Are homes for sale in Sequim and Port Angeles overpriced? This is a legitimate question. The answer is probably more accurately considered when you look at a particular home. In other words, while many homes are overpriced, many are not. Let me explain.

I heard an interesting story this past weekend. A FSBO (for sale by owner) is trying to sell her home for just over $200,000. What’s interesting is that she started a year ago listing it with an agent at $299,000.   As the story goes, nothing happened for many months until her agent came and said, “We need to reduce the price.”   The owner was upset.   She told her agent that she knew it was listed too high when she first listed it, but her agent listed it at $299,000. After this discussion they reduced the listing price to $269,000, which after many months proved to be too high again.   Hence, the current FSBO for just over $200,000.

I have a five acre, one bedroom home listed for sale at $225,000.   The owner lost his job and has moved, and this is going to have to be a short sale, meaning the sales price will be less than the balance owed to the bank.   The balance owed is about $256,000.   Any sale will be subject to the bank’s approval, of course.   Here’s my point about this listing.   When my client first called me to discuss listing this home, he asked me what I thought it should be listed at.   I gave it some thought and told him I thought a realistic selling price would be $225,000.   He said he agreed, but that the other agent he had interviewed had told him $325,000.   In his own words, he said, “I knew that agent was nuts when she quoted me $325,000 in THIS market.” Had she listed that house, it would have been $100,000 overpriced.   Wow!

On the other hand, I sold a house recently for $251,000 cash, and it would have cost $350,000 to buy the land and build the same house.   That home was listed with an agent.   The listing price was very fair, and even below FMV, but that’s what it took to sell it.   My buyer client got a steal, even in this market.

Some houses are overpriced, some houses are fairly priced, and a few are underpriced right now.   If you’re from out of town, I strongly urge you to work with an agent who has been around for a while and has the experience to differentiate prices for you.   You don’t want to pay too much for a home in this market.

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It’s a buyer’s market.   There are many foreclosures flooding the market, and the inventory of listed homes and FSBO’s has reached record highs all over the country.   So have prices dropped dramatically?   In some areas of the country, the answer is yes, but in other areas, the answer is, “not by much.”

Here’s a quick comparison of real estate prices in Arizona and Washington.

The Arizona Republic reports that, “In the Glendale ZIP code 85305, the median price of a home fell from $385,000 at the peak in 2006 to $227,000 today, which is about what it was in 2004.   The overall median home price in the Valley has dropped around 30 percent from $267,000 to $180,000 in the same time period.”   ((See Falling Home Prices Erasing What Many Valley Owners Gained))

Heading north to the Northern Olympic Peninsula in Clallam County, here’s a vignette of prices of homes sold in 2006 and thus far in 2008.

Clearly the prices in the Northwest have not crashed as in some other areas.   On one hand this is good news for sellers up north, but good news in this market is often a scintilla of anything positive.   The reality is that homes are still not selling in a reasonable period of time, such as 90 days, even at reduced prices.

Until the market begins to show signs of coming back in areas like Arizona and California, the market in Clallam County Washington won’t come back strong either.   The majority of buyers of homes and land in Sequim, Washington come from from the I-5 corridor to the south.

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What is the Sequim average listing price? What is the current inventory? Here’s a great graphic answering those questions. One short coming is that the Trulia database does not include the entire Olympic Listing Service database of listings, but it is still useful. You can also search the Trulia database for Sequim homes for sale. Drag your mouse over the line on the chart to see the actual listing prices.

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The inventory of Sequim homes for sale and Port Angeles homes for sale is high, higher than it has been in recent memory for most of us.   Price reductions are almost a common place event in our MLS listings.   Is reducing price enough to sell?

No, it’s not.   Reducing price and offering selling agents a bonus are motivational factors, but you could logically reduce the price of a listing every week and still not sell it until you were almost giving it away.

So if price is not the only factor, or not the major factor right now for the majority of listings, why are listings not selling?

The answer is simple.   Buyers are not showing up.

If buyers don’t show up, you can play with prices all day long and still get no results.   Sellers now compete with a very small pool of qualified buyers.   A seller has one property to sell, and there is only one unique buyer for that property.   Finding the One is everything.   Price is not.

When that unique buyer finds the ideal property, will the buyer negotiate hard on the price?   Absolutely.   For the buyer price is clearly a major factor, but only after they have found the ideal property.   Buyers know they have the advantage in a buyer’s market.   But for sellers price is not the primary barrier to selling.   The fact that buyers are not showing up is the major barrier.

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Is the Sequim real estate market now at a bottom?   This is the ultimate question.   Sequim is largely dependent upon markets in California, Arizona, Oregon, and Texas believe it or not.   Are these markets and the national market showing signs of bottoming out?

If anyone needs hard evidence that the real estate market cycle is flattening out and turning around, check out the latest pending home sales index numbers.

On a national basis, the index jumped by 5.3 percent last month. But more importantly, it rose in every region of the country, suggesting that the turnaround underway is broad-based — even if it’s likely to proceed slowly and modestly in the months immediately ahead.

The index — which measures signed sale contracts that haven’t yet gone to closing — is a leading indicator of home sales for the coming two to three months. You can bet on solid increases in sales in the South, where the index was up by 9.3 percent, and in the West, up by 4.6 percent. Pending sales in the Northeast states were up by 3.4 percent and in the Midwest by 1.3 percent.

[Source:   Realty Times]

These are good signs.   Whether we are at the precise bottom or not, this is still a very good time for buyers to take advantage of low prices and the power they have to negotiate a great price.     In my opinion, prices will not go lower, or they will not go significantly lower in Sequim.   But when they do start to rise again, when the pent-up demand kicks in, prices will bounce upward, and any buyers hoping for a super price will be sadly disappointed.

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