The Silent (?) Killer

This post is not about local real estate but another matter of significant importance to me and should be important to some of you too.

My Dad passed away last week. Part of what got him was untreated sleep apnea. Sleep apnea is something that is not to be ignored. More people have it and don’t do anything about it. I know I am one of those people who didn’t think it is/was a big deal and ignored it for many years. Luckily I learned from my Dad’s misfortune because when he was in the hospital last March for a couple weeks I saw firsthand what it does. I knew that I had to use a cpap machine. I’ve tried several times over the last 10 years and just couldn’t get used to it. I tried using a different mask called a “sleep pillow”. It is very easy to use and learned that my cpap is my friend. It is not that difficult to use. Some people just blow sleep apnea off as loud snoring and that is so wrong. If you are a snorer or if your significant other notice if you are holding your breath or breathing very shallow IF SO HAVE IT CHECKED OUT! It is not something you will win. It is a silent killer to the person with sleep apnea. To the person’s bedmate it is snoring then waiting while the person holds their breath to finally take a breath. Seriously if you snore at least mention it to your doctor. And guys don’t be too macho to mention it like it can’t affect you because the grim reaper doesn’t speak macho.

 Rest in Peace Dad.

Are We Back to the Future in Local Real Estate?

When the statistics came out last week for the month of September something jumped out right away. The graphs below are for single family homes in West Seattle. One graph covers February 2006 through July 2007. The height of the market occurred in 2006. March of 2006 had only 232 homes available (supply) and 200 pending sales (demand).

Contrast those numbers with August 2010 which had the most homes on the market (supply) at 655 active listings and  only 89 pending sales ).

Now check out the latest stats which include May 2011 through September 2012.. Notice the months of February, March, April, and December of 2006 along with January of 2007 look a lot like the last 3 months of July, August, and September of 2012.

It’s Time for Americans to “Wake the F*#@ Up!"

The housing industry is the engine that drives the economy. It has long ripple effect which benefits millions of other jobs. When people have more income they spend it. They go buy new shoes, they go out to dinner, buy furniture, appliances, roofing, and on and on. Don’t forget that the shoe salesperson, the furniture manufacturer and delivery drivers also prosper. Add into that group the companies that make the products have employees with families to feed. Their suppliers are another level of industry. The waiter/waitress makes more for their family and the ripple effect continues to drive the economic engine. Without home ownership this ripple effect stops and the economy stalls, homeowners lose equity (money) from decreased value.

The home mortgage interest deduction is an important tax deduction for millions of homeowners. Let’s look at some real numbers for real people. An average home here in Seattle is approximately $400,000. Let’s look at the savings for the homeowner who is financing 80% of the home at a 30 year loan with a fixed interest rate of 4% in the 28% tax bracket. To figure out how much this means to the middle class our example looks like this: $400,000 x .04 = $16,000 in interest deduction per year.  The property taxes are also deductible and in our example the tax on that home would be in the range of $4,000. Therefore the homeowner can deduct the $16,000 + $4,000 = $20,000 total income deduction  Now take 28% of $20,000  deduction and the homeowner receives an annual tax savings of $5,600 which is $466 per month into that middle class’s family pocket. And we all know that money will be spent on consumer goods.

The Defense Department’s budget is $800 billion to $1 trillion per year to support 700 military bases around the world. Each week we spend $2 billion just for the two wars. For every dollar that you send in for your income tax 53 cents (53%) of it goes to the military. This doesn’t include money for the CIA.

To put millions, billions, and trillions into perspective consider this. If you spent $100,000 per day it would take you 10 days to spend a $1 million, 27 years to spend a $1 billion, and 27,000 years to spend a $1 trillion.

Any proposal by any political party that calls for the elimination of the mortgage interest deduction which saves middle class taxpayers about $80 billion per year and bolsters the economy should not be supported. There are many more avenues to achieve fiscal stability, we still give hundreds of millions of dollars in tax breaks for huge multinational companies, there is massive waste documented in the pentagon budget.  The people at the top are raking in more money; the people on the bottom are getting poorer, when more of our brothers and sisters are living in tent cities, then leave the middle class alone! Regardless which political philosophy one choses to quote Samuel L. Jackson in a new video regarding the election, it is time for Americans to “Wake the f*#@ up!

Will Everyone Have to Pay a 3.8% Tax When Selling Their House?

I’ve just received yet another chain email regarding the rumor about The Affordable Care Act, aka Obamacare. The claim states that everyone will have to pay a 3.8% tax when you sell your house. This is part of the attempt to scare and it has succeeded with some people. No matter which side of the political spectrum one is on it always pays to check the facts for yourself.

