Let’s put it on the table right away: Our real estate market did not perform at the same level in 2018 as it did in 2017. That does not mean we had an unsuccessful market in 2018; nor does it mean we should brace for a difficult market in 2019. We need a bit of perspective.
Taken in the context of historical numbers, it appears 2017 was an “outlier,” especially between July and December. There was a frenzied demand throughout 2017, reflective of our metropolitan neighbor across the Sound. On Bainbridge, we had a peak during the second half of 2017, which flowed into the early months of 2018. But then the frenzy cooled, as it did in Seattle, and we moved toward a slower pace in the second half of the year. (There were 314 homes and condos sold on Bainbridge between July and December 2017, surpassing the previous high of 290 during that same period in 2015). When viewed historically, 2018 appears to be much closer to “normal” than 2017 was. And, when taken in the context of the larger local and national economies, our real estate market held up very well.
Considering All the Factors
When we look at real estate appreciation, 2018 was very successful. The median price for homes and condominiums rose almost 8% in 2018 and the second half of 2018 saw appreciation of almost 5% over the second half of 2017. These are healthy numbers and consistent with a healthy market. Using general statistics only gives us an idea of the movement of the market, and not necessarily of any individual home. But it does give sellers an inkling of the direction of their homes’ values. The rule of thumb says that a home needs to be owned for at least five years to really benefit from a market’s movement. Comparing the median home price sold at the end of 2013 ($527,000) with the same price at the end of 2018 ($908,500), we have seen a 72.4% increase. So if you had purchased a home in 2013 and were to put it on the market today – assuming it was properly presented and marketed – you would probably realize a healthy return on your 2013 investment.
When we look at the bigger economic picture, we do not see financial institutions collapsing or other deep recession signals, so we ascribe the market’s change to a shift to a more normal market. Sellers are now competing for buyers, while buyers are more discerning and disciplined in their approach. Pricing, presentation and negotiation – all areas where good agents bring value to the table – are critical for sellers to achieve the best net value from their homes and condominiums.
The condominium market experienced an even more dramatic drop-off in the second half of the year. At the end of the first half, 2018’s condo sales surpassed 2017’s but by the end of the year had fallen behind in total numbers (126 sold in 2017, 109 in 2018). However, when we look more closely, the area of steepest decline was in the $800K-$1M price range (24 sales in 2017 and 10 sales in 2018). This could have as much to do with inventory as market shift. Two new on-island projects, The Roost and Residences at Pleasant Beach, both sold briskly in the second half of 2017 and were completely sold out by the first half of 2018. No other new projects came to the market in 2018, so it appears supply might have as much to do with the drop as demand. As with homes, the median price of condos had a healthy increase of 8.6% over 2017. The prognosis for the Bainbridge condominium market is very positive. There are two buyer types who are especially drawn to condos: people needing more affordable residences and “downsizers.” In 2018, 42% of the condos sold (46 sales) were priced less than $500K compared to 17 homes sold for less than $500K. At the upper end of this segment of the market, the downsizers were the driving force in the over $800K sales and quality inventory was lacking in the second half of 2018.
Land sales in 2018 were also down compared to 2017 (31 in 2018 versus 41 in 2017), but the median price increased a whopping 60% ($400K in 2018 versus $250K in 2017!), although 58% of the sales were less than the median $400K. One has to be careful not to read too much into statistics when applied to such a small population, but it certainly indicates land values are healthy.
A Forward Focus
As we kick off 2019, we know it will be an interesting year. There is a lot of uncertainty out there and it is difficult to predict how it will affect our market. Still, the regional economic picture is healthy with a positive outlook. The bottom line: the Bainbridge Island real estate market is alive and well.
Checking the Thermometer
No, Chicken Little, the sky is not falling. It has just shifted from clouds skittering past to a more mellow and peaceful sky. Every day, we hear news about the cooling real estate market but it’s important to consider all the factors that go into those reports. Yes, our market has chilled slightly from its previously overheated state (although we never reached the same sizzle as the Seattle market) and has settled into what might be described as a strong normal market. The business section also contains reports of ongoing job growth in the Seattle area, especially in the well-paid tech industries. Concurrently, when Seattle’s transportation woes and other urban issues are taken into consideration, the demand for Bainbridge homes, especially for families, will likely continue for the foreseeable future.
