Blog readers: This information is specific to Snohomish County, Washington but I think the general trend that I discuss is occurring in many other areas of the county. — Steve
Q: Do you know what the average percentage of real estate appreciation (i.e., escalation) we’ve seen in Snohomish County by year since 2002? If not, do you know if Snohomish County Assessor Office has info on a web site or where I could find this information? I would sincerely appreciate any input you could offer – Thanks M.C., Everett
A: The Snohomish County Assessors office publishes an annual report that includes appreciation rates for the communities within the county.
You can find this report on the Internet by going to this website address:
http://www1.co.snohomish.wa.us/Departments/Assessor/Services/Forms/Annual_Reports.htm
However, keep in mind that these stats are based on the assessed value of properties in the county and not actual sales data.
To get sales data, you can visit the public version of the Northwest Multiple Listing Associations (NWMLA) data at this website address:
http://www.nwrealestate.com/nwrpub/common/mktg.html
The public version of the NWMLA data shows only the current year and previous years data. As a real estate broker, I have access to all of the data in the multiple listing computer system and here is what I found for Snohomish County.
Looking just at single family home sales (not counting condominiums) in Snohomish County for the month of October:
October 2002 – 865 home sales, average sales price: $245,781
October 2003 – 1278 home sales, average sales price: $259,585 (5.6% increase from previous year)
October 2004 – 1116 home sales, average sales price: $284,691 (9.6% increase from previous year)
October 2005 1279 home sales, average sales price: $342,405 (20.3% increase from previous year)
Total increase in average Snohomish County home sales price since October 2002: 39.3%
But like all statistics, these numbers can be misleading. The oldest clich頩n real estate is value is determined by three factors: location, location and location. It is a clich頢ecause it is true. While the market stats available at the websites listed above can give you some general housing market trends, you can’t simply add the specified appreciation rate to your homes previous value to determine its current value. There are many more factors that go into the home value equation, such as whether your home has a view, waterfront or is located in a highly desirable housing development. Homes appreciate much faster in some neighborhoods than in others, so your homes value will be determined more by your next door neighbor than by the price of homes in another part of the county.
As for appreciation, that depends on the basic economic equation of supply vs. demand. If you look at the numbers above, you sill see a huge jump in the number of homes sold in October 2003 versus October 2002. Thats partly due to the fact that mortgage interest rates dropped dramatically in 2003 and they have remained relatively low for the past three years. Low mortgage rates make homes more affordable, which has dramatically increased the number of buyers in the market (demand) while the number of homes for sale (supply) has been dropping. When you have more buyers than sellers, thats called a Sellers Market because the sellers are in a position to make buyers compete for their homes and drive up prices.
As I first wrote a couple of months ago, I believe we have reached the peak of the local housing market. I think that by next Spring you will see a more homes coming on the market and fewer buyers competing to purchase them. That will swing the supply/demand ratio back toward the buyers favor. We may not have a true Buyers Market where there are far more sellers than buyers, but I think an increased supply of homes for sale will cause the rapid price appreciation rates we’ve experienced over the past couple of years to come to a halt. In some cases, we may actually see some price reductions from the peak home prices of this year especially in the upper end of the housing market. The most expensive homes tend to appreciate the fastest during a housing boom and their values also tend to fall the fastest when the housing market cools.
Now, don’t get the wrong idea. Im not predicting a housing bust, but I do think the market will flatten out for awhile after the huge increase in home values we’ve seen over the past few years.
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