What a year it’s been. If it hadn’t been that the prior ten years were so GREAT, I’d really be ticked off.
Anyway, as I do some year end calculations to quantify how slow and punky things were, I rattled off this email to my crew of agents and associate brokers. Thought it might be worthwhile for some others as well:
As we finish up this year, thankfully, I look with optimism towards 2009.
1. Transaction Volume (velocity) will increase in 2009: Our transaction volume as a company was down over 35% in 2008 vs. 2007. This corresponds roughly with the 40% or so reduction in volume that the NWMLS has been reporting this year. In 2004 through November, RPA closed 275 sales; 2005, we did 330 (peak year for transaction volume); 2006 closed 261 through November; and in 2007 249 deals were done in the first 11 months. This year we’ve closed 157 deals. It’s well below our 10 year average, even as we’ve grown as a company. Can’t wait for that reversion to the mean;
2. Prices are down: In many areas, prices are down 12-15%. This is bad in one sense, obviously; but it’s good for your move up buyers! If the house you’re selling is worth $450,000 instead of $500,000, chances are that “move up” house is going for $810,000 instead of $900,000. The net effect is a $40,000 savings. The trick is making sure you don’t get greedier on your sale than you are on your purchase. The depreciation cuts both ways;
3. Interest rates are down: And down big. 5% or less for conforming (< $417,000) first mortgages. Contrary to the “credit tightening” that’s been going on, it’s still easy to get a first mortgage if you qualify with income, credit, etc. This helps buyers tremendously (and your past clients, who should call Steve Boyd at Real Property Funding Group to get their refinance going today!);
4. Seattle is relatively prosperous: Despite WaMu’s demise, our economic engines are doing quite nicely relative to much of the rest of the country. Most of the people I know who aren’t in real estate (or the auto business) have had little or no decline in their income (not mentioning the value of their portfolios). They are still buyers when and if the opportunity presents itself. Amazon’s stock may be down 50% from last December, but it’s up 20% from December of 2006; Costco’s stock is flat since then; Microsoft is down but holding steady in its trading range:
5. Positive Migration: People are moving to Seattle. Our property managers had terrific years, leasing properties for ever-increasing rates, through September. No one seemed to do anything in October or November as the markets got hammered, but in the past two weeks the activity for leasing is way up. This is a small sampling — we only manage about 1800 units — but I’m hearing similar stories from other landlords throughout the city. Whenever there are more people coming into town, demand increases — which supports prices for sale and for rent.
So it was a bleak 2008. We share the pain, as RPA posted its worst year in our 19 year history. However, we haven’t had to lay anyone off, and I appreciate the fact that we’ve had an incredible run, especially over the last five years.
2009 WILL BE BETTER. We need to prepare to get back to work, doing what we do best – earning our fees by advising Buyers and Sellers on how to take advantage of the increasing opportunities in this market.
Here’s to an incredible 2009!