Our North Kitsap real estate market has been even more competitive for buyers. Read on for key highlights from our strong third quarter and insights from Windermere’s Chief Economist, Matthew Gardner. 

Our Competitive Market

North Kitsap’s inventory is now lower than last year while the demand remains high. Remote working culture seems here to stay, opening doors to the greener pastures of Kitsap living. These eager buyers outnumber sellers, which is reflected in the lower volume of closed sales when compared to this same time last year. Our Brokers continue to experience situations where some buyers are outbid either by price or by an all-cash offer. But if you’re looking to buy, don’t let that discourage you. From first-time buyers to seasoned investors, our local experts are here to guide you through this competitive market. 

Market Data

Looking at the last five quarters in the graph below, there is a noticeable plateau for this year’s third quarter when compared to 2020’s third quarter.  But home prices are still increasing, and the amount of sold homes still outpace pending listings as a result of the increased demand.  As we enter the slower season and inventory wanes further, prices may level, which will start to balance out the market.  Or, it will at least start a shift in that direction.

Sale prices in North Kitsap remain strong. And, as you can see below, the listing and sale price divergence went through a slight correction in the second quarter of 2021, but it’s now back on track.  Our agents are still sharing experiences with many eager buyers and many happy sellers due to the continuing demand and our strong seller’s market.

Home Purchase Sentiment Index: Insights from Matthew Gardner

In his most recent Monday with Matthew video, our Chief Economist delivered a comprehensive analysis of the most recent Home Purchase Sentiment Index figures put out by Fannie Mae.  The data comes from a survey containing approximately 100 questions on housing-related topics. Fannie Mae collected 1,000 consumer responses from across the country. As Matthew Gardner says, “It’s the only national, monthly survey that’s focused primarily on housing.”

The survey shows that many Americans continue to think it is not a good time to buy because of the low supply and rapidly rising prices.  However, many feel it is a good time to sell as consumers predict home prices and mortgage rates will go down.  As Gardner explains, “most consumers continue to report that it’s a good time to sell a home, but a bad time to buy. They most frequently cite high home prices and a lack of supply as their primary rationale…However, the good time to buy component did tick up for the first time since March.”  While this is a recipe to shift towards a buyer’s market, we’ll see how things unfold in the coming months.

Gardner sums it up nicely: “The takeaways for me so far are that consumers tempered both their recent pessimism about home buying conditions and their upward expectations of home price growth.”  So again, we are seeing the potential for a shift toward a more balanced market.

Our North Kitsap market performed even better than expected during our second quarter. We’ve compiled key highlights so that you can easily stay informed about our local real estate market.

Our Strong Seller’s Market

North Kitsap’s inventory remains low and demand remains high. Many people are continuing to move out of bigger cities in part due to the remote working culture. There are still many eager buyers and fewer sellers. Our Brokers continue to experience situations where some buyers are outbid either by price or by an all-cash offer in this competitive market.

If you look at the last five quarters detailed in the graph below, you can see that growth trends in volume continue to rise, even when comparing 2020’s second quarter to 2021’s second quarter.  And, our market is definitely heating up this summer.

We’re continuing to see even higher prices. As you can see below, the listing and sale price divergence is shrinking now, as sellers benefit from our inventory shortage, asking for higher prices.  Many buyers are able to meet this demand and we’re still seeing low mortgage rates.

Market Insights from Matthew Gardner

In his most recent Monday with Matthew, our Chief Economist, Matthew Gardner, begins with the staggering fact that “prices have risen almost three-fold, as the cost to finance has dropped by 72%.”  If the number sounds too good (or bad) to be true, that’s because it is. To get an accurate picture, you also have to factor in inflation. Gardner explains that “just like other goods and services, the price of a house today is not directly comparable to the price of that same house 30 years ago because of the long run influence of inflation.”  When you adjust for inflation, the rise in housing prices becomes less drastic. Without adjusting for inflation, “prices have risen by 268%”. But when you adjust for inflation, the “real prices have increased by 83.6%”.  Therefore, the increase is much lower than what most people are discussing today. 

Matthew also compares mortgage payments, another important piece of the puzzle.  Although, without adjusting for inflation, “mortgage payments have increased by 74.3%,” the inflation-adjusted “real payments are 10.7% lower!”  Of course, there are other monthly payments associated with home ownership. This includes property taxes, which do not change with market fluctuations. But this still indicates “that prices have been able to rise so significantly because mortgage rates have dropped”. It’s also because “inflation-adjusted home prices really haven’t skyrocketed – contrary to popular opinion.” 

However, Matthew clarifies saying, “there are some markets across the country where the picture isn’t quite as rosy.  In these places, prices have risen significantly more than the national average.”  The Seattle metropolitan subunit (which extends around our local area) is one of these places. This is largely due to the increasing affluence as a result of the tech boom.  

Not a Housing Bubble

Gardner’s bottom line is this: “there are quantifiable reasons to believe that we are not in a national housing bubble today.” However, he does point out that some markets will see a slowdown in price growth given “where prices are today in concert with the spectre of rising mortgage rates.”  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 and mortgage rates continue to climb.