Windermere Real Estate/BI, Inc.
According to the Mortgage Bankers Association the current foreclosure rate for Washington State as of June 2008 is 1.04 percent, nationally, the rate is 2.75 percent.
Washington is ranked as the 45th state in delinquencies and 44th in foreclosures started.
Last year, Washington foreclosure rates were at .49 percent versus 1.40 for the rest of the country.
Yes, the numbers have gone up, but what I find most interesting, is that looking back to 2001-2003 when the hit to the tech industry had a great impact on the local economy, the foreclosure rate numbers were actually higher than they are now – they peaked at the 1.3 percent mark in 2002, compared to the current 1.04 percent.
Currently, as of October 25th, there are only two homes in foreclosure on the island.
The media depicts todays real estate market as the worst EVER. The media is the media. History shows us, these indeed are not the worst times we have weathered and we indeed will recover.
If you have any questions about foreclosures, feel free to send me an e-mail.
Data: Standard & Poor’s
Everyone who owns a home or is thinking of buying a home is watching the housing market very closely. We can not predict the future, but, educated guesses can be made by looking back at history. I made this chart up using information from the Standard and Poor’s Index. It is Seattle specific.
Basically, this chart illustrates the rate of increase in home prices since 1990. Back in the 90’s the purple bar illustrates that from January 1990 to January 1997 housing prices increased an average of 1.5% per year. Very sane and slow. In the late 90’s, when we bought our first home, things started to pick up. The green bar shows that from February 1997 to January 2004 housing prices rose at a rate of 6.6% per year. In 2004, prices started to go crazy. The blue bar illustrates that from February 2004 to July 2007 housing prices rose at an average of 21.3% per year. Homes quickly became out of reach for many as housing prices shot up, while salaries jogged along at their same old rate. Affordable housing slipped away.
The shift started at summer’s end in 2007. The red bar shows that in August 2007 to June 2008 housing prices declined at -19.1% per year. It looks a lot like a free fall. When will it end? To answer that question with any kind of logic, we need to look at the rate of increases before the fall. On the chart, the bars also have lines that are their same color. The lines are an extrapolation of the increase rate.
So, we want to look at where this current drop will meet back, with the older, slower, saner, rate of increases. Our current rate of decline will meet back with the 6.6% rate of increase around. Things could hook up there and housing could jog steadily along at the 6.6% rate of increase from then on. Or, prices may continue to drop. The current rate of decline will reach the 1.5% rate of increase around .
Historically, the purple bar and the green bar represent basically, the same amount of time in years. My educated prediction is that prices will stop dropping somewhere between the 6.6% and the 1.5%, likely in 2010.
Should you wait until then to buy or sell? Like I have said in earlier posts, you have to look at all things considered. First, your price range. Drops are more significant in some ranges versus others. Are you renting? Are you spending/losing $30K a year on rent? And you have to look at income tax deductions. If you are renting, you are not able to deduct your mortgage interest. For many that is also $25-30K a year in deductions off you income. I know that is huge for us.
To answer your own personal question you have to look at all your considerations. I know that right now, the buyers have a lot of elbow room in the market. A lot of selection, a lot of power. As the tide turns, when prices stop dropping (right now they actually have, on the chart, the line has leveled out over the past two months) the climate of the market will change, likely to a level market, where it won’t truly be either a buyer’s or a seller’s market. We bought both our houses in a seller’s market. I know which market I’d like to shop in next time.
Halloween always sneaks up on me. We are yet to go to Suyematsu Farm this year to get our pumpkins. It is always a beautiful setting on a cold clear fall day. This summer I did some further exploring of the island’s local food. I found the map on Sound Food, connected with Sustainable Bainbridge, amazingly helpful and I met some great folks like Mary at Harmony Acre Farms. Mary and her small farm got us through June until our own garden was able to provide veggies for the family.
This great map on Sound Food plots out all the farms on the island in an easy to read format and gives a short summary of what the farm offers. Many of the farms have street side stands or a small barn where they sell their goods. From berries to eggs, you can get the freshest of the fresh right in your backyard. Summer may be over, but farms are still open and the harvest is not over yet. Pumpkins are the stars this month, along with other squash. As we head into winter, wreaths and Christmas trees will pop up. The number of small farms on the island is impressive and just one more reason to shop local!
My good friend Allison turned me on to this blog. The blog contains pictures copied from Craigslist ads by folks trying (not very hard) to sell their house. The witty commentary by the blogger adds to the tragic reality of these pictures. The post Good Flowers is my favorite, so far. I am glad I’m not the only one horrified by tacky photos.
Now that summer is officially over, we can look back on the summer months that certainly were not hot – in regards to real estate. The numbers below are for Bainbridge Island single family homes, condos are not included in this data.
June 1, 2008-September 30, 2008
77 homes were sold
160 average days on market
Average square feet of homes sold 2534
Average listing price $789K ($317 per sq ft)
To compare, let’s look at 2007 data during the same time period June-September.
151 homes sold
106 average days on market
Average square feet of homes sold 2668
Average list price $830K ($319 sq ft)
Avg sale price $807K ($311 sq ft)
2006 – 155 homes sold with an average of 79 days on the market
2005 – 178 homes sold with an average of 93 days on the market
So, you can quickly see our volume is off. We sold half as many homes this summer compared to last. And looking farther back to 2005, you can see we have broken the trend.
The larger inventory has kept homes on the market longer and of course with supply and demand, we have seen a dip in price. The stats above show a price drop of about 10%, but that number is somewhat skewed by some large multi-million dollar sales over the summer. In actuality, the price drop in the homes in the $400K-800K is more like 15-20%.
So, what is my take on it? Should you camp out in a rental for the next two years? I look at it this way – rent is money given to someone else. I believe the prices are going to stabilize for a while, perhaps take another smaller dip in the 2-5% range and them stabilize again, before going up in late 2009 or 2010. Should you just wait until then? Maybe, but remember the rent you are giving to someone else and the tax write off you are not getting. Those elements need to be factored in when you are thinking/estimating that if you wait you can save $50K. That looks a lot like two years rent to me.
If you head out now and shop the vast market, it will be like having the special privilege of shopping at Costco before they open. No crowds, no lines, the best selection, all those great samples you can try and then try again – and still the super deals. Who wouldn’t love that?