The price of a typical home in the Seattle-Tacoma area, according to the national S&P/Case-Shiller index, continued in the same downward direction in February it's been heading since the summer. The index, which ties today's prices to a standard established in Jan. 2000, showed a 2.7 percent decline over the same month a year ago.

Most of the other 19 U.S. markets, however, saw far worse drops. Phoenix, Miami and Las Vegas all saw price declines of more than 20 percent. Only Charlotte, N.C., saw appreciation, at 1.5 percent.

Here's a look at how the Seattle-Tacoma area has been trending in the last several months, according to the index:

February: -2.7 percent
January: - 1.3 percent
December: 0.5 percent
November: 1.8 percent
October: 3.3 percent
September: 4.7 percent
August: 5.7 percent
July: 6.9 percent

For those looking for a longer-range perspective, the index also shows that a typical house in the Seattle-Tacoma market has gained 79.9 percent since 2000.

A new list from Forbes ranks the Seattle-Tacoma-Bellevue area as having among the worst homeowner debt, leaning heavily on the percentage of mortgages with a second mortgage or home equity loan.

Now that the market, banks and real estate industry are dealing with the many ripple effects of over-lending risky products to borrowers who mostly shouldn't have been borrowing -- aka the subprime debacle -- attention is turning to another recent phenomenon: saddling a first mortgage with another, smaller one.

The magazine says 26 percent of mortgages in the Seattle-Tacoma-Bellevue area have a second mortgage or home equity loan, putting it No. 13 in the country. You can find the whole Forbes story here.

Problem arise when a home saddled with two loans begins to lose value and can't be sold or refinanced, because the house is worth less than the combined loans. Anyone concerned about such scenarios in Pierce County?

I’ve been hearing a real estate agent theory on price dips the last few months that blames months of year-over-year declines on more home sales in the lowest prices. The median means half sell for more and half for less, so the idea statistically is that using the median price of closed sales minimizes the swaying of prices by one specific price category.

Pierce County median price declines have come in two forms in recent months – prices compared to the same month the year before have dropped six of the last seven months. Month-to-month prices have been down since peaking in August. (The median price was $258,405 in March.)

So I asked Dick Beeson, an MLS director and Windermere broker, to pull closed sales from Jan. 1 through March 23 for 2006, 2007 and 2008 in five different price categories. I examined sales in 16 Pierce County areas and several are seeing a higher proportion of sales in the under-$250,000 category than last year. But a few have also seen declines and a couple are essentially flat.

But if you look at the number of sales in the lowest-price category, Lakewood and the Puyallup area both saw an increase in closed transactions despite drops in sales overall. Plus, several areas show that the sales of homes priced below $250,000 fell less than sales drops in other price ranges. This is in contrast to numbers in November that showed most areas saw bigger declines in the lowest-priced homes. All very interesting -- and the best evidence that buyers in some areas are purchasing more of the cheapest homes than they did last year.

I’ve provided the proportion of the total sales that the under-$250,000 category accounts for in the first 114 days of each year. Tomorrow, I'll show the same areas with the increase or decrease of closed sales in the same price category.

All kinds of organizations do all kinds of good things to help people fix up their homes and become homeowners when they couldn’t otherwise afford it.

I wanted to recognize some groups coming together today for a three-day project that has a slightly unusual take on the donated home makeover: Redoing a house to get it eligible for a reverse mortgage.

The home is in Parkland and is owned by an 82-year-old widow, who lives with her disabled adult son. Rebuilding Together, along with the Washington Association of Mortgage Brokers South Sound chapter and Walsh Construction, will be giving the home top-to-bottom treatment, from new flooring, doors and windows to new electrical wiring, plumbing and landscaping.

“I can tell you at this point, without this work, the place was facing condemnation,” said Ed Hoffmann, a member of the mortgage association who is putting together the reverse mortgage for the homeowner.

Much like an FHA loan, homes must meet certain standards to qualify for a reverse mortgage, which is insured by the U.S. Department of Housing and Urban Development. A reverse mortgage allows seniors at least 62 years old to continue living in their homes while being paid from the equity they’ve accrued.

