As we look back on 2008 it is hard to imagine reporting anything new about the housing market. It seems that we were inundated with media reports about the ailments of housing. From financial experts, Congressional leaders, watch-dog groups, or news outlets, we heard them speak to all the issues -- except one.
Before exploring that one topic, it might be helpful to provide a picture of where real estate ended up for the year. In 2008, Thurston County experienced drops in both prices and the number of homes sold. There were nearly 3,000 homes sold in the county, which is down 23% from 2007. By way of comparison, the number sold is on par with sales in 2001, which means that 2008 was the 7th best performance on record.
The average sales price of a home dropped 5% to $283,907, which is where prices settled at the end of 2006. While 5% is modest compared to the rest of the country, it is clear that our market has come to terms with the fact it would have to give back some of the double-digit returns experienced from 2003-2006. During those years we saw the average sales price jumped 13.4% annually - compared to just 5.9% annually for the 20 years prior.
Even with downward adjustments our market still ranks near the top of the nation for price gains over the past 5 years. The Federal Housing Finance Agency's recent report ranked Olympia 12th out of 292 markets for price appreciation during that time.
The report reveals that 193 markets have experienced price drops over the past year, but only 19 have lost value over the past 5 years. The other 273 markets had average gains near 30%, which is consistent with Thurston County's long history of gains.
During our hot seller's market, however, our market brought returns twice that figure - 61%. When compared to our long, steady history of more modest price appreciation, it is not surprising that our market is now giving back some of that excess gain.
This leads us back to that one topic we do not see reported during the great 2008 debates - while we have seen some significant price corrections around the country over the past year, the vast majority of markets still have healthy gains consistent with a decades' long trend.
Price corrections will lead to healthier times by making housing more affordable to a wider segment of buyers without reliance on exotic loan products that pushes the borrower too far. Because buyers trade up and down in housing types throughout their lives, buyers are needed before a seller can buy their next home. This in turn frees up the next seller to buy that next home. This churn in the marketplace is why housing recoveries always start at the bottom price ranges.
Markets go up and they can come down. Over short runs, the stock market takes us on that roller coaster quite regularly. Fortunately for investors, the movement of stocks over the long-haul has always been upward.
Housing on the other hand never provided the thrill ride of the stock market. Instead of higher highs and lower lows, the average price of a home in the United States pursued a slow, steady rise. In fact, until the last couple of years the office of Housing and Urban Development, which has tracked prices for 40 years, had never reported a decline in the nation's average price - never.
The one thing that changed was the trajectory of prices. Earlier this decade, homes prices in many parts of the country more than doubled their normal gains. This pattern was sustained for 4-5 years. In many parts of California, prices jumped nearly 100% in five years. In normal times it would take 12-14 years to realize that same return. So even with that huge price correction last year, California's average price over the longer five year period is now back to returns that is in line with historical performances.
In our own market, homes that are priced at levels consistent with our longer-term history, as opposed to the inflated years, are selling quite well. In fact, they are selling one week faster than at the peak of our hot seller's market!
What we are seeing are buyers looking for value, and their definition of value does not mean sellers aren't making money. Sellers who have been in their homes more than 3 years are seeing 5.5% annual returns, which is close to our historic norm. As this pattern continues, the 2009 housing market in Thurston County is poised to have a great, if somewhat more typical year.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
Monday, January 19, 2009
Monday, January 12, 2009
Buyers are Jumping Back In
After being off double digits for most of the year, pending home sales in Thurston County shot up nearly 6% in December 2008, thanks in large part to prices and mortgage interest rates.
Prices in Thurston County jumped an average of 13.4% each year from 2003-2006. During the twenty years prior, prices only increased 5.9% each year, so those gains during the hot seller's market could not be sustained.
In 2008, prices began correcting to more sustainable and historic levels. For the year, the average sales price of a home dropped 5% to $283,907. In November and December prices were off 8% and 9%, respectively, from the prior year.
These prices are having an effect on the buyers, but they aren't the only reason buyers are jumping back in. Interest rates having plummeted to levels never before seen. Many local lenders are reporting rates below 5% for 30-year, fixed rate mortgages. This is a point or more below the levels seen just last summer.
