Carole's Blog

2015 will be a strong year for Gig Harbor home sales

I’m going out on a limb and predict 2015–even this winter–Gig Harbor home sales will be even more active than 2014. Here is why:

• The volume of pending sales throughout the Puget Sound—including Gig Harbor & Key Peninsula– is at a 9-year high. That is a turn-around from the slow earlier 4^th quarter and 1^st quarter.
• Interest rates are going to bump up, as much as 1% next year, according to Freddie Mac, encouraging buyers to make decisions sooner. A one point rate increase relates to 10% less purchasing power for the same payment. Credit is getting easier, with lower FICO scores being accepted and Fannie Mae and Freddie Mac are planning to offer 3% down loans.
• Owners are regaining some equity lost over the past 8 years and many have been waiting to market their home until prices improved. Many of those are looking for a lifestyle change. I estimate there is a “pent-up demand” by more than 200 waterfront owners alone who would like to make a move. I believe more of those owners will put their homes on the market next year, based on recent figures showing a volume increase of 25% between $750-1M and 50% over $1M in the past 3 months.
• Houses are sitting an average of only 75 days on the market, down from 108. Gig Harbor has just a 4.4 month supply of homes on the market, Pierce & Kitsap counties 3.3 months & King County less than 2 months. This puts pressure on Gig Harbor home sales.
• The median sales price for Gig Harbor home sales increased around 4% for the past 3 months — for Gig Harbor at $379,000 but is still swinging widely in Key Peninsula from $165,000 to $245,000. The higher tier has shown more improvement—$750,000-1M is up 5.8% and even $1M+ is up .2%.

Here’s my advice for today’s sellers. Technology has put the buyer in the driver’s seat, in determining what a house should sell for—so sellers cannot add “fluff” to the listing price, hoping to find a buyer who isn’t knowledgeable about the market. Buyers are knowledgeable.

And for buyers—keep in mind that one point in interest rate increase will buy you 10% less house, at the same time that prices are going up.