Mortgage rates have dropped to a 50 year low this week. Locally, we have heard lenders lock in mortgage rates around the 4.75 percent mark for a 30-year, fixed rate mortgage. As recently as the summer of 2008, those rates were at or above 6 percent. On a $300,000 mortgage, the monthly savings is about $230 (comparing 6 percent to 4.75 percent).
This drop in rates is causing a flood of refinancing activity, with local lenders reporting a huge jump in the volume of calls they are receiving.
These rates may help some local borrowers control their costs as they look to refinance out of adjustable rate mortgages. And while mortgage lenders have returned to more stringent standards of loan approval, we are hearing lots of reports of successful refinances in the South Sound market.
But it isn't just refinancing owners cashing in, buyers are also taking advantage of these great rates. The combination of moderating home prices and these interest rates have more buyers venturing out to look for houses. The Mortgage Bankers Association's seasonally adjusted purchase price index rose 10.6 percent.
Wednesday, December 24, 2008
Tuesday, December 23, 2008
Mortgage Modifications are Happening not with the Intended Results
Federal regulators reported on Monday that many borrowers who went through a mortgage modification earlier this year still having trouble.
Mortgage modification is one of the techniques being pushed by members of Congress and some federal regulators to help stem rising foreclosures. The hope has been to offer more affordable rates to those who bought homes using adjustable rate mortgages. Those borrowers are now facing much higher interest rates than when they originally purchased.
The loan modifications are working to a degree, but the report shows that six months after modification almost 37 percent of those mortgages were 60 days or more delinquent.
This high rate of delinquency shows that the problem is more multi-facetted than regulators might have anticipated.
A straight mortgage modification might well work where the home owner purchased a home he or she could truly afford, in a market that has not rapidly declined. There are those situations out there.
There are also many circumstances where borrowers bought more than they could afford betting on appreciation that history shows we should not count on. Those people were having a tough time making payments even at the low teaser rates before the mortgages reset. In those cases, even a mortgage modification will not help.
In addition, some markets around the country have seen such significant reductions in home values. These were the markets that saw appreciation rates that were more than double the national average. They had nowhere to go but down after gains like that. Mortgage modifications there may help delay foreclosure, but many homeowners are asking why stay in a home that is now selling for 40 to 60 percent less than what they paid.
The defaults on loan modifications highlights one of the most overlooked problems with the bailout: prices on many homes in many areas simply need to come down. Any solutions that purports to address the housing crisis without facing this fact is igorning the laws of supply and demand.
Strangely, we do not hear regulators criticize the double digit percentage gains in prices that occurred during the boom years; yet they want to keep prices from coming down to a place where supply and demand intersect. This is happening in the face of price gains never before seen. History shows a decades long trend of steady but modest gains in home prices. Now that the free market is naturally working its way back to that trend line, regulators want to halt it progress. They clearly want to have all the benefits of a free market but none of the risks.
And even in markets where prices have have substantial reductions, the longer-term trend still shows nice, if more reasonable price gains. Given this fact, the risks are still relatively modest. See December 3, 2008 blog posting.
The reality is that individual consumers are much more powerful than regulators. They will dictate the pace of housing sales and the gathering recovery more than Washington insiders.
When consumers see value they are jumping. Well priced homes in the South Sound, for example, are selling in record times and for nearly full list price. See our blog article of October 29th. By the same token, overpriced homes are languishing on the market.
In California, sales are up 12 percent over last year mostly due to consumers reaction to price drops from 30 to 40 percent. These gains in sales are happening mostly without the aid of regulators. Instead, pricing that is appropriately addressing the supply and demand balance is the leading factor.
The good news in the Northwest and here in the South Sound continues to be that our prices did not inflate as rapidly as those other troubled areas in the country. That means we did not see as many subprime, adjustable or interest only loans. The combination of these two factors as helped our market experience a more measured return to sustainable prices. As a result, mortgage modifications may well prove to be success here. In the meantime, consumers will continue to look for value and act quickly as it presents itself.
