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).
