Redfin reports that they expect listing price drops to drive a surge in home sales this fall.  There are a couple of issues driving their expectation.

Home sales have been below last year’s since November.  Additionally, pricing is becoming more stable with July showing virtually flat pricing.  Those factors have driven the market to a more balanced price negotiation point between buyers and sellers.

Additionally, 23.7% of homes listed in July had price reductions, compared to only 17.7% one year earlier.  Price drops are happening more aggressively this year as both buyers and sellers are seeing a softer market than was expected.

Lake Chelan has an additional factor, with its tourist season taking a dramatic downturn every year after Labor Day weekend.  It is a great time to make offers on homes at Lake Chelan.  Think of it as the “Labor Day Sale.”

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The Wall Street Journal published an article about strategies for pricing your home for sale.  It is a pretty good read.  The author recognizes that the list price is a negotiation tactic that sends a message to potential buyers.  Setting the list price is both an exercise in the psychology of pricing as well as one of the biggest challenges facing real estate agents and home sellers.

The list price does send a signal to the market.  The same type of psychology that applies to the retail trade applies in housing.  A price ending in a 9, like $499,000, is generally a better choice than rounding up, to $500,000.  The home just seems less expensive to the buyer.

The fact is most homeowners overestimate the market value of their home.  That often leads them to choose the real estate agent who suggests the highest price, rather than one who will get their home sold, for a realistic price.  Sellers often add up the cost of renovations with the expectation of getting all of that back on sale.  It can take months, or sometimes years, on the market for some homeowners to learn that the market doesn’t care how much was paid for the home, or its remodel.

Using a very precise number for the list price, a number like $785,475 as compared to $785,000, can indicate that a home is less negotiable.  At Lake Chelan it is unusually difficult to get good comparable sales for most homes.  The market is small, and most homes or their locations are unique.  The process becomes more complex than just setting list price and should include a strategy for price adjustments based on market feedback and the desired timing of the seller.

Timing can matter too.  Sometimes being on the market in the winter, when there is less competition, can get a home more, serious showings than being on the market competing against many similar homes.

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Freddie Mac has at least three reasons mortgage origination is going so slowly, in spite of low interest rates.

Sure, refinancing is down.  Home sales so far are down about 5% from last year.  Many are sick of mortgages and more people are paying cash.

But the part that caught my eye is that Freddie Mac says the key to an increase in mortgage origination will be “sustained economic growth and jobs.”

That is the kind of talk that makes me thing 2016 can’t get here soon enough!  LOL.

On another note, local mortgage guru Sandy Calicoat is not working at New American Funding.  She tells me that she has programs for “Condotels, Hobby Farms (to include residences with acreage/agriculture), leaseholds,  manufactured homes, FHA, VA, USDA, low to zero down programs, low credit score qualification, high loan to value for jumbo loans, and much more.”  

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Low demand from first-time home buyers is slowing the housing recovery.  Home sales did rise 2.4% in July to a 5.15 million annual pace, but it is still well below the 7.1 million peak sales pace from 2005.  Home sales are still running about half their historic norm of about 800,000 single family home sales.

Lack of credit for first-time buyers and affordability issues are keeping demand low.  First time buyers usually buy existing homes, which frees those existing homeowners to move up to more expensive homes.  When the first time buyers aren’t in the market, the entire market feels the domino effect.

Single family home starts in July were up 8.3% on an annual basis after an extremely weak June.  

However, low disposable income is expected to keep the second half of 2015 from being particularly robust.  Income growth has only averaged 2%, which barely keeps up with inflation.  The new jobs being created pay about 20% less than the jobs that were lost in the recession.  Millennials are burdened with higher unemployment, lower credit scores and more student debt than previous generations.

So, those baby-boomers wanting to sell their McMansions in the next few years will be wanting to see the younger generations employed, making money, and creating households to get housing demand up again.  Over the last several years I have seen too many folks wanting to sell their homes or properties and downsize into retirement only to find out their home is not worth what it was when they came up with their plan.

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Fannie Mae downgraded their outlook for 2014 after home sales were below last year for the first half of 2014.  The latest Snapshot Report from Pacific Appraisals also shows home sales running below last year in the Wenatchee Market.

By number of transactions, the sales of homes and condos are down 8% in the Wenatchee market for the year.  Pricing has held firm, or even increased somewhat, as the dollar volume of all sales are only down by 2% for the year through July in the Wenatchee market.

The long term outlook is not encouraging either.  Doug Duncan, Fannie Mae’s chief economist notes the performance so far this year: “In the first six months of the year, total sales have run below last year’s pace.”  He goes on further by saying “on the demand side, there appears to be a conservatism among consumers and their willingness to take on big-ticket purchases, such as homes.”

