December 2020 Housing Market Recap
Through the holiday season, we saw “insatiable buyer demand,” according to reports from Northwest Multiple Listing Service (NWMLS). Housing inventory is scarce as buyers try to outbid and outmaneuver each other.
In December, there were just 2 weeks of inventory — the lowest on record in many years. A common misperception is that the number of new listings has decreased. But in reality, we saw more homes for sale in 2020 than the year prior. But it’s just not enough to keep up with the increased buyer demand. Despite the pandemic, home prices increased by double digits in 2020, and experts predict we may see the same trends through at least the first half of 2021. Single family home sales prices increased about 13% in December, compared to last year (whereas condo sale prices have actually decreased).
COVID-19 has forced many people to spend more time at home, and reevaluate their needs. In addition to accommodating remote work and school, residents are spreading out from urban centers (like Seattle) and moving into more suburban communities like Kitsap County. So while the winter is normally slower for Kitsap County real estate, we’re still seeing intense buyer competition in the residential market. That means buyers are paying well over asking price, waiving inspections and financing contingencies, and making earnest money non-refundable to stay more competitive. Record low interest rates are attracting more and more renters, who find a fixed-rate mortgage to be more affordable than their ever-increasing rent.
The latest data shows pending sales are up by 34% over last year, while closed sales are relatively flat. Even well-priced luxury homes are selling quickly. A balanced market has 4-6 months of inventory; currently we have just 2 weeks of supply in Kitsap County. That’s what makes this an extreme sellers market for single family homes — we’re virtually sold old! Closing out the year, home values increased 11-15% overall in 2020.