First Quarter Review 2020 & COVID-19
Discussion about the Bainbridge housing market and the economy in general in the first quarter of this year is almost meaningless due to COVID-19. It did not really impact the first quarter market much at all. The data you see here regarding housing activity will be quite different by the time we report on the second quarter in July. Additionally, the high-end market has remained very active. Our lack of inventory still creates many multiple offer situations in homes under $1M.
From this first-quarter review, you can see that the median sale price has gone up 4.3% year-over-year and the number of transactions went up 31% year-over-year. However, as I said before, a look at the first quarter means very little since our situation has changed drastically since then.
Graphs were created by Windermere using NWMLS and Trendgraphix data for area 170 but the information was not verified or published by NWMLS or Trendgraphix. Market Share Data reflects all types of properties sold calculated on May 6, 2020. Companies not shown represented less than 2% of buyers and sellers.
What We Anticipate in the Months Ahead
The national and state housing markets were in good shape before the virus hit. We anticipate that they will be in good shape again, once we come out on the other side of this. When the economy opens up again, we foresee a rapid climb in the housing market volume. This will put upward pressure on prices again.
Windermere’s Chief Economist, Matthew Gardner, discusses the economy and job growth in relation to the housing market.
The speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.
Since 1987, I have been marketing and selling properties in the Seattle and Bainbridge Island markets. I always strive to exceed my clients’ expectations so becoming a ten-year winner of the Five Star Real Estate Agent Award means a great deal. The Five Star Award recognizes outstanding professionals in the real estate world. These professionals have shown a dedication to customers and they provide professional excellence. Each year, Five Star Professional researches real estate professionals’ credentials to determine the winners. In particular, they focus on the highest degree of ethics, continuing education, and high skill level together with, and after, conducting extensive surveys of clients/customers and fellow industry leaders.
Last year, I was a 2019 Five Star Real Estate Agent Award recipient. I was fortunate enough to work with wonderful people through various real estate transactions. I’m also Director of Windermere’s Premier Properties™ program, which addresses the specific needs of luxury market clientele. So I have access to Windermere’s global resource network and enjoy showcasing beautiful W Collection properties.
If you’re interested in buying or selling on Bainbridge Island or in the Seattle area, send me a message. I’m also happy to set up a meeting to discuss your real estate goals.
Bainbridge’s Residential Market: 2019 in Review
I’m often asked about the current state of affairs in Bainbridge’s residential market…whether or not it’s a good time to list your home or buy a home. For perspective, it’s a good idea to take a look at what happened last year and what the projection, while not an absolute certainty, is for this year. Inventory is very low on the island, and there is a great deal of buyer demand. So yes, it’s absolutely a good time to list while there is little competition among sellers to get their home noticed. At the same time, it is a good time to buy with the record low mortgage rates versus high rental rates.
Graphs were created by Windermere using NWMLS and Trendgraphix data for area 170 but the information was not verified or published by NWMLS or Trendgraphix. Market Share Data reflects all types of properties sold calculated on January 10, 2020. Companies not shown represented less than 2% of buyers and sellers.
Our 2020 Real Estate Forecast
Wondering what to expect for our market this year? Worried about the talk of a recession and how it will impact your buying or selling potential? Windermere’s Chief Economist, Matthew Gardner, gives his data-driven take on it all.
Understanding Our Current Residential Market
The market continues to benefit from low mortgage rates. The average 10-year fixed rate is currently around 3.6% and it is unlikely to rise significantly anytime soon. Additionally, borrowing cost remains very competitive. However, buyers are not necessarily jumping at any home that comes on the market. They have become increasingly price-conscious and the slowing home price growth reflects this.
The speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.
As 2019 comes to a close, here’s a look at our local real estate market for Bainbridge Island, Washington. I also want to take a moment to mention the upcoming change to Real Estate Excise Tax (REET) for Washington state. If you’re thinking of selling property in 2020, it may impact you.
Bainbridge Island’s Current Market
This snapshot shows year-to-date residential market information as well as how our market has changed from 2018 to 2019. The 31% increase in median sales price is certainly noteworthy, as is the average sales price, which has gone up by 34.6%.
Real Estate Excise Tax Change in 2020
Washington state’s Real Estate Excise Tax (REET) is changing to a graduated system in 2020. Real Estate Excise Tax is a tax on the real estate sale and it is typically paid by the seller. Will this new system impact you if you decide to sell your property in 2020? Here’s Windermere’s Chief Economist, Matthew Gardner explaining what this change means and who exactly will be impacted.
The New Tiered System for REET
Currently, there’s a flat rate excise tax of 1.28% with municipalities adding their own tax on top of the state tax. In general, cities add 0.5% so the total becomes 1.78%. With the new legislation, the tiered system will look like this.
If you still have questions or want to discuss your options, let’s set up a time to talk. I’m happy to discuss this further and provide any assistance you may need.
Partnering with the Seahawks to Tackle Homelessness
We’re proud to be the Official Real Estate Company of the Seattle Seahawks and we’ve partnered with them for a 4th year to help address homelessness through our #TackleHomelessness Campaign. For every Seahawks defensive tackle during a home game, Windermere donates $100 to Mary’s Place, which provides shelter, resources, and meals to families on their journey out of homelessness. As of Oct. 21st, we’ve raised $113,100.