Popularity of the loans is expected to jump as baby boomers continue retiring. Already, HUD is seeing more interest, having insured 1,727 such mortgages in the state in 2006, up from 253 in 2000.

To learn more about how Rebuilding Together helps provide disadvantaged homeowners a better place to live and how families can apply for the help, go here.

The numbers available so far for 2008 give a read on the first quarter and since so many on the national scene are making predictions about the bottom of this market and where it might be, I thought you might want to make some predictions, too.

As a starting point, Yale University economist Robert Shiller, admittedly bearish and known for the S&P Case-Shiller home price index, said this week that U.S. housing prices could fall farther than they did during the Great Depression. At that time, prices decreased by 30 percent.

Here’s where price changes stand, year-over-year, in Pierce County for the first three months of 2008, according to the Northwest Multiple Listing Service.

March: -6.02 percent
February: -7.8 percent
January: -2.5 percent

For additional context, prices in Pierce County have decreased compared to the same month the previous year in the last six of seven months. So where do you think prices are headed? Did we find the bottom of this market correction in March? Or will we be waiting through the rest of 2008, and perhaps 2009, or even farther down the road?

It seems the biggest factor in the near-future could be financing -- how readily it's attained, how strict lenders continue to be and how expensive loans are to get, considering the fees being tacked on in today's lending climate.

With gas prices remaining at extra-high levels – and predicted to go higher through the summer – I was wondering how such price increases are impacting real estate agents and all the other professionals tied to the industry. The average in Tacoma for a regular gallon of gas today is $3.63, up considerably from the year-ago price of $3.17, according to AAA. (The national average for the same gallon of gas is $3.51.)

I know there's a lot you can do electronically, but real estate jobs seem to be more mileage-dependent than a lot of others. Have any agents considered adding a surcharge to make up for the extra gas they’re spending driving clients around? Anyone else?

And what about buyers? Are you looking less from your car to save a few bucks? Or even rethinking where you might live to avoid driving and pricey gas bills?

This story highlights incidents in real estate markets around the country. But I thought that an increase in arson-for-mortgages odd and fascinating enough to pass on.

One piece particularly caught my attention, having covered the recovery of a family who lost their home to the fall wildfires of 2003. This L.A Times piece says that investigators are looking into the possibility that some of the 2,000 homes destroyed in last fall’s fires were instead burned by owners trying to get out of paying their mortgage.

Here’s the full LAT story:

Some folks celebrate their last home mortgage payment by setting fire to their loan agreement. Lately, people behind on their mortgages are simply setting fire to their homes.

In what appears to the latest symptom of the U.S. mortgage meltdown and credit crisis, insurers, law enforcement and state agencies nationwide have reported a jump in home and automobile fires in the past year set by owners unable to pay their debts. The numbers are small, but they’re leading the insurance industry to scrutinize more closely what seem to be routine blazes.

“We’ve seen a dramatic increase in this kind of fraud,” said Dan Bales, director of fraud investigations at Mercury Insurance. “People upside down on their house with variable interest-rate loans, or upside down on their cars, are pretty quick to burn their property right now.”

Last week, a Sacramento, Calif.-area couple was arrested on charges that they burned their Jeep and drove their Nissan pickup into a river, then filed fraudulent insurance claims. According to investigators, the wife admitted she was trying to escape her $600 monthly car payment.

Three weeks ago, police arrested a woman in Easley, S.C., and accused her of deliberately setting fire to her home just three days after the bank hung a foreclosure notice on her door. In January, an Omaha, Neb., man was charged with arranging to have his three-bedroom house burned down to avoid losing it to the bank.

The fires are keeping fraud investigators such as Anne Luce occupied. “I’m busier now than a one-armed paper hanger,” said Luce, who works on auto cases for Bristol West Insurance’s special-investigations unit. “What is happening is terrifically economically driven.”

These financially motivated fires are surprising some officials, because they come after a decadelong decline in overall arson rates nationwide. Few state or federal agencies categorize arson in terms of the financial status of liens on the property, making nationwide figures elusive. Still, areas of the country are showing a significant increase.

