Real Estate Information

Our market is showing a typical pattern during the start of the 4^th quarter. Our sales are decreasing and we are starting to experience an increase in inventory.  Our pending sales for October resemble the stats for Dec of 2007.  December is frequently our slowest month of the year.   It looks like our market is getting a little soft earlier this year.   Our median sales price of $172,000 is nearly identical to a year ago.    $225,000 and below our market is most active while homes above $375,000 seem to have fewer buyers.  Twenty five percent of our inventory continues to be new homes.

The real estate business is very fluid.  By that I mean agents are constantly entering the business and leaving after a few years. Agents leave the business for a variety of reason.  It is very difficult business for those raising small children who require routine in their daily lives.  With this fluidity, how does one find a “buyers agent” who can represent the interests of the buyer well?

First I recommend that you find an agent who has been active in the market place for at least two years.   Many times I have seen agents represent buyers who just moved to the community.  Many of these agents know little about market values, trends and potential troublesome areas.  Second, I would then eliminate agents who are representing builders.  Agents who represent builders frequently have a primary allegiance to builders first and other clients second.   Third, look for someone with strong negotiating skills and a “good” working knowledge of our real estate contractual forms.   Find an agent who places your interests above their own.  Sometimes agents need to make a sale for their next mortgage or car payment.  When an agent is having financial challenges, it can spill over into the business.

Finally, find an agent who continually strives to improve his/her professional education.   You can identify these agents by their designations.  Unfortunately some of the designations mean very little.  I recommend working with an agent who is a “Certified Residential Specialist” or CRS.   These agents not only had to prove themselves in the market place but also in the classroom as well.

Two weeks ago I attended a Realtors’ Educational Conference.  During one of the presentations, the instructor was informing us of the challenging working in today’s market.  As she continued to explain our market, I interpreted her to inform her that the Tri-Cities market did not correspond to her representation.   I thought about his situation following the conference and realized that the “media” frequently listens to the wrong source.   Real estate is a measured by what is happening in the local market and one must review the statistics.

While many areas in the Pacific North West are experiencing rising inventories with “major” price adjustments, the Tri-Cities inventory is actually slightly less than it was one year ago.  Our average sale prices have increased slightly.  Our strong new home construction market is contributing to this fact; however we are experiencing some softness in the resale market.  What is common with other markets is that our sales are about 35% less than they were a year ago.   These figures imply our economy is strong and fewer home owners are selling as compared to one year ago.

To listen to the rest of the story, turn on your speakers and hit the following link.  http://www.talkrealty.com/donhavre

During the last couple weeks, I have had real estate transactions dealing with couples who are in t he process of getting divorce.  As unfortunate as this situation is, the situation causes a real estate transaction to become more complex.  

As a younger real estate agent, I learned a lesson pertaining to Washington State’s community property law.  Specifically, I had an open house that resulted in two separate buyers for the home.  One was a couple who had a property to sell as a condition of sale and the other buyer, a “single” gentleman, who was willing to pay cash for the home.  Since both were offering asking price, the seller accepted the cash offer. 

A title search revealed the single gentleman was married to a lady who was in a mental institution.    The buyer did not have a power of attorney from his wife nor could his wife provide one because she was not legally competent.  Without a valid power of attorney, the buyer was unable to purchase real estate in Washington State, even for cash. The offer had to be rescinded and the couple purchased the home.  Ultimately months later, a judge had to issue a power of attorney for the “single” gentleman.

When dealing with married couples and only one is signing legal documents, a power of attorney is necessary or a quit claim deed.   Both of these documents affect legal rights; therefore, the advice of an attorney may be appropriate.   

According to “Broker Agent Professional” home builders are providing incentives to purchase their products.   Among the most popular are

1. Providing a discount to those who serve in the military or civil service.   Many builders are offering $5,000 discount to those in uniform
   
2. Lowering the asking price on “spec homes”.   Builders with larger inventories and debt service payments are lowering the price to reduce their overhead costs.
   
