Flipping houses is harder than it looks

Forget no-money down and other late-night TV fantasies. In the real world, flipping requires deep pockets -- and plenty of hard work.
By Pat Curry, Bankrate.com

You come home from a long day at work and while channel surfing, you come across a show in which guys are buying run-down houses, fixing them up and reselling them for huge profits before the first mortgage payment is due.

Wow. What's more, they claim they make as much money on this one house as you have in the last year.

They don't look or sound any smarter than you are and they're raking in the cash. You start crunching numbers and before you know it, you're thinking about a career change.

Before you quit your day job, can we talk?

It's not as easy as it looks on TV. The price run-up of the past few years led thousands of people to reach the same conclusion you have. There is a boatload of competition out there, which means that the obvious deals are gone in a heartbeat. The pros will tell you that they make their money on the front end by buying properties for at least 30% below market value. Finding those houses takes time and once you find them, you'll need to move fast. And no matter what the late-night gurus say about doing this with no money down, it hardly ever works that way. That means you'll need access to cash to do the deal, not to mention the rehab.

Dream catchers
"The masses believe in the dream that's been promised to them, that they'll be making a fortune in the next six months," says Manuel Iraola, president of Miami-based Homekeys.net, an online real estate company. "They don't have the basic know-how. If it were as easy as they make it seem, 286 million people would be flipping real estate."

Richard C. Davis, owner of Charleston-based Trademark Properties, and creator and star of A&E's reality show, "Flip This House" says no one can watch his show and get the impression that this is an easy way to make a living.

"In our original video, we had a warning," Davis says. "'Do not try this at home. It's for trained professionals. You will lose money.' I got two guys following me around with a camera. There are no scripts. If I lose $100,000, you see it."

While he understands the desire of people to get in on the action, he doesn't have a lot of sympathy for people who don't want to invest the time that's needed to learn the business.

"Right now, you have people jumping in on frenzy and it will bankrupt a lot of Joes and Susies who have no business doing this," he says. "I mean, my wife is a doctor, you don't see me going out doing heart surgery."

Here's the catch
What's there to learn? Atlanta-based financial adviser Bill Kring wishes people understood that they need to have adequate savings in place to pay the bills while money is flying out the door for cabinetry, plumbers and plants.

"In a business with zero income until liquidation, what are your resources?" Kring says. "What are your abilities to borrow? Without that, you'll never make it." Access to large amounts of cash is the hardest part -- and one of the biggest misconceptions -- of the business, says Raphael Isaac, who has been rehabbing and reselling houses in the metro New York market for 14 years. For most of his deals, he puts at least 10% down and then has a month to close.

"If you don't close in 30 days, they keep your money," he says. "Then you need more cash to carry the house, the insurance, the utilities and the maintenance. You won't get a contractor to renovate a house for no money. People go to trade shows and buy these books and tapes on how to buy a house with no money down. I've never seen someone actually do that."

Working against youAnother reason that access to cash is so important is that you'll probably need to hold on to the house for at least three months because of Federal Housing Administration (FHA) anti-flipping regulations. Houses sold less than 90 days after they were purchased aren't eligible for FHA mortgage insurance; those sold between 91 and 180 days are OK but require an additional, independent appraisal to make sure the sales price is justified.

What that means for you as the owner is additional carrying costs. Every day you own the house costs you money in interest, utilities, taxes and insurance.

If you're taking out a mortgage to buy the house, talk to your banker about pre-payment penalties. "We make money when people hold loans; we lose money when they pre-pay," says St. Petersburg, Fla.-based banker Mark Dannenmiller. A typical pre-payment penalty, he says, is 80% of the balance of the first mortgage, times the interest rate, divided by 2. So, if you borrow $100,000 and get a mortgage for 5.75%, your pre-payment penalty would be $2,300 ($80,000 times 5.75%, divided by 2).

Dannenmiller's advice to individuals who are considering going full-time is to keep your job, make a little bit of money and pay yourself back, building up your cash reserves.

