Low interest rates spur island home sales

Fueled by continued low interest rates, the Bainbridge Island housing market remained surprisingly strong in the first quarter of the year.

While fewer homes were sold in the first three months of 2002 than in the same period a year ago, the time needed to sell a home actually decreased slightly, and the median price showed a modest increase.

The picture is not entirely clear, according to local real-estate professionals.

“It felt very much like a buyer’s market, but at the same time, a majority of the well-priced, quality properties seem to get a lot of action very quickly,” said Jim Laws, broker at the Bainbridge Island office of Windermere Real Estate.

Broker Barb McKenzie at Coldwell Banker/McKenzie agreed.

“A lot of listings that had been sitting on the market a long time are starting to sell,” she said. “This is becoming a good market.”

Statistics from the Northwest Multiple Listing Service, furnished by Windermere Bainbridge, show that in the quarter, 78 single-family home sales closed, compared to 88 for the first three months of 2001.

Average sale time dipped from 101 days to 97. The median price – the figure at which half the homes sell for more, and half for less – climbed to $389,000, up from $373,000 a year ago.

A typical home in that price range is a newly built, 2,300-square-foot home with three bedrooms, two-and-a-half baths, a fireplace and granite kitchen counter-tops, such as those being built in the North Town Woods development.

While the average price dropped from $463,000 to $428,000, that gap is accounted for almost entirely by the sale in early 2001 of a $3.3 million property – the highest price ever paid for a Bainbridge home.

By contrast, the most expensive home sold in the first quarter of this year was a Sunrise Drive waterfront home that sold for $1.075 million.

If there is a “depressed” market segment, it may be in the normally hot price range of $400,000 to $600,000, and in the ultra-high end of over $800,000.

“Our market place has been the busiest in the $300,000 range, which is the middle of our market,” Laws said, something he attributed in part to the fact that home sales have been strong and prices rising rapidly in Poulsbo – lessening any price disadvantage the island might have.

Also, both buyers and sellers seem to be taking their time.

“There seems to be less of a sense of urgency,” Laws said. “Sellers are not feeling that they have to move, and buyers are being patient, waiting for exactly the right home. But we’re seeing an increase in the quality of the available inventory, and that is bringing out buyers.”

Re/Max broker Doug Nelson said he too has seen an element of caution.

“This is a fragile market,” Nelson said. “A lot of buyers out there are a little skittish. There are not a lot of counter-offers. If buyers don’t get what they want, they are walking away.”

But prices seem to be firming up after a period of decline, McKenzie said.

“Agents and sellers are being more realistic about prices,” she said. “They have had a year to get used to prices going down, and they have adjusted. Selling prices are not that far off asking prices.”

The factor keeping the market relatively buoyant, Laws said, is the low interest rates.

“With the uncertainty people have had between the terrorists and the economy, it’s a miracle the market hasn’t gone completely into the tank,” he said.

Interest rates for a fixed-rate, 30-year mortgage have hovered around 7 percent for the last 18 months, according to John Tiesing in the Bainbridge office of Washington Mutual, the nation’s largest mortgage lender.

Buyers willing to pay “points” up-front can buy a rate as low as 6 percent for a 15-year loan.

“The rates are set by investors who buy mortgages,” Tiesing said. “Generally, they track treasury-bill rates, but are a little higher because investors perceive that there is some risk with mortgages.”

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