The question, “Do people buy homes in Sequim in the winter months?” came up recently, and with this recent snow, it certainly is a relevant question.  The short answer is yes, but here’s a fuller explanation of who, what, and when on the subject of buying and selling homes in Sequim during the winter with another nice graphic illustration brought to you by the research staff of Chuck Marunde.

Homes in Sequim

Homes in Sequim and Peak Sales Years

A chart like this tells its own story.  Two quick explanations are necessary.  The months are shown in the bars as consecutive months, so for example in the first grouping of bars we have November and December of 2004 plus January of 2005, which keeps the months together.  Also I only include homes that sold for $150,000 or more.  You can’t buy much for less than $200,000 in Sequim, but I included low priced homes, some of which are probably foreclosures.

Homes in Sequim sold during the winter months of November, December, and the following January show us an interesting pattern.  The peak year for the sale (closing) of November homes in Sequim was 2006.  The peak year for the sale of December homes in Sequim was 2005.  The peak year for the sale of January homes in Sequim was 2006.

This is why I consider 2005 the peak year for home sales in Sequim.  Even the peak closings in January of 2006 were the result of deals written in November and December of 2005 since most transactions close 30 to 60 days after mutual acceptance.

Homes in Sequim and January Sales

The homes in Sequim that closed in January confirm a few things for us.  It turns out 2009 was the trough for lowest closings in January.  Only 11 homes sold in January of 2009.  That reflects buyers who were looking at homes in the prior two to three months.  And 2010 wasn’t much better with only 12 homes sold in January.  Interestingly enough 2011 sales jumped way up in January to 22.

Here we are today, the 21st of January, 2012, and so far this month we only have 3 closings.  What can we make of that?  We have 7 closing days left in the month, and closings often happen near the end of the month, so we shall see.  Check back at the end of the month, because I will update the number of closings in January.  One preliminary interpretation I will share.  I would expect January of 2012 to have  low numbers for Sequim, because in the summer and fall of 2011 retirees stepped up their purchases from the prior two years.  They told me that they had put their plans on hold for the past couple of years while they waited for the economy to begin to recover and the status of their retirement funds to stabilize, but after waiting, many have decided it’s time to move on and buy a home in Sequim and retire, regardless of the uncertainty in the economy and in the world.

Now you know about homes in Sequim that are selling in the winter months.

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• Sequim Homes for Sale: Tip for Buyers

Homes sales were up in November nationally, but it turns out the NAR (National Association of Realtors) overstated national homes sales by three million from 2007 through 2010.  That means the national real estate market was worse than reported.  NAR revised homes sales downward by 11% for 2007, 16% for 2008, 16% for 2009, and 15% for 2010.  What does this mean?  Not much for the individual home buyer.  The NAR data is used by building industry officials and large builders and associated businesses within the building industry, but for the individual buyer, it only tells us it was worse than the NAR thought.

Home Sales Overstated No Suprise

How could the NAR issue reports with home sales overstated?  The NAR collects its data from multiple listing services around the country.  That sounds simple enough, but the MLSs around the country consist of multiple companies, some are privately owned and some are owned by real estate associations.  They do not all use the same data systems, and the have different ways of assembling and report information from their databases.  In addition, MLSs often overlap geographic areas, so a listing might show up in more than one MLS and would result in multiple sales for one sale.  The NAR also does not collect sales data on all homes.  Not all MLS data is fed to the NAR database, nor are all sales posted in an MLS.  Only about 40% of all home sales are reported to the NAR.  That’s how we ended up with home sales overstated.

Home Sales Projections

I written elsewhere that one should not put much stock into government or association reported statistics.  Too often the statistics are either skewed, wrong, or incomplete.  While home sales are reported to be up last month, and that is encouraging, it doesn’t really mean anything to a retiree buying a home in Sequim, Washington.

Sam Chandon of the Wharton School of Business said that the majority of net new buyers in the coming months and years will be young couples, and the main issue right now for young couples is whether they have jobs that provide sufficient income and whether they feel secure enough in that job to buy a house.  In the Sequim area, we have very few buyers in that category.  The vast majority of buyers for homes and land in Sequim are retirees.   Sequim is fortunate that what happens on a national level has less impact on the Sequim real estate market than 90% of the rest of the country.  We are effected by retirees who cannot sell their homes elsewhere, if they have to sell before they can buy a home in Sequim.  But many retirees are buying homes in Sequim without having to first sell their other home.

Home sales in the Sequim will large be impacted not by young couples, but by retirees who are the majority of qualified buyers in Sequim.