Mortgage modification is one of the techniques being pushed by members of Congress and some federal regulators to help stem rising foreclosures. The hope has been to offer more affordable rates to those who bought homes using adjustable rate mortgages. Those borrowers are now facing much higher interest rates than when they originally purchased.
The loan modifications are working to a degree, but the report shows that six months after modification almost 37 percent of those mortgages were 60 days or more delinquent.
This high rate of delinquency shows that the problem is more multi-facetted than regulators might have anticipated.
A straight mortgage modification might well work where the home owner purchased a home he or she could truly afford, in a market that has not rapidly declined. There are those situations out there.
There are also many circumstances where borrowers bought more than they could afford betting on appreciation that history shows we should not count on. Those people were having a tough time making payments even at the low teaser rates before the mortgages reset. In those cases, even a mortgage modification will not help.
In addition, some markets around the country have seen such significant reductions in home values. These were the markets that saw appreciation rates that were more than double the national average. They had nowhere to go but down after gains like that. Mortgage modifications there may help delay foreclosure, but many homeowners are asking why stay in a home that is now selling for 40 to 60 percent less than what they paid.
The defaults on loan modifications highlights one of the most overlooked problems with the bailout: prices on many homes in many areas simply need to come down. Any solutions that purports to address the housing crisis without facing this fact is igorning the laws of supply and demand.
Strangely, we do not hear regulators criticize the double digit percentage gains in prices that occurred during the boom years; yet they want to keep prices from coming down to a place where supply and demand intersect. This is happening in the face of price gains never before seen. History shows a decades long trend of steady but modest gains in home prices. Now that the free market is naturally working its way back to that trend line, regulators want to halt it progress. They clearly want to have all the benefits of a free market but none of the risks.
And even in markets where prices have have substantial reductions, the longer-term trend still shows nice, if more reasonable price gains. Given this fact, the risks are still relatively modest. See December 3, 2008 blog posting.
The reality is that individual consumers are much more powerful than regulators. They will dictate the pace of housing sales and the gathering recovery more than Washington insiders.
When consumers see value they are jumping. Well priced homes in the South Sound, for example, are selling in record times and for nearly full list price. See our blog article of October 29th. By the same token, overpriced homes are languishing on the market.
In California, sales are up 12 percent over last year mostly due to consumers reaction to price drops from 30 to 40 percent. These gains in sales are happening mostly without the aid of regulators. Instead, pricing that is appropriately addressing the supply and demand balance is the leading factor.
The good news in the Northwest and here in the South Sound continues to be that our prices did not inflate as rapidly as those other troubled areas in the country. That means we did not see as many subprime, adjustable or interest only loans. The combination of these two factors as helped our market experience a more measured return to sustainable prices. As a result, mortgage modifications may well prove to be success here. In the meantime, consumers will continue to look for value and act quickly as it presents itself.
Wednesday, December 3, 2008
Home Prices Around the Country
Federal Housing Finance Agency recently released pricing data for 292 metro markets around the country. The data reveals the price changes over three periods, including the latest quarter, the last year, and the past five years.
Of the 292 markets, Olympia ranks number 12 for price gains over the past 5 years. According to the study, our market stands at nearly 61 percent appreciation over that time. Six of the top 15 best markets are from Washington State (Wenatchee, Bellingham, Mount Vernon, Spokane, Bremerton, and Olympia).
On the other end of the spectrum, only 3 of the top 50 worst markets over the last year are outside the states of California, Nevada, Florida, Arizona and Michigan. Yet even with these poor markets, the average appreciation over the past 5 years in all markets combined is still a healthy 27 percent.
And this is with many of the worst markets are now bouncing from their bottoms (as evidenced by the pace of sales escalating). California, for example, which has many of the worst price performing markets over the past 12 months, has seen sales increase 12 percent year over year.
