Spring 2012 Sales on Bainbridge Island

Where I 'had' to hang out one day this past week. This will soon be the front yard of one of my clients. Yes, that is a ferry in the background.

Things have been sort of crazy in my world.  2006 crazy.  Crazy like multiple offers and 70 hour work weeks.  Crazy like I had four inspections this week, submitted three offers  – all three of which were multiple offer situations and I had two families in from out of state shopping and buying houses.  And, this kind of busy is all over my office, all over the island.  Inventory is lower than we’ve seen in the past three years and the good inventory is even lower and lasts days or mere hours.  Things are moving fast.  All of a sudden buyers are sitting up and sensing what is going on.

What is going on?  And, what does it all mean?

1st – Why?

  • Low Interest rates
  • Consumer confidence/ relatively stable stock market
  • Strong market in Seattle

2nd – How strong?

  • 83 homes under contract on May 1st, last time we saw 80 homes under contract was May 30, 2006 (32%)
  • 28% of the condominiums listed are under contract
  • Pendings over $500K are a lot stronger

3rd – Where?

  • Many sections of Seattle (eg. Ballard, North Seattle, University District, Capital Hill) – Very Strong
  • Tacoma – Fairly Strong
  • Gig Harbor – Strong
  • North Kitsap – Okay

“Months of inventory” numbers are an indication of market activity. The Seattle market is at 2.2 months of inventory and Bainbridge Island is at 7 months of inventory.

Does this mean prices are going up?

The overall market prices will show an increase because the sales have occurred over a broader price range than in the past couple years where the majority of sales were occurring in the lower half of the market (below $500,000). Upward pressure for any one price range or home type will still depend on the competition in that segment. General statistics only show broad trends, you have to drill down to the “micro market” for individual homes or condominiums.

Inventory levels are at or above average for this time of year so there is not an obvious lack of supply (as in Seattle) to push prices up. Inventory May 1st there were 180 active listings, a year ago 196, two years it was 211. For perspective, a year of low inventory was 2006, when there were 111 active listings the beginning of May. Many homes that have sold, especially in the upper price ranges, have been on the market for a period of time and the sale occurred after the price became more in line with buyer expectations (buyers perceived it as a good value).

Will it continue?

We have had spurts of strength before, only to have a slowdown. This wave has occurred on the heels of a stable 1st quarter which connotes a strength we have not seen during this very long correction. Time will obviously tell, but indications are positive. If Seattle continues to thrive, chances are we will also benefit. This strength is not Puget Sound wide, so it would be difficult to make any general statements, but this is a very positive step toward stability and future growth.

 

First Quarter Home Sales on Bainbridge Island


First Quarter on Bainbridge Island

First Quarter is officially in the history books.  I personally had the busiest winter on record.  I was too busy to let the dreadful winter weather get me down.  That was a good thing.  But, the sun is shining as I type and spring is finally on the way. The good weather typically gets those buyers out looking, but this winter, dreadful weather and all, the buyers were out there, looking for and yes, buying houses.

“Oh that was because of the tax credit”

Last year in 2010 we had 74 closings 1st Quarter.  This year we were only up by one to 75, but keep in mind the very important first time home buyer tax credit that stimulated sales the first half of last year.  So when we compared the 2009 sales of just 50 closings to the 74 in 2010, everyone said “oh that was because of the tax credit.”  In 2011, no tax credit, no artificial stimulation going on here.  These are buyers buying because they are moving here for jobs, the schools, and they are motivated by the historically low interest rates.

Rates: can they go any lower?

In my last post, you saw that rates are dipping again.  If we start going into another dip in rates, our spring and summer closings will no doubt be swift.  Our low inventory, only 196 active listings, (and many of them are not “fresh” they have come in and out of active) is already motivating potential sellers.  These amazing rates will too, because sellers can possibly ask a little more for their homes . . . and we’ll see what happens, could this be the year where prices turn and start moving the other way?  Time will tell, but I think the push and pull of our current low supply and high demand is going to start benefiting the seller.  I can see that median home price cruising back up to $555,000 by the end of the year and perhaps staying put for a while.

