Cape Cods and Cappuccino: Parallels in Real Estate and Coffee

Ok, so Seattle is known as the coffee Mecca.

I get that.

Seattle having spawned Starbucks and the espresso shot heard 'round the world, it's understandable. Cold climate, hot drinks, social scene pulling in computer nerds, aerospace workers, college students, grunge rockers and the like.

This was not unique. 145 years ago the Julius Meinl coffee chain started in Vienna beginning a trend across Europe and at one time boasted 1,000 stores.

In the U.S. over the past 20 or so years, it has all been about competition: Burger wars, Cola wars, etc. And coffee has been no exception to that rule.

Of course Starbucks has raised some ire and eyebrows in competing with small local coffee houses, and other chains as a Goliath to their innumerable Davids.

Smaller companies are now fighting back with so called "sexpresso" shops spiraling outward from the Seattle coffee vortex.

Scantily clad women in little huts, whipping out lattes and mochas. And the trend is catching on! Given the cold climate in and around Seattle, one would wonder that the chilly environs would not be conducive to such uniforms, but the popularity and novelty apparently outweighs the discomfort. There have been multiple stories and discussions in the Seattle PI on this new development.

From Seattle, to Tukwila, to Ballard and Lakewood, Port Orchard, Renton: these little shops are sprouting up like Pacific Northwest mushrooms: Moka Girls, Bikini Espresso, Cowgirls Espresso, that plays on the word "naughty" with: Natte Latte, Knotty Bodies. All dubbed as a blend of "Starbucks meets Hooters" describing the service and... um... product presentation you experience in these shops.

Now what does all this have to do with Real Estate?

It's all about cycles and competition.

The Real Estate Market spun outwards from the 90's to 2008. Prior to that we had shorter cycles of increases in pricing and declines. Markets fluctuated more frequently on cycles of a few years.

The expansion of the Starbucks chain is like the real estate boom, it kept going with no end in sight....until the point of saturation.

It did not take a business genius to see that as soon as you started having stores competing with each other on the same block or in the same neighborhood, they would begin to cannibalize each other's business and cause a retraction. Or that limited incomes could no longer pay escalating home prices.

This has now led to a period of retraction. Stores are closing, real estate prices dropping, increases in availability of foreclosure properties. The market becomes much more competitive due to decreased spending and competing for a smaller total market.

What comes next? Innovation and creative marketing.

We now have bikinis thrown into the mix. Anything to get the buyer's attention.

Short sales and foreclosures are sexy too! A wide variety of selection at bargain basement prices for investors and first time buyers to compete for. Never into real estate? Maybe the $8,000 tax credit can entice you. On top of that., you can put it towards the down payment?

Never tried a Cappuccino? Try one and you get to see our sexy outfits.

Creative thinking and innovation will continue to get the attention of buyers. Until the general attitude of the market turns. There are definitely changes, innovation and creative solutions in the wind.

Just please keep the fringe out of my foam.

BE WARY OF DRAWING INACCURATE CONCLUSIONS

An article in the May 26 Seattle Post Intelligencer heralded that Seattle home prices had declined to what they were in 2005 citing the S&P/Case-Shiller Home Price Indices.

This index surveys metropolitan areas of 20 cities across the U.S. As a result the analysis is in very broad stokes using very broad analysis.

Another article in the P.I. On May 27 compared the S&P index results with the Federal Housing Finance Agency figures which showed a discrepancy in price declines.

Well of COURSE there will be discrepancies, the index are calculated based on different geographic criteria.

Broad analysis and trends painted with too big a brush in this market, do not paint an accurate picture. Micro-markets are proving to very very wide apart in trends which average to figures that are not representative of either area. In just analyzing the median home prices for the areas of Seattle, Sammamish and Woodinville, you are faced with these figures:

Seattle: $480K in August 2008 declined $50K to $430K in February 2009 and now stabilizing in the $435-440K range for the past several weeks.

Sammamish was at $740K in December 2008, declined $81K to $659K and appears to be stabilizing in that range.

Woodinville shows $670K in November 2008 down $70K to $600K in mid February 2009 and recovering somewhat to $640K

As you can see, there is a steady decline in one area, a slight rebound from the low in the Seattle market and a more significant rebound in the Woodinville market.

This is typical for many areas where some neighborhoods such as Vallejo or Tracy in The San Francisco Bay Area has been hard hit on pricing and sales are now active, bundled in with San Francisco where declines were not as great and there has been more stability in sales volume. Yet the indexes have them bundled together canceling out the true picture of situation in both markets.

Take any conclusions drawn from these indexes with several grains of salt. They are gross averages and will not accurately reflect the market conditions on any specific community.

WHAT DOES ADRIAN BELTRE HAVE IN COMMON WITH SEATTLE REAL ESTATE?

Adrian Beltre of the Seattle Mariners has been in a slump and was given a day off by the club.

Is this how he has always been?

Of course not!

In 2001 he batted a .203 average with only 6 RBIs but in '04 he was .314 with 36 RBIs.

Such is the Seattle Real Estate Market.

The stats in the past decade have shown great performance but right now the numbers aren't looking so good.

Median home prices have dropped $50,000 over the past year to a current low of $437,500 while average days on the market have gone up from an average of 85 to the current 155 with no change in sight. However, properties available on the market has seen a tick downward from a high of about 4,300 at the end of April.

What's happening in other markets? Some are in the same shape, (Los Angeles currently has over 14,000 foreclosures!) some of turning around (San Bernadino is having a great increase in the number of property sales) , and some are defining a bottom. The key factor is secure job situations and new home buyers stepping in to take advantage of low prices and interest rates. Some of the hardest hit are showing the fastest recovery from a bottom.

That obviously has not been happening yet in Seattle.

