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10/21/2007: "SJI Real Estate: Sales Drop, Value Remains Steady"

By Merri Ann Simonson

In reviewing the year-to-date results for period ending September 30, 2007, the sales volume for the real estate market on San Juan Island was less active when compared to the same period in 2006. Overall, decreased volume or averages doesn’t necessarily equate to reduced property values.

The median price for a previously owned home on less than 5 acres for year 2006 was $479,000. The median home price for the period of October 1, 2006 through September 30, 2007 is $480,000, so property values are maintaining on San Juan Island.

The volume in 2007 lags 2006 by $36,134,366 (24%). On San Juan, we have closed an average of 22.3 transactions per month so far in 2007. The chart below shows the actual numbers:





Buyers still waiting on the sidelines should consider the basic economic facts: If fundamentals aren’t supporting a market decline, then it’s not going to decline for very long. As the State of Washington and San Juan County are adding population, any appearance of a market decline is destined to be short lived.

In order to educate consumers about negative real estate articles regarding the national sub-prime lending crisis, the Washington REALTOR® Association published an article that provided very interesting information. Generally, the article indicated that Washington State is flourishing with strong job growth and some of the highest appreciation in home prices in the nation. Seattle is an especially hot job market, boosting confidence of sustained growth. Due to our close proximity, we tend to mirror that market.

Per the REALTOR® article, statistics reveal that Washington State’s real estate market is stable and an excellent investment:

* Home appreciation in Washington continues to out-perform the rest of the nation.

* Home prices in Washington have increased an average of 8.1 percent since the same time last year.

* The demand for median-priced homes has never been greater.

* The home market isn’t keeping pace with the growth of the state’s population, which is continuing to increase at 1.8 percent per year. The state’s population will increase by nearly one million over the present decade and reach 6.8 million by 2010.

* Foreclosure rates today are the same as they were 10 years ago. Fewer than one percent of mortgages end in default in the state. As of mid-June, sub-prime, adjustable-rate loans represented 20 percent of loans nationally, but just 6 percent of the home loans in Washington.

Where do San Juan Island buyers come from? Per Real Market Data LLC, in 2006, seventy three percent of the our buyers lived in western Washington. This falls in line with the premise that most second home owners desire to purchase a home within 2-3 hours from their primary residence. Further, our appreciation rate has attracted investors and buyers purchasing for future retirement. In addition, 25% of the buyers were from out of state and about one half of the out of state buyers were from California.

In summary, our volume is off from 2005 and 2006, which were exceptional years, and our volume will most likely end up similar to 2004 which was also a good year. Our values are maintaining and our real market is not feeling the impact from the sub-prime financial market crisis. Most buyers in our market were well qualified and did not require the creative underwriting that was used elsewhere and attributed to the high level of loans in default nationwide.

Inventory levels are high which make it an excellent time for buyers to invest in our market as the selection is good. Per the Northwest Multiple Listing Service as of October 15, San Juan island has 342 property listings of which 23 are under contract.


(Merri Ann Simonson is an Associate Broker for Coldwell Banker San Juan Islands, Inc, She can be reached at 360 378-2101