In a poll released today by Fannie Mae, nearly 2/3 of Americans say right now is a good time to purchase a home and the bottom has arrived. With that said, Snohomish County is still experiencing high volumes of inventory and ever increasing amounts of short sales and bank owned properties.

Residential Market Snapshot for 4/6/2010

– 308 Active Bank Owned Properties on the Market
– 727 Active Short Sale Properties on the Market
– 4,318 Total Active Properties on the Market
– 25% of inventory is either Banked Owned or a Short Sale

This morning, I received the Snohomish County Notice of Trustee Sale report and 87 more properties are heading to auction on June 25, 2010 and will become available for sale sometime in July or August. Even though the national real estate market trend is showing stabilization and/or growth, the greater Snohomish County area has yet to feel any relief.

Price is another factor hindering the County’s recovery and it is mostly due to the competitive nature of selling bank owned and short sale properties. To stay competitive, and achieve a sale, it is imperative that property owners price underneath competing properties. As a result, the properties are more desirable but it further drives market prices down. Right now, Snohomish County is experiencing 0.5% – 1.0% decrease in property values per month. In dollars and cents, a property listed for $295,000 (that isn’t selling) is loosing $1,475 – $2,950 per month when it is sitting on the market.

So has the Snohomish County real estate market hit bottom and now is a great time to buy? Or, will the best deals be actualized in the coming summer months?

Lot Sale Increase

The increase in sale volume has surged due to the high availability of vacant lots and limited number willing and able buyers. National building chains have seized the opportunity to purchase large volumes of lots for cheap. DR Horton purchased 38% of Snohomish County’s total lots with their single largest plat having 27 individual lots — Camden Meadows.

Decrease in Sale Price>

In the 1st Quarter of 2006 individual lots in Marysville were selling from $130,000 to $190,000. These were approximately 6,000 sq/ft lots. Now that same lot is priced from $44,550 to $60,000. In a perfect world, builders would lower the offering prices of their homes while keeping construction quality the same. New construction homes are being priced lower but have not retained the same interior quality — granite countertops, luxury carpet … etc.

Snohomish County Lot Sale 4th Quarter 2009

First Time Homebuyer Tax credit

From January to November sales in Washington increased from 2,650 total units to 5,523 total units with the highest month being October with 5,970 total units. During that time, even with rising unemployment rates, buyers who where on fence turned out in record numbers to capitalize on low housing prices, an abundance of inventory, and government incentives like the First Time Homebuyer Tax Credit. It is hard to discount the effects of the tax credit on sales but for 2010 it will take much more than incentives to get the economy going.

*June 2006 there was 11,187.00 total units closed.

The Year of the Bank Owned Properties

It seemed that the majority of the homes on the NWMLS where either foreclosed on or in the process. The homes where in a various conditions. Some foreclosed properties where missing their interior features. Floor coverings, cabinets, doors, and bathrooms where all gone. In some extreme cases homes where missing their ceilings. One the flip side, some homes where in excellent condition and buyers received some good bargains.

Current inventory shows 452 foreclosed properties in Snohomish County which includes commercial and residential. Bank’s toxic assets have assisted in the large price correction. Banks priced properties so low, which was great for buyers, that sellers where forced to reduce their prices so much just to compete.

Affordability Returning to Snohomish County

At the height of the economic boom, single family homes in Snohomish County would darn near cost a family’s first born. Prices for 3 bedroom 2 bathroom home reached the high $300,000 to mid $400,000, depending on which city you where looking at. In July 2007 the average home selling price was $393,553. Not what I classify as affordable. Since then prices have dramatically changed and buyers can now purchase a 4 bedroom 3 bathroom in Marysville for under $260,000 (a current client’s home).

Stability is another adjective to help describe 2009. 2009’s lowest average monthly selling price was $306,219 and a high of $330,345. The year end has settled at $308,699. Much more flat than the previous years increase and decrease. I look for prices to continue to stay flat and the market settle in 2010 with little price fluctuations.

Local Employment

Locally Snohomish County has a lot to think about. Due to Union and Boeing disagreements, the 787 Dreamliner’s assembly line will be moved from Everett to South Carolina. This could definitely impact the local economy and push the local unemployment rate well over 10% in 2010, 10.2% as of October 2009. Jobs will be the clear indicator that the local economy is turning around but I am not sure if President Obama’s Main Street Bailout will impact Snohomish County very much.

The Last Post of 2009

It is strange to think that we are at the closing of 2009 with 1 day in the calendar left to check off. For the most part 2009 will be the year of change for me. Change has touched everyone I know. From family and friends to business associates and clients, change is every. So I welcome the new year and looking forward to all the new people I may meet. Good Bye 2009 – Hello 2010.

