Kitsap Real Estate Market Report - July 2007
There is a curious phenomena in Kitsap real estate prices. The median price of sold properties keeps going up (up 9% compared to July 2006) even as the number of closed sales is slumping (down 14% compared to July 2006). In our local area only the most competitively priced houses (price to value in the customers eye) are selling. National news tells us that subprime loans are becoming much harder to obtain (and that is also our experience) because institutional buyers are shunning purchase of the instruments into which these loans are packaged. Even jumbo loan rates for highly qualified buyers are now climbing in response to the news of failed subprime mortgage investment funds at Bear Stearns and bankruptcies and financial turmoil at some large lenders (American Home Mortgage Corp., Aegis Mortgage Corp.). The subprime mortgage market is now shaking the underpinnings of the stock market and the economy. Many sellers consider that the pack of buyers is just too small, and that lowering their price won’t make a difference because when the right buyer comes along they will be happy to pay the asking price for their particular property - after all, prices haven’t gone down. How are we to resolve this discontinuity between the movement of price and the apparent weakness in our real estate market?
We know a few things about our local market. Job growth, fueled in particular by hiring at Boeing and Microsoft, has helped the whole region including Kitsap to expand. People are moving into our area attracted by good jobs, and many are buying houses. Also we know that interest rates have risen - the APR for a 30 year fixed rate mortgage is up about 1/2 percent this year - and that qualifying standards for buyers have become more restrictive in general. We have seen good sales activity for waterfront homes, particularly on Bainbridge Island. Perhaps we can generalize and say that the perceived rise in prices was caused by a small number of wealthier buyers driving up prices at the high end while the number of sales at the low end have plunged due to tighter credit and higher interest rates. The end result is that the median price (the middle price - half the sales are higher and half lower) continues to be skewed upward.
If we look Countywide at year-to-date sales through July 31st and compare with last year, here is what we see.
| Closed Sales | 2006 | 2007 | percent change |
|---|---|---|---|
| 2366 | 1985 | down 16% | |
| <$500k | 2078 | 1668 | down 20% |
| >$500k | 288 | 317 | up 10% |
| Closed Sales Volume | 2006 | 2007 | percent change |
|---|---|---|---|
| $781 million | $733 million | down 6% | |
| <$500k | $565 million | $478 million | down 15% |
| >$500k | $218 million | $256 million | up 17% |
Both the number of closed sales and total volume of closed sales for purchases under $500k have fallen significantly, the number of sales and total volume of closed sales with purchase price greater than $500k have risen significantly. Relatively few high end sales have made prices appear to move up. Still, sellers in these high end markets - Bainbridge Island for instance, have nearly twice as many listings competing for the same number of buyers as last year. The average listing price has held steady this year, while the average (not median) sales price has climbed nearly $40,000 (12%). Normally these would move in tandem in a rising market. Sellers have had to compete very hard in list price to get a sale. Sales of more expensive homes and fewer inexpensive homes have driven up the average. Although the Countywide average price is up, year-to-date average prices for closed sales are down in the following areas - Olalla, Chico, Silverdale, E. Central Kitsap, Poulsbo, and Indianola.
Residential Highlights
Kitsap County residential inventory in July (2427 listings) was up 4% from June. Inventory has risen 69% since the start of 2007 and was 42% higher than last year. Inventory levels in Kitsap County have not been this high since 1997. The number of year to date pending sales was down 9% compared to a year ago - down from minus 8% last month. Countering the downward trend, Poulsbo YTD pending sales are up 52% compared to a year ago. Of 77 current pending sales in Poulsbo, 67 are new construction, and most of these are presales that never appeared as active listings. Bainbridge Island year to date pending sales are up 13% from a year ago (they were up 16% last month). The number of YTD closed sales Countywide is minus 16% compared to a year ago - falling from minus 14% last month. Poulsbo YTD closed sales are up 14% from a year ago. Bainbridge Island closed sales were up 7% from a year ago.
Prices are rising…
The YTD median sales price of $294,950 rose 1% in July. This is up 9.2% from a year ago. It’s still important for sellers to be striving to be most competitively priced among their competition.
Seller expectations…
The median list price for the year remained steady at $355,000. This is about 2.6% higher than a year ago - a gap that continues to narrow. The inventory turnover (total homes on the market divided by number sold last month) is 7.3 months, up from 6.8 months in June. A year ago this number was 4.4 months, and that was already reflecting a market slowdown from its 2005 levels. Today a seller has a 14% chance of selling his/her home in a given month. Competitive pricing is essential, and almost every offer we see presented is negotiating on price.
The statistics for pending sales (compared to year-to-date sales last year) varied for different parts of the County. Here is a snapshot:
Bainbridge Island +16% (+16% last month)Poulsbo +52% (+45% last month) - 67 of 77 pending are new construction
Bremerton -24% (-26% last month)
Kingston -8% (-18% last month)
Silverdale -6% (+1% last month)
Port Orchard -6% (0% last month)
Olalla -21% (-23% last month)
Next entry: Download the August 2007 Prowse and Company Waterfront Update
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