Snohomish County WA Home Values For June 2011 [Video]
Snohomish County Real Estate Home Values.
Snohomish County Homes Trends and Values. Learn where the market is going, what is affecting Snohomish County Home Prices and why.
A class on WA Real Estate Statistics where we dove into Snohomish County Real Estate Statistics and the market. How the market is being affected by Bank Owned Properties, Short Sales, the Economy, etc. and When did Snohomish County Real Estate Peak?
Snohomish County graphs and pictures used in this presentation:
Snohomish County WA Home Prices Video:
Anton: Okay. Let’s go through and talk about this. Basically we’re going go through Snohomish County real estate statistics, and then we’re
going to go through some Washington foreclosure statistics and finish it up with the county foreclosure statistics.
What we have here is we have the market dynamics graph. Median price for sale, under contract, and sold for the last two years. What you can see when looking at the last two years, basically the for sale properties, that’s the ones here in red, have come down 22%. The under contract have come down 20.9%, and the sold properties have come down 20%.
Now one of the things that I consistently bring up, what’s very interesting when we’re talking about the trending in a downward market, if we’ve come down approximately 20% in the last two years, that’s about a percent a month. The other thing that’s very interesting too is that your for sale properties, the red lines, have depreciated more than the sold properties. What does that really mean to us when we’re talking to our sellers?
Participant: They’re chasing the market down.
Anton: Actually, that’s correct right there. They’re chasing the market down. These sellers had actually lost more money by not pricing their home correctly and chased the market down. If someone is having a discussion with you in relation to the pricing of their home and they want to overprice it relative to the market, you can say the average seller has lost almost an additional 3% in addition to depreciation in the last two years. Okay? Does that make sense?
In other words, price your home correctly, get ahead of the market, and don’t chase it down. Any questions?
Okay. I’m going to go over to the market dynamics month of supply, months of inventory.
Participant: Anton, where are you getting these reports from? Sandy?
Anton: Sandy emails them out to all of us. If you go into your email, you can type in June. That’s what I just did. I went into my email, typed in June. That’s how I pulled it up for the class. If you’d like, I can go make you a copy real quick.
Participant: No, that’s okay.
Anton: Okay. Right here we have the market dynamics, months of supply, basically looking at two years. It’s really interesting. You kind of see this trend. June, down. December, down. June, down. However, this has been the longest trend right here. If we look back at where we were in June of 2010, we were at 11.8 months worth of inventory since June of 2010. Over the last 12 months, we have basically seen a steady decline in inventory. Right now, being down to 4.3 months of supply.
What is another way to think about the months of inventory? Another way to think about months of inventory would be there are 4.3 sellers for every one buyer. That’s another way to put this into perspective. Another thing to think about in relation to months of inventory, too, is that six months is, basically, what we consider to be a neutral market. Above six months would be a buyer’s market, and below that six months, definitely where we’re at right now, is where you’re getting into a seller’s market.
Very interesting. Twelve months ago we were definitely heavy into a buyer’s market with almost one year’s worth of supply. Since then, we have trended down to 4.3 months, clearly putting us into a seller’s market.
Participant: How do you get the 4.3 sellers to one buyer?
Anton: Months of supply. In other words, if no new properties came on the market today, it would take you 4.3 months to sell through the rest of the inventory based on today’s current absorption. What that means is that there are 4.3 sellers for every one buyer, because every time one buyer comes in, consider that one buyer to be one month. They’re the ones that take that out.
Participant: Okay. I got you. Based on the [inaudible 04:31].
Anton: Yeah, exactly. It’s based on absorption. What it is, it’s the total number of active listings that are available divided by the number that just went pending. That’s your rate of absorption in the last 30 days.
Participant: Quick question. Why do you think we’re low on inventory?
Anton: What are your thoughts?
Participant: We had quite a few sales the last few months.
Anton: When we get to that category, we will discuss that, but the answer is sales have not jumped up.
Participant: Okay. It’s the banks just not unloading their properties?
Anton: Anyone else?
Participant: I would say it’s both. It’s the fact that we have less conventional sellers because they’re holding their property, and the banks are also holding a lot of properties that haven’t been turned over into the market yet.
Anton: Any thoughts?
Participant: Yes, I agree.