"Hopefully, by the fifth or sixth house, you don't need me anymore and you're buying houses for cash. That's important because as soon as you (quit) your job, you can't get a loan."

To Joseph Patton, getting cash is the easy part. The hard part is finding the properties to buy.

"These properties are not for sale through Realtors and they're barely available through auctions," says Patton, who buys primarily in Philadelphia. "(Finding them) is very time-intensive. You have to be out there on the street. It's almost banging on doors ... It's not an insider's game but you need to put in time to build the network."

The taxman cometh
One other point to consider: As far as the IRS is concerned, buying and selling real estate as an investment strategy and doing it as a business are two very different things. If you buy a house, fix it up and resell it while you're working another full-time job that provides the bulk of your income, that's an investment and the proceeds will be taxed as short-term capital gains (if you own it for a year or less) or long-term capital gains (if you own it for more than a year). A short-term capital gain is taxed at the same rate as your ordinary income. A long-term capital gain currently is taxed at 15% of the gain.

But if you're doing it year-round and it pretty much pays all your bills, that's a business and the IRS might consider you a dealer-trader, says Los Angeles-based CPA and tax attorney Bill Abrams. Then your gain will be taxed as ordinary income no matter how long you own it, the real estate taxes and interest will be regarded as an expense and you'll have to pay self-employment tax of 15.3%.

Plus, you won't be able to take advantage of IRS section 1031 like-kind exchanges, which can help with taxes when you have a property that sells for substantially more than you paid for it. Only property that's held as an investment qualifies for this tax break; while the tax code doesn't specify a time frame, the rule of thumb supported by case law is that you need to hold it for at least a year to qualify.

Right place, right timeSo, does it make any sense at all to do this? For the right people and the right reasons, sure. Detroit-based real estate broker and investor Ralph R. Roberts tells people to learn everything they can about the industry and don't consider making it a career until they've made double the amount of money in a year that they do in their current job.

"One person I went to high school with bought a house every year for 30 years," Roberts says. "He's flipped about 10 of them. Now he's building a mammoth house. But he never did it to get rich; he did it to have financial independence. You can't go into it for the hype. You do it for financial security down the road."

If that's your plan, maybe you don't need to quit your day job after all. It's possible, although often exhausting, to moonlight as a flipper, says New York-based real estate attorney Neil Garfinkel.

"I know plenty of guys who do two, three, four houses a year, keep their health insurance and do this on the side," he says. "Many times, they can double their salary."

And that's all you really wanted to hear, isn't it?

(Still interested in "flipping" real estate? Call the experts at The Katrina Williams Realty Group, 425-977-2748, to get a list of homes that would be ideal for your first "flipping" experience!)

Labels: fixers, flipping, northwest real estate, real estate market

Low credit score? No money down? No assets? No problem! Just be careful.

Subprime meltdown

By Steven Pearlstein
The Washington Post

Today's pop quiz involves some potentially exciting new products that mortgage bankers have come up with to make homeownership a reality for cash-strapped first-time buyers.

Here goes: Which of these products do you think makes sense?

(a) The "balloon mortgage," in which the borrower pays only interest for 10 years before a big lump-sum payment is due. (b) The "liar loan," in which the borrower is asked merely to state their annual income, without presenting any documentation.

(c) The "option ARM" loan, in which the borrower can pay less than the agreed-upon interest and principal payment, simply by adding to the outstanding balance of the loan.

(d) The "piggyback loan," in which a combination of a first and second mortgage eliminates the need for any down payment.

(e) The "teaser loan," which qualifies a borrower for a loan based on an artificially low initial interest rate, even though he or she doesn't have sufficient income to make the monthly payments when the interest rate is reset in two years.

(f) The "stretch loan," in which the borrower has to commit more than 50 percent of gross income to make the monthly payments.

(g) All of the above.

If you answered (g), congratulations! Not only do you qualify for a job as a mortgage banker, but you may also have a future as a Wall Street investment banker and a bank regulator.

