A friend of mine proposed a question to me about the real estate market: When will the real estate market turn around? Not satisfied with the short answer, in a few years, my friend asked for a little more detail.
Snohomish County, and the greater Seattle real estate market, has been one of the last metropolitan areas to feel the affects of the collapse. In very loose terms, the collapse started at the east coast and traveled west. While many market areas are showing signs of recovery, price stability and minor gains, Snohomish County is inundated with further pricing declines, short sales, and bank owned properties. Not a bad thing from a purchasing perspective but from the recovery standpoint it hampers the return to normal market.
Market recovery in Snohomish County is going to be driven locally and not by nationwide incentives likes the first time homebuyer tax credit – which expires at the end of the month with no forecast of renewal.
- Increase in local jobs and unemployment rate reduction
- Moving through the short sale and bank owned inventory
- Consumer confidence in home price stability
There are days when I feel I am beating a dead horse with ‘jobs’ being a solution but it’s a topic worth beating some more. If people are not employed the repercussions can be felt through the entire economy – don’t have to be a PHD in economics to understand that.
Here is where the Washington State government needs to ramp up its efforts. Elected officials need to make Washington State more attractive to business owners so they relocate their facilities here and hire locally – hint hint. By doing so, Washington State would see an influx of new employment opportunities that may not be centered on the aerospace industry or the technology sector (the State’s two leading industries). The County’s unemployment is still rising and as of January 2010 the rate is at 10.5%.
The next step, moving through the short sales and bank owned properties, is unfortunately just going to take time. How much time is dependent on how quickly people can obtain employment and then have the ability to purchase these homes. On average, there are 31 Notices of Trustee Sale filed per day since the first of the year and there is no definite answer on how many properties will be foreclosed on over the next 2 years. If the banks are unable to liquidate their assets due to slow economic recovery then the economic uncertainty will persist.
Finally, consumer confidence has to return to the real estate market. The DOW recently hit 11,000 but I feel it is going to be short lived – though the DOW is steadily proving me wrong – and not translate into local recovery though it may help. Experiencing a depression as we have, my educated guess leads me to believe consumers are, and will continue, basing real estate purchasing decisions on their family’s life cycle and financial situation more so than speculation.
Recovery is process and not a result of a single action. The multitude of factors going into the recovery are going to take diligence, hard work, and pulling ourselves up by the boot straps. Gone are the days of rapid decisions based on escalating housing prices and here are the days of planned and thought out financial decisions.
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