Sequim Association of REALTORs
Note: This is the third in a series of articles about conditions in our local real estate market. The goal is to dispel rumors so you have an accurate view of the market.
Myth: Nothing is selling. Our real estate market is dead!
Truth: There is a lot of activity in our local real estate market; the most active area being in the under $300,000 market. The chart below provided by Clallam Title Company charts the number of transactions by year.
In 2011, 71 percent of residential sales fell between the $100,000 and $300,000.
There are two signs of a healthy real estate market. First is the number of sales or closed transactions; the other is the volume of inventory. Going back to 2005, it was definitely a seller’s market — high volume of sales and a very scant inventory. By 2008, we had turned to a solid buyer’s market with sales down but worse, a large and growing inventory.
Today we have a mixed inventory; low volume in the lower prices and multi-year inventory in prices over $400,000. In fact, we currently have 30 homes listed above $700,000 where we only have had six sales over the past year. At this rate, we have a 5-year inventory of those homes. Here is a quick look at the more active markets and their current ratio of inventory to sales.
Manufactured homes in parks: In 2011, there were 56 sales of homes in parks; currently there are 51 active listings that would represent an even (or 1 year) inventory.
Residential homes: In 2011, there were 749 homes sold; currently there are 666 active listings which would represent less than one year’s inventory. In 2011, 339 homes were sold between $100,000 and $200,000; there currently are 216 which represents about 7-8 months inventory. In 2011, 210 homes were sold between $200,000 and $300,000; there currently are 196 homes listed which represent an even inventory; equal amount of active listings to sales in the past year.
Lots: In 2011, there were 33 residential lots under 1 acre sold; currently there are 292 vacant lots on the market. This represents about nine years of inventory.
Acreage: In 2011, there were 85 sales of acreage (greater than 1 acre) and currently there are 417 parcels on the market. This represents about five years of inventory.
Myth: Why list? No one is buying.
Truth: Recognizing a good deal in today’s lower prices, investors are buying for resale as well as for rentals and buyers are purchasing vacation and second homes. Sales of investment and vacation homes jumped in 2011, with the combined market share rising to the highest level since 2005, according to the National Association of Realtors®. Investment homes surged an extraordinary 64.5 percent from 2010.
Vacation-home sales rose 7 percent from 2010 to 2011. Vacation-home sales accounted for 11 percent of all transactions last year.
The investment homebuyer in 2011 had a median age of 50, earned $86,100 and bought a home that was relatively close to the primary residence. Nationwide, 5 percent of the homes purchased by investors last year already have been resold. The typical vacation-home buyer said the primary reason for buying was to use the property for vacations or as a family retreat.
Eight out of 10 of the second-home buyers said it was a good time to buy. Nearly half of all investment buyers said they were likely to purchase another property within two years as did one third of the vacation-home buyers.
Vacation-home sales accounted for 11 percent of all transactions last year, up from 10 percent in 2010, while the portion of investment sales jumped to 27 percent in 2011 from 17 percent in 2010. Eighty-two percent of second-home buyers said it was a good time to buy. Nearly half of investment buyers said they were likely to purchase another property within two years, as did one-third of vacation-home buyers.
Truth: NAR chief economist Lawrence Yun said investors with cash took advantage of market conditions in 2011. “During the past year investors have been swooping into the market to take advantage of bargain home prices,” he said. “Rising rental income easily beat cash sitting in banks as an added inducement. In addition, 41 percent of investment buyers purchased more than one property.”
Yun said the shift in investment buyer patterns in 2011 shows the market, for the large part, is able to absorb foreclosures hitting the market.
Myth: The housing market is not changing.
Truth: “Pending home sales are on an upward trend, which has been uneven but meaningful since reaching a cyclical low last April, and are well above a year ago, according to the National Association of Realtors®. The January index for pending home sales is the highest since April 2010 as buyers were rushing to take advantage of the homebuyer tax credit.
In summary, low interest rates at various levels of leverage are available, housing prices are affordable and the housing market is heating up.