Crunching the Numbers
On the whole, most indexes show data that support a steady market in the coming months. If we isolate the third quarter and look at sales, the number of homes sold only dropped 4.4% from 2017 (137 in 2017 and 131 in 2018). In that same period of time, the median price of homes sold actually went up from $875K to $912K – a 4.2% increase. If we compare the median price of homes sold during the third quarter, they are up a whopping 8.8% from the beginning of the year! Additionally, the Cumulative Days on Market (the average time it takes to sell a home) dropped in the third quarter of this year compared to 2017 (44 in 2018 vs. 47 in 2017). The inventory and pending numbers are where elements of the cooldown show themselves. Inventory is actually down in both total inventory and active (total less pending sales), which is contrary to what people are hearing. Pending sales (homes under contract) are weaker at 40 compared to 57 at the same time last year. Of all the numbers we examine, this 29.8% drop is the one that most directly supports the slowdown assessment. That being said, when we look at all the data at once, we can conclude that the market is pretty darn healthy and strong. Maybe not as feverish as last year, but it’s still a great time to be selling or buying on Bainbridge Island.
Condominiums and Land
The condominium market has softened compared to 2017, with 73 units sold compared to last year’s 89. There seem to be two parts to the condo market: the affordable (less than $500K) and the higher end, which usually includes a good view. The affordable is actually up from last year, with 64 sold versus 45 in 2017. The drop in this segment’s higher end appears attributable to a lack of supply rather than a softness in the market. Land is also lagging a bit behind 2017. We’ve had 24 sales so far this year compared to 29 in 2017. Buying land with the intention of building is not for the faint of heart these days. Good builders are busy and in short supply and construction prices are still rising. The new zoning rules have also added an element of uncertainty.
Taking Everything into Consideration
It is true that we’re not seeing as many multiple offers as we did last year. Prices have risen but not at the frenzied pace of last year (over 18% from the beginning of 2017 to the end of the 2018 third quarter!). Our rental market has also calmed down. Business in our Kitsap County neighbors, Kingston and Poulsbo, is also feeling healthy and strong and they are also benefiting from Seattle’s growth. Buyers do not seem to be particularly concerned with rising interest rates (which, after all, are still quite low), which helps boost their confidence. As we enter the fourth quarter, there are many opportunities for both buyers and sellers. Sellers benefit from the lower inventory (which means less competition) and the typically slower pace of the end-of-the-year market makes sellers view serious buyers with more attention because there simply aren’t as many buyers shopping this time of year.
Whenever the market shifts, it’s wise to ensure your strategies have adapted to it. As we tilt toward normalcy, there will be more competition for buyers that sellers need to accommodate. Presentation, realistic pricing and sound advice when offers do arrive are as important as ever. Skillful real estate brokers prove their value in helping both buyers and sellers match their approaches to the existing market. Your Windermere team is here for you, wherever you are in your real estate journey.
All in all, life and real estate are good on the island we call home. We wish you health and happiness as we head into the holiday season.
Bainbridge Island Single Family Homes | Sold January 1 through September 30
A WARM REAL ESTATE CLIMATE
Summer has come to Bainbridge, and with it our traditional celebratory activities. We had an energetic Third of July street dance, a festive Fourth of July parade, and a successful Rotary Auction that grossed more than $600,000.
When we move our attention to local real estate statistics, everything appears to be equally sunny. Our median price is up 12.5%, home sales over $1,000,000 are up almost 28%, and condominium sales are up 36%! Still, if you talk to the experienced agents, they are detecting a shift. Let’s explore all the reasons why.
BUYERS BEHIND THE WHEEL
We talk all the time about buyers’ markets and sellers’ markets. But it’s really the buyers who drive any market. Even in an ascending sellers’ market, buyers (or lack of) create the excess demand over supply.
Bainbridge is blessed with a sophisticated and knowledgeable buyer pool. They are well educated and disciplined. These days, they’re also beginning to be more cautious. Maybe that’s due to world economics, a possible interest rate hike, or a general assumption that we’ve been on this run for more than a couple of years and we must be close to the top. You might ask, then, why are our statistics are so positive? There are several factors at work; signs that the market is not as heated as last year and is stabilizing. Here are a few specifics:
- Inventory, something we’ve lacked for a while, is creeping up.
- More price reductions and fewer multiple offers, with more buyers saying, “Let’s just wait and see what happens.”
- The number of homes under contract is down 17.3% from last year and hasn’t bounced back in the first part of July.
