Carole’s Blog

The good news for sellers is there appears to be a few more buyers in the local market, especially in the price ranges of $300-400,000 and $500-600,000. Both of these price categories have seen more written contracts than this time last month. Reasons likely include good financing for buyers with good credit as well as buyers seeing good buys that fit their needs.

Unfortunately closed sales are on track with this same time in July, so don’t expect more than 50 homes to close in August. August is normally one of the top three months for closings. That won’t happen in 2008.

This week I am providing several tables of more specific information than generally addressed in NorthWest Multiple Listing Service news releases.

The first is a “snapshot in time”—the current housing inventory and the closings for July 22 through August 22 by price range. This represents single family homes and condos in Gig Harbor and Fox Island areas only and does not include Key Peninsula. There are 406 homes listed in Gig Harbor above $600,000 with just 11 recent sales. This will continue to be a tough market for sellers as they wait for market conditions to improve.

CURRENT ACTIVE LISTINGS & RECENT SALES

Gig Harbor and Fox Island only

Price range                  # Listings      Sold 7/22-8/22

All prices                       859                  37

   <300,000                    101                   5

300-399,999                  130                   9

400-499,999                  120                   7

500-599,999                  102                   5

600-699,999                  101                   3

700-799,999                  93                    2

800-899,999                  56                    0

900-999,999                  36                    1

1-1,499,999                   76                    5

1,500,000>                    44                    0

Gig Harbor is experiencing a larger drop in sales numbers than Pierce County as a whole, in part because of the prices of Gig Harbor’s abundant view, waterfront, and golf course homes. While attributing approximately 14% of the county’s inventory, the area is under-performing in the sales category–only slightly more than 8% of the total. The last couple years this area has represented over 8 1/2% of the county’s real estate residential sales. An interesting note is King County is actually experiencing a steeper decline than Pierce—off 43% from a year ago.

The smaller decline in Key Peninsula sales would indicate that affordability and financing are more the culprits than bridge tolls or gas prices.

YEAR-OVER-YEAR CHANGE IN # OF SALES

Gig Harbor                     ▼50%

Key Peninsula                ▼18%

Pierce County                ▼29%  

King County                      ▼43%

Gig Harbor and Key Peninsula combined have seen only a $6000 decrease in the median listing price from 2007–$525,000 to $519,000 but a huge reduction in the median sales price, from $414,000 to $355,000. The median is the price with half the number higher and half lower. High end sellers may well be advised to wait to sell until improved market conditions, expected in 2009. Unless priced under the competition, high end sellers should expect to get “beat up” on offering prices…if they even get showings, with a very limited number of buyers looking at a very large inventory homes. This table represents July’s spread between median list and sales prices.

Area                         Med LP          Median SP       Spread  

Both Peninsulas            $519,000            $355,000           32%     

Gig Harbor/Fox Is          $619,000           $416,000           33%

Key Peninsula               $435,000           $289,000           34%

Carole Holmaas is an Associate Broker with Windermere Real Estate, licensed since 1967. This is her real estate blog. 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.

New homes are on track this year for merely 70-75 sales. Typically at their midway point by June 30, only 34 homes have closed in the first six months. Only seven more were added in July. This is a 57% decline from 2007 and 67% from 2005–the slowest of the four best years (208 to 292 sales for each year). With 193 homes completed or under construction and July’s seven sales—this equates to a 27 month absorption rate. 2000 was the last year this slow, with 98 sales at year end.

Sales are slow in the few new subdivisions Chelsea Park, Harbor Crossing, Crescent View Estates and the Ridge, with a 50 home inventory and less than 10 closed .

Building permit applications have dropped sharply for Pierce County —32.4%. While most new construction in Gig Harbor will take place in the future within the Urban Growth Area the county is responsible for all permits in Key Peninsula. Chuck Kleeberg, director of Pierce County Planning and Land Services, said he expects this slow trend to continue through 2009.

Supply will need to contract before prices will firm up for builders. Meanwhile buyers have as many choices as there is candy in a candy store.

NEW HOME INVENTORY

PRICE RANGE       GIG HARBOR         KEY PENINSULA

Median list price    $733,000              $319,000

Median sq feet            3255                    2038

<$300,000                            7                              23

$300,000-399,999              5                              16

$400,000-699,999            52                                4

$700,000>                        78                                 8

TOTAL                            142                               51

More than 50% of Gig Harbor’s inventory is over $700,000 whereas 75% 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.

