“Sold” signs continue to be a common sight in all parts of Kitsap County

“Awesome! It’s just incredible,” exclaimed an excited Jessica Kennedy, broker of the Windermere office in downtown Bremerton, when asked about the market there.

But is that really the state of the local real estate market as we head into the summer of 2003? According to local real estate professionals all across the county, Kennedy is right on the money. Because of the record low interest rates, things are selling briskly. But just as it has been for the past several years, inventory — or a shortage of it driven by the lack of new construction — continues to be the number one concern.

There is still a marked lack of new construction countywide, with lots in critically short supply. The lot shortage invokes the law of supply and demand, putting severe upward price pressure on the existing home market because it makes up the majority of what inventory there is available.

Although homes seem to be being listed at about the same pace as they are selling, the lack of new construction has had a negative impact on affordability – especially at the low end of the market where most young first-time buyers are. The heavy demand — especially in Bremerton and South Kitsap, which have traditionally been the most affordable areas, has priced many of them right out of the market.

Interest rates have also caused another problem for local real estate professionals — getting paperwork from lenders, title companies, and appraisers back in time to close transactions. There is so much refinancing going on, that some lenders claim they are working with three-to-one ratios of refinances to sales, and even with much quicker electronic processing, are still falling behind the amount of new business being generated.

The redevelopment of downtown Bremerton has sent prices there skyrocketing as speculation, mostly in older properties investors are turning into rentals, seems to running rampant according to some sources. This too has contributed to the lack of affordable homes for first time buyers.

“We’re still in a multiple offer situation with many of the properties on the market,” Kennedy said. “Our business is up 35 percent from last year in terms of the number of ‘sides’ we’re doing.”

 When asked about speculation in Bremerton, Kennedy answered, “We do have some investors buying multiple units for rentals, but single family residences, which are the majority of our business, are being helped mainly by the low interest rates. And, don’t forget, there is still affordable housing in Bremerton — particularly when compared to the other side of the water.”

 She added, “The other thing that I think is contributing to this market is that the values of properties are rising rapidly.”

 It’s the same story in South Kitsap. “Everything is selling right now. The recent drop in rates just popped it wide open again. In my mind, one of the true momentum builders is the optimism I’m seeing from the public,” noted Fred Depee, an agent with the Port Orchard office of John L. Scott. “It perpetuates itself. Low end sales perpetuate the next pricing level and right up the ladder.”

Depee, who also works heavily in land sales, stressed the fact that the critical shortage of lots for new construction has had a negative impact on prices. “It’s become evident in everyday talk with everyday people around the county that this is a major problem — the availability to live on acreage in the country is disappearing very quickly — unless you have a lot of money.”

When asked about the market, Linda Rowe, broker at RE/Max Town and Country in Port Orchard answered quickly, “Anything under $160,000 is selling immediately. But it’s taking about two to three weeks to get an appraiser out and that’s slowing things down somewhat.”

She added, “Over $200,000 the marketing time is a little bit longer — at least 90 days.”

Rowe did say that there’s a lot of activity and showings on waterfront properties, but she’s not seeing much in the way of actual written offers.

Jacqui Curtiss, broker at the Port Orchard office of John L. Scott, said simply, “The market has been up substantially. Every month we significantly beat our sales for the same month a year ago — and last year was a good year.”

When asked what’s moving, she answered, “I don’t see any real soft spots in the market. The $180,000 to $220,000 market is red hot. I’d say anything under $130,000 is too, but that’s very hard to find. Basically, if a home comes on the market that looks good and is priced well, it goes immediately.”

“Business is brisk, but we don’t have enough listings,” declared Frank Wilson, broker of Windermere Real Estate in Silverdale. “We’d have many more sales, if we had more inventory because there are buyers out there that want to buy, but can’t.”

When asked what’s selling, he stated, “It’s all across the board. Even waterfront is selling briskly. If it’s priced right, it sells, which is different than the Seattle market, which has some pretty stagnant price points right now.”

Wilson added, “We’re also seeing more agents coming into the business because the perception is that the market is good.”

Denise Payne, an associate broker with Silverdale Realty, echoed Wilson. “It’s been very active. With today’s interest rates, things are moving quickly,” She said. “Both the upper end of the market as well as the lower end. It’s oddly, both a buyer and seller’s market. Buyers are finding what they want while sellers are getting what they need as well.”

