See current Prowse and Company waterfront homes and land listings.

Click here to download the latest copy of the Prowse and Company waterfront newsletter, which includes the latest sales statistics for waterfront communities in Kitsap County.

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Lots of people are interested in how the housing market will perform in 2012. The Kitsap Sun gave us a point of view shortly after the release of this month’s MLS statistics - “Kitsap Home Prices Continue to Slip”. Not only that, but December sales fell 16% too. Market oscillations produce these kind of statistics - November sales and prices were up, December sales and prices were down. Still the year end values for the more stable 3 month moving average had to be more encouraging. Sales up 3% from a year ago and prices down just 1.4%. 

We will offer a few housing expectations for 2012. There should be a rise in new construction sales and a rise in housing starts, though don’t expect anything earth shaking - these have been at near record lows for some time. There will be an increase in the number of foreclosures and short sales, where, despite a lowering rate of mortgage default, there is a huge backlog of (about 4 million) homeowners in foreclosure or more than 90 days behind on payments. Expect more efforts by the government to alleviate this backlog through refinancing, mortgage modifications, and deals to convert distressed homes into rental properties. Our  Kitsap market? Well, the hope is that prices will stabilize and the number of sales will increase. We’ll see.

An interesting post by economist Greg Mankiw discusses why the Federal Reserve’s days of near zero interest rates may soon be coming to an end.

Kitsap County closed sales in December were down by 13% compared with December 2010 but were up by 2% compared to November 2011. The more stable 3 month moving average number of Kitsap County closed sales is up 3% compared to a year ago. Month to month trends have been oscillating up and down. Pending sales fell about 16% compared to last month but were about the same as a year ago. In November, there were 191 closed sales and 229 pending sales. In December there were 195 closed sales and 191 pending sales. 32% of the closed sales were distressed properties. 38% of the pending sales were distressed properties. Among closed distressed sales, bank owned sales were more than 2 times the number of short sales closed. 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, the it looks like the number of closed sales will fall next month.

Residential Highlights

Kitsap County's residential inventory in December (1304 listings) fell 12% from November and is about 6% lower than a year ago. Distressed properties listed in the MLS make up about 26% of our market, up from 24% reported in November.  At the end of December, RealtyTrac showed 665 (707 last month) Kitsap County homes either in default, in foreclosure, or bank owned. At the beginning of 2011 there were 1473 distressed properties, so we've seen a decline of more than 50%. The MLS shows only about 50% of the distressed property inventory, so there could be as many as 332 distressed properties that have yet to be put up for sale. While this is large potential increase, it is much smaller than at the start of 2011.

Prices are falling...

Kitsap County's monthly median closed sale price in December ($229,900) was down 1% compared to November and down 3% compared to a year ago. The more stable 3 month moving average (see graph below) of the median closed sale price ($233,800) is less than 1% lower than last month and about 1% 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 December median list price was $265,000, about 4% lower than last month and 5% lower than a year ago.  The County has a listing inventory turnover rate of about 6.7 months, faster than the 7.8 month turnover rate in November. The turnover rate has recently been driven by the under $200k market, which this month had a turnover rate of 5.6 months, and the $200-300k market with an inventory of 5 months. All other price ranges were 8.5 months or more. There were no sales above $500k in South Kitsap, Bremerton, or Silverdale (second month in a row). Inventory turnover is the number of months it would take to sell the current inventory at the current rate of sales. In December, the number of listings fell and the number of sales was about the same as November. 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 72 listings County-wide in that price range. Inventory turnover in the higher price ranges has improved because the number of active listings has declined sharply rather  than because of an increase in closed sales. In August 2011 there were 140 listings above $800k. 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 December was about the same as a year ago and was down about 16% from November. The statistics for December pending sales varied for different parts of the County. Below is a graph showing the 3 month moving average of pending sales for different locations.

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 rebounded to near record levels this month. Median price fell slightly and interest rates have fallen (the 30 year fixed rate is below 4%). The affordability index rose to 1.45 in January from 1.43 in December. First time buyer affordability also rose to 0.97 from 0.95 in December. While affordability is very good, lending standards have tightened considerably, and many borrowers may not qualify for the best available interest rate. 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.