Carole Holmaas is as 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.

Annual home-price declines deteriorated with July statistics as volume plummeted for both Gig Harbor and Key Peninsula (44 sales compared to 90). The peninsulas were not alone as all of Pierce County dropped 9.4%.

The graphs below show median prices (half the homes selling above and half selling below this price) have dropped 10% from July 2007 in both Gig Harbor and Key Peninsula. With this drop comes a year-to-date 7% slump on both peninsulas so July’s figures reflect a deepening descent in sales prices.

Key Peninsula’s prices have stayed relatively steady for the past three years while Gig Harbor has dropped from a high in 2006. A case may be made that new home sales with resulting higher prices have attributed a larger percentage of total sales in Key Peninsula than in Gig Harbor in recent years.

In fact Key Peninsula’s median price has been driven upward with about 25% of business in both 2006 and 2007 from new home sales, with sales prices slightly above the median for all home sales.

In Gig Harbor, as affordable building lots have dwindled, sales of new homes have declined from a high of  a 27% market share in 2003 to just 9% in 2007. Both peninsulas have a finite number of building lots so Key Peninsula numbers will fall in the future as well.

NEW HOME PERCENTAGE OF SALES

                          2005        2006        2007       2008

Gig Harbor        20%        15%        13%        9%

Key Peninsula   26%        25%        18%       11%

New home prices in 2005 through 2007 hovered between $250,000 and $260,000 in Key Peninsula, above the overall median for the area.

Gig Harbor’s current median price is on a par with July 2005…just prior to the turning point in the historic ramp-up of prices over the first half of the decade. The number of sales started slowly drawing down in August of that year, although sales prices continued to climb throughout 2006 and much of 2007.

This year-over-year decline portrays only the single month of July of sales. June, with twice as many sales (83 compared to 44), actually experienced a 5% increase in prices.

Kitsap County experienced a 12.1% decline and King County 5.5%.

Carole Holmaas is an Associate Broker at Windermere Real Estate, licensed since 1967. Her real estate blog is http://blog.ISellGigHarbor.com. She may be reached at 254.549.6611 or Carole@ISellGigHarbor.com.

July home sales declined 47% since last month in a wild freefall, while marketing days increased 29% up to 129 days. July is also down 51% from 2007 and that July was the slowest July of this decade. All this to say there is currently no positive or even neutral trend with new contracts or closed sales on single family homes. Each of the last nine months has claimed the dubious honor of closing the fewest number of home sales in recent years.

The absorption rate (the number of months it would take to sell the existing inventory at July’s sales pace) jumped to nearly 24 months, double from June, representing the surge in unsold inventory. Spring and summer are normally the lowest inventory months—as few as three months in July 2005, the largest sales year historically.

Key Peninsula is absorbing its inventory slightly faster than Gig Harbor…an 18 month supply (297 homes), while Gig Harbor has a 27 month supply (749 homes). Key Peninsula is also experiencing a better ratio of sales price to list price…98% compared to 94.44%. This is in part explained by a lower median sales price ($267,000), a price slightly easier to finance in today’s uncertain lending world. Gig Harbor’s median is $398,000. Key Peninsula is picking up about 36% of the total sales; it generally produces about half of Gig Harbor’s total.

The most active price range is under $300,000 in Gig Harbor, with just a seven month supply of homes. This single range approaches a neutral market, considered to be six months. But for homes listed over $600,000, there are simply not enough buyers…eight for the 387 homes in Gig Harbor and four for the 46 homes in Key Peninsula in July.

CURRENT # MONTHS SUPPLY ON THE MARKET

Price range              Gig Harbor     Key Peninsula

All prices                      27                     18

<$300,000                     7                     18

300-399,999                  16                    18

400-499,999                  26                    25

500-599,999                  46                     9

600-699,999                  93                     ns

700-799,999                  45                     8

800-899,999                  56                     ns

900-999,999                  36                     ns

1-1,499,999                   24                     8

NS–no sales in this price range. There were no sales over $1,331,800.

