Central Kitsap’s market bounced back in our first quarter after the seasonal slowdown. We’ve compiled key statistics to keep you up to date with our local real estate market.
Our Strong Seller’s Market
Central Kitsap just had a great first quarter after the quieter winter season. With Central Kitsap’s proximity to Seattle and Tacoma, it’s appealing to people who are moving away from bigger cities as COVID-19 changes the way we work. There are still many eager buyers outnumbering sellers as inventory remains low and demand remains high. Our Brokers can help you navigate this competitive market. Many current buyers are being outbid and it can be an overwhelming process. That’s why it’s so important to have a local expert as your guide.
In the last five quarters outlined in the graph below, there’s a similar growth trend when comparing 2020’s first quarter to 2021’s first quarter. And, we saw a 15% increase in closed sales year over year. Get ready for the market to continue to heat up as we move from spring to summer.
As you can see below, the listing and sale prices both continue to rise as sellers continue to benefit from our inventory shortage. Many buyers have still been able to meet the pricing demands of this seller’s market. But low inventory means we’ll continue to see even higher prices. These prices could reach an affordability ceiling where potential buyers will be priced out of the market.
Affordability Issues and Market Insights
Matthew Gardner, Windermere’s Chief Economist, continues to track this affordability ceiling in his most recent Housing and Economic Update: “If the pace of home price growth continues, many households will start to be priced out” of what people can actually afford. As Gardner points out, we need more supply, and we need home prices to drop to alleviate this market strain.
Unfortunately, that might not happen fast enough for many hopeful homebuyers to make their dream a reality. Gardner reminds us that the cost of materials, recent storms, and the current housing market prices have all added to the cost of building new homes. This, in turn, will add to the listing price.
Additionally, Gardner points out that mortgage rates have risen after “a jump in bond yields has led rates to spike” as the country re-opens and economic activity increases. The resulting potential inflation causes the 10-year treasury interest rates to rise in hopes of attracting more buyers. However, it is still far below standard rates and shouldn’t be a concern for buyers right now.
Ultimately, it’s still a strong Seller’s Market with an overall low supply and high demand. We expect to continue to see issues with affordability as prices continue to climb.
Silverdale and Bremerton’s Central Kitsap market finished 2020 with a strong fourth quarter. We’ve compiled a comprehensive review of Central Kitsap market statistics, as well as insights and predictions for 2021 from Windermere Real Estate’s Chief Economist, Matthew Gardner.
Our Strong Seller’s Market
Central Kitsap remains a seller’s market, like the rest of Kitsap County. Inventory is low and everyone wants to buy a house away from the bigger cities. Buyers, the market is in a regular seasonal slowdown – but not as slow as expected given COVID-19. With many determined buyers and consistently low inventory, the advantage goes to sellers. Our Brokers have seen an increase in situations where some buyers are outbid either by price or by an all-cash offer.
In 2020’s fourth quarter, the average sale price in Central Kitsap was up 6.4% year-over-year at $399K. Sale prices continue to hover close to listing prices, indicating strong demand.
2021 Market Forecast
In his final Monday with Matthew video of 2020, our Chief Economist, Matthew Gardner, shared his 2021 market forecast. He’s optimistic and for some good reasons.
First off, Gardners expects mortgage rates will not rise significantly on a local level, nor will they vary significantly throughout different regions across the U.S. Since mortgage rates are heavily tied to 10 year treasury maturity rates/yields, rates shouldn’t rise significantly until the entire market recovers from the COVID-19 slowdown. Another great sign is that Gardner expects home sales will grow significantly, from 5.55% in 2020 to 5.93% in 2021. That’s “to a level we haven’t seen since 2006,” Gardner explains. With the continuation of historically low mortgage rates and the consistent increase of home values, 2021 looks bright.
“No! There isn’t a housing bubble forming. But price growth will slow & sellers may feel like it’s a collapse … it isn’t collapsing, it’s just normalizing.”
Matthew reminds us that there are pitfalls to be wary of in this strong market. First and foremost: “we need more inventory.” With the shuffling to new homes, and the huge wave of “first-time buyers [that] will continue to be a major player in the housing market,” many are making moves in a flood that will not persist. Buying during the pandemic will slowly settle. People are expected to stay in their homes longer, especially homeowners who have chosen to refinance. House values will rise due to the lack of supply, and that may price out many buyers who want to purchase in our area.
Western Washington’s Market Report
For a big picture glance at how our local market compares, here are highlights from The Western Washington Gardner Report.
WESTERN WASHINGTON HOME SALES
- Total Sales: 26.6% increase from Q4/2019, but 8.3% lower than Q3/2020
- Homes for Sale: 37.3% lower than Q4/2019, and 31.2% lower than Q3/2020
- Pending Sales: up 25% from Q4/2019, but 31% lower than Q3/2020
- Average: $617,475 (up 17.4% from Q4/2019). This continues the trend of above-average appreciation of home values.
- Interestingly, prices between Q3 and Q4 of 2020 only rose by 1%. Is there a price ceiling we’re reaching?
- Mortgage rates will stay competitive as the market continues to charge toward a price ceiling and potential affordability issues.
- Average: 31 Days (16 days less than Q4 just one year ago)
- In Kitsap County, average days on market: 17
2021 will continue the trend of working from home, which keeps demand high. This, in turn, will drive sales growth, while affordability barriers will balance our current runaway appreciation for home values.
Central Kitsap’s market had a very strong third quarter. We’ve compiled key stats below to provide a comprehensive review of our market, as well as insights and predictions from Windermere Real Estate’s Chief Economist, Matthew Gardner.
Our Strong Seller’s Market
It’s a strong seller’s market here in Central Kitsap. Inventory remains low while demand is high. In our third quarter, the median sale price was up 11.5% year-over-year at $379K. Buyers should be aware that multiple offer situations have become more common in our area.
Although mortgage rates remain historically low and demand is high, our Chief Economist, Matthew Gardner, has some concerns about how this may impact real estate down the road. “We may be heading towards a period where we see houses turn over at a far slower pace as we stay in our homes for longer than ever…this could be a problem as it leads to persistently low levels of inventory for sale, which itself could lead to prices continuing to rise at above-average rates and that would further hit affordability.” As for mortgage rates, Gardner does not expect them to rise significantly any time soon. However, he says, “We should all be aware that there could be consequences to very low rates”.
Western Washington Review
Let’s zoom out a bit and look at our area. Below are highlights from The Western Washington Gardner Report provided by Windermere Real Estate’s Chief Economist, Matthew Gardner.
WESTERN WASHINGTON HOME SALES
- Total Sales: 11.6% increase from Q3/2019, and 45.9% higher than Q2/2020
- Homes for Sale: 41.7% lower than Q3/2019, but up 1.6% from Q2/2020
- Pending Sales: up 29% from Q2/2020
WESTERN WASHINGTON HOME PRICES
- Average: $611,793 (up 17.1% from Q3/2019). Low mortgage rates and limited inventory are clearly pushing prices up.
- Prices will continue to increase as long as mortgage rates and inventory levels stay low. If this continues to be the case, affordability issues will become more apparent in many markets.
DAYS ON MARKET, WESTERN WASHINGTON
- Average: 36 days (an average of 4 fewer days than in Q2/2020 and 2 fewer days than in Q3/2019)
- In Kitsap County, average days on market: 20
In Gardner’s Western Washington Report, he states that, although we have a strong seller’s market that is very buoyant, he’s “starting to see affordability issues increase in many areas—not just in the central Puget Sound region—and this is concerning. Perhaps the winter will act to cool the market, but something is telling me we shouldn’t count on it.”