The third quarter results for San Juan Island and San Juan County are reflecting a downward trend in volume and transaction numbers. Per the NWMLS, the dollar volume year-to-date on San Juan Island was $117,630,750. with a total of 125 transactions. This reflects a 13% decrease in the dollar volume and a 9% decrease in the number of transactions.
For San Juan County, the total dollar volume was $251,538,375 with a total of 248 transactions. The County’s decreases were 16% in dollar volume and 19% in number of transactions.
Coldwell Banker San Juan Islands Inc. is holding their own and maintaining 48% of the market share on the island and 6 of the top 10 production agents on San Juan Island work at our office.
For 2023, my Team is on schedule to close production volume very similar to our volume in 2022.
All of the experts predicted the market corrections regionally and nationally, it was inevitable. Further, when low inventory is coupled with high inflation and increasing interest rates, a housing market correction is by design.
The current market is still considered strong as those that need to buy, or sell can do so in a timely manner. The market is more balanced with negotiations on both sides of the transaction.
The activity tends to be price driven, the buyers will come out if the prices are market or below.
If sellers are ready, they can attract a buyer via their pricing. On San Juan, many of our sellers are not that motivated. Many of our transactions involve a rental, second home or land that were held for investment, so our sellers are not feeling any urgency. It is not like a seller in Seattle that just secured a job in Tacoma and needs to relocate, most of our sellers have the time to wait out the market.
As stated above, it is still a strong market, the average sales price to list price ratio for a home on San Juan Island year-to-date is 95.7% or 4.3% off list price. For the County, the ratio is 96.1% or 3.9% off list price. In the past, I recall telling buyers that we can write the offer in the range of 8-10% off list price but expect to settle in around 4-6% off list price. Currently, we have returned to a more typical ratio in this category.
We still have a few situations where multiple offers are involved when a new listing with a good price is originated. In those cases, typically the seller is granted full price or above.
As of October 1st, the total inventory for San Juan Island was 91 listings for all types of properties with 19 of those pending in escrow and 72 were active listings.
For the County, the inventory total was 253 listings with 44 of those pending and 209 active listings.
The numbers are down in all three categories for the Island and County. The decrease in the number of pending transactions mirrors the market correction that we are currently involved in.
My comments to parties considering buying or selling in our market are noted below:
Sellers:
· We have buyers in our market; however, expect the offers to contain contingencies for inspection, feasibility and possibly financing. The transaction closing periods are back to 30-45 days.
· This is not the market to “test” the top if you want to sell in a timely manner.
· Most buyers purchasing in excess of $1M are cash. The high interest rates have impacted those buyers under $1M.
· As interest rates for land and construction loans are extremely high, sellers may want to consider carrying the paper for 1-3 years, interest only with a 6-8% yield, which is pretty attractive. The down payment recommended would be 25-30%.
· We haven’t had very many low appraisals, so the appraisers are finding enough closed comparable sales to support market values.
· The number of transactions with multiple offers and/or escalating prices are few and far in between.
· Many sellers are recognizing the market change and the seasonal time of year, and are electing to reduce their price in order to attract the buyers.
· Buyers desire the property to be in good condition. Most do not want to experience a remodel or repairs and appear to shy away from those homes with a “honey do” list. Perhaps they know that our service providers are fewer in number and extremely busy.
Buyers:
· There is a good selection to choose from and the days on market is increasing which creates some anxiety for our sellers. The fall slowdown has arrived, and our sellers are aware of it.
· There are fewer multiple offers and “bid wars”, so less competition.
· Buyers must still have their pre-qualification letter in hand and select a lender that can perform with loan approval in 30 days and close within 45.
· Interest rates are high, but several lenders offer creative programs such as BECU, they have an after closing float down rate option.
If you have any questions about our current market, please be sure to contact me. With over 28 years on the island in real estate, I have been through a few market changes.
Written By:
Merri Ann Simonson
Coldwell Banker San Juan Islands Inc
360-317-8668
simonson@sanjuanislands.com