14% Premium for Green Marketing

Redfin fan, Sterling Hamilton of Hamilton Investments, has written another report for Built Green looking at the effect of green real estate practices.

The last report was on how Built Green Homes on the Rise and Hold Value Better. This April 22nd, 2009 study, Green Building Marketing Analysis – Five County Region Western Washington [pdf], looks at the differences in marketing of green homes.

Sterling concludes that green-certified homes sell for more when their marketing remarks mention sustainable features and/or certification. THis isn’t all that surprising. But it is surprising 77% of green-certified homes don’t mention that they’re green certified!

Throughout the five county region, certified homes which were marketed as green achieved an average sales price of $534,000 and homes which were not marketed achieved an average sales price of $458,000. In all of the homes analyzed, a roughly 14 percent premium is associated with the marketing of green features. This study includes 1,470 certified homes sold between 2007 and April, 2009 and built between the year 2005 and 2009.

Here’s a chart showing the premium by county. (Y indicates certified homes marketed as green, N indicates certified homes not marketed):

Of course, it’s hard to control for other factors which may have contributed to a premium in the pricing:

While the findings of the study support the hypothesis that marketing comments are a good method for analyzing the effects of marketing on sales prices for certified homes, each sale referenced in this document cannot account for every agent’s knowledge and intentions regarding the sustainable features of each home sold. However, without at least some explanation or denotation of environmental certification within a listing’s marketing comments, the stage seems to be set for less than optimal transfer of information for both clients and agents who are uninvolved in the listing process.

If you’re selling your home and has Built Green or LEED certification sounds like you should definitely mention that and some of the green features in the marketing remarks.

Bubbles & Behavior: Highlights From Robert Shiller’s Talk

On Monday, Robert Shiller spoke at Seattle Pacific University about the causes of the housing bubble and his new book Animal Spirits. Shiller is a Yale professor of economics, who together with Karl Case, created the Case-Shiller Indices that track home prices (they released the latest numbers this week). Shiller talked a lot about the social and psychological forces behind changes in the market.

Bubbles Beget Bubbles
Shiller discussed how the crash of the 1990’s stock market bubble fueled the real estate bubble. The 1990’s stock market bubble changed how we think about careers, money and work. People made so much money investing in stocks; people began to think work is for chumps – investing was the way to go.

When the market crashed, investors didn’t question whether they should be investing in speculative markets. They just went looking for another market instead. In their eyes, the stock market was flawed, not their strategy. Investors went on to make the same mistakes in the real estate market that they had made in the stock market.

Don’t Rock the Boat
Throughout the talk, Shiller often mentioned the power of consensus – how people don’t like to rock the boat. He cited Bear Stearns as an example of how bad things happen when people are reluctant to go against a consensus. Shiller referred to the book Groupthink: Psychological Studies of Policy Decisions and Fiascoes in which Irving Janis shows how a bunch of smart people can make big errors because individuals are reluctant to rock the boat.

Seattle Housing Market
Shiller talked about the Seattle market only long enough to say that compared to the Case-Shiller 10-city composite, the Seattle bubble lasted longer, prices rose slightly higer and the bottom 1/3rd of the Seattle market grew faster and higher than the top 2/3rds.

1885 LA Housing Bubble
One of the best parts of Shiller’s talk was his analysis of the 1885 housing bubble in Los Angeles. In 1885, cut-rate railroad fares brought more and more people to Los Angeles. Housing prices shot up, then crashed. He quoted a newspaper story from after the crash in which the writer says that the residents of Los Angeles have learned their lesson: housing prices can’t keep rising forever and they have to be based on reality. For Shiller, this bubble was different from today’s bubble because it was local; the crash didn’t affect the national market.

We’re On A Sinking Ship
During the Q & A, someone asked Shiller about the government’s attempts to fix the economy. He cut to the chase and said, “We’re on a sinking ship.” One that’s sinking so fast, we don’t have time to figure everything out; we need to try something. He said the Obama administration is doing something.

What’s The Future Holds
Shiller was reluctant to make any predictions about the real estate market and he often qualified his statements with, “That’s not a forecast.” However, during the Q & A section he did share some of his ideas about the future:

• We can’t keep falling at this rate
• The rate of catastrophe is declining and will continue to slow down
• The market will flatten out, it won’t shoot back up again

Via = Miracle Whip?
Shiller also spoke to 1,400 people on Monday morning at Seattle Pacific University’s Downtown Business Breakfast. I didn’t attend the morning session, but you can read Aubrey Cohen’s coverage of the morning talk. I love Shiller’s claim that Starbuck’s Via is today’s Miracle Whip.

