Sunday, August 31, 2008
Mid August 2008 Kitsap Real Estate Outlook
Political conventions are in progress, and many people are counting on the election to turn around our current economic problems. There is no question that expectations have a significant role in the market trends. However, it’s hard from our point of view to see how any amount of political euphoria can provide much near term relief to the current uncertainties in our national housing market.
Fannie Mae and Freddie Mac continue to dominate the national real estate news. With home prices falling, the number mortgage defaults continues to rise. Even though the loans repurchased by Fannie and Freddie default at a much lower rate than subprime mortgages, falling prices have caused such a large number of homeowners to owe more than their homes are worth. The rate of defaults has increased, and now both agencies are suffering large losses. Stock in both companies has plunged - Fannie Mae’s value is 90% lower than a year ago. The companies balance sheets are complex since they both sell mortgage backed securities to other investors (making money off fees to guarantee payment of the principal and interest), borrow funds to purchase their own mortgages (making money off the interest rate spread between what it costs to borrow vs. what they receive in mortgage interest), and sell stock to investors. Many of the countries largest banks and investment funds, as well as foreign central banks, have a stake in Fannie and Freddie. The Department of the Treasury obtained authority last month to intervene by either extending a line of credit or to investing directly in the stock or debt of these companies. Until the Treasury Department’s form of intervention is known, investors are shying away and the agencies themselves have little ability to raise capital, since investors may or may not be wiped out depending on the method by which Treasury intervenes. Treasury has not indicated their intentions, and Fannie and Freddie still say no intervention will be necessary. There you have it - uncertainty.
In Kitsap County, home prices have not fallen that far. The trade off for this benefit is that homes have become much more difficult to sell. The graphs below highlight how the number of sales have fallen and chance of making a sale have fallen over the past several years.
We can look at affordability as a means of seeing how close our market is to returning to its pre bubble conditions. The Washington Center for Real Estate Research provides local affordability calculations that we can use to check on housing affordability using current median prices and interest rates. Affordability improved at the end of last year when median sales prices fell significantly. We assume that a buyer making the median family income puts 20% down on the median priced home and obtains a 30 year fixed rate mortgage. We assume that a first time buyer making 70% of the median income puts 20% down and on a house priced at 80% of the median and obtains a 30 year fixed rate mortgage. We assume that both buyers can afford to spend a maximum of 25% of their monthly income on the principal plus interest of the loan. Using the annual averages of median price, median income, and average annual 30 year fixed interest rate since 2001 we plot an affordability index equal to the maximum affordable payment divided by the actual payment. When the index is greater than 1, the loan is affordable to the typical buyer. When it is less than 1 then some buyers cannot afford to purchase. Our numbers for 2008 are estimates using the latest monthly data for median prices and interest rates, and an estimated median family income for 2008. The affordability index fell slightly to 1.02 in July from 1.03 last month. First time buyer affordability also fell to .89 from .90 in June. There is a second graph showing month-to-month affordability progress this year. It's up and down, sort of like the tug-of-war between buyers and sellers, and now reflecting loss of affordability because long term interest rates are rising due to fears about inflation. The past several months have been relatively flat.
| Year | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 |
|---|---|---|---|---|---|---|---|
| Annual Average interest rate | 6.54 | 5.83 | 5.84 | 5.87 | 6.41 | 6.34 | 6.33 |
| Median Income | $52,701 | $53,160 | $53,923 | $54,582 | $58,304 | $60,719 | $65,000 |
| Median Price | $165900 | $184000 | $206900 | $250000 | $275000 | $290343 | $267250 |
| Monthly payment | $880 | $867 | $975 | $1182.43 | $1378 | $1443 | $1328 |
| Affordable payment | $1,098 | $1,108 | $1,123 | $1,137 | $1,215 | $1,265 | $1,354 |
| Affordability Index | 1.25 | 1.28 | 1.15 | 0.96 | 0.88 | 0.88 | 1.02 |
| 1st time buyer payment | $674 | $693 | $780 | $946 | $1102 | $1155 | $1062 |
| 1st time buyer affordable payment | $769 | $775 | $786 | $796 | $850 | $885 | $948 |
| 1st time buyer affordability index | 1.14 | 1.12 | 1.01 | 0.84 | 0.77 | 0.77 | .893 |
Here are the current statistics for Pending - Inspection (formerly called Subject To Inspection (STI)) and Active Listings (comparing the number in mid August to the number in mid July). You'll recall that Pending Inspection status represents a newly signed around contract prior to the buyer and seller agreeing on the home inspection. Below we show the number of Pending Inspection contracts signed around in the first 2 weeks of the month. The number of Pending Inspection contracts is the best gauge for telling us in near real time how many sales are occurring. Some of these sales will fall apart as a result of the home inspection results.
