Sunday, December 30, 2007
Kitsap Real Estate Local Markets in November 2007
Much news has been made about the strength of the Seattle housing market compared to most other large metropolitan markets in the U.S. While our strong local economy and desirable quality of life may have some impact, the blog Calculated Risk showed a graphic comparing the Case-Shiller index for the three cities still showing price gains for the year (Seattle, Portland, and Charlotte, NC) compared to the composite index of the 10 largest markets. It’s apparent that the 10 city composite prices started accelerating well ahead of the Seattle market, which didn’t shift up to the unsustainable pace until the start of 2004. For this reason our market, though currently overpriced and starting to fall, has had some breathing room compared to most of the other markets used in calculating the composite index.
We have published this article monthly for most of the past year to explore some of the significant variations in the Kitsap Real Estate market. Overall, inventory turnover has continued to decline (takes longer to sell the existing inventory). Listing inventory continues to fall as sellers are taking their properties off the market for the Holidays. Median prices fell about half a percent in November, but remain up 7% compared to a year ago. We try to breakout the new construction sales from the resale market in Poulsbo to give a more accurate presentation of conditions there. A review of the year’s progress is fitting. Below are some graphs of the market fluctuations of total listings, number of closed sales, and median sales price using each individual month’s data for various areas. The more general area descriptions below cite the more consistent year-to-date numbers.
Total listings on the market by month for various Kitsap communities
Number of Closed Sales each month for various Kitsap communities
Variations in Median Price Month by Month for Closed Sales in various Kitsap communities
Bainbridge Island Real Estate
Homes on Bainbridge Island were selling for a median price of about $680,000 at the end of November, up about 5% from a year ago. Kitsap County median prices were up about 7% over the past year. The YTD number of Bainbridge closed sales is down 4% from a year ago, and the YTD number of pending sales is down 3%. The Bainbridge market activity has been considerably slower in the 4th quarter after being up for most of the year compared to 2006. The number of closed sales is down 17% Countywide from a year ago. The number of active listings on Bainbridge (222) is up 16% from a year ago. The Bainbridge listing inventory is falling as homeowners take their homes off the market until next year. The inventory turnover (total homes on the market divided by number sold last month) is 13 months, an improvement from the 24 months reported last month, but still very slow. Bainbridge Island is a strong buyers market.
Bremerton Real Estate
Homes in Bremerton were selling for a median price of about $214,750 at the end of November, up about 7% from a year ago but down over $1000 from last month. Kitsap County median prices were up 7% over the past year. The YTD number of closed sales is down 26% from a year ago, and the YTD number of pending sales is down 24%. The number of active listings (260) is up 47% from a year ago. The listing inventory is falling now as homeowners take their properties off the market for the Holidays. The inventory turnover (total homes on the market divided by number sold last month) is 8.1 months. Bremerton is a buyers market.
North Kitsap Real Estate
Using the example of Kingston - the largest housing market in North Kitsap - homes were selling for a median price of about $350,000 at the end of November, up about 4.5% from a year ago but down $15,000 from last month. Fluctuations occur because of the relatively small number of sales. Kitsap County median prices were up 7% over the past year. The YTD number of closed sales is down 17% from a year ago, and the YTD number of pending sales is down 11%. The number of closed sales is down 17% Countywide from a year ago. The number of active listings in Kingston (86) is up 28% from a year ago, and the inventory turnover (total homes on the market divided by number sold last month) is 14 months.
Poulsbo Real Estate
Homes in Poulsbo were selling for a median price of about $354,000 at the end of November, up about 1.2% from a year ago. Kitsap County median prices were up 7% over the past year. The number of closed sales YTD has increased 11% compared to last year, and the number of YTD pending sales has increased 32%, though a large portion of that increase is from presales of one moderately priced new construction development - homes that never appeared as active listings. The Poulsbo listing inventory (129) has risen by 13% compared to a year ago, a number that is continuing to rise after being lower than last year’s inventory for much of this year. The inventory turnover (total homes on the market divided by number sold last month) is 6.45 months. Calculating inventory turnover in this manner is artificially low since a number of the new construction homes closing did not show as active listings. Of 50 current pending sales, 42 are new construction. Of 72 non-new construction active listings in Poulsbo, only 4 closed last month, making the inventory turnover rate 18 months!