For another take on Shiller’s afternoon talk, take a look at Tim’s post on Seattle Bubble.

Case-Shiller: Seattle Home Price Drops Not Done Yet

It’s time once again for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI).

For an explanation of how the Case-Shiller data is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – February data is released in April).

Here are the basic Case-Shiller stats for the Seattle area* as of February:

February 2009
Month to Month: Down 1.5%
Year to Year: Down 15.4%
Change from Peak: Down 20.9% in 19 months

The following chart shows the Seattle HPI scaled such that the July 2007 peak is 100% on the y-axis. Data on the x-axis is scaled to display the last time (pre-peak) the Seattle HPI was at or lower than it was in the latest data (June 2005).

The magnitude of February’s drop was roughly equal to the gain that was seen between June and July 2005, when the housing bubble was in full force here in Seattle. It is also worth noting that the rate of month-to-month decline definitely softened from the last few months. It will be interesting to see if Seattle’s HPI actually posts a small gain this spring, as it did last year.

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves, so you can compare Seattle’s performance to other areas across the country:

And here’s our final chart, in which we line up the peak Case-Shiller HPI value for each of Redfin’s markets, so we can see how long each market has been declining, and how much it has dropped from the peak.

Of the 20 cities tracked by Case-Shiller, only Miami, Las Vegas, Los Angeles, and Atlanta had fallen further from their respective peaks than Seattle at the 19-month mark. The relative rapidity of Seattle’s decline is likely due to the fact that we were “late to the party” with respect to the bursting of the housing bubble. In effect, we have more ground to cover in a shorter amount of time in order to “catch up” to what’s happening in the rest of the country.

*[Case-Shiller defines Seattle as the Seattle-Tacoma-Bellevue, WA Metropolitan Statistical Area, which includes all of King, Pierce, and Snohomish counties.]

Reminder: Robert Shiller at SPU Today at 1:00

Don’t forget that today at 1:00pm, Robert Shiller (the Shiller in Case-Shiller) will be giving a lecture at Seattle Pacific University. The event is free and open to the public.

More information on the SPU website.

Redfin Open Houses This Sunday

New Listing in Maple Leaf

831 NE 86th St Seattle, WA 98115
$574,500
3 BR/2.75 BA
Listing Agent: Loren Ellingson

Open Sunday, April 26, from 1 p.m. to 4 p.m.

Queen Anne

1803 Bigelow Ave N Seattle, WA 98109
4 BR/2.5 BA
$1,715,000
Listing Agent: Loren Ellingson

Open Sunday, April 26 from 1 p.m. to 4 p.m.

Biggest Discounts April Update

Time for another update on where buyers are currently getting the biggest discounts off asking price. Our goal in sharing this data is to help potential buyers to know which neighborhoods are softer in terms of sale price discounts off list price, to better equip you when making an offer, and help you know where to look for potential bargains.

In the chart below, we have taken all sales data from the last two months in the Seattle area and sorted it by zip code. We calculated the overall difference between the sale price and the list price. Note that this reflects the final list price, after all price drops in the listing. Any zips with fewer than ten sales are excluded from the top and bottom ten rankings, but interested readers may download the full data summary in Excel format (xls).

For a quick look at where a given zip code is located, just type it into the Redfin search box, or drop by the handy USNaviguide.com zip code map.

Here are the top ten zip codes with the largest overall discount:

At 3.7%, the overall discount for the Seattle area came in slightly lower than last month’s 4.4%. 98004 (west Bellevue) shot from #4 last month to #1 this month. Meanwhile, 98199 (Magnolia) made its debut in the top ten at #2.

Here are the ten zip codes with the smallest discounts:

What’s the deal with the south Tacoma zip code 98444? It was the only zip code to come in on this update with an area-wide average sale price above the average list price. Something smells fishy here, but looking at the raw data nothing jumps out as obviously incorrect… odd.

Of the 3,058 sales we tracked in the 1.5-month period, 215 homes sold for 10% or more off the asking price, while 76 homes sold for 5% or more above the asking price.

We’ve been tracking the discount trend for five months now, and we have seen the Seattle area’s overall discount hold relatively steady between 3.4% and 4.4% off. It will be interesting to see what the spring and summer bring to these stats.

We’re Looking For Focus Group Participants

We’re hosting a focus group on Monday, April 20 and we’re looking for about 10 participants to talk about how we can make Redfin better.