Payne said she personally wasn’t finding inventory to be a big problem, as homes seemed to be coming on the market at about the same rate as they are selling. She added, “If it’s reasonably priced for both the area and the home, there’s lots of buyers out there.”

In Poulsbo it was the same story. “We’re really busy,” said an enthusiastic Brenda Prowse of Brenda Prowse Properties. “I have never been this busy in 23 years. We’re going to do about 130 transactions between three of us this year.”

When asked what’s selling, Prowse answered, “In North Kitsap, it’s houses priced under $320,000 and in good condition.” She added, “Our biggest problem right now is getting things closed. Everyone is so busy it’s hard for the lenders to get loan docs out on time, appraisers are backed up, title people are behind – I actually feel sorry for them.”

With that being the situation, she also stressed the need for buyers and sellers to have backup plans when it comes to actually moving in or out because getting things closed on time is very difficult right now.

“It’s hotter than a two-dollar pistol in a Saturday night gunfight,” chuckled Joe Sullivan an associate broker at RE/Max Platinum Services in Poulsbo. “If people are thinking about doing anything, now is the time. From my perspective, things are sold before I can even get them advertised. There’s lots of multiple offers. Of course it’s all being driven by interest rates. But I’m running out of listings and I’m not the only one with that problem.”

Sullivan added that in his opinion, a lot of investors are getting out of the stock market and into real estate. “I’m reselling homes I sold to people two years ago who are making a serious profit on them.” Sullivan too commented on the problem of getting paperwork on time from lenders, appraisers, and title companies.

On Bainbridge Island, the upper end market seems to be strong. According to both Georg Syvertsen of Deschamps Real Estate and Barb McKenzie of Coldwell Banker McKenzie and Associates.

Syvertsen commented, “Across the board, for us, the total number of sales this year verses last year is up about 50 percent, and the upper end – over a million - is going strong. Island-wide, there have been about six closings over a million so far this year.”

A trend Syvertsen spotted is the investment advantage real estate provides in today’s money market. “We’re seeing more and more people using larger down payments, and a lot of them are just paying cash. By putting more down, it’s like gaining five and a half or six percent interest on your money compared to what you can get elsewhere right now.”

McKenzie noted, “I would have to say pretty much all price ranges are coming on very strong. Land on the island is also picking up after a long time. The Condominium market is finally picking up again as well,” she added.

She also confirmed Syvertsen’s comments about the higher end of the Bainbridge market. “The upper end, whether it be waterfront or the slowest price range is all moving well. But it’s the $500,000 to $700,000 market that is still seemingly kind of quiet. Above that, things seem to be moving well.”

McKenzie also commented that there seems to be a movement on the island towards condominium living.

“There are several new condominium communities coming on the market and they are already showing strong advance reservations. There seems to be a lot of movement with empty nesters downsizing into condos, looking for a low maintenance lifestyle, so they can travel and not have to worry. There also seems to be a trend towards in town living which makes condos attractive as well.”

Meanwhile, over in Kingston, Sonny Woodward of John L. Scott stated, “Up here in the Kingston area it’s steady, but I wouldn’t say it’s red hot. Thanks to low interest rates people seem to be pretty confident.”

Woodward, who has been active in the land use debate, echoed Depee’s concerns about South Kitsap by commenting, “In this area, we’re still at the risk of the Urban Growth Boundary being too small, so we’re dealing primarily with resale homes. Since there isn’t any real amount of new construction, it’s put lots of price pressure on existing homes.”

He added, “I’m worried that all we’re selling is resale. That makes me nervous because new construction always tempers the prices. Meanwhile, we’re selling starter homes in Gamblewood for $165,000. That means young families don’t have any choice but to rent or look at a small condo.”

The story countywide seems to be the same. The only difference is the prices; depending on which area of the county you’re talking about. The lack of new construction, driven by the shortage of buildable lots, is the main concern for Realtors and builders.

There is some hope on the horizon, as the county Planning Commission gears up to work on the five-year update to the comprehensive plan as mandated by the state’s Growth management Act. A major public hearing on the plan is scheduled for June 3 at the Fairgrounds, with others to follow.

The difference between the outcome of this update and the last one is a process tied directly to politics. When the previous plan, which dictated the critical lot shortage situation the county now finds itself in, was submitted to the state, there were three decidedly no-growth county commissioners presiding. Since then, a pro-business majority has been elected to the commission. How will that change the outcome? Time will tell.