North Sound Property News

I am finally coming back from hiatus to blog here, and the first thing I want to do is to catch up on Snohomish County Market Statistics.

The market here in the county has been quite slow for homes since about August 2007 due to the credit crunch and what is now recognized as more widespread economic problems. In a sense, up until last year the Seattle area had been fairly well-insulated against these problems, but when investors lost confidence in the financial markets, those problems came home to roost. I guess the lesson being, real estate markets are local, unless there is a global financial crisis, in which case they are not.

That said, the news is not all bad. One of the things that is actually a positive sign is that absorption rates have stabilized over the last year. They seem to be hovering around the 8 to 9 month mark overall in southwest Snohomish county for most of the last year.  The only exception to this is the Christmas season 2008, where inventory levels shot up to 10 -  12 months and then promptly returned to the 8 - 9 month level in January.   This roughly followed the trend last year at that time.

Absorption rates are based on pending sales and active listings on the market, expressed in terms of how long it would take to sell through all active listings at the current rate of sales.  Our problem since August of ‘07 has been the combination of high levels of inventory….

Along with a significant reduction in the rate of sales…

You might visualize the scenario that this created as the proverbial “pig in a python.” The thing about pigs in pythons is that a python can digest a pig, but it takes a long time. Same thing applies to the inventory level in the county. The good news, I think, is that sales seem to have found a baseline level.  This baseline is about 1/3 of where it was at the peak of the market, and only absorbs a small percentage of inventory each month, but it seems to have stabilized and isn’t continuing to drop. 

What has been selling has seen a major sea change in the last year, as well.  Where up until a year or so ago we rarely saw sales of bank-owned or short sales, we’re now seeing those kinds of sales representing a significant portion of what is selling.  That, along with “selling-off” from builders, is driving a new pricing structure for homes. 

(Note that the above chart seems to imply that prices are on the upswing in area 740.  I think this may be more a function of the polynomial charting trying to find a trend in an area where the trend isn’t actually clear.)

The big questions for 2009 are going to be whether prices will reach a level that buyers and lenders will feel comfortable taking the risk of buying in?  For sellers, the question is likely to be, “what does it take to get a home sold in this market?” And in fact, these have always been the smart questions to ask, it’s just going to be more important than ever to ask them.

About the Author: Sandy Kaduce is Associate Broker of Gallery Homes Real Estate. She serves buyers and sellers in North King and South Snohomish counties. She is 2009 Board President of the Mukilteo Chamber of Commerce, as well as Vice President of Site Selection for Habitat for Humanity of Snohomish County. For more information, visit Sandy on the web at www.sandykaduce.com! Read more from this author