Home sales in 2011 were up from 2010 which is encouraging, especially considering 2011 was the first year in the past three with no federal-stimulus tax credits to entice buyers. Pending sales for November were 22.4% higher than the same month a year ago, marking the seventh straight month of double-digit year-over-year increases. At month’s end, inventories in the Seattle area showed a year-over-year drop of about 32%. The median price of houses sold in King County in December was $320,000, down 13.5% from December 2010, according to the Northwest Multiple listing service. It was the third straight month of a double-digit drop. Condo prices fell even more steeply; 18%.

Sales in 2012 will likely be similar as 2011 as renters decide to jump in with continued historically low interest rates and low prices and investors will be looking for the distressed properties which are likely to continue. Inventories will in all probability remain low as they did throughout 2011 which will put pressure on buyers to act quickly if a home is priced right and in good condition. Foreclosures will continue to hold prices down but more so in the lower price ranges as there are fewer distressed properties in the higher ranges. Last year bank repossessed homes accounted for 17% of sales in King County, up from 10% the prior year. Zillow estimates 29 % of King County home owners with mortgages are under water. We probably won’t see drastic changes in prices until the banks work through the distressed inventory, but hopefully the pace of this process will pick up over the next several months, so by this time next year we’ll be seeing some improvement. We will most likely be struggling overall for a few more years and bouncing along the bottom this year with hopefully no more declines in value but some experts say prices may slip a little more before they stabilize.

Thanks to our valued repeat and referred clients, we were able to help a variety of buyers and sellers successfully achieve their goals in 2011 and consider ourselves blessed to aid those who seek our help. Our average market time on most of the homes we sold last year was less than 30 days, we have a successful formula to help our clients reach their goals in this market.

Please contact me for your own personalized market analysis.

If we do have a double dip and another recession is on the horizon, it is estimated prices could go down another 10%, this creates fear among buyers and has slowed up the market in the last few weeks. Going into the fourth quarter there is typically a slower sales volume but the serious buyers who have to buy are the shoppers this time of year. The best advice to a seller is to take advantage of lower inventories, get your home in its best show condition, price appropriately and position yourself to sell above your competition.

Pricing appropriately is easier said than done in a market that continues to correct. Another analysis of where prices are going is to look at price to rent ratios. Nationwide, the ratio of home prices to yearly rents is 11.3, down from 18.5 at the peak of the bubble, according to Moody’s Analytics. The average from 1989 to 2003 was about 10, so valuations aren’t quite back to normal. Detroit and Miami are relatively inexpensive for buyers, with price/rent ratios of 5.6 and 7.7, respectively. New York and San Francisco are more expensive, with ratios of 17.6 and 17.2, respectively. Seattle’s price/rent ratio in January of 2011 was 24 and 22.5 in June 2011. It’s worth noting that the average was 26.6 between 1990 and 2003. While higher than the national average of 10, still historically below our area average especially when you take into account the low interest rates making home ownership even more affordable (estimated back to 1970′s levels when the income component is overlaid).

Unfortunately, because we are at a cross roads with a lot of factors at play (world economics, unemployment, US elections), we might not know for a few months and into early next year what the future has in store.

For more info on the best cities to buy versus rent visit: http://online.wsj.com/article/SB10001424052970204774604576629443313035736.html

We have been extremely busy over the summer (hence no blog since June), and the MLS has reported similar increased sales activity. Sales were up over 36% in June from the prior month but still off from the same time last year. What we are experiencing is that new listings that come on the market that are priced right, in great show condition and packaged and marketed properly are selling within 30 days or less. Those homes that have something unique or peculiar about them or not updated, not in good condition have to be priced well the below the market in order to attract a buyer.

The news of last week with the US debt being downgraded may have negative effects on consumer confidence which in turn could affect their house buying habits. The fact that the Fed now has said it won’t raise interest rates for 2 years in an effort to stabilize our week economy may or may not have an impact on the housing market as the Fed Fund rate and mortgage rates don’t always move in sync. http://economistsoutlook.blogs.realtor.org/2011/08/11/an-ultra-loose-monetary-policy/#more-3348 for the full story.

In terms of prices in our Seattle Metro market, it still feels like we are bumping along the bottom although we said that earlier in the year and we have continued to slide this year another 5-8% depending on what part of town you live in. There was however a recent article put out by the Wall Street Journal with information saying the Tacoma area and some parts of Seattle were poised for a rebound in prices next year, according to the financial-data firm Fiserv. “Residents of Tacoma are in for a 25% increase in home prices by spring 2013″, according to a report released Tuesday (8/9/11) by Fiserv Inc. Seattle and Portland’s prices are expected to stay flat through next March and then record double-digit gains of just over 10% each over the following 12 months. “Homes are undervalued in the Pacific Northwest,” said Stiff, “the economy is diverse and the demographics strong. It has tech, manufacturing and extractive industries (like lumbering and mining) and people are still moving into the area.”

In actuality, who knows if that is true. I remember the economist saying that the Seattle area was never going to have its bubble burst like other markets that were experiencing corrections of up to 50% as early as 2006 and 2007 when our market was still appreciating. After all, we didn’t have the issues that lead to those markets crashing like over building, buy and flip by overseas investors and mass unemployment; then the financial markets crashed and it all came down like a house of cards. Never say never.

What would help the housing market recover is to return to normal underwriting standards (not the wild no income verification, no down scenarios but less stringent guidelines); that would have a positive impact more than interest rates being at 4.2% versus 4.9%.
Please contact me if you would like a current assessment of your home or would like more information on anything discussed here.

