King County home prices posted their first gains in three years. After three years of continued decline, King County home prices may have finally reached their bottom. December 2010 ended the year with a surprise jump in home sales along with home prices. Many communities in King County posted year over year price gains, while others are still showing losses.
This reinforces the popular tag line "location, location, location" .
When checking the individual communities on the City Charts in the right hand column, we see that several cities posted positive price gains:
Lake Forest Park
We track only north and east of Seattle communities, there may be gains in other areas.
An increase in average home prices doesn't necessarily mean homes have risen in value, but rather higher priced homes have been selling which brings up the overall average. This is important to keep in mind, as we still see downward pressure on home prices overall.
Rising inventories of distressed home sales and foreclosures will certainly keep the pressure on prices, but the tide could be changing. This is also a clear indication that prices are no longer "falling off the cliff" and we are reaching a level of stabilization.
Certain economic conditions play a role in our local home prices, so while we still have lackluster employment numbers the market is most likely to remain flat until conditions improve.
Does that mean it is a good time to buy a home? If we take into consideration interest rates being at all time lows, it could be. There are many reasons people purchase homes. A place to live, an investment property, or a money maker.
For most home owners, buying a home was always a long term investment. That's what went wrong during the housing bubble. The days when one talked about paying off their mortgage so they could live rent free. Not irrational exuberance in sucking out equity to buy more things.
Homeowners make a community. They have long term visions associated with their home. They get involved in community and neighborhood organizations. Communities with higher home ownership have better educational performance and lower crime rates.
Still, while financial advantages shouldn't be the first and only thing to consider when we think about owning a home, it would be foolish to discount these benefits altogether. The opportunity to take advantage of tax deductions for mortgage interest and property taxes or the ability to benefit from the capital-gains exclusion on the sale of a home up to $500,000.
So there are other factors to consider when deciding to purchase a home other than sales price. Interest rates, tax benefits, community benefits, and the emotional benefits.
So is the market finally reaching a bottom? We will only be able to tell when we see price increases over a longer period of time. However, we see the market is opening up some great buying opportunities for some who are taking advantage of them now.