Carole's Blog

Gig Harbor waterfront prices up 10%

Gig Harbor waterfront prices up 10%, January to mid-May, over the 2013 year. The entire price bump is coming from Gig Harbor and Fox Island—up 14% while Key Peninsula is experiencing a 7% decrease. Here are the highlights…

Sales volume for Gig harbor waterfront

• On track for 100 sales by year-end—fairly typical
• Slower thus far than 2013’s all-time high of 135
• Sweet spot is $500-600,000, 4 closed/2 active listings
• Also $400-500,000, 8 closed/14 listings
• Also $900,000, 4 closed/8 listings

Median sales prices y-t-d for Gig Harbor waterfront

• Prices ↑ 10% on both peninsulas over 2013 year–$550,000
• Prices still ↓ 38% from 2007 peak
• $1m+ represents 30% of listings—but just 11% of sales
• $1m+ average 2 years on market before sale
• Under $1m—average under 6 months on the market
• Gig Harbor/Fox Island ↑ 14% over 2013–$713,000
• Gig Harbor highest sale $2,960,000 after 6 ½ years
• Key Peninsula ↓ 7%–$ 395,000
• Key Peninsula highest sale $600,000 this year

Proposed Gig Harbor waterfront changes muddy the waters

The proposed all-new Shoreline Master Plan for Gig Harbor waterfront, mandated by the State, is proceeding cautiously—with local  hearings postponed by the Pierce County Council. The Council has chosen to push back against the State Department of Ecology on issues including buffers and aquaculture, but with the threat the State will impose more onerous regulations on shoreline properties if the Council can’t agree. The current 50 foot “setback” is proposed to change to a 75-150 foot “vegetative buffer.” And structural expansion into the “buffer” would be limited to 25% of the existing footprint, in most cases.

Every Gig Harbor waterfront owner should pay close attention to the current process and seek professional assistance, “sooner than later” if there is any thought of expanding, building or selling in the future.

Cumulative House Appreciation 2014-2018.  The Home Price Expectation Survey 2014 1st Quarter was released last week by Pulsenomics. Pulsenomics surveys over one hundred economists, real estate experts and investment & market strategists asking them to project home prices. This includes three graphs for the national scene, projecting the highest this year and slightly lower the following four years.

1. The pre-bubble trend
2. The 25% most optimistic experts (bulls)
3. All projections
4. The 25% most pessimistic experts (bears)

And then, some indications historically of where annual appreciation sits:

Gig Harbor waterfront 2013’s sales volume was up 33% year-over-year.  April through October posted nearly identical volume each month—14 or 15 homes closing each month.  And the number of sales every month was the highest for Gig Harbor waterfront it had been for at least a decade.

Gig Harbor waterfront 2013’s strong activity was due to a nearly “perfect storm” of buying conditions…historically low interest rates the first half of the year, a fair amount of inventory available with pent-up seller demand, easier lending requirements, and the buyers’ realization the market had bottomed. However, the very high tier—over $1million– dropped off precipitously with no Gig Harbor waterfront contracts written after the end of August. This followed the nation-wide fall-off of all price ranges in 4^th quarter. This very high-end represented just 10% of all sales—the lowest percentage we’ve seen since 2004.

• Gig Harbor waterfront sales prices reached their peak in 2007. Prices have dropped 46% since then–now residing where they were in 2003-2004.
• The current slim inventory of Gig Harbor waterfront—coupled with still relatively low interest rates and easier financing could mean improving prices for sellers in 2014. On the other hand, if pent-up sellers place a surge of homes in the marketplace, it could continue to hold down prices. I believe there is a minimum of 250 waterfront owners who are ready to move—if market conditions (prices) will permit.
• Gig Harbor waterfront homes selling above $1m sold on average for 150% of their assessed value in 2013. Average waterfront was 170 feet.  Nearly all faced West or Northwest, 3 had docks, and 8 were low or no-bank…nothing unusual here.
• Homes selling from $750,000-1,000,000 were on average 120% of their assessed value. Sites here averaged 136 feet, slightly more than half faced north or east, most the rest south.
• Gig Harbor waterfront distressed home sales were down—just 9% of the sales last year were short-sales and 4% were bank-owned. This is a great reduction from two years ago at 9% and 13% respectively. The most expensive bank-owned house sold for $875,000 on Fox Island.

• There may be a window of opportunity for Gig Harbor waterfront  sellers now in early spring to take advantage of low inventory and buyers before more sellers enter the marketplace.

Gig Harbor home sales

Gig Harbor home sales annual review—strictly resale. This may surprise you but 2^nd quarter 2013 and 3rd quarter 2012 realized median sales prices near the 2006 peak of $425,000. This is “strictly resale” homes—not bank-owned nor short-sales.

