In September, the greater Gig Harbor area witnessed a slight decline in single-family home prices, slipping by 0.9 percent to an average of $827,492. This dip comes as a result of worsening housing affordability, marking one of the lowest months in this century. Despite the decrease, competition for well-priced homes remains fierce, thanks to historically low inventory levels.
Luxury Homes Facing the Squeeze
The rising mortgage rates have reverberated across the real estate market, hitting the Gig Harbor luxury home segment particularly hard. As homebuyers’ budgets become more constrained, luxury homes are spending more time on the market. This shift creates opportunities for highly qualified buyers to explore their options and negotiate.
Shift in Luxury Home Inventory
A year ago, luxury single-family homes priced at $1.5 million or higher represented 20.5 percent of available inventory in Gig Harbor. Today, they account for over a third of the total housing stock. These high-end homes remained on the market for a median of 27 days in September, a longer duration than any other price bracket. The increase in luxury home inventory has pushed the supply to 6.2 months, officially designating it as a buyer’s market, while other price brackets remain seller-driven or neutral.
Expanding Opportunities for Luxury Buyers
The influx of luxury homes into the market shows no sign of slowing, with 25.9 percent of all new listings in September falling into this category. Despite the potential opportunities for luxury buyers, homes priced below $1 million, especially those in the $400,000 to $700,000 range, continue to face limited supply. Such homes swiftly exit the market, with just 13 available in September and a median market presence of only seven days. A closer look at the pipeline of new listings in this price range reveals that this trend is likely to persist.
New Construction: A Diminishing Trend
The landscape for new construction homes is undergoing significant change, with a dramatic reduction in available inventory between the Purdy and Narrows bridges, including Fox Island. The number of new construction homes on the market has decreased dramatically in the past year, with only 11 available at the end of September. This marks a decline of 65.6 percent year-over-year and the lowest number of new construction homes on the market since mid-2013.
Many buyers were drawn to new construction in the previous year due to financial incentives provided by major homebuilders, effectively reducing interest rates. With fewer new construction options, homebuyers should explore alternative ways to lower their interest rates. These methods include seller-paid rate buy-downs or even taking over assumable loans, if eligible. These alternatives can potentially offer even better deals than those previously provided by prominent home builders.