Anton: You concur? I don’t know the exact answer, so the only thing I can do is guess. The guess is basically this, and when we get into the foreclosure stats, you’re going to see it. Banks are cancelling more foreclosures right now than they have before. They’re trying to work out more loan laws and, apparently, they’re also trying to work out more short sales. What you’re seeing is you’re not seeing that bank-owned inventory come in.
You’re also seeing sellers who, I believe, are kind of fed up with the market who are going to wait, who have removed their property from the market and said, “No, it’s not worth me selling in this low market. I’m going to wait until a later date in time,” if they have a longer time horizon. Also, I think you’re seeing sellers exit the market too due to them being fed up with their home not selling. Their home is not selling due the fact maybe it’s overpriced, or the buyers are having difficulty getting financing, or maybe the agent that’s representing them is not a full-time agent in today’s market. We’ve seen a mass exodus of real estate agents from our market too. I would say it’s probably a combination of all of those.
In relation to the foreclosures, CoreLogic just restated their numbers in relation to shadow inventory. They believe there are only 1.7 million units of shadow inventory right now versus before they were saying 1.9 million. Some of that inventory that’s been hiding in that foreclosure, I’m coming to foreclosure, I’ve already been foreclosed on arena, is actually starting to go down. We haven’t seen a tremendous spike in the amount of properties that are coming back to foreclosure, so I think it has to be sellers fed up with the market, sellers leaving the market, and people waiting.
Participant: You may get into this, Anton. Are you going to go into the months of supply of foreclosure properties?
Anton: I didn’t do that. I actually have to manually do that calculation, so I didn’t do that again. If you really want to know, I’ll put that together for you and email it to you guys.
Participant: No, just what’s your estimate? It was 18 months last . . .
Anton: The last time that I looked at it, we had 11 months’ worth of foreclosures in Snohomish County that weren’t on the market yet.
Participant: Eleven months?
Anton: Eleven months.
Participant: Which is not in this?
Anton: Which is not in this, but I’ll show you how I figured that out here in a second. I’m going to go into putting it into perspective. Graph, or actually it’s not a graph, it’s a chart.
Putting it into perspective, this is a great thing to look at in relation to price brackets, specifically when you’re talking about it for your clients and your buyers. Out of the price brackets that we have, which one, basically, here in Snohomish County has the largest level of inventory?
Participant: $300,000 to $400,000.
Anton: $300,000 to $400,000. Well, technically it’s the $200,000 to $300,000 because they had to break that down into 50s.
Anton: Okay. Between $200,000 to $300,000, there are over 1,100 properties in that $200,000 to $300,000 bracket. If you are in that $200,000 to $300,000 bracket and you’re a seller, you have the most competition. Also, conversely, if you are a buyer, you’re seeing the most amount of turnover in that $200,000 to $300,000 bracket. What that means is, because that $200,000 to $300,000 bracket falls right into our median price range, that is where the majority of the homes that are affordable to most buyers in Snohomish County fall.
Of course, you can see that under that price range, for instance in the $120,000 to $160,000, with 310 active listings and a little bit over 33% of them turned over in the last 30 days. That’s a huge turnover because the $120,000 to $160,000 would be highly, highly affordable for most buyers. In the $120,000 to $160,000 they are probably purchasing for less than what they are renting for.
Participant: Yeah, absolutely.
Anton: I have a home in Arlington right now. It is the cheapest home in Arlington, Joseph. You’ve seen that home on Alkazar. You can live in that home for less than what you would pay in rent.
Participant: That yellow one?
Anton: I don’t know what color it is off the top of my head.
Participant: Ninety-five grand or something?
Anton: Ninety five, $100,000. I think they just raised it to $100,000 because they went through and cleaned it. Moral of the story, it’s only going to cost you probably $700 with taxes and insurance to live there, and the property was renting for $800, $900, $1,000.
Anton: Yeah. That’s perfect. This is the first time in the last 15 years, and this is just a guess when I say 15 years based on the investors and stuff that I’ve talked to, that we have started to see rents exceed mortgages in certain areas of our market. It’s a great time to buy investment property.
Another interesting fact, too, if I am in the $1 million and above, that’s a blood bath. There are 86 properties on the market and 3 went pending.
Participant: The other ones are zero.
