Ready Set Go!

Your Waiting is Over

What do you create when you cross years of brisk sales and rising prices with higher than normal valuations?

Report after report indicate the real estate industry has experienced record Growth both in the numbers of new construction starts and residential re-sale homes, not to mention the increasing numbers of new communities specifically designed for the 55 and better home buyer. Cities around the country have flourished with double digit increases in market values helping to maintain economic growth amid the lackluster new jobs market, alarming some economists warning of a bursting housing bubble due to an over exuberant real estate market.

Housing starts and resale home sales including condominiums are not the only numbers increasing at alarming rates. Price reductions, expired listings, cancelled listings, and the number of New Real Estate Agents entering the industry have a dramatic negative affect on the market as well, artificially inflating prices literally forcing some buyers to sit on the side lines awaiting affordable housing.

Let’s focus on price reductions, expired listings, cancelled, re-listed properties and valuating property. As I write, the NWMLS (Northwest Multiple Listing Service) had 493 price reductions in the last 24hrs up sharply from the same 24hr time period last year. Expired listings the night of 5/1/07 totaled 55 properties in King, Pierce and Thurston Counties up from a mere 17 expired properties on 5/1/06. Cancelled listings in the three counties totaled 42 properties the night of 5/1/07 down from 50 on 5/1/06, but dramatically up from 4 cancelled properties on 4/1/04.

The three most common methods used to valuate real property are. The Income Approach, typically used in multi family dwelling of four or more units or investment properties producing income. The Replacement Cost Approach, normally used to valuate historical or monumental properties where the re-construction would require handcrafted materials and workmanship. The Comparative Market Analysis or C.M.A. Real estate agents will use this market data to help a seller determine what the market value of a property would likely be using other similar ‘SOLD’ properties from the same area, adjustments notwithstanding. These CMA’s are an indication of an affective price range.

In the first quarter of 1998 there was an estimated 11,000 real estate agents in the Northwest Multiple Listing Service. In the first quarter of 2007 we have nearly 30,000. What this translates into is a tremendous competitiveness between agents fighting for listings and good qualified buyers, many times dismissing market data.

The evidence is clear. The days of pricing a home based on the active market (what folks want for their home) as opposed to the sold market (what folks are actually getting for their homes) are over. At least for a while. The industry will experience some changes as new agents filter back to their pre real estate existence. The face of real estate will forever be changed with inevitable and welcomed State Legislation mandating Broker only licenses as found in states like California and Oregon, which will raise the level of legal accountability and responsibility for every agent. A long anticipated achievement indeed, and we'll be providing the same quality services as these changes take place.

One of my goals as an active member in our local association Professional Standards Grievance Committee is to promote a higher level of professionalism and expertise within the industry itself by raising awareness. I believe there are better days ahead for our local real estate market and I feel fortunate to be on the cutting edge helping to advance those positive changes for the good of the industry and the general public.

The answer to the question... what do you create when you cross years of brisk sales and rising prices with higher than normal valuations? You provide an opportunity for those sitting on the side lines to enter the realm of homeownership amid falling prices. You realize a purging of the industry from within. You invite governmental regulation, but what you create is a “BUYERS MARKET”.