Windermere Real Estate/BI, Inc.
Christmas in the Country is one of those events I call “So Bainbridge.” It is a Bainbridge tradition. This year is the 23rd year. For three days local artists and craftspeople put their talents on display and for sale at cool locations throughout the island. You can shop for the holidays in a very un-modern environment, like old barns and studios. Much more fun than Black Friday or Cyber Monday. At the various location there are also festive things like hot food, cocoa and cider, live music, pony rides and of course, Santa photos. Find out more about the events and activities here. And all of this all starts today, December 2nd! Click here for a full vendor list and their locations.
My Christmas tree is NOT up. Not even close. Is yours? Thanksgiving is officially over and the winter holiday season is underway. I am NEVER ready. But, ready or not, this weekend and next islanders will be out in force hunting down Christmas trees. Next week there are snowflakes in the forecast, so this weekend might be ideal. Brrr. If you don’t believe me, read Cliff Mass’ Weather Blog.
If you’d like to make a day of it and go out and cut your own tree, you will find the map below helpful. You could combine breakfast at the Port Gamble General Store with tree hunting. Stay warm! And remember, trees always look smaller in nature. Measure twice, cut once.
The American people have spoken and they have elected Donald J. Trump as the 45th president of the United States. Change was clearly demanded, and change is what we will have.
The election was a shock for many, especially on the West Coast where we have not been overly affected by the long-term loss in US manufacturing or stagnant wage growth of the past decade. But the votes are in and a new era is ahead of us. So, what does this mean for the housing market?
First and foremost I would say that we should all take a deep breath. In a similar fashion to the UK’s “Brexit”, there will be a “whiplash” effect, as was seen in overnight trading across the globe. However, at least in the US, equity markets have calmed as they start to take a closer look at what a Trump presidency will mean.
On a macro level, I would start by stating that political rhetoric and hyperbole do not necessarily translate into policy. That is the most important message that I want to get across. I consider it highly unlikely that many of the statements regarding trade protectionism will actually go into effect. It will be very important for President Trump to tone down his platform on renegotiating trade agreements and imposing tariffs on China. I also deem it highly unlikely that a 1,000-mile wall will actually get built.
It is crucial that some of the more inflammatory statements that President-Elect Trump has made be toned down or markets will react negatively. However, what is of greater concern to me is that neither candidate really approached questions regarding housing with any granularity. There was little-to-no-discussion regarding housing finance reform, so I will be watching this topic very closely over the coming months.
As far as the housing market is concerned, it is really too early to make any definitive comment. That said, Trump ran on a platform of deregulation and this could actually bode well for real estate. It might allow banks the freedom to lend more, which in turn, could further energize the market as more buyers may qualify for home loans.
Concerns over rising interest rates may also be overstated. As history tells us, during times of uncertainty we tend to put more money into bonds. If this holds true, then we may see a longer-than-expected period of below-average rates. Today’s uptick in bond yields is likely just temporary.
Proposed infrastructure spending could boost employment and wages, which again, would be a positive for housing markets. Furthermore, easing land use regulations has the potential to begin addressing the problem of housing affordability across many of our nation’s housing markets – specifically on the West Coast.
Economies do not like uncertainty. In the near-term we may see a temporary lull in the US economy, as well as the housing market, as we analyze what a Trump presidency really means. But at the present time, I do not see any substantive cause for panic in the housing sector.
We are a resilient nation, and as long as we continue to have checks-and balances, I have confidence that we will endure any period of uncertainty and come out stronger.
Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has over 25 years of professional experience both in the U.S. and U.K.
It’s election season, which means we hear assertions from candidates that sometimes warrant a bit of fact-checking. The same rules apply to real estate. At Windermere Bainbridge, we’ve heard a lot of mis-perceptions and embellishments about the state of our local market. “The bubble is bursting!” “Prices are being slashed!” “Prices are going up!” “Our market has peaked!” “Our market has gone crazy!” We’ve heard all this and more. So we’re here to set the record straight. Think of us as your real estate fact checkers. The fact is we are in the midst of a very healthy (not crazy) market that is moving in a manner we have been predicting for some time. Let’s explore the specifics.
ASSERTION: “Sales are down compared to last year and we are moving downward!”
FACTS: We have said for some time that the lack of inventory was holding our sales in check. When we started the 2016 business year (on January 4th to be exact), there were 53 houses available on all of Bainbridge Island. The first quarter ended with only 47 homes available. This lack of choices crippled sales and reflected a 21% drop from first quarter 2015 sales. But this lack of inventory also helped push prices up, bringing more sellers into the market. Consequently, our inventory began to grow, which meant sales did too. By the end of the second quarter, inventory had grown to 92 homes. (Still low compared to Q2 2008 when we had 291 homes available, or to 2012 when the recovery had set in and we had 189 homes available.) Our year-to-date sales number also dropped from 21% down to 15% by the end of the second quarter. Now, with the third quarter wrapped up, our available inventory is 98 homes (compared to 77 last year at this time) and the number of third-quarter sales rose by almost 5%. Hardly a sign of a decreasing market.
