Where is Market Value?!

The historical definition of “Market Value”: “What a willing and able buyer is prepared to pay for a property”. Traditionally, sellers have set their prices based on either their competition, recent sales activity or a combination of both. Historically, this information was provided to the Seller by a real estate agent. The internet created a paradigm shift of access to information that has changed the real estate business for everyone. Today, as consumers garner information, they have the resources to flex their shopping muscles and dictate sale prices.

Since the Wall Street collapse, many buyers have been reticent to pull the trigger on purchases. As they watch the downward trends, those that do, enter negotiations armed with data and a confidence that has not been seen in at least a decade. The difference this time is that almost any purchaser can harvest data in minutes. Not only do they dictate “what” the market price is, but “where” it is going.

Many sellers maintain the expectation that their home should sell for more than the most recent sales; while a buyer will insist on a price still 5-10% from the bottom. Due to the pressures sellers are feeling (ie longer selling time and lack of offers), they tend to back down at a much faster tempo than in the past. An experienced agent can assist a prepared buyer and negotiate terms that were previously unheard of. As a market-savvy agent, I have helped by clients write offers that at face value match the listed price but also include back-end concessions (for closing costs or repairs) that benefit the buyer and still allow the seller/developer to save face.

My concern for sellers today is that if they don’t get ahead of the curve it could become more and more costly for them. There is a difference between pricing a percentage below the last sale and pricing below the competition. The way we predict what a willing, able buyer will pay is to objectively look at these numbers - they will tell us where market value is.

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Who are the Joneses, and why is everyone trying to keep up with them?

As we celebrate Thanksgiving this month and with the recent crisis that has caused many to rethink what is important, I have been opining on a thought. It is not meant to judge or critique, just observations. My clients are confident that I served them to the best of my ability, taking a long-term approach to home ownership. The complexity of the current crisis has been illustrated by smarter people than I. However, I believe this is a crucial part of the dilemma.

It used to be that spending money on status symbols for the sake of flaunting your wealth was an activity reserved for celebrities and millionaires. That has all changed. Conspicuous consumption, what was once referred to as "keeping up with the Joneses", has brought the lifestyles of the rich and famous to suburbia.
The demand for status goods, fueled by conspicuous consumption, has diverted many resources away from investment in the manufacture of more material goods and services in order to satisfy consumer preoccupations with their relative social standing and prestige.

The philosophy of "keeping up with the Joneses" has widespread effects on society. According to this philosophy, conspicuous consumption occurs when "households care about their relative standard of living" in relation to their societal peers.

One area in which "living above ones' means" has caused negative social effects is that of credit card usage. In the first quarter of 2002, total credit debt was $660 billion. By 2005, the total credit card debt had increased to $735 billion. Americas' average credit card debt in 2007 was $8400 per household. By the end of 2007, consumer debt in America had risen to $2.5 trillion. According to the Federal Reserve, over 43% of households spend more than they earn.
Another recent example is the 2007 subprime mortgage financial crisis, in which credit was eagerly extended to homebuyers who were unable to afford the homes that they were purchasing. That in and of itself is an issue that has been addressed by many smarter people than me.

The Trappings Of SuccessEveryone is looking for the smallest phone, the cable provider with the most channels and the television with the biggest screen. Add in desktop computers and high-speed internet access and you've created a list of America's growing "necessities". According to a 2006 survey entitled "Necessity or Luxury" by the Pew Research Center, 33% of Americans now view cable or satellite TV as a necessity. In 1996 that number was 17%. Also, 51% now can't live without a home computer, up from 26% in '96.

Some items that were seen as fads or didn't exist ten years ago have jumped onto the necessity list:
· Cell Phone: 49%
· High-speed internet: 29%
· Flat-screen TV: 5%
· iPod: 3%

This tableau is at once absurd and sad--but not altogether surprising. We are, after all, a nation of accomplished spenders, slaves to advertising and status symbolism. The conspicuous fruits of our consumption shout out our aspirations and insecurities.

Why are we killing ourselves this way? In large part, we work so that we might spend. Americans are engaged in an intensifying national shopping spree rooted in competitive emulation--keeping up with the Joneses on a manic scale. We are impoverishing ourselves, in pursuit of a consumption goal that is inherently unachievable.

Corrosive consumerism, of course, has existed as long as envy and avarice. Look at the pharaohs' pyramids. Evidence of its current manifestation will seem blatantly familiar to anyone with a TV, a car, or kids. (The coolest brands are often fashion brands or 'badge items' that people wear and relay a message about themselves.)

In the late 20th century, competitive spending has intensified insidiously. In part, that's because the gap between rich and poor has widened, creating a highly visible class of superwealthy who set outrageous spending precedents for everyone else. At the same time, TV ads, not to mention the programs they punctuate, have brought images of Lexuses and Rolexes, directed at the rich, to the gazes of average Joes.

Much of our spending clearly is unnecessary or wasteful, raising troubling moral questions. Moreover, the uphill pursuit of material nirvana is stressing us out. Amid widespread wealth, most Americans aren't content with their lives.

