I just sent one of my clients an update on the Sultan residential real estate market. Unfortunately, things are tough. The only sales to close since January 1, 2009 are 2 cabins that each sold for less than $80K.
I think the real challenge is the new construction on the market. My guess is that builders, hard pressed to find development opportunities in the larger cities, took a chance on Sultan. In the hot market just a couple years ago, it was a good bet to make... at lest it probably seemed that way.
But like almost any pyramid scheme (and lets face it, the real estate bubble was a good part pyramid scheme... with builders and flippers and mortgage companies all hoping to not be the last one caught holding the bag), someone did get caught holding the bag. In this case, it looks to be quite a few builders.
Its a scene that has played out in quite a few areas of the country. Builders have to discount their homes to get them sold at all. Add the pressure of foreclosures and short sales, and they have to discount them even more. With new construction less expensive, existing homes have to discount to be competitive with the new construction and foreclosure/short sales. Often, this drives the home into the short sale category.. and once a home becomes a short sale, the price can tumble... the seller has no motivation to get a high price and its even more expensive to foreclose, so prices go down further. Its not unheard of for prices to get so low that you go back to multiple offers.
In Sultan, right now there are new construction homes on the market that are bank owned! Ouch! And lots of short sales around, pushing prices lower.
Have we hit bottom (or can we at least see it) in Sultan?
I don't know about the bottom, but I think we are starting to see that the prices have truly become attractive.
While there have been no sales, there are a really large number of pending sales... offers have been made and accepted by the sellers and now its a matter of closing the deal. Several are short sales and some are ‘old fashioned' new construction. There are some regular re-sale homes in the mix, but not many.
What about Commercial and Multifamily?
Commercial is equally slow. For such a small town, there are quite a few commercial properties for sale, including a strip-mall thats been on the market for a while and a nice industrial warehouse building that just came on the market. Unless the residential business picks up and indicates folks are again viewing Sultan as a good place to move out to, I'm not expecting commercial to do well for a while. The location on Highway 2 will hopefully help keep some businesses like restaurants going for a while.
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