THE BIGGER PICTURE
We are hearing of a cooling in other markets, both to the east and the west. This is not a cause for great concern, as our market is dynamic, and this sort of shift requires adjustments in strategy rather than extreme actions. Knowledgeable advice will help both buyers and sellers negotiate the changes and still achieve realistic goals.
Speaking of the vitality of the market, statistical charts show vivid changes. In the first half of 2012, 48 homes sold in the 0-$400K price range. By 2014, that number was halved to 24 and has plunged all the way to 4 this year. These homes didn’t disappear; they just moved up into another price range. Right now, there is only one home for sale for less than $400,000 on Bainbridge. In 2014, 78 homes sold for less than $600K, while this year that number is only 19. Here is what’s happening at the other end of the pricing spectrum: In 2014, only 31 homes sold in the $800K-$1.5M range and this year there were 101 sales in the same price range. So as our market stabilizes, we must acknowledge that it has appreciated dramatically.
A BUSY CONDO SEGMENT
With 62 sales in the first half of this year, you’d have to go back to 2007 to find a more active January-June period. The median was up 13.6% to $468K; matching the all-time median condominium price set in 2007. The condominium market has lagged the single-family residence market in price recovery from the peaks set in 2007, but the market has shown steady strength in the past year and a half. The condominium market benefits by offering residence on Bainbridge for less than most homes. It’s also shown an active upper end as people have downsized; which has been driven by success in the upper end of the house market. This success has happened despite low inventory.
The median price of land sales for the first six months also finally matched this segment’s 2007 peak. In 2007, the median was $406K and in 2018 it was $400K. As with condominiums, it has been a long road back to our previous highs, but they have arrived. The volume of 22 sales exceeded 2007’s 18 sales in the first six months but fell shy of 2015’s peak of 33 sales through June.
A POSITIVE TILT
All in all, we are giving our first six months of 2018 a very high grade. We detect some stabilization and cooling off in the home market, but Windermere is prepared to employ our strategies to guide both buyers and sellers toward their goals – regardless of shifts taking place.
Bainbridge Island Single Family Homes | Sold January 1 through June 30
I usually recommend staging to my sellers. Most of us do not live in our homes the way we present them on the market. To be honest, we are creating an illusion of peace and calm – the way we all wish we lived! My husband and I sold a home on Bainbridge when our two sons were still young and active – that translates to messy! Sports gear and legos everywhere. We made a pact with our sons that they could keep selected toys in organized bins in their rooms, and the rest would be packed up for the new house to open; like presents! We made their beds, and they slept in sleeping bags on the floor of their room so we could just roll up the sleeping bags and easily store in their (freshly organized) closets. They loved it – like camping!
A home is a big investment and buyers are often paying over $400 a foot for a home on Bainbridge Island. Let them see the space. Let them visualize their own furniture in a room. Depersonalize enough to let them in, but don’t make it sterile. Staging is critical. I can help you find the balance.
Lose the clutter
Visualize walking into your home from your front door with a fresh eye. Are there shoe bins, backpacks, large furniture pieces? Do they need to be there? How does it feel to walk from room to room; does it flow easily? What if someone has a walker or a cane? Remove the large furniture that blocks the flow from room to room. It is ok to have the garage a bit overstuffed if the house is clear and inviting.
Return rooms to their original function
You use your dining room as a billiard room or a TV room. However, buyers generally seek an actual dining room. Dig out that dining set that has been languishing in the garage for the last five years. A fresh coat of paint or seasonal color pillows will make it look great! Give each room a purpose. Buyers can see themselves in your home if they understand the use of each space. While they may use it differently after they move in, draw them in with an inviting space.
Maximize room size
You love your living/family room because it works for you. But perhaps removing one of the two sofas and one of the three recliners will let the room look as large as it actually is. Reduce the number of TV’s you have in your home, especially if they are very large. Think of removing unnecessary drapes or window covering. Staging and lighting reveal the room’s best qualities.
Clean the house
Professional cleaners are worth the money. They see things you don’t. (Buyers will!) Maybe your master bath is slightly dated and not “on trend.” Buyers will know they can live with your sparkly clean bathroom until they are ready to renovate. Invest in new bedding, towels and pillows to complete the fresh look. Stage your master bedroom and bath to feel a bit spa like, as if you were treated to a stay in a nice hotel.
Organize the cupboards, drawers and closets.