This report is fascinating in that it shows not just the bad with each market (253 of 292 markets lost value in the 3rd Quarter of 2008), but some of the good each has to offer. For instance, many news reports speak to how much California prices are falling. Bakersfield is, in fact, down almost 29 percent over the past year. That is not great. However, the market is still up 32 percent over the past five years. That is not bad. In real numbers, this would mean that a home purchased for $400,000 in the fall of 2003 is now selling for $527,000. This translates to a 5.7 percent annual appreciation. This level of appreciation is right in line with historical gains seen in most parts of the country (our market averaged 5.9 percent gains prior to our hot sellers market from 2003-2006).
However, facts like these are generally lost on the media. Instead, they report that the same house sold for $742,000 a year ago. And while this number is not to be trivialized, as many bought or refinanced with those inflated numbers, the majority of folks are nicely ahead of where they started (the average length in a home is 6 years, according to the NAR Survey of Home Buyers and Sellers, and 30 percent of homeowners have no mortgage at all).
As for Olympia, the fact that we rank so high on the report tells me at least two things. First, we did not fly as close to the sun. Our appreciation from 2001-2006 was 71 percent, while much of California, Nevada and Arizona were closer to 90-100 percent. As a consequence, our downward correction has not and should not be as sharp.
Second, we still have some price adjusting to do. Places like Bakersfield have normalized back to sustainable levels of price appreciation. Olympia still averages 8.75 percent annual appreciation over the past 5 years (our average price in 2003 was $188,870 and is now $286,187). So while we are close to normal, we are still a few ticks above our market's historically steady and sustainable levels of price appreciation. Once we get back to those levels, our sales overall will see a bounce.
In fact, we are seeing pockets of well priced homes move nicely. Comparing the 3 month periods ending October 31, 2008 and 2007, sales are up 17 percent in homes priced under $200,000. As I shared with you last week from a Real Trends article, "Any strong housing turnaround will start with recovery with entry-level buyers." History has proven this theory and we are starting to see it here. As a consequence, we are now seeing well priced homes in the trade-up price ranges sell. As more of those homes adjust their prices to better reflect the supply-demand balance, we will see even more of them sell -- just as we are seeing at the lower end of the market.
And while this discussion is about market-wide averages, it is important to remember that each home is unique and well priced homes in all price ranges are still moving. See our 10/29/2008 blog article for more information on that topic.
For a complete details of the FHFA market report, or any of the Coldwell Banker Evergreen Olympic Realty South Sound market reports, please feel free to contact us.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
Of the 292 markets, Olympia ranks number 12 for price gains over the past 5 years. According to the study, our market stands at nearly 61 percent appreciation over that time. Six of the top 15 best markets are from Washington State (Wenatchee, Bellingham, Mount Vernon, Spokane, Bremerton, and Olympia).
On the other end of the spectrum, only 3 of the top 50 worst markets over the last year are outside the states of California, Nevada, Florida, Arizona and Michigan. Yet even with these poor markets, the average appreciation over the past 5 years in all markets combined is still a healthy 27 percent.
And this is with many of the worst markets are now bouncing from their bottoms (as evidenced by the pace of sales escalating). California, for example, which has many of the worst price performing markets over the past 12 months, has seen sales increase 12 percent year over year.
This report is fascinating in that it shows not just the bad with each market (253 of 292 markets lost value in the 3rd Quarter of 2008), but some of the good each has to offer. For instance, many news reports speak to how much California prices are falling. Bakersfield is, in fact, down almost 29 percent over the past year. That is not great. However, the market is still up 32 percent over the past five years. That is not bad. In real numbers, this would mean that a home purchased for $400,000 in the fall of 2003 is now selling for $527,000. This translates to a 5.7 percent annual appreciation. This level of appreciation is right in line with historical gains seen in most parts of the country (our market averaged 5.9 percent gains prior to our hot sellers market from 2003-2006).
