Bonnie’s Monthly Newsletter

Happy Summer,

On a bright note, I am excited to let you know that I have partnered with Kelly Kleven.  We have been working together for a year or so and it’s been a great relationship.  Prior to taking on real estate full time Kelly spent most of his career as a general contractor, so the wealth of knowledge and experience he brings to our clients is invaluable.  Please take a quick look at the attached biography.

Per the latest Market Update from Movement Staff, “A significant week in Washington ended with the Senate passing the Fiscal Responsibility Act to raise the debt ceiling and cap government spending for two years. The passing of the bill prevented what could have been the first-ever debt default by the United States and helped the mortgage industry avoid what could have been a massive increase in mortgage rate.

Home prices are still an issue and have now shown two consecutive months of price appreciation. The S&P CoreLogic Case Shiller National Home Price Index showed a 0.7% increase from February to March. While that does not indicate that we are in for another spike like we saw in 2021-2022, it does suggest that the stress of high competition for a very low inventory of homes is keeping us in a sellers’ market.

Craig J. Lazzara, managing director at S&P DJI, said in the Case Shiller release that, “The farther west we look, the weaker prices are, with Seattle (-12.4%) now leading San Francisco (-11.2%) at the bottom of the league table. It’s unsurprising that the Southeast (+5.4%) remains the country’s strongest region, while the West (-6.2%) remains the weakest.”

The following is from the Seattle Times Business Reporter, Heidi Groover: In a typical spring boost, Seattle-area home prices ticked up slightly from April to May. But compared with a year ago, home prices took another dive across the region as high mortgage rates and economic concerns continued to weigh down the market.

Higher rates and lingering uncertainty in the economy mean “the sense of urgency for buyers to get into a home has really changed,” said Seattle Redfin agent Bliss Ong.

The median Pierce County home sold for $544,990, down 6%. The median Kitsap County home sold for $557,450, roughly flat from this time a year ago. (Even so, Kitsap hasn’t been immune to the market downturn. In April, the median price there was down 8% year over year.)  *See the Local Market Update below

“Certainly, we have seen a correction,” Windermere Chief Economist Matthew Gardner said, “which makes sense because the market was artificially overheated” by ultralow mortgage rates from 2020 through early 2022.

Average mortgage rates hovered between 6.3% and 6.6% in May, the highest level since the fall of 2008, according to Freddie Mac. (Rates had just begun to climb last spring and were averaging about 5% in May 2022. Average rates were about 3% in May 2021.)

Higher mortgage rates make monthly mortgage payments more expensive and push homeownership further out of reach for young and middle-class homebuyers. In May, pending sales were down 25% in King County, 30% in Snohomish County, 24% in Pierce County and 28% in Kitsap County, according to the listing service.

“We have got an absolute ton of homeowners with mortgage rates at or below 3%,” Gardner said. “Why would anyone move and lose that never-seen-before and likely never-seen-again mortgage rate?”

That dynamic is likely to keep inventory low throughout at least the end of this year, he said.

Gardner expects mortgage rates to stay around 6% through the rest of the year and believes

Seattle-area home prices will end the year about 5% lower than in 2022. A lack of new homes for sale will keep that drop from being more dramatic, he predicted. “I just don’t see where the inventory is going to come from.”

Local Update:

Active listings in the Gig Harbor, Fox Island and Key Peninsula area were up in May by 14.7$; Pending + Pending Inspection sales were up 5.6%; Closed Sales in May were up 22.4% more than the prior month; Closed Sales for the last six months were up 8.3%.  However, prices were down significantly. Closed sales in May averaged $844,320 (April sales averaged $929,478, 9.2% higher) Median priced home sales in May were $767,500 (Down 9.7% at $850,000 in April). And the average price per square foot for homes sold in May was $360.24 (Down 13.35% compared to $373.59 in April). See the Market Absorption Report

MARKET ABSORPTION REPORT FOR MAY 2023

Area’s 1-9, Gig Harbor, Fox Island and Key Peninsula