The miles and miles of shoreline Gig Harbor and Key Peninsula are known for are experiencing a steeper sales downturn than the real estate market as a whole. The number of sales is down 49% for the first half of 2008 from 2007, and 62% from 2002, the height of the market. Over-all real estate sales have slid 37% this year.

With 144 waterfront homes on the market and only 19 closed this year, Key Peninsula has bested Gig Harbor, 11 to 8.

2008 is developing into what could be the worst year for saltwater sales in the last 25 of my record-keeping. One has to go back to 1996 to find first half year closings under 20…and that year closed with 48 sales. All higher-end properties fit the same profile… only six closings over $900,000 in June, with an inventory of 151 homes.

The graph shows the comparison of annual and January to June numbers over the last 11 years. Normally by the 4^th of July half of the year’s waterfront business has taken place. The best season for sales is March to May, with buyers desiring to be “on the beach” by summertime. It looks like we are on target to sell only 35 to 40 homes for the year.

With both the economy and financing difficulties, sellers in the upper ranges should carefully examine their motivation for selling. It could be advisable to wait to a later date to sell. If there is a compelling reason to sell now, the property should be aggressively priced…meaning well below the market competition. With 144 sellers competing for the just 19 buyers who purchased in the last six months, sellers are facing a six year supply of homes on the market. On the other hand, with that large choice of houses, it is great time for buyers who are able to buy.

The chart indicates areas of listings. In each area the number of waterfront homes currently on the market is shown, as well as the number sold in the last six months, the number of market days, and the median sales price. With a single sale in several areas, too much should not be read into median sales price. It is easy to see the areas where the market is over saturated and those where sales are stronger. Key Peninsula is turning its inventory more quickly with one-third the market days of Gig Harbor. Sales prices are closer to list prices in Key Peninsula, 95% compared to 88%.

Area                         Active Sold  DOM    Median Sales Price

South Key Peninsula                 16        4          55                    $507,000

North Key Peninsula                 13        5          47                    $450,000

Wauna/Minter                            8        2           85                 $1,100,000

Fox Island                                19        3          133                $1,100,000

Wollochet/Narrows                  29        1           47                 $1,900,000

Arletta/Horsehead                    31        1          308                $1,500,000

Rosedale/Kopachuck                 6        2          210                   $770,000

Gig Harbor City/surrounds        14        1          135                $1,150,000

Gig Harbor North                     8          0                                  No sales

­­­­­­­­ 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

Only 335 single family homes (condos are not included) closed escrow the first half of 2008, compared to 537 for the same period in 2007. That is 37.2%, nearly an identical drop whether in Gig Harbor or Key Peninsula. Specifically, there have been 239 sales in Gig Harbor and 112 in Key Peninsula January to June.

June year-over-year closed out the month with a slightly better showing–83 homes sold. This is down 16% from June 2007 and 37% from 2006 but is the best month for home sales since last August. Lack of condo sales would pull the percentage down further. (More on the condo market in a future column.)

Each of the last eight months claims the dubious honor of closing the fewest number of home sales in recent years. June saw price reductions on about one-third, or 351, of the entire home inventory—about typical since January.

The median sales price (half the sales above and half below this price) is down 5% for the year compared to January to June 2007 but up 5% for the single month of June year-over-year. The year-to-date figure is important because it represents six months of trend. Lower median sales prices were evident in four of the last six months over 2007.

Absorption rates are supplied for each peninsula by price range. Absorption is the number of months it takes to sell the entire existing inventory, with no new added, at the same rate as the most recent month’s sales. Overall, the market is running about 14 months, or five months longer than a year ago.

A six month supply is considered a neutral market, a buyer’s or a seller’s market on either side of that number. The under $300,000 range in Gig Harbor is the only one approaching a neutral market.

# MONTHS SUPPLY CURRENTLY ON THE MARKET

Price range                     Gig Harbor    Key Peninsula

<300,000                                   8 mo              11 mo

$300-399,999                          10 mo              13 mo

$400-499,999                          18 mo              14 mo

$500-599,999                          10 mo

$600-699,999                          46 mo              16 mo

$700-799,999                          30 mo

$800-899,999                          14 mo

$900-999,999                          16 mo

$1-1,499,999                           24 mo

$1,500,000>                            43 mo

If there is no number of months listed, no sales were made in this price range.

