The record store will be missed, but the expansion of Olympia Pizza was done right. When picking up a take-out pizza tonight at the Olympia Pizza on 15th, I was pleasantly surprised to see that the newly completed addition included the bar from Pioneer Square’s J&M. It’s authentic and looks like it has always belonged there. Great stewardship of a piece of Seattle history. It’s not Elliot Bay Books, but it is another creative addition to an increasingly attractive 15th Ave E business district. Great atmosphere and  … as always … great za.

Pat Grimm is Owner/Broker of Windermere Real Estate/Capitol Hill located on 19th Ave E. CHS invites contributions from all community members.

Based on the quote attributed to me in the PI yesterday morning and the spin of the story http://www.seattlepi.com/local/412880_housing03.html , you would think that the real estate market is in the throw of a complete rebound. That’s just not the case. It always amazes me what bits and pieces of a conversation actually make it to print. Assuredly, the story is never as good or as bad as these articles want to make it. Personally, I’d like to skip the drama and just be real.

There is so much information coming at us all the time that we seldom get past the headlines. There is simply too much information noise out there. Unfortunately, the only thing most people likely saw in the article yesterday morning is “Home Sales Up 81%”. They don’t stop to consider the fact that if you take a number  … any number … and decrease it by 50%, and then subsequently increase it by 100%, you arrive back at the same number. That’s just simple math. But using increases and decreases by percentages without putting it in the context of a bigger picture is extremely misleading. The fact is that the reason things look so good for the real estate market recently is because they have been so gawd-awful for the past 2 years. Real estate equity has taken a huge hit since the fall of ’07. Values have dropped generally from 25 to 30% which translate into much higher drops in equity when you consider that most properties are highly leveraged by financing. Articles that paint the picture that everything is wonderful in real estate seem to summarily dismiss the pain and suffering that property owners have felt as a result of that hit. Granted, for many property owners, the equity loss has been just paper. But there are still many others who have felt the real sting of invested dollars that have simply evaporated… and they’re not going to return soon enough. It is what it is, but the resulting anxiety in the marketplace is not normal.

Have we returned to a normal real estate market? No. Have things truly stabilized? Far from it. When I contemplate the situation, I can’t help but think about the game that my kids recently downloaded onto my I-Pod Touch (I-Phone w/o the phone) called Super Monkey Ball. The basic premise of the game is to keep a rolling ball from falling off the edge of a flat surface by making quick adjustments to the position of the I-pod Touch. The game is really hard because every adjustment you make requires a counter adjustment to keep the ball on the surface. What a great analogy for our economy. The government seems to be playing a dangerous game of Super Monkey Ball, but it does create some big opportunities if you have some risk tolerance.

The adjustments made to the economy to stimulate the real estate market have been fairly extreme. Yes, the tax credit and artificially low interest rates have had a ripple effect on most price points and there’s no question that they have stimulated sales in the recent months. But I can’t help but wonder about the eventual counter adjustments. When? What? To what extent?  I wish I could answer those questions. Arguably, the real estate market will have stabilized when it no longer needs tax credits to stimulate sales, when rates are no longer artificially low or high, and when private money comes back into both the residential and commercial markets. A good sign that we have returned to a normal market is when someone else besides the government is buying mortgage backed securities…. AND sales activity remains relatively constant. Until then, welcome to real estate Super Monkey Ball.

All this is telling me that if you’re in a position to do so, now is a great time to be buying real estate. That’s where the real estate Super Monkey Ball is rolling right now. There’s a window of opportunity that is only likely to last thru April of 2010. After that, the tax credit will go away and rates will probably rise dramatically. Windows of opportunity like this just don’t come along too often. Getting into position to buy property may take some doing, but I think you’d look back and say it was worth it.

Now more than ever, for most people, it makes sense to work with a good real estate agent. I know that sounds self serving, but even if I wasn’t in real estate, the information “noise” factor would lead me to that conclusion. While it’s all accessible and transparent, the amount of ever-changing real estate information is simply deafening … ok, over stimulating… unless you’re on top of it every day. In the absence of good counseling and interpretation, it is nearly impossible to make a real estate decision without second guessing yourself. That uncertainty can be extremely unnerving. I’ve got to think that most people do not want to go through that. The opportunities are out there if you know what you’re doing, but it’s easy to make a mistake too. Part of a real estate agent’s job is to sift through the noise and guide you to the conclusion, with absolute certainty and clarity that the real estate decisions you’re making are the right ones for you.

