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.
The graph does not show March’s current flurry of activity. But it does show February’s 12 month inventory, far better than the continued increase experienced since July 2008. This represents a 9% uptick from July. I use only figures since July because reporting methods were changed by the multiple listing service in June 2008. While there is a possibility inventory will burgeon, as some sellers have sat on the sidelines for the market to stabilize, non-anxious sellers are best advised not to add to the inventory for awhile.
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.