Kevin Mullin

As a broker owner of a franchise company we have a tremendous amount of “cool” technology to offer the Realtors in our office. In our last managers meeting we discussed what the adoption rate was for our tools we have in the office. The answer was discouraging.

Web sites, Statistical Analysis, Transaction Coordinators, Marketing Coordinators, Internet Coordinators, Technological Support, One on One Coaching, On Line Lead Generation, and Customizable Buyer and Seller Packages are just some of the offerings we provide and we yet we have less than 30% of our Realtors taking advantage of these tools.

It seems logical that all of these tools increase efficiency and effectiveness, but do we really NEED them?

I would be interested to hear your thoughts…….

If you think this is critical, how do we get the “horses to drink the water”?

If we don’t need it, how do our Realtors grow their businesses?

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.

Search Pierce County Luxury Homes

So I get a lot of my friends asking me, “How is real estate going?” As most of us know that is a pretty complicated answer. I have a couple of thoughts on it, one being personal and the second being more analytical.

PERSONALLY

As a person that “invested” in real estate between 2005 and 2007, I am feeling some pain. So the question is do you keep “feeding” the properties or cash it out. If I had the cash, I would cash it out, but it has dropped so dramatically that I don’t even have enough to sell it! Refinance? That would take more cash than to sell it. This situation gives me some serious compassion for what many of our own clients are going through.

After evaluating the costs of the three options, I have decided to keep feeding the property until either I can reduce the principle, and/or the market provides a bit more value.

ANALYTICALLY

Adding market value is a great “dove tail” to the second thought which is what is going on in the Pierce County market? There are three signs that we are doing MUCH better than last year: Inventory is down 12.9% , Pending Sales are up 45.1% and sold properties have increased 10.6% all of which point to an improving market. That was the good news, the bad news which relates to the earlier aspect of my comments is that prices have eroded 14% to an average median price of $195,000. The only seemingly saving grace about that is that it has been hovering at or about this level for 5 months now. That would lead me to believe we are “bouncing on the bottom” of the market. This adjustment has been painful, but multiple national news outlets have predicted that the Tacoma Real Estate Market is poised for a very nice rebound.

Obviously, all of us in Pierce County would love for that to be true, but to survive in this market we have to live in the here and now. If you are selling a property purchased between 2004 and 2010, this is generally not a good market for you. If you purchased before that, and have equity or are a first time buyer, this is a great market! Low interest rates, and if your home is a “cream puff” that is priced right, statistically you will sell in 8 days.

The moral of this story is that there is plenty of real estate stories that we can cry about, but on the other hand, there are tremendous opportunities to celebrate as well. A good friend of mine once said “every market is good for someone” and that could not be more true today.

For anyone who is reading this I want to thank you for taking the time to read my inaugural blog post…

Like most people sitting down to write their first blog post I procrastinated until I found something that I was really passionate about. For me it is my company's commitment to Community Service. Yeah, I hear you all out there- but hold on! Don’t delete me yet, what was accomplished really is pretty unique.

In 2007 my company (Windermere Professional Partners) and all the Realtors committed to a donation of $50,000 for the development of the Multicare Foundation Tree House which is a residence for families to reside while there loved ones are going through sometimes lengthy health treatments. This service is similar to what the Ronald McDonald House provides….but in our opinion much cooler.

Tree House offers comfortable space for families, as well as a host of other amenities including:

43 sleep rooms, most with two queen beds

Private bathrooms

Telephone, cable and internet in sleep rooms

Free laundry facilities

Family Resource Room

Comfortable living room with big screen TV

Communal kitchen and dining room

Playroom – provides a space for parents to play with their other children

During one of the most traumatic times a family can face, family housing is a true gift that touches lives in a most meaningful way.

In 2007 the building renovation began. In the spring of 2008 one of our Founding Owners Wally Starkey passed away. Wally was well respected by everyone, and the Realtors at the company asked to name one of the residential rooms in honor of Wally, which the Tree House obliged.

At this point in the story many of you may be thinking "Well, yeah. That’s nice but what's so special about that?” Lots of companies donate money. I am so glad you asked! This is the part that encouraged me to write this blog.

In 2007 the real estate world was active and all was good, and that first year we raisedalmost $28,000 which was pretty impressive. However, as we all know after 2007 came 2008, 2009, 2010 and 2011 and there are few in the real estate world that would tell you life was good, and or fun the last four years. Even during some of the worst real estate years in history, the Realtors at Windermere Professional Partners lived up the commitment and raised the additional $32,000 to reach the $50,000 goal.

What I find so impressive about all this is that as with any business people come and people go. Realtors have left the business or switched companies, and we've welcomed new Realtors to the office- but one thing that was constant was the commitment to the people at the Tree House.

The Realtors hosted multiple resident dinners and fund raisers, and although it took five years, they never lost faith. It is also important to remember, each one of these Realtors is an independent contractor so any action they took was solely because they wanted to not because someone told them to. For an industry that has the perception of being selfish and just out from themselves, this is evidence of the contrary. I am proud to be associated with such a great group of people.

If you ever have an opportunity to stop by the Multicare Foundation Tree House, we encourage you to as there are some pretty special people there. Additionally, the Realtors at WPP participate in volunteer events regularly. If you're local and would like to join us some time, just let us know!

Thanks for taking the time to read this and I hope that you found it of some value.