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Distressed properties will compete with home resales | Forecast 2013
By Brenda Prowse
Realogics Sotheby’s International
No forecast for the new year can be complete without some discussion of the real estate market.
Nationwide, the market is in much better shape entering 2013 than it has been in the past four or five years.
The National Association of Realtors November pending sales index was reported to be up 9.8 percent from November 2011.
According to the NAR, new home sales in November were up 15 percent from a year ago (still the third-lowest number of sales since 1963) and some say they may double over the next several years. That means more construction jobs and benefit to our national economy over the next several years.
The Case-Shiller home price index rose 4.3 percent from a year ago. Home loan delinquencies, which in 2010 were more than 10 percent of all mortgages, have fallen to 5.9 percent, still about double the normal historical rate for our economy.
In the Kitsap County real estate market, by comparison, closed sales for the year were up about 14 percent from 2011 and easily the best we’ve seen since 2007. Pending sales in November were about 26 percent higher than a year ago. Our three-month moving average of median closed-sale prices at the end of November showed that home prices were up about 2 percent compared to a year ago. We can expect our market to continue to improve in 2013, though prices should be restrained by continued sales of distressed properties.
Still, the Kitsap market is complex — of 556 total pending sales, about 38 percent are short sales, about 9 percent are bank owned, and about 20 percent are new construction. Starting the new year, only one in three closed sales is non-distressed and not new construction. That means that homeowners planning to sell must prepare for competition. Only the best priced homes in the best condition will sell.
RealtyTrac shows that the number of homeowners in Kitsap County in default or foreclosure has risen by 33 percent since August 2012, so distressed property sales will continue to compete with residential resales in the coming year. Just looking at Poulsbo last year, in the price range where most sales occur - $250,000 to $350,000 — 44 percent of the sales were new construction. Buyers not willing to wait for the delays in a short sale or not willing to take on the risk of purchasing a bank-owned property are in many cases opting to purchase well-priced new construction. Home sellers, take note.
A final note. There are big differences between local markets in our county, and winners and losers appear to reflect the underlying employment opportunities. Bremerton sales last year were low, prices oscillated, and inventory rose. Bainbridge sales in 2012 were the strongest since 2007, prices have risen and inventory is very low. Employment opportunities in Seattle appear to be driving Bainbridge and helping the Poulsbo and North Kitsap markets as well. Improving economic conditions in Bremerton and Central Kitsap could make a big difference in the county real estate market for 2013.
— Brenda Prowse is managing broker at Realogics Sotheby's International Realty on Bainbridge Island. Contact her at Brenda@ProwseandCompany.com.