King County and Pierce County Real Estate October 2009
By Tyler Freed
November 19, 2009
In King County the number of active listings is down 3.8% from October 2008. More importantly the number of closed homes has increased 29.7% over the last twelve months, at an average closed price of $421,521. New Construction in King County has an average closed price of $517,545 with closings up 19.6%. New construction starts are definitely down from the year, leading to a decrease in active new construction listings of 18.81%.
Pierce County on the other hand has not seen similar prosperity in the new construction market. Active listings are down 10% and closed new construction homes are approximately 1/6th of the King County increase at 3%. New Listings in Pierce County are down 2.9% and closed sales are up 22%. The median sales price in Pierce County is $237,553.
What is the major factor of the increased sales?
There are many factors due to the increase in closed sales in both counties. The major factor that has spiked sales in the last quarter is the original 8K tax credit. The current home buyer tax credit can be as high as $8,000 on the purchase of a home by a first time buyer. The credit allows for 10% of the purchase price, up to $8,000. That credit has been extended and is now good through April 30th, 2010. As long as a contract is signed and closed before July 1, 2010, the buyer can claim the credit. For members of the Armed Forces who have been deployed outside the U.S. for at least 90 days at some point between Dec 31, 2008, and the cut-off date for the credit (May 1, 2010), the dates that end the period where they can claim the credit are extended to May 1 and July 1, 2011.
Another major factor is the 30-Year Fixed-Rate Mortgages. We have never seen average rates like these. The yearly average as of September was 5.08%, with a high of 5.42% in June and a low of 4.81% in April.
This 2009 Market has seen exceptional interest rates, reduced inventory, and government programs that help buyers with tax relief. The agent population is expecting to see more REO properties released in the beginning of 2010. Hopefully these bank owned homes will not decrease the local market values much more than they already have. If rates continue to stay around 5% and move up buyers are motivated by the $6,500 credit, 2010 could in fact be a much healthier housing market.
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This article is great news for the local economy in Western Washington! Real Estate is the first and foremost economic indicator of a struggling, prospering, declining, ascending, or (in Western WA\’s case) a stabilizing economy. There is no doubt that home sales are on the rise and houses are beginning to move. If the real estate industry stays on course or picks up steam we could be headed back to the promise land faster than we think in Western Washington. A few points to consider as to why I this could very well be the case.
With the first time home buyer tax credit was initially introduced as part of the stimulus package, it worked great to stop the housing industry from declining to crippling and dangerous levels. Now that the tax credit has been extended into 2010 rather than ending on November 30th as well as expanded to include current home owners (depening on income, value of current home, and other factors), the home buyer tax credit will begin to act as a plan that does in fact stimulate as opposed to what it has done so far which has been more like saving or stabilizing the economy. Since the economy is stablilizing and the so called experts are saying the we are officially out of the recession, we will begin to see the real estate industry climb significantly quarter to quarter. Consumers believe that their jobs are not in jeopardy any longer, the stock market is turning around, and the consumer confidence index continues to rise. All of those positives will contribute to people buying homes on their own regardless of free money from the government. Throw in a tax credit and you will see real estate sales act as if it was Cash for Clunkers all over again at a Toyota Dealership.
The next point is that a survey conducted at the beginning of the recession polled 1,200 real estate analysts, stock market brokers, and ecomomic analysts about which major metropolitan markets would recover the fastest once things finally did turn around. The survey participants rated each city based upon things such as mean home values, amount of available jobs, education levels, GDP generation, import/export importance, and company headquarters; among many others. The best news of this survey/study is that Seattle was rated by and far the best city in terms of recovery speed and rated best for being effected the least during the recession. Seattle and surrounding cities have so much to offer no matter what is happening we will be ahead of the curve, and that means we all can leave this economic hell a little sooner than everyone else.
The numbers from this article alone are reason to celebrate because they are our local indicator that we can take a deep breathe and relax, for a second. Or just long enough to clean our pants after remembering what happened in 2008 and most of 2009.
Hope you enjoyed my take.
JD
Exactly…this is why Tyler is one of the best Realtors around. Insight like this can help all current and potential homeowners understand market trends and gauge where it’s headed. The $8000 tax credit is really doing a lot to help get more people into homes and it’s great that they’ve extended it.
Overall, I think that the market it what it is right now, but low interest rates, effective lending programs, tax credits, and knowledgable Realtors (just like Tyler) are helping homeowners, home sales, and new construction.