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