Carole’s Blog

Finally! Single family home sales are up in Gig Harbor—10% from last year and up 43% from April. This is only the second month (December 2008 the other) in the past 18 that sales are actually improved from the same month the year previous.

Pending sales—homes where offers have been negotiated but sales not closed– are actually down from last year, reversing the trend up since March. They are down 8% from last year and 25% since last month. This is worrisome because pendings relate to the current enthusiasm for buying.

But the bad news is that prices are still tumbling downward—5% since last year. But it appears the median price may be stabilizing since it is up 1% from last month and has been holding to a range of $320,000 to $330,000 for the past four months.

There are 16% percent fewer homes on the market this May than the same month in 2008.  The decrease is an indicator of an improving market. This means a smaller selection for prospective buyers. As the inventory begins to shrink, buyers lose the upper hand in negotiating price.

With the $8000 tax credit for homebuyers who have not owned a home in the past three years and historically low interest rates, first-time homebuyers are the main group buying homes. The 78 homes that closed in May are reflective of the huge serge—111–of offers accepted in April.

61% of all homes closed were under $400,000 and only one closing was over $750,000. However business generated in May has produced seven properties listed over $750,000 now in pending status, all but one on salt waterfront.

In greater Pierce County home prices held steady at $225,000 which is down 13.4% compared with last May but is slightly better than the 14.5% dip that was experienced in April. Gig Harbor is faring better with sales prices than the county as a whole. County wide there is 30% less inventory on the market.

March pendings sales (contracts accepted but not yet closed) were up nearly 20% from 2008 but still down 17% from January, reflecting on the March madness for first-time buyers taking advantage of the $8000 tax credit, low home prices and low interest rates.

These new sales should result in better closed sales figures for April and May. The cautionary note here is that many sales are taking longer than normal 45 days. Some of these homes don’t pass buyers’ inspections or the buyer is not qualified to buy or the short sale process doesn’t function effectively. So there is more fallout than normal.

Median prices are still trending down—11% since last March. That will continue as the entry-level market hasn’t been this low since the early 2000’s for Gig Harbor and Key Peninsula.  Median prices are on a par with prices in second quarter 2005. In Seattle actual prices of same houses have depreciated, or “unwound”, to July 2005 prices.

Other good news includes fewer homes on the market, something likely to change as home sellers flood the market with the news of “increased sales.” There will be additional inventory as many foreclosed homes have been held back until current inventory can be absorbed. There is also another round or two of sub-prime adjustable rate loans to be reset in third quarter.

Currently two price ranges are experiencing a sellers’ market. Many of the sellers are banks. The $200-250,000 and $300-350,000 ranges are both experiencing a quick turnaround of three to four months. Ditto for the $450,000 to $500,000 range. Six to seven months is considered a balanced market and fewer months sellers’ market.  

Realtors are reporting sales on waterfront homes for the first time in a long time. There are nine homes that have contracts on them since the first of April.  One bit of good financing news is the incremental interest rate for the upper end has dropped to 1 to1 ¼%, after running 2 to 5% for the past half year. Larger down payments are still necessary however for these rates. The absorption rate is improving daily for the range between $550-800,000, currently sitting at eight months supply. However above $800,000 the 170 homes are languishing on the market with only one sale currently on the books (in the lower $800,000 range). This translates to a 170 months supply. So the real estate market in Gig Harbor is not out of the woods yet but it is beginning to see some clearing.

Local Realtors are seeing a spurt of energy from homebuyers that began March 1. Pending sales—transactions accepted but not yet closed–of single family homes dropped to a nine months supply in Gig Harbor and only a seven months supply in Key Peninsula—figures not seen in a long long time.

Pending sales are the harbinger of current market activity, as opposed to closed sales that reflect activity 45-60 days earlier. These new deals will result in closed sales mainly in April and have the potential of making April just the second month in nearly 18 with better sales numbers than the previous year.

The first week of March experienced fewer sales than 2008 but early March showing activity turned to accepted transactions beginning March 10 and quickly more than doubled the earlier rate.  Some of these will, of course, drop off, either from the inspection or financing process.

In Gig Harbor, the $200-250,000 range is most active…very close to a balanced market with buyers and sellers, followed by the $300-350,000 segment. In Key Peninsula, the hot market is $180-250,000. These ranges can be explained, to a large extent, by the first-time homebuyer credit of up to $8000, enacted by the Federal government February 27. Additionally, historic low interest rates of near 4.5% are also bringing buyers off the proverbially fence.