 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­

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.

June continues to repeat the history of the last 12 months and closes with the fewest number of sales contracts written in the month in more than a decade of record keeping. 10 of the past 12 months garnered the same results—the fewest in 10 years. Specifically, new contracts are down 12% from a year ago and 32% from two years ago.

Home sales however quietly improved in both May and June as May’s negotiated contracts reflect a more modest 20% decline from May 2007…a turnaround from the 40% to 50% slide each month since January.

Realtors use written sales contracts or “pending sales” as an indicator of the most current market activity. However, they are experiencing some of the highest rate of “fall out” in history. In today’s volatile financial marketplace, even after buyer and seller have negotiated the terms of the sale, buyers are not always able to secure financing. And appraisals, in some cases, are coming in lower than agreed-to sales prices.

The strongest segment of the Gig Harbor market is under $300,000 but there is no seller’s market or even a “neutral market” where supply and demand are in equilibrium. In Key Peninsula the strongest range is $300,000-400,000. There each segment over $500,000 is represented by only one sale and low inventory, reflecting in an unusually high percentage.  

BUYER OR SELLER MARKET?

The lower the percentage the more that price range is a buyer’s market

Price Range   Gig Harbor  Key Peninsula

<$300,000                   14%                    12%

$300-399,999                7%                   17%

$400-499,999                7%                     8%

$500-599,999              11%                   11%

$600-699,999                5%                     0%

$700-799,999                3%                   16%

$800-899,999                5%                     0%

$900-999,999                0%                     0%

$1-1,499,999                 3%                     0%

$1,500,000>                  0%                     0%

.

    1-44% = buyer’s market

  45-54% = neutral market

55-100% = seller’s market.

Percentage is derived by dividing number of pending sales by number of listed homes

Buyers are likely to buy, if they can, over the next few months. Inflation fears are nudging interest rates up—currently in the 6.25% range for 30 year loans under $575,000. Buyers want to take advantage of still attractive rates. Plus Federal buyer incentive programs are due to sunset in December.

Next week, I will review market statistics for homes that closed escrow in June. This will include the current absorption rate.

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 quietly improved in May as negotiated contracts (pending sales) showed a more modest 20% decline from 2007 than they have the past several months. April was down 48.8%.

Listing inventory also improved. 33% fewer homes were listed in May than in 2007. When inventory decreases, there is less downward pressure on prices. When home inventory increases above a seven month supply the market is considered a buyer’s market–today there is a 12 month supply.

Closed sales declined 35.7% for Gig Harbor and Key Peninsulas combined, but pending sales from May could indicate more closed escrows in June and July. Caution should be applied to this uptick, because it is only a single month of improvement. In today’s volatile financial marketplace, buyers are not always able to secure necessary financing. In early July, I will review market statistics for homes that closed January to June.

I am separating statistics for homes that closed in May for Gig Harbor and Key Peninsula, information not necessarily easy for residents to access.

                                   Year-over-year change          

• Gig Harbor        - 40%          (83/50 sales)   
• Key Peninsula   - 45%          (42/23 sales)
• Pierce County   - 42.1%

The graphs show median prices (half the homes selling above and half selling below this price) have dropped only 4% from May 2007 in Key Peninsula but a whopping 13% year-over-year in Gig Harbor. January to May median prices are down about 5% so May’s figures reflect a current steeper descent for Gig Harbor.

The mix of home prices and the availability of affordable homes are driving some of these statistics. The median price in Key Peninsula is $230,000 but $424,000 in Gig Harbor. Gig Harbor is being hit on the higher end where sales are stagnant with inventory of 350 homes over $650,000 and only six sales in the past month. And the higher price of gas is likely affecting sales in Key Peninsula.

These graphs provide perspective to the time (2002/2003) when median prices were more in line with inflation and were bought for reasons other than investment only. Key Peninsula saw a hefty price jump in 2005 though when new construction began there in earnest. Otherwise, median prices have been more moderate.

Buyers are likely to buy, if they can, over the next few months. Inflation fears are nudging interest rates up to the 6.5% range for 30 year loans under $567,500 and Federal buyer incentive programs are due to sunset in December.

Information is from NWMLS.

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