Saturday, January 17, 2009
Coldwell Banker Winthrop Realty ~ 2008 Market Analysis
Dear Friends,
At a time when many of us have lost 50-percent (or more) of the value of our stock holdings, it is a reassuring commentary that real estate values in the Methow Valley, although somewhat softer, held up remarkably well in 2008.
That is one of the chief conclusions of our 2008 market analysis, which we just finished.
Sale prices in 2008 dropped an average of only 7.7 percent from the most recent list price, while corresponding sale prices in 2007 dropped an average of 5 percent – a modest difference.*
The average sale prices in 2008 and 2007 were fairly close – approximately $12,000 apart –$236,568 in 2008 compared to $248,531 in 2007.
This relative price stability is a function of three things:
- The types of properties available in the Methow Valley are generally highly desirable and in limited supply.
- The types of owners we have – many multiple-property owners – seem more able to weather economic downturns.
- Methow Valley sellers faced little downward pressure from banks selling foreclosed properties, at highly reduced prices. As of this writing, we are aware of only two Methow Valley properties that have gone through foreclosure and are listed for sale.
Of course, that is not the case, nationally. The chief economist for the National Association of Realtors said 45% of all home sales in November involved distressed sales. A distressed property is one in which the seller faces foreclosure or is forced to sell for less than the value of his/her mortgage.
Widespread distressed properties drive down prices. Clearly, the absence of those conditions puts the Methow Valley in a distinctly stronger real estate position than most of country.
Price stability, however, does not mean the Methow Valley has not been affected by the recession – it most certainly has. Across the board, market activity has slowed substantially. There were only 148 transactions in 2008, a 34-percent drop from 2007, and gross sales reached $35 million, a 37-percent drop from 2007.
As in most sectors of the economy, many buyers have been in “fear” mode: holding cash, not spending, waiting for more economic stability.
As a result, thanks to government incentives, mortgage rates are at historic lows. As of this writing, some 30-year mortgages are available at what were once unheard of numbers – hovering in the high 4-percent range.
Low rates combined with other favorable market conditions have created buying opportunities. Methow Valley property inventories are strong and many sellers are motivated – a combination we haven’t seen for some time!
And remember, it is impossible to predict the exact timing of a market bottom or high – you always find out after the fact. So, the longer a person waits to decide, the more risk they take that prices will begin to firm up.
Bottom line: if you wish to buy a place in the Methow Valley and can afford to do so, it would be hard to find a better time than now to make your move.
And remember, the primary reason to buy a property in the Methow Valley, is not purely for investment, but because you love this place and want to be part of it!
Best Regards,
Linda
* These calculations measure the difference between the most recent list price and the final selling price. These calculations do not measure price reductions that may have occurred during the course of a listing (in either year).
Friday, January 16, 2009
North Cascade Heli Skiing
Enjoying the Power 
Liberty Bell 
The foreground is Peak of Pleasure 
Photo by Dale "Fuzzy" Caulfield
Silver Star Photo by Dale "Fuzzy" Caulfield
30-Year Rates Fall Below 5 Percent
Interest rates on 30-year, fixed rate mortgages averaged 4.96 percent this week, down from a previous week's 5.01 percent.
The low rates have caused a spike in home refinancing loans and a welcome relief to cash-strapped home owners facing a slowing economy and rising unemployment rates.
"The fact that interest rates have dropped to a record low is an important development since more affordable home financing could help bring buyers back to the market and prevent some of these foreclosures," says Lawrence White, professor of economics at New York University's Stern School of Business.
Other rates were mixed for the week:
- 15 year fixed rates: averaged 4.65 percent, up from 4.62 percent.
- 1-year adjustable rate mortgages: fell slightly averaging 4.89 percent from 4.95 percent last week.
- 5/1 ARMs: averaged 5.25 percent compared with 5.49 percent last week.
Mortgage rates have continued to drop ever since the Federal Reserve announced a plan in December to buy up $500 billion of mortgage securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae—the government-sponsored enterprises.
Freddie Mac started recording mortgages in 1971.
Source: Reuters, Julie Haviv (1/15/09)
Friday, January 9, 2009
The 2008/2009 Methow Valley Real Estate Market
Many of you have been asking me if the Methow Valley real estate market is being affected by the 2008 market downturn. Although there are some serious negative factors influencing the national marketplace, the Methow Valley is primarily made up of recreational homes, a second home market, and so far we seem to be somewhat insulated from what is happening in many of the markets around the country.
Make no mistake, 2008 has presented the Methow Valley real estate industry with challenges across the board. There are more homes listed for sale than one year ago, homes are taking longer to sell, prices are softening, and there are fewer buyers investing in recreational property. But as of yet, the Methow Valley has not experienced the significant upsurge in distressed home sales, as in the major markets around the country. Investment in Methow Valley property is, in spite of everything, still a strong venture.
In 2009, Methow Valley real estate market conditions will continue to shift in favor of the buyer. Many buyers will be jumping into the market, taking advantage of greater selection, lower interest rates, special seller financing, softer prices, and less competition. With market conditions stabilizing, first-time buyers will now have the luxury of time in making their housing decision. They also have greater purchasing power than they had one year ago – and their dollar will go much further.
We may be in for some challenges over the next year, but we should see clear signs of recovery in 2009. Now is an excellent time to invest in your Methow Valley dream!
Linda Mills
10 Real Estate Predictions for 2009
· Sellers will continue to face falling home values in the new year because they’ll be competing with banks and builders who are slashing prices to sell off the still-huge inventory of foreclosures and new homes.
· The Obama administration will act on its plan to crack down on abusive lending practices.
· Mortgage holders in danger of losing their homes will receive more assistance from a variety of programs since the Senate's Joint Economic Committee has predicted two million foreclosures in 2009.
· Banks' restructuring should bring increasing calm, making loan modifications and short sales easier to obtain. Eventually this will lead to a decrease in the number of bank-owned properties on the market.
· Mortgage applications will continue to receive a comprehensive review, requiring borrowers to provide extensive income and debt documentation. Those with the best credit will get the best rates.
· The foreclosure crisis has created wiser consumers, with a deeper understanding of real estate, mortgages, and credit enabling better decision-making going forward.
· Green is good with increasing numbers of buyers opting for smaller homes that are within walking distance of school and work.
· Buyers and sellers will be more and more tech savvy, relying on tools like video, webcasts, and mobile search. Consumers and practitioners will benefit from being ahead of the curve.
· Prices will be low as will interest rates, creating great buying opportunities, and likely, inspiring reluctant buyers to make their move.
· The recession will end and buyers will regain confidence in the market.
Source: Frontdoor.com (12/03/08)