   
3. Incentives are being tied to Builder’s Mortgage Companies.   Many builders have ownership interests in the mortgage company they recommend.  Builders with such relationships are paying closing costs and up to one year of home owner association fees.
   
4. Premium lot prices are being reduced.  More desirable lots may no longer have an increased price associated with them.
   
   
5. Builders are reducing the price of upgrade options.  The average new home buyer spends about 10% more on upgrades.
   
   
6. The standard feature lists are growing.  Builders are providing more and upgrading their standard features list.
   
   
7. Finally some builders are offering “free gifts” if you purchase their homes. Plasma screen TV’s are being offered as an inducement by some builders.

If you are shopping for a new home, look at the builders’ inventories.  If they are carrying several houses on the market, they may be open to many of the incentives listed. 

While many markets are experiencing increased inventory as a result of fewer sales, the Tri-Cities inventory has been reasonably stable.  Our total homes for sale are only 13 more homes than we had a year ago at this time. Our September sales are reflecting a 35% drop from a year ago. It would appear that with our strong economy, fewer home owners are placing their homes on the market; thereby creating a stable inventory of homes for sale.

Homes priced less than $225,000 are in strongest demand; while homes over $325,000 are facing severe competition.  It is interesting to note that our average and median sale prices continue to increase.  This is most likely due to the large number of new homes being sold. Approximately 23% of our homes offered “for sale” are new construction.

As storms pass through the SE portion of the United States, we have to consider ourselves blessed with the Tri-Cities area weather.  Our weather has been nearly perfect this month.   In addition, we do not have hurricanes, earth quakes, floods or tornadoes.  We do not have temperatures exceeding 110 degrees for months or temperatures dropping below zero.   Occasionally we will have a wind storm that lasts a few hours.

Our thoughts and prayers are with those who have had to evacuate their homes.

Our inventory has been fairly constant for the last three months hovering around 1400 homes available for sale and about 24% is new construction.  Our sales continue to show some softness with sales for the month of August at 231 homes which is about 20% fewer than the month prior.   In fact August sales resemble sales in December of 2007.   Our median price has dropped to $168,000;  down about $10,000 from the month prior.

This market is excellent for home buyers and more of a challenge for homes sellers.   Homes priced above $325,000 have the most competition and could be called a buyer’s market above $325,000.

Frequently I am asked what the standard markup is for housing prices. This question makes the assumption that home seller understand the true market value of their home and collectively home sellers mark homes up “x” percent above the market value.

The reality of the situation is that based upon information provided, some home sellers may know within a few thousand dollars the market value of their homes.   Many home sellers do not know the market value and others refuse to believe the data reference market value of their homes.   Others base their asking price on a home that is for sale in their neighborhood.   Mix with these variables seasonal variations and local economic conditions.

The bottom line is that the market value is what most who are looking for similar type homes would be willing to pay.  To identify a range, one has to look at similar recent comparable sales and make appropriate adjustments.  Then one has to determine the absorption rate for the subject property.  Is it a buyers’ market or a sellers’ market?  Based upon the absorption rate, one determines if it is better to be at the upper or lower end of the range.

Both buyers and sellers should be using a similar process.   Trained real estate professionals should be able to assist.

Summer is nearly over.  School is in session this week and college football games start Saturday.  

One trend that I am beginning to see is that many seniors are being attracted to the southern climates of Arizona and New Mexico as retirement locations.  Once there, they begin to reevaluation their decisions.    As one person stated, I did not realize that it is over 100 degrees for over 100 days each year.   One can play golf more days comfortably each year in the Tri-Cities than many southern areas.   Another retiree informed me that it is simply too hot to raise a garden.   Gardening is her passion.

If you are considering retiring, I recommend you evaluate the four seasons of the Tri-Cities and see if our area maybe a better choice.