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Home sales and home building have picked up in some areas of the country.  This is good, and it bodes well for the real estate market, but it does not necessarily give us a solid basis on which to predict a recovery.  Any improvement, any increase in market activity is encouraging.  The Sequim real estate market depends heavily on the health of the real estate market around the country, especially south (Oregon, California, Nevada, Arizona, Texas, etc.).

An increase in sales and building activity in a city like Las Vegas can be considered a lead indicator for Sequim, Washington, because many of our buyers come from these other states.  There has been an increase in sales and building in the Las Vegas area, including Henderson, Nevada.  In this photo above a home is building built in a Henderson subdivision.  There are actually about 10 homes being built in this neighborhood right now, and while I was walking the neighborhood, another couple drove up and stood on a lot they we were obviously contemplating buying.

(By the way, I was in Las Vegas this weekend to watch my son, Bristol Marunde, fight and win the mixed martial arts middleweight title.  If you have an interest in MMA, you can read all about Bristol’s fight at The New SCC Middleweight Champion.)

There are still segments of the real estate market that are in disarray and will be for years.  Foreclosures and short sales will plague the market for the foreseeable future.  The mortgage market is fraught with regulatory chaos that causes underwriters nightmares.  But there are healthy segments of the real estate market, and qualified buyers with good paying jobs or good retirement pensions will continue to buy and build homes.

Homes sales are picking up in some key areas around the country, and that was true in Sequim, Washington this summer and fall.

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This Sequim Horse ranch has been sold.  I am pleased to report that I represented the sellers, and the buyers were represented by their own Sequim agent.  This home sits on 10 Acres with 4 Bedrooms, and 2 Baths. This property (two legal 5-acre parcels) was originally listed at $540,000 and was most recently listed at $375,000.  It just closed at $335,000.

This is an ideal Sequim horse ranch, because most of the property has been cleared, had stumps pulled and the fields turned with rich soil and organic grass, has high quality fencing, and is irrigated. But one of the most valuable features of this property is the proximity to miles and miles of horse trails into the hills. You don’t need to load your horses in a trailer and drive to the trails. The trails lead out of the back of this Sequim horse ranch!  Obviously the buyers, who have horses, realized the value.

Sequim Horse Ranch

Sequim Horse Ranch Very Private

This Sequim horse ranch is located about halfway between Sequim and Port Angeles. There are miles and miles of DNR horse trails adjacent to this gorgeous 10 acres. How much is that worth? The house on this property is an older home, but it was remodeled and is in excellent condition. Nothing needs to be repaired or fixed.  Here is a video tour of the property.

Sequim Horse Ranch One in a Million

One of my personal observations as to why it took so long to sell this property and why the price had to come down so far is that there are very few buyers with horses who are financially capable of buying a little horse ranch.  Buyers for horse ranches are 1 in a 1,000.  These buyers are definitely lucky.  There is not another Sequim horse ranch like this one.

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How many days have Sequim homes for sale been listed in the MLS and on the market for sale?  As you can see in this revealing chart, there have been some Sequim homes for sale on the market for over 1800 days!  That’s a long time to be for sale and in the MLS.  [Click on this graph to enlarge it.]

Sequim Homes for Sale in MLS

Sequim Homes for Sale- Average DOM

When you click on this graph and enlarge it you will see that there are 804 Sequim homes for sale (active listings of single family homes) in the local MLS (the Olympic Listing Service) including both the Sequim and Port Angeles areas, and that the average number of days on market (DOM) is 170 days and the median days on market is 100.

It is more than interesting to see that 9% of the Sequim homes for sale have been on the market for over 400 days.  That’s a long time.  But it is amazing when you see so many homes on the market for more than a year.  91 homes have been on the market for more than a year, and 32 for more than 600 days.

Sequim Homes for Sale – Why so Long?

How can we interpret this chart and what does it mean that so many Sequim homes for sale have been actively listed for so long?  The recession around the country and in nearly every regional real estate market has impacted Sequim, no doubt about that.  But we can also say some things about some of the data.  Let’s point out the obvious.  A home that has been on the market for 1,000 days has issues.  The term “issues” is normally associated with people as a layman’s psychological term.  Perhaps rather than say a home has issues, I should say a seller has issues.  These homes are clearly overpriced or they would have sold.  Demand and supply tell us that even in a real estate recession.

But the issues inherent in a listing that has been on the market for hundreds (100′s) of days go the owner and their agent.  These issues may involve a misconception of value, a stubborn insistence that, “we just need to find that one buyer,” a refusal to recognize that the home does not fit within the bell curve of what buyers want in Sequim and Port Angeles, a lack of understanding about unique or unusual floor plans or features that devalue a home to buyers, lack of acknowledgment that the home may be in an unattractive area to buyers, unwillingness to be honest about true comparables when determining price, and fundamentally a lack of understanding of many real estate issues.