However, facts like these are generally lost on the media. Instead, they report that the same house sold for $742,000 a year ago. And while this number is not to be trivialized, as many bought or refinanced with those inflated numbers, the majority of folks are nicely ahead of where they started (the average length in a home is 6 years, according to the NAR Survey of Home Buyers and Sellers, and 30 percent of homeowners have no mortgage at all).
As for Olympia, the fact that we rank so high on the report tells me at least two things. First, we did not fly as close to the sun. Our appreciation from 2001-2006 was 71 percent, while much of California, Nevada and Arizona were closer to 90-100 percent. As a consequence, our downward correction has not and should not be as sharp.
Second, we still have some price adjusting to do. Places like Bakersfield have normalized back to sustainable levels of price appreciation. Olympia still averages 8.75 percent annual appreciation over the past 5 years (our average price in 2003 was $188,870 and is now $286,187). So while we are close to normal, we are still a few ticks above our market's historically steady and sustainable levels of price appreciation. Once we get back to those levels, our sales overall will see a bounce.
In fact, we are seeing pockets of well priced homes move nicely. Comparing the 3 month periods ending October 31, 2008 and 2007, sales are up 17 percent in homes priced under $200,000. As I shared with you last week from a Real Trends article, "Any strong housing turnaround will start with recovery with entry-level buyers." History has proven this theory and we are starting to see it here. As a consequence, we are now seeing well priced homes in the trade-up price ranges sell. As more of those homes adjust their prices to better reflect the supply-demand balance, we will see even more of them sell -- just as we are seeing at the lower end of the market.
And while this discussion is about market-wide averages, it is important to remember that each home is unique and well priced homes in all price ranges are still moving. See our 10/29/2008 blog article for more information on that topic.
For a complete details of the FHFA market report, or any of the Coldwell Banker Evergreen Olympic Realty South Sound market reports, please feel free to contact us.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
Thursday, November 20, 2008
Home Sellers still have nice returns despite price drops
With all the reporting of falling home prices, there is one fact I have yet to see reported (a fact we have been discussing all year): these large drops in prices do not mean that everyone in those markets is losing money.
You will recall that in the hardest hit markets, prices were escalating at twice the national and historic averages. From 2001-2006, prices around the rest of the nation increased 47 percent. In many parts of California, Nevada, Arizona and Florida, price gains ranged from 89-109 percent. So even with 30-40 percent drops in prices over the past 18 months, the long term trend is still up.
Recall our example in last quarter's Quarterly Report:
Over the hot seller's market from 2001-2006, prices escalated nearly 89 percent in Las Vegas. That is nearly double the national average of 47 percent. That means a $300,000 home purchased in 2001 would have sold for $567,000 in 2006. Even with the 15 percent drop in prices in Las Vegas, that home is now selling for almost $482,000, a 61 percent gain since 2001. So even with large downturns, the longer trend is still positive.
With all the price corrections that have occurred in Las Vegas, the net result is that average annual gains are about 4 percent since 2001. That number is much closer to a 5-6 percent norm than the 15+ percent annual growth they were experiencing from 2002-2006.
Despite the price drops here, we are seeing the vast majority of home owners still achieve returns. Even if we drop another 5-8 percent over the next five months, which is the road map California, Arizona, and Nevada have shown us, most sellers will still be seeing positive results -which includes buying a more affordable next home.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
You will recall that in the hardest hit markets, prices were escalating at twice the national and historic averages. From 2001-2006, prices around the rest of the nation increased 47 percent. In many parts of California, Nevada, Arizona and Florida, price gains ranged from 89-109 percent. So even with 30-40 percent drops in prices over the past 18 months, the long term trend is still up.
