The high inventory of new homes in Gig Harbor and Key Peninsula in all price ranges with fewer buyers makes this market a buyer’s dream, compared to 2002-2005 when homes were being sold as fast as contractors could permit them and sometimes for more than list price.
At the end of third quarter I predicted new homes were on track this year for 70-75 sales. The stats are in—72 is the number. This is a 51% decline from 2007 and a 77% decline from 2000-2006’s average of 212 sales.
With 141 homes completed or under construction—this equates to a 23 month supply at the 2008 selling pace. And the supply has dropped more than sales would indicate as builders have placed some of their homes in the rental pool to wait out market conditions.
NEW HOME INVENTORY—GIG HARBOR & KEY PENINSULA
|
Median List Price |
$625,000 |
|
Average Sq Ft |
3272 |
|
<$400,000 |
34 |
|
$400,000-499,000 |
16 |
|
$500,000-599,999 |
18 |
|
$600,000-699,999 |
24 |
|
$700,000-799,999 |
15 |
|
$800,000-899,999 |
13 |
|
$900,000-999,999 |
7 |
|
$1,000,000> |
16 |
Sales are slow or non-existent for some builders, in new subdivisions of Chelsea Park, Harbor Crossing, and Crescent View Estates. Chelsea Park has four sales and 15 homes available. Little Boat at Harbor Crossing has been experiencing slow sales and Bennett Homes has dropped prices, added especially attractive financing with still no success—and sitting on nine homes. Crescent View Estates now has its first sale, with seven in inventory.
Quadrant’s Ridge at Gig Harbor has closed a half dozen homes and pulled out of the Gig Harbor market for now. Chaffey Homes at the Highlands at Gig Harbor is still waiting for the first sale. The high-end plat of Salmon Bay on Fox Island is waiting for its first sale and TimberCrest is sitting on inventory after early success.
Patio homes at Canterwood were a bright spot with consistent home sales over the past couple years. Many of the other homes on the market are on odd lots or on in-fill lots in mature subdivisions.
Building permit applications have dropped sharply for Pierce County and the city of Gig Harbor. While most future new construction in Gig Harbor will take place within the Urban Growth Area the county is responsible for all permits in Key Peninsula. This has caused budget holes for both governments.
The median home price has declined $140,000, or 29%, December 2007-December 2008, reflecting the tighter credit market. Never have homes been built as large as those selling today. Five years ago the average square footage was 2543—today it is 2829. And it was even 200 square feet smaller eight years ago. There is emerging a national trend of building smarter and smaller.
Although there are 24% fewer new homes on the market than a year ago, supply will need to contract even more before prices level out. Meanwhile buyers have as many choices as there is candy in a candy store. It is taking a builder 35% longer to sell than during 2000-2006.
More than 50% of Gig Harbor’s inventory is priced over $700,000 whereas 60% 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, due to sewer and traffic concurrency. When the market does turn around there will be a large pent-up demand for new housing.
The first graph shows closed sales of new homes historically plus the standing inventory at each of the quarterly periods for the past six years. The second graph shows the historical spread between list and sale price.
Carole Holmaas is an 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.