If you’re interested, take this short survey so that we can find out a little more about you. If you’re selected, we’ll get in touch.

We’ll give each participant $50 and we’ll provide dinner and drinks.

Update: Sorry, we’re full! However, please join us at 6:30 onwards at Fado on 1st and Columbia for a Seattle real estate happy hour. You can find us in the furthest back room. Cash bar.

Redfin By The Numbers, March Edition: Redfin Agents Are Tops in King County

We’re kicking off a new series on Seattle Sweet Digs called Redfin By The Numbers. In this series, we’ll take a look at our brokerage stats to see how what our clients are doing right now reflects what’s happening in the market.

The information in these posts comes from the NWMLS, the database for real estate transactions and listings for western Washington state, as well as our own database and surveys of Redfin customers.

Let’s look at Redfin’s March numbers from the Seattle area.

We Have The Top Three Agents In King County

According to the NWMLS, Redfin agents Febe Cude, Trevor Smith and Rachelle King are tops among agents who represented home-buyers in King County for March based first on number of deals, then by total dollar amount. All six of our Seattle agents rank in the top sixteen for King County.

Redfin’s agents are experts on what’s going on in the Seattle real estate market right now. They’re active in the market and successfully closing deals.

Those numbers are just for King County. To see how busy our agents were in March, let’s look at their closed deals from other counties:

Our Clients Love Our Fanatical Service

We survey every client and track every transaction in a central customer database. For the surveys we received in March from our Seattle-area clients:

• 35 clients responded to our customer-satisfaction survey and posted a review online, up from 27 in February.
• 33 of those clients, or 94%, would recommend Redfin to a friend, down from 100% in February.
• 1 of our clients gave Redfin a five-star review on Yelp.

In these surveys, Redfin asks customers to rate the likelihood that they would recommend Redfin to a friend on a 0-to-10 scale. Customers who rated 6 or higher count as people who would recommend Redfin to a friend.

More People Are Looking At Foreclosed Properties

In March, our Seattle clients were busy seeing homes and making offers:

• Redfin clients in Seattle toured 914 homes in March, a 32% increase from the 692 homes toured in February.
• Our clients made 63 signed offers on homes, up from 37* in February.
  o Febe Cude: 16 offers
  o Cheryl McLaine: 11 offers
  o Trevor Smith:11 offers
  o Rachelle King: 9 offers
  o Loren Ellingson: 8 offers
  o Allie Howard: 8 offers
• 10 of these offers, or 16%, were on bank-owned foreclosures, up from 8% in February.

This jump in offers on foreclosures is due in part to how banks are pricing their foreclosure properties.

“More and more buyers are making offers on foreclosures because that’s where they’re finding good deals,” says Redfin Seattle agent Trevor Smith who worked on four offers on foreclosures in March. “Banks aren’t messing around any more with foreclosures. They’re aggressively pricing the homes so they’ll sell quickly and get them off their books.”

*In the previous post with the February numbers, we reported the number of unsigned offers we received from Redfin clients. Starting with this post, we’re tracking the number of signed offers our clients submitted to listing agents.

We also had a huge turnout for our home-buying class in March. More than 85 people came to our Seattle HQ to learn about the home-buying process and to meet our agents. There were a lot of questions about the first-time home-buyer tax credit and how to look for a deal. Check out the slide deck from that class. You can see what Justin and Ryan Twittered about the class.

It’s Taking A Week Longer To Close On A Home

In March, it took a lot longer for our Seattle clients to close on their homes:

• For our clients who bought re-sales, the average time from the initial agreement on terms until the close of the deal was 38 days, a 25% increase from February’s 31 days.
• 1 deal failed to get financing, up from 0 in February.
• All of our deals passed the home inspection, the same as in February.
• Of our closed deals, the average discount off list price for homes sold was 3.41%, down from 3.52% in February.

“Home-buyers should be prepared for a longer closing process because lenders are dealing with a higher refinance volume and stricter underwriting guidelines,” says Redfin Seattle agent Febe Cude. “Our clients are getting through inspection with no problems, but closing is taking longer because we’re often waiting to hear back from lenders about appraisals and underwriting.”

Look For Our April Report

We’ll be back next month with a report on what happened in April. What numbers would you like to see in our April report?

Redfin Open House This Sunday: Fremont Townhouse with City Views

Check out this spacious Wallingford/Fremont townhouse with great city views.
See the seller’s comments below.

Open House Date & Time:
Sunday, April 12, 12 p.m. – 4 p.m.

