Being curious myself I did some research and I was surprised by the information that I found and if you live in Pierce County I think you will be too. I should also throw out a couple disclaimers, in that I am not an economist, or statistician and all my information came from Trendgraphix, which is comprised of NWMLS data.
With an average median price of $195,000 for July 2011 I wondered what the higher end market was doing compared to the rest of the market. For analysis purposes I wanted to see what the changes were from July 2009 to July 2011 for $400,000 and below and $400,000 and above. Here is what I found:
$400,000 and below 7-2009 7-2011 Change
Avg SQFT $ $122 $104 -14.8%
Units of Inventory 3970 4159 +4.5%
Months of Inventory 4.9 6.3 +22.2%
Avg Sold $ $221,000 $194,000 -12.2%
Median $ $220,000 $186,000 -15.5%
Sold Properties 520 664 +27.7%
Pending Properties 639 948 +48.4%
The inventory is up, and although the months of inventory is increased, the market is very active as you can see by the increase in closed and pending sales. Additionally, the median price is now at it lowest point in two years and has shown little sign of increasing as of yet. The previous four months were all within four thousand of each other so there are some signs of stability. The next few months will provide some valuable insight as to whether we have truly found the bottom. Overall, this is a very active market in need of some good inventory.
$400,000 and above 7-2009 7-2011 Change
Avg SQFT $ $170 $160 -5.3%
Units of Inventory 1553 915 -41%
Months of Inventory 14.1 12 -14.9%
Avg Sold $ $575,000 $569,000 -1%
Median $ $500,000 $488,000 -2.4%
Sold Properties 50 76 +52%
Pending Properties 79 72 -8.9%
There is a stark difference between the two markets. The first being the dramatic 41% drop in inventory in the past 24 months. We can only assume these homes have been rented or the owners are waiting for the “market to come back”. Additionally, the median price drop of just 2.4% is significantly less than the under $400,000 market at 15.5%. The assumption I am making here is that there has not been enough activity in this market for it to show the same “recalibration”. It is important to point out that the 76 closings in July 2011 for this segment is the most in two years, so we may see the beginning of some increased activity. If this segment reacts similar to the under $400,000 market we can expect to see some price erosion perhaps closer to the 15.4% adjustment realized by the under $400,000 market.
What I learned from this analysis, which of course is up for discussion, is this; as a buyer, the risk of further price erosion seems unlikely, but not assured. As a seller, if you have a clean move in ready home chances are very good you will be able to sell your home if the market feels it is priced right.
The Luxury Home market priced over $400,000 Pierce County had a mass exodus of inventory in the past 24 months, and there do not seem to be many buyers in this price range. 76 closed sales in July 2011 was the most in 24 months so the market activity is encouraging. Prices so far have surprisingly remained stable, but as activity increases we would expect to see some downward adjustments.
No matter what the market is doing it is good for someone, and this analysis is no exception. Great bargains for buyers in the under $400,000 market and those that are able to sell in the Pierce County Luxury Home priced over $400,00 are doing pretty well so far, and only time will tell if the pricing will remain stable.
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