If buyers are serious about your home, they will look everywhere. If clothes and shoes are disorganized, your massive master closet will appear to be too small. Pack up your out of season clothes that you will not need while your home is on the market and put the boxes in the garage. Find a way to take everything off the floor of your closet. Inexpensive shoe racks work wonders. If plastic containers and lids are falling out of the kitchen cabinets when the doors are opened, it screams “Not enough storage!”
Weighing The Cost vs. The Benefit of Staging
Staging requires an investment – usually of time more than money. It is worth it because it almost always leads to a quick sale at your target price. I work with clients every day to look at rearranging the furniture they have, adding a few pops of seasonal color and depersonalizing a bit. I also work with professional stagers who do wonders with a vacant home. All buyers begin their home search on line – usually in their PJ’s. A bare room will not photograph well and will not give a sense of space. Will their queen bed fit in this home? Who can tell from a photo of an empty room? I love this part of Real Estate. Let me help you with it!
Easy Landscaping Ideas
Landscaping is the first thing buyers see when they consider purchasing your home. It extends either an invitation or a warning. If the outside of your home is neat and well maintained, it is safe to assume that the inside of the house will reflect that same care. Conversely if the outside is unkempt, buyers will assume that maintenance of the house has been neglected. Take any or all of these five measures to spruce up for that crucial first impression.
Trim, Groom and Rake
In the Northwest we love our rhododendrons, but they should not be blocking the windows. Trim all shrubbery and trees and rake out old leaves from the visible base of all hedges and plants.
We get an abundance of unwelcome moss over the winter. I recommend a good pressure wash over all hard landscape surfaces.
Use an edger to define plant beds, lawn and sidewalks. A good edging will give buyers a clear path to the front door. It’s better than a welcome mat.
Pop the Color
Place seasonal annuals in the front for interest and a bit of whimsy. Place potted plants for visual interest near the front door. Nothing says “come in!” like a friendly display of impatiens.
Use brown mulch under all the plants to cover dirt. This is quick, simple and cleans up the look of your front yard dramatically.
We get a lot of rain in the Northwest. Since you are already sprucing things up, add some fertilizer so essential nutrients are replenished and not washed away. This will ensure a fresh and healthy look for your landscaping, as well as the promise of a bright future.
Outdoor “rooms” can be so appealing. Gather a few chairs with comfortable, colorful cushions and place them around a fire pit. Don’t have a fire pit? They start around $50, and you will probably get some use out of it yourself before the “SOLD” sign goes up.
Don’t sweat the details, but don’t skip them either. Survey your property with an objective eye, and get help if needed. Your realtor can assist you with landscaping recommendations that will save or even make you money in the long run.
THE SPRING BOARD
Things We Know Are True
In the real estate business, we know never to count our proverbial chickens. Offers aren’t made until directed by a client, offers aren’t successful until they are accepted, inspections aren’t completed until everyone is satisfied, and we never take a transaction closing for granted. Every step forward is a cause for celebration. We view the market in the same way, especially after 2008. When we say that the first quarter of 2018 had many similar challenges as the first quarters of the past few years, we mean that there was strong demand, some supply, affordable interest rates, and a solid outlook.
This is particularly true of inventory, which experienced new lows. At the beginning of April, there were only 40 available (active) single family home listings on the island. This includes all prices, pre-sale homes (which haven’t even been finished yet), and your typical cadre of homes that are woefully overpriced or in a condition or location the typical buyers shy away from. (Bainbridge is different from Seattle, where these types of things tend not to deter buyers.) Nevertheless, 66 homes sold in the first quarter, which surpassed our sales from the past two years! Those additional sales also confuse the lower inventory numbers because homes were essentially selling faster (some might call it “velocity” or “higher turn”) so there would have been more homes left on the market if we sold homes at last year’s rate. (The average cumulative days on market fell from 85 in 2017 to 70 this year – a 17.6% drop!) Combined with a 20% increase in both average and median prices (for the first time, our average price for a quarter is over $1 million), you would have to conclude that our market is very strong. Granted, buyers are paying more with fewer choices, but we are still seeing buyers looking west from Seattle and finding a far saner market with much better values. This surge is not limited to single family. Condominium sales matched last year (technically, up by one) with the median price growing 12%, from $515K to $575K. Land sales, unimpressive last year, burst out of the blocks in 2018 with a 50% increase in lots sold and a 100% increase in median price ($217,500 to $435,000)!