3652 Whitman Ave N Seattle, WA 98103
Priced at $499,950
3 BR/2.5 BA
Listing agent: Cheryl McLaine

Seller Comments

Coffee Shop of Choice:
Kuma Coffee on Stone Way, also Lighthouse Roasters in upper Fremont makes for a nice Sunday morning walk.

Favorite restaurant in the area:
Brad’s Swingside Café for Italian, Paseo for Cuban sandwiches, and even with the ownership changes, the 35th Street Bistro continues to exude a strong energy and solid menu. Oh, and of course the numerous Thai restaurants ensure that we all get our share of vegetables and spices!

Favorite places to go:
El Camino – margaritas on their deck are a must! For music, check out Nectar and Tost. For a mellow day in the sun, take a short hike up to the Woodland Park Rose Gardens and Greenlake.

What’s in the neighborhood?:
Everything! Fremont is the center of the universe. People come to Fremont on weekends, so if you live here, consider Thursday nights instead. Business is good with Google, Adobe, and Getty Images just a short walk away. Even after the huge development push, Fremont still keeps to its roots with its Annual Solstice Parade and Festival, Sunday flea market, and outdoor movies. You’re on the Burke Gillman trail so bike out to Shilshole or Chateau St Michelle. Or, get a Kayak and carry it down to Gasworks Park.

Best features of the home:
The deck off the master bedroom. East facing windows ensure early morning warmth and stepping onto the deck to enjoy the morning sky. Sleeping on the deck in August is pretty cool, too.

Any remodeling since you purchased the home?
No, but it has been repainted with the Divine line of paints. I would like everyone to know I replaced the hot water tank and clothing dryer in March 2008.

Favorite room:
I hate to say it, but the garage. Driving the car in after grocery shopping, getting in the car without having to throw on my coat, having a warm car on winter mornings…Top it off with storage for so many toys! I can work on my motorcycle, store my bikes, skis, snowshoes, and camping gear. Somehow it just makes it so much easier when heading up into the mountains to have everything easy to load. Plus, there’s STILL room for wine and homebrew operation. I suppose the garage just makes everything in and around Seattle that much easier to enjoy.

Most romantic spot in the home:
With my new hot water tank I am sure that sunken bathtub off the master suite on a cold rainy evening takes the case. Hook up some tunes, candles, wine, and dim the lights.

What you will miss most:
The space – this townhouse got it right. There is so much room. TONS! Peacefulness – for what may appear so close to Aurora Bridge by map, the place is completely blocked from Highway 99. Yes, you CAN sit on the deck and enjoy your coffee. The real noise comes from the Lake Union water planes. Sure, there may be newer townhouses on the market, but NONE will have this city, the Cascades, Mt. Rainier views, my square footage, parking for two cars and accessibility to downtown and Greenlake (which you can walk to).

Built Green Homes on the Rise and Hold Value Better

Redfin fan, Sterling Hamilton, co-authored a report for Gardner Johnson and Built Green (an environmentally-friendly, non-profit, residential certification program) about the value of green homes. You can find it here, Built Green Value Analysis. East King County Single-Family Residential & Seattle Multifamily Townhome Markets [pdf].

The two important takeaways are:

1. Built Green certified homes have held value better than non-Built Green homes
2. In the last three years Built Green certified home sales rose from 9% to 23% of total new construction sales

Their analysis looks at two groups of Built Green homes, Eastside single family homes and Seattle townhomes. Keep in mind their data set is only up until August 2008 and doesn’t include the (turbulent) last six months and they readily admit that more sophisticated statistical analysis is required “to narrow the metrics for the quantitative value of green building.”

Eastside Single Family Home Takeaways

Their major finding for the Eastside is that “East King County Built Green certified homes did not show median price depreciation through August of 2008 whereas uncertified homes showed an overall decline of 2%.”

Seattle Townhome Takeaways

For Seattle townhomes they found:

• Built Green certified townhomes have increased in sales price while non-Built Green townhomes have seen their sales prices decline.
• In 2008 Built Green certified townhomes appreciated 8% where uncertified townhomes lost 4% in average sales prices.
• Built Green certified townhomes in Seattle saw a 4% (2007) and 16% (2008) premium over uncertified townhomes.

Unfortunately we don’t yet have a way to search for green homes on Redfin but the conclusions of this study are something to keep in mind if a green home is important to you.

To see a partial list of green projects in the area check out Built Green’s list of case studies. The building I live in, Trace Lofts, is on the list with 2-star certification. However, Urban Canyon is a townhome development on Capitol Hill that still has one unit left that has caught my eye. It’s a 5-star project.