Inside Gig Harbor Housing: Expect a balanced market in ’23
Ho- Ho-Home for the Holidays!
The answer to the trending question this month is definitely, YES! You can have decor up when selling your home during the holidays. I’d avoid the 46-piece village your mom gave you. Think minimalist holiday decor, BUT go ahead and put up that tree!
As promised from last month, here is a breakdown of price ranges in the Gig Harbor market:
To know if a market favors buyers, sellers or is neutral, we look at sales ratios — the number of pending sales divided by the number of listings on the market. A seller’s market as a sales ratio of greater than 55%, a buyer’s market has a sales ratio of less than 55%, and a balanced market is 55% ratio.
Gig Harbor/Fox Island stats
Total number of homes and condos for sale as of Nov. 30, 2022: 141
Fastest-moving price ranges: $800,000 to $1 million (28 active, 16 pending) and $1.5 million to $2 million (7 active, 4 pending).
Slowest-moving price ranges: $2+ million (10 active, none pending) and $1 million to $1.5 million (33 active, eight pending).
The overall market remains balanced, with no strong advantage to the buyer or seller. Pay close attention to price and condition if you are in the slower-moving price ranges.
Key Peninsula stats
Total number of homes & condos for sale as of Nov. 30, 2022: 65
Fastest-moving price ranges: Under $400,000 still trending to a slight advantage to the sellers (13 available, 9 pending). The $550,000 to $700,000 price range is second (18 active, 9 pending).
Slowest-moving price ranges: $700,000 to $850,000 (5 active, none pending) and $850,000 to $1 million (4 active, none pending).
The overall market slightly favors buyers. The Key Peninsula always has clear seasonal slowing of activity, making some price ranges too small of data sets. Understand the days on market expectation so you don’t undercut your price too quickly.
The housing market has slowed, but homes are still selling
Homes in Gig Harbor, the Key Peninsula, and Fox Island are selling. While more homes are on the market than in 2020 and 2021, we are still well below a healthy amount of inventory for buyers.
The average time homes are on the market is rising. The average days on market for our whole area in November 2022 is about 33 days, up from four days in March 2022. For buyers, this means there is more to choose from than back in March, but still fewer choices than you’d like for a healthy amount of inventory.
However, buyers may have more pricing leverage with homes that have been sitting on the market for a while. For sellers, this means that pricing their house correctly is very important if they don’t want it to sit on the market forever. Homes priced well are selling, often in less than a week.
Home prices will be stable in 2023
Supply and demand drives home prices. Right now, there are enough buyers and sellers in the market to keep prices stable.
According to Matthew Gardner, economist at Windermere Real Estate, the low inventory of supply will keep prices from falling too much farther. Rising mortgage rates were among the core drivers of the decline in home prices in the back half of this year. Would-be home sellers were reluctant to sell and give up their great mortgage rate, and buyers had less buying power.
We expect rates to increase two more times, but start to stabilize in 2023 and possibly head down by the beginning in the fourth quarter of 2023. If this happens we’ll likely see buyers and sellers return to the market equally, maintaining a balanced market into 2024.
Seasonal activity has returned
Over the past two years, homes have sold regardless of the time of year. Now that we’re in a balanced market (with no real advantage to the buyer or seller) and the pace has slowed, I fully expect that we will return to more normal seasonal activity – home listings pick up late in the first quarter, peak late in the second quarter and start falling again late in the third quarter.
While timing the market is nearly impossible, people planning to sell in 2023 should start preparing now to ensure they are well-positioned to enter once the time is right. Gone are the days of selling a home in any state of disrepair (leaky roof, beat-up baseboards, etc.) for top dollar. Today’s sellers will need to be highly strategic. This means hiring a professional who has deep experience with the current market data and will stage, clean, and market the home using modern marketing standards.
Buy a home when you find the right home you can afford
Inventory is not expected to spike and oversupply the market, so when you find something you LOVE, snap it up if you can afford it. Programs are available for buyers to increase affordability (like a 2-1 rate buy down where you pay to decrease your interest rate for the first two years of the loan), and over the past three months buyers have been able to negotiate the seller paying the rate buydown and/or closing costs!
Buying a home is a deeply personal experience and one of the biggest financial decisions one can make. Mortgage rates have impacted affordability and, in many cases, buyer expectations.
“Start by finding out what you can afford, and then start your house hunt,” said Satya Delgadillo, Realtor at Neighborhood Experts Real estate. “Doing it in reverse can lead to serious disappointment and potentially push your budget further than you are really comfortable with. If you find that you can’t get your dream home within your budget, that’s okay. Start somewhere, build equity over time, and buy the home later.”
Loan limits increase in 2023
The conforming loan limit has increased for Pierce County to $977,500 in 2023 from $891,250. Conforming loans, the most common type of loan today, are often easier to qualify for, usually have a lower interest rate than non-conforming loans, and may accept a lower down payment.
“Qualified buyers in Gig Harbor may be able to purchase a $1 million dollar home with as little as 5 percent down with conventional financing,” said local lender Petros Christophilis of Cornerstone Home Lending. “This creates more opportunities for home buyers.”
Home owners still have a ton of equity in their homes, inventory is relatively low and once buyers figure out the loan program that works for them they’ll be back out to purchase. Appreciation will revert back to our normal, sustainable pace of growth, which makes for a healthy housing market overall.
If you have any specific questions about the housing market please reach out to [email protected] and we will answer in next month’s column!
Paige Schulte is an entrepreneur who sells real estate in the Gig Harbor market and community philanthropist who also runs the nonprofit ChelseaPaige Foundation. Last year she closed 94 units and $84 million and has been featured in USA Today and the Wall Street Journal for use of digital media. In February 2022, she launched her own boutique office with a continued effort to niche down and partner with other community-focused real estate entrepreneurs. She also has three kids, a patient husband and a pup named Lucy. They live in Gig Harbor. For more information visit www.askpaigeschulte.com.