Playing Hardball in a Soft Market

It had to happen. Sooner or later, all those Belltown condos sprouting up like boy bands would lose their sizzle. The tears, the screams, the fainting, the multiple-offer frenzy, and same-day bidding wars of a few years ago have cooled to a relaxed, reasonable, adult top-40 kind of market. It's not exactly a condo glut: According to the Multiple Listing Service, condo listings were up 20 percent from February 2002 to 2003, yet they're on the market much longeran average of 79 days compared to 63 days.

What John L. Scott realtor Edward Krigsman sees is "a lot of inventory compared to buyers." As a result, he estimates condo prices have dropped 15 percent to 20 percent over the past two years (although they're firmer at the competitive low end). Buyers are in "an unusually privileged position [with] the luxury of time" to find what they wanteven if the market isn't one of rock-bottom steals and bargains. It's soft, but not marshmallow-soft.

Take the example of Krigsman's client Mark Lindquist, a noted novelist (Never Mind Nirvana) and Pierce County deputy prosecutor, who just found the Pioneer Square loft of his dreams. "I'd been looking for seven months," he explains. "And you hone in on what you're looking for in the course of that. Because I was so specific about what I was looking for, very few came on the market. I saw so many places that weren't right."

He paid the full asking price of $317,000 for 1,000 square feet in a 103-year-old building, with parking, in a prime location just a stone's throw from his favorite book storeElliott Bay. (That certainly makes for convenient author readings.) "I wouldn't call it a bargain price, but it was a fair price. This is what I was looking for. In my quest here, I did talk to other people who were looking. And if you're less particular about what you're looking for, you can get a bargain." What would his loft have sold for during the new-money dot-com hysteria? "I wasn't in the market during those go-go years. It's a whole different market [now], obviously." But something closer to $400,000 wouldn't be a bad guess.

The moral of the story, which Krigsman supports, is a kind of picky, go-slow approach to condo shopping. Developers have still more buildings in the pipeline (some unhappily initiated back to the precrash, pre-Sept. 11 period). On the resale side, there are fewer choices in older red-brick buildings, which tend not to be plagued with water leakage. Among newer resales, however, motivated sellersout of work, reduced to one paycheck, or looking for a better job far from Seattleare coughing up their own money to close deals, further benefiting buyers. Either way, shoppers also have the benefit of ultralow lending rates.

Speaking of stories, what about Lindquist's next novel? "I'm hoping to finish it this year. It's set in Seattle. I actually wanted to write the final draft while I'm living in downtown Seattle." And now he will. A case of life into art? "Exactly."

Refi Insanity

It's madness out there. Just when you think mortgage rates couldn't possibly get any lower, they get lower still. It seems like everyone and their dog is refinancing right now. It's a sport; it's a hobby; it's the new national pastimeand one of the few bright spots, for banks and borrowers alike, in our glum local economy.

"It's as busy as it's ever been," says First Horizon Home Loans' Dan Blair, particularly as his existing clients with fixed-rate mortgages have seen rates drop below the 6 percent barrier. Borrowers have more options, Blair acknowledges, and they can certainly shop around for rates, but he sees most customers stick with their present lending institution to avoid the paperwork hassles of changing banks.

Among Blair's busier, if not entirely typical, clients is Alex Black, a Shoreline realtor who recently did three refis in a single day! The history of his trio of deals tells you something about how the refinance market is working for recent and first-time home buyers: House No. 1, purchased in 1999 for $223,000 at a 7.5 percent fixed rate, was literally Black's house No. 1. Refinancing that residence led to house No. 2 at $194,000 (with the cash savings going into the new down payment). Refinancing those two houses, now used as rental properties, led to house No. 3 at $270,000. (Granted, most of us stick with house No. 1 and put that freed-up money into, say, a new kitchen or college fund.)

Successive refis have kept Black at about the same monthly mortgage payment while steadily increasing his home size. "People are realizing they can move up," he notesin his case from a 1,290-square-foot starter home to a 3,100-square-foot residence where he and his wife can more comfortably raise their first child (with another on the way).

Back in '99 when he was self-employed, Black recalls, he resented how his mortgage required a 20 percent down paymentmoney he took out of a stock market that would soon begin its grinding plunge. Nor did he anticipate that rates would also begin their submarine dive. "You can imagine today how I feel about that," he says. "The [lower] rates were kind of icing on the cake."