Bainbridge Island residential properties were selling for a June median price of $545,950, about 6% higher than in May and 17% lower than a year ago. The more stable three month moving average closed sale price rose 3% from last month to $522,000 and is 3% lower than a year ago. The Kitsap County 3 month moving average median price is about 3% lower than it was a year ago. The 3 month moving average for Bainbridge Island's number of closed sales is about 28% lower than a year ago. The 3 month moving average of closed sales is down 20% Countywide from a year ago. The 3 month moving average number of Bainbridge pending sales in June was down 16% from a year ago. The number of active listings on Bainbridge (257) rose 10% from May and is about 1% lower than a year ago.  The inventory turnover (total homes on the market divided by number sold last month) is 9.2 months, faster than the 14.6 months in May and slower than the 8.1 months of a year ago. Bainbridge Island is a buyer’s market.

More About Bainbridge Island Real Estate

This is an archive copy of our July 2011 newsletter.

You may have read the recent Kitsap Sun real estate report debating whether the Kitsap real estate market has hit bottom. The Sun report considers all sales, while our report focuses residential sales only (not condos), but otherwise we show the same slight uptick in median price for closed sales last month versus a year ago. However, month-to-month trends have been up and down quite a bit this year (from +7% to −8% versus a year prior), so we prefer to look at a longer time average to better see the trend. Our 3 month moving average still shows prices are down about 3% from a year ago. Though most people interviewed in the article predicted that our market is near bottom, there are still many naysayers in the national market.

More interesting are the complexities of judging home prices using the median price as an indicator. When we use the median price to judge whether prices in the overall market are rising or falling, we assume that the shape of a graph of all of the sales vs price doesn’t change - prices might change but the shape of the curve plotting all the sales from lowest price to highest price remains constant (so the median or middle price occurs at the same point on the curve every time). Unfortunately there are factors in our market that keep changing this distribution, making the median price an unreliable indicator. A recent post at Calculated Risk discusses one factor:

A few years ago, several people (including me), noticed that the seasonal adjustments were getting pretty "wild". This was because of all the distressed sales - distressed sales are distributed throughout the year (with no seasonal pattern), and non-distressed sales were still following the usual pattern. So there was a very large percentage of distressed sales in the winter, and this led to huge swings in the seasonal adjustment.

So we have a pattern of normal sales that rises in the summer and falls off in the winter, but this is skewed by the short sales and bank owned sales (generally adding more sales to the low end of the distribution), which don’t come on the market according to the same seasonal trend. Even if prices aren’t changing, the median price falls in winter and rises in summer depending on the percentage of lower priced distressed sales. 

But there’s another trend with distressed sales. The total number of Kitsap County distressed properties as shown by RealtyTrac (not just short sales and bank owned properties in the MLS, but the total on file at the County as having received a notice of default or other notice in the foreclosure process) has fallen 40% since the start of the year. Since distressed properties are a greater percentage of sales in the lower price ranges, this trend has also changed the price distribution of sales.

A big reason why the number of properties in foreclosure has fallen may be Washington’s Foreclosure Fairness Act, due to become effective July 22^nd. The legislation forces major lenders to engage in a conversation and problem solving with borrowers prior to foreclosing. It’s not apparent from the percentage of owners underwater on their mortgages or the unemployment ratethat other conditions have improved to cause that much drop in the number of foreclosures in the near term. Calculated Risk provided a good post showing that nationally the shadow inventory has declined about 20% from the peak last year as a result of a lower rate of defaults and a rising rate of completed foreclosures.

The number of closed sales in Kitsap County in June was up about 21% from May and down about 12% from a year ago. Pending sales rose about 3% compared to last month and were 25% higher than a year ago. Pending sales had fallen dramatically a year ago after the homebuyer tax credit ended. In May, there were 193 closed sales and 289 pending sales. In June there were 233 closed sales and 299 pending sales. 29% of the closed sales were distressed properties. 22% of the pending sales were distressed properties. Both these figures are down considerably from the 35 − 40% we have seen in recent months, indicating that more traditional sales are occurring as we approach the peak selling season. Also efforts by the states and regulators to ensure proper documentation of foreclosures and short sales may be having an impact on the market. What we know for certain is that a considerable number of distressed home sellers still need to resolve their situations before this market will clear. Among closed distressed sales, bank owned sales were more than 3 times the number of short sales. This ratio is rising again after falling for the past 2 months . Shown below is a graph of month-by-month pending sales vs closed sales. Pending sales tend to lead closed sales in direction if not magnitude by about 2 months. Based on past trends, we expect the number of closed sales to rise next month.

