Over the last several years, many of the circumstances that triggered the previous housing bubble have changed. Windermere’s Chief Economist, Matthew Gardner, breaks down how tax policy, bank regulations, interest rates, lending standards, and home equity have improved our ability to avoid another bubble.
The Big Picture:
If you consider only the number of homes (or condos) that sold during the first quarter of this year, your initial reaction would probably be, “Ho Hum”. Look carefully, though, and you will see some interesting things. If you include what is happening now, in mid-April, you might get even more intrigued.
There were 55 home sales in the first quarter this year, compared to 56 last year, which indicates stability more than improvement. Nonetheless, these are good numbers compared to 2008 (when there were only 34 sales) and 2009 (with 37 sales). Condos dropped from 19 sales in 2011 to 12 this year.
So far, not a lot to get excited about. But when we look at the median price, we had a 6.2% increase. Our first quarter median price has been declining steadily since its peak in 2008 – until this year. When you look at the distribution of the sales, the median increase becomes clear. Sales over $800k were up 320% from last year. In all of 2011, there were 24 sales over $1 million; this year we have already had 12 just in the first quarter. (I cannot help but point out Windermere Bainbriddge was involved in 10 of those 12 sales and Winderrmere represented 50% of the parties involved.)
Stats Tell a Positive Story:
On March 30th, there were only 59 homes under contract. By April 5th, there were 74 homes under contract. By April 10th, there were 80. Of those 80, 22 are over $800K and 13 over $1 million. We have not seen these kinds of numbers in several years. Not only are the numbers good, they have grown quickly this month.
Over the past five years, we have had strong individual quarters like the first quarter just ended. But we could not sustain the momentum, and poor performance followed. In 2011, the first quarter was up 14% but then dropped 14% in the second quarter (from the previous year). Our market has gone up and down on an almost quarterly basis while prices have steadily decreased. Now we see a strong first quarter, prices inching higher and a very strong start to the second quarter. These are all positive indicators. Optimism is beginning to creep in, but it will take more time for many of us to feel comfortable making any proclamations. We’ve been lured by the sirens before only to find ourselves on the rocks.
Bainbridge Still a Stronghold
When one looks at market conditions around the Sound, there are active markets like ours and other areas that are not doing as well. Seattle has pockets of energetic activity while nearby areas are considered “stable”. North Kitsap is healthy, but not yet seeing the surge we are experiencing. The economic news is generally good, our regional economy continues to grow and the stock market is fairly stable. These are all positive indicators for our marketplace. The next few months will be interesting and- we hope-exciting!
Did you know that if you are planning a long distance relocation or even a local move across town I can help? As a broker, I work with people every day going through the buying and selling process, so I know how stressful it can be to relocate. I want to make certain that your next move is a positive, smooth experience, even it it’s just across town.
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The average sold price per square foot for single
family homes in Metro Seattle dropped slightly from
July to August, but prices overall remain stable.
Our brokers report that the market is “hot” in the
$400,000—$1,200,000 price range, with multiple
offers on many new listings. This trend is fueled by
lower prices, continued availability of distressed
properties, higher housing affordability, and well
publicized studies indicating that Seattle real estate
prices of entry level homes may rise during 2012.
Inventory of single family homes in Metro Seattle
declined in August, while pending sales experienced
an increase of about 10% above the previous month
and about 27% over the same month during 2010.
Inventory of homes for purchase will likely remain
tight through the end of 2011: Home buyers with
assertive brokers are profiting from lower prices,
while a majority of sellers with well‐priced, welllocated,
and neatly presented homes, are securing
sales in about 30 days.
Interest rates are now about 4.0% for a 30‐year fixed
mortgage, an historic low. Future changes are difficult
to predict, however, when the economy improves,
interest rates will likely increase.
The data indicates that 2011 remains prime time for
Seattle real estate investors. With real estate prices
down 35% from the high in June 2007, and a strong
local economy—evinced by new hiring, with salaries
among the nation’s highest—investing with a longterm