No, folks, I'm not making this up. Not only has the industry embraced these "innovations," but it has also begun to combine various features into a single loan and offer it to high-risk borrowers. One cheeky lender went so far as to advertise what it dubbed its "NINJA" loan — NINJA standing for "No Income, No Job and No Assets."

In fact, these innovative products are now so commonplace, they have been the driving force in the boom in the housing industry at least since 2005. They are a big reason why homeownership has increased from around 65 percent of households in 1994 to a record 69 percent in 2004.
They help explain why outstanding mortgage debt has increased by $9.5 trillion in the past four years. And they are, unquestionably, a big factor behind the incredible run-up in home prices.

Now they are also a major reason the subprime mortgage market is melting down, why 1.5 million Americans may lose their homes to foreclosure and why hundreds of thousands of homes could be dumped on an already glutted market. They also represent a huge cloud hanging over Wall Street investment houses, which packaged and sold these mortgages to investors around the world.

How did we get to this point?

It began years ago when Lewis Ranieri, an investment banker at the old Salomon Brothers, dreamed up the idea of buying mortgages from bank lenders, bundling them and issuing bonds with the bundles as collateral.
The monthly payments from homeowners were used to pay interest on the bonds, and principal was repaid once all the mortgages had been paid down or refinanced.

Thanks to Ranieri and his successors, almost anyone can originate a mortgage loan — not just banks and big mortgage lenders, but any mortgage broker with a Web site and a phone.

Some banks still keep the mortgages they write. But most other originators sell them to investment banks that package and "securitize" them.

And because the originators make their money from fees and from selling the loans, they don't have much at risk if borrowers can't keep up with their payments.

Key problem
And therein lies the problem: an incentive structure that encourages originators to write risky loans, collect the big fees and let someone else suffer the consequences.

This "moral hazard," as economists call it, has been magnified by another innovation in the capital markets. Instead of packaging entire mortgages, Wall Street came up with the idea of dividing them into "tranches."

The safest tranche, which offers investors a relatively low interest rate, will be the first to be paid off if too many borrowers default and their houses are sold at foreclosure auction.

The owners of the riskiest tranche, in contrast, will be the last to be paid, and thus have the biggest risk if too many houses are auctioned for less than the value of their loans. In return for this risk, their bonds offer the highest yield.

It was this ability to chop packages of mortgages into different risk tranches that really enabled the mortgage industry to rush headlong into all those new products and new markets — in particular, the subprime market for borrowers with sketchy credit histories.

Selling the safe tranches was easy, while the riskiest tranches appealed to the booming hedge-fund industry and other investors, like pension funds desperate for anything offering a higher yield.

Eager investors
So eager were global investors for these securities that when the housing market began to slow, they practically invited the mortgage bankers to keep generating new loans even if it meant they were riskier. The mortgage bankers were only too happy to oblige.

By spring 2005, the deterioration of lending standards was pretty clear. They were the subject of numerous eye-popping articles in The Washington Post by my colleague Kirstin Downey.

Regulators began to warn publicly of the problem, among them Fed Chairman Alan Greenspan. Several members of Congress called for a clampdown. Mortgage insurers and numerous independent analysts warned of a gathering crisis.

But it wasn't until December 2005 that the four bank regulatory agencies were able to hash out their differences and offer for public comment some "guidance" for what they politely called "nontraditional mortgages."

Months ensued as the mortgage bankers fought the proposed rules with all the usual bogus arguments, accusing the agencies of "regulatory overreach," "stifling innovation" and substituting the judgment of bureaucrats for the collective wisdom of thousands of experienced lenders and millions of sophisticated investors.

And they warned that any tightening of standards would trigger a credit crunch and burst the housing bubble that their loosey-goosey lending had helped spawn.

The industry campaign didn't sway the regulators, but it did delay final implementation of the guidance until September 2006, both by federal and many state regulators.