Today’s graph of Gig Harbor home sales shows resale, new and bank-owned sales plus the resale trendline, by quarter, from $400,000 in 2005 to $370,000 today.  Resale is now off just 13% from its peak and only 7.5% from its trendline. Sale prices performed well in the first half 2013…but removed much of those gains in the second half…performing at 2005 prices.This is true of all Gig Harbor home sales.

More stats on the resale market

• Current $370,000 sales price is considered neutral, based on a 6-quarter trend
• Sold-to-listing price ratio  is up to 94% from 89% a year ago
• With 40-55% of 2006-07 sales new large homes, this pulled up the sales price overall above $450,000 —  just as bank-owned sales pulled it down below $325,000

I offer some observations…positive and negative for Gig Harbor home sales

• The recent Boeing contract and high tech industry will produce a more robust housing market than much of the rest of the nation
• Interest rates will likely  climb to 5.4% by year’s end and lending will be less supportive to a housing recovery
• Income growth will continue very slowly. This is the deepest and longest employment “recovery” we have experienced since the Depression
• Investors have pulled back from buying homes, creating part of the slowdown in sales since summer
• Inventory will stay low until sellers can retrieve more of their equity—higher sales prices. Nationally 13% of homeowners owe more than their home is worth. Washington is 11^th for foreclosure filings, bucking the national trend
• Puget Sound sales volume has dropped the last 3 months after all 2013’s earlier months topped the charts
• January 10’s tighter underwriting standards will keep more first-time buyers renting

Gig Harbor resale home prices down just 5.1% over peak. Stripping out new home and distressed home sales, Gig Harbor resale prices are actually down just 5.1% from the 2006 peak. Hopefully this week’s graph will provide some perspective for sellers as they contemplate marketing their home in 2014. The numbers show Gig Harbor resale prices down 21% from its boom but that figure includes distressed sales and new home prices that outpaced the rest of the market by $150,000-300,000 at the peak.  New homes were much larger than the product being built today in Gig Harbor North. All sales combined are up 6.3% over a year ago.

A caveat – Competition for any home sale depends on the options available to the buyer at that time. It is one thing to compete in a market with a 2-year supply of homes and 50% of it distressed compared to a 4-month supply of homes with only 10% distressed currently.

While first quarter 2013 was the low point for combined Gig Harbor sales prices, this entire year has been the highest (with an exception in early 2010) since first half 2008 for Gig Harbor resale prices itself.

Inventory is down 47% from first half 2008 high. Gig Harbor hasn’t experienced low inventory since 2004-05. This is why brokers routinely urge sellers to consider marketing early in the year – traditionally a low inventory period, producing faster sales and higher prices.

Gig Harbor resale prices

Gig Harbor home prices and sales pause in October

Pending sales volume during October was level with 2012 sales as well as September’s.  The higher tiers have seen fewer contracts and closed sales in the past two months.

The consensus is the federal shutdown during the first two weeks of October, the unknown of the Affordable Health Care law and below-normal inventory has shaken consumer confidence.

Consumer confidence “deteriorated considerably” in October as a result of the shutdown and debt ceiling squabbles, according to The Conference Board. A recent Gallup poll found some improvement in Americans’ economic confidence, but reported it is still well below mid-September, before the shutdown

MLS figures summarizing October’s activity show year-over-year drop in inventory (down 10% in Gig Harbor and 20% in Key Peninsula), nearly 20% increase in the volume of closed sales, and healthy increases in selling prices (up 9.4% in Gig Harbor and 5.9% in Key Peninsula).

Gig Harbor’s median price of $350,000 is 9.4% higher than a year ago – 12.9% lower than September – essentially the same as first half 2005 prices. First half November Gig Harbor home prices are also lower.

• As of Nov 17, $285,000 is the median Gig Harbor home price for closed sales
• Gig Harbor home prices are running at 1^st half 2005 prices
• Key Peninsula’s median price of $216,000 is 5.9% higher than last year & the same as September
• As of Nov 17, $183,000 is the median for closed sales this month
• Prices are running at 2^nd half 2005 prices
• Nationally house prices are expected to increase 4.3% in 2014 and settle around 3.4% after that
• October homes closed at 99% of then current list price. November is seeing a slight tick down from that and slightly longer market time
• Inventory is down 10% for Gig harbor and nearly 20% for Key Peninsula

Existing Gig Harbor home prices take jump. My past reports of year-over-year drops for Gig Harbor home prices may be behind us for now. Existing Gig Harbor home prices are up over 11% for the November-January quarter, over a year ago, for Gig Harbor/Key Peninsula combined. And one home sale just closed for $3,600,000—the first sale over $3 million for nearly five years.

