Market update: Have we hit bottom?
When comparing the first quarter of 2008 versus 2007, fewer homes sold as many more came on the market. Not that this is a surprise as we all know the market has softened. Currently there are approximately 50 percent more homes on the market than last year, and sales are down by approximately 14 percent. In Kingston, Poulsbo, Hansville, Suquamish and Indianola, and market time has increased by 12 percent. This is an even greater reason to price your home competitively and have it staged professionally to attract a buyer.
Most people forget that the current housing bust is nearly three years old. According to Cyril Moulle-Berteaux of the Wall Street Journal, home sales peaked in July 2005. New home sales are down a staggering 63 percent from peak levels of 1.4 million. Housing starts have fallen more than 50 percent and, adjusted for population growth, are back to the trough levels of 1982.
The boom made housing unaffordable for many American families, especially first-time homebuyers. During the 1990s and early 2000s, it took 19 percent of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25 percent of monthly income. For first-time buyers, it went from 29 percent of income to 37 percent. That just proved to be too much.
Prices go so high that people who intended to actually live in the houses they purchased (as opposed to investors) stopped buying. This caused the bubble to burst.
Since then, house prices have fallen 10 to 15 percent, while incomes continue to grow (albeit more slowly recently) and mortgage rates remain reasonable. As a result, it now takes 19 percent of monthly income for the average homebuyer, and 31 percent of monthly income for the first-time buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best times of the 1990s. Numerous households that had been priced out of the market can now afford to buy.
It’s interesting to note home values are down by only 2 percent from last year and selling within 7 percent of the listed price. This tells us that for our area, home values continue to hold steady, not bad compared to the rest of the country, very welcome news and a positive plus!
Contact Tracy Corriveau and Kim Poole at Windermere in Kingston, (360) 297-2661.