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prepared exclusively for windermere real estate the gardner report western washingthird quarter 2012,iXolume X Windermere real estate is proud to partner with Gardner e conomics on this analysis of the Western Washington real estate market. this report is designed to offer insight into the realities of the housing market. Numbers alone do not always give an accurate picture of local economic conditions; therefore our goal is to provide an explanation of what the statistics mean and how they impact the Western Washington housing economy. We hope that this information may assist you with making an informed real estate decision. For further information about the real estate market in your area, please contact your Windermere agent. windermere.com | mobile.windermere.com regional economics perCent C hange in ann UaL eMpLoYMent as the weather starts to turn in Washington, so do its economy and real 1.4% estate markets. in all, i was quite pleased with this report inasmuch as itgton State 1.7% shows, in aggregate, continued improvement on all fronts, but there aWhatcom (Bellingham m Sa) 4.2% headwinds that need to be acknowledged. Snohomish (everett mSa) 3.1% the counties included within this report increased the employment King (Seattle/BellevueSa) 3.1% base by 50,000 over the past 12 months. that said, we actually lost 7,300 Skagit (mt. Vernon-anacortes mSa) 2.5% jobs between q2 and q3. at present, i am not too worried about this Pierce (tacoma mSa) 1.8% as i am seeing some wild seasonal fluctuations in some government employment sectors that should be ironed out by year’s end. i will, Cowlitz (longview mSa) 0.3% however, be closely watching the figures over the next couple of months. mason (Shelton mSa) 0.1% as previously stated, between September of 2011 and September of 2012,sland (oak harbor) 0.1% the area added 50,000 jobs—a 2.3% growth rate, which comfortably thurston (olympia mSa) 0.0% exceeded the state and nation. in our region, eight counties expandedlewis (CentraliaSa) -0.7% their employment base, one remained flat, and seven showed modest contraction (a total of 3,620 jobs were shed in these counties). Kitsap (Bremerton/SilverdalSa) -1.0% Year-over-year, Whatcom County (+4.2%) grew at the greatest Clallam (Port angeles mSa) -1.9% Jefferson (Porownsend mSa) -3.7% rate—i believe this to be due to the value of the Canadian dollar versus the “greenback”! this was followed by Snohomish and King Counties, Kittitas (ellensburg mSa) -4.1% which both expanded their job base by 3.1%. Job losses in other countGrays harbor (aberdeen mSa) -4.2% were modest, with San Juan (-5.9%), Graysharbor (-4.2%), Kittitas (-4.1%), San Juan (Fridayarbor mSa) -5.9% and Jefferson (-3.7%) Counties suffering the largest percentage losses. When we look at the unemployment rate across the region, all -6% -5% -4% -3% -2% -1% 0% 1% 2% 3% 4% 5% counties—with the exception of San Juan County—saw the non agri CULtUre eMpLoYMent: septe Mber 2011–septe Mber 2012 unemployment rates drop from a year ago, a trend that we have growth growth been seeing since early this year. inasmuch as this is certainly pleasing,y growth rate County growth rate i do note that we have not been seeing any expansion in the civilian Clallam (Port angeles mSa) -440 -1.9% lewis (CentraliaSa) -170 -0.7% workforce which, undoubtedly, is having an effect on the overall unemployment rate. Cowlitz (longview mSa) 100 0.3% mason (Shelton mSa) 10 0.1% Grays harbor (aberdeen mSa) -940 -4.2% Pierce (tacoma mSa) 4,700 1.8% the latest data is positive but the expansion appears to be losing some steam. as a result, i am going to leave the economy with the “B” gradesland (oak harbor) 10 0.1% San Juan (Fridayarbor mSa) -340 -5.9% that i gave it in the last quarter. Jefferson (Port townsend mSa) -300 -3.7% Skagit (anacortes mSa) 1,100 2.5% it is not unusual that, in an election year, the private sector tempers its King (Seattle/Bellevue mSa) 36,400 3.1% Snohomish (everett mSa) 8,000 3.1% hiring until it knows who will be occupying the White house. i believe that this is the case here in Washington as much as it is anywhere Kitsap (Bremerton/SilverdalSa) -800 -1.0% thurston (olympia mSa) 0 0.0% else. Whether we will see marked improvement in the fourth quarter Kittitas (ellensburg mSa) -630 -4.1% Whatcom (Bellingham m Sa) 3,300 4.2% is uncertain, however, i feel optimistic that our market will continue to Washington State 49,600 1.7% united States 1,822 1.4% outperform other West Coast markets as well as t.S. as a whole. NotSeasonallyAdjusted the gardner report | windermere real estate third quarter 2012, Volume X iX page 2 regional economics UneMpLoYMent rate C oMparison UneMpLoYMent rate Year-over- Year County Unemployment uS (Metropolitan area) employment rate Washington State Clallam (Port angeles mSa) 22,320 9.1% Grays harbor (aberdeen mSa) Cowlitz (longview mSa) 36,000 10.6% lewis (CentraliSa) Grays harbor (aberdeen mSa) 21,660 12.0% Cowlitz (longview mSa) island (oak harbor) 15,090 7.8% mason (Shelton mSa) Jefferson (Porownsend mSa) 7,830 9.0% Clallam (Port angeles mSa) King (Seattle mSa) 1,197,600 6.9% Jefferson (Poownsend mSa) Kitsap (Bremerton/SilverdalSa) 82,000 7.1% Pierce (tacoma mSa) Kittitas (ellensburg mSa) 14,640 7.5% Skagit (mt. Vernon-anacortes mSa) lewis (CentraliaSa) 22,700 11.8% island (oak harbor) mason (Shelton mSa) 12,840 10.2% Snohomish (everett mSa) Pierce (tacoma mSa) 272,300 8.5% Kittitas (ellensburg mSa) San Juan (Fridayarbor mSa) 5,460 5.3% thurston (olympia mSa) Skagit (mt. Vernon-anacortes mSa) 45,500 8.5% Kitsap (Bremerton/SilverdaSa)m Snohomish (everett mSa) 262,700 7.6% Whatcom (Bellingham mSa) thurston (olympia mSa) 97,400 7.4% King (Seattle mSa) Whatcom (Bellingham m Sa) 82,700 7.0% San Juan (Fridaarbor mSa) 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% ■ Septmeber 2011 ■ September 2012 the gardner report | windermere real estate third quarter 2012, Volume X iX page 3 regional real estate perCent C hange in Y ear-to-date CL osed sa Les San Juan (Fridayarbor mSa) 83.7% the market has registered 40,270 home sales year-to-date in 2012—an impressive increase of 15.3% over the number of sales Jefferson (Porownsend mSa) 41.1% seen in the same period in 2011. i n the third quarter, there were cloKing (Seattle/BellevuSa) to 15,500 transactions completed—another impressive figure. 19.1% Kittitas (ellensburg mSa) 18.6% all but two counties exhibited improving sales velocities over the Clallam (Port angeles mSa) 18.1% same period in 2011. the counties where there were fewer sales, Grays island (oak harbor) harbor and Cowlitz, are an anomaly as both are small areas and the 16.4% absolute contraction was equally small. Snohomish (everett mSa) 15.9% of the 16 counties contained within this report, half reported double-Kitsap (Bremerton/SilverdalSa) 15.4% Whatcom (Bellingham mSa) digit improvements in sales volumes when compared to the same 15.2% period a year ago. thurston (olympia mSa) 13.2% From a transactional standpoint, the data is positive but we are startinggit (mt. Vernon-anacortes mSa) 9.0% to see a slowdown in aggregated sales. the second quarter of the year mason (Shelton mSa) showed an astonishing improvement of 44% in transactions when 8.6% Pierce (tacoma mSa) 8.3% compared to the first quarter. t he growth rate in q 3 has slowed to 6%. as i stated in my last report, “Choice