While King County’s 17 percent year-on-year price increase is impressive and baffling, even more so is Kitsap County’s 23 percent year-on-year increase. What could possibly be driving prices in the rural east Puget Sound county? Definitely not wage increases.
August home prices were 23 percent higher than those in August 2004, topping three years’ worth of near-steady increases.Some fear that many would-be-homeowners will be priced out of the market.
“Wages are definitely not keeping up with increases in housing prices,” said Mike Eliason, with the Kitsap County Association of Realtors.
Despite predictions of a national slowdown in the housing market, none appears to be in sight for the Puget Sound Region.
Inventory continues to drop, and prices continue to rise, and we all know it can’t last forever. But just how long can it last? Will I still be asking this question a year, two years, five years from now? Doubtful, but it’s certainly hard to see the big picture when you’re sitting in the middle of this kind of madness, isn’t it?
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Local Home Prices Still on the RiseSeptember 18, 2005
Kitsap home sales hit the quarter-million mark last month as prices continue to rise.
The median price of a home sold in August was $255,000, meaning that of 489 homes sold last month, 244 cost more than a quarter million, according to data from the Northwest Multiple Listing Service. NWMLS represents real estate brokers mostly in Western Washington.
August home prices were 23 percent higher than those in August 2004, topping three years’ worth of near-steady increases.
Some fear that many would-be-homeowners will be priced out of the market.
“Wages are definitely not keeping up with increases in housing prices,” said Mike Eliason, with the Kitsap County Association of Realtors.
Despite predictions of a national slowdown in the housing market, none appears to be in sight for the Puget Sound Region.
Last month, the number of homes sold in King, Pierce and Snohomish County increased over the number sold in August 2004 by 8.3 percent, 21.4 percent and 28.1 percent respectively.
The average time it takes to sell a home has declined.
In 2003, it took, on average, 74 days to sell a home, and last year it took 68.
So far this year, a house sells on an average in 59 days.
“What’s driving it? Depending on who you speak with, even among different economists, you get different explanations,” Eliason said.
“In general terms, just about any factor that affects prices in Kitsap County has been in play.”
Low mortgage rates prompting people to buy, fewer people in more houses and most recently Hurricane Katrina are among the contributing factors.
One factor local home builders and real estate agents point to most frequently is a dwindling supply of houses on the market and lots on which to build new ones.
So far this year, 4.5 percent fewer Kitsap homes have had “For Sale” signs posted out front than there were by the end of August last year. Of 4,578 homes listed for sale, that’s about 200 fewer homes.
The number of lots has decreased roughly 12,000 to 14,000 from the amount available a decade ago, said Art Castle with the Home Builders Association of Kitsap County.
“That means that for builders and people looking to buy a lot to put a home on, there isn’t a lot to choose from,” he said.
So the lot price increases, and roughly every extra dollar spent on a lot means another four dollars on the price of a house.
A decrease in the number of people living in each house has exacerbated the problem.
The average number of people per household dropped from 2.8 in 1990 to 2.5 in 2000, according to the U.S. Census.
“The marketplace had to build 12 percent more (homes) just to house the existing population,” Castle said.
A seasonal slowdown is expected in October — people buy fewer homes during fall and winter months — but it is yet unclear if sales will ramp up again next spring and drive prices again to double-digit increases.
The median house price in Kitsap County last month was $255,000.
By Angela Smith-Dice
(Angela Smith-Dice, Kitsap Sun (free sign-up req.), 09.18.2005)
“…even more so is Kitsap County’s 23 percent year-on-year increase. What could possibly be driving prices in the rural east Puget Sound county? Definitely not wage increases.”
Tim, do you have any local stats on the level of RE investment around Puget? That might shed light on Kitsap’s increases. You’ve probably read that NAR estimate where about 1/4 of purchases are investments, with an additional 13% as “vacation homes”–possibly some speculation there too.
From what I’ve read, when a metro market (Seattle) heats up to the point that investors see less gains, they’ll expand outward to cheaper areas for better returns. The idea is: if you buy in before the other guy, you’ll ride the market farther up (unless it busts). Given there’s a lot of waterfront residential areas in Kitsap, it’s an easy bet that speculation is actively driving up prices (like everywhere else). When I was in Poulsbo recently, I noticed quite a bit of interest from the vacation-home crowd. We’ll see what happens.