August 2009: Local Real Estate Update
Tags:$8000 first time home buyer tax credit, active listings, Balanced Market, Buyer's Market, closed sales, housing inventory, pending sales, whatcom county real estate
Local real estate numbers are now in for August. Here are a handful of stats and my analysis for the Whatcom County housing market in the month of August, which I’ve paired with month-to-month and year-to-year comparisons.
Active Listings, Pending Sales and Closed Sales
We’re seeing less listings on the market than we have in years past. Current local active residential listings are down by about 11% from the same period one year ago.
I recently commented on the trend of rising pending home sales on the national level, and we’re noticing that same trend here at home as well. Local pending sales numbers are up 14% for the month, and they are up 8% for the year over the same period last year.
However, not all of those pending sales are turning into closed sales. Closed sales are down 10% for the month and down 15% for the year, which may be attributed to a growing number of transactions missing their closing date deadline (I’ll talk about this more later).
The graph below shows the trends in the number of Whatcom County homes for sale, the number that have sold, and the number that are pending, from June 2008 to August 2009.
Median, Average Home Prices Down
Whatcom County’s year-to-date median home price has fallen 5.3% from last year. It now stands at $265,000, compared to $280,000 this time last year.
The average price of homes for sale in Whatcom County has also dropped from this time last year (down 2.5%), from $448,000 to $433,000. As you’ll notice, the average home price is significantly higher than the median home price, as average prices are skewed upward by the higher priced homes on the market.
The following graph shows the discrepancy between the average price of homes for sale and the average price of homes sold in Whatcom County, for the past 14 months.
Condos
Condominium pending sales continue a downward trend both for the month (down 23%) and the year (down 35%). Closed condo transactions also remain slower: down 50% for the month of August and down 50% year to date.
Local Price Reductions = Rising Affordability Levels
Fortunately for buyers, price reductions have put local housing affordability levels at their highest levels in decades. Add attractive interest rates and an $8,000 tax credit for first time home buyers, and what we get is a situation that is enticing buyers back into the market (as seen in the rising number of pending home sales, both on the national and local levels).
Common Transaction Delays and Disruptions
On the downside, many local transactions are missing their closing date. Last minute demands from lenders are common and final underwriting reviews are causing delays. Inexperienced appraisers are gumming up the works as well. For those of you who are planning to take advantage of the $8,000 first time homebuyer credit, plan ahead and allow for delays.
The Road Back to a Balanced Market
Our market will need a string of months of positive sales growth if we are to get back to a truly balanced market. That is because inventory levels still place us squarely in a buyer’s market, with a 10.1-month supply of homes for sale (meaning it would take about 10 months for our current inventory levels to sell, were no new listings to be introduced to the market).
Prices will continue to correct down until we are back in a balanced market, which is characterized by a four to six-month supply of homes. Fortunately, we have already seen evidence of local prices stabilizing in the last few months. And, with the amount of activity we’ve seen in the last three months, we may have reason to believe that a balanced market is not too far away.