Seattle currently shows over 4,300 houses on the market and there are about 1,200 foreclosures currently on the rolls.

Real estate agents, lenders, financial institutions and local governments in many communities have seen the trend to foreclosures and short sales and have streamlined the process out of necessity. This in turn has spurred multiple offers and overbidding on the low prices properties.

Beltre can and will turn around his streak, and it is up the the job market and local industry to set up to the plate to turn around the real estate market as is happening in so many other communities.

Rainier Valley Light Rail Update

There's been a lot of talk recently revolving around the light rail opening soon in Rainier Valley. After five years of construction, Sound Transit’s light rail is nearly up and running and not everyone is excited.

I've put together a couple of links so you can catch up on all the news.


The Rainier Valley Post is an AWESOME blog and if you live in South Seattle it is a must read.
On the Light Rail Issue:
Here you can find local opinions a plenty with viewpoints ranging from semi-racist, to hyper-informed, most worth reading. There are a couple of different articles written on the subject, so be sure to check this blog out.


The Seattle Pilot has a recent article that expounds on the development, or lack there of, that the light rail has brought to Martin Luther King Blvd.

Seattle Transit Blog talks about similar development issues surrounding the transit line.

Public Purpose This was written a few years back and is the "against" in the light rail argument. It's pretty dense read, and if I had to summarize that main point of the article can be understood with this quote:

Sound Transit is hurrying to sign a 'full funding grant agreement" with the federal government. That will oblige the region to complete the project, without regard to its burgeoning costs, diminishing benefits, or the fiscal capacity of current taxing authority. This is a precarious moment in the history of Seattle and the region.

So there you have it. If you're in the area, and would like to chime in with an opinion, please feel free.


-Raj

Seattle Slugger Ichiro Puts Issaquah, WA Home on Market

According the Wall Street Journal, Seattle's Super Star right fielder, Ichiro Sazuki has put his Issaqua, Washington home on the market for $1.75 Million. The home was extensively remodeled in 2003 and boosts sweeping views of Lake Sammamish, the Cascades and Mt Baker.

Ichiro, or "一郎" to Manga lovers, has moved into new digs-also on Lake Sammamish. And while local agent Rick Minor decided against using the Japanese sluggers name (or symbol) to promote the listing, he did subtly eluded to the possibility . This, from the listing:

"Batter Up!..for this knock your baseball socks off luxury home with unobstructed views of Lake Sammamish, the Cascades and Mt Baker! This magnificent home is in a gated community with 8 custom luxury homes. A superstar remodel will leave you in AWE! Formerly listed as high as $3.2 MIL, now priced at a steal of a deal. Exotic stonework graces this one-of-a-kind masterpiece. Private patios, gardens & sports court. Step up, take a swing, hit a grand slam and make this your home base!"

The foul mouthed Ichiro has made over $75 Million since signing with the M's in 2001. Among his many baseball talents, perhaps Ichiro's most over looked skill is his ability to provide awesome quotes. The jet setting super start had this to say about upon hearing his club would be going to Cleveland instead of Chicago:

'To tell the truth, I’m not excited to go to Cleveland, but we have to,' Ichiro said through an interpreter. 'If I ever saw myself saying I’m excited going to Cleveland, I’d punch myself in the face, because I’m lying.' Ladies and gentlemen, 一郎!

You can check out additional pictures of the Ichiro's 5,000 sq home here.

Distressed Property Law Changes Realtor® Liability

Changes to the Distressed Property Law have passed both branches of the Washington State Legislature and the bill is headed to Governor Gregoire’s desk for signature. You can read the piece of legislation here. Agents are now exempt “from the definition of “distressed home consultant” when the broker or salesperson is providing services governed under the real estate brokerage laws and the services do not result in a distressed home conveyance.”

Realtors® had been unhappy when their liability increased under the original Distressed Property Law. Many Realtors were refusing to list short sales because of the risk leaving potential clients wade the murky foreclosure waters on their own. Things began to change in early 2008 as the foreclosures began to pile up like. Now thanks to the pending law change Realtors® are now exempt from the DPL. However, not all Realtors® are trained to deal with foreclosures, so make sure your Realtor has attended a certified course and knows what he or she is doing.

Check out Seattle Foreclosures here.

Redfin To Begin Working With Outside Agents

Seattle-based online real estate brokerage Redfin has announced it will stat working with outside agents in markets where it has no agents of its own.

"We've got nearly half a million people browsing our website in areas where we can't afford to have agents," Redfin Chief Executive Glenn Kelman said. "So we're asking those folks if they want to work with a traditional agent, but on Redfin's terms."

Clients who buy form one of the outside agents will receive half of Redfin's referral fee, which is usually run 30% of the agents commission.Customers will be able to choose an agent from profiles that show details of every transaction since Dec. 15, 2007 and every review Redfin could get for those transactions.

Unique Spaces in Seattle

The Smith Tower Residences

There are many weird residences in and around Seattle, but none as cool as the Smith Tower Penthouse. The space sits on the 37th floor was originally occupied by the buildings manager and shared the space with a 10,000-gallon, cast iron water tank, which was dissembled and removed through the elevator in 1996. In 1997 a women (all attempts to located the wealthy lady were unsuccessful) signed a 40 year lease and had the space renovated by architectural firm, Castanes Partners. A massive Dale Chihuly chandelier hangs down through the center of the residence making the unique space taste like blueberry.

Fun Facts:
The Smith Tower opened on July 4, 1914. At he time of completion is the was the fourth tallest building in the world and weighed 48,650 tons. It remained the tallest building west of the Mississippi River for almost 50 years.
The Penthouse is the only residence in the building.









We plan on updating the Unique Spaces Of Seattle Series every month. Suggestions are welcome.