Silverdale Real Estate
Homes in Silverdale were selling for a median price of about $318,500 at the end of November, down less than 1% from a year ago ($320,000). The number of YTD closed sales was down 1.4% from a year ago, compared to a drop in closed sales of 17% for the County as a whole. The number of pending sales YTD is up 1.7% from a year ago. The number of active listings in Silverdale (124) is up 33% compared to a year ago. This inventory is now falling as homeowners are taking their properties off the market for the Holidays. The inventory turnover (total homes on the market divided by number sold last month) is 10 months.
Wednesday, December 19, 2007
Mid December Kitsap Real Estate Outlook
Before exhausting you with details about our real estate market, we want to wish you a Merry Christmas and a happy holiday season. As would be appropriate, most families are focused on other things besides real estate this time of year. We have much to celebrate and be thankful for.
The first half of December has brought a deluge of real estate news, much of it very pessimistic on the national scene. Moody’s Economy.com, Inc., has predicted that existing home sales will fall 40% from their peak in 2005 of just over 7 million homes sold to 4.25 million homes sold in 2008. Sales in 2007 will be about 5.7 million. Global Insights predicts 4.7 million in 2008, Goldman Sachs predicts 4.9 million (in August), the National Association of Realtors predicts 5.7 million, and also that sales are near the bottom now - lots of divergence of opinion. Furthermore, there are some frightening numbers concerning falling home prices and the number of homeowners with no or negative equity. At the end of 2006 there were about 3.5 million in this category. Nationwide, prices have fallen another 5% or so in 2007, bringing the number of no equity homeowners to about 5.6 million. Some economists are predicting another 10% drop next year, which would bring the number of no equity homeowners to 10.7 million, and some economists are predicting that prices will have to fall 20 to 30% to restore the proper ratios of income to home prices seen in past historical markets. That would be a roll back to the prices at the start of 2003, and the number of no equity homeowners might reach as many as 20 million! Some experts have pointed out that falling home prices rather than subprime loans will result in increased foreclosure activity, so we might have good reason to fear that there will be many foreclosures as the market recovers. No political remedy has yet been proposed that provides incentives for homeowners who have no equity to continue making their mortgage payments.
Using the assumption that falling prices rather than subprime mortgage rate resets pose the real threat to large scale foreclosures, how do we look in Kitsap County? In the period 1984 to 2000, Irwin Kellner at Dow Jones Marketwatch reports that the median home prices nationally were on average 2.8 times the median family incomes, and in the '70s this ratio was even lower. Now that ratio is 3.5 nationally, down from a peak of 4.2 last year. In Kitsap County the current median home price is about $293,500 (year to date for closed sales). It was $265,000 for sales closed last month. The 2007 estimated Kitsap County median household income is $60,719. Since it will take some time for prices to fall, let's assume that the median family income in 2008 increases by 5% to $63,755. The current ratio of median home price to median income is 4.4 (using the $265,000 median). If we use Dr. Kellner's historical ratio of 2.8, then the Kitsap County median home price needs to fall to $178,513 - another 33%! That would take us back to the prices of mid year 2002. Just as a check, we might look at the ratio of median home price to median household income at the start of 2002, it was $165,900/$52,701 = 3.13, so the median might only fall to $199,553 using this as our guide, a fall of 25%. Most scenarios view this drop as proceeding more slowly and continuing into 2009 before reaching bottom. In any case, you can see that housing prices must fall if mortgage lending reverts to the standard types of home loans available prior to the advent of subprime lending.