January 's APR is 4.054% on a 30-Year and 3.438% on a 15-Year, both conforming. December's APR were 4.054% on a 30-Year and 3.565% on a 15-Year, both conforming. If you qualify for FHA, VA, or USDA loans , these programs have are attractive for low downpayment buyers. As a result of recent Congressional action, the conventional and FHA loan limits have again been raised to $475,000 for Kitsap County. A typical 30 year fixed jumbo APR (with total costs of the loan, not just the rate factored in) is 4.256% on one major bank web site.  To check the daily rate you can contact your lender or preview web sites such as this one - http://bankrate.com/.

Buyers are searching for real estate again. Please try our improved home search athttp://www.prowserealestate.com/IDX-Search.

Reposted from http://bprowse.com/silverdale_market

Reposted from http://bprowse.com/poulsbo_market

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See current Prowse and Company waterfront homes and land listings.

Click here to download the latest copy of the Prowse and Company waterfront newsletter, which includes the latest sales statistics for waterfront communities in Kitsap County.

Reposted from: http://bprowse.com/bremerton_market

Reposted from: http://bprowse.com/bainbridge_island_market

Reposted from: http://bprowse.com/silverdale_market

Reposted from: http://bprowse.com/poulsbo_market

Reposted from: http://bprowse.com/north_kitsap_market

Brenda Prowse, Broker and Owner of Prowse and Company Real Estate in Poulsbo, presented a check for $3,240 to Gateway Christian Schools (formerly Christ the King Academy) of Poulsbo. As in past instances where Brenda has made contributions to her client's favorite charities, this donation represents a portion of Brenda's commission earned for the sale of the home of Conrad and Judy Green. Accepting the check on behalf of Gateway Christian Schools was Head of School Michael Forney.

We have a new and improved home search up and running, and soon it will replace the existing home search on our web sites. We think the new search is better than any other product available for buyers in our market. For those who are receiving email listings or have saved searches using our current home search, your information will still be available until December 1^st. Please try out our new search at:

http://prowse.kitsaphomefinder.com/

The national real estate market has several competing, yet opposing factors contributing to its current state. A few comments follow on the distressed property market, new government assistance programs, and opportunities for home buyers. 

Banks have increased their foreclosure filings, with current levels the highest seen in 7 months. The number of filings is still about 30% below the level of a year ago, as banks continue to delay starting the foreclosure process because of legal challenges to documentation that have yet to be resolved. Once a foreclosure settlement between the banks and states attorneys general is reached, we expect that more foreclosures will be processed and that the REO (bank owned properties) inventory will rise. 

The distressed property market is hard to follow because, while the economy is improving and the number of people missing payments on loans is falling, bank delays in completing the foreclosure process have resulted in a backlog of more than 4 million properties either in the foreclosure process or more than 90 days in default but not yet having received notice that foreclosure proceedings have started (that’s a year’s worth of home sales). Foreclosure documentation legal challenges, have caused banks to delay initiation of new foreclosures, so the REO and short sale inventory has fallen, making it appear as if the distressed property contribution to our overall market is shrinking. We’ve seen a decline of about 50% in Kitsap County this year. With the overhang of unprocessed foreclosures, some expect the number of REO and short sales to be on the rise again, possibly sapping housing demand.

Governments programs to modify loans, refinance mortgages, and provide incentives for short sales instead of foreclosures have not reached nearly the number of homeowners as originally projected. The latest mortgage refinancing program, dubbed HARP 2.0 (Home Affordable Refinance Program) in the media, increases the number of eligible homeowners (current on their mortgages yet owing more than their homes are worth) who can qualify to refinance their homes. This program has not yet been implemented on the HARP web site. Details are scheduled to be released on November 15^th. In essence it doesn’t help the 6.4 million homeowners (including those less than 90 days delinquent) who are behind on their mortgage payments, but it does provide some relief for more of the 29% of all mortgages that are currently underwater.

The new HARP program allows borrowers with FHA, Fannie Mae or Freddie Mac mortgages that were sold to Fannie or Freddie before May 31, 2009,  to be able to refinance, no matter how far underwater they are. Banks will only have to verify that borrowers have made their last six payments, that they’ve haven’t missed more than one payment over the past year, and that they have a job or another source of regular income. Housing analyst Mark Hanson, no fan of the program, says that HARP 2.0 is really intended to stimulate refinance activity to keep bank revenue flowing, as well as to allow banks to get out from under their responsibility to buy back failed loans by allowing GSE backed refinancings. He is also critical of another proposed solution to rent more than 250,000 properties in the government's REO portfolio rather than sell them. Hanson argues that such action would lower rents and remove the incentive for first time buyers and investors to purchase homes. He maintains that the only feasible solution will be to work off the distressed inventory through foreclosures and short sales.