The Supply Chain
e know that demand is strong this year, but what about supply? The construction behind Harbor Square (between Cave and Ferncliff) called Bainbridge Landing will consist of about 107 rentals and 25 residential condominiums. The DR Horton project on Sunrise and Torvanger (11 homes) is about 50% complete. Quadrant is building 19 homes on Weaver (the model is under construction). The Reserve at Winslow on Finch Road features 12 homes, Madison Grove off Duane Lane includes 8 homes, and Madison Landing will feature 24 condominiums. The Roost has begun their second phase of live-work structures and The Residences at Pleasant Beach is going in for permit on their second tier of 12 homes.
These projects are being built within the geographic boundaries of our current comprehensive plan, which has pushed density into specific neighborhoods on the island, leaving a majority of our landmass with its much lower density zoning.
Beyond these projects, it becomes a bit muddy with the city’s moratorium and impending changes to design rules. It is still unclear what the result of the moratorium and new restrictions will be, but it appears building will be more difficult and expensive; likely having an impact on the affordability of housing on Bainbridge.
How about our neighbors to the west and north? The North Kitsap market (Hansville to Poulsbo) is also active and fast-moving. There, 167 homes sold in the first quarter, with an average of 46 days on market, and at a selling pace 34% faster than ours! Since 2015, the median price (currently $385K) has risen 23%, almost 17% of which was this year over last. Things are popping across the Agate Pass Bridge!
The Value of Local Knowledge
If the first quarter is an indicator of the rest of the year, it appears we are in for an active year in Bainbridge Island real estate. To keep things moving in the right direction, our local experienced real estate agents bring a lot to the table. In an environment when buyers need to make decisions on sometimes short pressurized timeframes, a good agent will have sellers’ listings prepared in a fashion where the potential buyers feel more comfortable stretching their budgets. When representing buyers, it’s as much about preparing them to be able to act as it is about advising on locations, limits and putting things in the proper perspective. This guidance to both sides may sound “simple” but often makes many thousands of dollars’ worth of difference in transactions (to say nothing of the peace of mind it provides all parties).
Overall, the outlook good – occasionally stressful, but good. We need to celebrate this current strength and not take it for granted. While we do, we’ll enjoy the beautiful flowers and the sun’s warmth as temperatures and optimism rise together!
Bainbridge Island Single Family Homes | Sold January 1 through March 31
CELEBRATING THE NEW YEAR
As we welcome a new year, let’s explore some dynamics that played out while we marched through the 2017 calendar. Our market saw a decline in the total number of residential sales for each year between 2013 and the start of 2017. Despite healthy buyer demand, the lack of inventory caused buyers to become wary of over-paying. Buyers weren’t confident that they wouldn’t get caught in another correction. As the new year progressed, we saw a shift in buyer confidence and people were willing to spend more to get what they wanted. The result was an 18% increase in the number of homes sold last year. There were 435 residential home sales in 2017; the first time we’ve seen more than 430 sold on the island in any year since 2005’s record 442 sales. (The low was 187 in 2008.)
Even with an uptick in sales, we are not experiencing the same craziness as our Seattle neighbors. Our average cumulative days on market was 52, more than double Seattle Metro’s 20-day average. Our average price increased by a healthy, but not record-breaking, 10.7%, compared to Seattle’s 17%. (The record was set at 26.74% in 1990, followed by 21.5% in 2005.) There were many homes that experienced substantial price reductions and others that failed to sell at the sellers’ desired numbers. But when homes were properly priced and presented, buyers were willing to act – even if it meant spending more than they originally anticipated. This willingness can only come from a place of confidence of good value and a sound investment. We were assisted by strong buyers from Seattle and California, a rising stock market, smooth financing and appraising with rates that have remained “comfortable,” even with a rising prime rate.
A prime beneficiary of this strong market were luxury homes. There was a 44.6% increase in sales of homes over a million dollars and sales doubled for homes over $1.5M (133 total with 52 over $1.5M). Home sales increased 49% in the $800-$1M range. On the flip side, affordable homes were scarce, and sales of homes priced less than $600K decreased 34.7% from last year. This overall shift in the market pushed our median price up more than the average (>13%) and our condominium market was affected by these market forces as well. This certainly illustrates our trend away from affordability; which Bainbridge struggled with in the early- to mid-2000s until the 2007-2011 correction.
