Since there are many different factors affecting our local market, we'll try to touch on a few different topics to give you the flavor of what is happening nationally as it affects Kitsap real estate, as well as our usual review of local markets.
Regarding prices in our local market (from Fortune):
"In normal times, people won't pay too much more to own a house than to lease it. After all, if you're paying rent instead of a mortgage and taxes, you still get to enjoy the same rec room, chef's kitchen, and casita for visiting grandparents. So the surest sign of a frenzy appears when owning becomes far more expensive than renting. That's precisely what happened during the last bubble."
On average, the Deutsche Bank analysis (see link to article above) of rents in 53 cities showed that in 1999 families were paying about 87% as much to rent as to own. By mid 2006 the cost to rent was only 60% of what it cost to own, and the cost to own was far higher in some bubble markets like Las Vegas. The good news is that in about a third of those cities (including Phoenix and parts of California) home prices have now fallen to where the cost to own exceeds the cost to rent by less than 10%. In another third, including Boston, San Jose, and Chicago, the difference has fallen farther - to less than 6%. Unfortunately, the final third, including Seattle, still have prices 24% to 32% above the 1999 benchmark, and Deutsche Bank expects home prices to fall further in these areas.
In a separate independent analysis, John Burns Real Estate Consulting ranks the Bremerton Metropolitan Statistical Area (Kitsap County) as the 4th most overpriced area in the country in comparison with the 26 year history of housing affordability in our area. They compare current conditions in the area to historical conditions in our area - so they're saying that we are overpriced compared to historical affordability for our area. Seattle is 2nd most overpriced on the list. Their analysis compares local incomes, down payments, and house payments to derive an affordability index. The factors affecting the sale of any given property are always local, but organizations looking at the pressures on our overall market are saying that prices still need to fall to get back within the historical norms for our own community.
Regarding mortgage delinquencies (Housing Wire):
"Mortgage delinquencies of 60 or more days rose for the 12th straight quarter, hitting a record high 6.89% in Q409, according to market research by credit bureau TransUnion."
On the other hand, the number of mortgage delinquencies of 30 or more days have fallen. If you look at the graph in the link from Calculated Risk blog, you'll see that although the rate of new defaults may have started to decline, there are still a large number of distressed loans to be resolved through loan modification, short sale, or foreclosure.
Regarding the current progress in loan modifications (Bloomberg News):
"Modifications made permanent jumped 75 percent in January from December, while new trials rose about 9 percent, according to U.S. Treasury Department data released today. In total, 116,297 people in the Home Affordable Modification Program have been successfully steered into more manageable loans, with 830,438 more trying to navigate through the trial phase of the plan.
As the program nears the one-year anniversary of its unveiling, it is still short of the 3 million to 4 million at- risk homeowners Obama targeted. About 2.82 million U.S. homeowners still lost their properties to foreclosure last year and 4.5 million filings are expected in 2010, RealtyTrac Inc. said last month."
A recent article by real estate analyst Mark Hanson points out that there are no resources to implement a wide scale principal reduction program and that the median recipient of a permanent loan modification is being saddled with a 55% debt to income ratio and left with virtually no disposable income. He advocates the HAFA program (Home Affordable Foreclosure Alternatives) coming April 5th and a resumption of bank foreclosures as the only practical ways to de-leverage homeowners from unsustainable amounts of mortgage debt.
Regarding the rise in short sales vs sales of bank owned properties (REO) (Calculated Risk):
"Short sales approved by Fannie Mae and Freddie Mac, which own 57% of U.S. mortgages, nearly quadrupled in the first nine months of 2009 compared with the same period in 2008. At the nation's largest mortgage servicers, short sales soared 165% to 74,513 in the first nine months of 2009 from the year-earlier period.
Short sales are still few compared with foreclosures, but policymakers are looking at such sales to shrink the number of bank-owned homes on the market."
The Calculated Risk article quoted above also notes that the HAFA program will probably accelerate further the number of short sales completed.
Each month we publish a snapshot of several local markets to show variations in our larger Kitsap County real estate market. Kitsap County's residential inventory in January (1437 listings) is about 5% higher than December and down about 20% from a year ago. This is the first rise in the number of listings in some time, and may be evidence that we'll see a more typical seasonal listing curve, with then number of properties for sale rising into mid summer and falling off as the we get later into the year. We may at least see some of the shadow inventory become active again as foreclosures increase and sellers come back to test the market. The County has a listing inventory turnover rate of about 8.35 months, slower than December's 6.0 months. Inventory turnover varies greatly by price, with an inventory turnover as low as 6.5 months for the lower price ranges and four or more times that long for homes priced above $400,000. The 3 month moving average number of closed sales Countywide is up 57% compared to a year ago, up from plus 38% last month, but temper this with knowing that we were at the very bottom of our market a year ago. Closed sales were down 11% compared with December 2009. January's closed sale median price ($239,700) was almost the same as December, and is less than 1% higher than a year ago. The number of pending sales in January was up 5% compared to a year ago. Regional pending sales have tailed off after peaking in October 2009. The links to regional market trends below will show both tables and graphs that further enhance the data reported below.
