Carole's Blog

Gig Harbor home prices—is it a seller’s market? Yes…and No! While reports of current home sales indicate it is a seller’s market, that is not completely accurate for Gig Harbor and Fox Island. While it is true for much of the Puget Sound, it is a bit different where 72% of homes listed is above April’s median selling price of $500,000. This is a “dual market” for Gig Harbor home prices. Extremely low inventory under $500,000 has created a seller’s market with only 1.2 months’ supply. Multiple offers are common in this market and successful buyers will be well prepared with financing pre-approval lined up.

Months’ supply is calculated by dividing current inventory by the number of contracts accepted (pending) for the previous month.  For April, it would take 1.2 months to sell everything on the market listed under $500,000.

In the $500-750,000 Gig Harbor home prices the  inventory is still tight at 1.9 months and is only slightly better at $750-1,000,000 category with 2.5 months.

But once above $1M, buyers have a bit more breathing room and likely won’t face a bidding war for Gig Harbor home prices.. Up to $1,250,000 homes will remain on the market a bit longer, providing a 3.3-month supply and an opportunity for the move-up buyer to sell in a seller’s market and buy up in a buyer’s market.

Above $1,250,000 it jumps rapidly to a buyer’s market for  Gig Harbor home prices with 6.5 months of homes in the $1,250-000-1,500,000 category and 20 months at $1,500,000 plus. Multiple offers are rare in the upper reaches and sellers likely have a longer wait especially at $1,500,000. Exceptions are found for homes in high demand areas, turn-key and priced where buyers believe it to be current market value. Currently 20 homes are available with just one sold in April and none pending.

So…pleased may be the seller under $750,000 and the buyer over $750,000, and trying perhaps for the buyer under and the seller over that mark.

Gig Harbor home prices rise nearly 24%. But the devil is in the details! The median sales price for Gig Harbor and Key Peninsula combined is up nearly 24% year-over-year for 4^th quarter. $393,000 tops the $353,000 from a year ago. I used the full quarter of statistics to equalize any single month’s velocity. And I used the end of the year to most represent the current market.  But details for each area vary widely.

New construction dominates close-in Gig Harbor home prices, including the booming area surrounding Costco as well as Rosedale. Fox Island and Wollochet statistics are heavily weighted from waterfront sales.  And a drop in distressed sales had a major impact for some of Key Peninsula home prices.

Gig Harbor–New home sales captured 41% of all sales, pushing the Gig Harbor home prices in this area up nearly 20% to $464,000. Waterfront sales were down by half, dropping median prices to $400,000 from $836,000 in that category.

Gig Harbor North–1 of every 8 sales was a new home, predominantly in Crescent Lake Estates. That market jumped $561-730,000. Gig Harbor home prices in this area showed an uptick $500-535,000 for 7%. While waterfront prices jumped 35%, less than half the number sold.

Fox Island–Prices jumped 45% $419-609,000 overall, with waterfront prices up 30.9% –$943-1,234,000. There are many view homes on the island, which helped push up the sales price. However, a smaller percentage of the sales was waterfront than a year ago. The few new homes on the island also added to the increase.

Median Home Prices 4th Q 2016 change from 2015

Arletta/Horsehead–21% of all sales were new homes with the median here for Gig Harbor home prices down slightly. 50% more waterfront homes sold this year, but those sales were down in price $935-835,000. There were more waterfront sales, albeit less pricey.

Wollochet/Narrows– 35% more waterfront homes sold, boosting Gig Harbor home prices here $422-800,000, pulling up the entire market $339-465,000 for a healthy 37.2% increase overall.

Rosedale/Kopachuck–The median price dropped here, $527-495,000. 1/3 fewer waterfront homes sold and those prices were down 30% to $583,000. Overall there were just fewer sales.

Wauna/Minter–Wauna and Minter experienced a huge boom in prices –$222-398,000. Double the waterfront sales and 1/3 fewer distressed sales made all the difference for this area with a 79% increase in median price.

North Key Peninsula–Here a reasonable increase $229-244,000. A 20% drop in distressed sales was a boost.

South Key Peninsula–Here a nice comeback $190-231,000 the past year. A few less waterfronts sold but distressed sales dropped 35%, making a major difference in the median price.

Regionally, prices year-over-year 4^th quarter rose 12.9% for Pierce County, 4.3% South Kitsap, and 13.8% for King County.