The combination of these factors has returned many of the homes in our market to affordable and sustainable levels for the years to come.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
Prices in Thurston County jumped an average of 13.4% each year from 2003-2006. During the twenty years prior, prices only increased 5.9% each year, so those gains during the hot seller's market could not be sustained.
In 2008, prices began correcting to more sustainable and historic levels. For the year, the average sales price of a home dropped 5% to $283,907. In November and December prices were off 8% and 9%, respectively, from the prior year.
These prices are having an effect on the buyers, but they aren't the only reason buyers are jumping back in. Interest rates having plummeted to levels never before seen. Many local lenders are reporting rates below 5% for 30-year, fixed rate mortgages. This is a point or more below the levels seen just last summer.
The combination of these factors has returned many of the homes in our market to affordable and sustainable levels for the years to come.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
Friday, January 9, 2009
Is it a good time to buy?
Is it a good time to buy?
We are often asked, "Is it a good time to buy?" There are many factors to be considered when buying, including the much discussed direction of prices.
The best way for us to address a question like this is to say that it is a really great time to be a buyer. Prices on many homes and mortgage interest rates are two reasons compelling a great many buyers -- more than 3,000 in our marketplace last year.
House prices have started returning to more sustainable levels. The average sales price of a home in Thurston County is now $283,907, which is $16,000 less than 2007. That is great news for buyers.
However, broad price discussions are a difficult thing. Averages are just that - averages. It means that some homes have declined more than the 5% average in our market, while others have not dropped as much if at all. Some are well priced and others still need to be reduced. The trick is finding the former and avoiding the latter.
We are seeing a great many well priced homes in our market. Each month, we undertake a study of all sales in the county. We separate them into two categories: (1) those that did not require a price reduction before selling, and (2) those that required at least one price reduction before selling.
In December 2008, homes in the first group spent only 33 days on the market, which is 10 days faster than the peak of our hot seller's market. Those are well priced homes and the buyers are jumping on them.
In the second group of homes, those that required a price reduction, the average days on market was more than four months longer - at 158 days. With these homes, buyers simply waited for the price adjustments to be made before they saw the value. And the buyers jumped fast when they saw value, with these homes going under contract in just 30 days after the final price adjustment.
And the price adjustments were significant. Those homes sold for just 83.9% of original list price (compared to 97.7% for the well priced homes).
Our market continues to present great opportunities for buyers to find value. It is very important to have a good professional helping you evaluate the options and find the right fit for you.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
We are often asked, "Is it a good time to buy?" There are many factors to be considered when buying, including the much discussed direction of prices.
The best way for us to address a question like this is to say that it is a really great time to be a buyer. Prices on many homes and mortgage interest rates are two reasons compelling a great many buyers -- more than 3,000 in our marketplace last year.
House prices have started returning to more sustainable levels. The average sales price of a home in Thurston County is now $283,907, which is $16,000 less than 2007. That is great news for buyers.
However, broad price discussions are a difficult thing. Averages are just that - averages. It means that some homes have declined more than the 5% average in our market, while others have not dropped as much if at all. Some are well priced and others still need to be reduced. The trick is finding the former and avoiding the latter.
We are seeing a great many well priced homes in our market. Each month, we undertake a study of all sales in the county. We separate them into two categories: (1) those that did not require a price reduction before selling, and (2) those that required at least one price reduction before selling.
In December 2008, homes in the first group spent only 33 days on the market, which is 10 days faster than the peak of our hot seller's market. Those are well priced homes and the buyers are jumping on them.
In the second group of homes, those that required a price reduction, the average days on market was more than four months longer - at 158 days. With these homes, buyers simply waited for the price adjustments to be made before they saw the value. And the buyers jumped fast when they saw value, with these homes going under contract in just 30 days after the final price adjustment.
And the price adjustments were significant. Those homes sold for just 83.9% of original list price (compared to 97.7% for the well priced homes).
Our market continues to present great opportunities for buyers to find value. It is very important to have a good professional helping you evaluate the options and find the right fit for you.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
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