There are mitigating factors that have kept prices from falling in our area. Population growth, fueled by strong demand for new jobs and by the beauty and natural attraction of our region, was about 1.7% in 2007, well above the national average of .9%. Economic conditions for our major employers remain very good, and the weak dollar has also helped exports that are very important to business in our region. The upshot of these factors is that we still have greater buyer demand than in other parts of the country, and to an extent this mitigates the downward pressure on prices described above. There is no simple way to predict how the ratio of median family wages to median house price returns to its normal range.
Armed with knowledge of the trend, if not the magnitude or duration of the current real estate market conditions, what advice might we offer sellers in the new year? Prices are headed downward - selling sooner is going to be better than selling later. Competing to be the best price among comparable properties must be your goal. If you are selling and buying in this market, your loss as a seller will offset when you are the buyer. If it is your time to buy, negotiate for the best price on the best property you can purchase.
Here are the current statistics for Subject To Inspection (STI) and Active Listings (comparing the number in mid December to the number in mid November). You'll recall that STI represents a newly signed around contract prior to the buyer and seller agreeing on the home inspection. Below we show the number of STI contracts signed around in the first 2 weeks of the month. The number of STI contracts is the best gauge for telling us in near real time how many sales are occurring. Some of these sales will fall apart before they become pending sales.
| Area | STI 12/15 | STI 11/15 | Active Listings 12/15 | Active Listings 11/15 |
|---|---|---|---|---|
| S. Kitsap W. of HWY 3 | 3 | 12 | 154 | 163 |
| S. Kitsap E. of HWY 3 | 4 | 2 | 150 | 151 |
| Port Orchard | 4 | 4 | 169 | 177 |
| Retsil/Manchester | 1 | 1 | 121 | 125 |
| Seabeck/Holly | 1 | 5 | 109 | 132 |
| Chico | 1 | 1 | 36 | 33 |
| Silverdale | 10 | 9 | 106 | 124 |
| W. Bremerton | 7 | 11 | 233 | 259 |
| E. Bremerton | 1 | 7 | 105 | 112 |
| E. Central Kitsap | 7 | 4 | 153 | 169 |
| Hansville | 0 | 0 | 45 | 48 |
| Kingston | 2 | 1 | 80 | 86 |
| Port Gamble | 1 | 3 | 24 | 28 |
| Lofall | 0 | 0 | 35 | 32 |
| Finn Hill | 0 | 2 | 73 | 75 |
| Poulsbo | 2 | 1 | 126 | 129 |
| Suquamish | 1 | 0 | 43 | 44 |
| Indianola | 0 | 2 | 39 | 38 |
| Bainbridge | 2 | 7 | 199 | 210 |
| Totals | 47 | 72 | 2000 | 2135 |
‘STI’ deals in December fell by 35% compared to the first two weeks in November. The number of active listings in our residential inventory decreased by 6%, showing that sellers are pulling their properties off the market in some cases rather than relisting. The ratio of sales to number of active listings fell from 3.7% to 2.4%. Silverdale, E. Central Kitsap, and W. Bremerton were the only areas with other than low activity. More than 90% of the sales were under $400,000 and almost 75% were under $300,000.
We have been doing this mid month review for a year now. Here is graph of the cumulative data for Kitsap County as a whole.
December’s APR is 6.353% on a 30-Year and 5.999% on a 15-Year, both Conforming. November’s rates were identical. If you qualify for FHA or VA loans, these programs have become much more attractive for low downpayment buyers. Check with your lender to see if you qualify. To check the daily rate you can contact your lender or preview web sites such as this one - http://www.wellsfargo.com/mortgage/rates.
Download the December Prowse and Company Waterfront Update
Download the December Waterfront Update. This is your guide to our latest waterfront listings and market statistics about waterfront sales in Kitsap County.
Statistics not compiled or published by NWMLS
