Greetings Valued Friend,

As we approach the end of 2008 while there is still fear and uncertainty in the markets we are beginning to see some positive change as we approach 2009.  Interest rates continue to remain low, oil prices have come back to reality and the citizens of the United State of America have elected a new president.  While we are not out of the woods yet hopefully the enclosed Spokane area market update will assist you in planning  and executing your real estate endeavors.

Market Activity

October Activity as reported by the Spokane Association of Realtors reported closed sales of  439 units during the month which is down 26 units from the  closed sales as reported in September's Activity.  In comparison to October 2007 closed sales were down 157 units which is a 26.3% decrease month vs. month.   For October pending sales reported were 363 units, which is down 55 units as compared to September pending sales of 418 units, this equates to a 13.2% decrease.  In comparison to October 2007 pending sales for the month were down 135 units, a 27.1% decrease.

On a year to date basis closed sales through October 2008 were 4,364 units, which is a decrease of 1,642 units as compared to year to date sales through October  2007 of 6,006 units.  This 1,642 unit difference represents a 27.3% decrease in closed sales year over year.   Pending sales year to date through October 2008 of 4,456 units is down 1,448 units compared to pending sales year to date through October 2007 of 5,904 units.   This represents a 24.5% decrease in pending units year over year.  

The importance of looking at pending units vs. sold units is that pending units are a more recent indicator of market absorption and activity.  When a property goes pending this signals that the property has gone under contract and the contingencies of the purchase and sale agreement have been satisfied.  All parties are now moving towards the agreed upon close date.  Sold units indicates that the property successfully changed owners.   Due to deals having elongated closing dates related to contingent home sales, financing, 1031 exchanges, etc. this metric doesn't provide us the most current market activity and direction.

During the month of October the average sales price in Spokane  county was $201,797 and the median sales price was $177,000.  This is in comparison to September average and median prices of $201,372 and $174,900 respectively.  On a YTD basis through October our average price of $207,003 is down $4,961 dollars per unit or 2.3% compared to October's 2007  YTD average price of $211,964 .  From a median price perspective the October 2008 YTD price of $184,900 is down $1,300 from our October 2007 YTD price of $186,000, resulting in a .69% decrease.

As we discussed in last month's newsletter as we approach the end of the year we historically experience a downward turn of inventory on the market.   October continues this trend as  Spokane Inventory  for the month stood at 3,173 units which is down 214 units as compared to September 2008.  This represents a 6.3% decrease in inventory from September to October.  In comparison to October 2007 inventory is up 67 units over this time last year which equates to a 2.2% increase.   So now when someone says to you the market is overloaded with inventory and is x times what it has been you can now factually inform them that inventory in only slightly higher then it was this same time last year! 

While overall inventory continues it's downward trend with only 363 pending sales during the month of October our  Spokane market absorption rate  moved downward to 11.69% from September's rate of 12.34%.  We continue to hold steady over the last 3 months with our absorption rate in the 12% range.  When looking at months of inventory on the market October stood at 8.56 months.  This is an increase of 5.6% compared to September's months of inventory available of 8.10 months.   Thus at the current absorption rate of 11.69% and assuming no new listings come on the market, it would take us 8.56 months to sell the current inventory of 3,173 units.   

As a reminder when months of inventory are above the 6 month supply the market is considered a buyer's market.  Buyers have many properties to choose from and thus have an advantage when negotiating with sellers.  When inventory levels are between 3 to 6 months the market is considered neutral, where neither the buyer or the seller has an advantage.  Under 3 months is considered a sellers market, where sellers have an edge over buyers.  Based on the recent trends we continue to be in a "Buyers" market and sellers need to understand this when deciding to list their properties for sale.

As always from month to month we experience and see strength and weakness in various area's and segments of the market.  Whether you are considering buying or selling a property understanding the nuances of your market is key.  Enclosed is the Spokane October Market Analysis which will provide further analysis and activity for various price ranges and area's of Spokane.

Commentary

So what does this all mean? For buyers let's look at the positives; low interest rates, a healthy selection of homes in good condition is great for first time home buyers to position themselves for the future as home values in the more affordable price ranges will only continue to appreciate in the coming years.  For "Move Up" buyers the narrowing of the price gap between the more affordable price ranges and the rest of the market provides an excellent opportunity to "price jump" into a higher priced home.  It is important to note the while many areas are now more affordable, you buy and sell at CURRENT market values, thus being realistic regarding the value of your existing home is crucial.

For investment buyers the CURRENT market allows them to take advantage of no longer having to pay premium prices of a multiple offer market.  In addition with rents going up, its time to take advantage of low interest rates and increase the value of their investment portfolio.

These are just a few of the opportunities that exist in the CURRENT Spokane Real Estate market!  Here at the Spokane Real Estate Advisor our primary goal is to educate, serve and provide value to you my clients.  If you would like a more in depth discussion of the market and how you can benefit in the current market conditions please contact me.  I look forward to earning your trust, respect and business!

Regards,

John Creighton
Spokane Real Estate Advisor

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