Jay Agoado, GRI, SRES Mercer Island, WA

I follow statistics every friday morning and I am just stunned as to the lack of activity taking place on the island. I guess it's true that those markets which were affected last will recover later than others. What an amazing time to be a buyer on the island in that homes which have excessive market times are taking drastic price reductions. Unfortunately, we're not seeing a lot of great homes to purchase. It's fairly simple to find a 40-year old not updated home but how about an updated home, on a great street, at a realistic price?

Check out my weekly trackings to better understand what I am talking about. Definitely a buyer's market...

http://www.jayagoado.net/blog/QuarterlyRatios(Area510).pdf

L = # of listings

P = # of pending sales

SR = Sales Ratio

0-45% = Buyers Market

46-55% = Balanced Market

56-100% = Sellers Market

I found the below commentary quite interesting since many homebuyers are sitting on the fence. Are they sitting on the fence waiting for the "bottom" in interest rates and/or home prices? Unfortunately, one never knows when the "bottom" is until it has already occurred. Just like how we found out a few months ago that we've been in a recession for over one year! Most of these events are not accurately noted until after the fact. Just thought I would forward since rates AND home prices are ridiculously low right now. It's actually a "perfect storm" for buyers and who knows how long it will last.

Commentary: William O'Donnell, U.S. bond strategist at UBS securities hit the proverbial nail-on-the-head when he said, "Investors are reluctant to crank rates much lower -- knowing that behind Door #1 looms the huge beast of new Treasury supply." In a nutshell, he has described perfectly the current status of the mortgage market.

Though it has yet been formally announced, most credit market participants (including mortgage investors) are anticipating the Treasury Department will begin their massive round of borrowing by issuing $86 billion in short-term securities next week. Treasury is expected to follow those fireworks up by announcing plans to issue a record-setting $80 billion in notes and bonds the following week. The "so-what-factor" here is significant.

Uncle Sam can either print money, tax, or create a combination of both revenue generators to pay his obligations. Because he has this unique power Uncle Sam is considered to offer a "riskless" rate of return to global investors. His ability to generate essentially unlimited amounts of capital for debt service also means Uncle Sam has little concern regarding the rate of interest investors' demand. Whatever the required yield - he can pay it.

Much of the capital used to fund the mortgages you create come from investors who have the option to either invest in Treasury obligations or agency-eligible mortgage-backed securities. To successfully attract the capital away from Uncle Sam and into the mortgage market we have to offer investors a higher rate-of-return on their money. From this perspective it almost goes without saying that the endless bill being racked up by Uncle Sam's all-out-effort to restart the country's economic engines will almost certainly continue to mute any sustained effort by mortgage interest rates to move lower. Thank goodness the Fed still has a pocket full of cash earmarked specifically to support the mortgage market. Without their big checkbook - mortgage interest rates would likely be sharply higher than where they stand today.

The year started off in its typical slow fashion but started to pick up toward the end of the month. I noticed some homes, that were taken off the market for the holiday season, relist and sell at the beginning of the year. What we are seeing is a great buying opportunity but many buyers are sitting on the fence, unsure if prices are going to drop. Certain price ranges are still selling relatively well and other price ranges are requiring price reductions. But, our market certainly is a lot better than most.

January Activity

‘07 total active listings: 74

‘08 total active listings: 119

‘07 median listing price: $1,797,000

‘08 median listing price: $1,499,000

‘07 days on market for listings: 130

‘08 days on market for listings: 106

‘07 closed sales: 19

‘08 closed sales: 16

‘07 median sale price: $1,089,000

‘08 median sale price: $912,500

‘07 days on market for sold properties: 94

‘08 days on market for sold properties: 86

February has started off strong and I look forward to seeing the statistics come out at the end of the month. Stay tuned......