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Despite rumors to the contrary, the local real estate market is doing well.

From January 1, to June 10, 2007 there have been 512 sales of property in Bonner and Boundary Counties, listed with the Selkirk Association of Realtors, with an average sales price of $250,774 for a grand total of $128,396,469.00. Sounds like a good market to me but we will need to compare that number to last year’s sales to better understand how the market is doing. For the same period in 2006 there were 616 sales with an average sales price of $215,787 and $132,925,084 in total sales for the same six month period. So we are down about 17 percent in the number of properties sold but the average sales price is up about 16 percent. In all, there was a net loss of about $4,000,000 in total sales dollars which is about a 3 percent decrease. So, yes the market could be said to have decreased by about 16 percent in number of sales and 3 percent in total sales dollars.

But I think it is much more interesting and perhaps telling to look at the market over the last five years. We all know that real estate boomed over the last five years and that prices have increased but it is interesting to see when and how much. In the table at the right, you can see the data I synthesized from the local Multiple Listing Service:

To me the most interesting information to distill out of the figures above are the following:

From 2002 to 2003, total sales were up 52 percent and there was a nine percent increase in sales price.

From 2003 to 2004, total sales were up 29 percent and sales price was up 12 percent.

2004 to 2005 the increase in total sales was 24 percent, and sales price increased 23 percent.

In 2005 to 2006 that trend continued, with a 34 percent increase in sales and a whopping 31 percent increase in total sales price.

And last year, 2006 to 2007, there was a 17 percent increase in total sales, with a corresponding 16 percent increase in price.

So, the total number of sales peaked in 2005, coinciding with the national figures from the National Association of Realtors, which indicate that the peak of this real estate cycle was in July of 2005. Here in our market it looks like the increase in sales prices lagged behind the increase in sales volume a year or so and ironically even though the period between 2005 - 2006 saw the largest decrease in sales volume, it also saw the largest increase in sales prices. Overall, the number of sales in our area are decreasing but the average sales prices are still increasing, though at a much lesser rate than the two previous years. So, yes the capitalist free market system is working, and the market is correcting itself after a drastic spike. This is, of course, a good thing creating a more stable and sustainable market which is much less likely to crash at any time in the foreseeable future.

What does this mean to the buyer of real estate? Well, to me it indicates that now is the time to buy because prices are still increasing and I doubt real estate will ever actually get any cheaper unless there is a severe economic downturn, such as the Great Depression. Fortunately for those who are not prepared to buy now, prices will not be increasing as fast as they have been over the last few years but they will still be increasing. If you can make it happen, it would seem logical to me to buy before prices go up any more.

For the seller of real estate… now is also the time to sell, too, because although prices will continue to increase, the rate of return is beginning to decrease. If the trend continues there will also be fewer buyers in the market from here until some unknown time in the future. Therefore, the best chance to sell your property, at the best price or rather at the highest rate of return, in the foreseeable future, is now while there is the maximum number of buyers in the market and before the rate of property value increase decreases any further.

If you do intend to buy or sell real estate, make sure to pick a good brokerage and Realtor. In addition, you don’t have to accept the agent who is assigned to the floor that day. There are a lot of part-time agents out there who have little, if any, experience in real estate, no background which is an asset in real estate and no real qualifications to be handling one of the biggest financial deals of your life.

It is wise to make sure that the agent you choose is a full time agent, who has a significant amount of sales behind them to have acquired the experience needed to represent you well. As a rule of thumb, 20 percent of the agents are responsible for about 80 percent of the volume of sales. That leaves about 280 agents out of 350 with relatively little or no experience.

In addition, try to find an agent who specializes in the type of property you want to sell or for which you seek. Find out what their qualifications are for their specialty and how much experience they have in that specialty. Picking a neighbor, the person who used to be your bank teller, a friend or relative or whomever mailed you a solicitation letter is really not the wisest way to choose an agent.

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Author info

Michael White Michael White is a Realtor with Coldwell Banker - Sterling Society and a consultant for Northwest Group In-Land. He has a BS in Forest Resources & Ecosystem Management and specializes in land, ranches and homes with acreage.

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