Residential Highlights

Kitsap County's residential inventory in June (1700 listings) is about 3% higher than May and about 10% lower than a year ago. Distressed properties listed in the MLS make up about 18% of our market, same as we reported last month.  At the end of June, RealtyTrac showed 890 (1056 last month) Kitsap County homes either in default, in foreclosure, or bank owned. At the beginning of the year there were 1473 distressed properties, so we’ve seen a decline of nearly 40% this year. It’s not clear whether the numbers reported here represent real progress in loan modifications and curing of defaults or if instead it represents reluctance on the part of banks to declare defaults given the government scrutiny of foreclosures. The MLS shows only about 33% of the distressed property inventory, so there could be as many as 598 distressed properties that have yet to be put up for sale. Closed sales were down 12% compared with June 2010. The more stable 3 month moving average number of Kitsap County closed sales is down 20% compared to a year ago.

Prices are falling...

Kitsap County’s monthly median closed sale price in June ($240,000) was about the same as May and about the same as a year ago. The more stable (but also lagging in showing trends) 3 month moving average (see graph below) of the median closed sale price ($230,266) is about 2% higher than last month and about 3% lower than a year ago.  Our median price graphs show a 3 month moving average of prices, which better shows trends and reduces the month-to-month fluctuations.

Seller expectations…

The June median list price rose to $299,000, barely changed from last month. More higher priced homes are being listed for sale. Median list price is about 6% lower than a year ago. The County has a listing inventory turnover rate of about 7.3 months, faster than the 8.5 month turnover in May. The turnover rate has been driven by the under $200k market, where there was 4.6 months of inventory, but recently there have been improvements in sales from $200 − 300k (6 months) and the $300 − 400k (6.2 months) markets. All higher price ranges have 8.5 or more months of inventory. Inventory turnover is the number of months it would take to sell the current inventory at the current rate of sales. In June, both the number of listings and the number of sales rose compared to May. Shown below are graphs of inventory and inventory turnover for Kitsap County in 2007-11. 

The inventory turnover also varies by price range, with higher priced homes selling more slowly than lower priced homes. We've made the point recently that the higher price ranges will be more difficult to reduce in inventory because today's lending environment has greatly reduced the pool of qualified buyers. There were 6 sales in the $800k and above range among 142 listings County-wide in that price range. Every seller is in a price war and beauty contest at the same time. If your price is not best among comparable properties, the chance of sale is very small. Below is a historical depiction of the changes in the ratio of listings to closed sales.

The number of pending sales in June was up 25% compared to a year ago and was up about 3% from May. The statistics for May pending sales varied for different parts of the County. Below is a graph showing the 3 month moving average of pending sales for different parts of the County.

Affordability

We assume that a buyer making the median family income puts 20% down on the median priced home and obtains a 30 year fixed rate mortgage. We assume that a first time buyer making 70% of the median income puts 10% down on a house priced at 85% of the median and obtains a 30 year fixed rate mortgage with mortgage insurance.  We assume that both buyers can afford to spend a maximum of 25% of their monthly income on the principal plus interest of the loan. Using the annual averages of median price, median income, and average annual 30 year fixed interest rate since 2001, we plot an affordability index equal to the maximum affordable payment divided by the actual payment. When the index is greater than 1, the loan is affordable to the typical buyer. When it is less than 1 some buyers cannot afford to purchase. Mortgage insurance quotes are dependent on credit scores - MI for a FICO credit score of 700 might be $20 per month higher than MI for a credit score of 750. We use 750 and have corrected all PMI values to be consistent with this. Our numbers for 2011 are estimates using the latest monthly data for median prices, interest rates, and median income. As a point of reference the index in 2001 was 1.31 and the first time buyers index was .89.