ASSERTION: “Prices are being slashed!”
FACTS: It’s true we are experiencing price reductions. This is a normal phenomenon created by sellers being unrealistically optimistic and buyers being informed and disciplined. The demographics of our marketplace bring more experienced buyers than many other markets. They are informed, know the risks of overpaying, seek professional advice and are careful. It’s like the old expression, “It’s the seller’s job to ask and the buyer’s job to say no.” Here also, sellers who seek (and listen to) competent professional advice in pricing will often experience less disappointment, along with a quicker and often more profitable experience. (There are reams of data showing that properly priced homes net more than overpriced homes that adjust downward.) Prices are still rising. The median price is up 17% from last year. The median price of homes sold during the third quarter this year was $765K, compared to $648K last year. This strength is reflected in the shift of sales in specific price ranges. There were 47 sales below $600K in the third quarter last year, but only 35 this year. Conversely, sales over $600K grew from 61 in 2015 to 78 this year! This indicates a shift upward in the prices of all homes. Hardly a sign of falling prices.
ASSERTION: “Prospects for new inventory are stagnant!”
FACTS: Developers from all over the nation are eagerly investing in our market, which is also a signal of strength. Two new home projects are currently being marketed in Wing Point and a project by DR Horton is under construction on Wyatt Way. The “Roost,” Grow Village Phase 3 and another DR Horton project at Torvanger/Sunrise are coming out of the ground. The long anticipated project at Pleasant Beach Village will start next month and another neighborhood at Weaver and Finch are in the planning/design phase. These projects will continue to bolster inventory and provide our healthy buyer pool even more choices. Hardly a sign of stagnation.
ASSERTION: “The condo segment is too limited to grow!”
FACTS: Our condominium market is experiencing similar strong activity. At the end of the third quarter last year there were 5 active condominium listings; this year there were 26 available. Last year, 25 condos sold during the third quarter; this year 42. And prices are up over 8%. As home prices continue to rise, condos provide attractive alternatives. Pleasant Beach and Grow Phase 3 are both great examples of single family home alternatives in areas where services and amenities are concentrated. They are both examples of our comprehensive plan to enable growth while maintaining our rural feel. Hardly a sign of a weak market segment.
We are very happy with our current conditions and don’t see anything on the horizon that would likely disrupt the trend in the near future. Crystal balls are dangerous (we certainly learned that in 2007/2008) but our region shows every indication of continued strength. Seattle is strong and more and more people are trying to escape from the challenges of its growth. Kitsap is also strong, with sales up and growing. Barring some big surprise, we see strength continuing at least through next year. The Bainbridge real estate market is looking good, and that’s a fact!
A couple of weeks ago, on a classic, sunny August day, before their September 1st demolition deadline, clients of mine watched from a small boat as their home traveled on a large barge from Lake Washington, through the Ballard Locks, to its new home here on the west side of Bainbridge Island. Yes, when you really, really want a low bank waterfront home and you can’t find one, well, you can just move one. That’s what my clients did anyway. It is indeed easier said than done, but, they are not alone in this house moving business. Living on an island means barging a home is actually feasible here. In the almost ten years I have been here, I have seen three homes barged to or around the island. It is quite the engineering feat. One I was pretty thrilled to witness up close.
But, let me know back up. My clients had looked for a home in earnest for well over a year. Finally, a low bank waterfront piece of land near Battle Point Park with Olympic Mountain Views and western exposure became the place they wanted to raise their family. But, the lot had no viable home and the land price for the low bank waterfront lot alone did not make building a new custom home feasible for them. They had already become familiar with Nickel Bros, the go to home barger in the PacificNorthwest, and while we were in escrow on the lot, this nicely sized Craftsman home came up on the Nickel Bros website for sale. My clients liked the idea of living in an older home and really liked the “recycled” home concept. If a home is not purchased from Nickel Bros, it is demolished. My clients felt this home was too special and had too much character to be demolished. They soon secured it and we spent the next six months purchasing the land (a septic easement had to be created and a well drilled). My clients then spent the next the summer months doing their site plan and getting the foundation ready for the home.
If you are not familiar with the barging process, know that homes that get moved are purchased for $1 and then the cost comes in the barging and moving of the home itself. I have seen barging costs that range from $60K to $800K, it all depends on the difficulty of the homes and sites.
My clients are thrilled to have their home on their land and will spend the coming months doing an addition that includes a bump out and a full basement. They are working with a builder on the island Ray Stevenson of Jefferson Fine Homebuilders, who has been involved in several other barged home projects. I can’t wait to see the finished product.