And even now, with the market for subprime mortgages collapsing around them, the mortgage bankers and their highly paid enablers on Wall Street continue to deny there is a serious problem, or that they have any responsibility for it.

In substance and tone, they sound almost exactly like the accounting firms and investment banks back when Enron and WorldCom were crashing around them.

What we have here is a failure of common sense. With occasional exceptions, bankers shouldn't make — or be allowed to make — mortgage loans that require no money down and no documentation of income to people who won't be able to afford the monthly payments if interest rates rise, house prices fall or the roof springs a leak.

It's not a whole lot more complicated than that.

Copyright © 2007 The Seattle Times Company

(Need a local lender to answer questions for you about your next home loan? Just give us a call here at the Katrina Williams Realty Group, 425-977-2748, and we will put you in touch with a lender who is right for you!)

Labels: home loans, loans, mortgage, northwest real estate, real estate, subprime

By Sarah Jackson, Herald Writer

Some houses just need a little love.

John and Marilynn Churchill knew that. In fact, they were open to a remodeling project when they began house hunting.

More than anything, they longed for a home with a dramatic view.

Quickly, there was a front runner, a 1949 rambler in Everett, built by a longtime local plumber.

Its construction was undeniably sturdy. Efficient hydronic under-floor radiant heating, original to the house, ran throughout the home. And the view, well, it was hard to resist, boasting nearly 180 degrees of unobstructed panorama overlooking Possession Sound and Port Gardner.

It was enough to convince John Churchill, who was skeptical of the home at first, to go for it.

"We kept coming back to it," Marilynn Churchill said, feeling ever confident they could give the humble home new life. "I said, 'Trust me.'" Instead of rushing into a remodel, however, they lived in the home about six months to get a feel for the flow, and their use of its spaces and view.

When it came time to remodel, the Churchills, who have remodeled homes throughout their 25 years of marriage, didn't just give the old rambler a little love.

They gave it quite a lot.

Today, their home is a one-of-a-kind masterpiece, featuring all the conveniences of a modern existence amid a large collection of traditional furnishings.

The Churchills partnered with City Builders, a remodeling company in Lynnwood specializing in upscale makeovers.

They modernized the home with all kinds of basics, such as new windows and wiring. They also upgraded the property with two large additions: one for a formal dining room, great for entertaining when their five grown children visit; and one for a large master bedroom.

They recast the exterior of the home with two dramatic new gables that allowed higher ceilings inside, as well as a large entrance.

Their kitchen, laden with knotty alder cabinets and exquisite molding, is one of their favorite rooms.

Not only does it afford breathtaking views of both the Olympic Mountains and the Cascades, but it's also a work of art.

Like many high-end remodeling projects, it prominently features granite. But the stone the Churchills chose is far from typical.

Though they could have selected a homogenous slab with consistent colors and particle formations, they instead opted for a dramatic sweeping pattern with large swirls and variations in color, a Jackson Pollock in the world of granites.

It couldn't be more appropriate for the tone of the large kitchen or the rustic look of the cabinets.

John Churchill credits his wife for the home's luxurious and appropriate colors, textures and surfaces.

"She's got a great knack," he said. "She has a vision."

Gordon "Gordy" Gregg, owner of City Builders, said the Churchills knew what they wanted but were open to his ideas, too.

He's particularly proud of his design and craftsmanship on the marble range hood, featuring large corbels, intricate detail work and copper accents, a project he took special time out to do, with some help from a tile setter.

"I actually love to work with my hands," Gregg said. "All of the stone components in that were all made at the site."

This isn't just a home with a killer kitchen, however. Many of the rooms are design showcases.

In the living room, just off the kitchen, they had the walls painted with a rustic faux finish, added cozy furnishings and had the fireplace surround rebuilt, another handmade creation by Gregg.

Near their new master bedroom, they turned two side-by-side bathrooms into one master bath with travertine tile in a walk-in shower. Built-in cabinets surround the marble-topped vanities.