The best closed sales segments include $200-250,000, $300-350,000 and $500-550,000—giving those ranges anywhere from a 7 to 9 month absorption rate. For example, a buyer looking between $200-250,000 in Gig Harbor would have 18 homes to look at, with about half that number under contract. That gives strong motivation for the buyer to make a decision.

On the other hand, the buyer in the $550-650,000 range has 82 homes to choose from with just three under contract–or a 27 month supply. This does not produce nearly the same motivation for the buyer.

All areas of Key Peninsula as well as Gig Harbor, with the exception of Fox Island, are drawing renewed activity. Financing help is on the way for Fox Island and other areas of high median sales price.  A few major banks are beginning to lend in the jumbo arena at rates of 1 ½%, or less, over conforming loans. Since last fall, rates for jumbo loans have exceeded conforming rates by 2 ½-4%—if financing was available at all.

Jumbo loans start at $567,501 for FHA, with conventional expected to follow suit. This new ceiling is in effect through 2009, extended in the economic stimulus legislation passed last month. This should help both buyers and sellers with the peninsula’s “higher-than-usual” median home price. 

INVENTORY, ACCORDING TO MONTHLY PENDING SALES

 Carole Holmaas is an Associate Broker Windermere/Gig Harbor, licensed since 1967. She may be reached at Carole@ISellGigHarbor.com or 253.549.6611.

The high inventory of new homes in Gig Harbor and Key Peninsula in all price ranges with fewer buyers makes this market a buyer’s dream, compared to 2002-2005 when homes were being sold as fast as contractors could permit them and sometimes for more than list price.

At the end of third quarter I predicted new homes were on track this year for 70-75 sales. The stats are in—72 is the number. This is a 51% decline from 2007 and a 77% decline from 2000-2006’s average of 212 sales.

With 141 homes completed or under construction—this equates to a 23 month supply at the 2008 selling pace. And the supply has dropped more than sales would indicate as builders have placed some of their homes in the rental pool to wait out market conditions.

 NEW HOME INVENTORY—GIG HARBOR & KEY PENINSULA

Sales are slow or non-existent for some builders, in new subdivisions of Chelsea Park, Harbor Crossing, and Crescent View Estates. Chelsea Park has four sales and 15 homes available. Little Boat at Harbor Crossing has been experiencing slow sales and Bennett Homes has dropped prices, added especially attractive financing with still no success—and sitting on nine homes. Crescent View Estates now has its first sale, with seven in inventory.

Quadrant’s Ridge at Gig Harbor has closed a half dozen homes and pulled out of the Gig Harbor market for now. Chaffey Homes at the Highlands at Gig Harbor is still waiting for the first sale. The high-end plat of Salmon Bay on Fox Island is waiting for its first sale and TimberCrest is sitting on inventory after early success.

Patio homes at Canterwood were a bright spot with consistent home sales over the past couple years. Many of the other homes on the market are on odd lots or on in-fill lots in mature subdivisions.      

Building permit applications have dropped sharply for Pierce County and the city of Gig Harbor. While most future new construction in Gig Harbor will take place within the Urban Growth Area the county is responsible for all permits in Key Peninsula.  This has caused budget holes for both governments.

The median home price has declined $140,000, or 29%, December 2007-December 2008, reflecting the tighter credit market. Never have homes been built as large as those selling today. Five years ago the average square footage was 2543—today it is 2829. And it was even 200 square feet smaller eight years ago. There is emerging a national trend of building smarter and smaller.

Although there are 24% fewer new homes on the market than a year ago, supply will need to contract even more before prices level out. Meanwhile buyers have as many choices as there is candy in a candy store. It is taking a builder 35% longer to sell than during 2000-2006.

More than 50% of Gig Harbor’s inventory is priced over $700,000 whereas 60% of Key Peninsula’s new homes are priced less than $400,000. Close-in lots are in higher demand, lots have become more expensive to develop, and, in Gig Harbor, lot supply is dwindling quickly, due to sewer and traffic concurrency. When the market does turn around there will be a large pent-up demand for new housing.

Carole Holmaas is an Associate Broker with Windermere. Her real estate blog is http://blog.ISellGigHarbor.com. She can be reached at Carole@ISellGigHarbor.com or 253.549.6611.

Salt waterfront home sales for the year are down slightly more than home sales in general—40% compared to 33%.

2008 has turned out to be the slowest sales year for waterfront in at least the last 25 years (this is when I started seriously compiling waterfront statistics). One has to look back to 1996 to find sold numbers even close to this year—still in 1996 there were 48 sales. At the end of the third quarter I said in my blog that it looked like we were on track to finish with 40-45 sales for 2008. And we just barely made that.