Fannie Mae’s Economic & Strategic Research Group believe 2014 will finish below last year in total sales.  They expect 2015 to be have higher sales volumes than either 2014 or 2013, but still not a breakout year for home sales.  Remember, this is the same group that is downgrading their expectations for this year.

The Wenatchee housing market is still showing weak demand in the over $500k price range, where inventory soars to over 1 year and there is only  .67 homes per month sell in the price range of $500k to $550k.

The Chelan market reports have been somewhat devastated by the MLS changeover.  However, looking at sold homes, condominiums and manufactured homes from January through July of this year shows 95 transactions.  For the same time period last year, the volume was 96 transactions.  So, sales have been basically the same.

One difference in the Lake Chelan area is that the sales levels of existing homes have fallen more significantly.  There are new homes being built on speculation and pre-sales that have landed a bigger share of home sales than in previous years.  New construction sales through July in 2014  count for 11 sales versus only 4 for the same period in 2013.  For those trying to sell their existing home, the market is noticeably below 2013.

In spite of the Federal Reserve keeping interest rates at what are historically unsustainable rates, they have not been able to stimulate consumers back to housing market in droves, or even to the levels they expected.  We do live in interesting times.

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Zillow took a look at the cost to make payments on homes in several cities which are seeing high demand, including Seattle and Portland, now and in the future.  They projected the prices of homes and interest rates one year from now and looked at how that impacted home payments.

For example, a $475,000 home in Seattle, if purchased now, would have payments of $2378 per month.  According to their projections, that same home one year from now could have payments of $2,813 per month, or $435 per month higher.

Of course, Zillow is in the business of selling homes.  But, interest rates are projected to rise, as well as home prices.  So, their scenario is possible.  I still suggest that you buy a home when you are good and ready to buy a home, and don’t worry about what the market is doing until that time.

 

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Tubing on Lake Chelan

After a few days of rain and clouds, it is forecast to warm back up into the nineties with sunshine for Saturday, Sunday and Monday.

All of the fires are knocked back with the rain, and the skies are clear of smoke.

But, all the fires, smoke and storms also slowed down housing shopping.  With inventory good, and sellers motivated to get a deal before the end of the season, this might be the best weekend of the summer to shop for homes and property at Lake Chelan!

I still have room available on my dance card this weekend to assist your property search as well!  Bring your friends and boat, you will have time because the water is fantastic!

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It seems like just yesterday I was telling my clients about the rare availability of a home in the exclusive neighborhood of W Lakeshore Place in Chelan.

And here we are, a week later with a deal on that home!

There are other potential bargains available this summer.  The selling season hasn’t been sizzling on Lake Chelan, and fires and weather have slowed things down a bit.  There are even a couple Lake Chelanwaterfront homes at prices rarely seen, with one below $300k!

Have a look at the Lake Chelan waterfront homes and lots for sale, there are more choices than I have seen in years.  Your dream is waiting!

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The weather is the big news at Lake Chelan right now.  It is pretty smoky, with the air not looking very clear or healthy.  We are having a temperature inversion that is holding smoke from all the fires down.

The good news is that is supposed to change tonight, with a forecast for a bit of a storm blowing through that should clear out the smoke.  But, there is bad news as well, with lightning forecast as part of that storm front that could spark more fires!

This has been an epic year for fires so far, with lots of losses of homes and property to the north and damage across North Central Washington.  There are funds set up through the Community Foundation and Red Cross for those that care to donate and help.

Wildfires are a normal part of the late summer/early fall environment around here, but this season they have started early and been huge.

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I’ve been all around Lake Chelan today, from 25 mile to Manson.

Overall, it is a bit smoky.  For most of the day, there has been a visible haze.  I am pretty sensitive, and it doesn’t bother my eyes or anything much.

It also varies by location and time of day.  Late afternoon is usually the worst, as the fires get more active in the heat of the afternoon.  Wind direction makes a difference too.  Some days are very clear, and others are like I am describing. It was clear as a bell at 25 Mile today, and is hazier in Manson than Chelan.  All that is subject to wind shifts though.

The funny thing is I would have guessed from Chelan that 25 mile was engulfed in smoke, but it was no.

People are still out, enjoying Lake Chelan and businesses are open.  I plan to play on the jetski for a bit this evening.

So, this is my report.  If you are wondering, yes, I am available to show properties.  This is kind of an epic year for wildfires, so if you are looking at buying over here, come and see it at its worst.  It is not actually very bad.

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