The partially finished basement, once home to a large, heated underground garage and shop, also has some dramatic changes, including a TV lounge area, a lavish bar trimmed with wood and stone, a rec room and a wine cellar.

Two new bedrooms have taken the place of the old underground garage, including one for their daughter, Chelsea, 23.

Chelsea's bathroom has a definite retro look, thanks to the home's original turquoise tub, toilet and pedestal sink, repurposed in a whole new setting.

"They were in perfect condition," Marilynn Churchill said. "They're not chipped or anything."

Marilynn Churchill, who says she's a decorating-magazine junkie, played off the look with white tiles accented by a border of floral-themed tiles in turquoise.

An old Good Housekeeping magazine cover reinforces the mood, along with salvaged chrome fixtures.

"We had a lot of fun doing it," John Churchill said of the entire remodeling project. "We like picking things out together."

Though the Churchills had to move out for about nine months during the whole-house project, they say it was completely worth it.

"It's an extremely comfortable, livable house," he said, as she added: "We love it."

Reporter Sarah Jackson: 425-339-3037 or sjackson@heraldnet.com.

Published: Thursday, March 15, 2007

Labels: fixers, northwest real estate, remodeling

# posted by Katrina Williams @ 11:03 AM

Chicago-based Walton Street Capital filed papers with the city Wednesday to begin what could be a months-long process of getting approval to redo the tower as housing.

It seems that living in old buildings is more charming — and practical — than working in them.

The tower's architectural details, such as its terra-cotta façade, Mexican onyx staircase and marble wainscot, would appeal to people who like living in old buildings, said Michael Allmon, Walton Street's local operating partner. He added that the women and men who run the seven brass-and-copper caged elevators would remain, as would the building's ornate Chinese Room, popular for weddings and public events.

The proposed change is a way to ensure that the tower remains a vibrant part of downtown Seattle, Allmon said.

"It's what we don't plan to do with it that's key," Allmon said. "We want to embrace and enhance the historical fabric of the building."

A tall historyBuilt: In 1914 for $1.5 million, by typewriter tycoon Lyman Cornelius Smith, of Smith Corona.

How tall is it: Officially 38 stories of offices and ground-floor retail, although a plaque on its exterior says 42.

Claim to fame: When built, it was the tallest building west of Ohio — not New York (that's an urban legend).

Features: Bronze exterior window frames and sashes; carved-wood ceiling and furnishings of the Chinese Room on the 35th floor. The room was designed by the empress of China, after Smith visited China and presented her with typewriters. All furniture remains, including a "Wishing Chair" that has a carved dragon and phoenix and is said to augur marriage within a year for any single person who sits in it.

The 260,000-square-foot building holds landmark status with the city and cannot be substantially altered without permission. The exterior falls under the control of the Pioneer Square Preservation Board; the interior under the city's Landmarks Board. The proposed change was filed with the city's Department of Planning and Development.

Condominiums in new downtown high-rises are selling for $700 a square foot and up. At that price, a 500-square-foot unit would cost $350,000.
But it's too early to gauge the Smith Tower's potential appeal to buyers. The number and size of units has not been determined, nor the prices.
Matthew Gardner, principal in the Seattle-based land-use economics firm Gardner Johnson, said Smith Tower's conversion "could be incredible."

"The building itself is iconic, so it does make sense to go down this road."
Gardner also said the switch would benefit Pioneer Square by bringing more residents into the neighborhood.

Smith Tower has struggled a bit to attract and retain business tenants as more modern office towers emerged in recent decades.

"The building itself was never ideally suited to a modern, commercial office-type tenant," said Kevin Daniels, president of Nitze-Stagen, a private commercial-property investment firm.

The floor space in the upper stories is too small — just 2,000 square feet — and the spaces on the lower levels are either too cut up or too big.
Smith Tower's occupancy rate was up to 90 percent last year, from 75 percent a decade earlier. But that could reverse itself with the reported departure of two of its largest tenants.