Why We Do It
There are a variety of factors driving consumption:
· The desire to show off our success
· The need to have what other people have
· Prolific advertising and product placements
· Easy credit
· A society that favors instant gratification over hard work

The Joneses Are Broke
Many of the people driving around the suburbs in their giant SUVs while talking on their new cell phones are deeply in debt. If you ask them how they are doing, they will tell you that they are just barely getting by. Why so much debt and such a grim outlook from areas of obvious affluence? It's simply a matter of people spending far more money than they should. If you can "afford" life's luxuries but aren't funding your 401(k) and investing in your retirement savings, you may want to reevaluate your financial situation.

If you believe what you read, we have to have stuff! More and more stuff! Without it we are less important, less beautiful, and less popular and the biggest lie, less happy. Let us CHOOSE to be grateful for what we have and those around us.

The sky is NOT falling

Everyone has an opinion... that's okay, this is AMERICA!!

I'm sad to say that to one degree or another, everyone is guessing. There were those that said early 09 was when it was turning around. That was said in late fall of 07, just after the crisis of August 6th impacted everyone.

The sky is NOT falling, we will adapt and be better than before. I believe this is the time when people willing to take a risk will be industry leaders in the future.

When a business cycle starts to falter, the media start wringing their hands. Then big businesses do, freelancers, entrepreneurs and soon everyone is keening.

People and organizations that have no real financial stress start to pull back, "because it's prudent." It's almost as if everyone is just waiting for an excuse to do less. In fact, they are.Growth is frightening for a lot of people. It brings change and the opportunity for public failure, they find an excuse. We decide to do it later, or not at all.

But uncertain times, frozen liquidity, political change and poor astrological forecasts all lead to less competition, more available talent and a do-or-die attitude that causes real change to happen.

"Houses cost too much for the mass market. Today's average price is out of reach for two-thirds of all buyers." ~Science Digest 1948 (average price at the time: $8,000)

"The era of easy profits in real estate may be drawing to a close." ~Money Magazine 1981

"Most economists agree...a home will become little more than a roof and a tax deduction, certainly not the lucrative investment it once was..." ~Money Magazine 1986

"Financial planners agree that houses will continue to be a poor investment." ~Kiplinger's Personal Financial Magazine 1993

The JUMBO Effect

The past few weeks have been fraught with hysteria, calamity, fear and anxiousness. We could all use a little good news couldn’t we? I believe one of the factors that will bring health and balance to our Eastside market is the resizing of the Jumbo Loan… actually the fact is that the conforming loan is getting bigger. Allow me to explain.

Prior to the first stimulus package the maximum loan amount for a confirming rate was $417,000.00. When the Congress and the President signed the first package there was a temporary ceiling (expiring December 31, 2008) on the maximum to $567,500.00. The investors didn’t feel the kind of confidence (due to the climate we were in) required to offer the rates that the lower price loans would receive, so there actually became a third tier—Conforming Jumbo. Now that the second stimulus package has been passed, there is a new permanent loan limit. For King, Pierce and Snohomish Counties it is now $522,100.00.

This is exciting because the median home price in our counties is certainly above the $417,000.00 limit. Those buying a home with conforming loans will receive not just better rates but better terms as well.

The trickle up effect this will have is a fundamental in inventory being absorbed. Considering the fact that there is now over a $100,000.00 increase in the ceiling that will assist those that should be buying in our median price range, this will give them the ability not to overstretch, but find reasonable monies to fulfill their housing objectives.

As we pray to see our young men and women come home from the conflicts in the middle east soon. In the past, those service men and women, using their V.A. (Veteran's Administration) loans were forced to live farther out due to the maximum limits as well. As they return home, they will also have the opportunity to take advantage of the new higher loan limits.

As the more affordable price points see sales increase it will help absorb the upper-end price points. That’s an effect we can use.

CopperRidge Townhome

Spectacular Sanctuary Retreat

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Emmanuel Fonte Marketing

Lake Sammamish Home

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Emmanuel Fonte Real Estate Marketing

Emmanuel’s approach to real estate sales and marketing is both straightforward and complex. He operates with the utmost reliability and candid professionalism, his practice is client-centered and people-driven. Emmanuel’s clientele and their needs always come first.

Conversely, the effective marketing of residential real estate properties is, by nature, complex. Every listing is professionally managed throughout this complicated process. Each property receives the assistance of industry-leading marketing, as well as advertising, working together to develop a strategic and tactical marketing plan customized to each client and each property.

Emmanuel’s marketing approach includes an aggressive mix of sophisticated multi-media internet marketing that includes Architectural Digest-quality photography, professional copy writing, high-quality video tours as well as full-color brochures and high quality publishing.

At every juncture of this multi-faceted process - from signed listing agreement to close of escrow - Emmanuel’s clients receive streamlined, measurable, up-to-the-minute feedback and updates as to the marketing and sales status of their property.

By ensuring his clients’ needs are met at all points in the marketing and sales process, Emmanuel works hard to earn both your trust and referrals.

Bellevue Urban Living

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