The condominium market benefited from these improved conditions in a couple of ways. The number of sales grew more than 21% (from 104 in 2016 to 126 in 2017) and the median price jumped 31% (from $400,750 to $525,000). Though sharply higher, the median price of $525K was substantially below the 2016 single home median of $838,000. Consequently, we saw more individuals and families coming to the condominium market. Condo sales were also helped by the strong upper-end residential market.
Many residents have been waiting on the sidelines for their homes to get to a price point where they felt comfortable selling and downsizing to smaller, more manageable and easy care, i.e. condominiums. Complexes such as The Grow Community, Residences at Pleasant Beach and the Roost all experienced strong sales last year as they completed with condominiums for market share.
Many condominium buyers stress the desire to be closer to Winslow for the walkability, an interest in a complex that offers a sense of community, grandparents following their adult children to the great Northwest, and those who want the easy lifestyle and affordability of condominium living. Fortunately, we have had some good choices for our buyers this past year and experienced a total of 126 condominium sales in 2017. The only sector of our market that struggled last year was raw land. This category was hampered by a lack of choices, financing difficulties, hurdles with building permits, and escalating construction costs.
It is hard to find any economist predicting a substantial slowdown in our area’s economy or real estate in the near term; not to say that there aren’t clouds. The new federal tax law is not beneficial to a higher-end market like ours; financing interest and property tax deductions now have limitations. The prime interest rate will undoubtedly rise and even though mortgage rates have been incredibly low, rates will probably go up but stay below 4.5%. In the midst of all this activity, one thing remains constant; Bainbridge Island is desirable and a great place to live.
Values are high, and our inventory is at an all-time low. If you are considering selling your home this year, now is the time to get started so you are not competing with the typical spring rush.
Bainbridge Island Single Family Homes | Sold 2017
Leaves Fall as the Bainbridge Island Real Estate Market Rises
The Big Picture
To paint an accurate portrait of the Bainbridge Island real estate market during this autumn season, it’s important to put it in the context of the broader regional economy. Through that lens, things are looking very good. Estimates for September 2016 through September 2017 indicate an employment increase of 76,100 in Washington. According to the U.S. Bureau of Labor Statistics, the private sector added 61,400 jobs while the public sector gained an estimated 14,700 jobs over the year. Windermere Chief Economist Matthew Gardner backs that up in his Third Quarter Report, writing, “I maintain my belief that the Washington State economy will continue to outperform that of the U.S. Given such a strong expansion, we should also expect solid income growth across Western Washington.”
The Seattle job market continues to be a huge draw for people moving here from across the country and around the world. As the number of residents in the Puget Sound area rises, Bainbridge Island has been and continues to be a viable and attractive residential option. The desirable amenities are obvious: from the rural feel to the vibrant community to the relative ease of a 35-minute commute by ferry versus an hour and a half by vehicle in the Seattle Metro area – just to name a few.
Another factor that affects our market is Buyer fatigue. We’re seeing an increase in Bainbridge Island buyers who are fed up after multiple failed attempts to purchase in Seattle, where real estate market is extremely competitive, and choosing to look in our direction for alternatives. This very real and frequent market dynamic contributes to the health of our local market.
A Positive Price Report
The third quarter of 2017 saw continued upward pressure on prices. As the chart on page two shows, we saw near double-digit price gains in terms of average and median sales prices over the same period last year. This resulted in a dramatic increase in sales activity in the high-end market with a 34% increase in sales between $1 to $1.5 million and a whopping 85% increase in sales over $1.5 million. Having to list sales that exceed $1.5 million in a separate category is solid evidence of our changing market.
Our price growth has been consistent over the last several years. The strong population and employment numbers mentioned above help to move the market, but low inventory continues to limit Buyers’ choices. A nominal but consistent decrease from the third quarter of 2016 inventory of 98 homes on the market to the 2017 third quarter inventory of 92, suggests a continued upward price movement is inevitable.
Keeping Things in Check
In a transitioning market, we need to look at data from every angle. Given the positive signs summarized here, Sellers should not assume that they can sell their homes in a matter of days, without regard to condition and elevated prices. This is clearly a Sellers’ market, as 2.4 months of limited inventory would suggest but realistic expectations are critical. While there are multiple-offer scenarios, those have become less prevalent over the course of the year. Instead, we have experienced more price reductions as aggressively high pricing will not draw Buyers or even, perhaps, pass appraisals. It’s important to remember that every house, every neighborhood and every transaction has its own distinct characteristics. A Realtor is essential for navigating the latest market conditions and getting the highest and best price for your home.