| Area | Pending Inspection 08/15 | Pending Inspection 07/15 | Active Listings 08/15 | Active Listings 07/15 |
|---|---|---|---|---|
| S. Kitsap W. of HWY 3 | 6 | 4 | 241 | 229 |
| S. Kitsap E. of HWY 3 | 4 | 5 | 192 | 196 |
| Port Orchard | 7 | 7 | 167 | 165 |
| Retsil/Manchester | 3 | 4 | 170 | 160 |
| Seabeck/Holly | 5 | 2 | 121 | 118 |
| Chico | 2 | 3 | 41 | 39 |
| Silverdale | 4 | 0 | 149 | 142 |
| W. Bremerton | 5 | 8 | 271 | 259 |
| E. Bremerton | 7 | 7 | 140 | 144 |
| E. Central Kitsap | 7 | 10 | 172 | 179 |
| Hansville | 1 | 1 | 60 | 62 |
| Kingston | 1 | 3 | 105 | 108 |
| Port Gamble | 0 | 1 | 20 | 24 |
| Lofall | 4 | 2 | 47 | 56 |
| Finn Hill | 2 | 0 | 109 | 104 |
| Poulsbo | 4 | 7 | 179 | 174 |
| Suquamish | 3 | 1 | 36 | 42 |
| Indianola | 1 | 2 | 40 | 39 |
| Bainbridge | 8 | 7 | 296 | 300 |
| Totals | 74 | 74 | 2556 | 2540 |
The number of Pending Inspection deals in August was the same first two weeks in July. The activity is 27% lower than it was in August 2007. The number of active listings (2556) in our residential inventory increased slightly from July. The ratio of sales to number of active listings rose to 2.9% from 2.4%. About 81% of the sales were under $400,000 (same as last month) and 68% were under $300,000 (down from 70% last month).
Here is a graph of the mid month sti data for the past year:
August's APR is 6.606% on a 30-Year and 6.252% on a 15-Year, both Conforming. July's rates were 6.733% on a 30-Year and 6.378% on a 15-Year, both Conforming. As you can see, interest rates have fallen slightly since last month. If you qualify for FHA or VA loans, these programs have become much more attractive for low downpayment buyers. Limits for FHA and conventional conforming loans have risen recently to $475,000. 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://bankrate.com/.
Saturday, August 30, 2008
Kitsap Local Real Estate Markets in July 2008
July’s inventory of homes for sale rose by 2.7% from June. The listing inventory is continuing to grow. Median year to date closed sale prices were about the same in July compared to June and were down 8.6% percent 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. Below are graphs of the month-to-month market fluctuations of total listings, number of closed sales, and median sales price for each areas. The descriptive comments for each area below cite the more consistent year-to-date numbers. These regional statistics are updated each month on our website at http://www.bprowse.com.