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Short sales continue to be a hot topic in a difficult housing market. I wrote about the option, which allows a homeowner to sell a home for less than what’s owed on the mortgage, in February.

A recent Wall Street Journal story details the many difficulties related to what can be a lengthy and frustrating process. On an anecdotal note, I have friends who are now on their second attempt to buy a short-sale home. The first one fell through after months of unresponsiveness from the seller’s bank. Anyone else finding success or frustration with a short sale?

Here's the WSJ story:

As more people fall behind on their mortgages, lenders have been slow to take advantage of a longstanding alternative to foreclosure — a so-called short sale.

At first glance, a short sale might seem like a win-win for everyone involved. In such an arrangement, the borrower sells the home for less than the amount owed, with the lender forgiving the difference.

The sale releases borrowers from their obligations. For mortgage holders, it can be less costly than foreclosing — and could provide protection against future price drops. For buyers, it can be a chance to buy a home at an attractive price.

Short sales — which were rare when the housing market was booming — can also be a good way for lenders and investors to minimize losses.

They typically result in losses of 19 percent of the loan amount, compared with an average loss of 40 percent for homes that are sold after foreclosure, according to a recent analysis by Clayton Holdings Inc., which tracks more than $500 billion in mortgage loans monthly for investors. The costs of foreclosure can include not only legal fees, but also taxes, insurance and the expense of maintaining the home until the property is sold and repairing any property damage.

As the housing market continues to weaken, the number of short sales is edging upward. Short sales currently account for about 18 percent of home sales, according to the National Association of Realtors. But it can be extremely difficult to get these deals completed. Unlike a traditional real-estate sale, a short sale requires the approval of not only the buyer and the seller, but also the mortgage-servicing company. In many cases, loans have been packaged into securities — which means that the mortgage servicer must consider the interests of the investors who own the loans.

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So why is it that while so many other professionals charge an hourly rate, real estate agents take a commission? Think about the other types of professionals you might hire to do something for you or your home: accountant, attorney, mechanic. They charge by the hour, which translates to paying for the work done rather than paying a percentage of a sale that can happen in days or months.

All have to maintain their own businesses and do some share of advertising, networking and marketing their services. Real estate agents, however, do take on the additional burden of marketing each property they try to sell.

I’m not looking to make this into another discussion on whether or not real estate agents deserve the money they make. But I am interested in your thoughts on how they get paid and whether as consumers you like the idea of hourly rates vs. commission. And, agents, have you considered switching to an hourly rate. If you haven’t, why not?

And one more question: Knowing that agents are required to be licensed and keep current on classes and many bring various levels of expertise, what would be a fair hourly rate for a good agent?

Remember the San Diego real estate agent sued several months ago by a couple who blamed him for bad advice tied to the value of the home they purchased. Well, a jury took his side in the trial that ended last week.

The buyers had accused Re/Max agent Mike Little of withholding information about similar homes in their neighborhood selling for less, causing them to pay more for her $1.2 million house in 2005 than they should have.

But, according to the North County Times, it took a jury less than two hours to decide in favor of the agent.

From the story:

The Ummels said Little had failed them and thus owed them the amount they felt they overspent.

But the jury found that Little had not breeched his responsibility to the couple as their agent, nor had he been negligent.

"Mr. Little did what he was supposed to do," jury forewoman Wendi Brick said. "The bottom line is that you (as a buyer) are responsible when you sign a contract and purchase something."

New foreclosure stats for the month show Washington state’s March rate posting a huge increase – 120.6 percent over the same month a year ago – but that jump is likely not as high as it looks.

RealtyTrac, the California company that supplies the numbers, said in its release that in several states, including Wyoming, Vermont, Maryland and Washington, “actual increases may not be as high due to data collection changes or improvements.” (Washington, D.C., with the same caveat applied, saw a year-over-year increase in foreclosure filings of 6,040 percent.)

Nationwide, foreclosure filings increased by 57.4 percent, according to RealtyTrac, which follows auction and default notices and bank repossessions.

I called this morning to get more info on the change in data collection and why that altered Washington state’s numbers to the degree that all of a sudden the state was No. 16 in the national foreclosure tally after months of being middle of the pack. I’ll update if I get a call back.

