The high inventory of new homes in all price ranges makes this market a buyer’s dream, compared to 2002-2005 when homes were being sold as fast as contractors could complete them and sometimes for more than list price.
New homes are on track this year for merely 70-75 sales. Typically three-quarter of the annual sales total is reached by September 30—this year only 47 homes have closed in the first nine months. This is a 59% decline from 2007 and 71% decline from 2005–the slowest of the four best years from 2002 to 2005 (208 to 292 sales for each year).
With 169 homes completed or under construction—this equates to a 32 month supply at the 2008 selling pace. 2000 was the last year this slow, with 98 sales at year end. the supply has dropped more than sales would indicate as builders have placed some of their homes in the rental pool.
Sales are slow, or non-existent, for builders in new subdivisions of Chelsea Park, Harbor Crossing, and Crescent View Estates. Quadrant’s Ridge at Gig Harbor has 10 homes under contract and about the same number reserved. Many of the 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.
NEW HOME INVENTORY
|
|
Gig Harbor |
Key Peninsula |
|
Median List Price |
$736,000 |
$342,500 |
|
Average Sq Ft |
3505 |
2297 |
|
|
|
|
|
<$300,000 |
1 |
12 |
|
$300,000-399,999 |
3 |
11 |
|
$400,000-499,000 |
10 |
3 |
|
$500,000-599,999 |
10 |
1 |
|
$600,000-699,999 |
23 |
3 |
|
$700,000-799,999 |
26 |
4 |
|
$800,000-899,999 |
12 |
2 |
|
$900,000-999,999 |
5 |
1 |
|
$1,000,000-1,249,999 |
6 |
1 |
|
$1,250,000-1,499,999 |
3 |
|
|
$1,500,000> |
7 |
|
The median sales price has declined $40,000 in the past quarter, reflecting the tighter credit market and as well as an average 150 square foot smaller home. Never have homes been built as large as those selling today. Five years ago the average square footage was 2543—today it is 2804. And it was 200 square feet smaller eight years ago.
There are 16% fewer new homes on the market than a year ago. But supply will need to contract even more before prices will firm up for builders. Meanwhile buyers have as many choices as there is candy in a candy store.
More than 50% of Gig Harbor’s inventory is 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. When the market turns around there will be a large pent-up demand for new housing.
New homes in Gig Harbor have declined from a high of 27% of all home sales in 2003 to just 9% in 2007 while they have attributed 25% of sales in Key Peninsula in the past three years. This has helped Key Peninsula sustain until recently a nearly steady median home price for the past three years.
The following graph shows closed sales of new homes January to September plus the standing inventory at the end of the third quarter.
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.