in many markets has become lewis (CentraliSa) 1.4% limited which, if it does not improve, will likely lead to a slowdown inays harbor (aberdeen mSa) -1.2% transactions in the second half of 2012.” Cowlitz (longview mSa) -4.0% i am afraid that my fears appear to be turning into reality. i believe it -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 50% unlikely that we will see much improvement as we move through the fall months, and i am now looking for signs that we will see a strong spring market relative to new listings. We certainly need it. CLosed sa Les a Ctivit Y of existing sing Le-fa MiLY ho Me & C ondo Ytd Ytd Ytd Ytd County sept 12 sept 11 County sept 12 sept 11 Clallam (Port angeles mSa) 280 237 lewis (CentraliSa) 437 431 Cowlitz (longview mSa) 545 568 mason (Shelton mSa) 493 454 Grays harbor (aberdeen mSa) 479 485 Pierce (tacoma mSa) 6,190 5,716 island (oak harbor) 702 603 San Juan (Fridaarbor mSa) 158 86 Jefferson (Porownsend mSa) 285 202 Skagit (anacortes mSa) 858 787 King (Seattle/BellevueSa) 17,952 15,069 Snohomish (everett mSa) 6,285 5,421 Kitsap (Bremerton/SilverdalSa) 1,947 1,687 thurston (olympia mSa) 1,701 1,503 Kittitas (ellensburg mSa) 332 280 Whatcom (Bellingham mSa) 1,626 1,412 the gardner report | windermere real estate third quarter 2012, Volume X iX page 4 regional real estate hoMe pri Ce growth rate as is shown in the chart to the right, 13 counties saw the average San Juan (Fridayarbor mSa) 112.6% sales prices at levels above that seen a year ago (up from 10 in my last Clallam (Port angeles mSa) 18.5% report), just two were lower, and one was static. in aggregate, priceisland (oak harbor) homes sold in the counties analyzed have turned around with prices 15.8% 6% higher than those seen in September of 2011. t his figure excludesSnohomish (everett mSa) 15.1% Kittitas (ellensburg mSa) the volatile San Juan County. if we include it, prices paid for homes 14.5% grew by a whopping 17% year-over-year! Pierce (tacoma mSa) 13.1% excluding San Juan County, of the counties that saw appreciation, King (Seattle/BellevuSa) 10.2% the most pronounced gains were seen in Clallam (+18.5%), i sland Grays harbor (aberdeen mSa) (+15.8%), Snohomish (+15.1), and Kittitas (+14.5%). declines were seen 10.1% mason (Shelton mSa) 9.4% in Jefferson (-21.5%) and Whatcom (-0.4%). Kitsap (Bremerton/SilverdalSa) 7.5% i was also pleased to see that there are some counties where sale lewis (CentraliaSa) prices are now higher than they were two years ago. this is important, 3.3% as the early summer of 2010 represented the end of the First ime Skagit (mt. Vernon-anacortes mSa) 2.7% homebuyer tax credit that functioned to artificially (but temporarilythurston (olympia mSa) 0.5% support home prices. Cowlitz (longview mSa) 0.0% the choice of homes available to purchase is woefully low across the Whatcom (Bellingham m Sa) -0.4% region and does not look as if it is likely to increase any time soonJefferson (Porownsend mSa) Because of this fact, and regardless of the solid price growth that -21.5% 30% 20% 10% 0% 10% 20% 30% we are witnessing, i cannot raise my grade above the “C” that i gave it last quarter. saLes pri Ce sing Le-fa MiLY & C ondo: septe Mber 2011–septe Mber 2012 net net growth growth growth growth County rate ($000’s) County rate ($000’s) Clallam (Port angeles mSa) 18.5% 34.0 lewis (CentraliaSa) 3.3% 5.0 Cowlitz (longview mSa) 0.0% 0.0 mason (Shelton mSa) 9.4% 17.0 Grays harbor (aberdeen mSa) 10.1% 13.0 Pierce (tacoma mSa) 13.1% 26.0 island (oak harbor) 15.8% 42.0 San Juan (Fridayarbor mSa) 112.6% 437.0 Jefferson (Porownsend mSa) -21.5% -65.0 Skagit (anacortes mSa) 2.7% 7.0 King (Seattle/BellevuSa) 10.2% 39.0 Snohomish (everett mSa) 15.1% 