What the law says is according to Politifact.com and FactCheck.org is the health-care plan does include new taxes. One of them is a 3.8-percent tax on home sales by the wealthy and won’t affect the vast majority of sellers or buyers.

Here's why.

The tax does not apply to individuals with an adjusted gross income of under $200,000 in the year the sale takes place. Nor does it apply to couples with an AGI below $250,000. The amount a person (or a couple) makes on the sale is not included in the income calculation.

That rule alone eliminates the tax on more than 97 percent of tax returns.

Even if the seller exceeds the income limit, the tax only applies to the profit from the home sale, not the sales price itself. That's why it's not a sales tax, as it's sometimes characterized.

There is more to this story that can be read at

 http://www.politifact.com/rhode-island/statements/2012/jul/15/vincent-buddy-cianci/talk-show-host-buddy-cianci-says-obamas-health-car/

FactCheck.org has researched it and here is their conclusion under the heading “A 3.8 Percent “Sales Tax” on Your Home?”  Check out the details at

http://www.factcheck.org/2010/04/a-38-percent-sales-tax-on-your-home/

There is no Santa Claus, no Man-in-the-Moon, and certainly no provision in The Affordable Care Act which says everyone who sells a home has to pay a 3.8% tax. Period.

Notice to Builders Regarding Home Buyers



The builders are back at it. Drive around any area of Seattle now and you will see homes being demolished and a new home being built in a short time. This is great for the economy because as housing goes so does the Nation’s economy.

The problem from my viewpoint and experience is builders should be building some single level homes because there definitely is a market for them. The baby boomer population is aging rapidly, at least one day at a time, and they are having a hard time finding homes with little or no stairs. In West Seattle, for example, if you want to buy a one level home most likely will have to choose between this 1940s built “war house” or that 1940s “war house”.  These homes are typically 2 bedrooms, one bath and from 720 sq ft to 800 sq ft.

One recent transaction saw a one level modular home that was in “fixer” condition was purchased and flipped. This home is located just west of the Alaska Jct. I saw it come on the market at $550,000 and knowing the market my first thought was this home will be on the market for a long time. Two days later there was a “Sold” sign on it. Figuring the home would need to pass the appraisal process it would ultimately sell for less. Much to my surprise, and that of every agent that is familiar with the home, was surprised to find that is sold not for the asking price of $550,000 but actually closed for an all cash price of $575,000.  Not everyone wants a huge 2-story home that takes up most of the lot.  

Builders take notice that you are missing an opportunity for what would be a very lucrative niche market because of the growing number of us aging people, and that include all of us.             

Look Before You Leap: Cost vs Value

National Cost vs ValueHave you ever wondered how much value a kitchen remodel added to your home vs how much that new kitchen costs? More and more homeowners are taking on remodeling projects. Some are upgrades, some are new additions, and some are necessary replacements. This site is a plethora of information about remodeling. Remember to look before you leap!

Here is a link to finding the cost vs value for the entire nation

National Cost vs Value Data

You can "drill down” to find it or use this link to jump directly to Seattle

Seattle Cost vs Value Data 

Are Home Prices Too High??



After reading a few questions on another site’s blog regarding, “Are home prices too high?” and the subsequent comments peeked my interest. I hear and read frequently that same question. Let’s look at how it is in the “real world” of real estate prices which is basically the same as selling a car, a suit of clothes, or a loaf of bread.

If I want to buy a suit of clothes and the store is asking more than I think it is worth I will pass it up and not buy it for their price. A clothing store has set prices and we in this country do not bargain like some other cultures. The same is true with that loaf of bread.

However, buying some items like a home or a car it is not uncommon for buyers and sellers to negotiate at “an arm’s length agreement” as it is called. In other words if the buyer doesn’t want to pay the asking price then they make an offer which the seller can either accept, reject, or make a counter offer to the buyer. When an agreement on the price is reached between the parties then that is the value of the home. If no buyers are interested in the home then the “asking price” is too high and the home sits on the market until the seller adjusts their asking price closer to the actual current market value. As supply and demand ebbs and flows so do the market values. That is one reason why home values fluctuate and timing, just like location, is critical.

If the home is financed with a mortgage then the lender sends out an appraiser to protect the lender’s stake in the property. The appraiser is looking for similar homes which have recently sold to justify the value to the lender.

Home values are set by demand for that home which is in direct proportion to the amount of supply at any given time. Example if there is one buyer and 10 homes then due to the number of homes (supply) the value is lower. On the other hand if there were 10 buyers and one home the price would be higher.

So when you hear that question,” Are home prices too high” now you can put that into proper perspective and make it work to your advantage.