Island home prices continue to rise
June 9, 2008 · Updated 6:44 PM
"Buying the statistically average home on Bainbridge Island today requires either a six-figure income or a six-figure down payment.According to information supplied by the Northwest Multiple Listing Service, the average selling price for an island home in the first quarter of 2000 was $412,870. That compares to an average of $355,191 for the first quarter of 1999. And the combination of higher prices and rising interest rates have pushed up the income necessary to buy in Bainbridge. Any way you look at it, it takes money to buy on Bainbridge, said Becky Benz of Puget Sound Mortgage and Escrow.At today's interest rates, a buyer who made a 20 percent down payment of roughly $82,500 on the average $412,870 house would face a monthly payment of roughly $3,000, Benz said. And qualifying for that mortgage would require a family income of approximately $9,000 per month or $108,000 per year, even for a low-debt family with excellent credit.Buying that house with less than $100,000 income would require a down payment of roughly $120,000, Benz said.Another alternative would be to have a wad of cash. If you had $500,000 in the bank you could probably qualify with a lower income, Benz said. Or you might qualify for a lower down payment, but then you would need a higher monthly income.That price escalation is occurring even in the face of slowing demand. Figures compiled by Ed Kushner of Windermere Real Estate show that 71 single-family homes were sold in the first quarter of this year, a 16.5 percent decline from the 85 sales in the first quarter of 1999. There has been a drumbeat of problems with the ferry system, Kushner said, suggesting a possible explanation for the diminished activity. People back away from uncertainties.The high average price is somewhat misleading, Kushner said, because the that average is skewed upwards by a few large sales. The figures bear him out. So far this year, four island properties have sold for over $800,000, whereas only one property in that price range sold in the first quarter of 1999.More significant, Kushner said, is the fact that this year, 14 properties sold for under $250,000 in the first quarter, down from 22 the previous year. And 38 sales this year were between $250,000 and $500,000, down from 51 in 1999.The bottom of the market is collapsing because demand is pushing up prices, and new construction is not being built at the lower price levels, Kushner said.The rate of new-home construction is essentially unchanged from 1999. This year, the city issued 39 building permits for single-family homes in the first quarter, compared to 35 for the same period last year.On the rare occasions when lower-priced property comes on the market, demand is intense, as illustrated by the only single-family property offered for less than $150,000 this year.That property is an 80-year-old cottage on Beck Road. While the lot is two-thirds of an acre, the one-bedroom, one-bath dwelling has only 500 square feet, and was described in the listing as a re-do.We had four or five offers in the first three days, said listing agent Jack Vidano of Coldwell Banker, adding that the house sold for the list price of $135,000. The majority were people looking for a fixer-upper to get into the Bainbridge Island housing market, Vidano said.The Bainbridge price spiral may not continue for much longer. Kushner said that in his experience, the Bainbridge housing market is affected by regional economic trends, although we lag behind the Seattle market by about six months.Given the legal uncertainties and stock-price declines at Microsoft and the problems at Boeing, we may be in for a decline in our market in the next few months, he said."