According to both residential and commercial sales associates and brokers, the demand is outstripping the supply and real estate is selling in less time than at any period in recent memory. The demand is also driving up prices to the point that young families as well as strong, qualified, credit-worthy buyers are being priced completely out of the market.

Every single local real estate professional we interviewed cited the lack of new construction and zoned, buildable lots as the main reasons the law of supply and demand is hammering the Kitsap market so brutally.

New listings fell five percent in July, totaling 550, down from 573 a year ago at the same time. The total number of homes on the market also dropped five percent from a year ago from 1,658 to 1,582. However, those 1,582 homes are the most available since last August.

At the same time, the median home price rose four percent, from $162,350 last July to $169,250 last month. Days on the market, a telling indicator of just how strong demand really is, is averaging 69 days, down 20 days from a year ago.

Meanwhile, sales have fallen 11 percent, from 1,437 at this point a year ago to 1,285 so far this year. Many Realtors attribute that to the lack of inventory, which has caused the average price to jump 15 percent, from $196,852 to $225,571. That has blown a lot of buyers — especially first time buyers — right out of the market because they can’t qualify for the higher prices.

“It’s been a very good summer. July was the best July we’ve had in three years,” said Mary Ellen Hooks, broker at All Points Properties in Bremerton. “What’s selling is affordable housing — $150,000 and under.”

But she was quick to qualify that remark with the comment, “Affordable is a very misleading term. Some people can’t afford that price range, and we have a lot of people in this county who to can’t afford to buy a house. It’s that simple.”

The median price last month in West Bremerton was $108,050 — lowest in all of the 19 regions of Kitsap County broken out by the Northwest Multiple Listing Service (NWMLS). It was $129,950 in East Bremerton.

Hooks was the first interviewed for this story and the first to say, “It’s all about supply and demand.”

She added, Prices are going up and up. Everyone in this office, and I’m sure in every other office, has a list of buyers they can’t find homes for.”

It’s the same story in Port Orchard, traditionally, the least expensive part of the county except for West Bremerton. According to Fred Depee of the Port Orchard office of John L. Scott, “This is probably one of the best markets this county has ever seen. Really, there is nothing that isn’t selling. If it isn’t selling, it isn’t priced right.”

Depee added that every indicator shows prices escalating rapidly. “Land is becoming scarcer and scarcer with the GMA tightening up all the buildable sites, and no new ones being created. It’s all about supply and demand. If the commissioners don’t free up some more buildable land, prices will escalate higher than we’re ever seen them,” he predicted.

Depee also noted that Pierce County now has lower loan limits than Kitsap, meaning Kitsap is surpassing Pierce County’s home prices for the first time in history. Depee observed that Kitsap is also quickly moving up on King County prices. “Low mortgage rates, combined with a war-based economy, are fueling a tremendous amount of activity.”

Frank Wilson, broker at the Silverdale Windermere office, who also does the Saturday morning “Realtor Radio” show on KITZ, echoed the lack of affordable housing and supply and demand themes.

“I would say what has hurt us the most this year is the lack of inventory,” he stated. “Average prices have gone up, but there’s a big difference between ‘affordable housing’ and what you can afford. Right now the average price is pushing $160,000 in Silverdale.”

He pointed out prices are rising rapidly with some neighborhoods selling at new highs, and that appraisals to support the selling prices are an issue. “Appraisers look at data from three and four months ago, while we’re dealing in a market that is today. In some neighborhoods, it’s getting to the point we worry the appraisals won’t come in even though we have willing buyers at those prices.”

It’s a similar story in North Kitsap according to Teri Hewson of John L. Scott’s Poulsbo office.

“The market is good,” Hewson said. “The area has seen a two percent increase in sales and there’s been some appreciation in value. Market time also seems to be down.”

Hewson commented that Poulsbo is also suffering from a lack of new construction — except at Woods and Meadows, which is one of the few rural subdivisions not completely built out — and that’s driving prices upward.

He added, “Another thing we’re hurting from is a complete lack of reasonably priced building lots. The law of supply and demand is in effect.”

Hewson also commented on the effect the county’s proposed, new, substantially higher impact fees will have. “If they’re implemented, it will hurt everyone. The builders can’t absorb that and it will just be passed on through to the consumer. I think that’s going to have a major impact on who is able to buy. Thank God interest rates are as low as they are. If things were more like normal, that would dramatically impact affordability.”