Existing Gig Harbor home prices— median

• Gig Harbor ↑ 5.3% quarterly
• Key Peninsula  ↑ 3.9% quarterly
• Pierce County ↑8.4% quarterly
• Gig Harbor/Key Peninsula  volume ↑ 19% quarterly (12.5% annually)
• Inventory ↓17% from a year ago

New Gig Harbor home prices–median

• Gig Harbor/Key Peninsula  ↓ 42% quarterly
• Gig Harbor/Key Peninsula ↓ 22.5% from 2010
• Gig Harbor/Key Peninsula volume ↑ 250% quarterly (40% annually)

An interesting sidebar to our trending Gig Harbor home prices is new construction.  Nearly all of Gig Harbor’s current construction is in Gig Harbor North…Quadrant and Rush. New construction accounts currently for less than 10% of all sales, with the median price hovering under $300,000. In 2010 the median price was $470,000 and in 2011 $330,000. This year’s median price computes to a 13% drop in price from 2011…and 39% for the year before.

Gig Harbor’s new construction pricing will be a drag on the combined new and existing median price, at least for a while. For a better perspective of the trending market for Gig Harbor home prices going forward I will separate these two.  Sellers have more interest in resale prices while buyers watch both new and existing prices as they make their buying decisions.

Two of the county’s other major new home areas have experienced an increase in sales price, compared to Gig Harbor home prices; at the same time new construction is a larger portion of their overall sales. In Puyallup roughly 25% of sales are new homes with prices up 4.7% quarterly from a year ago.  New homes in Bonney Lake account for about 16% of sales and prices have increased 8.8% for the same period.

The price differences can be explained, in part, that during the economic downturn builders in the east side of the county were able to take advantage earlier of bank foreclosed plats, with drastically reduced lot prices. Builders passed lower lot costs on to their consumers. Banks took longer to foreclose on builders/developers in Gig Harbor and the current inventory is now reflecting those lower lot prices and thereby Gig Harbor home prices. Six years ago Gig Harbor had a bevy of small builders building high-quality product on larger lots. Currently most of those builders are gone and only the corporate builders remain, building on smaller Urban Growth Area (UGA) size lots.

This may change slightly as two builders have purchased lots in two uncompleted subdivisions and will likely be building in the $450-550,000 range.

Gig Harbor home prices end 2012 on a high note! The statistics say it all…Gig Harbor home prices are making a “comeback.” Let’s check off the changes in the median sales price (half the sales above and half below this price). Nearly all signs are UP.

GIG HARBOR/FOX ISLAND PRICES

• ↑ 3.7% 4^th Qtr 2012/2011
• ↑ 5.3% Dec  Y-O-Y
• ↑ 2.9% Dec over Nov
• ↓ 20% 4^th Qtr 2012/2006

KEY PENINSULA PRICES

•   ↑ 10% 4^th Qtr 2012/2011
•   ↑ 19% Dec Y-O-Y
•   ↑ 32% Dec over Nov
•   ↓ 13% 4^th Qtr 2012/2006

Gig Harbor home prices are 3.7% higher for the 4^th quarter over the prior year and Key Peninsula sales prices have improved 10% in the same year-over-year period.

Gig Harbor and Key Peninsula sales prices in 2011 decreased three out of every four months from 2010. While the same was true for Gig Harbor home prices most of the first half of 2012 the market recovered faster and stronger for Key Peninsula. But by summer Gig Harbor home prices stabilized as well.

Gig Harbor is now down only 20% for 4^th quarter from the housing boom period in 2006 for a median price of $340,000.  Key Peninsula is down 13% for a sales price of $218,000.

Sales numbers have come roaring back too, with each of the last five months marking the most sales since 2005 in Gig Harbor.

In Gig Harbor home prices are currently down 20% from late 2006 and 12% from two years ago. This emphasizes just how much of a hit the last two years have been… until the past few months.

Inventory is down 15% in Gig Harbor and down 9% in Key Peninsula.  And pending contracts (accepted but not yet closed) are at some of the highest levels since the housing boom…up 83% in Gig Harbor and 120% in Key Peninsula. Brokers were busy right through the holidays as buyers who had been house hunting were eager to have a house under contract by year’s end.

Currently the local market is experiencing a “balanced market” overall. But the strong demand and low inventory does not bode well for buyers this spring. Buyers need to be ready to act when they find the right house and realize in many prices ranges it has become a seller’s market for Gig Harbor home prices. But for sellers who have wanted to sell and “move on” they should have the confidence it is possible if the house is priced right.

Gig Harbor home sales show steady progress!

