independently for longer by utilizing the apartment for caregivers to live in.

Many apartments in homes are built illegally, in other words permits have not been taken out build them. I think its always a good idea to take out a permit to make sure the work is done safely and correctly, especially the electrical and plumbing.  As a Realtor,  I can say that homes with unpermitted work can be more difficult to resell at times. Most towns and cities allow accessory units either in or attached to an existing structure. Recently, the City of Seattle has been working on a project to allow more back yard accessory  units in the name of increasing density and affordability. Here is more info.

Here is a link to a nice USA TODAY Story on backyard cottages.

Seattle Rated 15th Highest City to Recover

A recent Forbes Magazine article rated Seattle area as the 15th in its list of cities to recover from the recession. The  factors  used included diversity of industries, unemployment rates, economic growth in the past year, and stable housing fundamentals.

Last week at the National Association of Realtors convention in San Diego, Lawrence Yun, NAR’s chief economist, predicted a 15% increase in sales and that prices will climb 4% for 2010. I hope he is right.   I am seeing some bottoming out of prices

for homes in traditionally strong Seattle neighborhoods, but also a lot of continued softness in prices of both condos and homes in outlying areas.

It’s interesting how much happy news is coming out in recent days. In fact there is so much that it seems a bit overblown.  It reminds me of how much exaggerated bad news was abut the economy was coming out a year ago. Perhaps the media had  so saturated the market  with bad news that the only news that they can sell  now is good news. Hopefully this time it will be a self-fulfilling prophecy too.

Boomers are buying homes to retire in

Most of the news we have seen is about how the echo-boomers are saving the housing market by buying their first home. Now we are seeing a trend of boomers buying their next home now, and taking advantage of lower prices, (especially in resort areas)  and dirt-cheap interest rates.

The strategies have changed, as the above article reports. In the anything-goes market of a few years ago, it was nothing to take a 2nd on y0ur primary residence and buy a transitional home. Now it takes a 2nd home mortgage and an actual down payment, along with professional management if it is out of town.

Another way is to buy your next home in an IRA using a special trust company. This gets a little complex, as the house is strictly an investment that you or relatives can’t live in while its in the IRA. However, when it’s time to retire and move in, the house is taken as a distribution from your IRA.

Another $8K Tax Break Extension Idea

Every day there are more rumors about ideas floating around in the Senate to extent the tax break.  Some make sense, some smell of compromise.  Below is today’s latest. I like the idea of extending it to buyers who “move up” after owning for 5 years, but why just “move up” buyers? Do they mean you have to buy a more expensive house? What about “move down” buyers who want to get into a home that makes more sense for them?

Senate Dems on Board with Credit Extension
Senate Banking Committee Chairman Chris Dodd (D-Conn.) says Senate Democrats have agreed to extend the first-time home buyer tax credit. The latest version extends the program to home sales signed — not closed — by April 30. Purchasers would have another 60 days to close the sale. The credit will also be expanded to include so-called step-up buyers who have lived in their current home for at least five years.

The credit would be cut nearly 10 percent to a $7,290 cap. Income eligibility for first-time home buyers would stay the same, but it would rise for step-up buyers to $125,000 for individuals and $250,000 for couples.

Source: Bloomberg News, Dawn Kopecki and Ryan Donmoyer (10/27/2009)

Reverse Mortgage Rules Changed for the Better

With the difficult economic times, many more borrowers are taking advantage of Reverse Mortgages.  With recent changes, reverse mortgages can now be used to buy a new house, not just to take equity out of an existing one. Also, the loan limit has temporarily been raised to $625,000 as part of the stimulus package.

Here is an article that explains it.

Washington Post
Reverse Mortgages Come to the Rescue
By Mary Beth Franklin
Kiplinger’s Personal Finance
Sunday, August 9, 2009

Reverse mortgages have been around for nearly 20 years, but it wasn’t until the current financial crisis that they caught on. Seniors are turning to these loans to tap the equity in their homes and generate tax-free income to help them ride out hard times.

You can take it with you. A reverse mortgage can be a good option for people who want to relocate or move to a smaller home but don’t want to sink all of their cash into a new house or might not qualify for a traditional mortgage.

