Short Sales and Foreclosures Tempered the Real Estate Recovery in 2011 for Vancouver WA
Late in the year 2010 many real estate economists expected the start of the Third and largest wave of Foreclosures in the USA. We have reviewed the home sales dataˡ from the Vancouver MLS for the year 2011, and summarized it in a form that will let us illustrate the depth of this challenge to our local economy.
Homes For Sale in Vancouver WA -- Composition and Volume Level
Housing Inventory available for sale is the level of homes listed at any one
time. The "Normal" level of inventory is about
6 months of supply (calculated by dividing the Active Listings by the Sold
listings for that month).
Clark County started January 2011 with
11.7 months of supply (also known as a Buyers Market with abundant inventory
relative to the number of home buyers); and ended the year with a 6.5 month
level -- which is a substantial reduction during the year. Removing
the inventory of listings categorized as "New" the level is down to 4.8 months;
and nearing the range of a Sellers Market!
Even with the greatly reduced level of housing for sale appearing to be a Sellers Market, the continued falling of prices is 2011 shows how powerful the Distressed property segment has been.
Over Half of the 2011 Vancouver WA Home Sales are Distressed Property Sales
The Vancouver MLS was updated in 2009 to allow the tracking of Foreclosures and Short Sales, which allows reporting here. Another Distressed Property element are the homes purchased at the Foreclosure Auction by Flippers. Many but not all of the Flipped homes (Flips) were listed and sold; as some were pre-sold and won't be tabulated here. The Flip segment is also harder to gather all the data within RMLS thus, we'll only have an estimate for the Flips that were listed and sold.
From our review of the homes sold through the Vancouver MLS for the total
year 2011, we believe that prediction of the Third and Largest wave of
Foreclosures came true. It is also a fact that a good number of Short
Sales are still awaiting their offers to be approved by the bank from the Second
Wave, and even the First wave!
Total Vancouver home sales increased by 202 units (6.4% -- 3,335 in 2011 vs. 3,122 in 2010). However, the Distressed Property segment came in at 1,720 (includes the estimate for Flips), a whopping 51.6% of total sales. This percentage compares to 50.2% County wide.
Affordability Hits Another High with Prices and Interest Rates Heading Down
Early in 2011 we saw home loan interest rates in the mid-4% range, and even hitting 5% for a moment; until they turned and fell to new historic lows just under 4%. Combining the low lending rate with the falling prices, the Housing Affordability Index as reported by the Washington Center for Real Estate Research shows Vancouver and Clark County's housing as one of the most affordable areas in Washington's I-5 corridor!Searching for Equilibrium and the New Normal
Any Recession, and more so in a major housing led Great Recession, the
real estate market seeks out a new equilibrium -- which often seems like that
mythical place (will we ever get there?) where the supply of houses will match
the demand for them; with prices back on a slow and steady upward path.
For 2011 the transaction activity, as evidenced by this chart, shows a much more typical rise and fall of activity throughout the year. We view this as some sense of purchase normalcy returning as buyers are being motivated to purchase based on their basic needs, and not by at artificial federal incentive program. (more charts and statistics available by clicking on the chart).
During the year, only two months saw the Median Days on Market go slightly above 100 days; and in the summer the median came close to 50 days. Little by little, many of the key indicators of market health are showing improvement.
What's in store for 2012? We'll be exploring that in a future updates -- Stay Tuned!
Note 1: The type of Residential Homes reviewed are Single-Family Detached; Attached (Townhome-style); Condos and PUD. Excluded are In-Park; Floating and other types.