We have some uncertainty about our national economic picture. Markets have both fallen and surged. The Gulf oil leak might be stopped. Unemployment remains high, though in Washington it’s improving. Consumer confidence remains low. Lending to hedge funds is no problem, but getting a construction loan is difficult. The huge financial overhaul bill has passed in the Senate. Things will get better, just not this month.
In Kitsap County real estate, the number of closed sales in June rose about 6% from May (whereas we expected a drop because of last month’s drop off in pending sales), while pending sales also rose 6% after falling 45% from the April peak. There was some urgency in closing sales by the end of June to qualify for the homebuyer tax credit. The closing date to qualify for the credit (for contracts in place by April 30, 2010) has now been extended until September 30th. In May, there were 252 closed sales and 226 pending sales. In June there were 266 closed sales and 239 pending sales. Shown below is a graph of month-by-month pending sales vs closed sales.
Residential Highlights
Kitsap County's residential inventory in June (1879 listings) is about 2% higher than May and about 7% higher than a year ago. Inventory has been steadily rising this year, and is now at the highest we’ve seen since 2008. Some of the shadow inventory has become active again as bank owned and distressed sales and as regular sellers coming back to test the market. Distressed properties make up about 15% of our market. Closed sales were up 7% compared with June 2009. The more stable 3 month moving average number of Kitsap County closed sales is up 17% compared to a year ago.
Prices are steady...
The County’s monthly median closed sale price has bounced around between $228k and $252k in recent months. June's median price ($239,000) fell about 2% compared to May, and is 2.5% lower than a year ago. The more stable 3 month moving average (see graph below) of the median closed sale price ($237,083) has hardly budged with all these fluctuations and is about 2% lower than a year ago and about the same as last month. The current low median price coupled with record low interest rates offers good affordability. Conventional mortgage rates are now about 4.63% for 30 year loans. Speculation that rates will rise later this year has been dampened by the debt crisis in Europe. Jumbo loans are now offered at about 5.5% The conventional and FHA loan limits remain at $475,000 in Kitsap County. The VA loan lender imposed limit is back to $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 June median list price rose to $319,000 from $309,950 last month (3% increase - 2nd month in a row). Median list prices have fallen significantly since a year ago as sellers became more aggressive in getting their properties sold. The current rise in list price may reflect a new seller’s optimism, though there isn’t anything in sales data that would indicate that prices are actually rising. The County has a listing inventory turnover rate of about 7.1 months, a bit better than the 7.3 month turnover in May. Inventory turnover rate is calculated by dividing the number of homes for sale by the number of closed sales last month. This is a buyer’s market. Both the housing inventory and the number of closed sales increased in June. Shown below are graphs of inventory and inventory turnover for Kitsap County in 2007-10.
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 with today's lending environment the pool of buyers have been greatly reduced. See the graph below for a better perspective. 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 down 36% compared to a year ago and up 6% compared to May. The statistics for June pending sales varied for different parts of the County. Below is a graph showing the 3 month moving average of pending sales for several representative areas. Pending sales in most areas dropped. Generally the expiration of the tax credit had a greater effect in lower priced markets.
That's our report for June! Please give me a call if I can help you or anyone you know with purchasing or selling a home.
Brenda Prowse