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Kitsap Real Estate Market Report - February 2011
By Admin
Once in a while we see a real change in our real estate market. A recent Wall St Journal article notes that home prices have returned to pre-bubble levels, and Moody’s Analytics claims in the article that 47 of 70 metro areas now have home affordability as good or better than the affordability prior to the economic crisis. The same article states that Seattle came late to the party and still has an overvalued market. This had also been the case at John Burns Real Estate Consulting, which a year ago evaluated both Seattle and Bremerton as overpriced in comparison with their historical median price to median income ratio. Seattle was 2nd and Bremerton 4th on their list of overpriced metro areas in the US. However, the tune at John Burns has now changed, with both Seattle and Bremerton evaluated as underpriced and showing Seattle now in 40th place and Bremerton in 60th place among 183 metropolitan statistical areas. Housing Wire cites a Zillow report showing that home prices in the 4th quarter dropped the most in the past 2 years. The Wall St Journal reported that more cash buyers are entering this market to pick up bargain properties. While heavily distressed areas like Miami have 54% of all purchases completed by cash buyers, Seattle buyers pay cash in only 16% of the transactions.
All this talk of falling prices is hard to square with the Kitsap Sun report that January median prices in Kitsap County were up 11% compared to a year ago. January 2010 was an outlier. The median Kitsap residential price in January 2010 fell 6% compared to December 2009 to $224,450, but then recovered in February 2010, rising 12% to $252,435. The Sun’s report doesn’t substantiate a continuing rise in home prices, and we expect that their report for next month will show that prices are falling. Month to month fluctuations are smoothed out in most home price models (such as Case Shiller). We use a 3 month moving average in our graphs (see below). Except for those periods when federal homebuyer tax credits were nearing deadlines, local home prices have been trending downward or remaining flat for more than a year.
The number of closed sales in Kitsap County in January fell sharply, down about 42% from December and is 24% below a year ago. This comes after an unexpected rise in closed sales at the end of the year. Pending sales rose about 24% compared to last month and were about 6% lower than a year ago. In December, there were 225 closed sales and 191 pending sales. In January there were 131 closed sales and 238 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, we expect the number of closed sales to rise next month.
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