With 105 waterfront homes currently on the market and just 41 sales this year, we currently have a 30 month supply of homes at last year’s sales rate. And for a change, Key Peninsula edged out Gig Harbor—22 to 19 sales.

Price is where it was last year. Not so in 2007. Normally Key Peninsula represents one-third of sales. This year the two areas are more equal—the reason–price. The total sales dollar volume is still one-third Key Peninsula, two-thirds Gig Harbor. 

Notable is how far the median price has fallen in just the last three months in Gig Harbor. Yearly 2007 and 2008 prices remain nearly identical, hovering at $1million. But fourth quarter shows a $270,000 drop–the effects of the slower economy and financing requirements. In the first half of 2007, typically, a buyer could get financing with 5% down. Today that figure is 20% or even 30%. Add to that, often 2% higher interest rate for a jumbo loan and we can see what keeps deals from going together. 

The median list price of the homes sold in Gig Harbor was $1,200,000, or $200,000 less than the median sales price. Key Peninsula’s over-all median price dropped this year about 10% and the fourth quarter bulge is explained by a single 11,000 square foot home with four acres in Vaughn selling as a short sale for over $1,600,000. In Gig Harbor, one home sold west of Highway 16 fourth quarter for $960,000 after 228 market days.

In the overall market, inventory showed stability in December—8% fewer homes than a year ago were added, a trend experienced throughout the year. Fewer homes on the market now will help stabilize prices, with less selection for buyers.

There are 43 waterfront homes currently listed for more than $1 million. And it is now taking less time to sell Key Peninsula waterfronts than Gig Harbor homes—another first. And again, it’s about price.

The strongest markets where sales demand and current inventory are in equilibrium are Rosedale/Kopachuck, Wauna, and Key Peninsula North. But this can change in a minute as inventory is added to the market.

On a regional basis, Seattle was singled out as a top-ranked real estate investment market to watch, in a report released late October by the Urban Land Institute and PricewaterhouseCoopers LLP. The report cited Seattle’s importance as a Pacific gateway, with “corporate giants” and housing prices that will stay above national averages. The report stressed this was the long-term outlook–that housing demand and prices will continue to slip in the near future.

Locally the two peninsulas beat the four-county Puget Sound region in one respect–pending sales in December. Overall the region experienced a 19% drop in pendings over 2007. The local area actually saw no change from 2007.

Carole Holmaas is an Associate Broker at Windermere Gig Harbor, licensed since 1967. She may be reached at Carole@ISellGigHarbor.com or 253.549.6611.

Home sales took a slight tick up in December, reversing the year-long trend. It is too early to know if this is the beginning of a better sales market or an abnormal month.  Many of these sales were initiated following Election Day and closed amidst December’s snow and icy conditions. Two months of positive statistics will give us a far better picture of the direction of the market.

We will have to wait to see if the improvement can muscle its way through the continuing downturn in the economy. If it does, we may be putting the worse of Gig Harbor’s housing market behind us.

Two areas that I have mentioned throughout this year whose sales numbers have been stable finished the year still steady. The area surrounding the city of Gig Harbor has just two less sales than 2007 and Wauna/Minter is exactly the same as last year.

While the credit crunch may be a problem for many businesses and individuals seeking loans other than home loans, there is still plenty of money for employed homebuyers with very good credit and down payment. 30-year fixed rates loans are very available for 4.75% currently.

December closed sales show modest improvement but is still down 33.2% for the year in Gig Harbor and Key Peninsula.

Single-Family & Condos Sales Compared to 2007

Inventory is 8.3% less than last December and has been creeping down all year. The current closed sales and inventory indicate an absorption rate (the number of months it will take to sell current inventory at the December sales rate) of 16.8 months.  This is better than last December and better than half the months in 2008. This is due, in part, to sellers withdrawing their homes from the market. But it also represents the first month the sales numbers are not worse than the year before. A six to seven month supply of homes is where the balance tips between a buyer and seller’s market.

Time to market homes has increased dramatically over the year—166 days average in Gig Harbor and 193 days for Key Peninsula, compared to December 2007.

The graph depicts the combined Gig Harbor and Key Peninsula median home price over the past several years for single family homes, compared to Pierce County.  This sales price is currently at the March/April 2005 level.

Year-to-date median sales prices are down 10% for Gig Harbor from both 2007 and 2006 and down 5% for Key Peninsula from 2007 but up just a bit from 2006. I’ve included the median price for the first three quarters of the year as a comparison because it shows a 4-5% decline in the last quarter of 2008 alone. Median price is the midway point in number of sales. This chart represents single family home sales only.