Many sellers and their agents will refuse to reduce the price until the seller reaches his or her threshold of pain.  Obviously for some, reaching the threshold of pain can take years.  Then the price comes down.  Some will argue that they cannot reduce the price because they would have to take a loss compared to what they paid for it in 2004 or earlier, or that they cannot sell it for less because they would have to write a check at closing.  That may all be true, but unfortunately, these price issues are irrelevant to buyers.  They are not going to pay more than the current fair market value (FMV) for a home in this market.  Many sellers have not learned to look at their home from a buyer’s perspective, not a seller’s.

This chart tells an interesting story about Sequim homes for sale and how long they’ve been on the market.

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Looking at Sequim homes for sale?  Here is a very practical tip that could save you $10,000 or more–literally.  I have seen this kind of price discrepancy so many times, I thought it was time I write about it so my buyer clients could be on the lookout for this kind of price discrepancy in Sequim homes for sale.

Sequim Homes for Sale and the Dilemma

The truth is . . . many sellers are out of touch with the true value of their homes.  Homes that are on busy superhighways are worth less than the equivalent homes in a beautiful quiet neighborhood.  And a 40 year old home built with lesser materials and on a poor lot is worth less than a new home built with good quality materials and good workmanship.  But you would never know this, because many homes in these categories are listed at the same price with no differentiation for the deficiencies.

The interesting thing is buyers are typically much more in tune with the fair market value of a home than sellers.  That’s not true 100% of the time, but think about how this works.  A seller asks a Realtor to look at comps and come up with a listing price.  Some sellers simply trust their Realtor, but other sellers have been looking at a few homes in the area and they know what they have in their own home, so they may have a number in their head, but my experience is that in 95% of the cases, sellers have a higher number than the current fair market value.  This is true.  This is no criticism of sellers.  It’s just true, and has been true for the past 30 years I’ve been in real estate from Alaska to Washington to Nevada, and most likely all over the country.

Sequim Homes for Sale on Short List

Now consider your average buyer in Sequim.  That would be a retired professional couple who has been planning the move for a long time.  They have owned several homes in their lifetime, and they are careful and wise with their money and investments.  They know how to do their due diligence on homes and prices long before they get here.  They hire a Sequim Buyer’s Agent (that would be me), and they are well educated before they ever arrive to look at Sequim homes for sale.

By the time they look at their short list of prospective homes, they have seen hundreds on the Internet, and by the time they write an offer, they have walked through a dozen to two dozen homes.  Is it any wonder buyer’s are more in tune with prices?

What does all this mean?  It means sellers list their Sequim homes for sale at prices all over the price map.  So you end up with huge price discrepancies.  For example, consider these listings (the actual prices have been slightly changed to protect the guilty):

House No. 1.  A brand new 3 bedroom, 2 bath home with 1,850 square feet on a quarter acre lot.  Listing price $230,000.

House No. 2.  A 1972 manufactured home that is run down, but with 3 bedrooms and 2 baths, a couple of sheds in the yard.  Listing price $260,000.

House No. 3.  A 1980′s single level 3 bedroom, 1 bath home with 1975 square feet on a freeway.  Listing price $270,000.

Sequim Homes for Sale Priced Reasonably or Not

If house No. 1 is priced at true fair market value (FMV) in this market, and if the other two were commensurately priced, the other two would be $20,000 to $70,000 less than the new home.  But they are not.  We have discrepancies like this among Sequim homes for sale (and Port Angeles home for sale).

I’m often amazed, because the gross price discrepancies are so obvious to a buyer who looks at many Sequim homes for sale and compare them (and to Realtors like me who look at hundreds of homes and compare them).  One might ask why such discrepancies exist.  Ultimately, the answer must fall back on the seller.  The seller bears the responsibility to price the home right, and while relying on a Realtor may be the reason it is priced where it is, the seller still bears responsibility.  In most cases where a home is priced grossly out of proportion to other (and even better) homes, it is because the seller insists the Realtor list it at that price.

I strongly urge buyers who are looking at Sequim homes for sale to hire a professional Realtor who can help them make these important price distinctions.

Possibly Related Posts:

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• Home Sales Oversated by NAR
• Home Sales and Building Pick Up
• Sequim Horse Ranch Sold
• Sequm Homes for Sale – How Many Days Listed in the MLS?