Real Estate Information

As the economy jives and shimmies its way out of recession, an observer confronted with the facts of high unemployment and continued banking and credit problems nevertheless might conclude that though the picture doesn’t look too good, there is a certain optimism. Mortgage rates for 30 year fixed rate loans have again fallen below 5% (driven down by Federal Reserve policies) and jobs don’t appear to be coming back. The local Kingston Share Net food bank sees no drop off in demand.

Credit markets are still hurting. Consumers and small businesses find themselves unable to get credit - while large well capitalized companies can obtain credit easily. The problem is that many investors are reluctant to buy securitized debt, which funded most credit in the past few years. The blog Baseline Scenario mused that there is no reason why the next bubble has to be in securitized debt - why not something else, and Paul Krugman is cited for his advocacy of a return to traditional bank lending. The exception to this credit shortage is housing, where consumers can still get low downpayment loans from FHA, VA, and Department of Agriculture. Now there is concern that FHA may need a bail out as their reserves have fallen below the minimum required by Congress. Also, while the well capitalized big banks have picked up more than half of the home mortgage lending market, small independent mortgage lenders have been frozen out by the high cost of capital and lack of access. Now Fannie Mae has launched a program to guarantee the debt of these smaller lenders providing they make home loans conforming to standards of Fannie and Freddie Mac. Since Fannie is already guaranteeing the debt of these loans, some observers think this is just another opportunity for Fannie to fail.

So with all of these negative reports related to the progress of our recovery, the Central Bank of Australia surprised everyone last week by raising their short term interest rate target - which is to say they think the boom is coming and are acting now to prevent inflation. The exchange rates for the US Dollar plummeted against most major currencies as investors fled safety to pursue opportunity and higher interest rates elsewhere. While the favored political position is always to back a strong dollar, the weakening of our currency is an opportunity to sell more US exports and relieve our country’s trade imbalance.

We have repeatedly advocated more government and banking industry support for short sales as the most efficient course to sell off most of the distressed property inventory. The government recently announced that the Home Affordable Modification Program has met its goal of 500,000 trial loan modifications. Almost at the same time, the Congressional Oversight Committee challenged the efficacy of the program, noting that only slightly more than 1% of the trial modifications had thus far become permanent. As an aside, much of the  current debate in government policy concerns whether the government has the wisdom to implement efficient policies to correct our economic problems - versus a point of view that these problems are so complex and unpredictable that the unintended consequences will not be worth the effort. New York Times columnist David Brooks recently provided a clever depiction of the problem.

Meanwhile, back in Kitsap County closed sales this year are 2% behind last year (4% behind last month), pending sales are running 24% ahead (27% ahead last month). There’s a good chance that closed sales in 2009 will top 2008. The County has a listing inventory turnover rate of about 6.9 months, improved from August's 7.4 months. In August, there were 243 closed sales and 348 pending sales. In September there were 253 closed sales and 350 pending sales. Shown below is a graph of month-by-month pending sales vs closed sales. 

A typical pending sale should close within 60 days, so we should see the closed sales lagging pending sales by about 2 months. However, in our situation the closed sales level has not reached the pending sales level for 6 months, so something else is up. Tighter lending standards, delays in approving short sale offers, and sellers and bank owned properties with little room to give have made it more difficult for Realtors to close sales. Shown below are graphs of inventory and inventory turnover for Kitsap County in 2007-09.

Residential Highlights
Kitsap County's residential inventory in September (1739 listings) is about 3% lower than August and down about 25% from a year ago. This trend is counter to most years and suggests  that a portion of last year's sellers may be waiting for conditions to improve.  In part inventory has been held down artificially by the accounting for short sales, where properties with offers still awaiting bank approval are shifted to pending status even though many of these properties are still open to receive other offers. The number of pending sales in September was up 8% compared to a year ago and about the same as August. The 3 month moving average number of closed sales Countywide is up 14% compared to a year ago, improved from plus 12% last month.

Prices are steady…
The median price in Kitsap County has been pretty steady this year, and is up slightly from the beginning of the year. September's median price ($250,000) was up 2% from August (see graph of 3 month moving average below), and is about 5% lower than a year ago. This low median price coupled with historically low interest rates has maintained good affordability. Conventional mortgage rates have fallen a bit recently. Jumbo loans are becoming more accessible - they are offered at about .8 to .9% higher than the 30 yr fixed rate conventional.  With passage of the President's Stimulus Program, the conventional, VA, and FHA loan limits were restored to $475,000 in Kitsap County, which should give a lift to sales of higher priced homes. We have reworked our median price graphs to show a 3 month moving average of prices, which will better show trends and reduce the month-to-month fluctuations.