Recall our example in last quarter's Quarterly Report:
Over the hot seller's market from 2001-2006, prices escalated nearly 89 percent in Las Vegas. That is nearly double the national average of 47 percent. That means a $300,000 home purchased in 2001 would have sold for $567,000 in 2006. Even with the 15 percent drop in prices in Las Vegas, that home is now selling for almost $482,000, a 61 percent gain since 2001. So even with large downturns, the longer trend is still positive.
With all the price corrections that have occurred in Las Vegas, the net result is that average annual gains are about 4 percent since 2001. That number is much closer to a 5-6 percent norm than the 15+ percent annual growth they were experiencing from 2002-2006.
Despite the price drops here, we are seeing the vast majority of home owners still achieve returns. Even if we drop another 5-8 percent over the next five months, which is the road map California, Arizona, and Nevada have shown us, most sellers will still be seeing positive results -which includes buying a more affordable next home.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
Prices dictate the Pace of Sales
An article in yesterday's Seattle P-I points out that the State's number of home sales dropped 36 percent from a year ago. It also correctly points out that this year over year comparison could be somewhat misleading because our state's housing market continued its upward climb through much of 2007. As a result, our state's drop looks much more severe than the rest of the nation, which has been correcting since 2006.
The drop in home sales in Washington State is simply an indication that some home prices are too high. So as sales have dropped so now too is pricing. King County's median prices have declined 10 percent from a year ago to $427,000. Thurston County's decline has been only 3.7 percent (from $265,950 to $256,000). Even with these price adjustments, the number of sales is still down. This is simply more evidence some homes are still priced too high.
Because California, Nevada, and Florida started correcting a full year before our market, we can look to those areas for clues on our market's future. Before we do that, however, keep in mind that their highs were much higher than ours, which means their drops will look more severe as well. Despite these differences, the overall concept is the same. When demand falls well below supply, prices will adjust down to restore balance.
The price corrections in those other markets are now paying dividends by (1) returning price appreciation to more sustainable levels, (2) bringing home buyers back to the market, and (3) offering affordability in homes. Consider the following from yesterday's Seattle P-I article:
"Metropolitan-area price changes ranged from a 13 percent annual increase in Elmira, N.Y., to a 39 percent drop in Riverside, Calif. Two other California metro areas, Sacramento and San Diego, posted the second- and third-largest drops, down 37 percent and 36 percent, respectively.
"Such declines helped give California the second-largest quarterly sales increase, 28 percent, among states. A similar pattern occurred in No. 1 Arizona, where sales were up 28 percent, and No. 3 Nevada, up 26 percent. Nevada had the biggest annual increase, 76 percent, followed by California, up 58 percent, and Arizona, up 49 percent.
"'A pattern of sharply higher sales in areas with large price declines is well-established,' said Lawrence Yun, the association's chief economist. 'Affordability conditions have consistently been a major factor in driving sales'."
These numbers reflect the power of supply and demand to set prices.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
The drop in home sales in Washington State is simply an indication that some home prices are too high. So as sales have dropped so now too is pricing. King County's median prices have declined 10 percent from a year ago to $427,000. Thurston County's decline has been only 3.7 percent (from $265,950 to $256,000). Even with these price adjustments, the number of sales is still down. This is simply more evidence some homes are still priced too high.
Because California, Nevada, and Florida started correcting a full year before our market, we can look to those areas for clues on our market's future. Before we do that, however, keep in mind that their highs were much higher than ours, which means their drops will look more severe as well. Despite these differences, the overall concept is the same. When demand falls well below supply, prices will adjust down to restore balance.
The price corrections in those other markets are now paying dividends by (1) returning price appreciation to more sustainable levels, (2) bringing home buyers back to the market, and (3) offering affordability in homes. Consider the following from yesterday's Seattle P-I article:
"Metropolitan-area price changes ranged from a 13 percent annual increase in Elmira, N.Y., to a 39 percent drop in Riverside, Calif. Two other California metro areas, Sacramento and San Diego, posted the second- and third-largest drops, down 37 percent and 36 percent, respectively.
