Yesterday's New York Times had a great interactive article about home values around the country. It seems Wells Fargo commissioned a study to see what the real picture is regarding the debt to current market value.
http://www.nytimes.com/interactive/2008/11/10/business/20081111_MORTGAGES.html
The gist of its message is that in some areas of the country, huge percentages of home owners owe up to 90% of what they could sell their homes for. And, some are "underwater," or as we who live on an island say, "upside down," with their banks. Mostly that is in California, Nevada, Florida and Georgia.
How are we doing in Washington? According to this model, the average homeowner in our state owes less than 60% of what his house could currently fetch in today's market. That's equity that will survive a couple of years of price drops and eventually, make money for the homeowner.
We hear in the national news about foreclosures and short sales (when the price a home sells for will not pay off the underlying debt plus closing costs.) We're seeing that on Bainbridge Island, but they are still a small percentage of our total number of listings. That's data I can track pretty well.
What I hadn't known is how much equity most of us have in our homes. If you bought here before 2006, or if you had a substantial down payment, you should still have good equity in your home. For most of us, even in this current market, our homes have made good money for us in the last decade.
In 1998 the average selling price on Bainbridge Island was just over $340,000. The average selling price year-to-date at the end of October 2008 is almost $790,000. (I prefer looking at the mean rather than the average. The mean gives a more accurate reflection of market trends, than average but we don't have historic data for mean.) Nonetheless, the picture is still clearly illustrated here.
Can you expect to sell your home today for more than it might have received at the height of our market, around spring of 2007? Probably not, and if your home is worth more than $600,000, you may have a particularly hard time selling right now because jumbo loans (over $417,000) are difficult to find. Which means the pool of buyers with a loan and enough cash in hand to buy your property is going to be small. Hard to hear, but true.
Here's what I remind myself when times get tough: this is my life today, but it won't always be my life. Bainbridge Island remains an amazing place to live. Seattle and Kitsap County's employment picture is strong. We're luckier than 99% of the people living now or ever on this gorgeous planet of ours.
Time to count our blessings instead of dollars (or sheep.) We'll sleep better. Cheers!
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