Looking at the national unemployment rate of 10.2%, local unemployment rate remains at 8.8%, it is hard to argue that Americans need jobs to aid the national recovery process. The flip side of Obama’s job creation plan is a further increase in the national deficit. So far the Republicans have been very vocal about this section – funny – as they where in control when the deficit was rising faster than any other time in history.

But I have a question: Can you have job creation without an increasing national deficit in a struggling economy? Right now it seems highly unlikely.

Here are the highlights from Obama’s job creation plan.

Zero capital gains for small business investments

To encourage investment by small businesses and improve their access to capital, the Obama administration called for a one-year elimination of the tax on capital gains from new investments in small business stock. The Recovery Act allowed a 75% exclusion from capital gains taxes on small business investments.

Enhanced expensing provisions for small businesses

The Obama administration called for the extension through 2010 of the Recovery Act provision that allows small businesses to immediately expense up to $250,000 of qualified investment.

Cut taxes for small businesses

Many businesses remain reluctant to hire. In this economic environment, an employment tax cut for small businesses has the potential to accelerate the pace of hiring.

The Administration believes it is important to provide a short-term tax incentive to encourage small business hiring and support employment, and will work with Congress to design a provision that accomplishes these goals.

Cut taxes for small businesses

Many businesses remain reluctant to hire. In this economic environment, an employment tax cut for small businesses has the potential to accelerate the pace of hiring.

The Administration believes it is important to provide a short-term tax incentive to encourage small business hiring and support employment, and will work with Congress to design a provision that accomplishes these goals.

Energy efficiency

The President called on Congress to consider a new program to provide rebates for consumers who make energy efficiency retrofits.

Such a program will harness the power of the private sector to help drive consumers to make cost-saving investments in their homes.

Investments in clean energy

The Recovery Act included investments that have helped to build the foundation for a clean energy economy.

The Administration supports expanding programs for which additional federal dollars will leverage private investment and create jobs quickly, such as industrial energy efficiency investments and tax incentives for investing in renewable manufacturing facilities in the U.S.

How to pay for it?

Because of the Administration’s stewardship of the TARP program – combined with our broader efforts to revive the economy – the administration now expects the cost to be at least $200 billion less than anticipated as recently as August.

Since the Obama Administration has taken office, only $7 billion has been provided in assistance to banks, compared to $114 billion in capital that banks subject to the “stress test” have raised from the private sector.

These savings will allow us to pay down the deficit faster than was anticipated while also investing funds that would have gone to banks in job creating efforts instead.

*end of highlights

There will be plenty of discussion on this topic and I just finished reading the many comments on the Business.Newsvine.com site. There are some really intelligent responses and others are just wasted space with political groaning. After all the comments, the one that stood out the most for me was by jack c-1506422.

i don’t rightly give a crap ! ! , i’ve been unemployed for 20 months now..if there’s a way to get me working again, i’ll take my chances ! ! , i’d shovel at a sewer treatment plant with a smile on my face and be a half hour early to work, if there was work…. i love this ” just cut taxes ” .. morons ! ! how can you cut what i don’t have, if i don’t make any paycheck taxes, what the hell good is cutting taxes going to do for me… i don’t care, just get us back to work ! ! what is so hard to understand about that.. i have no plans to win the battle, i just want to work…if you think standing up and denying any of us the slightest chance to have some kind of work is going to help get your party elected is nuts ! ! , i don’t give a damm about the deficit, that’s always going to be there, if there’s a chance that there’s going to be jobs out, let’s get it done, if we can bail out big banks, we can put people back to work, just give me / us a chance at that shovel at the sewer plant, we’ve failed long enough to not see this growing unemployment problem, 10% / 11% , is just the ones that can get unemployment benefits.. 16% is closer to what it really is

Jack C’s comment illustrates the feelings, stress and a desire to have a job. America has to have jobs and that means thinking of new ways to create them but it is funny that the comments do not discuss job creation and none (when I read through the comments) none posed a solution.

Here is my 2 cents on job creation. As a world leading country, it is America that has to lead by example. Looking at the environmentally friendly energy industry there is a lot of opportunity to 1) create jobs, 2) become a global leader in an emerging industry, 3) become less reliant on foreign countries that deplete American resources.

Inject funds to companies that are growing their operational scale in order to 1) provide jobs and 2) and can deliver environmentally friendly products to the America public. Sounds simple but I bet it can be done if there was more cooperation in the government instead of political bickering.

Less talk and more action – Let’s get America back to work and start helping the citizens of this country.

