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We’ll start with the basics.  Sales are holding up fairly well, with all areas above or close to sales in 2010.  While average and median prices rose a bit from the November numbers in most areas the price trend is still drifting downward.  This may be the reason the number of sales are holding up:  prices are lower and people can afford to buy, even with the more sensible loan requirements.  

Sometimes it is interesting to look at the longer view, so I went back in the dusty archives to 2003.  At that point I wasn’t tracking quite as much as I do now, but the basics are very interesting.  Following is a table showing changes as of the end of each year.  It is interesting, of course, to see the changes in number of homes sold and prices over the past 9 years.

Year

12/31 Active

12/31 Pending

Total Sales

Avg Price Sold

%  Change            Year to Year

Median Price Sold

%  Change            YTY

2003

236

135

1354

$235,648

 

 

 

2004

209

171

1425

$266,393

13%

 

 

2005

401

165

1272

$327,309

23%

$285,000

 

2006

540

157

1197

$368,312

13%

$305,500

7%

2007

497

85

1219

$375,161

2%

$315,000

3%

2008

453

64

881

$359,151

-4%

$299,000

-5%

2009

412

87

912

$339,521

-5%

$288,444

-4%

2010

455

99

788

$334,304

-2%

$278,000

-4%

2011

363

99

806

$317,874

-5%

$264,250

-5%

  However, the really interesting part may go beyond the basic comparisons.  Look at the Active figures from 2004, 2005 & 2006.  They increased substantially.  Now look at the Sale numbers for 2005, 2006 & 2007.  They dropped substantially from 2004 levels.  Throughout 2006, inventory, pending and sale numbers were clear indicators that the market was out of balance and cooling off.  At the same time, look at the sale prices. They increased substantially from 2004 to 2006, and continued to some degree into 2007.  It seems as though the law of supply and demand, even with easy financing, was not operating as might have been expected. 

At least two other factors did seem to be operating:  the fear of loss (“I have to buy now or I will be priced out of the market forever”), and consumer confidence based on what everyone else was doing and the tales of making fortunes in real estate.

It is always easy to look back and see that something was coming.  That is only helpful when we can apply the knowledge to what is happening today.  So what have we seen since prices started dropping? 

  • We have worked through a lot of inventory.  Not only have we dealt with typical sales, but Bellingham has gone through 152 short sales and 193 lender owned properties since we started tracking them in May of 2009.  A total of 3387 homes have sold in that time period.
  • Prices have come down a lot more slowly than they went up.
  • Fear has been rampant, rightly so: all the talk has been about what everyone has been  losing in real estate, not to mention the implosion of the financial sector.  Consumer confidence has been low.
  • Inventory is below 2004 levels.  Remember that supply and demand does eventually work.

And now it is time for me to go out on that prediction limb. 

  • I don’t think prices are going to get back to the boom levels for a long time.  We have seen the results of a rapid increase, and I can’t imagine that any of us want to go through that again.
  • I think home sales are going to gradually increase.  Even somewhat warm water can be scary after one has been burned.
  • I think inventory will be low for a while.  Yes, there are more short sales and foreclosures in the pipeline, but don’t read the national numbers and think locally. 
  • I think many people would still like to own their home…for reasons beyond making money from it…and those numbers will increase as the memories of the bad times dim.

In short, I think we are in for a stable, calm real estate market for a while, which is undoubtedly better for everyone.

We wish the very best to you and yours in 2012.
 

www.JohnsonTeamRealEstate.com also includes a constantly updated list of newly listed properties and a list of properties being offered as short sales & foreclosures (REOs), as well as the entire listing database of the Northwest Multiple Listing Service, fully searchable to your specifications.