"Real estate microclimates can behave very differently," according to one industry leader in commenting on the latest report from Northwest Multiple Listing Service. On first glimpse, the statistics for much of Western Washington indicate a market slowdown persists, but a closer look illustrates the "microclimate" theory:
Inventory overall dropped slightly in November (down 1.8 percent) compared with a year ago, with 9 of the 19 counties in the NWMLS area reporting a smaller selection of listings.
Pending sales of single family homes and condominiums declined in all but one county. Jefferson County bucked the trend with a 53 percent jump in the number of offers made and accepted but not yet closed. Within King County, where the multiple listing service tracks 29 map areas, four of those areas reported double-digit gains in pending sales of single family homes. (The "hot spots" were Jovita/West Hill/Auburn; Skyway; Central Seattle/Beacon Hill and Bellevue-West of I-405.)
Prices overall for last month's closed sales lagged figures from a year ago (down about 9.5 percent), but six counties reported gains. For the West region of the U.S., prices of single family homes plunged 26.7 percent and condo prices dropped 24.5 percent from a year ago, according to the National Association of REALTORS.®
Counties where prices rose from a year ago included Cowlitz, Island, Okanogan, Pacific, San Juan and Skagit; prices were unchanged from a year ago in Lewis County. System-wide, the median price for last month's closed sales of single family homes and condos was $285,000, down 9.5 percent from the year-ago figure of $315,000. In King County, prices fell about 5.4 percent, from $385,990 to $365,000.
Although not isolated in the NWMLS monthly reports, brokers say the rising number of foreclosures is having some impact on statistics.
"Until all the foreclosures and short sales are gobbled up, they represent a chunk of the inventory, and prices will fall," said Dick Beeson, broker/owner of Windermere/Commencement Associates in Tacoma. Asked to comment on reports of recent auctions of unsold inventory, he said this approach has limited usefulness, usually under special circumstances. "They may work for some new housing tracts, but probably not for individual single detached homes," he remarked.
The existence of real estate microclimates means consumers and agents alike should understand that expertise within a specific market segment is now more important than ever, says Pat Grimm, owner of Windermere Capitol Hill, Inc. "I remind our agents that regional trends don't always speak for all product types, property locations or price points -- the pressures on supply and demand are never evenly distributed."
Grimm noted new construction activity tends to be understated in Northwest MLS reports, in part because of how pre-sales are handled. For example, he notes multiple high rise condominiums are in various stages of construction in downtown Seattle. Some builders-developers are pre-selling or only listing a sampling of their offerings with NWMLS brokers, he explained.
Grimm estimates around 500 additional sales around downtown Seattle are scheduled to close in the near future, but they are not listed in the MLS database. "When considering all this activity, the reality is actually better than the perception in this situation," he remarked.
Looking at the "macro" market, condo inventory across the Northwest MLS service area is comparable to a year ago. At month end, there were 6,948 active listings of condos in the system, up slightly (1.4 percent) from the year-ago total of 6,855. Prices for condos that sold last month were down about 5.2 percent from condos that sold twelve months ago. In King County, which accounts for nearly two-thirds of all condo sales, prices fell 3.6 percent.
While condo inventory rose slightly, the choices for single family homes shrunk from a year ago. At the end of November, there were 36,636 active listings of single family homes, a drop of 908 listings (down 2.4 percent) from twelve months ago.
Echoing Grimm's "reality versus perception" observation, J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, said that also comes into play for home loans in today's market.
Recent actions by the Federal Reserve have resulted in mortgage rates dropping to their lowest levels since 2003, Scott stated, adding, "What consumers may not understand is that every half-point change in interest rates is equal to a 5 percent drop in the sales price of a home. That means the recent dramatic drop in interest rates is equal to at least a 10 percent reduction in home sales prices."
Lower rates are providing opportunities for homeowners to significantly reduce their monthly payment by refinancing, Scott emphasized. Contrary to what prospective homeowners may have heard, perfect credit isn't needed to qualify for a low interest loan, nor is a large down payment or a large amount of equity in an existing home. "Loans still exist for the majority of people looking to purchase or refinance."
Windermere's Beeson, a member of the Northwest MLS board of directors, reports "keen interest from sidelined buyers" because of dramatic dips in interest rates. "In fact," he remarked, once unqualified buyers are now qualified because of the full 1 percent drop in rates – "and they're buying."
"If inventory continues to shrink, if lower interest rates are maintained, if homebuyers are stimulated through proposals like the $7500 tax credit plan the National Association of Realtors® proposes for every buyer (not just first time buyers), if GSEs (government sponsored enterprise) set their loan limits at the highest levels, and if the banks are required to work with existing troubled homeowners by reducing their payments or arranging repayments at lower interest rates (but not focusing on debt forgiveness), we could all breathe a bit easier for 2009," Beeson suggests.
~ Courtesy of NWMLS
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