Carole's Blog

Gig Harbor home sales in “recovery mode” 

In a nutshell—prices are up, inventory is under par, sales volume is down and the upper tier is appreciating. Now the details for Gig Harbor home sales year-over-year for the quarter…

Gig Harbor home sales down 16.5%

July itself is not usually a high sale volume month for Gig Harbor home sales (or any other area) with vacations. Only 2004 and 2013 were better in last 12 years, so in perspective, this is not bad.

The middle one-third of Gig Harbor home sales ($325-500,000) has predictably shown the least downturn in sales volume and the top one-third ($500,000 plus) has shown the least downgrade on number of contracts written (pending). Contracts written but not closed indicate current activity, thereby important because they show “move-up” activity as well as increased market strength and pricing for the higher tier.

Gig Harbor home sales “pending” down 14%

Pending sales for the quarter are down but shot up 14% from June, which is the experience local brokers have seen. Most central Puget Sound counties had the same experience.

Prices for Gig Harbor home sales up 7.2%

The median price is appreciating–$387,000 for the quarter and $410,000 for July. July is also up 3.8% over June and up 25% year-over-year for the month. It has been gradually strength this year, after starting very low at $303,000 in January. This increase in prices for Gig Harbor home sales will encourage more sellers to list, adding the inventory the area badly needs.

We are down 18% from our 2006 third-quarter peak–or at summer 2005 prices. But at that time new homes made up as much as 40% of the sales, priced at $600,000 plus. The King/Pierce/Snohomish market as a whole is down 12.6% from the peak—the lower figure representing ever-strong metro King County.

Price increases are not exorbitant–just realistic appreciation. Brokers area-wide are saying sellers who overprice their homes face disappointing consequences.

Resale non-distressed appreciating

Sales prices have steadily been gaining since the first of the year–now at first-quarter 2006 prices $395,000.  August 2006 the peak–we are down 18% from the peak.

Inventory up 3%

Inventory is still low, which leads to multiple offers and homes selling above their list prices. Brokers throughout the Puget Sound point to the quality of some homes plus unrealistic pricing hindering sales. They say buyers often will not even look at a house they perceive to be over-market but just wait for a price reduction before viewing it.

New homes sales 10%

New construction has taken over 10% of all Gig Harbor home sales, down from 15% a year ago. But it represents 19% of all active listings,

Distressed sales 12%

This distressed market represents just 12% of Gig Harbor home sales—slightly less than the 14% in 2013. The single month of July was even better at just 6.5%.

Waterfront sales down

Sales volume is down significantly following the last 2 “makeup years”. Sales over $1m are running at just half-speed from those 2 years.

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