That sums up, more or less, the sentiments of the local real estate agents. They say a large part of the local real estate slump can be attributed to fears spurred by national coverage of several parts of the country where homeowners are living through real estate horror stories while financial news about sub-prime mortgages and other related industries have been going from bad to worse. In the Kitsap area, those fears may be unfounded but there is a long chain reaction: Sellers are still reminiscing for the hot offers homes were getting two years ago, and are not willing, or able, to price their homes as low as the market would bare. Prospective buyers who are ready to buy are watching on the outfield — not moving either because of those fears or because they’re waiting for a good deal.

Some local Realtors report that this is the first time in many years when they’re seeing sellers actually bringing money to the table. They are seeing an increasing number of short sales (when a lender accepts less than amount owed to “pay off” the loan) — although representatives with two of the largest local banks say they are not doing short sales.

“There is so much negative press about the market. Home buyers are sitting tight because they’re worried,” says Doug Nelson with RE/MAX Unlimited of Bainbridge Island. “Regionally (in the Northwest), we’ve seen a 41 percent drop in volume this year from a year ago.”

Penny McLaughlin, owner of Penny’s Team in Poulsbo, agrees. “The buyers are like birds on a wire. They’re sitting, they’re watching, and when prices go down, they jump,” she says.

Countywide statistics compiled monthly for Kitsap Homebuilders Association by Sandy Foote with Windermere Real Estate, West Sound Inc. in Silverdale show nearly 12 months’ of inventory in April ‘08 compared to about five months’ worth a year before, and about two months’ four years ago. Realtors consider four to five months of inventory a healthy number. An average of eight homes per month was sold in the last six months, vs. 34 homes in the same period a year ago. (Foote’s stats exclude mobile homes and condominiums.)

“When I started in real estate in Kitsap County in 1994, we were selling about 300 homes a month,” Foote says, noting that homes selling the best are those under $300,000.

She says being a military area is part of the challenge. “They (military) don’t feel they can buy a house and build enough equity to sell it,” she says. “Demand is huge in the rental market.”

Gig Harbor area is in the same shape, with the market there, too, as tough as nails. “We have more supply and less demand,” says Dan Bennett with John L. Scott Real Estate in Gig Harbor. “Buyers are very slow and methodical in how they approach the process.” He said March ‘08 had 884 homes on the market, with 59 sold, while March ‘07 had 728 homes listed and 105 sold.

“Our demand problem in this area is not as much based on the economy as on people who can’t qualify for loans because of tightening credit [criteria] and fewer buyers are moving from other areas,” he says.

The current news is not as gloomy as the Northwest weather — recent months have seen a clearing in the sky (at least in the market, if not in the weather). The market is on a slight upswing, with slightly more sales in the last three months or so, but it’s keeping to a tide-like pattern of ebbs and flows.

“It’s definitely better, but we ask ourselves, is it because of the time of the year? We have more buyers, are getting more offers on the listings, and sellers are getting into a better mindset,” Foote says.

Even so, with encouraging signs showing, it is, as McLaughlin describes it, “a price war and a beauty contest.” “Right now, if you price the property correctly, there is still a chance you’ll get multiple offers, she says. “And it has to be in immaculate condition.”

It’s unclear whether the upswing will continue once the spring/summer season, which generally has increased activity, migrates south. Some local industry veterans say the market, while it will eventually self-correct, will never go back to pre-Quadrant days.

“Quadrant Homes entering the market (locally) has had a huge impact on prices,” says Fred Depee with John L. Scott Real Estate in Port Orchard. “They’re the ones setting the tone.”

It took a while for the tone to go from a quiet solo to a full chorus: Usually months go by before the impact is fully realized, and Kitsap is seeing that impact now. And Gig Harbor is next: Quadrant who completes a new home in 52 days — start to finish — is in the process of building a subdivision there as well.

Hugh Nelson with Prowse and Co. of Poulsbo, who keeps a close watch on the trends and blogs about them (www.bprowse.com/index/weblog/index), notes that 41 of 44 pending home sales in Poulsbo are new construction homes — and most top sales are Quadrant homes. Some Realtors spend entire days in the subdivision showing and closing.

“When Quadrant homes were built, pricing well undercut the Poulsbo market. Admittedly, those are postage stamp lots and low-priced construction, but people flocked to it,” he says.

As for the rest of the county, geographically speaking, Bainbridge is in pretty rough shape (16 months’ worth of inventory recently, according to Nelson), Central Kitsap is following the ebb/flow tide and Bremerton appears to be doing a little better than most places, partially due to a significant drop (13 percent) in median prices from a year ago. “Overall, with a larger drop in prices, more stable inventory, and lower median price level, it looks like Bremerton is well-positioned to make progress in this market,” Nalson says.

He is one of several local Realtors and builders who do see the silver lining: Sellers will continue to have to drop prices to more realistic levels instead of the inflated levels of a few years ago, and affordability will go up. “Affordability fell way off by 2003 but it’s coming back up,” he says. “It’s back to the 2002 market. It will get back to normal, and it’s getting there but in fits and starts.”

It’s not all good news, however. “It’s a hard spot to be in. To solve the problem, it means a lot of people have to suffer by losing equity in their homes,” he says.

Doug Nelson of RE/MAX (no relationship to Hugh) shares this view. “I think we’re in far better shape than the majority of the country, but nobody will escape unscathed,” he says. “We had a five-year cycle of incredible sales, and we can’t expect to stay at that pace.”

Predicting how long the slump will last is a little bit like predicting tomorrow’s temperatures, but there are encouraging signs. Depee says one must only look at the commercial boom to see the long-term prospects are excellent. “When a commercial company comes in, they look at how much per foot they can generate in sales, and they do a 20- to 30-year projection,” he says. “If the economy downturn is what it is, then why is Lowe’s coming, and Home Depot and Sam’s Superstore all want to come here? They know the market will do nothing but grow. This is all temporary.”

In the meantime, neither sellers nor buyers need wait for the market to sort itself out, Realtors say. It’s a golden time to buy, and not a bad time to sell, if all due diligence is followed (pricing right, cleaning up, etc). And the best advice they have is this: Ignore the national real estate outlook and news.

“Remember that real estate is local, not national. Event with Washington state, we have different markets. You need to understand what’s going on in your submarket, whether you’re a buyer or a seller,” Bennett says. “Other than that, the sky is not falling.”