Affordability has dropped but is still very good. With last month’s significant rise in median price and a small drop in the interest rates, the affordability index fell to 1.28 in July from 1.30 in June. First time buyer affordability also fell to .86 from .87 in June. Below is a  graph of the year-to-year changes in affordability and a second graph showing month-to-month affordability over the past year.

July’s APR is 4.812% on a 30-Year and 4.069% on a 15-Year, both conforming. June’s APR was 4.559% on a 30-Year and 3.817% on a 15-Year, both conforming. If you qualify for FHA, VA, or USDA loans , these programs have are attractive for low downpayment buyers. The conventional and FHA loan limits remain at $475,000 in Kitsap County. These higher limits have helped sales of higher priced homes, but they are set to expire this October. The VA loan lender imposed limit is back to $417,000. A typical 30 year fixed jumbo APR (with total costs of the loan, not just the rate factored in) is 5.138% on one major bank web site - up a bit from last month.  To check the daily rate you can contact your lender or preview web sites such as this one -http://bankrate.com/.

That's our report for July! Please give me a call if I can help you or anyone you know with purchasing or selling a home.

Brenda Prowse

Homes in Silverdale were selling for a May median price of about $266,500,  9% higher than a year ago and 3% lower than last month. Silverdale's more stable 3 month moving average median closed sale price was $269,167, less than a percent lower than last month and about 1% higher than a year ago. The Kitsap County 3 month moving average median price is about 5% lower than it was a year ago. The 3 month moving average for Silverdale's number of closed sales is 33% lower than a year ago. The 3 month moving average of closed sales is down 20% Countywide from a year ago. The 3 month moving average of Silverdale pending sales in May was 15% lower than a year ago. The number of active listings in Silverdale (105) is 7% higher than a year ago. The inventory turnover (total homes on the market divided by number sold last month) is 8.8 months, faster than the 11.9 months reported last month and slower than the 7 month turnover of a year ago. Silverdale is  a buyer's market.

More About Silverdale Real Estate

These statistics are for Poulsbo, including the downtown core, from the head of Liberty Bay southeast to Ne-Si-Ka Bay, and parts north to Sawdust Hill Rd. Other parts of Poulsbo and its suburbs should have similar trends. The May median sales price for Poulsbo was $350,000, down about 21% from a year ago and up about 17% from last month. Like in North Kitsap, this rise is the result of a change in the mix of homes sold (a few higher priced homes sold, shifting upward the median, or middle price in the group of sales). It is not a good indicator of rising prices - prices in fact continue to fall. The more stable three month moving average closed sale price was $309,767, about 1% higher than a year ago.  The Kitsap County 3 month moving average median price is about 5% lower than it was a year ago. The 3 month moving average number of closed sales in Poulsbo fell 11% from a year ago. The 3 month moving average of closed sales is down 20% Countywide from a year ago. Poulsbo’s 3 month moving average of pending sales is unchanged from a year ago. The Poulsbo listing inventory (116) is 13% higher than a year ago and 4% lower than last month. The inventory turnover (total homes on the market divided by number sold last month) improved to 7.3 months compared to last month’s 10.1, but it is still slower than the 5.7 months reported a year ago. Poulsbo is a buyer’s market.

More About Poulsbo Real Estate

Statistics here are for Kingston, the largest of the remaining housing markets in North Kitsap. Activity in Kingston should be representative of the other nearby communities. Kingston homes were selling for a month end median price of about $379,900 at the end of May, 22% higher than a year ago and 90% higher than last month. This is a classic example of a change in the mix of sales (a few more higher priced homes sold and a small number of sales) skewing the median price to look like the value of all the homes in Kingston jumped by 90%. This is not the case - overall prices are steady or falling slightly. The more stable 3 month moving average ($275,633) of closed sale price is 1% higher than a year ago.  We have low inventory and few sales. The Kitsap County 3 month moving average median price is about 5% lower than it was a year ago. The 3 month moving average of Kingston closed sales was 56% lower than a year ago, while the number of pending sales fell 57% from a year ago. The 3 month moving average of closed sales is down 20% Countywide from a year ago. The number of active listings in Kingston (55) is down 29% from a year ago - very low. The inventory turnover (total homes on the market divided by number sold last month) is 11 months, faster than the 14.5 month turnover reported last month and quite a bit slower than the 7.7 month turnover of a year ago. Kingston is still a buyer's market.

