Appreciate fact that prices don't always rise
Seattle Times staff reporter
Q: We bought our house in 1996 for the same price as the sellers who bought it in 1990. We'd like to buy another house, but are hesitating for fear we're about to enter another zero-appreciation cycle. Are conditions right for that to happen?
A: Let's take a historical look at those conditions.
The year 1990 was the high point of a brutally hot housing market that began two years earlier. In 1990, 50-plus King County neighborhoods recorded appreciation of 30 percent or more, according to a Seattle Times analysis based on price per square foot of single-family homes sold that year.
Eight neighborhoods, including Green Lake, Mercer Island and West Shoreline, had one-year appreciation that topped 40 percent.
Fueling this, recalled veteran property appraiser Alan Pope, was a strong economic base that was adding thousands of new jobs, attracting both investors and new residents from other states.
In 1991, runaway appreciation stopped. Home prices rose only modestly for the next few years. Why? Again it was the economy, said Pope, owner of Alan Pope & Associates in Redmond. Boeing restructured and thousands of jobs were lost through 1994. The Japanese economy took a nosedive. Pacific Rim investment money shriveled.
Now we're at war, and negative economic indicators are on the horizon, most notably spiking fuel prices and a slow but steady rise in mortgage interest rates.
Are those negatives enough to offset an otherwise robust local economy and cool our home market? Only time will tell.
However, after weighing all factors, Pope anticipates Puget Sound-area home prices to climb substantially this year and next, mostly because the region's major employers, including Boeing, are doing very well.
"We're bringing in a high-paid, well-educated work force that is going to demand housing," Pope said.
But because of various growth restrictions, "there isn't enough housing to go around," he said.
When housing demand significantly outstrips supply, prices go up, as they are now. It's basic economics.
Pope would have to know more about your particular house to know why it didn't appreciate from 1990 to 1996.
"It's possible that in 1990, the buyer overpaid," he said.
His advice: "If they're not investors, most buyers should buy for shelter first. Appreciation is a benefit of homeownership over the long term."
Q: After our house purchase closed, we discovered the seller hadn't honored our written agreement to remove pet waste in the yard. He also left a pickup truck's worth of junk in the house, and there's a fresh scratch on the hardwood floor.
Our agent suggested we take the seller to small-claims court to recover the cost of fixing these problems, but he's left the state. Shouldn't the seller's agent be liable, then try to collect from the seller?
A: Real-estate agents are like matchmakers. They bring the buyer and seller together, but they're not part of the marriage — or in this case the written sales contract — and thus they have no legal duty to uphold the details of those contracts, explained attorney Mark Schedler of Williams, Kastner & Gibbs in Seattle.
"The bigger answer is that we have a system that seems odd to the uninitiated, and it continues because it works in almost every case," he said. "Sellers promise to do things prior to closing. Buyers promise to close by a certain date, and in reliance of that, sellers usually move out before the transaction has closed."
When this good faith breaks down, as it did in your case, your only option is to try to get the seller to make it good.
If he won't do it voluntarily, then your only option is to take him to court.
Q: My house is in a 60-acre development in unincorporated King County. The covenants and restrictions were recorded with the county in 1979, and they're on the title. However no homeowners association was ever formed.
Another owner in our development now wants to develop his property in a way that violates our covenants. Without an association in place, can he do this? What can other owners do about it?
A: Seattle attorney Michael Brandt of the Brandt Law Group said it's not necessary to have an association to enforce a covenant.
"A covenant runs with the land just like an easement," he explained. "The covenant — not an association — is the controlling issue."
Brandt suggests you band together with your neighbors and inform the offending property owner that he must cease any development that violates your covenants.
Ignorance of them on his part is not a defense that would allow him to proceed. If that doesn't work, it's time to see a lawyer. Hopefully those same neighbors will pitch in to pay the legal costs; if not, you will have to foot the bill yourself.
A lawyer can examine the situation and tell you if you have a strong case. You may not if, over time, many neighbors have violated covenants and no action has been taken to stop them.
If your case is strong, an attorney can seek a temporary restraining order that quickly brings the offending neighbor's work to a halt.
Home Forum answers readers' real-estate questions. Send questions to Home Forum, Seattle Times, P.O. Box 1845, Seattle, WA 98111, or call 206-464-8510 to leave a question on a recorded line. The e-mail address is email@example.com. Sorry, no personal replies. More columns at www.seattletimes.com/columnists.
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