But I did post about a RealtyTrac miscalculation in October in Atlanta that resulted from the company counting foreclosure filings twice.

UPDATE
I just talked to Daren Blomquist, marketing communication manager at RealtyTrac, who said that Washington state's numbers are being revised and will be rereleased in the next couple days. It turns out that some Pierce County documents led to miscalculations by the company's automated system.

A company that supplies RealtyTrac with foreclosure filings sent substitution of trustee notices, which were instead tabulated as notices of default, Blomquist said. On top of the document misfire, Blomquist said the company does not typically look at notices of default in Washington state because such notices are not a required part of the foreclosure process.

The numbers will be adjusted accordingly, he said, and should lower the state's foreclosure rate. I'll update when I get the new numbers.

I'm seeing a new Associated Press housing poll everywhere this morning, so I thought I would use it as a jumping off point for a kind of home buyer I've been thinking about lately: the move-up buyer.

Here are some of the results of the Associated Press-AOL Money & Finance poll.
• Sixty percent said they definitely won't buy a home in the next two years, up from 53 percent who said so in an AP-AOL poll in September 2006.
• 11 percent are certain or very likely to buy soon, down from 15 percent two years ago.
• The biggest worriers are those expecting to buy soon. Of that group, 43 percent frets that their home's value will drop in the next two years, compared with 25 percent of those not expecting to buy shortly.

Yes, it's a national poll, but it hits on what real estate agents often tell me: buyers continue to be hesitant. The buyer who seems to be in the toughest spot is the move-up one afraid of losing money on a sale while trying to buy. Which would be OK, because what's lost on one end could be made up on the other, except it seems folks are worried homes are depreciating rather than increasing in value, perhaps contributing to today's hesitancy.

Any move-up buyers feeling extra hesitant? Any out there who've taken the plunge recently? Any agents working with move-up buyers?

Here's a look at March home sales activity in 17 areas around Pierce County, according to the Northwest Multiple Listing Service.

All but Anderson Island, with one home sold, had fewer sales last month than the same month in 2007. Countywide, sales for houses and condos declined 32.9 percent.

The smallest drop by percentage? Eatonville. The biggest? Browns Point.

The breakdown on March median home prices in areas around Pierce County produced a range of year-over-year changes, from strong growth to way down to simply flat.

Keep in mind this is a one-month snapshot examining how median prices for the homes sold last month compare to what sold the month a year ago. The median means half sold for more and half for less. While the number can be swayed by more homes selling in the highest or lowest price ranges, statisticians generally consider it a stronger measure than average prices.

When providing these numbers each month, I am going to exclude communities where 10 or fewer homes sell. This month that means no numbers from Anderson island (one sale) and the Roy area (10 sales).

Las Vegas has a $1 million home problem. Yes, they're not selling. But perhaps not for the reasons you might think, according to a story in the Los Angeles Times.

It's not that buyers don't want to spend $1 million plus in today's market. Apparently, when it comes to luxury homes in Las Vegas, what's worth $1 million changes so quickly that what was ultra-luxe a few years ago is not worth the money today.

Las Vegas has one of the nation's more troubled housing markets, thanks largely to rampant new home construction and speculators. But in the high-end category, shoppers want new and so the homes built during the boom sit. According to the story, about 1,000 houses are listed for sale in Vegas for $1 million or higher, with more than 600 of them built since 2004. In an MLS search today, I found 383 homes in Pierce County listed at $1 million and up.

In a town of excess it should come as no surprise that bigger is better. But four years old and outdated?

My favorite part of the story:

Michael Lemoine, an architect who specializes in custom houses for the wealthy, says he has clients who build houses as often as some people buy cars.

"New neighborhoods pop up that become the place where these people want to live," he said. "They move from one to another because they want to be with their friends, then in five to seven years' time they go to another community."

To be considered a premium home, "8,000 to 10,000 square feet is the new threshold," Lemoine said. It was 5,000 to 7,000 square feet just five years ago, he added.

