04/24/2012: "Real Estate Sales Looking Better"
By Merri Ann Simonson
While The first quarter results for San Juan Island were disappointing, as the real estate dollar volume was down 31% from the same period in 2011, the number of transactions was almost equal to the first quarter in 2011,
This supports the fact that there are more transactions in the under $300,000 price range than in past years, with a total of 17 closings, and counting, in 2012.
The high level of sales for properties priced under $300,000 can be partly attributed to the amount of bank owned and short sales offered in the price range and the low interest rate environment.
We had a total of 7 sales during the first quarter that were bank owned or distressed. Many of the home sales in this segment of our market represented terrific buying opportunities. Those opportunities actually convinced some of our investors to move off the fence and re-enter our real estate market.
Having homes priced in this range has also brought out some of our first time home buyers as our prices haven’t been this low for years, and this may be their only window of opportunity. Sellers that closed in the first quarter negotiated on average 6.3% off list price at the time of sale.
The median price for a previously owned home on less than 5 acres on San Juan Island for the 12 month period ending March 31st is $366,000, which is equal to the price at the end of 2011. This is good news as there is a lot of downward pressure on the median price due to the high level of sales under $300,000.
The median price for platted lots on San Juan Island for the same 12 month period is $110,000 which is a slight increase over the price of $105,000 for year end 2011. It is encouraging that our median prices appear to be more stable.
Our showing activity started to increase in February and then the pipeline of pending sales started to build up as well! We are all very encouraged as we haven’t had this many transactions in escrow at Coldwell Banker San Juan Islands since June 2007. We are also pleased that Coldwell Banker’s volume in the first quarter was only down 20% versus the 31% of the overall San Juan island market.
As 60% of our buyers come from Western Washington, we are very excited to read about the activity level in the Seattle�"Bellevue markets. Many of the agents in those areas are reporting multiple offers in all segments of their market, not just bank owned. Their average days on market has decreased sharply as compared to last year.
We have not reached their level of activity, but we do tend to mirror their market, subject to a lag period.
Our area remains primarily a second home market and typically, owners desire their second home to be located within 2-3 hours of their primary residence. When some of the baby boomers are able to sell their homes in the Seattle area, they are then able to downsize their primary home and purchase their second home in areas such as the San Juans, and enter the next phase of their lives.
The recession placed a “hold” on numerous lives which postponed many planned events. People are very tired of the recession and politics in general and just want to move on and improve the quality of their lives.
As reported in the above chart, the most active price range was under $300,000 but the second most active category was $500,000-$800,000, which is surprising.
In years past, this price range was considered our “flat zone” as it was too high for islanders buying and too low for the first and second home purchasers new to the island. This affirms that in some cases, a home that sold for $1,000,000 back in 2007 is now selling under $800,000 or a 20%+ decrease in that segment of our market. Further, our median home price decreased 24% from the high in 2007 of $480,000 to the current median price of $366,000.
Advice for Buyers: Our market offers some great buying opportunities. We are a very conservative company, by the time we finally report in our newsletter that our market has recovered and we are trending upward from the lowest point, it will be past. Unfortunately, there is no crystal ball at our office, so we don’t know if this current activity is a window, a flurry or the start of a recovery for our market, but we hope that our clients take our advice and seriously consider investing in the San Juans, especially at the current prices, extremely low interest rates, and inventory levels.
Advice for Sellers: The property listings that are selling are those that are considered by the buyers to be the best value. Pricing is very important in our market. As said above, we don’t know if this activity is a window, a flurry, or the start of a recovery. Many of our sellers have been waiting for the market to recover as opposed to adjusting their price to the current market. Those sellers may want to consider the other possibilities; a window or flurry? Will you obtain a higher price one year from now? Two years from now? Can you sell your property and invest the funds in a higher yielding instrument? We recommend you list now but price right. Sell and get on with your life.
General Advice: In the old days, we use to advise clients that waterfront homes and anything with a dock would appreciate at the highest rate in our market. We would say “buy waterfront, and lots of it”. Unfortunately, due to the Critical Area Ordinance update we have had to change what we recommend. We now must caution buyers on the purchase of waterfront lots, parcels with wetlands, and those homes or cabins that are underdeveloped and may become non-conforming should the update increase the buffers to undesirable levels and make a high percentage of the buffer “no touch”. Homes that are already developed to their highest and best use, such as a large waterfront home, with guest house and dock, in all likelihood should increase in value since you may not be able to create those improvements or have those views in the future. As those homes are already in place, you won’t be concerned over the non-conforming growth restrictions as contained in the current regulations; however, the next owner may have wanted to expand the home. What you may want to be concerned about is the decrease in value of the waterfront lots, parcels with wetlands and future non-conforming underdeveloped properties and their subsequent impact to not only you directly, but also to our tax rolls and the revenues that our county services depend upon.
(Merri Ann Simonson is an Associate Broker/Sales Manager for Coldwell Banker San Juan Islands Inc. She may be reached at:360-317-8668 and email at: firstname.lastname@example.org >)