More About North Kitsap Real Estate

Statistics are for the Bremerton downtown core and west to Kitsap Lake. The market for other parts of Bremerton and its suburbs should be similar. Bremerton homes were selling for a month end median price of $147,000 at the end of May, 14% lower than a year ago and about 24% higher than last month. The more stable 3 month moving average median price ($127,500) was about 21% lower than a year ago and 1% lower than last month. The Kitsap County 3 month moving average median price is about 5% lower than it was a year ago. Bremerton's 3 month moving average for number of closed sales is 33% lower than a year ago and 8% higher than last month. The 3 month moving average of closed sales is down 20% Countywide from a year ago. The 3 month moving average number of Bremerton pending sales is down 14% from last year. The number of Bremerton active listings (128) is 24% lower than a year ago. The inventory turnover (total Bremerton homes on the market divided by number sold last month) is 6.7 months, a bit slower than the 6.2 month turnover last month and also the 5.6 month turnover a year ago. This improved turnover rate reflects the rapid turnover of homes under $200k in our current market. The Bremerton market is still a buyer’s market.

More About Bremerton Real Estate

Bainbridge Island Real Estate Market Trends

Bainbridge Island residential properties were selling for a May median price of $516,000, about 6% lower than in April and 13% higher than a year ago. The more stable three month moving average closed sale price rose 1% from last month to $522,000 and is 2% higher than a year ago. The Kitsap County 3 month moving average median price is about 5% lower than it was a year ago. The 3 month moving average for Bainbridge Island's number of closed sales is about 19% lower than a year ago. The 3 month moving average of closed sales is down 20% Countywide from a year ago. The 3 month moving average number of Bainbridge pending sales in May was down 34% from a year ago. The number of active listings on Bainbridge (233) rose 20% from April and is about 5% higher than a year ago.  The inventory turnover (total homes on the market divided by number sold last month) is 14.6 months, slower than the 10.3 months in April and significantly slower than the 6.9 months of a year ago. Bainbridge Island is a buyer’s market.

More About Bainbridge Island Realt Estate

This is an archive copy of our June newsletter.

Over the past month the stock market has fallen and the economy has slowed. National real estate prices continue to fall. RealtyTrac’s Rick Sharga makes the case that there will be no housing recovery until 2015. The Economic Cycle Research Institute is quoted to say that we are in a pervasive and persistent cyclical turn [downward], not just a one or two month affair. The New York Fed’s William Dudley predicts that economic growth will pick up in the second half of this year. In the mean time a Wall Street Journal article advocates that with today’s low interest rates and better than average ratio of income to home prices, now is the time to buy a home. John Burns Real Estate is predicting that rental demand in top markets is about to explode and will rise more than 25% over the next 3 years, an optimistic call for multi-unit apartment construction. I scratch my head. 

Calculated Risk blog confronts the question more narrowly in an article titled, “Key Question: Is the Slowdown Temporary?” After weighing some of the conflicting factors, the author concludes:

I think the data will help us over the next month or two. If the impact was temporary, auto sales and manufacturing should rebound by July. If there are more severe issues, the weakness will persist. 

We have to also remember that Residential Investment (RI) will probably make a positive contribution to the economy this year, for the first time since 2005. The five years of drag on GDP from RI (2006 through 2010) is the longest period on record, breaking the previous record of four years from 1930 to 1933. The positive contribution this year will mostly be due to a pickup in multifamily construction (apartments) and in home improvement. Of course single family housing starts will continue to struggle.

Since RI is the best leading indicator for the economy, I think a pickup in RI suggests the recovery will continue. This isn't perfect - nothing is - but RI is usually a strong leading indicator for the business cycle. 

