A house is a structure that is boards and nails, glass and roof. Just a few years ago, when buyers were lining up to be the first to make an offer on a house, it would have been hard to convince those who bought houses to sell quickly for profit, or others who used the equity of a property to borrow against, that a house does not a rich man make. We have learned that is actually true ... at least in the short term.
One of the most profound lessons for all of us in recent years as housing prices dropped and our confidence in the once fast-appreciating equity in our homes waned is that we have changed what we value as most important; we have learned to prioritize our dreams. We are cautious with our budgets and want the best value for our hard-earned money.
“Home” has an entirely different connotation than “house” or “housing,” with a value much more enduring. A home is something of great value to a family, a big part of the American Dream, beyond just the financial investment. It is a place where children are provided stability in a neighborhood or school.
Homes allow families to put down roots, build family memories and create lifelong friends.
A recent study found that homeownership has a significantly positive effect on the reading and math performance of children between the ages of 3-12. Homeowners move less frequently than renters and that stability raises educational attainment in children from families of all economic levels.
Homeownership is investing in a community, which translates to more civic involvement. Research from the National Association of Realtors shows that homeowners are happier and healthier with higher self-esteem and higher perceived control over their lives. They even report that homeowners have higher self-ratings on their physical and mental health.
Despite the national gloom over the housing market, all local real estate markets are unique, influenced by local demand, local land-use and building rules, and a host of other factors one cannot see from the 40,000-foot lens of national news coverage.
In Washington, there is certainly opportunity for the creditworthy to make a wise investment in a home right now. By the end of 2009, the WSU Center for Real Estate Research index that measures affordability had risen above 100 in all areas of the state. In Clallam County in the final quarter of 2010 it was 138, up from just below 100 in 2005-2006. That means that the homebuyer making an average income has more than enough to purchase a mid-priced re-sale home.
Home prices are a big part of the affordability formula. Those prices are affected by two major factors: supply and demand. On the supply side foreclosures and massive overbuilding in certain areas of the country have caused a glut of inventory that have put home values in a hole that is hard to dig out of; while there are too many foreclosures in Washington and in our county, the number of them is moderate compared to the rest of the country. And the price of land has kept a governor on the type of overbuilding that resulted in excessive inventories in Arizona, Nevada and Florida.
On the demand side, Washington also is sitting better than most of the country. Even in 2009, Washington had the fourth largest net increase in migration in the nation. That was 58,000 more people who needed a home. Clallam County’s net population growth remains strong at nearly 1 percent.
We do have one thing in common with the other real estate markets: People want and need affordable places to call home.
With interest rates as low as we have ever seen in history, getting into a home here is as affordable as it was in 2000 when considering home prices and the historically low mortgage rates. Those low rates can shave hundreds of dollars off monthly payments and thousands of dollars interest off the life of a loan.
A healthy caution lingers for every homebuyer out looking today no matter where they live. But here in our corner of the world those who are creditworthy and want to invest in something of great value to their family for many years, rather than the short-term investments of the past, still have the potential of finding what they are looking for, something of great value — Home Sweet Home.
Mike McAleer is a managing broker with Re/Max Fifth Avenue in Sequim and is part of Team McAleer.
Editor’s note: Mike McAleer served as the Sequim Gazette’s guest editor for the week. His “duties” included assigning an article, writing the editorial and discussing other news stories with staff. McAleer “won” the week’s work through a donation at the annual Boys & Girls Clubs of the Olympic Peninsula auction. Many thanks go to Mike McAleer for his help and support of the Boys & Girls clubs. — MD