Bob’s Bugle Real Estate Newsletter February 2011
February 11, 2011
*Motivated Buyer’s Returning to Housing Market*
KIRKLAND, WA, February 3, 2011 – Dramatic increases in open house activity and shrinking inventory are fueling optimism among members of the Northwest Multiple Listing Service. Commenting on the just-released MLS report on January’s housing activity, one director stated, “There is a strong belief in the industry that the worst is behind us and we can look forward with confidence. “Seller’s accepted offers from 4,359 buyers last month, only 40 fewer than a year ago when members of Northwest Multiple Listing Service reported 4,399 pending sales of single family homes and condominiums. In 2008, members notched 3,255 pending sales, down from 2007’s total of 3,950 pendings and the 2006 figure of 5,744 mutually accepted offers.
Darin Stenvers, a managing broker in Bellingham, Washington, who made that comment, also noted consumers are gaining confidence and buyers may be seeing what they believe is the bottoming of the market. “I’m very optimistic about the housing market for 2011 and the buyers and sellers should be as well,” he exclaimed.
Year-over-year pending sales were down somewhat, the volume of new listings declined more than 23 percent, sales prices continued to slip, but the number of closed sales increased slightly across the 21 counties in the Northwest MLS service area.
Last month’s pending sales lagged totals for the same month a year ago, but only by 186 units system- wide, a decline of about 3.3 percent. Northwest MLS director Matt Deasy, a broker at Windermere Real Estate in Bellevue, said he considered anything within 5 percent of a year ago when tax incentives were boosting sales a “home run.”
Members reported 5,393 pending sales (mutually accepted offers) of single family homes and condominiums during January. That compares to 5,579 pending sales for the same period a year ago, and marked a big gain from both January 2009 (4,353 pending sales) and January 2008 (4,499 pending sales).
“I expect sales to be soft through April when compared to last year since first quarter sales volume was artificially inflated by the rush to take advantage of the tax credit that expired on April 30,” said OB Jacobi, president of Windermere Real Estate Company. “A more apples-to-apples assessment of sales will be to compare first quarter this year with first quarter 2009,” he suggested.
Closed sales rose a modest 2.1 percent from a year ago, increasing from 3,142 transactions to 3,207 sales. Prices on those completed sales were down about 6.3 percent. The overall median price for last month’s closed sales of single family homes and condominiums was $243,500, which compares to the year-ago selling price of $259,903. For single family homes (excluding condominiums) the median selling price was $250,000, down about 5 percent from a year ago; for condos, last month’s sales had a median price of $200,000, down 16.7 percent from twelve months ago.
Only four counties (Clallam, Cowlitz, Kitsap, and Okanogan) reported year-over-year price gains.
In King County, the median sales price on last month’s sales was $333,500, a drop of 4.7 percent from twelve months ago when it was $350,000.
Brokers attribute part of the price drop to sales of distressed homes (in general, meaning homes under foreclosure or impending foreclosure).
“Distressed properties are making up an increasingly greater share of sales than a year ago, and that trend is expected to continue,” observed Jacobi. Noting the sales price for distressed properties could be 20-to-30 percent less than for normal sales, he said “it’s no surprise that a greater percentage of low-priced distressed properties are pulling down the median price.”
Whether considering a property classified as distressed or a conventional listing, house-hunters can choose from 32,647 active listings in the Northwest MLS system at the end of January. That selection is 4.7 percent smaller than a year ago when there were 34,256 properties listed with member-brokers.
Not nearly as many newly listed homes were offered for sale last month compared to twelve months ago. MLS members recorded 8,556 new listings, which included 7,167 single family homes and 1,389 condominiums. The combined total is down nearly 24 percent from the same month a year ago when members added 11,206 new listings to inventory.
MLS director Bobbie Petrone Chipman said overall, January was a positive month around Pierce County, where her office is located. Noting that area experienced a 27 percent reduction of new listings, a 2.4 percent increase in pending sales and a 10.8 percent jump in closed sales, Petrone Chipman, managing broker in the Tacoma/Puyallup area, said the month reflected “a bit more balance as we dip our toe into the new year.”
Deasy also expects more balance, with sales more evenly distributed during the year, unlike 2010 when sixty percent of their sales occurred in the first half of the year. He also predicts closed sales will increase year over year, while at the same time pending sales might decrease year over year. This is the result of a higher percentage of pending sales actually closing, he explained, citing various factors. “Banks are better at short sales, brokers are better at short sales, appraisal issues are less frequent, and lending standards are becoming more stable.”
