Some national reports site that the improvement in the housing market has been in better neighborhoods and for non-distressed properties. There is no question we have a bifurcated market.
Nationally non-distressed properties are down on average 25% from the peak while the distressed property market is down 40%. Numerous charts show the non-distressed segment has shown far more (relative) price stability than the overall market.
Whether you call it a bifurcated market or a market duality it is interesting to analyze the impact of distressed sales on the overall market. When valuing a home I think it’s important to understand what the distressed market does to overall values.
I decided to take a look at Whatcom County’s “bifurcated” market and see if there was any truth to the national reports.
First, I analyzed the number of distressed sales and found that we have gone from a peak of about 30% of our market to 16% in the third quarter of 2012. Even though it is a double edged sword I hope this tread continues.
Secondly, I analyzed the first three quarters of 2012. As you can see by the charts there is a difference in valuation when you subtract the distressed sales. I broke the sales into four categories. 1) all sales; 2) REO; 3) short sales; 4) sales without distressed properties.
What I found was that after subtracting the distressed properties from the mix the non-distressed properties were up anywhere from 5%-8% and in some cases more than 10%.
Why is this significant?
I think it tells a different story than you hear on the news reports about real estate. Statistically in Whatcom County, our values are about even from the same time last year (that is good compared to the previous three years). However, if you remove the distressed sales we are up. From the peak we are down about 18% but only down 12% without the distressed sales.
I think it is important for sales professional to understand these differences.
Gragg Miller, Principal Managing Broker – Bellingham
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