Buyers today want two sets of refrigerators and freezers, two game rooms (one for the kids, another for adults) and showers that are at least 7 feet by 7 feet, he said, adding, "Laundry rooms now are better than kitchens were five years ago. They have stainless steel cabinets, glass tiles."

Find the full version here.

The latest on the Northwest Multiple Listing Service numbers show a continued year-over-year decline for Pierce County, down 6.02 percent last month compared to March 2007.

This is Pierce County's sixth year-over-year price drop in the last seven months. And so far in 2008, every month has registered a price decrease. Any thoughts as to where this might be headed? What about when prices might level off and/or start swinging in the other direction? (Look for posts later this week on sales activity and how prices in March broke down for various areas around Pierce County.)

Here’s how nearby counties and their March median home prices shook out:

Zillow recently added a feature that allows you to compare and vote for the bathrooms, bedrooms, kitchens, etc. that you like best.

The company calls them duels and pitches them as a means of finding design ideas. There are 10 matchups in each of the duels. You could easily soak way too much time into sorting through pics that vary largely in attractiveness and appeal. Some of the pictures don't give enough detail; others are so good you can't believe homes are really that nice. Others are so blah it's a toss up. But I did particularly like a bathroom in a Medina home selling for somewhere north of $3 million.

A Zillow spokeswoman said the pictures come from the homes featured on the site, which include about 10 million photos.

When you're done voting, you see where the room you ended up with falls in the overall ranking. A bedroom I selected that had doors opening to a wooded balcony was No. 60 -- and in a San Francisco home selling for $4.95 million. (There's no direct link to the duel portion of the site, but if you go to the main page you can find it under "See design ideas on Dueling Digs.")

In other Zillow news, the real estate site this week is launching a new mortgage feature allowing customers to request customized loan quotes by filling out a form, according to a news release from the Seattle company. It said there's no limit on the number of quotes you can get and the quotes do not require personal info such as name, address or Social Security number. Zillow estimates tax and insurance costs and a borrower's identity is revealed, the release said, when contact is initiated by a borrower.

Those who planned to retire on the proceeds of their appreciating homes (and stock portfolios) are being especially hard hit by today's housing slowdown, according to a Wall St. Journal story I spotted today.

Prices in the Northwest haven't suffered to the degree that other areas have, but long gone are the days of double-digit appreciation. (It was typical in 2005 and 2006 for Pierce County home prices to increase year-over-year by 12, 15 and 17 percent -- and more -- compared to a decline last month of 7.8 percent, according to the Northwest Multiple Listing Service.) Anybody made retirement or move-up or any other kind of plans based on fast-rising prices that have since been reined in?

Here's an excerpt of the WSJ story:

As the falling real-estate and stock markets erode their savings, many aging Americans are delaying retirement, electing labor over leisure in uncertain times.

A three-decade veteran at International Business Machines Corp., Dick Boice had planned to sell his house, pack up and move to Arizona with his wife, Lauren, to take early retirement. But two months after the January date he set to exit the work world, Mr. Boice, who is 59 years old, is still on the job. He figures he'll stay put for another couple of years.

The Boices had counted on proceeds from the house sale to boost their retirement income. After a year on the market, the roomy colonial in Blue Springs, Mo., didn't move, forcing the couple to cut the asking price by $40,000 to around $250,000. The house remains unsold. Meanwhile, Mr. Boice has watched the value of his 401(k) and individual retirement accounts fall by roughly 20 percent so far this year, to a combined $240,000.

"Everything is just heading south," says Mr. Boice, who works in client support for IBM in Kansas City, Mo. "You can't hardly make any kinds of plans because you don't know what you can count on."

Mr. Boice has plenty of graying company at the grindstone. Millions of retirement-age Americans, stung by the recent economic pall, suddenly are having to reassess their plans — with many forced to quickly change course. In February, the proportion of people ages 55 to 64 in the work force rose to 64.8 percent, up 1.5 percentage points from last April. That translates to more than an additional million people in the job pool, according to the U.S. Labor Department. The ranks of those 65 and over in the work force rose to 16.2 percent from 16 percent in the same time span — meaning 212,000 more hands on deck. So far, the numbers for March continue to show a "sharp" increase, says Steve Hipple, a department economist.

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