Leaders seeing more first-time buyers entering the market

An $8,000 federal tax credit, low interest rates and declining home prices make a good combination for first-time home buyers.

And those looking to buy now are prepared. They know what they can afford and what they’re looking for.

“They’ve done their homework and they’re not just trying to get a house because their friend got one,” said Leonard Johnson, owner and broker of American Dream Real Estate.

The combination of a down economy and a typically slow winter have made for sluggish sales here, but local real estate leaders are optimistic the housing market will pick up as the weather continues to warm.

There is still a fair amount of homes on the market with lower asking prices than in recent years. Leaders say people are still interested in moving here and haven’t stopped looking despite the economic slowdown.

“I think we’ll see some sales. We have a lot of lookers,” said Jim Clarke, owner and broker of John L. Scott in Anacortes.

Anacortes is coming off a few years of hot sales and real estate leaders don’t expect to see that kind of market return anytime soon.

“I don’t think anybody expects us to jump back to where we were in 2006,” Clarke said. “The big question is what will the normal pace of sales be.”

Right now, first-time home buyers are taking advantage of the good conditions and getting into homes in the $350,000 and less range.

“We’ve seen a lot of action in that end of things,” Clarke said. “It’s a good opportunity for people.”

In the first quarter this year there were more new listings, more homes on the market and fewer closed sales compared to the same time period last year. Average and median sale prices also dropped.

There were 16 closed sales in March 2009 compared to 20 in March 2008, according to the Northwest Multiple Listing Service. The first quarter saw fewer total sales as well, with 38 this year compared to 54 in the same time frame last year.

Pending sales were better this March, with 22 sales pending compared to 16 in March 2008.

“January and February were probably our worst months ever,” Johnson said.

He said March and April picked up quite a bit in comparison.

Despite the lower sale numbers, Nate Scott, owner and broker of Windermere Real Estate, said he was pleasantly surprised by the first quarter.

“March really helped us out. It’s still not what we’d like but it’s better than we thought,” he said.

MLS shows the average sale price for the first quarter this year has dropped nearly $80,000 from last year — $416,716 in 2008 to $337,887 in 2009. That’s a 19 percent dip. The median price is also down— from $370,000 in 2008 to $322,500 in 2009 — about a 13 percent drop.

The total number of active houses on the market in March was up — from 317 active listings in 2008 to 359 in 2009. The number of new listings was also up — from 52 in March 2008 to 62 in March 2009.

Jean Groesbeck, owner and broker of Coldwell Banker Island Living, said the area could use more homes in the lower price range.

“We could use more lower priced inventory to sell. That is very encouraging,” she said.

Many buyers now are looking for a deal, she said.

“People are definitely looking. The issue is what they are looking for is bargains. They’re really looking for good values. Something that is priced well may or may not sell. What they’re looking for is exceptional values,” Groesbeck said.

Local agents agree homes in the lower end are selling, with higher-end homes above $500,000 sitting for longer periods. The average number of days on the market is hovering between 160 and 200.

The higher-end inventory has remained almost the same this year compared to the same time last year. That’s because a lot of the same houses are on the market because they haven’t sold, Clarke said.

“That’s obviously an issue for sellers and agents and everybody,” he said.

He was pleased when an agent recently sold an $800,000 home.

“That’s a good sign,” Clarke said. “I feel pretty positive that we’re going to see some turnaround.”

Scott said buyers in the $1 million and higher market haven’t been seen for a while but agents are starting to see signs of life.

“(Sellers) have to be really aggressive in that market or really patient,” he said.

Groesbeck expects sales of higher-end view homes to start picking up.

“Now that the weather has finally turned we are seeing the view properties get a lot more showing activity though we haven’t had a tremendous amount of sales yet,” she said.

Groesbeck is seeing some clients getting more conservative. Some who were looking for homes in the $1 million-plus range are now looking at homes under $1 million.

She said after waiting a few years, some people are ready to get back in the market.

“A lot of people are going to go ahead and make the move. They’re tired of waiting, they’re tired of the process,” Groesbeck said. “Most people feel we are at the bottom of the market.”

The area also isn’t see any land sales by custom home buyers or builders.

“They’re definitely not around,” Clarke said.

He said the price of land hasn’t decreased enough to entice people.

“It may not have come down in price as much as it needs to,” Clarke said.

