The slippery slope of Kitsap County housing: When the marketplace dominoes fall, some people are left on the outside, looking in.
An unprecedented housing sales boom throughout the Puget Sound region has created a market here where home and apartment rentals have become scarce, sending rents significantly higher.
For many house hunters, the situation has reached critical mass. The few homes for sale in Kitsap County include asking prices that are almost 14-percent higher than at this time last year. But just as the supply of homes is low, buyers who have braved the competitive real-estate market are plentiful. In many cases, sellers now have the luxury of sorting through multiple purchase offers from buyers.
“I had a home in the $200,000 range that sold in one day after being listed,” said Tamara Peterson, a broker with Coldwell Banker Park Shore, a real-estate firm in Port Orchard. “The $200,000 to $300,000 price range for houses is super hot right now. It’s been really difficult to find houses in that range for people.”
While searching for a suitable house for sale or rent can be time-consuming and frustrating in this market, Peterson said buying is an option for many current renters who’re facing increased monthly rents.
“I’m always surprised by the number of people who haven’t even considered buying. There are zero-down mortgage loans available and lots of low down-payment programs.”
She said VA and FHA loans are especially attractive if you qualify. In many cases, those mortgage payments, even with hefty mortgage insurance costs, can come in a little under the rent of an apartment unit.
With the paucity of homes for sale, incoming residents, in particular, are looking to the rental market for housing. The selection is sparse there, as well. And if a unit can be found, the cost to rent it may force some tough decisions to be made.
About one-third of Kitsap County’s 97,993 households live in rental properties. According to a report by the Housing Solutions Center of Kitsap County, the average monthly rental unit rent increased $287, or 32 percent, since the beginning of 2014.
Here are some revealing statistics for the 11,595 households that fit into the low-income category: For every 100 very-low-income households ($22,600 a year or under) that need affordable housing, there are only 12 units available. And for every 100 households classified as low income ($37,800 a year), only 32 units countywide are available.
Just a handful of years ago, the housing landscape looked far different.
The Great Recession generated an overload of foreclosed and short-sale homes that were turned back to the banking and home mortgage industry by out-of-work residents who subsequently flooded the low-end rental market.
Since then, however, the economy has made a slow recovery, the job market is flourishing and residents are now ready to buy homes. Unfortunately, the housing inventory hasn’t been able to keep pace.
Those residents looking for a place to rent, like their counterparts seeking to buy, also are competing with a growing number of people entering the Puget Sound region who’ve taken new jobs in Seattle and elsewhere.
To complicate matters, the ups and downs of the Bremerton-based military industry currently is at a peak level, especially with the USS Nimitz and the almost 3,000 families it supports now moored in Kitsap County.
A regional survey by Market Insights shows rents have increased 4.1 percent over the first quarter this year in King and Snohomish counties. The increase is tied to an overall vacancy rate of 3.86 percent in the same market.
In Kitsap County, apartment rental prices reached an average of $1,186 a month in the third quarter, according to Tom Cain of Market Insights, 12.1-percent higher than last year. And South Kitsap areas, including Port Orchard and Bremerton, have experienced the highest increase in the county. In Port Orchard, there’s just a 3.32-percent apartment- vacancy rate.
“We are in awe about how robust this market is,” Cain said about the Puget Sound area.
“One would expect that the massive amount of new units that have hit the market over the past few years would slow rents and cause the vacancy rate to go up. But this is not happening.”
In Kitsap County, construction of new homes and multi-unit buildings is just gaining traction. The improving economy is starting to drive some new construction, but the process from start to finish is long and arduous for developers.
The better economy also is encouraging property investors to buy and renovate multi-unit apartment complexes in the area. In tandem with those improvements are increased market rental rates.
Between 2015 and 2017, the county’s housing needs assessment estimates that 867 units out of 4,272 affordable housing units currently available — about 20 percent — will soon disappear from the market.
“Because of the demand, you’re seeing property owners take housing that’s relatively affordable, maybe not the newest or in the best location, and converting them into nicer units,” said Stuart Grogan, executive director of Housing Kitsap, which works with the county to provide affordable housing to lower-income residents.
“They’re being rented for higher prices and, in many cases, tenants who can’t afford them are being thrown out. Others are having their budgets really squeezed in order to keep their units. It’s a really tough situation.”
Grogan said Housing Kitsap has a mixed portfolio of properties, some of which are available to people with very low incomes, including fixed housing under the HUD Section 8 umbrella and public housing.
The bulk of the agency’s portfolio, he said, is for moderate-income households.
“They include people who are doing pretty well in the world, but don’t make enough money where they can pay market rates for their housing,” he said.
“Many who fit that category work in the service industry, have lower-paying jobs and can’t afford the high market rents we’re seeing today.”
Grogan said Housing Kitsap is actively working to create additional affordable housing. The agency also is helping homeowners build their own homes through its self-help home ownership program.
The agency has its own stock of new housing, he said, plus several projects in Port Orchard, including the Silver View housing project just off Sedgwick Road.
Some say buy, don’t rent
Even though landing a home that’s for sale is difficult these days, Peterson from Coldwell Banker said that people who can’t find rental housing in Kitsap should consider buying, because even though inventory is low, there are lower-end properties available.
“There are homes on the market priced at or lower than most people are paying for rent,” Peterson said.
“There are also many loan programs available for first-time buyers and those with low credit scores. I just don’t think most people are aware of these programs.”
Bob Smith can be reached at email@example.com.