December 2010 Kitsap Real Estate Affordability Outlook
By Admin
Our Mid Month Affordability Outlook for December has been posted. Find out the trends in housing affordability for first time and move up home buyers.
The surprise in real estate this month has been a sudden increase of more than .8% in mortgage interest rates to above 5%. While rates are still at near historic lows, the Wall St Journal reports that this increase is the same as a 7% increase in home prices. A panel at the Economist magazine attributes the trend of rising bond rates worldwide to enhanced growth expectations (and passage of the US tax accord), creditors increasing distrust of borrowers (and fears of sovereign defaults), and evidence that central banks are doing too much. On the other hand, MSN Money financial writer Charley Blaine recently explained to me (at a Christmas party in Kitsap County) that the rates we saw in the low 4’s were because investors anticipated the Fed’s second round of quantitative easing (purchases of longer term Treasury bonds to stimulate the economy and hold down interest rates), and now that the scope of the program and its impact have been assessed, rates are returning to their previous level.
In Kitsap County we have 1569 active listings, about 20% (313) of which are either bank owned or short sales (where the seller must get permission from his bank to accept an offer to purchase for less than what the seller needs to pay off the house). Earlier in the month I calculated that 28% of the properties on the market in King County were distressed sales. According to RealtyTrac, there are 1450 properties in Kitsap County that are in default (missed a payment), received a foreclosure notice, are attempting to sell short, or are bank owned. That means that as many as 1137 additional properties are likely to soon be for sale - a shadow market that is 72% as large as the number of properties currently on the market. In the near term this large overhang of properties needing to be sold yet not on the market means that prices will probably fall in the future, so sellers currently on the market would be better off making a deal when you receive an offer. The bottom line is that there is much more inventory than meets the eye.
See more of the report at http://bprowse.com/kitsap_market_blog/view/1225/december_2010_kitsap_real_estate_affordability_outlook
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