Providence Health & Services will relocate about 200 employees to office space it recently bought in Renton. And the Disney Internet Group will move to a building in downtown Seattle, according to reports in the local business press.

Allmon declined to discuss individual tenants, but he did say that the reported departures got Walton Street thinking about changing the building's function.

"We bought it, frankly, as an office building, and it wasn't until we found out we would lose the two largest tenants in the building that we really looked carefully at what our options were," Allmon said. "We've just become excited about the possibility of changing its use.

"It's important that all possible current and future uses be explored in the preservation of this iconic tower," he added.

Walton Street became the historic building's 20th owner last year when it made an unsolicited bid, snapping up Smith Tower and an adjacent two-story building for $48 million. Its previous owner, the Samis Foundation, paid $7.47 million at a liquidation sale a decade earlier, then spent $28 million on renovations in the late 1990s.

Allmon believes a condominium-ized Smith Tower would have little trouble competing with the dozen or so swank condo developments under construction in downtown Seattle.

"I think this really is a category unto itself," he said.

When the tower opened in 1914 at the corner of Second Avenue and Yesler Way, typewriter tycoon Lyman Cornelius Smith spared few expenses. Fireproofing was a major concern, so Smith went as far as to paint and carve metal window frames to give the appearance of fine mahogany.

Downtown Seattle has seen relatively few landmark buildings readapted for residential use. The Cobb Building on Fourth Avenue, long made up of medical and dental offices, reopened last year with luxury apartments.
In 2001 the Seaboard Building, which formerly housed Nordstrom corporate offices at Fourth Avenue and Pike Street, went condo.
Daniels, of Nitze-Stagen, said Pioneer Square has a real need for market-rate housing. Converting Smith Tower to residential condos "could be positive depending on how the building's historic preservation element is dealt with," he said.

It might also improve the historic area's reputation, which Daniels says is undeserved.

"If you look at the demographics and crime facts, you'll find Belltown actually has more crime."

Allmon says he's seeking the input of city officials and historic preservationists. "It's a great building, and we're really very excited about having this conversation with the city."

However, the transformation could meet with sadness from current tenants.

"You're kidding," said Robbie Cape, CEO of Cozi, a software company that occupies about 4,000 square feet on the seventh floor, upon learning about Walton Street's proposal. Cape said he "adores" Smith Tower. "It's a bright, bright place, and it increases morale."

Cape said Cozi's lease at Smith Tower runs through spring 2009, but if Walton Street "wanted to buy us out of our lease and make it worth our while, we'd move."

Walton Street is in the process of converting portions of two office buildings in Chicago to residences, Allmon said.

Amy Martinez: 206-464-2923 or amartinez@seattletimes.com

Elizabeth Rhodes: 206-464-2306 or erhodes@seattletimes.com

Copyright © The Seattle Times Company

Labels: northwest real estate, pioneer square condominiums, seattle real estate, smith tower, smith tower condos

There are so many sources available to the public for determining a home's current value. Most are simple: You log onto a website, input your numbers (# of bedrooms, # of bathrooms, square footage, year built) and “Voila”, the site will kick back a number. This is what your home could sell for on the market, right? Not always!

A computer does not know if your home is located on a busy street vs. the end of a quiet culdesac. Or whether your front window overlooks a parking lot or the Cascade Mountain Range. And what about upgrades? Does the computer know that you recently installed those beautiful new granite countertops? Or that you just recarpeted the entire main floor? The answer to all these questions is NO!

What do I recommend? Getting a real estate professional to come out and actually see your home. Give them the grand tour! Show them what improvements you have made over the years and brag about the highlights of your home. The more the real estate professional gets to know your home the better they can determine an accurate value.
And while you’ve got them there, pick their brain on suggestions to increase the value even more! Perhaps new exterior paint? Bathroom remodel? Does the roof need replacing? Just ask them!

Whether you are thinking about selling your home, refinancing, or just staying put, a visit from a real estate professional is a great idea.