The Fall Real Estate Market Cool Down
- In the last 9 months, single-family homes have sold for an average of $1,019,444. That’s a 1.6% increase from the same time period in 2018, showing how our robust regional economy positively impacts prices.
- Local agents have sold 288 residential homes through Sept. and 116 of them were sold during the summer. The market did heat up, but when comparing this time period to last year, that’s a 10% drop in homes sold.
- The 3rd quarter absorption rate (the rate at which available homes are sold each month) was 42.1% for single-family homes, a 13.2% decrease when compared to last year’s 3rd quarter.
- As of Sept. 30th, there were 80 active listings. Compared to Sept. of 2018, that’s an 11% decrease. But the number of homes sold in Sept. went up by 3% year-over-year and the number of pending sales increased by 6.5%.
A Look at Condominium and Land Sales
In the condominium market, 78 units have been sold so far this year. When we compare that to 2018, it’s a 21% decrease in units sold. However, September’s average sold price was $629,000, which is a 23.3% increase year-over-year.
Regarding land sales, the average sold price in September was $241,000, a 56.2% drop from September of 2018. But 12 lots were sold during the 3rd quarter this year while only 3 lots were sold during that quarter last year. Land still tends to sell quickly if there aren’t any major issues.
Why a Local Realtor Makes a World of Difference
Sunny Skies For Our Summer Bainbridge Market
This summer, our Bainbridge market has really picked up in the last couple of months. Inventory is getting snatched up quickly and there are often still multiple offers, though that’s not as frequent as it was in the past.
- Local agents have sold 183 single-family homes so far this year.
- Of those, 133 were sold in the 2nd quarter, up 3.9% year-over-year.
- In the last 6 months, single-family homes have sold for an average of $1,017,667 up 2% year-over-year.
- June’s absorption rate (the rate at which available homes are sold each month) for all properties was 42.7%, down 26.7% year-over-year, indicating a change toward a balanced market.
- As of July 1st, there were 112 active listings. This is the most we’ve had in the past 5 years at this time. We also have the fewest pending sales (currently 48), so there’s more inventory and fewer sales. Let’s see if this trend continues with consistency toward a market shift.
Buyers are often more selective so understanding their expectations and Bainbridge’s current pricing is important. Many buyers are looking for homes that are in pristine condition. That’s why it benefits you to work with an experienced agent who can guide you through the process.
The Latest on Condominium and Land Sales
While the condominium market has softened, we’re still seeing significant sales with 50 units sold so far this year. June’s average sold price was $491,000. When it comes to land, if it isn’t encumbered by easement issues or similar challenges, then it tends to sell quickly. The average sold price for land in June was $247,000, which is a 51.5% decrease year-over-year. However, my colleagues and I are seeing more activity on vacant land; in June alone, 3 lots were sold and 11 went into pending status.
Moving Toward a Balanced Market
Windermere’s Chief Economist Matthew Gardner anticipates that we will begin to move toward a balanced market. In the past two decades, prices have either been skyrocketing or crashing. “Many [home buyers and home sellers] have never seen a normal market,” Gardner explains. “From a home seller’s perspective, they still have very heady expectations as to what their homes are worth…that needs to be tapered down a little bit. From the home buyer’s perspective, they’re seeing more choice now than they’ve seen in several years.” Despite what some media outlets say when analyzing shorter term averages, it is still a seller’s market and Gardner expects that “home price growth will continue but at a more modest pace.”
If you can dream it, we can find it.
Whether you’re thinking of buying or selling, I’m here to assist you. I can provide you with a wealth of information, from market trends and pricing to local schools and resources.
When you’re ready, I’m just a click or a call away.
2018 Year in Review
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.
2018 3rd Quarter in Review
Checking the Thermometer
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, the median price of homes sold 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 8.8% from the beginning of the year. Additionally, the Cumulative Days on Market dropped in the third quarter of this year compared to 2017 (44 in 2018 vs. 47 in 2017). Active and pending inventory numbers are where elements of the cooldown show. Inventory is down in total inventory and active (total minus pending sales), which is contrary to what people are hearing. Pending sales are weaker at 40 compared to 57 at the same time last year. Of all the numbers we examine, this 29.8% drop is what supports the slowdown assessment. However, when reviewing the data, we can conclude that the market is 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 unit sales are up from last year, with 64 sold versus 45 in 2017. The drop in the higher end appears attributable to a lack of supply rather than a softness in the market. Land is barely lagging behind 2017, with 24 sales year to date compared to 29 in 2017. Buying land with the intention of building is not for the faint of heart these days. Builders are busy while construction prices are still rising. New zoning rules have also added an element of uncertainty and expense.
Taking Everything into Consideration
Multiple offers are less common than last year, and prices have risen but not at the frenzied pace of last year. Our rental market has also calmed down. Our Kitsap County neighbors, Kingston and Poulsbo, are also performing well and benefiting from Seattle’s growth. Buyers do not seem to be concerned with rising interest rates (which, after all, are still quite low), which helps to boost confidence. As we enter the fourth quarter, there are many opportunities for both buyers and sellers. Sellers benefit from the lower inventory (less competition) and the typical slower pace of the end-of-the-year market brings buyers who are serious about making solid offers.
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 need to be accommodated. Presentation, realistic pricing and sound advice 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. I am here for you, wherever you are in your real estate journey.
2018 2nd Quarter In Review
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.
2018 1st Quarter in Review
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
We 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!