Kitsap median home prices reach $600K even as inventory rises

The median residential home price in Kitsap County jumped from $550,000 to $600,000 in June, a record-high price for homebuyers who are increasingly finding it difficult to afford a home, according to data from Northwest Multiple Listing Service.

Meanwhile, median home prices in Washington state dropped slightly from $660,000 to $650,000.

Active listings rose from 288 listings in May to 606 listings in June, an inventory increase of 110%. The market has 1.28 months of housing inventory, compared with just 0.54 months in June of last year.

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But Frank Wilson, Kitsap regional manager at John L. Scott Real Estate, said that a typical housing market three years ago would have had between 1,300 and 1,500 active listings each month, rather than under 1,000. "We need to put it all in perspective," he said.

Wilson added that last year, he was seeing 80% of the homes selling the first week on the market. Now, he said he's seeing the market slow down, and only 25% to 30% of homes sell in the first week on the market.

The market is still a sellers' market, but these changes in inventory and the speed of sale mean buyers can be a little more relaxed when buying their home compared to 2021 or early 2022, Wilson said.

"They still can't wait — if they see a house, they need to take action on it — but at least it's not as much pressure," Wilson said.

Wilson attributes part of the jump in Kitsap home prices, in contrast to the rest of Washington state, to higher demand from buyers who've moved to Kitsap with jobs that went remote because of the pandemic.

"If you have the choice of working and living in a large, congested city, or working and living in a place with great views, with waterfront opportunities and with lower prices compared to other areas, certainly, the choice to me is pretty obvious," Wilson said. "Kitsap is a wonderful place to live. So I think that puts a target on us."

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In June, the Federal Reserve raised the benchmark interest rate by 0.75%, the most aggressive jump since 1994, to curb inflation the U.S. has not seen since 1981. Fed officials anticipate that another increase in interest rates would be approved in July, according to minutes at the Fed's June meeting.

The Fed's increase in key interest rates — or the federal funds rate — does not directly raise mortgage interest rates but instead determines the rate of interest when banks borrow money.  However, the two rates often move in the same direction: when the funds rate climbs, mortgage rates tend to as well.

Yet, the 30-year-fixed-rate mortgage dropped from 5.70% to 5.30% last week, the largest drop since December 2008, according to the mortgage-finance company Freddie Mac. However, these rates still remain much higher than the 2021 and 2020 mortgage rates of under 4%.

The jump in the funds rate may decrease the inflationary effect on home prices, Wilson said.

"It's going to cool the market a little bit and slow down the rate at which homes are going up in value, which will help affordability in the long run," Wilson said.

Wilson said he expects inventory to increase in the next few months, but that it might take many years for the housing market to reach an average inventory of 1,300 to 1,500 homes again. Certainly, he said, the inventory will not return to that level in the next two years.

Ultimately, Wilson summarized Kitsap's new housing market this way: "More houses on the market, longer market times, stabilizing home prices, fewer showings and open house visitors, fewer offers at one time, and more adjustments."

This article originally appeared on Kitsap Sun: Kitsap County median home prices reach $600,000; state prices drop