My recommendation?
Call the Katrina Williams Realty Group at John L. Scott Real Estate. They have a team of professionals who are experts in all areas of Snohomish, Skagit and King Counties. A team member will visit your home, then the next day provide you with a thorough Market Analysis on your home, as well as homes that have recently sold in your neighborhood (an important factor in determining value!). And they are more than happy to provide this service to the community free of charge and with no obligation. As simple as calling (425) 280-4655. Now wasn’t that easy?!

Labels: determine value, home improvement, home value, house value, northwest real estate, real estate

Q: We’re remodeling our kitchen and installing new countertops. Synthetic countertops cost slightly less than granite, but how do they compare in the long run?

A: As the saying goes, imitation is the greatest form of flattery. Countertops made from acrylic and other manufactured materials may have the somewhat “look” of granite, but the similarities end there. For resistance to bacteria, heat, scratches, stains, and overall performance, granite is unsurpassed. (Natural Stone Council 05-26-06)

First remember that granite is natural stone. Corian is composed of acrylic polymer and alumina trihydrate (chemicals). Most Corian tops have a plastic unnatural appearance where granite has a natural beautiful appearance. Disadvantages of Corian are that it scratches easily, can be damaged by chemicals and is not heat resistant, so it can be melted by hot pots and pans. (Wikipedia, encyclopedia)~ The number one question we get is, "Is granite sanitary"? Countertop Sanitation: Today’s consumer is offered a wide range of surfacing materials for use in countertop applications. Once in service, these countertop surfaces will be exposed to a variety of contaminative substances. The key safety issue to the consumer is the degree of cleanability of the surface material, that is, how easily any contaminants can be removed using normal and reasonable cleaning practices. The following study by Dr. O. Peter Snyder of the Hospitality Institute of Technology and Management (www.hi-tm.com) used E. coli bacteria as its contaminating agent. The findings of the report show significant cleanability advantages of natural granite countertops over almost all other commonly found countertop surface materials. The study included 6 countertop surfaces which were washed and rinsed after exposure to the bacteria. They were later cleaned with a 10% solution of white household vinegar (1 part 5% vinegar, 9 parts water). Bacteria counts were taken after both cleaning methods.
Granite Ranked 1st in CleanabilityAfter washing and rinsing, the granite tops provided the greatest reduction in bacteria counts of all the countertop materials tested:

Granite:
36,000 to 1

Stainless Steel:
4,000 to 1

Concrete:
2,400 to 1

Tile:
900 to 1

Wood:
500 to 1

Plastic Laminate:
285 to 1

When Dilute Vinegar Solution Used: Granite 2nd Only to Stainless SteelCounts taken after the application of the dilute vinegar solution showed the granite having a bacteria count reduction second only to stainless steel, but 160 times better than the next closest material:

Stainless Steel:
230,000,000 to 1

Granite:
80,000,000 to 1

Plastic Laminate:
500,000 to 1

Tile:
233,000 to 1

Concrete:
30,600 to 1

Wood:
2,000 to 1

Caution: The reader is cautioned that although vinegar was used as a disinfectant for the purpose of this test, there are some granite species that contain trace mineral groups which could be attacked by exposure to acidic solutions. Some sealers, impregnators, or other agents applied to the stone may also be subject to attack or discoloration from mild acids. Do not use vinegar as a cleaning agent without consulting your stone supplier as to the mineralogy of your particular granite as well as the compatibility of any sealer or impregnator that may have been applied to the stone. Vinegar should never be used on calcareous stones such as marble, limestone, or travertine. (Marble Institute of America 5-25-06)

Labels: granite, granite countertops, home improvement, real estate

Seattle is one of the "Housing Rebels" in the country

Affordable housing and booming job markets have helped some metros buck the national trend of stagnant home prices

by Maya Roney

You can buy a house on Park Place with $200 in Monopoly money, but the real thing will cost a whole lot more, especially after last year. Even as national home prices saw their worst-ever decline last quarter, the median home price in the Atlantic City (N.J.) area shot up almost 26%, to $339,800, marking the sharpest year-over-year increase of any U.S. metropolitan area.

