Gig Harbor and Key Peninsula’s well-known miles of waterfront homes are experiencing a nearly identical downturn as the rest of the local real estate market. The number of sales is down 38% year-to-date, compared with 2007, and down 59% from 2002, the high of waterfront home “turnover”. Over-all real estate sales have slid 37% this year.
With 134 waterfront homes currently on the market and 33 sales this year, Gig Harbor just edged out Key Peninsula for number of sales—17 to 16.
2008 is developing into what likely will be the slowest sales year for saltwater in the last 25 years of my record-keeping. One has to go back to 1996 to find closings under 35 for January to September—and that year finished with 48 sales. The average number of saltwater homes to sell annually through real estate professionals is 79 during those years. However, prior to this decade there were many more undeveloped waterfront parcels that sold as well—now a rarity.
The slowest market segment, in all sales, is $650,000 and above. This represents a sales price of roughly 10% above the conforming loan limit–$567,500—below which are the lowest interest rates. The spread between the rate for conforming and jumbo loans (above $567,500) has been about 1 ½%, jumping to 2 1/4% this past week.
Sales in this higher-end are running 48% slower than 2007, marketably slower than the overall market. But waterfront sales in this segment are just 41% slower. Waterfront buyers likely have more options for financing or use more cash toward the purchase.
The graph shows the comparison of annual and year-to-date numbers over the last 11 years. Normally by this time more than 75% of the year’s waterfront business has transpired. It looks like we are on track to sell 40 to 45 homes for 2007, including six homes pending closing.
With the current economic and financing climate, sellers in the upper ranges should 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 competition. Sellers might consider offering seller financing as well. With 134 sellers competing for the 33 buyers who purchased in the last nine months, sellers are facing a five year supply of homes on the market. Actually 35 homeowners have taken their homes off the market since July 1, helping draw down the inventory.
On the other hand, for buyers, it is great time to buy. There has rarely been this choice of homes and conforming rates are well below the 23 year average of 8%. Some buyers are securing a first and second loan, with only the amount over $567,500 at the higher rate.
Most buyers look in several of these areas during their search. Key Peninsula is turning its inventory in about half the market days of Gig Harbor and sales prices are closer to list prices in Key Peninsula, 96% compared to 89%. Key Peninsula represents more of the affordable waterfront, with median prices staying close to the conforming loan limit.
Area Active Sold DOM Median S P
South Key Peninsula 16 7 96 $475,000
North Key Peninsula 13 5 44 $537,500
Wauna/Minter 5 4 102 $590,500
Fox Island 18 4 127 $1,180,000
Wollochet/Narrows 34 3 65 $1,150,000
Arletta/Horsehead 30 4 126 $1,149,500
Rosedale/Kopachuck 3 4 218 $770,000
Gig Harbor City/surrounds 11 1 135 $1,150,000
Gig Harbor North 8 0 No sales
DOM is number of days to sell
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