It was reported last week that home foreclosures have exceeded the 1 million mark nation wide. Most of those however are located in other states. Washington State accounts for less than 1% of all foreclosures nationally. Most of these foreclosures nation wide have been blamed on adjustable rate mortgages, when the buyer was offered a "teaser" rate then saw their house payment increase significantly over the next couple of years while their income only went up slightly. We believe that some of the foreclosures in the Seattle area have and will be the result of buyers paying too much for the home when they bought it over the last couple of years as well.
Seattle saw years of biding wars. 1995 to 1997, then again in 2001 and 2002, and most recently from 2005 through most of 2007. In the fall of 2007, we started to see our real estate market change and prices have fallen and inventories have increased since then. Depending on the area of Seattle, prices have adjusted down between 5% to 12% in the $400,000 to $1,000,000 ranges mostly. But because many people paid $500,000 for a $450,000 home in 2006, that home is worth about $450,000 today, most likely.
Seattle has been one of the last areas in the US to see a downturn in our real estate market. There is still good activity out there however, and there are buyers ready to buy but sellers have to go about selling their homes much differently now than from years past. Pricing and condition is the key and overpriced properties just will not sell. The seller has to then reduce the price until it's below what it should have been and then it will most likely sell for even less than that because buyers expect a good deal and there so so much inventory now they have many many options and are willing to be patient.
Washington State has seen almost an 18% increase in foreclosure filings compared to the same time in 2007 however, according to RealtyTrac. Now there are buyers really looking for great Foreclosure sale prices, somewhere between 70 to 80 cents on the dollar. That translate into about a 20% or 30% reduction in price, but we believe that is still the exception and not the rule for most buyers. There are far fewer buyers out there, but they are usually willing to make an offer on a home that is priced fairly in our current market conditions. Then, there are those neighborhoods that have held their value pretty darn well even in this downturn. These are usually the very close-in neighborhoods like Queen Anne, Magnolia, Capitol Hill, Madison Park, Bryant and Ravenna. Gas prices, traffic congestion and a strong Seattle economy is keeping home prices in these area stronger than in most other neighborhoods.
The Tacoma area, Pierce County, is #1 in the state for foreclosure filings, according to the report, with one in every 574 households going into foreclosure. Interestingly, though, that number was a 6% decrease from the same time period in 2007. The Seattle area, King County is #2, Clark County is #3, and Snohomish County is #4 in the state, as of April 2008.
Then a new law in Washington State was passed an took effect on June 12, 2008 to protect homeowners that were in the foreclosure process or potentially within 4 months of the process. While this new law has many good parts, many fear that good real estate agents will stay away from helping those that need them the most, the distressed Home Seller. This new law also has a potential impact on the person wanting to buy a home that is in foreclosure. Now as the law requires, if the transaction is set to close 20 day before the foreclosure date then the buyer has fiduciary duties to the seller that are above those to himself. This could cause many buyers to not buy these homes because of unnecessary but very real liabilities.
There will be real estate agents that will see a great opportunity to help distressed home sellers and be willing to take on the extra liabilities and knowledge required. Some of these will do a great job and some won't, so it's real estate business as usual but with more at stake for everyone, the real estate agent, the home sellers, and the buyers.
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