Atlantic City isn't the only place that appears immune to the U.S. housing "bust." Seventy-one other U.S. metro areas saw price gains in the fourth quarter of 2006 from a year earlier, including 14 metros with increases of 10% or more, according to a Feb. 15 report from the National Association of Realtors (NAR).

Five metro areas remained unchanged and 73 areas had price declines, contributing to an overall U.S. median home price drop of 2.7%, to $219,300, the biggest year-over-year decrease on record. Home prices in the Sarasota (Fla.) area fell 18%, the sharpest decline among the metro areas.

Rare Affordability

How did Sarasota lose out and Atlantic City get lucky? In general, the more home prices increased in an area during the housing boom (2001-05, roughly), the more they needed to go down in 2006 to create a more balanced market in which prices matched household income.

Areas such as the Florida coast and Southern California saw the most speculation and consequently the most rapid price runups in the boom years. Places that didn't experience dramatic price appreciation until recently, including Atlantic City, Salt Lake City, Texas, and the Pacific Northwest, remained relatively affordable last year, drawing buyers and sending prices skyward.

"Everybody got used to that double-digit appreciation that was going on and that just really was not reality," says Bill Hanley, president of the New Jersey Association of Realtors (NJAR). "We're coming into a balanced market again."

Casino Boom

Economic law isn't the only factor driving home price gains in many metro areas. More than $2 billion in new construction in Atlantic City, including casinos, megaresorts, and shopping centers, is now attracting a "yuppie" crowd, according to Drew Fishman, president elect of NJAR and an Atlantic County-based realtor.

"We're seeing a whole new wave of casino activity going on," Fishman says. Many buyers are choosing second homes in the metro area to be close to the ocean and entertainment for a more affordable price than they might pay in other beach towns. There's even speculation that hotel-casinos will soon start to add condo residences, as Las Vegas has already done, Fishman says.

Job creation also led to significant home price appreciation in some metro areas last year, especially in the Northwest states. Three Oregon metros—Salem, Portland, and Eugene—and two Washington metros—Seattle and Spokane—saw double-digit price growth in the fourth quarter of 2006.

"Our market just seems to keep chugging along," says Terry Miller, a realtor at Seattle-based Coldwell Banker Bain. The median home price in the Seattle area was up 11.3% last quarter, to $372,900. Tech companies like Microsoft (MSFT) and Amazon (AMZN) are headquartered in the Seattle area, and aerospace-manufacturer Boeing (BA) remains one of Seattle's largest employers. In 2006, Seattle began a major redevelopment of its South Lake Union neighborhood to attract more biotech companies to the city. Microsoft cofounder Paul Allen has contributed financially to the effort.

Tough Negotiators

A large and increasing immigrant population in the Seattle area has also helped create demand for housing, Miller says. In addition, the Northwest region's price increases in recent years have not been as significant as in other parts of the U.S. "We had times when we were slower than the rest of the country," Miller says.

Maybe the slump in national home prices isn't the housing market's biggest problem, as evidenced by the positive price changes in nearly half of the nation's metro areas. In fact, problems may just be starting for areas like Seattle, which could see prices get out of control. "Prices are so high now, it is a concern," says Miller.

It may be a buyer's market in many parts of the U.S., but it seems like sellers have been tough negotiators when it comes to price. NAR has said the last three months of 2006 marked the bottom of the current housing cycle. Although the 2.7% decline in national home prices is the biggest on record, it pales in comparison to the 10.1% decline in total existing U.S. home sales in the same period.

"The number of homes selling has gone down, but the homes that are selling are selling around the same price and are appreciating [in some areas]," says NJAR's Hanley. "I don't believe that everything's falling out."

Roney is Real Estate writer for BusinessWeek.com.

Labels: housing prices, northwest real estate, real estate, seattle