"Such declines helped give California the second-largest quarterly sales increase, 28 percent, among states. A similar pattern occurred in No. 1 Arizona, where sales were up 28 percent, and No. 3 Nevada, up 26 percent. Nevada had the biggest annual increase, 76 percent, followed by California, up 58 percent, and Arizona, up 49 percent.
"'A pattern of sharply higher sales in areas with large price declines is well-established,' said Lawrence Yun, the association's chief economist. 'Affordability conditions have consistently been a major factor in driving sales'."
These numbers reflect the power of supply and demand to set prices.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
Tuesday, November 4, 2008
Seller's are still realizing nice gains when selling
With all the reports of declining home prices, it would seem that every seller is under water. To be sure, there are a number of sellers who are selling for less than they paid. However, in our market the vast majority of sellers are achieving very healthy returns.
In our recently updated report of repeat home sales, where we track the gains or losses of the home's value from the time purchased to the recent sale, we found that people in their homes less than three years were selling on average 4 percent less than purchased. This group represented just 23 percent of all sales, and half of these sales were bank-owned properties.
That means the remaining 77 percent of all sellers were making money on their sales. In fact, they were making returns right in line with our market's historical average annual gains of 5.9 percent. Below is a chart of the average appreciation for each class based on length of homeownership*:
· 3 Years 14 percent· 4 Years 31 percent· 5 Years 54 percent· 6 Years 56 percent· 7 Years 71 percent· 8 Years 78 percent· 9 Years 74 percent· 10+ Years 87 percent
One of the more interesting facts of this study is that it confirms an old adage of real estate that suggests one must be in a home for 3 threes before the investment starts to pay dividends. That experience sort of went out the window during the hot seller's market of from 2003 through 2006. In most cases it is now back in force.
So while prices have undergone, and in some segments will continue to undergo some needed adjustments, the good news for sellers is that the investment is still paying off nicely.
* Repeat Home Sales Report, Homes Sold in Thurston County during August and September of 2008. NWMLS Sales only, analysis by Coldwell Banker Evergreen Olympic Realty. Statistics not compiled by NWMLS. For more details, contact one of our sales professionals.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
In our recently updated report of repeat home sales, where we track the gains or losses of the home's value from the time purchased to the recent sale, we found that people in their homes less than three years were selling on average 4 percent less than purchased. This group represented just 23 percent of all sales, and half of these sales were bank-owned properties.
That means the remaining 77 percent of all sellers were making money on their sales. In fact, they were making returns right in line with our market's historical average annual gains of 5.9 percent. Below is a chart of the average appreciation for each class based on length of homeownership*:
· 3 Years 14 percent· 4 Years 31 percent· 5 Years 54 percent· 6 Years 56 percent· 7 Years 71 percent· 8 Years 78 percent· 9 Years 74 percent· 10+ Years 87 percent
One of the more interesting facts of this study is that it confirms an old adage of real estate that suggests one must be in a home for 3 threes before the investment starts to pay dividends. That experience sort of went out the window during the hot seller's market of from 2003 through 2006. In most cases it is now back in force.
So while prices have undergone, and in some segments will continue to undergo some needed adjustments, the good news for sellers is that the investment is still paying off nicely.
* Repeat Home Sales Report, Homes Sold in Thurston County during August and September of 2008. NWMLS Sales only, analysis by Coldwell Banker Evergreen Olympic Realty. Statistics not compiled by NWMLS. For more details, contact one of our sales professionals.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
Wednesday, October 29, 2008
Thurston County Market Update - Third Quarter 2008
If Dickens were describing our housing market he might call this “A Tale of Two Markets”. There are homes selling quickly while others languish on the market. What’s at play?
The first thing to consider is pricing. Over the four years from 2003-2006, our average prices climbed 13.4% each year. This was simply not sustainable when historical average gains over the past 25 years are closer to 6% each year.