Anton: Yeah. In the $800,000 to $900,000 . . . no, excuse me, the $900,000 to $1 million, you have 25 on the market, 0 went pending. $800,000 to $900, 000, thirty-nine. In these ones, you have to do something to get definitely ahead of the market. What’s also interesting to look at is which ones showed the most sold activity and then which ones had the most expired activity. Once again, if you look at the $200,000 to $300,000, putting these two brackets together, that’s going to make up the majority of them.
Any questions or thoughts in relation to this?
Anton: Okay. The Snohomish County Area Real Estate Statistics report. Getting back to what you guys were saying. Our total number of sales, when you compare year-to-date of 2011 to year-to-date of 2010, is actually down by 7.1%. You had said maybe it was a jump in the amount of sales that took out the inventory. The answer is the number of sales is slightly down. When you compare June of 2011 to June of 2010, it’s actually down by 3% when you’re just comparing the month to the month. Our sales are slightly down, so that’s one of the things that’s not accounting for the decrease in inventory.
Average price, when we compare June of 2011 to June of 2010 for overall Snohomish County, we are down 8%. When you look at the year-to-date for 2011 versus year-to-date for 2010, we’re down 11%. The median price for June of 2011 versus June of 2010 is down 10.6%. The median price for year-to-date is down 12.5%. We always need to bring this up, what’s the difference between median and average?
Participant: Median is just the middle. 50% above, 50% below.
Anton: Median is the middle, and the average is all of them added together and divided by the total. If the median is depreciating more than the average, what is that basically telling us? It means the upper price ranges are being more annihilated than the lower price ranges.
Participant: They’re sticking on the market longer.
Anton: They’re taking larger price reductions than the properties below the median. That’s what that means. If you look at both the average year-to-date and the median year-to-date, you can say that we are depreciating at least 1% every month. In relation to your buyers who are looking at homes, when they’re talking about where the market is going, it’s going down 1% a month. For your sellers who are thinking about selling . . .let’s just say they are the median price, okay? The median price was $250,000 for June of 2011. That means that every month that they don’t sell, it costs them $2,500.
Jeff: When does it stop?
Participant: Million dollar question.
Anton: Million dollar question, Jeff.
Jeff: The property is going to be zero eventually.
Anton: Yeah. I’m going to go trade a chicken for a house. No, I don’t think that’s going to happen. Here’s why. Boeing. Boeing, right now, I know three people that work at Boeing. They’re working doubles and triples to keep up. Boeing is hiring like crazy. They’re one of our largest employers. That’s a good sign. The things like that in the local economy are definitely going help us out. I think realistically we’re going to depreciate another 8% to 12% before we hit the bottom, most likely the double digit depreciation, unless that hiring kicks in at a higher level or some other major employers hire too, and then the market’s going to go flat.
In other words, right now, looking at that depreciation graph before, it was trending in the downward direction. It will keep trending down and then it will flatten off, because you’re not going to have anything that’s going to majorly force the appreciation. Then what’s going to happen is probably for another 12 months it will continue flat, and then it will start to go up.
Participant: You’re telling me 2013?
Anton: I’m telling you late 2013, maybe 2014, we could start to see appreciation. What’s happening is our foreclosure market and activity is still trending in an upward direction. What I mean by that is both the total number of foreclosures and then the amount of bank-owned REO inventory and short sale inventory in the MLS, that level of inventory has to go up and peak and start to come down before prices will be able to come up. Think of it in terms of motivated sellers. Who are our most motivated sellers in today’s market?
Participant: People who [inaudible 16:12] the homes.
Anton: Okay. Let’s just call it the distressed homeowner. That could be death, divorce, loss of job, loss of income, someone who’s in a negative equity situation. Someone who’s more motivated than that most likely is a builder because the builder doesn’t have one mortgage. He probably has 10 or 12 that he’s trying to get rid of at this time. Then the next one is going to be a bank. They don’t have 10 or 12. They have 10,000 to maybe 100,000 properties, on a national level, that they’re working to get rid of. When these banks pull in these properties, their goal is to sell them in less than 90 days. Well, if our average time frame, days on market for June of 2011 was 87 days, and their goal is to sell them faster than that, what is the only method that they have to do to outpace the market?
Participant: Drop the price.
Anton: Discount the price. If multiple homes in a neighborhood are being discounted, what does that do to the price?
