The following is from my Spring newsletter:
Interesting times right now in real estate. The market continues to be slow and the lending pendulum has officially swung all the way.
Inventory is way up, sales are down and we never saw our traditional high Spring sales activity. In Seattle we have depreciated about 8-10% from last years highs. We may have a bit further to go as we continue with our housing market correction. Buyers are out there and sales continue to happen. However, I am finding Buyers a bit more hesitant and cautious. Sellers are having to plan for longer marketing times and more aggressive pricing. Days on market are higher due to a combination of factors including Sellers not factoring in the price declines in their asking price, Buyers taking more time to make decisions and the fact that less Buyers are now qualifying to be homeowners.
While over the last few years banks & lenders were far too lenient in their qualification guidelines for home-buyers, now they are positively difficult. Our market struggles and where we are today is due to those lackadaisical standards and now all markets must pay the price.
Seattle is weathering the storm well. Our market is down but nothing compared to other parts of the country that were radically over-priced. Thanks to our strong local economy and large scale local employers we will probably level out soon and see a few years of no appreciation while the market catches it’s breath. Much like we saw in the early 1990’s. For those that have been in, or have followed the local real estate market, you will remember that we have seen this before. In fact it was much worse. In the early 1990’s we depreciated significantly over night and “flat-lined” for several years.
Now we must get back to basics. You do not buy a home and expect to sell for a profit within two years. Buying real estate is a long term investment. When I first got into the business lesson number one was: that if you are not going to live in your home for at least 5 years, don’t buy! Somewhere that rule was forgotten and with large & fast appreciation many lost sight of what real estate is. Buying real estate provides you a home and a long term investment with the power of leverage. A pretty great thing if you are doing it with proper planning & with the realistic expectations.
