The general real estate market in the country is definitely a "buyer's market". The Pacific Northwest had been spared until recently when the Seattle Times reported that the median Seattle house price in August 07 was $ 501,000 while in December 07 it was $ 455,975. Locally, property under $800,000 is still moving slowly. The $1 million and up market is in fair to good condition and similar to 2002 and 2003 levels. Beginning in 2002 and 2003, we started to have buyers looking for second home investments utilizing appreciation in their primary homes for their purchase here. We estimate this segment of the market to be between 20-30% of the overall market over the last five years in the $500,000 to $2 million range. These buyers are gone for the foreseeable future because that rate of appreciation no longer exists.
The interest rate increases in 2006 and the beginning of 2007 have slowed the under $1 million market. Interest rates have now been dropping for the past several months, and we believe that interest rates will continue to drop providing incentive for the $300,000 to $ 1 million market to pick up. Locally our inventory is not increasing, which typically means that prices are stable. The number of overall sales is dropping but gross dollars sales have dipped just 10%. In 2005, there were 225 sales for total dollar sales of $96,407,746. In 2006, there were 185 sales for total dollar sales of $97,371,723. And, in 2007, there were 139 sales for total dollar sales of $86,186,535.
The banking industry is in crisis with qualifying standards for mortgage applications rising and home values declining, making it more difficult to get a loan. In the rest of the country, the scenario consists of housing inventories rising, home values declining, and a decreased number of successful loan applications; this will likely depress the real estate market for some time to come. Because the Pacific Northwest is more and more recognized as a premium place to move for lifestyle reasons, we anticipate that we will be mostly immune from a long term devaluation.
To summarize, we are very lucky here in the Pacific Northwest as compared to the rest of the country, and even more fortunate in the San Juan Islands. We have seen a number of price decreases in our listings but we believe that prices will stabilize in the coming year. However, it may take a little longer to sell a property depending on how it is priced compared to the competition. That being said, there are inevitably some truly great values for buyers.
