John L. Scott/Anacortes January, 2010

In this version of Market Soundings, covering real estate sales and conditions in the Anacortes/Fidalgo Island, Guemes Island and LaConner marketplace, we attempt to summarize the past year’s market activity and offer our perspective on the results. It is our hope that the information and perspectives provided will help our clients and friends. make more enlightened decisions.

Goodbye 2009! Last year was bad news / good news story. On the plus side we really did see a positive trend in the number of properties sold during the year. The total jumped +5.2% over the previous year, with most of this improvement occurring during the second half of the year. A sizable portion of this was due to a resurgence in the number of condominiums sold, which more than doubled over the previous year. The bad news can really be summed up with the fact that total dollar volume for sold properties dropped -14% versus the previous year and was down by a whopping -56% from its annual high in 2006. In fact, total sales for the Anacortes-Guemes Island-LaConner market barely surpassed $100 million in 2009.

Looking only at single-family homes, that comprise the majority of property sales, 2009 saw average sold prices drop to $344,659. This was a decrease of nearly -7% from the previous year and -21% over the past three years of sales.

Several factors led to this outcome. Of course, general economic conditions and overall negative housing news were the major drivers. But, a dramatic shift to lower priced home purchases along with an ever-increasing number of foreclosures and short sales also dragged the market down. All this made it extremely difficult to get a “read” on the market, even for Realtors involved in it every day. The largest hit segment of the market were those sellers trying to convey properties in excess of $500,000, where we saw (single family) unit sales drop from a high of 129 in 2006 to just 34 in 2009.

As you can see from the chart to the left, the government’s stimulus program, aimed primarily at first time buyers did fuel sales of lower priced homes, but it was not as pronounced as in other markets. The chart on the right depicts 2009’s severe erosion of sales above higher priced homes, particularly as compared to 2006 and 2007.

One final 2009 market comment involves short sales and bank-owned transactions and the inability for buyers, sellers and their agents to obtain approvals from lending institutions holding mortgages on the subject property. Many transactions were cancelled or expired because of this red-tape phenomena. Unfortunately there may indeed be more of these kinds of transactions on the horizon for 2010. However, we are confident that increased knowledge within the real estate industry along with new systems put in place by lenders will work to improve this situation.

Skagit Assessor Weighs In. As the new year approached, many county residents were greeted with a notice from the Assessor’s office that their valuations were being revised downward. In a nutshell, all properties except waterfront (where values were left the same) were affected. Although our research has also uncovered non-waterfront properties, particularly some with recent sale activity, where values were unchanged. We believe that the Assessor’s actions were sparked by the fact that current valuations could not be supported by the market. And, our core group sampling indicates that the reductions were in the range of 10%-15%, depending on location. We caution, however, that these reductions probably will not translate into equivalent tax reductions as this calculation is based on the tax millage rate.

Anecdotally, this action alters the pendulum again. Historically, true market values have always been higher than assessed values---perhaps as high as 20%+ during periods of high demand. But, in 2009 we saw many transactions at or substantially under assessed value. Our current prediction is that 2010 assessed values are back to being slightly lower than where we see market values.

2010 Signals Market Improvements. We are already seeing an upwards trend in buyer activity, probably fueled by improved consumer sentiment. In addition, the Seattle area, which affords us with many residential prospects is rated as one of top rebound markets. Finally, it is our believe that many of the “boomers” that have been put on hold will begin transition to our remarkable coastal lifestyle.

See Your John L. Scott Agent For Valuation Updates. Now is a good time to “tune” your expectations and talk about market opportunities for 2010.