Seller expectations…
The September median list price rose slightly from $337,500 to $338,950. This market is in transition, with the percentage of sales in the upper price ranges still depressed compared to the past several years and what could be a large number of listings withdrawn into a shadow inventory that could return to the market if prices improve. The inventory turnover (total homes on the market divided by number sold last month) is 6.9 months, somewhat better than the 7.4 months in August. The inventory turnover also varies significantly by price range, with higher priced homes selling more slowly than lower priced homes. See the graph below for a better perspective. In the higher price ranges it is definitely improving even though it is still slow. Turnover for homes above $900k was much worse last month than earlier in the summer. 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 is up 8%, which is off quite a bit from the double digit improvements of the past several months. The statistics for pending sales (compared to September pending sales last year) varied for different parts of the County. Below is a busy graph showing the 3 month moving average of pending sales for different parts of the County.

Homes in Silverdale were selling for a September median price of about $275,000. This median is down 8% percent from a year ago. Silverdale's more stable 3 month moving average median closed sale prince in September of $284,333 was down about 4% from a year ago. The Kitsap County 3 month moving average median price is down 8% compared to a year ago.  The 3 month moving average for Silverdale's number of closed sales was 67% higher than a year ago, compared to a rise in closed sales of 14% for the County as a whole. The number of Silverdale pending sales in September is up 7% from a year ago, but recall this number includes pending short sales that may not close. The number of active listings in Silverdale (93) is 23% lower than a year ago. The inventory turnover (total homes on the market divided by number sold last month) is 5.5 months, same as last month and very good compared to many areas. Silverdale is looking now like a seller’s market, but there appears to be a large shadow inventory of unsold homes not currently on the market that will deter prices from rising.

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 September median sales price for Poulsbo was $301,000, down about 8% from a year ago. The more stable three month moving average closed sale price was $291,987, about 11% lower than in September 2008. The Kitsap County 3 month moving average median price has fallen 8% over the past year. The 3 month moving average number of closed sales in Poulsbo rose 5% from a year ago. The number of closed sales is up 14% Countywide from a year ago.  September pending sales were down 7% in Poulsbo. Recall this number includes pending short sales and new construction that may not close soon. The Poulsbo listing inventory (98) is 36% lower than a year ago. The inventory turnover (total homes on the market divided by number sold last month) is 5.2 months, somewhat worse than the 4.4 months reported last month - but still very good. Poulsbo is probably still a buyers market because of the shadow inventory of homes pulled off the market in the past year without selling, but looks like it has improved recently.

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Statistics here are for Kingston, the largest housing market in North Kitsap. Activity in Kingston should be representative of the other areas in North Kitsap. Kingston homes were selling for a month end median price of about $309,500 at the end of September, 26% lower than a year ago. The low sales volume can produce large fluctuations when one or two high priced homes sell.  The more stable 3 month moving average of closed sale prices is down 22% compared to a year ago.  The Kitsap County 3 month moving average median price has fallen 8% over the past year.  The 3 month moving average number of Kingston closed sales fell 14% from a year ago, while the number of pending sales is 50% higher than a year ago. Recall our current pending sales include pending short sales that may not close. The number of closed sales is up 14% Countywide from a year ago. The number of active listings in Kingston (59) is down 39% from a year ago. The inventory turnover (total homes on the market divided by number sold last month) is 9.8 months (worse than the 13.6 months last month). Sales in North Kitsap still seem to be slower than farther south in the County. Kingston is a buyer's market.

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 $159,000 at the end of September, about 18% lower than a year ago and down 4% from last month. The more stable 3 month moving average was 13% lower than a year ago.  The Kitsap County 3 month moving average median price has fallen 8% over the past year.  Bremerton's 3 month moving average for number of closed sales is up 11% from a year ago. The number of closed sales is up 14% Countywide from a year ago. The 3 month moving average number of Bremerton pending sales is up 46% from last year, but recall this number includes pending short sales that may not close. The number of Bremerton active listings (178) is 31% lower than a year ago. The inventory turnover (total Bremerton homes on the market divided by number sold last month) is 6.1 months (better than the 8.2 last month but definitely improved from 14.1 months a year ago). The Bremerton market is probably still a buyers market because of shadow inventory that has been pulled off unsold.

