Fourth Quarter Review and 2021 Market Forecast

Our local real estate market here on Bainbridge Island finished 2020 strong. You’ll find key stats below, providing a comprehensive overview, and a 2021 market forecast from Windermere Real Estate’s Chief Economist, Matthew Gardner.

Bainbridge Island’s Strong Seller’s Market

Inventory remains low while demand is high, so we still have a strong seller’s market. Buyers: you should know that although the market is in a seasonal slowdown, it is not as slow as expected. There are still many buyers looking to move away from big cities like Seattle yet still remain in close proximity. I have seen an increase in situations where some buyers are outbid either by price or an all-cash offer. In 2020’s fourth quarter, Bainbridge Island’s average sale price was up 12.9% year-over-year at $1.315M.

2021 Market Forecast

In his last Monday with Matthew video of 2020, Chief Economist, Matthew Gardner, shared his 2021 market forecast. He expects mortgage rates will not rise significantly on a local level. He also doesn’t think they will vary much throughout different regions across the U.S. Since mortgage rates are tied to 10-year treasury maturity rates/yields, he doesn’t think rates will rise significantly until the entire market recovers from the slowdown caused by COVID-19. Additionally, Gardner expects home sales will grow, from 5.55% in 2020 to 5.93% in 2021.

“No! There isn’t a housing bubble forming. But price growth will slow & sellers may feel like it’s a collapse … it isn’t collapsing, it’s just normalizing.”

With the shuffling to new homes, and the huge wave of first-time buyers that Gardner says will “continue to be a major player in the housing market,” many are making moves. But buying during the pandemic will slowly settle. People will probably stay in their homes longer, especially homeowners who decided to refinance. The lack of inventory may price out many buyers who want to purchase in our area.

Western Washington’s Market Report

For a look at how our local market compares, here are highlights from The Western Washington Gardner Report.WESTERN WASHINGTON HOME SALES

Total Sales: 26.6% increase from Q4/2019, but 8.3% lower than Q3/2020
Homes for Sale: 37.3% lower than Q4/2019, and 31.2% lower than Q3/2020
Pending Sales: up 25% from Q4/2019, but 31% lower than Q3/2020

WESTERN WASHINGTON HOME PRICES

Average: $617,475 (up 17.4% from Q4/2019)
Mortgage rates will stay competitive as the market continues to charge toward a price ceiling and potential affordability issues.

DAYS ON MARKET, WESTERN WASHINGTON

Average: 31 Days (16 days less than Q4 just one year ago)
In Kitsap County, average days on market: 17

Conclusion

Gardner says, “I am moving the needle even further in favor of sellers.” The resulting limited supply has “caused the region’s housing market to be incredibly active.” There may be “affordability concerns” that could prevent some homebuyers from entering the market and eventually slowing growth. Many will continue to work from home in 2021, which will keep demand high and drive sales growth.

If you have any questions about our local real estate market, feel free to contact me.