Wenatchee valley home sales remain off ’09 pace by 13%

As I mentioned on August 20th, the number of closed sales still lags behind the rate of 2009 closings by 13%.  As of today, 330 single family homes have closed in the Wenatchee valley.  Last year saw 373 homes close as of September 6th.  Keep in mind that the buyer’s tax credit was in effect last year and it was supposed to have a deadline of November 30th (it was later extended to April 30th).  That helped sway some first time buyers to take the plunge.  Our market now lacks federal government intervention (except for Federal Reserve manipulation of interest rates).

Let’s not forget that all markets find a happy medium between supply and demand sooner or later.  Our market has yet to do that and I think it may take a few more years of economic recovery.  But, in spite of the many political and economic woes of our day, the market will eventually find solid ground and growth will begin again.  My hope is that we all are sober-minded once the bull market is back in full swing.

Hope you had a good Labor Day!

Kelly

2010 sales fall 13% vs. 2009 YTD

As of today, 299 single family homes have closed in the Wenatchee valley.  This compares with 342 on the same date in 2009.  In 2006, 654 homes had closed in the same time period.

Wenatchee valley prices to continue slide

Day after day I am seeing more evidence of a continued slide in local real estate prices.  The future of the market is dependent on a few key factors, namely 1) the availability of financing, 2) market perception of buyers, 3) the supply of  homes for sale, and 4) the absorption of distressed properties.

Let me comment briefly on each…

1) The availability of financing – The market for a home loan is dramatically different than it was 3 years ago.   The qualification, appraisal, and underwriting processes are eliminating a great percentage of prospective buyers.  I wish there were a way to accurately determine what percentage of buyer prospects are turned away but my instincts tell me it may be near 50%.

2) Market perception of buyers – In the 20 years of my real estate career, I am not sure I have witnessed such a low sense of urgency on the part of buyers.  We are entrenched in a Great Recession psychology and fear is a primary motivation to delay big purchases.  It’s obvious that significant change will need to take place before the mood moves from pessimism to optimism.

3) The supply of homes for sale – The supply of homes for sale perpetuates falling prices.  Some sellers are in a must sell situation.  Some would sell if they got their price.  Some are in financial trouble.  Some prefer a new location or style of home.  Regardless of the motivation, with fewer and fewer homes selling per week, month, and year, competition increases and prices come down.

4) The absorption of distressed properties – Distressed properties are on the rise!  I am seeing more and more people go underwater in their mortgage (owe more than what the home is worth).  Frankly, this scares me.  The irrational behavior of 2004 – 2008 tempted many to pull maximum equity out of their home through refinance or purchase with 100% financing.  In many cases, values are now significantly below the loan amount.   Foreclosures are on the rise and I think we have only seen the tip of the iceberg.

Like it or not, this is the reality of the situation.  Depending on your perspective, this is great opportunity for some and great tragedy for others.

Do you need help sorting it all out?  Give me a call and I can help you make your next move.

Blessings,

Kelly

Bank owned homes are selling

Of the 49 bank owned homes for sale in our local MLS, 20 are under contract. Bank owned homes have a much higher listing/pending ratio (as would be expected). The banks have no reason to hold the homes, they want them off their books.

So far this year the supply of homes for sale has not fallen below 600. 17% of homes listed have resulted in a pending sale. Prices will continue to fall at this level of supply and rate of sales. If you are looking for prices to level off, then wait until the supply gets down to around 300.

I would be shocked if this happened by next year but is entirely possible by 2012. One thing I have learned in all my years of real estate sales is that just when you think a market cycle will never end, it ends!

Yes, homes are selling in the Wenatchee valley!

As a matter of fact, 44 homes have been reported as pending so far this month (33 of which are under $300k).  8 of these sales went under contract in less than 30 days.    In addition, 19 homes have closed this month.  8 of the closings were in less than 70 days on the market.

As I study each of the pending sales under 30 days and the closings less than 70 days, I see a common thread.  Each home was in great condition (lots of updates) and each home was priced below its competition.

Yes, you can sell your home in this market.  Give me a call and I can help you price your home and recommend updates.