For the first 5 months of the year, sales are off about 5% from the same period last year, pending sales are only off 2.4%; healthy sales given the absence of government assistance. As for prices, area wide median sales prices are off 11% from last year, 9% in King county for single family homes. On the Eastside, prices are off 4.1% year over year. Of course, even local markets have variation from community to community its best to contact a professional who is familiar with your particular area.

As far as what the future holds, no one can really be sure. There are pundits on both sides that give convincing arguments for further price declines due to the shadow inventory of foreclosures that will continue hold prices down. The arguments for prices stabilizing is driven by the lack of inventory and current buyer demand (fueled by historically low interest rates and lower prices) that some feel will eventually lead to prices stabilizing. However, while there are sellers willing to sell at current market prices, those homes will attract the buyers while homes with 60-90 day old pricing will continue to stay on the market.

Please contact me for a private consultation or to gain specific market information for your home.

I was reminded by a colleague recently that I accurately predicted what is transpiring; the firming of prices as homeowners put off selling who do not want to compete with REO’s and short sales leading to a shortage of good, saleable homes. How long this phenomena will last is unknown. The Seattle area was estimated to decline another 5-7% this year, so far we have adjusted 9.3%. From the analysis done (Fiserv, FHFA, Moody’s, Economy.com) prices are not going to recover until 2014-2019 in the Seattle area (2030 in some areas of the inland empire in Southern California and Florida). In fact, Lennox Scott pointed out recently that taking out the bubble years of 2005, 2006, we are exactly where we should be.

If you are considering a move or would like a private, current assessment of your home, please contact me. I have a repertoire of steps to take in order to insure a smooth and successful move. If you would like to see the power point that accompanies this blog, please email me.

Default notices, scheduled auctions and bank repossessions were reported on 681,153 properties, down 14.8 percent from the previous quarter and a drop of 26.9 percent from the first quarter of 2010.

It was the lowest level of foreclosures since the first quarter of 2008.
Nevada maintained the highest U.S. state foreclosure rate as one in every 35 homes had a foreclosure filing. California alone accounted for nearly a quarter of overall foreclosure activity. Washington saw one in every 779 homes receive a foreclosure filing in March 2011.

Foreclosures add supply to a housing market that already has too much inventory available which helps to keep home prices down. But with very strong home sales over the past quarter and reduced foreclosures, the table is set for home prices to stabilize. Let’s hope so.

If home prices go down, will they eventually go back up – or at least level off? The Wall Street Journal’s Simon Constable says yes.

He’s predicting an end to the housing crisis…. this year.

Let’s take a look at what we know. Last week’s S&P/Case Shiller index shows prices fell another percent in December. In fact, since the bubble burst in 2006, prices have fallen nationally by 31%, after steadily rising for more than a decade.

But with falling prices comes affordability. An average family would only need 19 months of pay to afford a home – that’s the lowest point in 35 years. The national average used to be closer to two years, but that varies depending on where you live.

Five years ago – at the height of the housing boom—a home in Los Angeles would require four and a half years pay. Now it’s back to two years. And even though experts predict prices will still fall somewhat this year – they foresee only a drop of 5%.

So now may be the time to jump into the real-estate market. One analyst says, “Pricing is down so much in some markets that when you analyze renting versus owning it makes much more sense to own…”

Another sign of better days to come: investors are jumping back into the game. That gives confidence to a struggling market and may push a turnaround. And many of these investors are paying in cash – another great sign. The paper points out that nationally more than a quarter of homebuyers paid in cash last year. Some regions are even better: in Miami, more than half of all transactions were made in cash. In 2006 it was only 13%. The same goes for Phoenix, where nearly half of the transactions are now in cash – triple what it was in 2008. In Seattle, about 17% were cash buyers last year.

It is very doubtful that in the next few months we’ll be back to the heyday of the last decade… nor should we be. But we need to get people back into the housing market, making sound investments with the right amount of savings…and a turn-around may be just the way to do it.

Area wide pending sales for February were off 9.2% from a year ago but up 11% from January. Because normal sellers are reluctant to compete against the depressed prices of short sales and foreclosures, the number of new listings coming on the market was down 27% from this time last year. Due to the lack of good inventory, the non-distressed homes on the market that are priced appropriately and in good condition are drawing multiple offers.

I myself have been the recipient of this as both a buyer’s agent and listing agent. A 3 way multiple offer on a home in a close-in Bellevue neighborhood drew 3 competing offers recently even though it had been on the market since last October. Even with multiple offers however, buyer’s were still reluctant to pay full price. As a listing agent, I did receive multiple full price offers on a new listing that we took the time to prepare for sale and priced competitively. So the news is not all bad.

Prices however are not likely recover; in King County, the median selling price for last month’s sales was $320,000, down about 6.8% from a year ago. Distressed properties accounted for 37% of single family home sales in King County in February as compared to 30 % a year ago; mostly due to sales from bank owned properties that drag on home prices. In one analysis, if you take out the distressed sales for February, the median home price jumped to $390,000.

On a positive note, last week’s announcement of The Boeing Company’s win on the Air Force tanker contract which is supposed to bring 11,000 direct and indirect jobs to the area and this week’s news from the state Employment Security Department that February marked Washington’s strongest month of job growth in more than three years, and several positive earnings reports from local corporations are all encouraging indicators for the housing market as we head into the time that is usually a strong selling season.

Please contact me if you have any specific questions or comments!