It is not surprising then to see the average sales price of a single family home down 4.5% from September 2007, as price gains trend back to historic levels. While our market’s adjustment is nowhere near the 35% price correction seen in California, local buyers are recognizing the need to carefully consider price.
Yet even with all the media discussion of poor sales and slacking prices, buyers are still active in our market. The number of homes sold in Thurston County is on par with 2002 levels (year prior to the start of our 4 year hot seller’s market).
Today’s buyers are simply looking for value. When they see it, they are quick to move. Our studies show homes that did not require a price reduction to sell were moving in an average of just 34 days. This is 9 days faster that the peak of our seller’s market in 2006.
Conversely, homes that required at least one price reduction are waiting, on average, 163 days to sell. These homes are going under contract in just 25 days when they reach the final asking price. This fact tells us that buyers are willing to move quickly when they see value.
In this market, the seller’s risk is not so much in overpricing – almost 65% of sellers are in that boat – so much as in not reacting to the market. When an active market like ours does not generate showings or an offer, the price should be repositioned until it does. Our research indicates that the buyers are jumping in when they finally see the right price.
Our advice to sellers is to price aggressively compared to the competition and then quickly reposition price if an offer does not come within the first several weeks.
The good news for sellers is that a lower average price does not always mean money lost.
So much attention in real estate is on the shrinking values of homes, with average or median sales prices often quoted. To be sure, there are homeowners who are selling for less than they paid, even in our relatively steady market. However, the vast majority of Thurston County sellers are still making nice returns.Our continuing study of repeat sales examines all homes sold and determines the appreciation for each home. We then group those by the number of years the seller was in the home.
As in prior studies we’ve shared, the most recent report from August and September home sales shows that homeowners who have been in their homes at least three years are seeing gains right in line with our market’s historical performance. The average homeowner stays six years in one home.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
The first thing to consider is pricing. Over the four years from 2003-2006, our average prices climbed 13.4% each year. This was simply not sustainable when historical average gains over the past 25 years are closer to 6% each year.
It is not surprising then to see the average sales price of a single family home down 4.5% from September 2007, as price gains trend back to historic levels. While our market’s adjustment is nowhere near the 35% price correction seen in California, local buyers are recognizing the need to carefully consider price.
Yet even with all the media discussion of poor sales and slacking prices, buyers are still active in our market. The number of homes sold in Thurston County is on par with 2002 levels (year prior to the start of our 4 year hot seller’s market).
Today’s buyers are simply looking for value. When they see it, they are quick to move. Our studies show homes that did not require a price reduction to sell were moving in an average of just 34 days. This is 9 days faster that the peak of our seller’s market in 2006.
Conversely, homes that required at least one price reduction are waiting, on average, 163 days to sell. These homes are going under contract in just 25 days when they reach the final asking price. This fact tells us that buyers are willing to move quickly when they see value.
In this market, the seller’s risk is not so much in overpricing – almost 65% of sellers are in that boat – so much as in not reacting to the market. When an active market like ours does not generate showings or an offer, the price should be repositioned until it does. Our research indicates that the buyers are jumping in when they finally see the right price.
Our advice to sellers is to price aggressively compared to the competition and then quickly reposition price if an offer does not come within the first several weeks.
The good news for sellers is that a lower average price does not always mean money lost.
So much attention in real estate is on the shrinking values of homes, with average or median sales prices often quoted. To be sure, there are homeowners who are selling for less than they paid, even in our relatively steady market. However, the vast majority of Thurston County sellers are still making nice returns.Our continuing study of repeat sales examines all homes sold and determines the appreciation for each home. We then group those by the number of years the seller was in the home.
As in prior studies we’ve shared, the most recent report from August and September home sales shows that homeowners who have been in their homes at least three years are seeing gains right in line with our market’s historical performance. The average homeowner stays six years in one home.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
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