Based on anecdotal reports of open house traffic, brokers are hopeful of upticks in sales.
“The buyer activity at open houses in the close in Seattle neighborhoods has increased dramatically in the past month, said Northwest MLS director Mike Skahen. “If there were more good new listings coming on the market there would be more sales,” he suggested.
Skahen, a designated broker in Seattle, WA, believes the shortage of new listings is causing an increase in multiple offers. As an example, he said a small Green Lake townhouse project that had been on the market for more than four months with no offers finally had one unit sell a few weeks ago. Last weekend four offers came in on another unit. “I have not seen buyers this motivated in three years,” he remarked, adding, “Sellers should not wait for spring flowers to bloom to put their homes on the market as they usually do because there is much less competition now than there will be soon.”
Industry leaders have recommendations to benefit both sellers and buyers.
Accurate pricing is paramount. “Sellers are learning there is a small window of opportunity to have consumers sees their home before ruling it out and moving on,” suggested Stenvers.
MLS director Pat Grimm, a designated broker for Windermere Real Estate, detected some hesitancy to list properties now. Distressed properties sell for less, but buyers face uncertainty and a long timeframe, he explained, noting the large percentage of distressed properties on the market has resulted in an interesting side effect: sellers of non-distressed properties are having an advantage.
“On one hand, I’m seeing sellers that are hesitant to bring their listings onto the market and compete with the price of short sale properties,” Grimm commented. On the other hand, he said buyers are looking at all the inventory and, because of the complications of purchasing distressed properties, are favoring properties that are not short sales or bank owned.
In Seattle, Grimm said the sweet spot is homes priced $400,000-500,000, in good shape that are not distressed. “They appeal to both first-time buyers and downsizers,” he reported, citing two examples:
A Capitol Hill home went on the market at $450,000, received seven offers and sold in a week for significantly more than asking price. In the second example, a View Ridge listing priced at $499,000 had 25 groups through an open house in a two-hour span. It has a view and a great location above the Burke-Gilman trail. “Both homes were in the $400-$500,000 price range, well maintained, and not distressed.”
Several other NWMLS directors commented on the impact of distressed properties:
- “We still have the better part of the next five years to work through short sales and bank owned property but this is a start,” commented Frank Wilson, a managing broker at in Poulsbo, WA. He described January 2010 as an anomaly due to the tax credit, and said even though last month was down in many respects compared to last year, it better reflects the true market. “It is good to start a new year off without any government incentives and is hopefully the start of returning to normal.”
- Some owners are opting to rent their homes as the market recovers. As demand increases and rents rise, investors are returning, said Stenvers. Also emerging is a new group of renters – past owners who lost their home to foreclosure or short sale, he noted, adding, “These renters are willing to sign long-term contracts so they can get their credit rating repaired.” For example, Stenvers said his office recently listed a rental. The renters were a professional couple in the midst of a short sale in Florida. “They are looking at a very long term commitment to renting to help them save money and recover from their loss.”
- “Buyers are reluctant to look at distressed properties not because of the characteristics of the property, but because of the process,” said Grimm. He called the long delays with lenders regarding the sale of distressed properties “a major choke point.” Grimm acknowledged there has been significant progress with the banks trying to figure out the situation, but stated, “We’re still a long way from making it buyer-friendly.”
Figures from the National Association of Realtors® show distressed homes rose to 36 percent of sales of existing homes in December, up from 33 percent in November and 32 percent a year ago. Such homes are typically discounted by 10 to 15 percent, according to NAR research.
Commenting on the volume of distressed homes on the market, Windermere’s Jacobi said, “Hopefully new regulations requiring banks to speed up the sales process for distressed homes will help move that inventory more quickly.”
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Bob’s Bugle Real Estate Newsletter February 2011
Statistical Summary by Counties: Market Activity Summary for January 2011
4-County Puget Sound Region Pending Sales (SFH + Condo combined)
(Totals include King, Snohomish, Pierce & Kitsap counties)
Bob’s Bugle Real Estate Newsletter February 2011
Northwest Multiple Listing Service, owned by its member brokers, is the largest full-service MLS in the Northwest. Its membership includes more than 24,000 brokers and agents. The organization, based in Kirkland, currently serves 21 counties in Western and Central Washington.
Bob’s Bugle Real Estate Newsletter February 2011, copyright 2011. All material contained herein is owned and protected. Any attempts to reproduce this information without the express written consent from the owner will be prosecuted.
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