Eight Predictions for Maple Valley Real Estate Market in 2010

In honor of having survived completed two decades in service to the real estate industry, I thought I’d step out on a limb and publish my first ever official list of predictions for our local real estate market here in Maple Valley, WA.

Here’s how I see things shaking out for 2010 (in no particular order):

• Short Sales will continue to put downward pressure on pricing

  Currently 20% of our active inventory are short sale listings, however they account for 54% of pending sales because their prices are so attractive. Buyers will only step into the short sale pit if there is financial incentive…meaning, if they get more home for a lower price in exchange for their willingness to be patient and risk having nothing in the end. What this means to “regular sellers” is that you’ll get more for your home than the short sale down the street, but it’s tough to ask a buyer to pay 20% more for the same exact house. Don’t kid yourself, short sales affect everyone’s home value.

• Cash will be King

Our market has often followed that of Northern California, albeit lagging by about 9 months or so. A year ago, the East bay area began to see investors coming back to the market, lured by aggressively priced foreclosures. We have begun to see signs of this here as well. Investors with cash will trump most first time buyers, especially in an REO situation. Cash terms are more attractive to banks and asset managers who want these properties off their books as quickly and painlessly as possible. Most first time buyers will be making offers subject to FHA financing, which can mean more money into the property for FHA required repairs.

• Rental Market will Remain Strong

As more homeowners find themselves unable to stay current with high mortgage payments, they will either look to short sales or lose their home in foreclosure but will still need some place to live. Many will want to stay within the Tahoma school district and rent at a much lower amount than their mortgage payment. I think this trend will remain for at least 2-3 years.

• Market Will Dip in May/June

The first time home buyer tax credit should keep the first quarter of this new decade on a fairly brisk pace, but once the April 30 deadline arrives, it’s unclear whether buyers will continue to show interest in as high a number. Chances are there we’ll see a lull as things settle and buyers, now feeling no urgency realize they really do want to own but can now take their time (and maybe wait for that short sale).

• Units Will Stabilize or See Marginal Increase

In 2006 there were 1074 single family homes sold through NWMLS within the Tahoma School District. In 2007, that number dropped to 762. Last year there were 480 homes closed and as of the writing of this post, we have closed 415. My guess is we will be somewhere around 425-430 once everything has closed by Thursday, the 31. My feeling is that we will stay on this steady pace, maybe increase again in March and April (tax credit urgency) but then see more slowing in May and June before picking up again in the Fall to finish right about the 435-450 mark for the year.

• More Realtors Will Leave the Business

For me, this is a hard one because I feel that we have already lost most of those who really weren’t dedicated to real estate as a career….those who said “I think I’ll give real estate a try”. But the business is getting harder, more expensive and let’s face it, there’s less of it to go around. I think we will see older agents retiring sooner than they had planned, and many others deciding they have to go in a different direction altogether. It’s sad to see, but a reality of the business right now.

• Foreclosure Inventory will Double

According to Realty Trac, one in every 255 homes in Maple Valley received a foreclosure filing in November 2009. It appears that most of the loan modification efforts have really only postponed foreclosures, not eliminated them. Some distressed owners will sell through the short sale process, but if banks begin to act on shadow inventory, to get that off their books, we could see twice as many REO and Bank Owned homes as we did last year, maybe more.

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  The Over $500,000 Price Range Will Continue to Languish

  
  

Seller’s with homes valued over the $500,000 price point are going to have to be prepared to deeply discount their price in order to stand out amongst the competition. Most of the Maple Valley move-up buyer pool has been decimated by declining values, therefore, your buyer is probably going to be one relocating to the area, or with the financial ability to rent their existing home and still buy. Either way, there is a large selection from which these savvy buyers can choose and with a 12 month absorption rate on properties priced over $500,000….they’re going to demand a discount, either up front (aggressively priced) or at the negotiating table.

We’ll check back next year and see how I did….it’s not rocket science, but let’s face it, no one’s crystal ball has been clear for quite some time.

Happy New Year!