But prices have come down enough for investors to start looking again. Many left the market in 2004 when prices started going up, Clarke said.

Even with the fluctuating economy and lower sales volume there is still interest in the Anacortes housing market.

Windermere, John L. Scott, Coldwell Banker Island Living and several other brokers have teamed up to do some real estate advertising in areas like Seattle.

“The idea is to continue to entice people to Anacortes and give them something in the home product to look at when they come here,” Clarke said.

Anacortes’ real estate surge was driven largely by coastal retirees, he said, who can be lured to Anacortes to find the new life they’re searching for.

A recent piece in the Seattle Times drew about 80 people to an open house at San Juan Passage at Ship Harbor, he said.

“That is what is encouraging to me,” Clarke said. “There’s still a huge opportunity for Anacortes to bring new life to the community through real estate. They saw what a lifestyle opportunity there is in Anacortes.”

He said for some it is just a matter of time before they buy here.

“There’s still a high level of appeal and desire for community. It’s just that people are stuck,” he said, either waiting for the stock market to rebound or to sell a current home. “The numbers continue to be disappointing but the level of interest continues to be exciting.”

Anacortes has seen some foreclosures and short sales.

“We’ve had our share of problems with people who are under water,” Clarke said. “We have some but not anywhere to the degree of any other market.”

Of the 86 home foreclosures in the county last week, just a handful were in Anacortes.

Clarke said Anacortes has a lot of cash sales or buyers who put more money down and can get a better loan. He said most have enough equity to ride this out.

Agents have also been feeling the pinch but most are sticking with the job.

Clarke said some are expanding their geography to include Oak Harbor, where there are more first-time buyers who are secure in their jobs with the Navy.

Some agents are moving on, Scott said, but the ones who see real estate as a career are still working.

“You have to be devoted and work hard to make it,” he said.

The market can be challenging now for sellers and that means more marketing, Johnson said.

“For sellers the only thing is to make sure they’re pricing their houses right and make sure they have a good marketing person who will push their house,” he said.

Johnson said pricing can make a lot of difference. American Dream lowered the price on some condo units for sale and had two sell.

“We’re seeing a lot more prices being negotiated,” he said.

Scott said the strategy for sellers is to price ahead.

“You have to be priced for today or tomorrow, not yesterday,” he said.

For many people their home is their biggest investment, so lowering the price can be hard to do, Scott said. But it could mean a sale versus more months on the market.

“The trend is going down and it hasn’t stopped,” he said.

Clarke said the easiest way to find the price where the market will react is to go back to a comparable sale in 2004 or 2005 and then apply 4 to 5 percent compound appreciation.

“That would be a fair value. That’s what history tells us about home appreciation,” he said.

Besides price, having a home that is staged correctly and “sparkles” helps the sale, Groesbeck said.

“In a soft market it’s more critical than ever that they have their home staged properly, inside and out. The home has to be in excellent condition,” she said.

She said it also takes someone who is ready to sell.

“If they’re not motivated to sell they shouldn’t bother to put it on the market,” Groesbeck said.

With the soft market she said it is a good time for people looking to move up. If you’re selling a $300,000 home at a 10 percent discount and buying a $500,000 home at a 10 percent discount it works out in the buyer’s favor.

“You’re losing $30,000 on the sale but getting $50,000,” she said.

With spring here and summer just around the corner, real estate leaders expect sales to pick up.

“We’re still getting a lot of people out there who are saying this is the time to buy,” Johnson said. “I’m expecting that this spring and summer is going to cruise along. As the weather comes out everyone comes out.”

It’s hard to predict when the market will bottom out but real estate leaders think we’re close.

“By the time you see the bottom it was two months ago,” Scott said.

He said the good news is the California market is starting to pick up, which could drive some sales here.

His advice: “Get out there and buy if you’re ready.”

Check out first-time buyer event
Windermere Real Estate in Anacortes is hosting a first-time buyer event featuring properties listed at $300,000 and less.

The event is noon to 4 p.m. Saturday, May 23. Pick up a list of properties at 3018 Commercial Ave. and tour the homes. Organizers expect up to 15 homes and condos will be open for viewing.

A lender from Windermere Mortgage will also be available at the office to explain financing options or participants can fill out a financial worksheet that will give them an idea of what they can afford.