Pat Grimm is Owner/Broker of Windermere Real Estate/Capitol Hill located on 19th Ave E. His office is not currently representing and does not own property in the Brix building.

Last week, Seattle Real estate pundits were predicting that the Brix and Gallery auctions would yield prices that would be 30% off the original asking prices, but I wouldn’t  have bet on it. Patterns from previous auctions at The Press (-17%), Queen Anne High(-32%) and Lumen (-38%) and the sheer number of units being sold at one time … 80 plus … suggested to me that the discounts would be greater. Interestingly, the pundits were almost dead on.

The numbers are in and it looks like the Brix and Gallery average auction prices came in at 30.37% and 32.47% respectively off original prices. Did the winning bidders get a good deal? Well, I’d have to get out my crystal ball to answer that but that thing broke last year. In all seriousness, time and the marketplace will ultimately define the good deals. My gut is telling me that these buyers did well, but, more importantly, I believe that they got a really fair deal.  Each unit is different, but as an average, the final bid numbers seem to be commensurate with the adjustments we’ve seen in the marketplace and the risk that each buyer is assuming.

Let’s face it, condo ownership requires a certain amount of risk tolerance. Because of the fact that it’s communal living, it’s kind of like Forrest Gump and his box of chocolates … you never know what you’re gonna get. This is arguably more true for the new buildings that are lying vacant in a stagnant market. But the risk can vary from unit to unit, from building to building, from micromarket to micromarket and from region to region. 

In my opinion, the single most important factor that is affecting the value of a condominium in our marketplace today is not the desirability of the lifestyle or the livability of the space … it is the stability of the building. (but more on that topic later)

The developer did what they had to do in auctioning off these units. In spite of what anyone may think of the process that is generated thru auctions … and now potentially bulk sales (see The Decatur at www.realogics.com) …it is the right strategy for all the stakeholders. The worst thing that can happen is to have a building with a bunch of vacant units that aren’t selling. Does this all translate into a good deal for the Buyers? Yes. The Buyers may have been able to negotiate hard on their own and gotten similar terms, but the volume of the other transactions all at the same time can’t help but lead to a more stable building and therefore makes it an even better value. Time will tell, but as long as they don’t try to spin these units right away, I think these Buyers will look back favorably on the deal they got.

Pat Grimm is Owner/Broker of Windermere Real Estate/Capitol Hill located on 19th Ave E. His office is not currently representing and does not own property in the Brix building.

Sunday, September 27th, condo developer, Schnitzer West, will be attempting to move 40 units at Brix on Capitol Hill and 43 units at Gallery in Belltown…all within a 6 hour period. The issue is that no one has ever attempted to sell…bang of the gavel…gone…80 plus condominiums in a single afternoon in the City of Seattle.  It’s a little like trying to predict the outcome of the Seahawk game this weekend, but there’s no question in my mind that the outcome will impact Seattle real estate.

Which brings up some interesting questions:  Is the market deep enough? Are there enough sideline players waiting for this kind of opportunity? How much more than the minimum bid will they go for? What percentage off the original list price will they go for? The outcome of this event could speak volumes in terms of where we really are with the Seattle real estate market … as it applies to condos.

But Schnitzer West isn’t the only one laying things on the line here.  Every condo owner in the city has something at stake here as well, especially the condo owners with their property on or soon to be on the market. It should be noted that more than half of the dwelling units in the City are now condos, townhomes or co-ops.

Hundreds of potential buyers and curiosity seekers have been through these projects over the past few weeks. It will be interesting to see how many show up on Sunday. On one hand, I’m visualizing low bidding and the outcome to be like ripping off a bandage and exposing a very ugly and painful sore with the realization that market values are significantly less than current expectations.

On the other hand, I can also see the potential for a lot of bidding and a ratification that the expectation adjustments that have already been made are true to the market.  Either way, I think we’re going to find out where the market really is, and right wrong or indifferent, it is what it is. And that is bound to create some certainty in the minds and hearts of Buyers and Sellers, which can be stabilizing. … and after the past couple of years, I welcome stability.

As for me, I’ll have to choose between the Seahawk game and the auction on Sunday afternoon. I have to admit, the auction could be way more interesting.

http://www.auctionbrix.com/index.php?keyword=brix%20condos

http://www.auctionthegallery.com/