When asked about Poulsbo Place, which county officials point to as an example of “Smart Growth.” he answered, “It was hot, but has hit a price point that seems to have been met with some resistance.”

According to NWMLS figures, Poulsbo Place also has a higher than usual number of resale listings for such a new development. It may be an indicator people aren’t quite as enthralled with the “Smart Growth” lifestyle as they originally thought they might be.

In Kingston, Neil Swanson, owner of Coldwell Banker Kingston Cove Realty concurred with everyone else. “We’re busy,” he said. No doubt about it.”

When asked what’s selling, he answered, “Homes under $200,000 in neighborhoods are selling pretty good.”

Like everyone else, he referred to the law of supply and demand. “There are definitely not enough lots being created in Kingston. That’s impacted affordable housing. It’s just hard to find something people can afford.”

Then, in a very telling question, he wondered out loud, “What’s the definition of affordable housing anymore?”

It’s a slightly different story on Bainbridge Island according to Georg Syvertsen, owner of Deschamps Realty.

“Year to date through the middle of the month is slightly below last year, but it’s so close it could actually change in a few days,” he said. “The peculiar thing is the inventory is up. There’s 269 listings right now compared to 190 at this time last year. But sales are the same. You just have to be a little more realistic in your pricing. If things are priced right though, they’re moving.”

He also added, “Tax assessments are going up and some people have equated that with values going up, and that isn’t the case.”

Syvertsen also mentioned the law of supply and demand impacting the market. “It’s all tied to the supply of lots,” he said. “There aren’t many being created right now and that impacts prices. I’d hesitate to say prices are going up drastically, but we’re seeing modest increases.”

It seems to be the same story in the commercial market according to two local commercial brokers.

”The commercial market over the last two years has been exceptionally good,” said Tim Arnold, owner of Bradley Scott in Bremerton, the largest Kitsap-based commercial brokerage. “Low interest rates have driven part of it, but the economic growth in the county has supported that.”

He also seemed to reaffirm Depee’s comment about the war-based economy, saying, “The good thing about what we have here is steady growth in the primary job sector. PSNS expects to add 450 to 500 new primary jobs per year for the next several years.”

Arnold also noted the impact of supply and demand. “The problem is finding good product to market without the ability to create new apartments, warehouses and office space. Our inventory sheet has dropped to less than one page today.”

He lamented, “No new things were built for such a long time due to the Navy slowdown in the early 90s. There were a few multi-family projects, but other than senior housing and specialty housing, you still don’t have anyone building anything. So, as things turn around, you see the existing products go quickly.”

Arnold cited land use issues as one reason for the supply and demand situation and wondered out loud what impact the GMA will have over the next five years.

He also observed that the problem has forced some commercial real estate investors to take another route. “We’re seeing more 1031 exchanges in the last few years than we’ve seen in some time.”

In South Kitsap, Dick Brown of the Kitsap Commercial Group pretty much reaffirmed what Arnold had to say, adding, “In the south end, there are people looking for the right piece at the right price, mainly along Bethel Road. The problem is, the Bethel Corridor Plan so severely restricts what can be built, and how it has to look, that not much is going to happen there.”

Brown, an outspoken critic of county land use policies, also noted that political wrangling as far back as 1993 has hampered the Sedgwick and Sidney Roads intersection near Highway 16 from developing. ”We’ve lost some major retailers that were looking there — and the tax money they would generate for the county — to Gig Harbor,” he said.

He did say a small business park on south part of Bethel Road near where it crosses over Highway 16 was getting ready to develop, but criticized the amount of time it has taken for the zoning to be approved.

Brown makes absolutely no bones about blaming the county for the supply and demand situation the local real estate market is facing.

“There’s a misconception by government that’s there is plenty of commercial property available,” he stated. “The problem is, all these properties have some kind of issue, be it environmental, zoning or the fact they’re simply not for sale. There’s very little speculation going on because too many people have been burned by government changing the rules between the time they buy and they try to build. It’s like being in a baseball game where the rules are changed every inning and no one knows for sure what they are – including the umpire.”

Like Hewson, Brown was also critical of the county’s proposed new impact fee schedule. “If they try and add more impact fees into the marketplace on commercial, it will hurt things even more. We’re not on a level playing filed any longer. There’s too much regulation and it’s strangling growth.”

One thing is clear: The law of supply and demand is the law of the land — literally — in Kitsap County. And like a third world dictator who rules with an iron fist, there doesn’t appear to be a coup on the horizon.