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HOME PRICES CONTINUE TO RISE IN JANUARY AS SUPPLY REMAINS TIGHT.
FEDERAL RESERVE RAISES INTEREST RATES
According to the S&P Case-Shiller Home Price Index, home prices in the Seattle Metropolitan Index (which includes Pierce County) rose 0.6% in January. This represented the highest increase in any of the cities in Case Shiller’s 20-city Index except San Diego where prices were up 0.8%. For the twelve months January 2016 to January 2017 prices rose 11.3% in the region. A reminder: Case Shiller reports prices with a two month lag.
Home Prices on upward trend
David Blitzer, Chairman of the Index Committee reported: “Home Prices continue on a generally upward trend. The recent action by the Federal Reserve raising the target for the Fed Funds rate by a quarter percentage point is expected to add less than a quarter percentage point to mortgage rates in the near future. Given the market’s and the economy’s current strength, the small increase in interest rates isn’t expected to dampen home buying. If we see three or four additional increases this year, rising mortgage rates could become a concern.”
Inventory
“While prices have varied month-to-month and across the country, the national price trend has been positive since the first quarter of 2012. In February, the inventory of homes in the market represented 3.7 months of sales, lower than the long-term average of six months. Tight supplies and rising prices may be deterring some people from trading up to a larger home, further aggravating supplies because fewer people are selling their homes. The prices also hurt affordability as higher prices and mortgage rates shrink the number of households that can afford to buy at current prices levels. At some point, this process will force prices to level off or decline—however we don’t appear to be there yet.”
Gig Harbor Area
In the Gig Harbor/Key Peninsula/Fox Island market, the 115 home sales this March was a 28% increase over the 90 sales in March of 2016. There are currently 263 active listings of homes for sale in Gig Harbor, representing only a 2.6 month’s supply, based on current sales volume. See where you home fits on the attached Market Absorption Report.
