By Merri Ann Simonson
In reviewing the year-to-date volume for 2014, the real estate market volume on San Juan Island reflects an increase of 33 percent for the period of January through September, as compared to the same period in 2013.
As for the number of transactions, the gain over the 2013 January through September was 28 percent. This strong increase is a good sign of recovery in our market.
Per the NWMLS as of Oct. 15, San Juan Island has a total of 390 listings for all property types, which includes the 34 properties under contract or 8.7 percent. The current inventory level is very similar to the same period last year when we had 389 listings with 30 under contract or 7.7 percent. The slightly higher percentage of transactions in escrow is another good sign.
Our percentage of transactions in escrow is very similar to other second home markets, such as Chelan County, which currently has 7.8 percent in escrow. Port Ludlow has 9.9 percent of their inventory under contract and in escrow.
Metropolitan areas such as Snohomish County and Seattle are in full recovery and have 34 percent and 44 percent, respectively, of their inventory under contract and in escrow. Their recovery includes multiple offers and bidding wars, both of which can be very stressful on parties involved in the transaction. During those types of situations, even the sellers can end up feeling as though the real estate transaction took its toll.
On San Juan, most agents would like more recovery in all price ranges. This would help some of their sellers get the opportunity to consider offers. Most agents agree that a recovery in our market may be slow but it will be more likely sustainable, which is best for all.
It is unfortunate that many of our sellers whose properties are priced above $600,000 didn’t have much action this year. In fact, several sellers have decided to remove their property from active marketing and wait until next spring in the hopes of more recovery. This is not unusual this time of year but if the property isn’t listed it is out of sight and it is out of mind. The charts below reflect the closing activity year-to-date.
It is fortunate that many of our sellers are in a position to wait for more recovery.
It’s important to note however, that waiting for more recovery can be misleading. Carrying costs incurred during the holding period could actually result in a lower net proceeds amount.
Based on the chart below for the Average Days on Market (DOM) year-to-date for closed transactions, it is apparent that many sellers decided to wait for quite a while and found their buyer through recovery or price reductions. I thought it would be interesting to compare DOM to 2006; as you all recall, our volume peaked in 2005 and our prices peaked in 2007.
As evidenced in the chart for 2006, the average days on market was considerably less than today’s averages. Inventory was considerably less and prices considerably higher. As agents, we all considered 2006 as one of the best real estate years and our sellers were happier as the market was in their favor.
Of the 191 unsold residential listings in the NWMLS for San Juan, 77 have been on the market for greater than one year and another 64 have been on the market for over 100 days and counting. I believe that many of the sellers that made it through the six-year recession feel they might as well wait longer.
Further, many sellers originally listed years ago and in hindsight, those sellers listed too high and got quite attached to visualizing the results of that original sales price. Even now, after going through the balance of the recession, that sales price is still in their mind and that is the price they want.
It may be that they need that price to pay off their mortgage or to buy what they have in mind elsewhere. It may also be that they have plenty of financial wear-with-all and intend to wait. Whatever the case be, 74 percent of our current sellers are in the same mindset with the trend of being on the market for more than 100 days and counting.
In this buyer’s market it is all about pricing, and listings that are priced properly sell in a timely manner. If sellers desire action around their listing, they should price their property to sell based on the level of recovery in our market and amount of inventory that is direct competition.
As I mentioned in the beginning of this update, we are noting evidence of recovery but we have yet to enjoy appreciation or enough inventory absorption to add upward pressure on our prices. Although our closing volume and transaction count is an increase over last year, we are replacing the sold properties just as fast with new listings and maintaining a steady inventory level.
We continue to offer an eight-month supply of homes listed under $400,000, which is the most active price range in our market. Unfortunately, the remaining price categories all offer a larger supply. Our market remains a strong buyer’s market and those individuals currently shopping in our market are using their leverage to negotiate some very good purchase prices.
The statistical data and pure volume is favorable but unfortunately many of our sellers are very frustrated with the slow level of market recovery. Seller advice: Don’t shoot your realtor, we are just the messengers and we are reporting statistical information. Buyer advice: We have great buying opportunities in our market but momentum is building towards more recovery. We won’t remain a buyer’s market for much longer.
To view all market charts year-to-date, visit www.sanjuanislands.com
— Editor’s note: A full-time San Juan Island resident since 1995, Merri Ann Simonson is managing broker and sales manager of Coldwell Banker San Juan Island.