First Quarter Median Home Prices on Bainbridge Island

 

So, if you are a buyer right now . . .

  • Be ready.
  • Have your financial ducks in a row – get your pre-approval letter.
  • Have a good lender (one that calls you back and does not need hand holding).
  • Know that contingent sales are NOT appealing to a seller.
  • Have an agent who is ‘Johnny on the Spot.’

Because you will most likely be in a multiple offer situation and you need a savvy, aggressive agent to make sure your offer comes out on top (I might know one). But, seriously, what is happening is homes are selling fast, homes are selling before they go on the market. Agents in the know are snapping them up for their buyers.  I currently have two ‘off-market’ deals going on.  Good agents are being creative to satisfy the needs of their buyers.   The market is constantly evolving, keeping it interesting  . . . keeping us on our toes.

Data from NWMLS – stats based on residential sales, excluding condos.

Home Buying in today's market on Bainbridge Island

Buying a home in today’s market could be one of the best financial decisions you make.

At our office meeting this week, my Managing Broker, Casey McGrath brought up an article about how a broker in San Jose, Lisa Blaylock, had an appealing philosophy that got her clients to look at the market with a new set of lenses  – and ultimately got fence-sitters to hop off that very crowded fence.

We agents in the field have all worked with buyers this year (and last) who have look and looked, weighed, wondered and worried – but have not put pen to paper.  And, of course the national economy and the news feed their fears about buying or even entering the market as sellers.

After walking the walk with many a buyer and listening to them fret about the state of the economy, Blaylock, in San Jose, turned to her buyers and challenged,

“Ok, yes the national economy is fragile right now and it is important to pay attention to that, but how is your own personal economy?”

Blaylock began the dialogue with her clients that helped them see that the state of the national economy was not nearly as important as their personal circumstances.  She asked them questions like, how is the stability of your job?  How much equity might you have in your house? Do you want to move-up to larger home?  Through her conversations and investigations Blaylock found that the vast majority of her buyer clients had stable jobs with good incomes and savings in the bank.  She also found that many of her sellers actually had a good amount of equity in their homes too.

A Nexus of Good Things

Looking then at the national economy coupled with personal circumstances, she and many of her clients together came to the conclusion that now may actually be the best time for them to make a move. With interest rates at a record low and a healthy amount of inventory, move up buyers, for example, could price their current home aggressively and take advantage of today’s market to find their dream home.  Down-sizers can also benefit from getting a great value and interest rate on their new purchase.

We all know folks out there who are struggling

But, we also know folks out there who are thriving. One of my friends is an Acupuncturist, all-in-all a small business owner, yet her practice has not skipped a beat in the past three years.  Another friend of mine is a firefighter in CA.  The hiring freeze on firefighters led to a boom in overtime for current firefighters during the fire season – they paid cash for a new built-in pool.  And even in the challenging world of real estate, some savvy agents are having record years.

Don’t Put Your Dreams on Hold

I have seen many families put their goals, hopes and dreams on hold out of fear.  If  buyers and sellers reluctant to enter the market do a little self-assessment, they may very well find that they can and should move across the country to be closer to granchildren or family.  They can sell their current home they’ve outgrown and get the large home they’ve been needing, or they can sell the big home they no longer need as an empty-nester and buy the waterfront condo they’ve had their eye on.  The national economy will likely take years to straighten out – I think it is a good idea for those who can to not to put their your goals on hold for that resolution.

So we all need to remind ourselves to look around and pay attention, but remember to stand back and take stock of what is going on at home.  If folks pay attention to their goals the “personal economy” may be the very best indicator one has when making the decision to enter today’s real estate market.