Are we better off than we were five and six years ago? No, but we’re climbing out steadily. Here’s the evidence:

• Sales were up 27%  this last quarter compared to 2011
• Sales were down 19% this year compared to 5 years ago
• Inventory is down 13% from August 2011 and very close to 6 years ago
• Homes are taking 21% less days to sell than a year ago
• Pending sales are up 7% this quarter compared to last quarter
• Pending sales are up 10% for last 12 months compared to previous year
• Sale prices are running 94% of original list price
• Supply & demand—only 5.7 months’ supply—verging on a seller’s market
• Median sales price down 13% year over year
• Median sales price down just 4.7% this quarter over last quarter
• Median sales price down 32% this quarter from 6 years ago

Nearly all the signs are positive and have been for several months–enough to be a trend. We’ve slowed the decline in prices and the inventory is quite tight. These statistics are for Gig Harbor and Fox Island.

Evidenced locally, our Gig Harbor Soundview Windermere office had the best summer months for sales that we’ve had in five or six years. And new listings are only coming in at half the numbers of sales the brokers are making. Homes priced to be “in the market” rather than just “on the market” are selling quickly at all price ranges, often with competing offers. This is a nice “window of opportunity” for sellers who have been waiting to sell.

Waterfront is having its best year since 2007. It fairly exploded in last August and early September. September generally is about the third best month for sales.

With only 5.7 months’ supply of homes on the market we are clearly no longer in a buyers’ market. And we are sliding beneath the 6 month “normal” market into the range of a seller’s market. We’ve had as much as 32 months’ supply and it was even 9 months in July.

Aside from supply and demand, the ratio homes are selling for compared to their original list prices is up to 94%. We haven’t been this high since 2007 and we hit 76% in 2010 and 84% in 2011. These last two figures should be lessons to the buyers in the marketplace. The “killing” the buyers were able to make in the past few years is rapidly disappearing.

Our distressed home sales have dropped dramatically with only 10% of the market bank-owned or a short sale listing.

So…high sales volume, low inventory, fewer days on market, homes selling for closer to list price…Can a solid nudge in prices be far behind?

Carole Holmaas is a Broker at Windermere Real Estate in Gig Harbor, licensed since 1967 along with her husband John. She specializes in waterfront, view and golf course homes. She may be reached at 253.549.6611 or Carole@ISellGigHarbor.com

Gig Harbor home sales—something for everyone

• Local inventory ↓ 17% from 2011 –7.2 mo supply
• King/Sno/Pierce inventory    ↓ 42.65% from 2011
• Median price ↓ 1% Y-T-D –rate of decline slides
• Waterfront prices↑ 6% Y-T-D
• Nationally, price increase ↑3.5% not to 2016
• Local sellers’ market through $350,000 prices
• Local balanced market through $700,000 prices
• Washington REO inventory less than 2%

Gig Harbor home sales are trending with overall national figures. Sales–the first part of any housing recovery have come back with vigor. Prices–the second piece of the recovery is lagging. Both Gig Harbor and Key Peninsula have experienced as many positive as negative months this year–again typical nationally.

Prices are declining at a shallower rate than in past months. Both peninsulas are currently at second half 2004 prices for Gig Harbor home sales —improved  from 2003 prices  we experienced most of last year but still down 1% for the first half of the year.

The good news is that distressed Gig Harbor home sales have dropped 10% from the beginning of the year—another national trend. Short sales outnumber REO properties nearly 2-1. And currently distressed homes make up just 10% of the inventory.

Washington is fortunate to have a non-judicial foreclosure process which has cleared the backlog faster than in states where the courts make the determination. This leaves less shadow inventory in the wings as well. In fact Washington has less than a 2% foreclosure rate—one of the lowest in the country. Lenders are working more aggressively with homeowners on modifications and short sales.

An increase in Gig Harbor home prices depends on supply and demand. The supply side is down to seven-month inventory but prices haven’t spiked yet—largely because anticipation of surfacing foreclosed properties. We will know shortly if we need to factor in more than the current 2% into the market pricing equation for Gig Harbor home sales. Inventory in the tri-counties has dropped 42% from last year—the fifth largest drop in the nation.

So this summer is an excellent window for sellers—inventory is low and interest rates have never been lower. Home supply is down nearly 20% from a year ago and over 40% from the peak. It is truly a sellers’ market under $350,000 and a nicely balanced market up to $700,000.

There is a tremendous pent-up demand for sellers who want to move for employment, be closer to family or scale down in size. And there appears to be little reason to wait for price increases because the national prediction is it will take until 2016 for house prices to reclaim the 3.5% increase in value considered the pre-bubble “normal”.  Maybe a bit more down this year, up 1.3% in 2013 and 2.6% in 2014, is what the June Home Price Expectation Survey says.

Friday respected magazine The Economist, reported “America’s houses are now among the world’s most undervalued: 19% below fair value, according to our house-price index.” Another good reason to buy.

As I said at the beginning…there is something in Gig Harbor home sales news for everyone.