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.