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
Residential homes on Bainbridge Island were selling for a YTD median price of about $614,000 at the end of July, a drop of 8.5% from a year ago. It is noteworthy that the median price for closed sales occurring in July ($551,000) was about $100,000 lower (15% lower) than it was in June. Kitsap County YTD median price has fallen 8.4% over the past year. The YTD number of Bainbridge closed sales is down 52% from a year ago, and the YTD number of pending sales is down 46%. The number of closed sales is down 28% Countywide from a year ago. The number of active listings on Bainbridge (300) is up 20% from a year ago. The inventory turnover (total homes on the market divided by number sold last month) is 16.7 months, worse than 15.7 months last month. Bainbridge Island is a strong buyers market.
Bremerton Real Estate
Statistics we refer to are for that part of Bremerton encompassing the downtown core and west to Kitsap Lake. The market for other parts of Bremerton and its suburbs should have approximately similar trends. Homes in Bremerton were selling for a YTD median price of about $185,000 at the end of July, about 13% lower than a year ago. The July median price for closed sales ($192,500) was 4.8% lower than the median for last month. Kitsap County YTD median price has fallen 8.4% over the past year. The Bremerton YTD number of closed sales is down 28% from a year ago (compared to a Countywide drop of 28%), and the YTD number of pending sales is down 29% from last year. The number of active listings (260) is only up 4% from a year ago, but has been fairly constant for the past 5 months. The inventory turnover (total homes on the market divided by number sold last month) is 10.8 months, up from 10.4 last month. The Bremerton market is weak, but showing signs that it is stabilizing.
North Kitsap Real Estate
Using the example of Kingston - the largest housing market in North Kitsap - homes were selling for a YTD median price of about $350,000 at the end of July, down about 4% from a year ago and up about 3.7% from last month. Kingston prices fluctuate more than some of the other markets because of the lower listing and sales volume. Kitsap County YTD median price has fallen 8.4% over the past year. The YTD number of closed sales is down 36% from a year ago, and the YTD number of pending sales is down 36%. The number of closed sales is down 28% Countywide from a year ago. The number of active listings in Kingston (101) is up 4% from a year ago and down 9% since last month. The inventory turnover (total homes on the market divided by number sold last month) is 11.2 months. Kingston is a buyer’s market.
Poulsbo Real Estate
Statistics we refer to are for that part of Poulsbo encompassing the downtown core, from the head of Liberty Bay southeast to Ne-Si-Ka Bay, including parts north to Sawdust Hill Rd. The market for other parts of Poulsbo and its suburbs should have approximately similar trends. Homes in Poulsbo were selling for a YTD median sale price of about $343,363 at the end of July, down about 3.5% from a year ago and up slightly from last month. Kitsap County YTD median price has fallen 8.4% over the past year. The number of Poulsbo closed sales YTD is down 7.9% from a year ago, and the number of YTD pending sales is down by 36%. The large difference in performance of pending and closed sales reflects the backlog of new construction pending sales that are now closing. There was a drop of 28% in YTD closed sales compared to a year ago for Kitsap County as a whole. That portion of currently pending sales coming from new construction presales is 25 of 36. The pace of new construction sales has fallen along with the rest of the market. The Poulsbo listing inventory (165) has risen by 7.8% compared to a year ago and is down 7.8% since last month. The current drop in inventory combined with an increase of nearly 40 homes in July of last year brought the current inventory much closer to what it was a year ago than we reported last month. The inventory turnover (total homes on the market divided by number sold last month) is 11 months.
Silverdale Real Estate
Homes in Silverdale were selling for a YTD median price of about $294,000 at the end of July, down 3.6 percent from a year ago. The July median closed sale of $248,000 was about 16% less than the July median a year ago. Kitsap County YTD median price has fallen 8.4% over the past year. The number of Silverdale YTD closed sales was down 36% from a year ago, compared to a drop in closed sales of 28% for the County as a whole. The number of pending sales YTD is down 38% from a year ago. The number of active listings in Silverdale (143) is 4.7% lower than a year ago but 11% higher than last month. The inventory turnover (total homes on the market divided by number sold last month) is 8.9 months (up from 7.9 last month). Silverdale remains one of the better markets in the County.
Wednesday, August 27, 2008
Download the August Waterfront Update!
Download the August 2008 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