So for now I'll stick with my general forecast for 2011: growth will remain sluggish, but I expect 2011 to be better than 2010 for both employment and GDP growth.

The number of closed sales in Kitsap County in May was up about 6% from April and down about 23% from a year ago. Pending sales rose about 4% compared to last month and were 28% higher than a year ago, but recall that pending sales took a nose dive last year in May after expiration of the home buyer tax credit. In April, there were 183 closed sales and 279 pending sales. In May there were 193 closed sales and 289 pending sales. 35% of the closed sales were distressed properties. 40% of the pending sales were distressed properties. In 2010, 25% of all closed sales were distressed properties, so we are seeing more distressed sales now than previously. Among closed distressed sales, bank owned sales were more than 2 times the number of short sales closed. This ratio has been declining the past several months. Shown below is a graph of month-by-month pending sales vs closed sales. Pending sales tend to lead closed sales in direction if not magnitude by about 2 months. Based on past trends, we expect the number of closed sales to rise next month.

Residential Highlights

Kitsap County's residential inventory in May (1646 listings) is about 4% higher than April and about 11% lower than a year ago. Distressed properties listed in the MLS make up about 18% of our market, same as we reported last month.  At the end of May, RealtyTrac showed 1056 (1138 last month) Kitsap County homes either in default, in foreclosure, or bank owned. The MLS shows only about 28% of the distressed property inventory, so there could be as many as 756 distressed properties that have yet to be put up for sale. Closed sales were down 23% compared with May 2010. The more stable 3 month moving average number of Kitsap County closed sales is down 20% compared to a year ago.

Prices are falling...

Kitsap County’s monthly median closed sale price in May ($239,999) rose about 14% compared to April, and is just over 1% lower than a year ago. The rise in May came after two previous months of sharp drops. In our current market, this rise reflects a change in the price distribution of homes sold rather than an across the board rise in prices. Prices are actually level or falling. Below you can see how the price distribution of closed sales changed from April to May, where more sales closed in the $200-500k range (perhaps more relocation or move up buyers in the market). This caused the middle price among all sales (known as the median price) to move to the right. If the prices were rising across the board, the number of sales at the low end would fall and there would be a corresponding rise at every higher price range. The more stable (but also lagging in showing trends) 3 month moving average (see graph below) of the median closed sale price ($225,933) is about 2% lower than last month and about 5% lower than a year ago. The current low median price coupled with still low interest rates offers the very good affordability. Conventional mortgage rates are now at 4.49% for 30 year loans, down from about 4.59% last month. The Kitsap County conventional and FHA loan limits remain at $475,000, which has helped sales of higher priced homes. The VA loan lender-imposed limit is $417,000. Our median price graphs show a 3 month moving average of prices, which better shows trends and reduces the month-to-month fluctuations.

Seller expectations…

The May median list price rose to $298,950, a rise of nearly $20,000 from the median of two months ago. More higher priced homes are being listed for sale. Median list price is about 4% lower than a year ago. The County has a listing inventory turnover rate of about 8.5 months, nearly the same as the 8.6 month turnover in April. The turnover rate has been driven by the under $200k market, where there was 4.9 months of inventory. All higher price ranges have 8 or more months of inventory. Inventory turnover is the number of months it would take to sell the current inventory at the current rate of sales. In May, both the number of listings and the number of sales rose compared to April. Shown below are graphs of inventory and inventory turnover for Kitsap County in 2007-11. 

The inventory turnover also varies by price range, with higher priced homes selling more slowly than lower priced homes. We've made the point recently that the higher price ranges will be more difficult to reduce in inventory because today's lending environment has greatly reduced the pool of qualified buyers. There were 4 sales in the $800k and above range among 134 listings County-wide in that price range. Every seller is in a price war and beauty contest at the same time. If your price is not best among comparable properties, the chance of sale is very small. Below is a historical depiction of the changes in the ratio of listings to closed sales.

The number of pending sales in May was up 28% compared to a year ago and was up about 4% from April. The statistics for May pending sales varied for different parts of the County. Below is a graph showing the 3 month moving average of pending sales for different parts of the County.

