| The 400 condominiums in downtown Bremerton went for auction at the end of April, some starting at nearly half their price. Washington Mutual has closed its loan processing center in Silverdale. The number of foreclosures in Kitsap is up. Everywhere, there are signs of the real estate market in apparent trouble.
But much of the negative feeling is based on perception, some local experts say. It’s a perfect time to be in the real estate market — if you’re a buyer, that is.
“This is the best time to buy real estate since I’ve been in business,” says veteran Realtor Don Pennington with Windermere Real Estate/West Sound based in Silverdale. “We have willing sellers, low interest rates and good economy in Kitsap. I’ve never seen that combination before.”
While the crisis in the subprime lending market has consequently shifted the real estate industry from a hot sellers market, locally the impact has been minimal compared to some parts of the country. Nonetheless, the publicity, and continuing troubles in the financial sector, has caused many buyers to slam their checkbooks shut.
“People are afraid of buying,” Pennington said. “It’s psychological. Every lender I know is waiting to loan some money.”
Even homes that are underpriced by tens of thousands of dollars are not getting any takers — not even showings. Some homes are selling for as much as 25 percent less than they would have two years ago. With much more inventory and a smaller number of buyers, sellers hoping to get out of their home fast are out of luck.
But while subprime loans haven’t had a huge impact locally, builders of new homes are contending with another issue: regional, big-name home developers that started eyeing the area around 2004. Port Orchard saw Quadrant Homes and DR Horton starting subdivision construction at the end of 2006, and now Quadrant Homes is courting Gig Harbor too.
“What’s hurting us more than anything is the influx of outside builders to the area,” said Rick Courson, owner of Cedar Bay Homes and state director with Kitsap HBA. “Inventory is now 10 months and climbing, where in 2004-05 was two months.”
Courson said “almost everybody has stopped building.” The subprime loans situation has still impacted this area indirectly, he notes, because the bad news from three or four states “scared everybody psychologically.”
The good news is that the market may have bottomed out and it probably cannot get any worse. “It will start picking up — we’re already seeing it,” Courson said. “I don’t think we’ll see a boom and bust for a few years.” He too says this is the best time in the last 15 years to buy.
Elliot Gregg, president and CEO of Kitsap Credit Union, said while the subprime situation has been overdramatized, including at the government level, it will help bring the market back down to more realistic home prices. Not that long ago homes were appreciating at incredible speed, some even doubling in value in less than three years. Gregg said the 2005-07 appreciation “wasn’t real.” “It will settle back to a healthy appreciation rate,” he said. “We’re going to have to get over the thinking that our house will be worth 20 percent more next year… Some people will hurt but it will not be as huge in this region. It will be painful and there will be some foreclosures but the impact is overexaggerated.”
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