Summer’s Here: The Solstice is just around the corner and the weather has been just spectacular. One of the best Springs we have seem in a very long time.
Here is the Local Real Estate Update:
San Juan Island Real Estate
Although the real estate transaction activity has been brisk,
fewer homes are selling this year as compared to last.
But vacant land sales on San Juan Island
have shown the inverse result so far this year.
The average number of active monthly listings in
our local inventory has been falling.
Some reasons why our inventory is so low…..
It’s not only here, but across Western Washington and many other US markets, sellers and buyers are dealing with the challenges of slim housing inventory. A combination of factors, both economic as well as legislative, are contributing to today’s market conditions. A recent analysis that appeared on Inman.com, a real estate news service, provided the following set of reasons: Capital gains exclusion on primary residence. Before 1997, home sellers could only avoid capital gains taxes on the sale by purchasing another house of equal or greater value. In short, sellers were motivated to move up, providing a built-in supply-and-demand dynamic. But with the Taxpayer Relief Act of 1997, sellers were allowed a capital gains/appreciation exclusion ($250,000 for singles, and $500,000 for married couples). Value disruption from the recession. In many markets, values plunged from 2007-2010. People and investors who bought homes at a discount are inclined to hold on to the properties and take advantage of their good fortune. Expectation for values to climb. Much like holding on to a stock, expecting the price will rise, homeowners believe their property values are on the upswing and want to ride the wave. Consequently, more homes are “frozen” out of inventory. Sustained environment of low interest rates. Since many homeowners and investors have either purchased or recently refinanced to take advantage of low rates, they find themselves “locked in” to their favorable rates. Consequently, these owners are unlikely to sell anytime soon. Where would I go? Low inventory begets low inventory. For instance, seniors who might be inclined to sell after retirement are encountering limited options in their communities, and decide to stay put. Stunted development. Home builders put on the brakes in 2008, and are slowly ramping back up to pre-recession levels.
Over the past 4 years, Windermere Realtors have represented more than 45% of all property buyers in our County. We have qualified buyers looking for homes, but unless the inventory improves, these folks will stay on the sidelines. All of this points to an interesting second half of 2015. Stay tuned!