Affordability

We assume that a buyer making the median family income puts 20% down on the median priced home and obtains a 30 year fixed rate mortgage. We assume that a first time buyer making 70% of the median income puts 10% down on a house priced at 85% of the median and obtains a 30 year fixed rate mortgage with mortgage insurance.  We assume that both buyers can afford to spend a maximum of 25% of their monthly income on the principal plus interest of the loan. Using the annual averages of median price, median income, and average annual 30 year fixed interest rate since 2001, we plot an affordability index equal to the maximum affordable payment divided by the actual payment. When the index is greater than 1, the loan is affordable to the typical buyer. When it is less than 1 some buyers cannot afford to purchase. Mortgage insurance quotes are dependent on credit scores - MI for a FICO credit score of 700 might be $20 per month higher than MI for a credit score of 750. We use 750 and have corrected all PMI values to be consistent with this. Our numbers for 2011 are estimates using the latest monthly data for median prices, interest rates, and median income. As a point of reference the index in 2001 was 1.31 and the first time buyers index was .89.

Affordability has dropped but is still very good. With last month’s significant rise in median price and a small drop in the interest rates, the affordability index fell to 1.30 in June from 1.46 in May. First time buyer affordability also fell to .87 from .97 in May. Below is a  graph of the year-to-year changes in affordability and a second graph showing month-to-month affordability over the past year.

June’s APR is 4.559% on a 30-Year and 3.817% on a 15-Year, both conforming. May’s APR was 4.812% on a 30-Year and 4.195% on a 15-Year, both conforming. If you qualify for FHA, VA, or USDA loans , these programs have are attractive for low downpayment buyers. The conventional and FHA loan limits remain at $475,000 in Kitsap County. These higher limits have helped sales of higher priced homes. The VA loan lender imposed limit is back to $417,000. A typical 30 year fixed jumbo APR (with total costs of the loan, not just the rate factored in) is 5.012% on one major bank web site - down from last month.  To check the daily rate you can contact your lender or preview web sites such as this one - http://bankrate.com/.

Homes in Silverdale were selling for a April median price of about $276,000,  11% higher than a year ago and 4% higher than last month. Silverdale's more stable 3 month moving average median closed sale price was $270,333, 1 percent higher than last month and about the same as a year ago. The Kitsap County 3 month moving average median price is about 5% lower than it was a year ago. The 3 month moving average for Silverdale's number of closed sales is 34% lower than a year ago. The 3 month moving average of closed sales is down 13% Countywide from a year ago. The 3 month moving average of Silverdale pending sales in April was 15% lower than a year ago. The number of active listings in Silverdale (107) is 22% higher than a year ago. The inventory turnover (total homes on the market divided by number sold last month) is 11.9 months,  faster than the 14 months reported last month and quite a bit slower than the 5.9 month turnover of a year ago. Silverdale is  a buyer's market.

Reposted from http://bprowse.com/silverdale_market

These statistics are for Poulsbo, including the downtown core, from the head of Liberty Bay southeast to Ne-Si-Ka Bay, and parts north to Sawdust Hill Rd. Other parts of Poulsbo and its suburbs should have similar trends. The April median sales price for Poulsbo was $299,500, down about 4% from a year ago and up about 7% from last month. The more stable three month moving average closed sale price was $284,725, about 8% lower than a year ago.  The Kitsap County 3 month moving average median price is about 5% lower than it was a year ago. The 3 month moving average number of closed sales in Poulsbo fell 15% from a year ago. The 3 month moving average of closed sales is down 13% Countywide from a year ago. Poulsbo’s 3 month moving average of pending sales rose 11% from a year ago. The Poulsbo listing inventory (121) is 14% higher than a year ago and 10% higher than last month. The inventory turnover (total homes on the market divided by number sold last month) slowed just slightly at 10.1 months compared to last month’s 10.0, and is a slower than the 8.2 months reported a year ago. Poulsbo is a buyer’s market.

Reposted from http://bprowse.com/poulsbo_market