Carole’s Blog

Home sales have reversed last month’s slight improvement. October declined 8.7% in home sales from September and is down 26.7% from this time last year in Gig Harbor and Key Peninsula. None of this is surprising after the roller-coaster events of September and October .The decline from 2007 is not as sharp as it was in September. However it was in August and September 2007 that sales prices stopped accelerating, as the news of the subprime mess was first disclosed.

 

The good news is there is still plenty of money for employed homebuyers with good credit and a down payment. And there is a reason for buyers who have been waiting on the sidelines to act immediately. The lowest interest rate—hovering around 6%–is only available for “conforming” loans. Conforming is limited to $567,500 and is being lowered to $506,000 January 1. Jumbo loans—over the conforming limit–runs about 2% more currently. This is the last opportunity for buyers to receive the $61,000 spread at the lower interest rate. The loans must close prior to the end of the year.

 

 

While sellers are withdrawing their homes from the market because of few higher-end sales, the slow October pushed up the absorption rate. Expect this to continue to ratchet up going into winter as sales numbers decline in the normal slower selling months ahead. A six to seven month supply of homes is an ideal market. As we approach that number, prices for sellers will firm up. Less than six months inventory produces a seller’s market. Gig Harbor has seen supply as little as three months.

 

Time to market homes was 134 days in October rather than 118 days in September, again not unexpected.

 

The graph depicts year-to-date median sales prices over the past several years for single family and condos for Gig Harbor and Key Peninsulas.  These are down 7% from 2007 and 5% from 2006, typical for the entire Puget Sound.

 

The median sales price–$300,000 for the single month of October,  compares with May 2005 local prices, but is better than national statistics with prices either at or nearing 2004 levels.   It was the end of third quarter 2007 that the subprime mess was disclosed and when sales prices stopped accelerating. Median price is the midway point in number of sales.

 

Homes actually selling are averaging 4% less than their list price, perhaps an indication of realistic pricing strategy for those sellers whose homes are receiving offers. There is still a very large discrepancy in list prices of unsold homes and sales prices—nearly $170,000, or nearly $75.00 per square foot. The average home is 2287 square feet. Intent sellers are looking at the per square foot price of homes selling comparable to theirs—not just the comparable listings—and are pricing accordingly. 

 

This table shows single family home and condo sales for the year. Prices are down about 2% in Key Peninsula and 7% in Gig Harbor.

 

Year-to-date Median Sales Prices

 

 

 

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