New rules that took effect in January allow seniors to use a reverse mortgage to buy a new home. Say you own a house in Massachusetts worth $500,000 and you want to buy a $400,000 house in Florida. If you were to sell your house and pay cash for your new home, you’d have just $100,000 left to add to your savings. But if you took a $100,000 reverse mortgage on the Florida house, you’d have twice the amount left — $200,000 — to add to your savings.

How it works. You must be at least age 62 to take out a reverse mortgage. Plus, your house (current or future) must be your primary residence, and your mortgage must be either paid off or have a small balance. Unlike a traditional loan, there are no income or credit-score requirements, and you may use the money as you wish. The older you are, the higher the appraised value of your home (up to the maximum federal loan limit) and the lower the interest rate, the more you can borrow.

As part of the economic-stimulus package, Congress raised the reverse-mortgage loan limit to $625,500 through the end of 2009. After that, the lending limit reverts to $417,000, unless Congress intervenes.

You can take your payment as a lump sum, a monthly cash payout, a line of credit held in reserve or a combination of all three. No repayment is due until the last homeowner moves out or dies, at which point the home can be sold to pay off the debt. The loan repayment can never exceed the home’s market value (even if it declines), absolving your heirs of any liability.

High fees. You’ll pay the usual closing costs, plus loan-servicing fees, an origination fee of up to $6,000 and interest over the life of the loan. Also, you’ll pay an initial insurance premium equal to 2 percent of the home’s value plus 0.5 percent per month of the mortgage balance.

If you are thinking that a reverse mortage may meet your needs, call Greg Bartell at DownsizeNW at 206-713-2921 for names of local reverse mortgage specialists.

New Bridge Loan Available

With the market heating up again for those good properties that are priced right. If you want one of those, making an offer contingent on your present house selling probably won’t get you the house you want.

The good news is that the bridge loan is back! If you have high equity in your present home, this new product cross-collateralizes both properties, or finances both of them in one loan. This lets you buy your new home, and pay off part of the loan when the older house sells. The payments are high of course when you are carrying both homes, then they come down with the partial payoff.

Contact me for names of lenders who offer this.

Staging, Inspection, and Pricing Essentail for Sellers

I just finished two days in the classroom for the Seller Representation Specialist course. It was a sobering review of current industry standards and new technology for getting houses sold in this market. It can be best summed up with the three P’s: Preparation, Presentation, and Pricing.

Preparation

In this market, buyers are taking two bites out of the apple: once when they negotiate the purchase price, and again after the inspection. The first bite is about fear of the market, the second is about fear of what the house will cost them to own. The best way to eliminate the second bite is to have your house inspected in the pre-listing process. You will know the inspection issues your property has, and you will be able to address them before you put the house on the market. You will also have a clean report to show the potential buyers. Buyer’s agents still recomment their buyers have their own inspection, which is fine. But with your pre-inspection, surprises, and that second bite of the apple, will be eliminated.

Presentation

Presentation is all about how your house looks to buyers when they view it, first on the internet (87% of buyers look there for a home) and when they see it in person. The first step is de-cluttering and de-personlizing the home, followed by staging. Staging is no longer optional with this competative market, and it provides the drama necessary to get buyers into the home through the photos, and makes them feel at home when they get there to see it in person. When I list a property, I bring in a staging consultant early in the process, and I pay for the consultation. The consultant is an experienced decorator, and she looks at the house, the present furnishings, and recommends how to first work with the existing furniture, and then supplement if necessary. I highly recommend Pam Christensen of Staging for Charisma for her common-sense solutions and reasonable cost. A link to her website is in the right column of this blog.

Pricing

Here’s the dreaded third P, Pricing. Fortuantely, there has been an uptick in sales recently. This has at least given our market some sales prices to use as reference points when pricing and appraising property, and has to some degree arrested or slowed the free fall of prices. Now that we have somewhat predictable values, it is easier to predict what price will attract a buyer.

It is still VERY IMPORTANT to price right the first time, to avoid chasing the market down by over-pricing initally, then reducing slowly, but never enough to catch the market.  If you have been tracing the value of your property up over the years, it will be disapointing to know that we are at 2005 price levels in many area. The good news is that we can predict your homes sales price range easier now, and get it sold. And if you are buying again, there are some incredible deals out there!

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