Gig Harbor, Fox Island, Key Peninsula all experience highest recorded sales prices. Gig Harbor home sales volume is still expanding; prices are still on the upswing and inventory is still down—in Seattle and throughout the Puget Sound. Here’s the evidence.

• October was the best month for sales volume ever recorded
• Days on market are 20 in King County & 32 in Pierce
• Seattle has replaced Portland as the fastest growing market
• King Co prices are up 14.5%, Pierce Co 10% year-over-year
• Seattle is the 9^th most expensive rental market in the nation

So, how’s “our neck of the woods” doing?

Gig Harbor home sales & Fox Island home sales

• MSP (median sales price) increase of 9.6% from a year ago
• Last 2 months of $492,000 MSP, besting 2006 peak of $482,000
• Each of 7 months of this year the MSP topping 2006
• September is 2nd highest recorded MSP; October is 7^th best
• New listings are up 23% for the past 3 months over 2015
• Closed sales have climbed 17% during that time
• Pending sales show modest increase of 6%
• Cumulative days on market have dropped from 92 to 72

Key Peninsula home sales

The KEY has rebounded! That’s the good news for the peninsula that has struggled even as its eastern neighbor began to rebound a couple years ago.

• January to May the MSP was lower than same months of peak 2005-07
• Since June monthly prices have outpaced every previous year
• MSP is up 18% from $220,000 to $260,000 quarterly since 2015
• Closed volume is up nearly 10% for the quarter
• New listings are up over 28% for the quarter

Gig Harbor home prices catch up to “boom” years. Gig Harbor resale home prices have climbed back to 2006’s boom year $420,000…and just 6.6% off that year’s summer bubble.

So that is the resale market for Gig Harbor home prices. New construction is another matter. Off 35% from its 2007 high, the forces at work may not allow local prices to catch up for several reasons.  National and regional builders, rather than local small builders of 10 years ago, are building smaller on smaller lots (thank you Growth Management), with less detailing for the main part. Many of current lots, other than Harbor Hill, were picked up at rock bottom prices from banks who acquired them in the recession. Lot prices will increase as new inventory comes online…but the pipeline is slim and then in-fill lots will be the future. I believe Gig Harbor North will be built-out by 2017, considerably ahead of original plans.

Highlights for Gig Harbor home prices

• It’s a seller’s market up to $750,000, with just a 3.8 month supply, even in the $500-750,000 category. Last year that range was working through a 13.4 month supply
• It is averaging just 3 months market time in the $500-750,000 range, less below $500,000
• 39% of the 228 listings, and 1 of 4 sales last month were new homes
• Inventory is down 30% and contracts written are running about 20% higher than a year ago

• Highlights for Key Peninsula home sales

• Resale home prices are running $244,000 for last 3 quarters—same as 2007-2008 “best years”
• Distressed sales still hover at 15%, but down from 35% 2 years ago
• New construction has not returned in any measurable way

Here are my observations…and predictions for Gig Harbor home prices

Interest rates finally started their climb which will bring buyers to the buying table sooner than later, even though these are historically some of the lowest. I expect rates to remain under 5% for the year.

Lending requirements are beginning to loosen a bit which will particularly help first-time buyers.

Wages are still a drag on the economy. That will either slow the creep for Gig Harbor home prices or continue to magnify the difference of who can buy and who can’t.

Inventory will remain low for two reasons. Sellers are waiting to cash in more of their equity with higher Gig Harbor home prices. But more likely those same sellers can’t find a home to move into. There is a very large “supply” of sellers with “pent-up” selling desires.

Waterfront home sales are “behind” 150 or more that should have sold historically during the period of the recession. The 120+ sales in each of the last three years hasn’t caught up to the recession years with only 4-5 dozen home sales.

Year of the new house, with most buyers settling for less privacy, yard and trees. But new.

Gig Harbor home prices look healthy going into 2016, as we approach the end of the year.

A good gauge for Gig Harbor home prices (including Fox Island) is the quarterly figure of $434,000 — up a substantial 14.8% from a year ago, positioning Gig Harbor home prices very close to the peak years of 2006-07. The single quarter high was summer 2006.

New construction continues to produce one in four sales for Gig Harbor, while it creates one in three listings – typical for an area desirable to live and not yet built-out.