36.0 Kitsap (Bremerton/SilverdalSa) 7.5% 19.0 thurston (olympia mSa) 0.5% 1.0 Kittitas (ellensburg mSa) 14.5% 27.0 Whatcom (Bellingham m Sa) -0.4% -1.0 Average $’s the gardner report | windermere real estate third quarter 2012, Volume X iX page 5 regional real estate sing Le-faMiLY ho Me priC e trend s Median ho Me pri Ce growth rate County home price escalation 112.6% (Metropolitan average Quarter 1 Year* 2 Year* 5 Year* San Juan 45.8% area) price King Clallam $218,000 23.2% 18.5% -6.8% -41.4% Cowlitz $151,000 18.9% 0.0% -11.7% -31.7% Whatcom Grays harbor $142,000 23.5% 10.1% 1.4% -25.7% Skagit island $308,000 13.7% 15.8% 0.3% -18.9% island Jefferson $237,000 -9.5% -21.5% -20.2% -24.5% mason King $421,000 1.2% 10.2% -1.6% -12.5% thurston Kitsap $272,000 -9.3% 7.5% -6.5% -28.6% Pierce Kittitas $213,000 -1.8% 14.5% -21.7% -29.0% Jefferson lewis $156,000 0.6% 3.3% -22.8% -27.1% Snohomish mason $197,000 11.3% 9.4% -4.8% -22.1% Grays harbor Pierce $225,000 6.6% 13.1% -7.0% -23.7% lewis San Juan $825,000 117.1% 112.6% 45.8% -3.8% Skagit $263,000 16.4% 2.7% 15.4% -14.1% Kitsap Snohomish $274,000 6.6% 15.1% -2.1% -24.9% Kittitas thurston $215,000 -6.5% 0.5% -13.7% -22.9% Cowlitz Whatcom $268,000 -3.9% -0.4% -7.3% -13.3% Clallam *Yearoveryearfrommostrecentmonthsurveyed -40% -30% -20% -10% 0% 10% 20% 30% 40% ■ one-year ■ two-year ■ Five-year the gardner report | windermere real estate third quarter 2012, Volume X iX page 6 conclusions about matthew gardner there were a lot of interesting data points in this latest report that certainly gave me mr. Gardner is a land use economist and principal with Gardner much to chew on. it is human nature to think positively about the future but to still keep economics and is considered by many to be one of the an eye on the past. the economy and real estate market in Washington continue to exhibit foremost real estate analysts in the Pacific Northwest. positive growth, but the rate of growth has started to taper. in addition to managing his consulting practice, mr. Gardner is Now, some of this can certainly be attributed to seasonal fluctuations, as well as the current a member of the Pacific real estate institute; chairs the Board political environment, but it is important to put this into context. o ur region continues to of trustees for the Washington State Center for r eal estate outperform not only all other West Coast markets, but also the united States as a whole. research; the u rban l and i nstitutes t echnical a ssistance the headwinds that do exist, mainly in the form of low levels of housing for sale, are likely Panel; and represents the m aster Builders a ssociation as an to be temporary. in-house economist. i mentioned that it is in our nature to be of a positive disposition while, at the same time, he has appeared on CNN, NBC and NP r news services to discuss real estate issues, waiting for something to go awry. m uch has been talked about the “shadow inventory” and is regularly cited in the WallStreetJournal and all local media. of distressed housing that could flood the market and cause prices to start to sink again. inasmuch as there are certainly a substantial number of homes that are in this predicament, i do not see that it is likely that the banks that own these assets will list them en-masse. the market needs homes to buy and there are certainly more buyers than sellers in the market. distressed inventory will actually play an important part in the housing recovery. windermere.com | mobile.windermere.com ©2012WindermereServicesCompany&GardnerEconomics.Allrightsreserved. the gardner report | windermere real estate third quarter 2012, Volume X iX page 7
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