Kitsap Real Estate Market Report - November 2007
The tempo of news stories about the US real estate market, mortgage defaults, and the fallout in financial markets as a result appears to be peaking at year end. Since we can’t really address the scope of all the issues, we will just focus on yesterday’s Kitsap Sun headline proclaiming, “Kitsap Home Prices Drop While Surplus Grows.” According to the article, the median sales price in the County dropped $19,000 last month compared to a year ago while the inventory remains up by 25% and pending sales were down by 27%. The median sales price drop is about 7% in one month. The article cites numbers only for the month of November rather than following our usual standard of looking at the year to date. If we look at monthly graphs Median Sales Price, Number of Closed Sales, and percent change in each of these values compared to a year earlier, it does paint a stark picture of decline in our market at year end.
While the month to month data may serve in this case as a timely warning of a sea change in our market, the relatively small number of sales can also be misleading. For instance, the monthly median sales price dropped from $284,000 in Nov 2006 to $268,400 in December 2006, a 5.5% drop, only to rebound to $280,000 in January 2007. Some individual areas in Kitsap showed large increases in median sales price and some showed large drops, both indicative of buyers purchasing a relatively small number of homes in a price range different from the previous month. We sense that prices are probably falling, but doubt that the change is as abrupt as the month-to-month data would indicate.
The listing inventory has actually been falling as the holidays approach and many sellers are pulling their properties off the market. Nationally this same trend is occurring in most areas. This drop in the total number of listings obscures the 22% increase in the number of new listings that came on the market last month compared to a year ago. Although the data for the month shows a significant drop in median sales price compared to a year ago, median price for the year (taking into account all sales year to date) dropped only about $1500 (less than 1%) compared to last month and is still up 7% from a year ago. Here are some more details.
Residential Highlights
Kitsap County residential inventory in November (2196 listings) was down 5.1% from October. Inventory was 31% higher than a year ago. The number of year to date pending sales was down 13% compared to a year ago - compared to minus 12% last month. As noted in the Sun article, pending sales for the month of December were down 27.5% compared to November 2006. Nationally the report of pending sales in October reported a small rise compared to a year ago. Countering the downward trend, Poulsbo YTD pending sales are up 32% compared to a year ago. Of 52 current pending sales in Poulsbo, 42 are new construction, and most of these are presales that never appeared as active listings. Bainbridge Island year to date pending sales are down 3% from a year ago (a reversal over the past several months after being up for most of the year). The number of YTD closed sales Countywide is minus 17% compared to a year ago - same as last month. Poulsbo YTD closed sales are up 11% from a year ago, down from 12% last month. Bainbridge Island closed sales were down 4% from a year ago, reversing the positive trend we have reported for most of the year.
Prices are falling…
The YTD median sales price of $293,500 in November was down less than a percent from October. It has basically been flat for 5 months now. This is up 7% from a year ago. It’s vitally important for sellers to be the most competitively priced among their competition if they want to generate an offer.
Seller expectations…
The median list price for the year remained steady at $350,000. This is the same as last month and is less than 1% higher than a year ago. The spread between the median list price and median sales price is telling - when the market is good this spread becomes larger and as the market declines this difference becomes smaller. Two years ago (at the top of the market) the spread between median list and median closed sale price was $74,100. A year ago the spread was $74,900, This month the spread is $56,500. The inventory turnover (total homes on the market divided by number sold last month) is 10.1 months, up from 9.3 months in October. This number has been steadily going up for the past several months. A year ago this number was 6 months, and that was already reflecting a market slowdown from its 2005 levels. Today a seller has a 10% 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. Most areas have slipped some in the past month. Here is a snapshot:
Bainbridge Island -3% (-2% last month)
Poulsbo +32% (+39% last month) - 42 of 52 pending are new construction
Bremerton -24% (-21% last month)
Kingston -10% (-9% last month)
Silverdale +2% (+3% last month)
Port Orchard -6% (-4% last month)
Olalla -25% (-23% last month)
Next entry: Download the December Prowse and Company Waterfront Update
Previous entry: Kitsap Real Estate and Economic Conditions in 2008