Traditionally, real estate activity tends to slow down in the fourth quarter, but this year has been quite different. In October, our office has nearly doubled the number of sales compared to this time last year. Open house activity has been robust, indicating an energized pool of Buyers just waiting for that perfect home to come along. If these trends continue, we could be in for a very exciting close to an already strong year. Here’s to a healthy and hearty season in all corners of our wonderful Island community.
Bainbridge Island Single Family Homes | Sold January 1 through September 30
MID-WAY THROUGH A GOOD YEAR
A Bustling Springtime
Even though the first quarter of 2017 didn’t start that slowly, it sure felt like it did. But the second quarter was a different story. We were flat-out busy between April and June. There were 141 home sales on Bainbridge during Q2, which was a 31.8% increase over last year and a 306.5% increase over 2009 (for those of you who remember those days). The only second quarter to get even close in the past decade was 2013, when 125 homes sold.
The Mechanics of Price
Still, a curious piece of data accompanies all those sales: the median price of homes sold in the first half of 2017 increased only 3.6% over the comparable period last year. That is the slowest growth of prices since 2012-2013 (when it actually went down). Here’s why this is significant: even though there is healthy demand, buyers are showing restraint and patience. The basics of presentation, pricing and negotiating (which good agents bring to the table) still prevail. You cannot just take a house in any condition, throw a price at it and expect success. This is one of the factors that differentiate Bainbridge from the Seattle market. The flip side is that a major source of new buyers on Bainbridge are frustrated Seattle buyers who are tired of dealing with the city’s growth and market conditions. Our office was involved in 96 Bainbridge transactions during the first six months of this year, 30 of which (or 31.3%) involved Seattle and Eastside buyers. When we expand the circle, we see that out-of-state and Seattle buyers accounted for 51% of our transaction in the first six months.
Our condominium marketplace has had a booming first half of the year. Sales climbed from 38 in 2016 to 50 in 2017 (almost a 32% increase!) and the median price rose from $404,500 to $499,250 (up 23.4%), finally surpassing 2007’s previous record of $468,000. It took a decade for these numbers to return, and we’re happy to welcome them back.
Land is now the only remaining soft spot in our market. Sales were down 39% from last year but median prices rose 14%. We attribute this mostly to no new large parcel sales and the possibility that people are intimidated by the new construction process. The planning and designing phases of any new project are exciting, but then come permitting, the search for contractors and all the costs. With quite a bit of new construction coming on line, people seem to be waiting to see what someone else has built.
A Construction Zone
There is quite a bit of new construction on Bainbridge, which means the development topic is getting a lot of attention among locals. Bainbridge Island is such a great place to live that the pressure to grow comes naturally. History tells us that restricting growth will push up prices and eventually affect the market’s diversity. However, growth is a concern to existing residents who fear it will spoil what makes the community desirable in the first place. So the community stance has been to try to limit development to specific pockets of the island as a way of preserving rural character in general. When we map the major new construction projects, we see that this goal has largely been met:
- Winslow: The Grow Community, Wyatt Way (D.R. Horton), Weaver, Bainbridge Landing, Finch, Freestone Landmark (Wing Point), Freestone Ferryview (Wing Point)
- Lynwood Center: The Roost, Pleasant Beach
- Rolling Bay: Sunrise Square
These projects are all within designated growth areas. Indeed, the only multi-home development out of the growth centers is the 10-home project going in at Torvanger/Sunrise Drive, and that’s being built on a 12-acre parcel.
How long will this pressurized market last? Anyone who experienced the 2007 market, which was also quite active just before it changed dramatically, is reluctant to make long-term predictions. However, there are some key differences between 2017 and 2007. Today, the lending and banking environments are far healthier. Also, job growth is the primary fuel of real estate growth. And our local economy is far stronger now than then. Windermere Chief Economist Matthew Gardner had this to say about regional job growth in his Q1 2017 report:
Washington State continues to add jobs at a steady rate. (We) continue to see unemployment fall and I anticipate that we will see this rate drop further as we move through the year. In all, the economy continues to perform at or above average levels and 2017 will be another growth year.
Ever the Rock
Yes we have growth and new construction, but there is diversity in the construction (family homes, homes ideal for downsizers, and homes close to services). When you drive around the island, you find most of it untouched by new developments. We also have the best parks, hikes, beaches, bays and communities in Puget Sound. Our region’s star is still rising as a great place to live and work and we are one of the premier neighborhoods in it. Growth pressure will continue; it’s up to all of us to work together to address it in ways that honor the past, present and future of this great place.