Key Peninsula’s improvement is more difficult to quantify. While Gig Harbor homes have gained value consistently all year, the Key has ranged from value increases as low as 2% to as high as 35%. Likely explanations include 1) the number of waterfront homes trading in a single month 2) a smaller number of sales in any single month 3) more distressed sales than Gig Harbor and 4) lack of new construction.

Top Quartile of Sales Makes Comeback

The top quartile of sales…that is the top 25% of sales by price…is making a noticeable comeback. That quartile encompasses sales starting at $580,000 currently and everything above—a strong increase from the $500,000 a year ago.

And while sales over $1m will always be a relatively small number, the 36 sales this year to date are nearly double 2014 and represent the highest number since 2007. The $1m+ category for Gig Harbor home prices has languished at less than half that number for the past six years. In 2014 this category included only view or waterfront homes. 2015 sales include a horse farm, Canterwood homes, and waterfront land as well. Market days have dropped from 127 to 102. All of these sales occurred in the Gig Harbor/Fox Island area.

The stage should be set for a continuing robust market for the top quartile in 2016.

Gig Harbor August home prices up 13.8% over 2014–8% off 2006 quarterly peak. Both Gig Harbor and Key Peninsula markets are looking very healthy, as we approach the 4^th quarter.

The year started a bit slow with the prices trending $75,000 lower in Gig Harbor.  But August’s median sales price of $470,000 is the single highest month since May 2007—and is reminiscent of roaring 2006. A better gauge though, in my opinion, is the quarterly figure of $442,000 which is up a solid 8.6% from a year ago and positions Gig Harbor to prices just 8% off that peak.

Key Peninsula’s improvement is more difficult to gauge. While Gig Harbor has been gaining consistently all year, the Key has fluctuated as much as 2-35% in a single month. This can be explained by many waterfront homes trade heavily in the spring and summer months, which can bounce prices around. The Key is still feeling the effect of more distressed sales than Gig Harbor (20% compared to 6%) as well as not receiving the number of new home sales. But overall the Key is looking healthy, with only a 3.9 month supply of homes for sale.

Noteworthy…

• Gig Harbor MSP August–↑13.8%
• Key Peninsula MSP August↑33%
• Pierce Co MSP August ↑6% — $250k
• King Co MSP August ↑13.2% — $451k
• Kitsap Co MSP August ↑8% –-$260k
• Inventory is building very slowly but new listings are barely staying ahead of pending sales
• New home sales continue increase—20% of sales in Gig Harbor–26% of listings
• Gig Harbor’s volume was third highest recorded, on the heels of 4 months of record setting numbers

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.

Signs of hope for Gig Harbor homesellers!

Looking at the broader picture of the real estate market than simply the month of September, which was excellent by the way, there are definite signs of hope for homesellers with well-priced attractive homes. Reduced inventory—down nearly  45% from the 2008 high–coupled with an 80% reduction in bank-owned sales  and record low interest rates—have all served to bump sales prices up 4.5% for the last quarter in both Gig Harbor and Key Peninsula.

GIG HARBOR/FOX ISLAND 3^rd QTR 2011-2012

• Median sale price rose 4.5%–$346,000
• Closed sales bumped up 4.4%
• Number of homes/condos for sale dropped 13.4%
• 7 month supply of homes currently (5-6 is a balanced market)
• Median sale price for 3^rd Qtr at  1^st Qtr 2005 prices—low $340,000’s
• New home sales are up 50% from a year ago
• New home building sites appear to be diminishing rapidly

KEY PENINSULA 3^rd QTR 2011/2012

• Median sale price rose 4.5%–$204,000
• Closed sales bumped up 9.5%
• Number of homes/condos for sale dropped 10.5%
• 8 month supply of homes currently
• Median sale price for 3^rd Qtr at 4^th Qtr 2005–$204,000

Market days from listing to pending have been chopped in half this past year.  Selling prices are slightly closer to list prices. Pending sales have swollen 40% from a year ago.

At the current pace subdivisions currently under construction look to be essentially built out by this time next year. This bodes well for a couple of plats in preliminary stages as well as Olympic Resources’ Gig Harbor North newest plats. Much of the construction the past 18 months has been on the back of lots bought on the cheap as banks foreclosed on the original builders. New lots won’t have that kind of pricing, resulting in more expensive housing inventory in later 2013 and into 2014.

In a balanced market climate list prices and sales prices both are slightly higher after the first of the year—a fact that many buyers realize could well be the case this winter.