Year-to-date Median Sales Prices

One very large discrepancy is the difference in list prices and sales prices—$160,000, compared to $130,000 for 2007. This is a mainly a reflection of the price range that is selling compared to the listed  inventory and, at least for Gig Harbor,  the larger spread between  listing and selling prices of many of the closed sales.

I’ll have more in the following weeks, including waterfront sales, new construction and the condominium market.

Carole Holmaas is an Associate Broker at Windermere Real Estate, licensed since 1967. She may be reached at Carole@ISellGigHarbor.com or 253.549.6611

Today I will show the historical perspective as well as a current snapshot of what we, in the real estate business, call ”Absorption Rate”. This rate represents the number of months it would take to sell the existing inventory of homes at the same rate with which they sold over the past month. This is also known as “number of months supply”.  This week I am reviewing Gig Harbor. Next week I will post this for Key Peninsula.

The first graph represents the monthly supply and demand for homes over the past four years.   Throughout 2004 and 2005 and until July 2006, the market was considered a seller’s market–there was as little as a two and one half months supply of homes in the spring of 2004. 

In July 2006, the market reached what is called a “neutral market” when the absorption rate was between six and seven months supply. That condition persisted from July through September of that year. Since that time it has become a buyer’s market and has been running between 11 and 20 months’s supply. Current inventory is about 700 single family homes and condos in Gig Harbor.

In the height of the seller’s market 103 homes were sold in March 2004 with 260 on the market. We call all remember the buying frenzy that the low supply and high demand created. In the neutral market era inventory had reached 627 homes with 82 selling.

It is also normal  for a downward dip of inventory and sales during the late fall and winter months. November, December and January normally represent the lowest number of sales.

This graph depicts Gig Harbor and Fox Island single family homes only.

Inventory and Sales History  2005 to Present

This next graph shows what has taken place in the 30 day period from October 25 to November 25 in Gig Harbor and Fox Island. It is a snapshot of the current inventory and sales, based on price range. It is obvious Gig Harbor area is running high absorption rates, which can largely be explained with our inventory of higher end homes.

Pierce County median sales price for October was $250,000 while Gig Harbor is $100,000 higher. And King County is only $40,000 more at $390,000. It is a fact of  real estate values in Gig Harbor.  

Interest rates made a major downward drop last week as the Fed pumped enough money into the lending environment for the lenders to finally be more comfortable making loans. The rates dropped nearly one percent to hover around 5%. This represents an excellent buying opportunity for anyone with good credit.

These rates may not go any lower and while prices might decline a bit, it can more than be made up for with the lower interest rates. A buyer will have the same monthly payment for a $400,000 loan at 6% as he will for a $480,000 loan at 5%. With the inventory available, today’s buyers have many opportunities.

Carole Holmaas is an Associate Broker at Windermere Real Estate, licensed since 1967. She may be reached at 253.549.6611 or Carole@ISellGigHarbor.com

Two areas—surrounding downtown and Wauna–are holding their own for home sales this year compared to 2007. Both would be considered “close-in”, for two distinctively different reasons…Gig Harbor because of the proximity to services and Wauna because it is close-in for affordable housing.

Most other areas have suffered a decrease in home sales anywhere from 26-57% for the year.

Median sales prices for both Peninsulas are down 14% over the same month last year but down just 1% in Key Peninsula for the year. Year-to-date prices for Gig Harbor are down 9%.

But in two Gig Harbor communities—Rosedale/Kopachuck and the area surrounding Gig Harbor Bay and downtown–median sales prices are equal or better than 2007 so far this year. Two others—South and North Key Peninsulas–are almost the same year-to-date but down October 2008 over 2007. 

The table illustrates median sales prices in each of the areas. This is year-to-date 2007 and 2008, as well as October for the two years.  There is more credibility in the numbers for each of the peninsulas a whole because some of the individual areas are represented by only one or two sales for October.

Single family median sale prices

The star of the show currently is the one that surrounds Gig Harbor Bay and downtown. It extends north to the commercial Gig Harbor North, west to Highway 16, and south to Hunt Street and includes East Gig Harbor. 2008 sales are nearly constant with 2007 for the month of October. The median price is nearly identical with October 2007 and actually higher for the year than 2007. It also takes the least amount of time to sell a home in this area—average of 52 days

Home inventory is at a record high, although drifting down slightly which is normal at this time of year. The maximum sales price is lower in two-thirds of the Peninsula’s communities than last year—23% lower. And selling time is up across the board.

