“Economists have predicted that home prices will continue to decline for the next five quarters as a growing number of foreclosure sales depress prices. According to Mr Yun, 45 per cent of transactions in December were distress sales at discounted prices.” See Bargain Hunters Spur US Home Sales. Price have dropped by large percentages in many areas of the United States, but how has that effected the Sequim and Port Angeles home prices?
In the stock market there is a mathematical tool called volatility. For example, an option to purchase stock might have a very high volatility quotient, meaning the price of the option can fluctuate dramatically as the result of any small change in the price of the underlying stock.
I would suggest that home prices in Sequim and Port Angeles, which are obviously stable compared to so much of the country, have a low volatility quotient. In other words, even though we depend heavily on buyers from outside the state, and even though those buyers have largely put their buying decisions on hold, the prices have not dropped here accordingly. If prices here were measured directly by the number of buyers and their willingness to pay fair market value based on the national market, prices in Sequim and Port Angeles would be down something like 40%. But they’re not.
On the Northern Olympic Peninsula in Clallam County, here’s a vignette of prices of homes sold in 2006 and thus far in 2008 (as I gathered these stats in October, and not much has happened since then).
|
AVERAGE PRICE IN 2006 |
MEDIAN PRICE IN 2006 |
|
$287,075 |
$269,000 |
|
$279,357 |
$263,500 |
|
Days On Market: 84 |
Days On Market: 59 |
|
AVERAGE PRICE IN 2008 |
MEDIAN PRICE IN 2008 |
Clearly the prices in the Northwest have not crashed as in some other areas. Prices are far more stable in our market than in many areas. I would suggest that there are three reasons the prices here are more stable.
First, the majority of sellers here are not desperate to sell at any price. Second, we don’t have a huge foreclosure inventory here. And third, this remains a very popular retirement area, and everyone knows that. That means retirees will continue to move here as the market starts to come back. Therefore, the majority of sellers are willing to wait this market out rather than have a garage sale they don’t need to have.
The price volatility quotient here is low, and our prices are fairly stable. That’s just one more reason retiring here and owning a home makes good sense, good investment sense, especially compared to the stock market.
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I think your market statistics look better than many around the country. I also don’t believe we will decline for 5 more quarters. All the money in the market nowis starting to show up. Lets see how it morfs into real estate.