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.” ¹

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.

1. See Falling Home Prices Erasing What Many Valley Owners Gained [↩]

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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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Sequim and Port Angeles real estate listings have seen some reductions in prices recently.  Realtors love to use euphemisms.  Just as a used car is a “pre-owned car,”  so a price reduction is a “price improvement!” True from the buyer’s perspective, but certainly not from the seller’s perspective.

In the last three months, there have been 298 properties (homes and land) in the Sequim area that have had the listing price reduced.  In Port Angeles, 220 properties have had a price improvement.  Here’s a graphic showing the reductions.

In Sequim listed prices have been reduced in the past three months to about 90.39% of the orginal listed price, and in Port Angeles listed prices have been reduced to about 89.59% of the original listed price.  This represents an average price reduction of 9.61% for Sequim properties, and 10.41% for Port Angeles properties.

These are significant reductions, but certainly not the 30% or more that cities like Las Vegas are experiencing.  Still this is significant for our area.  These numbers are meaningful, because anyone who has their home or land listed for sale must realize that they are not in the driver’s seat to bargain like they were in 2005.  This is a buyer’s market.  Sellers are not in control, at least not until the market begins to come back stronger.

NOW, do you want to see some actual numbers?  Below is a list of 167 listings that have been reduced in price, and I’ve only included the major buyer’s range from $200,000 up to $460,000.  Look at the last column to see the actual dollar amount of the reductions.  There are many $25,000 reductions, $40,000, $65,000, and up from there.  I haven’t included the million dollar home price reductions, because the majority of the buyers are just not there.  But if you’re thinking a $5,000 price reduction might move your house, think again.  Many have reduced the price 10 times that amount and more.

Read the rest of this post to see the full table of price reductions below.

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Price reductions for real estate listings in Sequim and Port Angeles in the month of June, 2008 are revealing.  There were about 95 properties that were either sold for less than the listed price or are still listed for sale but had a price reduction.  The average price reduction in June is 91%.  [Source of Data:  Olympic Listing Service].

This is valuable information, because it tells us where the market says prices are with respect to the listed prices.  While each property is unique, whether you are buying or selling, it is good to know that prices have been generally reduced in the month of June by 9.0%.

To view the entire data, view the rest of this post.

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Sequim real estate prices are reasonable but not as low as some areas of the Midwest United States. I often receive email requests or telephone requests for a stick built home with 3 bedrooms, 2 baths, and a garage under $125,000. The average price of homes sold in Sequim in the first five months of this year was $324,450.

I’ve talked with many builders in the area, and they all express the same sentiment. They cannot build a home and sell it for less than $279,000, and with a few upgrades most people want in their homes, that boosts the price of a new home to above $300,000. That’s pretty much rock bottom pricing.

Most new homes, including the price of the land, site preparation, and home construction are $350,000 to $450,000. A significant number of retirees to the area are spending a total of $550,000 to $750,000 on land and construction. Those are not even luxury homes. Luxury homes are much higher.

You can find an older stick built home for less, but you can’t replace it today at that price. Homes that are inhabitable and listed under $225,000 are gone. In a heartbeat.

Here is some real data in the form of listings that you can view in the Sequim market for homes priced under $200,000. In fact, here is a complete list as of this date of all homes listed for sale in Sequim for $200,000 and under. There are only seven, and you can click on this link and view these listings. There maybe one in here that is ideal for you, and if there is, you can email me or call me. I’d be glad to either get you more information or show you this house at your convenience.

These listings are best viewed in Internet Explorer, so if you are using Firefox, click on the link below but then switch to Internet Explorer if all your images are not showing correctly.

Click Here to View Listings

Courtesy Chuck Marunde and Sequim & Port Angeles Real Estate, LLC

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What has been happening with real estate prices in Sequim and Port Angeles recently? During the month of December, 2007, there were 72 price reductions for residential properties.

Click on the image to enlarge it for viewing.

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