Amid all the stagnation in resolving the problems with non-performing loans, another factor in the current market is the ever improving opportunities for buyers. Rising rents, falling home prices, and historic low interest rates have created new opportunities for home ownership and for real estate as an investment. A simple rule of thumb uses the rent ratio, the purchase price of a house divided by the annual cost of renting a similar one. If the ratio is above 20 than you should consider renting, especially if you are going to move in the next 5 years or so. If the ratio is under 20, the case is much stronger for buying. The rent ratio for Seattle has been high for the past several years, but has now fallen into the low 20s. Using the analogy from the Planet Money article provided for Seattle and median home price in Poulsbo ($285,000) and median monthly rent ($940) would give us a rent ratio of 25. On the other hand, Bremerton has an median price of $101,268 with an average rent of $887, for a rent ratio of 9.5! There is obviously some slop in our considering the market as a whole rather than evaluating a property on a case by case basis. 

Closed sales were up by 21% compared with October 2010 and 6% compared to September 2011. The more stable 3 month moving average number of Kitsap County closed sales is up 17% compared to a year ago. Pending sales fell about 12% compared to last month but were 12% higher than a year ago. In September, there were 199 closed sales and 309 pending sales. In October there were 210 closed sales and 271 pending sales. 35% of the closed sales were distressed properties. 38% of the pending sales were distressed properties. Among closed distressed sales, bank owned sales were about 3 times the number of short sales closed. 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, the it looks like the number of closed sales will fall next month.

Residential Highlights

Kitsap County's residential inventory in September (1672 listings) is about the same as August and about 5% lower than a year ago. Distressed properties listed in the MLS make up about 19% of our market, up from 17% in August.  At the end of September, RealtyTrac showed 742 (830 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 50% this year. The MLS shows only about 43% of the distressed property inventory, so there could be as many as 425 distressed properties that have yet to be put up for sale. While this is large potential increase, it is much smaller than at the beginning of the year.

Prices are falling...

Kitsap County's monthly median closed sale price in October ($239,000) was up 3% compared to September and down 3% compared to a year ago. The more stable 3 month moving average (see graph below) of the median closed sale price ($235,667) is less than 1% lower than last month and about 7% lower than a year ago. The break out in falling prices is evident both in our County-wide graph and in our regional graphs of median price. 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 October median list price was $285,000, about 1% lower than last month and 5% lower than a year ago. The County has a listing inventory turnover rate of about 7.5 months, faster than the 8.4 month turnover in September. The turnover rate has been driven by the under $200k market, where there was 4.8 months of inventory, and all categories under $600k had less than 10 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 October, the number of listings fell and the number of sales rose compared to September. 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 5 sales in the $800k and above range (all above $1 million) among 108 listings County-wide in that price range. 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 October was up 12% compared to a year ago and was down about 12% from September. The statistics for October pending sales varied for different parts of the County. Below is a graph showing the 3 month moving average of pending sales for different locations. 

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 fell slightly compared to last month. Median price rose and interest rates rose just a bit, though they remain near historic lows. The affordability index fell slightly to 1.37 in November from 1.41 in October. First time buyer affordability also fell to 0.91 from 0.94 in October. 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.

November's APR is 4.433% on a 30-Year and 3.691% on a 15-Year, both conforming. October's APR was the same for these types of loans. Even though we report above that interest rates went down, rates for this particular lender (whom we have quoted for many months to present consistent data) shows that the total cost of current loans went up. You might want to shop around if one of the large US banks is your first choice for a loan. If you qualify for FHA, VA, or USDA loans , these programs have are attractive for low downpayment buyers. The conventional and FHA loan limits have reverted to $417,000. A typical 30 year fixed jumbo APR (with total costs of the loan, not just the rate factored in) is 4.634% on one major bank web site.  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 November! Please give me a call if I can help you or anyone you know with purchasing or selling a home.

Brenda Prowse

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 Reposted From http://bprowse.com/bremerton_market

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Poulsbo Real Estate - October 2011

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