Housing markets all over the world are slowing after over two years of fast-rising house prices. Some of the most popular neighborhoods in Kitsap County saw appreciation in the range of 20-30% from mid-2020 through mid-2022. This increase in prices was driven primarily due to out-of-state home buyers looking to relocate to the area for the incredible quality of life we experience here, but also by lack of inventory.

Due to the rise in lumber prices and supply chain issues, home builders simply haven’t been able to build new homes fast enough to meet demand. All the hungry buyers, including those who would normally look for a new construction home, then looked to buy an existing home.

With all those hungry buyers fighting for limited inventory, the best properties received offers that were tens of thousands of dollars over the listing price. For a while there, buyers often felt like they had to be willing to throw their life savings and their firstborn child at a seller just to get their offer accepted.

Of course, everyone who decided to stay put in Kitsap County felt pretty good about all their new equity. At least, they were until their property taxes increased.

What’s Going On?

Now, mortgage rates are on the rise (more than doubling in the last few months from 3% to 7%) in an effort to curb inflation, and now a lot of people refinancing or getting a mortgage for the first time are getting sticker shock.

The numbers for October 2022 show that the median home price in Kitsap County is around $535,000. A mortgage on a home of that value at 7% over 30 years compared to the same mortgage at 3% is around $1,300 more a month for the same home. That means anyone buying now compared to even just 9 months ago needs to have the means and be prepared to pay that additional cost.

Needless to say, the interest rate hikes are doing what they were designed to do; knock people out of the market and make them think twice about spending and borrowing money.

What Buyers & Sellers Should Know

I want to talk in real terms about the opportunities available in this market. We’ve touched on the doom and gloom (you can certainly find that in plenty of other places), so let’s discuss what buyers looking to move to the area and sellers looking to move out should know.

Buyers

The good news for buyers is you’re starting to get options. For a long time, home builders and sellers weren’t doing anything, forcing anyone looking to buy in the area to compete for the handful of properties available. There were no buyer incentives, no concessions, and often sellers were sitting on offers for a few days to see if they could get a few more to compete.

I believe we’re seeing a return to the 2019 market, when–while it was still a seller’s market–buyers had more choices. You could take your time to view homes and put in a considered offer, rather than throwing everything you have at every home within 24 hours of it coming onto the market.

Home builders are also starting to offer more incentives to get people through the door. They’ve gone from just trying to keep up with demand to having inventory to market and sell. My inbox is full of new home sale reps letting me know about their inventory and the thousands of dollars they have to throw at clients if they buy a home in their community.

If you’re interested in buying a new construction home, you not only get more choices, but home builders are offering long-term locks on interest rates. This is a good way to lock in some certainty for the future.

The takeaway? The balance of power between buyers and sellers is starting to return to equilibrium.

The only buyers who may lose out by buying now are those who only stay in a home for a year. Now may not be the right time to flip a home; it may be best to rent for a year to see what happens View Website. But provided you plan to stay in your home for 3 years or more, you’re not going to come out of your purchase worse off than you went into it.

Sellers

Sellers don’t need to worry either – sure, you’re not going to get 15 offers within the first day of it going on the market, but you can still expect your home to do well. Most homes are still selling at or near the list price within a few weeks. That may not sound like a win, but in today’s uncertain market, it is.

You also don’t need to worry that the rising interest rates will deter all buyers. What’s happening is buyers don’t have to throw their life savings at a property to offer $50,000 over the asking price, so they’ll have a little more money to play with when it comes to affording the increase in interest rates.

The truth is, the market I believe we’re moving into (at least here in Kitsap County) is simply a “normal” market. Of course, compared to the way the market has been over the past few years, “normal” is so different it’s causing sellers and agents to start freaking out.

So… When’s the Housing Market Going to Crash?

Now to address the question I’ve been getting all the time recently – when is the housing market going to crash?

Here’s the thing – the housing market is fundamentally different from what it was in 2008 because most people are actually sitting on a ton of equity in their homes and banks haven’t been giving away mortgages to anyone who asked for one. I remember people getting 120% mortgages back then, which put you in negative equity when you closed on your home.

The banks weren’t just tempting people into debt they couldn’t afford by handing away too much, they were also offering adjustable rate mortgages that offered home buyers 1-2% when they applied but later ballooned to 7-8%, making their mortgage virtually (and sometimes literally) unaffordable.

In short, the banks didn’t do their due diligence when lending people money – often people were encouraged to lie about their income because the lenders wouldn’t go the extra step to verify their income.

It simply has not been like that over the past few years. While house prices have rocketed, you still had to have the money behind you to afford the down payment and the mortgage. Buyers had (and still have) to have good credit. There will always be someone who loses out due to a change in circumstances, but the market won’t crash.

Don’t Worry

The news will scare you into thinking that rising inflation rates will make homeownership completely unaffordable for you, or that it’s a bad time to buy because homes are no longer going up in value the way they were in 2021.

But it’s important to remember that the housing market is a lot like any other financial market – it goes up and down, and in an area like Kitsap County, you’re putting your money into an asset. Kitsap house prices are still rising, despite the uncertainty. If you can afford a mortgage at a higher rate, you can afford to buy.

If you want to settle down in Kitsap County, try not to worry about interest rates, provided they are affordable. I always say, “love the home, date the rate.” In other words, you can and will refinance your mortgage in the future.

Need Advice? I’m Here to Help

I’ve been talking to a lot of buyers and sellers recently who are uncertain about what they should do next, and don’t want to make mistakes. I’m not just here to help you sell or buy a house, I can help you talk through your options so you make the right decision for you and your family when moving in or out of Kitsap County and the surrounding area.

If you’re thinking of buying or selling anywhere in Western Washington, give me a call, shoot me a text, or send me an email – I’d love to hear from you and I’ll have your back as you move to, in, or away from Western Washington.