2009 A Quick Review
What a year. We started the year with the markets in free fall and finally saw buyers start responding to lower prices and government stimulus in April. “Market Timing” became the big deal for buyers as they sat on the sidelines and saw average sale prices go down each month but the $8,000 tax credit and the government’s willingness to buy mortgages from FHA, FNMA and FHLMC pushed them off the side lines. In my opinion the quick action to prop up the banks and put liquidity into the system kept this downturn from spiraling into a depression. This is the first true deflationary downturn I have experienced in my 30+ years in this business and it was ugly. The big question is by sub substituting public debt for private debt and socialized bank losses (not the profits) through the Treasury have we created an anchor so big will it just keep us in place and not allow us to move forward even as the tide and wind turns in a more favorable direction?
The upper end saw the return of the Jumbo Loan in March and that market saw volumes pick up. Some outstanding values were obtained with new homes over a $1,000,000 sale prices going for under the cost of construction without the land or financing cost. In Bellevue we saw a big pick up in sales volumes and more buyers entered the market in July as they had a good selection and the feeling the free fall in pricing was over.  However the big story as we close out the year is that pricing remains stuck. Effectively on a per sq. ft. basis it remains in a “trading range”. In fact as the new construction inventory becomes depleted the averages are starting to fall again. The new construction homes tend to sell for a higher average price than the resales and pull the averages up overall. The best place to look for true pricing is to check the per. sq. ft. price as to the average home sale price. The per sq. ft. price tends to show an overall average better indication of what a buyer will pay for a home in a particular area whether new or resale. A review of the Altos stats will show that pricing remains soft and the buyer is focused on value and is very discretionary. They will buy but only if the price is right. So what is in store for 2010?  Tomorrow I will identify what I think the big trends are that will effect 2010.