Buyers mentalities appear to be changing from buying a home because it will appreciate in a few years to buying a home for lifestyle reasons. A lot of buyers seem to have purchased a home last year because they needed more square footage or a bigger back yard and not looking to make money. The mentality now seems to be to buy and stay for the long run so if the home does go down in value a little, it doesn’t matter because they intend to stay for several years. This change goes back to how purchasing a home used to be 20 or 30 years ago.
Home sales in 2011 were up from 2010 which is encouraging, especially considering 2011 was the first year in the past three with no federal-stimulus tax credits to entice buyers. Pending sales for November were 22.4% higher than the same month a year ago, marking the seventh straight month of double-digit year-over-year increases. At month’s end, inventories in the Seattle area showed a year-over-year drop of about 32%. The median price of houses sold in King County in December was $320,000, down 13.5% from December 2010, according to the Northwest Multiple listing service. It was the third straight month of a double-digit drop. Condo prices fell even more steeply; 18%.
Sales in 2012 will likely be similar as 2011 as renters decide to jump in with continued historically low interest rates and low prices and investors will be looking for the distressed properties which are likely to continue. Inventories will in all probability remain low as they did throughout 2011 which will put pressure on buyers to act quickly if a home is priced right and in good condition. Foreclosures will continue to hold prices down but more so in the lower price ranges as there are fewer distressed properties in the higher ranges. Last year bank repossessed homes accounted for 17% of sales in King County, up from 10% the prior year. Zillow estimates 29 % of King County home owners with mortgages are under water. We probably won’t see drastic changes in prices until the banks work through the distressed inventory, but hopefully the pace of this process will pick up over the next several months, so by this time next year we’ll be seeing some improvement. We will most likely be struggling overall for a few more years and bouncing along the bottom this year with hopefully no more declines in value but some experts say prices may slip a little more before they stabilize.
Thanks to our valued repeat and referred clients, we were able to help a variety of buyers and sellers successfully achieve their goals in 2011 and consider ourselves blessed to aid those who seek our help. Our average market time on most of the homes we sold last year was less than 30 days, we have a successful formula to help our clients reach their goals in this market.
Please contact me for your own personalized market analysis.