5 Lessons Home Renovations Can Teach You About Yourself
I could spend ages talking about everything there is to learn from remodeling your house: the best types of tile for a shower floor, little details that you shouldn’t overlook when remodeling, tips and tricks for finishing a project on time — you name it.
But a remodeling project, being a rather noteworthy life experience, can also teach you a lot about yourself. No, I’m not talking about your tastes or preferences (for example, you learn that you love the color blue on your walls or you learn that you really just don’t like remodeling). Rather, it can teach you about some characteristics you never knew you possessed, or at least never had the opportunity to focus on — the good and the bad. Here are some things you might learn about yourself.
Jane Lockhart Interior Design, original photo on Houzz
You’re more impatient than you thought
Remodeling will — I repeat, will — test your patience. It doesn’t matter whether you’re a dedicated yogi who can sit and meditate for hours at a time or a hobbyist who works late into the night tirelessly assembling detailed ships in bottles. Weather delays, unforeseen problems (wait, there’s mold behind that wall?), busy trade schedules — it’s almost impossible to have a remodeling project without a delay or two. And when it’s your project with the delays, you might just find yourself repeating the mantra of kids stuck in the family car during a road trip, “Are we there yet?” Or more specifically, “Are we done yet?”
Transitional Sunroom, original photo on Houzz
Bathroom remodels and kitchen remodels are notorious for, well, making bathrooms and kitchens unusable while they’re under construction. At the beginning this might seem like a major inconvenience (truth be told, it is!), but by the end you might be thinking “Who really needs a full kitchen?” After all, there are so many small appliances loved by college students and remodeling survivors alike — toaster ovens, microwaves, slow cookers, camping stoves.
Bathroom remodels can be easy to work around if you have another bath that isn’t under renovation, or a next door neighbor who is fairly generous, or membership in a gym with clean showers. Remember, creativity and adaptability are your friends. So embrace your inner MacGyver.
AMW Design Studio, original photo on Houzz
You want in on the action
It starts small: At first, you’re just chatting with your contractor about the status of your project — normal stuff. But as time goes on, you can’t help but ask questions about the more technical side of things. Some people might find details about tile installation eye-rollingly boring, but you’re intrigued.
Suddenly, you find yourself searching for home improvement how-to books and classes on design. You may even start planning your second project (which you’re considering doing yourself) or looking for houses you think you’d like to flip. Watching your own home transform before your very eyes has been an exciting process, no doubt, and now you’re ready to try your hand at it. Don’t be surprised if at first you just want the process to be over, only to find that you never want it to end.
Deville Custom Homes, original photo on Houzz
Your relationships can (probably) weather any storm
If the space you’re remodeling is a place that you share with someone else (whether it be your spouse, children or others), it’s likely that you’ll feel a little more stress than if you were just remodeling your own personal space.
Every stress that you feel about the remodel, they probably feel as well. Every worry you have about budgets and schedules and paint colors, they have too. Pour all that stress into a small group of people who live together, and, well … things can get messy.
But when you finally see the light at the end of the tunnel, you realize that all that pressure was worth it, because you and your people have a beautiful new space to use for years to come. It probably took some compromise and communication to get there, but now that you’ve finally made it, you know you’re that much stronger because of it.
Or not. I don’t want to be a Debbie Downer, but what you might discover about yourself is that you can’t collaborate with the person you’re with. Remodeling is like a stress-test on relationships — for good or ill.
Tiffany McKenzie Interior Design, original photo on Houzz
I’ll tell you this much: It takes a lot of inner strength to not freak out when you see someone you’ve never met come through your front door with a hammer. Remodeling can make some people stronger. Once you see your home demolished before your very eyes by strangers wielding tools and driving heavy construction equipment, your definition of “scary” changes a little.
Obviously, this isn’t an all-encompassing list, nor is it supposed to mean that you will find yourself relating to every point. You may or may not feel the urge to become an amateur remodeler. You might (understandably) still get freaked out at a stranger coming into your home with a hammer. Remodeling is a personal journey, full of personal discoveries and accomplishments and all that good stuff. The only way for you to truly know how it will affect you is for you to experience it yourself. But whatever happens, you will learn more about yourself than you have in a long time.
By Hannah Kasper, Houzz