2017- 3rd Quarter in Review

Fall on Bainbridge

Leaves Fall…Market’s Rise

The Big Picture In order 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 the U.S. as a whole. 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 island buyers who are fed up – after multiple failed attempts to purchase in Seattle, where they may have competed against dozens of other eager bidders – 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 saw continued upward pressure on prices. 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. (The fact that we’ve begun to list sales that exceed $1.5 million as 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. In fact, we had a small decrease in the inventory from the third quarter of 2016 (when there were 98 homes on the market) to this year’s third quarter inventory of 92. These data points would suggest continued upward price movement, at least in the short term, that’s complementing a gradual increase in residential sales in recent months.

Brilliance on the Island!

Keeping Things in Check As is true in any transitioning market, we need to look at things from every angle. Even given all the positive signs summarized here, sellers should not assume that they can sell their homes in only a matter of days, in any condition and at whatever high price they set. This simply is not the case. Yes, we are still in a sellers’ market, as 2.4 months of limited inventory would suggest. However, realistic expectations are critical. While we do still experience multiple-offer scenarios, those have become less prevalent over the course of the year. Instead, we have experienced more price reductions as sellers were perhaps a little aggressive in their initial pricing. It’s important to remember that every house, every neighborhood and every transaction has its own distinct characteristics. A real estate professional is essential for navigating and getting the most from the latest market conditions.

Finishing Strong Traditionally, real estate activity tends to slow down in the fourth quarter. Already, this year has been quite different. In only the first few weeks of 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.

 

Posted on November 7, 2017 at 9:00 pm
Shannon Dierickx | Category: Bainbridge Island, Uncategorized | Tagged , , ,

2016 Year in Review: A Promising Start to the New Year!

Helping you find your piece of the Island Lifestyle!

Bainbridge Island is just a ferry ride away!

Familiar Themes With regard to the Bainbridge Island real estate market and its year-end numbers, the similarities between 2016 and 2015 are striking. In both years, the market struggled with a lack of inventory and strong demand, while the market trends (that actually began in 2013) continued to respond to this condition. What makes 2016 special is we surpassed most (if not all) of the records set in our last ascending market of 2004-2007. While it makes some people nervous to be in this rarefied air, with the uncertainty that can accompany it, we don’t foresee any specific event that will change our market trajectory in 2017 (with one possible exception, which we will discuss later).

Record-Setting Prices The median price of a home sold on Bainbridge has never been higher than in 2016. Even more impressive is the steady growth in the median since the valley floor we hit during the difficulties of 2011. In only five years, our median has grown from $493K to the current $740K – an increase of 150%. In that time, we officially drew even with and then surpassed the 2007 peak median of $680K. This is welcome news to all those sellers who have been hanging in there, whether they wanted to or not, waiting for prices to climb back up. Our upper end has been the last market segment to enjoy our market’s resurgence, and finally joined the party in 2016. Sales over $1M were up 32.4% from 2015 and up 88% from 2014. Not only did we set a new “highest price sold” of $5.97M but we
had five sales over $3M. Previously, the highest price for a home sold was $3.497 in 2007. Also for comparison, in the ten years between 2005 and 2015, there were only eight homes sold for more than $3M (an average of less than one, compared to the five sold in 2016).

Condos, Land and New Construction Our condominium market also experienced a resurgence. In 2008, there were only 42 condominium sales on the island; in 2016, we had 104 sales distributed over all price ranges – the largest number since 2007. The condominium valley floor was in 2012 with a median price of $297K. In 2016, by contrast, we raised that by 35%, reaching a median of $400,750. Although land sales were down last year (for reasons that are unclear, but we suspect a cyclical reaction from 2015’s exceptionally strong sales), new construction seems to be everywhere (especially in community centers). There is a plethora of multi-home projects underway across the island. Some are being developed by local owners, but we have also seen an influx of off-island larger development companies. New communities under construction: Ashbury – Off Wyatt – 18 residential homes (off-island developer); Landmark – Off Wing Point Way – 17 residential homes (off-island developer); Ferryview – Off Wing Point
Way – 11 condominiums (off-island developer); Roost – Off Baker Hill – residential, commercial and townhomes (island developer); Pleasant Beach Village – 14 view condominiums (island developer). There are also many multi-home projects in the planning/permitting stage (Weaver, Finch and Torvanger to name a few).

The Density Trend The development we’re seeing in places like Winslow and Rolling Bay addresses a sentiment we’ve been hearing from our clients for years: “We want to downsize and move into town.” As the higher end has become healthier, people have been able to achieve their goals of selling their larger homes (to enthusiastic new buyers!) and moving to smaller homes or condos in denser community centers. We anticipate Lynwood Center will also benefit from this trend as new homes come online (like The Roost and Pleasant Beach Village Townhomes and lots).

Moving Parts We’re keeping a close eye on interest rates, which are slated to go up again sometime soon. The concern is they rise to a point where they materially affect mortgage payments (and therefore home prices). Loan rates are still exceedingly affordable, so let’s hope they stay that way. Demand will probably not be a concern for 2017, and supply will still most likely lag demand. We have new projects coming on-line now and throughout the year, but we still see some clients waiting to sell their homes (adding to inventory woes) be-cause there aren’t yet enough choices on the market to justify the risk of having nothing to move to once they sell. The new projects will help, especially because they provide what current potential sellers have been asking for, but we see overall demand still exceeding supply. As much as last year? That may depend on Washington DC …

The Crystal Ball Will 2017 go down the same growth-oriented path as 2015 and 2016? Will the change in federal leader-ship have a negative impact on our market? Obviously, we can’t predict unforeseen events, but the economic outlook for our region is very positive. Professional and business services jobs are predicted to grow 3% in the Seattle Metro area next year. Computer and mathematical jobs up 3.5%. All that growth without any new transportation infrastructure only makes Bainbridge look increasingly appealing. People continue to look beyond King County, and many are excited to discover the beauty and quality of life found on Bainbridge Island.

 

Posted on January 19, 2017 at 7:57 pm
Shannon Dierickx | Category: Bainbridge Island | Tagged , , , , , ,