Looking far back, 2011 was a bummer of a year for real estate. Buyers were hesitant, sellers were anxious, listings languished on the market and many real estate agents left the business. Good thing I was pregnant for most of it and had other thoughts on my mind.
Things started looking up in 2012. The continued low prices and low interest rates created buyer confidence. Passage of time had something to do with it as well, buyers had a sense that we had ‘hit the bottom’ after much hesitancy in 2011. This past year saw more buyers enter the market and the competition for ‘good’ homes became commonplace. Unfortunately inventory of ‘good’ homes was slow. Less supply and more demand usually makes prices go up, and they did! A very general look at King County price appreciation is from the NWMLS stats that December 2012 median home price was $342,000, up 17.53% from the 2011 median price of $291,000. If you would like specifics for your area I will gladly provide that for you. Just ask! (And yes, NWMLS stats can be questionable as the data is only what is provided to NWMLS on that specific month, but we are just looking at trends here, not for an exact number for appreciation).
So what is in store for 2013?
I anticipate continual improvement in the general movement of home sales and in home prices. One thing that will help the recovery is continued low interest rates. Also, new building starts are up, bringing more good inventory on the market and helping create couple jobs here and there for the unemployed.
One challenge we continue to face is the effect of short sales on home prices. For example, I have a listing in a housing development in West Seattle. We received an offer and two other buyers who would have gladly paid the price of our accepted offer. There are three other similar homes for sale on the block – all short sales and pending sale. If I look at recent CLOSED properties the value for my listing matches the offer price. But these darn short sales (which are all by the way can not be counted as SOLD until they are CLOSED) have been priced so low (seller doesn’t care, just wants an offer) that the appraiser may raise an eyebrow and shoot us down for the contract price my sellers and the buyer have negotiated. I wait eagerly to hear the result in the next couple of days. I’ll let you know how it goes. Short Sales will continue to be a large part of listing inventory. Part of the Fiscal Cliff deal was extending Mortgage Forgiveness Debt Relief – Short Sellers get a break in the tax code from having to declare any reduction in principal (not having to pay the ‘short’ part of the loan) as income. Had that not been extended we probably would have seen more owners opting for foreclosure or bankruptcy. Not better than all the short sales, just different. Perhaps better to flush out these properties now, quickly, than see them come on as bank owned in years to come?
The way the market fares is largely due to consumer confidence. No buyers are buying homes if they think the sky will fall but as soon as the media turns to reports of price appreciation more buyers make the decision to enter the market. By listening to people coming to my open houses these days I get the feeling buyers are back for good. That doesn’t mean I see all sunshine and rainbows. The US economy is far from recovery, as we all know we are in a big economic hole. If the dollar tanks who knows what mess we will be in. Until then…
I am looking forward to a prosperous year. I found a shiny penny on the ground on my first run of the year so it can only mean a very magical 2013 for all of us!