Carole Holmaas is an Associate Broker at Windermere Real Estate, licensed since 1967. She may be reached at Carole@ISellGigHarbor.com or 253.549.6611

Home sales have reversed last month’s slight improvement. October declined 8.7% in home sales from September and is down 26.7% from this time last year in Gig Harbor and Key Peninsula. None of this is surprising after the roller-coaster events of September and October .The decline from 2007 is not as sharp as it was in September. However it was in August and September 2007 that sales prices stopped accelerating, as the news of the subprime mess was first disclosed.

The good news is there is still plenty of money for employed homebuyers with good credit and a down payment. And there is a reason for buyers who have been waiting on the sidelines to act immediately. The lowest interest rate—hovering around 6%–is only available for “conforming” loans. Conforming is limited to $567,500 and is being lowered to $506,000 January 1. Jumbo loans—over the conforming limit–runs about 2% more currently. This is the last opportunity for buyers to receive the $61,000 spread at the lower interest rate. The loans must close prior to the end of the year.

While sellers are withdrawing their homes from the market because of few higher-end sales, the slow October pushed up the absorption rate. Expect this to continue to ratchet up going into winter as sales numbers decline in the normal slower selling months ahead. A six to seven month supply of homes is an ideal market. As we approach that number, prices for sellers will firm up. Less than six months inventory produces a seller’s market. Gig Harbor has seen supply as little as three months.

Time to market homes was 134 days in October rather than 118 days in September, again not unexpected.

The graph depicts year-to-date median sales prices over the past several years for single family and condos for Gig Harbor and Key Peninsulas.  These are down 7% from 2007 and 5% from 2006, typical for the entire Puget Sound.

The median sales price–$300,000 for the single month of October,  compares with May 2005 local prices, but is better than national statistics with prices either at or nearing 2004 levels.   It was the end of third quarter 2007 that the subprime mess was disclosed and when sales prices stopped accelerating. Median price is the midway point in number of sales.

Homes actually selling are averaging 4% less than their list price, perhaps an indication of realistic pricing strategy for those sellers whose homes are receiving offers. There is still a very large discrepancy in list prices of unsold homes and sales prices—nearly $170,000, or nearly $75.00 per square foot. The average home is 2287 square feet. Intent sellers are looking at the per square foot price of homes selling comparable to theirs—not just the comparable listings—and are pricing accordingly. 

This table shows single family home and condo sales for the year. Prices are down about 2% in Key Peninsula and 7% in Gig Harbor.

Year-to-date Median Sales Prices

Carole Holmaas is an Associate Broker at Windermere Real Estate, licensed since 1967. She may be reached at Carole@ISellGigHarbor.com or 253.549.6611

The high inventory of new homes in all price ranges makes this market a buyer’s dream, compared to 2002-2005 when homes were being sold as fast as contractors could complete them and sometimes for more than list price.

New homes are on track this year for merely 70-75 sales. Typically three-quarter of the annual sales total is reached by September 30—this year only 47 homes have closed in the first nine months. This is a 59% decline from 2007 and 71% decline from 2005–the slowest of the four best years from 2002 to 2005 (208 to 292 sales for each year).

With 169 homes completed or under construction—this equates to a 32 month supply at the 2008 selling pace. 2000 was the last year this slow, with 98 sales at year end. the supply has dropped more than sales would indicate as builders have placed some of their homes in the rental pool.

Sales are slow, or non-existent, for builders in new subdivisions of Chelsea Park, Harbor Crossing, and Crescent View Estates. Quadrant’s Ridge at Gig Harbor has 10 homes under contract and about the same number reserved. Many of the homes on the market are on odd lots or on in-fill lots in mature subdivisions. 

Building permit applications have dropped sharply for Pierce County and the city of Gig Harbor. While most future new construction in Gig Harbor will take place within the Urban Growth Area the county is responsible for all permits in Key Peninsula. 

NEW HOME INVENTORY

The median sales price has declined $40,000 in the past quarter, reflecting the tighter credit market and as well as an average 150 square foot smaller home. Never have homes been built as large as those selling today. Five years ago the average square footage was 2543—today it is 2804. And it was 200 square feet smaller eight years ago.

There are 16% fewer new homes on the market than a year ago. But supply will need to contract even more before prices will firm up for builders. Meanwhile buyers have as many choices as there is candy in a candy store.

More than 50% of Gig Harbor’s inventory is over $700,000 whereas 60% of Key Peninsula’s new homes are priced less than $400,000. Close-in lots are in higher demand, lots have become more expensive to develop, and, in Gig Harbor, lot supply is dwindling quickly. When the market turns around there will be a large pent-up demand for new housing.

Carole Holmaas is an Associate Broker with Windermere. Her real estate blog is http://blog.ISellGigHarbor.com. She can be reached at Carole@ISellGigHarbor.com or 253.549.6611.