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Indicators point to a recovering residential market
by Heidi Hansen
For the Sequim Association of Realtors®
“Real Estate brokers around Washington state agree today’s market is far different from two years ago, with one industry veteran summing it up by saying key indicators ‘are in perfect alignment for a spring market to remember.’”
So reads a press release from the Northwest Multiple Listing Service (NWMLS) last month.
What happens in the metropolitan areas of Washington is not usually an indicator of what is happening in our local market. Our real estate market historically tends to follow the Seattle market by 12-18 months.
What are those key indicators? Naturally, the volume of sales is one of them as well as pending sales, which are reported in the national news lately. One of the most significant factors is inventory levels.
At the downturn in the market, our local inventory levels rose into several years’ worth in every category and price range. During the past few years, we have seen a decline in the inventory levels under $300,000 fall below a 12-month supply.
For 2012 there were 465 residential sales in the Sequim area.
In the Sequim area, there is current inventory of homes priced under $250,000 of less than six months. In the past six months there have been 166 sales of homes in that price range.
Of homes priced between $250,000-$300,000, there are 39 homes on the market, representing an 18-month supply with only 13 sales in the past six months.
Of homes priced between $350,000-$400,000 there are 26 homes on the market, representing a nine-month supply with 18 sales in the past six months with nearly half of those sales in this year.
At the top of the range (homes priced more than $600,000) there are currently 36 homes for sale, representing nearly a four-year supply with only five sales in the past six months; however, three of those sales were in the first quarter of this year.
Pending sales for Sequim at the end of the first week in April are 85, with eight closed transactions this month to date. Those 93 transactions nearly match the first-quarter sales of 112. First-quarter sales for 2012 were 72, showing an increase of 55 percent.
Foreclosures and short sale activity in the Sequim market never reached the levels reported in some areas, however those “distressed” sales made up about 25 percent of our overall sales over the past several years.
In the current market there are 23 short sale residential listings with nearly half (10) already under purchase contract.
For REO (bank owned) properties, there are currently 19 listings with seven under purchase agreement.
For 2012, REO and short sales made up less than 15 percent of the residential sales.
All of these indicators point toward recovery in the residential real estate market.
Supporting this upsurge in market activity are the low interest rates.
Arthur Buhrer of Clift Mortgage advises, “The mortgage interest rate market has recently improved during the first week of April. Interest rates have been moving up since Christmas when the Federal Reserve commented on monetary policy adjusting its stance on keeping rates low until the end of 2014. Some in the Federal Reserve felt it should begin to taper off the program that is helping to keep interest rates down at the end of 2013.
“This info from the Fed is a key indicator on how long we can expect these current rate levels.”
Purchasers include new residents to the area as well as move-up and downsizing buyers as well as investors. With the downturn in the market, many buyers took a wait-and-see attitude and chose renting over buying. There is demand for more rental property and the investors are responding to that need as they see the bottom of the market in the rearview mirror.
Another indicator that the market is moving is the fact that the percentage of asking price on recent sales is averaging around 95 percent. This means that asking prices are close to market value and that buyers are willing to pay close to asking prices.
Have we seen the last of the “steal deal”? Are home prices on the rise?
Your local Realtors® are making preparations for the annual Nationwide Open House Weekend, April 20-21. Watch this newspaper for a pullout section featuring open houses.