Kitsap Real Estate Market Report – May 2013
This month’s real estate report continues to look good. Inventory turnover is only 4.9 months, the fastest we’ve seen since before 2009. Sales volume is the highest we’ve seen in Kitsap County since 2007. There are several aspects of the national market that may be of concern. Many national reports show home prices rising briskly. For instance, the FNC price index reported a price rise of 5.5% year over year in March. Although FNC uses sophisticated methods to gather data for its index, our check of residential average closed sale prices in Kitsap County shows that prices year over year have fallen in April – down 4% on year to date sales. Median prices are up only about 1%. The price distribution of sales has changed as a result of fewer distressed sales and more short sales and new construction sales, so conventional measures such as median price and average price don’t accurately show rising prices. Still it’s hard to believe that prices have risen 5.5% over the last year in Kitsap County. Also, many economists believe that, expecting the Federal Reserve to start tapering off on its purchases of bonds and securities, interest rates will rise and the real estate and stock markets as well as employment may be impacted. Minneapolis Fed President Narayana Kocherlakota summed up the argument about why the Fed is proceeding so carefully as follows:
Tightening the credit spigot “will definitely lead to lower employment and prices” and “may reduce the risk of a financial crisis—a crisis which could give rise to a much larger fall in employment and prices.”
Of 831 total pending sales (all, not just last month), 38% are distressed properties (including 25% short sales) and 18% are new construction. That leaves just 44% of the buyers looking to purchase a resale home. As the number of pending sales appears to leap off the charts, note that many of these sales will take a long time to close. Also there are big differences between markets. We’ll post separately some additional information specific to local markets in Kitsap County.
The number of closed sales in Kitsap County in April rose about 12% from March and was about 41% higher than a year ago. This is a big jump. Pending sales rose about 11% compared to March and were about 14% higher than a year ago. In March, there were 234 closed sales and 411 pending sales. In April there were 262 closed sales and 456 pending sales. 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, it appears that the number of closed sales will rise next month.
Kitsap County’s residential inventory in April (1287 listings) was about 7% higher than March and is about 8% lower than a year ago. Overall the market has a lower inventory than last year, but some local markets have higher inventory and some lower than the inventory of a year ago. A further complication is that the inventory in local markets is changing – Bainbridge is building inventory after being very low. Bremerton is shedding inventory after being higher than the inventory of a year ago. The overall result is that this year’s inventory is gradually closing the gap on last year’s inventory.
Prices are rising…
Kitsap County’s monthly median closed sale price in April ($237,965) rose by 1% compared to March and is 2% lower than a year ago. The more stable 3 month moving average (see graph below) of the median closed sale price ($231,253) is about 1% higher than March and 1% higher than than a year ago. While many national reports show healthy increases in median prices, median price gains in our market are only modest. Median prices were depressed early last year before rising late in the spring. There has not been a similar upward movement this spring. Our median price graphs show a 3 month moving average of prices, which better shows trends and reduces the month-to-month fluctuations.
The April median list price was $269,000, about 3% higher than last month and 2% lower than a year ago. The County has a listing inventory turnover rate of about 4.9 months, faster than the 5.1 month turnover rate in March and the 7.5 month rate of a year ago. Shown below are graphs of inventory and inventory turnover for Kitsap County in 2007-13.
We’ve made the point 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. If your price is not best among comparable properties, the chance of sale is very small.
The number of pending sales in April was up 14% from a year ago and was up about 11% from March. The statistics for April pending sales varied for different parts of the County. Bremerton pending sales have been rising steadily and have now moved past Bainbridge Island. Most other areas also had an improvement. Below is a graph showing the 3 month moving average of pending sales for different locations.
May ‘s APR is 3.790% on a 30-Year and 3.165% on a 15-Year, both conforming. Both have risen a bit since last month. If you qualify for FHA, VA, or USDA loans , these programs have are attractive for low down payment buyers. The conventional and FHA loan limits are $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 3.986% 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 May! Please give me a call if I can help you or anyone you know with purchasing or selling a home.