Discussion Froms Twitter
– #Obama Conversation
– #Senate Conversation

Even though 2009’s data shows an increase of property sales exceeding an increase of a 100% (114% to be exact), a healthy economy was not the precursor. The First Time Home Buyer Tax credit was the major driving force in 2009’s sales – buyers seized the opportunity to receive a government bonus while purchasing a home that maybe undervalued.

Yesterday I received a phone call from a gentlemen reviewing the blog and he asked me what is my opinion of the real estate market through 2010. Interesting enough,this is a topic in which one of my clients and I have touched on quiet often.

To look at 2009’s sales statistics and claim the market has turned around and everything is going to be okay would be unwise. It is a good thing that sales are up but after analyzing a greater scope of the market there is little hope on the horizon for an upswing. Snohomish County is faced with the relocation of the 787 Dreamliner to South Carolina and with a unemployment rate 8.8% it seems highly unlikely the local economy will be healthy enough to drive recovery.

There is buzz on the tax credit and rightfully so. In recent months, leading up to the November 30, 2009 deadline of the tax credit, Washington housing sales have increase from 2,402 in January 2009 to 5,132 in September 2009, a 114% increase with the largest volume in July 2009 of 5,527 units. When the next NWMLS activity reports are made available look to see home sales increase (my educated opinion) to around 5,700 – 5,900 sales then slow down to 4,500 after the first year.

In the realm of Twitter, real estate agents and brokers are discussing this very topic, #taxcredit, and in the coming days I look for the topic to be highly covered by agents and media sources. According to the House’s latest Tweet, the House could vote as early as today or tomorrow.

So what is the lowdown of the tax credit extension and its expansion of the homebuyer tax credit?

– Extend the $8,000 till April 30 2010 for first time homebuyers or anyone who hasn’t owned a home in the last three years
- Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500
- The credit would be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.

The story the will continue and will keep you all posted to the latest details.

Congress passes the first time homebuyer tax credit bill and now it is front of the President Obama.

Cheap prices seem to be driving lot sales primarily just like in the resale market but the resale market has the tax credit to help it along the way. 44% of the lot sales in 2009’s 3rd quarter have been purchase from banks or REO companies in what John Wahl calls the “new business”. When this “new business” is gone will prices rise back to where they were before the economic downturn? I highly doubt it.

2010 is going to be an interesting year and we’ll be hear to watch it unfold.

With that said, there are two types of business out there when looking at raw and vacant land: old business and new business.

Old business are lots and developments that builders and developers could hold onto and continue to build on with the hopes of future sales. New business are the lots and developments that have been foreclosed on and are now back up for sale at a price reflecting current Snohomish County real estate conditions.

In 2006, Snohomish County raw and vacant land was being purchase by large developers that where looking to capitalize on affordable housing opportunities and growth. Seattle real estate was so expensive and many residents decided that a single family home under $500,000 was more appealing. The surging market forced raw and vacant land prices to soar and lots in Marysville where selling for $135,000 – $160,000 and now in the new business lots in the same city are selling for $55,000.

The majority of the bank owned lot sales have recorded in the 2nd quarter of 2009 and will Snohomish County will continue to see this trend, at least, through 2010. After all the old business is gone the Snohomish County real estate market will hit its bottom. A new business cycle is upon us and affordability is coming back to Snohomish County. I look for lot sale prices, in late 2009 and 2010, to be really affordable for buyers looking to build a custom home or looking to purchase affordable new construction.

1st Quarter 2009 Snohomish County Lot Sales

2nd Quarter 2009 Snohomish County Lot Sales

With 5,695 lots and homes to sell at an average of 118.65 sales per month we have a 48 month supply; this does not take into account the 1,123 developer held lots.

In the calendar year of 2008 we average 159 new construction closings per month as compared to 310 closings per month in 2007.

The average sale price for a new home in Snohomish County is $385,128 which is a decline of 13% from one year ago at $435,194.

According to a NAR (National Association of REALTORS®) the national median home price has fell to $180,000, a 12% loss in 2008, though Snohomish County’s median prices are still much higher. That does not mean that local real estate is still in the unaffordable range and good buys cannot be found throughout the county. Quite the opposite.

Recently I had the opportunity to work with a first time homebuyer who purchased a home in Gleneagle Arlington for $225,000. It was a single family rambler with 1,400 sq/ft, 3 bedrooms and 2 bathrooms. Deals like these can be found if you look hard enough and have time and patients to work with the banks.

How far prices will slip is still up for debate but the Obama administration is putting policy together in order to curtail the situation.

In a recent address from Phoenix, President Obama said “We must stem the spread of foreclosures and falling home values for all Americans, and do everything we can to help responsible homeowners stay in their homes”. More on this topic to come as the details are still being released.

Snohomish County Median Home & Condo Prices