Windermere Real Estate/BI, Inc.
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 I will discuss later).
The median price of a home sold on Bainbridge has never been higher than in 2016. Even more impressive is the growth in the median, which has risen steadily since bottoming out in 2011 following the difficulties that began in 2007. 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).
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 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).
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) because 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 could depend on what happens in Washington DC . . .
Will 2017 go down the same growth-oriented path as 2015 and 2016? Will the change in federal leadership 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.
Today much of our world (the island) went back to work and school after the two week winter holiday season. We put the 2016 real estate market to bed only last week and jumped into the 2017 market today at out first office meeting. Last year seemed fast and furious, although as you can see below the volume of sales, overall, was on par, if not slightly less than 2015. The lower inventory with the steady stream of buyers meant more multiple offer situations, hence the frenzy I am still feeling from 2016.
Many buyers were downsizing out of higher priced markets (California, Vancouver BC, Manhattan, even Bellevue) into our island’s luxury homes, sometimes at half the price. The fact that the Pacific Northwest and Bainbridge Island, specifically, is still a relative bargain over places like California will keep the market going strong into 2017, I predict.
Land volume was down in 2016, but several large parcels acquired in 2015 are now being developed into neighborhoods like the DR Horton neighborhoods on Wyatt and Weaver. Those developments will help relieve the inventory shortage a bit.
The market is always changing. Whether you are a buyer or seller there are strategies to consider for your success. We are a very seasonal market (most activity in the summer). Depending on your goal knowing the ins and outs of timing and preparation as you enter the market (as buyer or seller) can translate into thousands of dollars saved or earned. Being a buyer or seller in the slower shoulder market can be advatageous for some, although waiting until peak summer market could be better for others. If you are thinking about jumping into the market in 2017, let’s chat.
All data taken from the NWMLS as of 1/3/2017.
Yes, you heard it. That was indeed the musical firetruck. The iconic tour around the island is already underway. Wasn’t it just Halloween? I am never ready for Christmas, but I must say the snow day we had last week did really nudge me into the holiday spirit. I love that the truck hits our neighborhood on the 23rd or 24th every year (because by then I am finally ready for Christmas) but I love seeing the truck out and about the island as we lead up to the merry day. Thank you Bainbridge Island Fire Department for this very Bainbridge tradition. Listen for the truck 5-9pm from now until Christmas Eve. Link to a larger version of the map and schedule here.
And note, if the truck has extra time they can make additional laps through your neighborhood. We have been lucky enough to see them twice in some years.
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.