Your first offer is often your best…

I recently represented a buyer in the purchase of a home here in the Wenatchee Valley.  They made an offer on a home that was obviously overpriced but had appeal to my buyer.  The seller was reluctant to accept the buyer’s offer and so my buyer decided to buy another home within a block of the first home.  Once the seller realized they had lost out on a legitimate buyer, they called us and offered their acceptance of the last offer.  It was too late.  The buyers had lost interest and were on to the next home which worked out perfectly at a better price.  Note to sellers:  the first offer you get may indeed be the current market value for your home.  If you really need to sell, think twice before you send them down the street.

Wenatchee real estate data from Pacific Appraisal

Click here to view the latest Real Estate Snapshot and easily compare this year’s numbers with last year.

Still tracking 2009 sales

So far this year has been almost identical to last years numbers.  As of today, 249 homes have closed in the Wenatchee valley market.  Compare this with last year where 256 homes had closed as of the same date.  The market has seemed to found a steady rate of sales.

If the supply of homes were about half of where it is now (534), then our prices would stabilize and maybe increase.  I am not sure we will see that kind of a decrease in supply this year.  I have a feeling that many prospective sellers that have been attempting to find a buyer for the past 6 months or more are going to give up and decide to stay in their home.  This should decrease the supply a bit but many have no choice but to sell and short sales/bank owned homes are on the rise.  This process is going to take some time.

The urgency level among buyers right now is about as low as I have ever seen it (in 20 years of real estate).  We’ve got lots of sellers competing for a small handful of buyers.  For sellers, it’s a pricing war and beauty contest.  Sellers must have their home in its best shape ever and have the best price too.   Buyers would rather buy a well priced home than make lowball offers.  Making low offers is uncomfortable and not a first choice.  If you want to sell, the temptation is to keep the price high thinking the buyer will want to  make low offers.  Resist the temptation and list it with about a 1% to 3% margin.  You’ll find you will get more showings and eventually an acceptable offer.

I am always available for your questions or comments…thanks!

Evidence that home prices are at 2005/2006 levels

Check out these recently closed sales:

211 N. Emerson – Sold for $115,000 on 8/11/05 – Sold again for $115,000 on 5/21/10

121 N. Delaware – Sold for $268,000 on 8/02/07 – Sold again for $148,000 on 3/01/10

2114 N. Avenida – Sold for $228,000 on 7/19/06 – Sold again for $205,000 on 2/18/10

625 Pearl St – Sold for $269,000 on 10/15/07 – Sold again for $205,000 on 4/14/10

624 Royal Anne Dr – Sold for $223,500 on 8/29/05 – Sold again for $230,000 on 2/19/10

2408 Harvester Loop – Sold for $250,900 on 8/03/06 – Sold again for $234,000 on 5/28/10

930 Idaho St – Sold for $289,900 on 6/17/08 – Sold again for $229,900 on 5/21/10

1428  John St – Sold for $350,000 on 4/21/06 – Sold again for $350,000 on 4/27/10

955 Sage Crest Dr – Sold for $540,000 on 7/24/06 – Sold again for $495,000 on 2/18/10

I think you get the point.  If you bought a home since 2005, chances are the value is the same or less.  For many, these are perilous times.

Sales steady under 250k

The bright spot in our market are the sales under 250k.  Of the 210 closed sales so far this year, 131 are 250k or less.  This underscores my theory that a majority of our sales are local people (as opposed to buyers relocating in from higher priced markets).

Our median income per household is in the neighborhood of $50,000/yr.  If a borrower has good credit, most lenders would allow this income to qualify for approximately $230,000 (interest rate of 5% on a 30 year amortization).  Further proof that our market is primarily made up of local buyers.

If you want to buy a home under 250k, there is a good selection and most seller’s are ready to pay your closing costs.  If you are buying above this range, the selection is even better but keep this in mind:  a seller will not be flexible in price unless they believe they can get an equally good deal on their purchase.  Don’t be surprised if sellers in the higher price range don’t budge.  It’s simply because they don’t want to undersell and overpay when they go to buy.