Kitsap Real Estate Blog

Going Up Or Down?

Year to year comparisons of home sales in Kitsap County continue to broadcast bad news. The NWMLS statistics report for October 2008 indicate a significant drop in volume of residential sales from 2,836 units sold (10/2007 YTD) to 2,148 (10/2008 YTD), a 24%+ decline.

This is what I call a deep background picture. But how useful is it in gaining perspective about what is happening now and for the immediate future. Is it likely that values and sales volume are likely to continue to go down?

Before tackling that question it is important to note the severity of the deeper backdrop, the collapse in the availability of credit and how that affects demand for housing by buyers that don’t currently own a home. Purchases by these owner occupants tend to reduce the supply of housing. Diminishing credit tends to reduce the pool of these buyers because they are no longer able to buy.

On the other hand reductions in prices make home buying more affordable for a larger number of these people so the two trends combined tend to have off-setting affects. Do we have shorter term indicators that might give us a better picture of what is happening now?

Most real estate professionals that study and use statistics will look carefully at the ratio of pending sales to inventory as a more reliable short term indicator, short term meaning 3-6 months. In Kitsap County the October report shows a ratio of 233/2156 pending to current inventory or 10.8% for October, 2008 and a ratio of 290/2314 or 12.5% for October, 2007.

In September those numbers were 14.0% for September, 2008 and 10.1% for September, 2007. The healthy improvement for September 2008 would otherwise be an eyebrow raising possibility of improving conditions but the slide back again in October would not detract from the formation of a possible bottom to further price decline in Kitsap County or at lease a reduction of the rate of decrease.

Many unknowns face us in the coming year with likely reductions in incomes, increasing unemployment and the results of various stimulus plans being rolled out but if you are a buyer worried about the value your newly purchased home falling from where you bought it, you might take heart.