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Tuesday, October 5, 2010

“Wise Buyers” Taking Advantage of Chance to Get Stellar Homes

KIRKLAND, Wash. (Oct. 5, 2010) – Home sales remained subpar around most of Washington during September, but directors from Northwest Multiple Listing Service say they are encouraged by some positive signs.
“It’s a slow recovery, but it’s trending in the right direction,” said Joe Spencer, president and COO of John L. Scott Real Estate and a member of the NWMLS board of directors.
Among positive indicators the directors cited were pending sales (“starting to show signs of life”), month’s supply of inventory (pointing toward a more balanced market), stabilizing prices (with more homes being priced competitively), the market adjusting to no more tax credits, and strong sales of “specialty homes.”

Northwest MLS members reported 5,741 pending sales during September across the 21 counties in its service area. That’s a drop from August (down 4.9 percent) and from the same month a year ago (a decline of 24.3 percent), but an improvement on the total number of mutually accepted offers for May, June and July.

MLS director Pat Grimm, managing broker at Windermere RE/Capitol Hill in Seattle, reports an upsurge in people looking at properties, particularly move-up buyers. He attributes some of that activity to homes “finally being priced competitively.” The new pool of potential buyers are “getting their feet wet, but they’re taking their time before they jump in,” he commented.
Prospective buyers have plenty of choices across the price spectrum. MLS members added 9,038 new listings to inventory during September, bringing the total selection to 42,153 active listings.

Spencer, of John L. Scott Real Estate, said he is encouraged by the month’s supply of inventory at the end of September. “The three-county area of King, Snohomish, and Pierce are reporting about six months of inventory, which is a positive indicator based on the last 30 years of market data.” Historically, the MLS director noted, this points to a more balanced market and stabilizing home prices. “That’s not to say we should expect prices to increase right away, but it’s a positive sign nonetheless, especially when you consider that the national supply of inventory is more than 11 months,” Spencer stated.

“There are many very wise buyers taking advantage of what may be a once-in-a-lifetime opportunity,” said Mike Skahen, whose real estate career spans nearly 30 years. “We haven’t seen a summer like this in home sales since 1982 when interest rates were hovering around 16 percent,” he observed.

Skahen, the owner and designated broker at Lake & Company Real Estate in Seattle and a member of the NWMLS board of directors, said the buyers they’re seeing have good jobs with Google and Amazon. “They realize they have the chance to get stellar homes in great locations at 25 percent off what they were selling for three years ago and at interest rates approaching 4 percent. I doubt you’ll see a market and selection better than right now,” he commented.
Skahen said his office just had a $600,000 Green Lake mid-century home sell with four competing offers, and his company was one of three brokerages that presented offers on a $770,000 Ravenna listing, but they were outbid.

“Buyers are snapping up homes in all price ranges that are well located, in good condition, and that are priced fairly,” Skahen reported.

NWMLS members reported 3,997 closed sales during September, down from the same month a year ago, when members notched 5,132 completed transactions. Year-to-date, the volume is up about 9.8 percent from the first nine months of 2009 (40,318 closings through Sept. 2010 versus 36,714 closed sales through Sept. 2009).

Last month’s closed sales of single family homes and condominiums (combined) had a median price of $257,600. That’s down about 5.6 percent from the year-ago price (area-wide) of $273,000. Ten of the 21 counties served by NWMLS reported year-over-year price increases.
“The types of homes that are selling particularly well are specialty homes-- homes that have a unique mix of character and amenities. It can be a waterfront estate or a Craftsman cottage, but there are qualities about the home that really make it stand out. Those homes are one of a kind and they're never bought on price alone,” said OB Jacobi, general manager of Windermere Real Estate Company.

“Crazy requirements” are impeding the pace of sales, according to NWMLS director Dick Beeson, broker/owner of Windermere Commencement Associates in Tacoma. “Agents are finding it’s much more difficult to navigate the closing process than ever before. If it’s not the conditions of an inspection report, it’s the appraisal coming in off sale price or lenders reviewing and re-reviewing the buyer’s qualifications or buyers rethinking whether or not to buy,” he explained.

Looking ahead, Beeson expects the balance of the year to be “somewhat fickle,” in part because of upcoming elections and lingering uncertainty around the slow pace of the recovery.
“Sellers know they must position themselves better than their competition on all levels – price, condition, terms,” Beeson stated, while noting buyers who procrastinate risk losing purchasing power because of anticipated increases in interest rates.

“Interest rates below 5 percent are an extraordinary event, and buyers need to take advantage of them,” Beeson emphasized. A 1 percent increase in the interest rate on a $300,000 mortgage increases the monthly payment by $183, he explained, adding experts expect rate hikes. “It’s not if, it’s when,” he contended.

Northwest Multiple Listing Service, owned by its member brokers, is the largest full-service MLS in the Northwest. Its membership includes more than 24,000 brokers and agents. The organization, based in Kirkland, currently serves 21 counties in Western and Central Washington.

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