Bainbridge Island residential properties were selling for an September median price of $592,000, about 11% lower than in August. The more stable three month moving average of closed sale price fell 17% from last month to $580,417 and is 2% lower than it was a year ago (recall that the median price can be misleading when the price distribution of sales is changing). Sales at the top of the market lagged - there was only 1 closed sale above $900k in Kitsap County last month. The Kitsap County 3 month moving average median price has fallen 8% over the past year. Note that prices tailed off at the end of last year so we expect this gap to close in the coming months. The 3 month moving average for Bainbridge Island's number of  closed sales is 15% higher than a year ago - a testament to last months jump in sales. The 3 month moving average number of pending sales in September rose 30% from a year ago. The 3 month moving average of closed sales is up 14% Countywide from a year ago. The number of active listings on Bainbridge (242) is down 9% from a year ago. The inventory turnover (total homes on the market divided by number sold last month) is 9.3 months, a jump improvement from the 13.9 month turnover rate of last month . Bainbridge Island is a buyers 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 August median sales price for Poulsbo was $282,960, down about 17% from a year ago. The more stable three month moving average closed sale price was $309,320, about 8% lower than in August 2008. The Kitsap County 3 month moving average median price has fallen 9% over the past year. The 3 month moving average number of closed sales in Poulsbo rose 6% from a year ago. The number of closed sales is up 12% Countywide from a year ago.  August pending sales were down 19% in Poulsbo. Recall this number includes pending short sales and new construction that may not close soon. The Poulsbo listing inventory (111) is 35% lower than a year ago. The inventory turnover (total homes on the market divided by number sold last month) is 4.4 months, better than the 6.4 months reported last month. Poulsbo is probably still a buyers market because of the shadow inventory of homes pulled off the market in the past year without selling, but looks like it has improved recently.

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 $165,000 at the end of August, about 10% lower than a year ago and down 3% from last month. The more stable 3 month moving average was 9% lower than a year ago.  The Kitsap County 3 month moving average median price has fallen 9% over the past year.  Bremerton's 3 month moving average for number of closed sales is up 11% from a year ago (compared to a Countywide rise of 12%). The 3 month moving average number of Bremerton pending sales is up 46% from last year, but recall this number includes pending short sales that may not close. The number of Bremerton active listings (178) is 31% lower than a year ago. The inventory turnover (total Bremerton homes on the market divided by number sold last month) is 8.2 months (significantly worse than the 4.9 last month but definitely improved from 13.6 months a year ago). The Bremerton market is probably still a buyers market because of shadow inventory that has been pulled off unsold.

Homes in Silverdale were selling for a August median price of about $270,000. This median is down 2% percent from a year ago. Silverdale's more stable 3 month moving average median closed sale prince in August of $308,500 was up about 9.4% from a year ago. The Kitsap County 3 month moving average median price is down 9% compared to a year ago.  The 3 month moving average for Silverdale's number of closed sales was 36% higher than a year ago, compared to a rise in closed sales of 12% for the County as a whole. The number of Silverdale pending sales in August is up 33% from a year ago, but recall this number includes pending short sales that may not close. The number of active listings in Silverdale (88) is 34% lower than a year ago. The inventory turnover (total homes on the market divided by number sold last month) is 5.5 months, worse than last month's rate of 3 months but still very good compared to many areas. Silverdale is looking now like a seller’s market, but there appears to be a large shadow inventory of unsold homes not currently on the market that will deter prices from rising.

Statistics here are for Kingston, the largest housing market in North Kitsap. Activity in Kingston should be representative of the other areas in North Kitsap. Kingston homes were selling for a month end median price of about $242,000 at the end of August, 51% lower than a year ago. The low sales volume can produce large fluctuations when one or two high priced homes sell.  The more stable 3 month moving average of closed sale prices is down 18% compared to a year ago.  The Kitsap County 3 month moving average median price has fallen 9% over the past year.  The 3 month moving average number of Kingston closed sales is the same as a year ago, while the number of pending sales is 25% higher than a year ago. Recall our current pending sales include pending short sales that may not close. The number of closed sales is up 12% Countywide from a year ago. The number of active listings in Kingston (68) is down 35% from a year ago. The inventory turnover (total homes on the market divided by number sold last month) is 13.6 months (worse than the 8.5 months last month). Sales in North Kitsap still seem to be slower than farther south in the County. Kingston is a buyer's market.