See Kitsap County graphs at http://www.bprowse.com/kitsap_market_trends.
Bainbridge Island Real Estate
Bainbridge Island residential properties were selling for a January median price of $553,500, about 10% higher than in December. The more stable three month moving average of closed sale price rose 4% from last month to $515,500 and is 4% higher than it was a year ago. The Kitsap County 3 month moving average median price is about 2% lower than it was a year ago. The 3 month moving average for Bainbridge Island's number of closed sales is 20% higher than a year ago. The 3 month moving average number of pending sales in December rose 31% from a year ago. The 3 month moving average of closed sales is up 57% Countywide from a year ago (when sales were very weak). The number of active listings on Bainbridge (166) is down 14% from a year ago. The inventory turnover (total homes on the market divided by number sold last month) is 10.3 months, slower than the 7 month turnover rate of last month. Bainbridge Island is a buyers market.
See tables and graphs at http://www.bprowse.com/bainbridge_island_market.
Bremerton 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 $129,300 at the end of January, about 31% lower than a year ago and down 16% from last month. The more stable 3 month moving average was 22% lower than a year ago. The Kitsap County 3 month moving average median price is about 24% less than it was a year ago. Bremerton's 3 month moving average for number of closed sales is up 10% from a year ago, but for January, there were only 10 closed sales. This will make the inventory turnover (see below) look large. The 3 month moving average of closed sales is up 57% Countywide from a year ago. The 3 month moving average number of Bremerton pending sales is up 9% from last year. Recall this number includes pending short sales that may not close. The number of Bremerton active listings (150) is 12% lower than a year ago. The inventory turnover (total Bremerton homes on the market divided by number sold last month) is 15 months (way slower than the 5.1 last month and from 10 months a year ago). While prices are way down the rate of sales fell off as well. We'll look to see if this trend continues or is just an isolated case last month. The Bremerton market is probably still a buyers market.
See tables and graphs at http://bprowse.com/bremerton_market
North Kitsap Real Estate
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 $299,000 at the end of January, 36% higher 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 up 41% compared to a year ago. The Kitsap County 3 month moving average median price is about 2% lower than it was a year ago. The 3 month moving average number of Kingston closed sales rose 167% from a year ago, while the number of pending sales is unchanged from a year ago. Recall again that sales at the end of last year were very few and far between and that our current pending sales include pending short sales that may not close. The 3 month moving average of closed sales is up 57% Countywide from a year ago. The number of active listings in Kingston (59) is down 13% from a year ago. The inventory turnover (total homes on the market divided by number sold last month) is 14.8 months (a sharp slowdown from the 4.7 months last month). Kingston is still a buyer's market.
See tables and graphs at http://bprowse.com/north_kitsap_market
Poulsbo 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 January median sales price for Poulsbo was $287,500, down about 6% from a year ago. The more stable three month moving average closed sale price was $277,709, about 17% lower than a year ago. The Kitsap County 3 month moving average median price is 2% lower than it was a year ago. The 3 month moving average number of closed sales in Poulsbo rose 67% from a year ago. The 3 month moving average of closed sales is up 57% Countywide from a year ago. The 3 month moving average of pending sales was up 44% in Poulsbo. Recall this number includes pending short sales and new construction that may not close soon. The Poulsbo listing inventory (80) is 46% lower than a year ago. The inventory turnover (total homes on the market divided by number sold last month) is 6.2 months, a bit worse than the 5.9 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.
See tables and graphs at http://bprowse.com/poulsbo_market
Silverdale Real Estate
Homes in Silverdale were selling for a January median price of about $230,000. This median is down 4% percent from a year ago. Silverdale's more stable 3 month moving average median closed sale prince in December of $259,667was up about 2.5% from a year ago. The Kitsap County 3 month moving average median price is 2% lower than it was a year ago. The 3 month moving average for Silverdale's number of closed sales was 57% higher than a year ago. The 3 month moving average of closed sales is up 57% Countywide from a year ago. The number of Silverdale pending sales in January is up 10% from a year ago, but recall this number includes pending short sales that may not close. The number of active listings in Silverdale (65) is 14% lower than a year ago. The inventory turnover (total homes on the market divided by number sold last month) is 7.2 months, slower than the 5.2 months last month. Silverdale is probably still a buyer's market because of the shadow inventory of unsold homes not currently on the market that will deter prices from rising.
See tables and graphs at http://bprowse.com/silverdale_market