On October 21, 2010, in Real Estate Business, by

These graphs take a step back and look at the last three years.  We are certainly on a downward trend in regards to price per square foot, but we see that irregular, erratic market at play through all of the seasons.  Winter months like December of 2008 and January of 2009 prices dipped down below the latest data from August of 2010, yet in February of 2008, there was an upward spike in price per square foot, followed by the highest of the three years in June of 2008. And, as I pointed out in the last data post, we saw spikes in the volume of homes sold this past summer of 2010 – likely due to the tax credit.  Stay tuned as we finish out the year.

For Sale vs. Sold vs. Pended 2007-2010

Bainbridge Island Housing Market 2007-2010

Average Price Per Square Foot 2007-2010

The pricing data used below is for homes priced up to 2 million.

Bainbridge Island Housing Market 2007-2010

One of the Best Things You Can do to Sell Your Home

Here’s a piece from MSN Money that details the psychology of pricing and selling a home. The piece reiterates what I tell my clients when we sit down for a listing presentation.

Buffer Pricing

“You’re selling your home. Here’s the big decision: Should you set the price high, expecting buyers will bargain you down eventually? Or should you start low to attract a lot of attention and get the inevitable discounting over with upfront?”

This is a classic scenario, right? Since people have been selling homes they’ve faced the “price high and drop later” or “price aggressively” decision/trade-off. And most people I work with are more comfortable going the price high route.  RIght move? No, not really.  When I sold my last home (in a buyer’s market), we priced it very aggressively and it sold in one weekend. Also, folks think they need a buffer, a cushion because buyers will make low-ball offers.  Yes, they sometimes do, but isn’t it interesting that the average home on Bainbridge Island sells for 97% of the last asking price. Says a lot about what actually sells and who is actually buying.

The Debut Price

“Experts agree that starting high with the idea that you can always drop it later is a costly mistake. Pricing doesn’t just determine how much money you stand to make — it also dictates whether buyers even give your home a serious look. With so many competing properties for sale, yours has to pop out immediately as a good value or buyers will move on, unlikely to return. You get one first shot at your home’s debut, and it’s easy to blow it.

The amount of traffic that a listing gets in its first week is five to seven times what it gets in its ensuing weeks,” says Glenn Kelman, the CEO of Redfin, an online brokerage and listings site. “Let’s say you lower the price (later). No one will notice. You really are broadcasting that discount to a much smaller audience of buyers and will have the perception it is damaged goods.”

Do you want to price it for what it is worth, now or later?  I say now and the data agrees.  It is no fun having your house on the market or having your family split up during a relocation.  I did not want to spend the summer in California with the kids while my husband was in Seattle.  Did that cost me on the sale of my house?  Maybe?  Could we have gotten ten thousand dollars more, maybe. Maybe not. But time is money too and factoring in the added hassle and stress for me, it was a wash.

Chasing the Market

“Your job as a seller seems simple: Price it right to make the sale. Identify your home’s true value, and set the price slightly under that. At worst, you’ll lose about $10,000, but you might make a quick sale. If you’re further under market than that, buyers are likely to bid the price back up, Kelman says.

An error on the high side, however, can cost you more than just time. Once you drop your price, buyers smell blood. “They say, ‘He’s knocked $30k off the price; he’ll do it again.’ It’s death by a thousand cuts,” Kelman says.”

As a seller you begin chasing the market and you hope the buyers will follow, but often they won’t. The first 30 days are key. As a selling agent, if my client is dead-set on a higher price, even after they get the facts, I get them to agree up front to do a reduction at 21 days, if the action on the listing has been slow.  In my mind, it leaves you a week and to agents and buyers a serious reduction that soon gets their attention, it let’s them know we’re serious about selling.

Homes are not selling for more than market value.  The question you have to ask yourself is whether or not you want to sell it for market price now, or after 120 fun-filled days of having your house on the market?  My own personal home was on the market for three days and it felt like three months – I am not sure how sellers do it.  Some key numbers to end with, on Bainbridge Island.

Average Market Days for Active Listings on the market -138

Average Market Days for Homes Just Sold – 65

On September 8, 2010, in Real Estate Business, by

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