Mark DeSpain

The old saw that the three most valuable aspects of a house are location, location, location, is as true as it ever was. But when it comes to the interior of the home the number one biggest selling point is the kitchen.

For many buyers the kitchen can be what “sells” the house. It is the room where much of a family’s time is spent. And this is true across countries and cultures world wide. It is the focal point of entertaining guests and serves as a show piece for the home. It is the room on which house flippers concentrate most of their time and energy to attract buyers.

The kitchen is also probably the most expensive room to renovate, particularly when the cost of new appliances are included. Many of the “window shoppers” I meet at open houses are there to get ideas for renovating their own kitchen. When I am showing homes to potential buyers the kitchen is almost without exception the first room they gravitate towards.

For sellers, it is always important to look at the competition in your neighborhood with your real estate broker. If you live in a high-end neighborhood, you need to have a high-end kitchen. Your older home may have a comfortable functional kitchen, but buyers will look at your formica counters and white appliances and start calculating the cost and stress of a remodel to deduct from their offer price to you. If you don’t want to put in the time yourself to make upgrades then you may end up having to make concessions in the price.

Sometimes more minor changes can be done (particularly if your not in a high-end neighborhood). Change the paint color to a warm, neutral tone. Get rid of any clutter. Update your appliances, paint your cabinets, change the pulls, or get a high-end looking counter for a fraction of the cost (faux-granite or lower end granite). You might even save by doing some of the work yourself. But it is usually unwise to make design decisions on your own without getting buy-in from your broker or your broker’s design consultant.

For buyers, know that if you are not happy with the kitchen of the house you want to buy, it could be a major expense and inconvenience to have it done the way you want. It’s great to have your own style reflected in your new home, just be realistic about the time and money it will take.

Do your homework (pun intended) by getting your broker to show you the competition in your area. And buyers, have your broker collect best estimates from his contractors so you have a realistic picture of the costs and logistics of your new kitchen. The key take-away is that a kitchen can sell a home or discourage the sale.

The market in north Seattle continues to show signs of stabilizing, albeit slowly. Pending sales were up 4.7% from December of last year and the number of homes on the market fell more than 24%.

Average Cumulative Days On Market are down nearly 15% from last year, and percentage difference of the original asking price vs. the final sold price remained completely flat.

The bad news is that the average sold price is down 10.3% from December of last year and the median price is down 8.1%. This is at least partially an effect of the majority of sales activity taking place in the low to low-mid price ranges while the high end properties continue to languish. Investors are making an impact on the market in the lower price ranges too as they have begun purchasing more distressed and bank-owned properties.

Visit each month for the most current and detailed statistics on what’s happening in the Seattle-King County real estate market. You can also request specific statistics for your neighborhood.

The residential real estate market continuted to show signs of stabilizing in several categories in December. The charts below tell the story: activity is down from last year with the exception of the number of pending sales (under contract but not yet closed) which were up 12% from the same month last year.

The Average Cumulative Days on Market for a property fell 14.7% while the percentage of the original asking price that was realized by sellers rose 2.2%.

The next two graphs are not so happy; showing that, though slowing, sold prices are continuing to fall. The median price for single family homes is down nearly 15% from last December.

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Visit after the 7th of every month for the most current and detailed statistics on the Seattle-King County real estate market.

You can also request customized reports specific to your neighborhood.

It doesn’t take a lot of insight to understand that foreclosures will be on the
rise this year and for years to come. In the past year banks have been slow to
foreclose at least partially because the government and regulatory authorities
have been closely examining the banks’ practices. So in some cases it is taking
years to foreclose on some properties. In New York State, it would take 62 years to
at the current rate of sales to get all the foreclosures off of lenders’
books. That’s the highest in the nation.

So you can count on 2012 seeing an increase in the number of foreclosed homes on
the market. Although this will affect some areas more than others, it will
affect the entire nation as banks put more of these properties on the market. The Federal
Reserve has sent a letter to the ranking members of the Senate Banking and House Financial
Services Committees with several ideas to moderate the inflow of foreclosures
into the existing housing inventory, and explains that the lagging housing
market is the major obstacle to a more robust recovery of the economy. But even
if some or all of these ideas are implemented, it will take time to get the
Congress and the regulators, and there will probably still be a steady rise in
the number of foreclosures on the market.

There will be some bright spots in cities with broad technology bases like Seattle.
Many metro areas will see some slight increases in pricing as some
neighborhoods did last year. But the increases will be very slight (less than
1%) and probably in the low to middle price ranges of these areas.

The Federal Housing Authority has been making a lot of re-hab loans on their 203(k)
program. These loans will probably increase in popularity, giving potential
buyers more options to consider and helping to ease the glut of bank-owned, or
distressed, properties on the market.

Overall, home prices will continue to drop across the nation in 2012 and in Seattle –
but only slightly – by some projections only a few percentage points. This will
be a direct result of the foreclosure glut and will not change until the banks
and the government get together to put into action some of the creative ideas
being proposed.

You would think with interest rates at historic lows, nobody
would be paying cash for homes in this market. But the percentage of
buyers paying all cash rose to 38% of all existing home sales for 2011 according to research
company, Hanley Haywood Market Intelligence. According to two analysts with
Hanley, tighter lending standards and the difficult search for yield on
investment is spurring investors to pay all cash – mostly for distressed
properties.

After 10 years in real estate, I represented my first all
cash buyer this past year. Although it was not a “distressed” property, it was
in very poor condition and was purchased with the intent to eventually
redevelop from single family to mixed-use – townhomes and commercial space. I have talked with other
brokers locally that are seeing more investors with cash as well.

As many home owners give up their homes to the banks or
short sales, investors will continue to be there to turn those properties into
rentals – a sad but necessary reversal of the previous trend of nearly every
one being aspiring to home ownership. You can expect the percentage of cash investors
to continue to rise until the glut of foreclosures and bank-owned homes on the market begins to
abate, which will take at least a couple more years – optimistically.

Written by Mark Despain