Participant: It drives it down.
Anton: It drives it down. Okay. The other good thing that’s happening to us, and we just saw it too, is the lack of supply. Lack of supply will basically create demand. Once more demand is created, that could help to ease this price decline quicker. If there aren’t homes available, especially in that lower price range . . . we’re seeing this on our team and I know you guys are seeing this too. It’s where there’s that one house and it gets eight offers. That’s because of the lack of available and affordable inventory in those price ranges. That will help to bolster up pricing.
Jeff: That’s a good point. I have a property that I thought would be a pain in the ass to sell, and we sold it in two weeks because the agent said there’s nothing out there for them to purchase in that price range.
Participant: I know, Jeff, too, nationally they’ve said the upward trending won’t start again until 2015 based on [inaudible 18:22] pricing and everything else.
Participant: If our months of inventory keep declining, 4.3 is the lowest in, who knows, the last two years. That’s going to be a factor.
Anton: I think it’s the lowest it’s been in the last three years, maybe even longer than that. At one point, we were up to almost 16 months’ worth of inventory. That was about two and a half years ago. We had quite a bit of property on the market.
Let’s go through to these ones specifically. The City of Snohomish, what they’re experiencing right now, their total number of sales for June versus June is down 12.3%. Average price June ’11 versus June ’10 is down 8.5%. Year-to-date they’re down 12.2%. Their median for June of ’11 versus June of ’10 is down 16.1%. Then year-to-date down 10.9%.
You mentioned Marysville. We’re going to flip all the way down to Marysville then, just because Marysville, right now, is a bloodbath. June of 2011 versus June of 2010, we’re down 31% in sales. For the year-to-date, we’re only down 7.3%, which more mirrors the overall Snohomish County trend. The average price is down 20.4% with year-to-date down 14.5%.
What this means, most likely, in June, because that is such a large drop and it exceeds the year-to-date by so much is that June was a slight anomaly and we sold a bunch of cheaper houses in Marysville than we usually do. That’s why the year-to-date isn’t down as much. Make sense? The year-to-date is still outpacing overall Snohomish County, so it is worse than the county. You see the exact same trend in the median when you compare June of 2011 and June of 2010 down 21.3%. The year-to- date is down 15.5%. Average time on market is, basically, almost exactly the same with 89 days in June of 2011.
Looking at the rest of our cities, Bothell sales in June were up slightly, down a little bit for the year. Average price doing much better in Bothell. Why would Bothell do better than Marysville?
Participant: Because it’s located more toward the big cities.
Anton: Absolutely. Bothell has a much higher median price. As you can see in June, the median price was $351,551. You’ve got a higher level of income that lives in that area, and you’re located closer to major job centers. They’re definitely performing better than Marysville.
Lake Stevens, slight uptick in sales in June, but year-to-date overall sales is down 22.6%. That’s definitely outpacing the county. Not quite sure why it’s declining more on Lake Stevens. Lake Stevens also saw the same anomaly that we see in Marysville, where June of 2011 versus June of 2010 was down 20.6%, but year-to-date they’re only down 13.5%. Median price down 21.9% and year-to-date down 13.1%.
City of Lynnwood, sales up by 15%. June down 2.5%, year-to-date down 10.6%. The median price in June 2011 versus June 2010 is down 11.9%. The median price year-to-date this year versus last year is down 14.2%.
Everett is, basically, faring slightly better than Lake Stevens and the City of the Marysville. Year-to-date sales down 7.1%. The year-to-date average price is down 12.9%. The year-to-date this year versus last year median price is down 10.7%. Any thoughts?
Okay, second page. This months of inventory calculation is done slightly different than the market dynamics one. That’s why it’s a slightly different number, but it’s still great to look at. It’s saying overall Snohomish County has 5.1. Relative to last month, that is also a slight trend down. Lynnwood has 4.2 months’ worth of inventory. Marysville has 6.4. Monroe 4.3. Everett 4.1 months of inventory. Lake Stevens 6.9 and Snohomish 7.4.
Basically, if you’re looking in Monroe or Lynnwood, it’s very clearly into a seller’s market. Snohomish still being a bit of a buyer’s market, with Marysville and Lake Stevens currently in more of a neutral market.
Questions or thoughts?
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