Some signs of real estate recovery
By BRIAN KELLY
Bainbridge Island Review Editor
January 14, 2010 · 4:50 PM
For the first time in two years, real estate activity on Bainbridge Island is on the rise. Slightly.
Agents and brokers say movement is still just a trickle, but December capped a fourth quarter that indicates more buyers are beginning to re-enter the market.
As one agent said, sellers have finally accepted the fact that it’s a buyer’s market and they’d better adjust their prices to be competitive. The result? “There are a lot of good deals out there right now,” the agent said.
Last month, for example, according to Northwest Multiple Listing Service and island professionals, there were 23 single-family homes sold on the island, compared to only 13 in December 2008. For the year, 212 single-family sales occurred, compared to 187 in 2008.
But outside of Bainbridge Island, the four-county Puget Sound region (Kitsap, King, Pierce and Snohomish counties) was experiencing much more dramatic results during the last half of 2009, primarily because homes selling for less than $400,000 were flying off the shelf in 2009 – even on Bainbridge.
Jim Peek, an associate broker with John L. Scott, pointed out that the under-$400,000 sales in 2009 numbered 44, compared to 18 homes in the same price range in 2008.
On the west side of Agate Passage, there was a buying surge for houses in the $200,000 to $300,000 range. Many of the county’s low-priced sales were due to bank-controlled properties re-entering the market, brokers said.
While it appears to be mostly a buyers’ market, sellers throughout the region are benefitting somewhat from a much smaller number of houses being listed than were available a year ago.
Less inventory means sellers’ listings are receiving more exposure to a larger pool of buyers. Kitsap County reported the biggest inventory drop in the region at 25.4 percent over the last 12 months.
Island real estate professionals admit the gains have been smaller here – “plodding” said one island broker – but it’s the first sign of recovery in an industry that has been in a steady free-fall since the end of 2007.
Brokers cite the shrinking inventory (and prices), extension of the homebuyer tax credit (through April 30, 2010) and favorable interest rates as reasons for their cautious optimism. Even the condo market has improved slightly on the island, probably due to the tax credit.
“It has been picking up,” said Vicki Browning of John L. Scott. “It was pretty steady over the holidays with people looking for housing deals mostly. It’s primarily the same type of buyer as in the past, but they have more negotiating power now because they can get a better deal than a few years ago. I’m very optimistic right now.”
She said that the $8,000 tax credit for new buyers helped indirectly.
“When you’ve got that first-time buyer getting into the market,” she said, “the seller then takes that money and buys something else, often as an investment. I’m also seeing some people taking money from other investments and moving into real estate. That’s very encouraging.”
Barb McKenzie, broker/owner of Coldwell Banker McKenzie Associates, said she isn’t quite sure what to think about the last quarter’s uptick until she sees the market stabilize.
“We’ve had more active buyers, whether they were walking in or going online,” she said. “We have a smaller inventory because a lot of people decided to take their homes off the market. But they will be back. I’m just happy to see it happening and hope that this year will be better.”
Bainbridge’s active listings for residential properties during 2009 dropped to 497 compared to 556 for 2008. The median price for a single-family home was $698,5000 at the end of the year, down from $875,000 in December 2008. Despite the high cost of homes on Bainbridge, Kitsap County’s median price for residential was down to $309,000 at the end of 2009.
“Probably 70 percent of the homes on the market in north Kitsap County are in the two-to-three-hundred-thousand-dollar range,” said Jim Laws, the broker/manager for Windermere Bainbridge.
“There are a lot of first-timers, and that’s led to some trickle-up buys on the island. On our upper-end houses that have moved, we’ve seen a lot of cash and huge down-payments,” he said.
But the reality, Laws said, is that island home sales are down 19 percent since the end of 2007.
“The first six months of 2008 were pathetic,” he said. “The market was down 24 percent, but it rallied during the last six months, and we were down only 9 percent for the whole year. But the drop in prices continues, and we’ll have to have more volume (of sales) before we talk about price stabilization.”
He said he was “slightly optimistic” entering 2010 because more buyers are finally pulling the trigger after waiting for prices to drop precipitously. But he isn’t expecting a quick turn-around.
“I think we’re going to be in a different reality than what we had here for many years, probably for at least a few years,” he said. “Our industry is like our whole economy, which is fairly fragile. But Bainbridge is still a great place to invest in. People who bought here during the last five years will be OK if they just hold on to what they’ve got.”
Maureen Buckley of Buckley & Buckley Real Estate, a firm of four agents that caters to high-end properties, said December was a busy month, with five offers coming in late in the month. “And we’ve had three sales in the office already this month,” she said.
“It seems that people have the pent-up desire to take advantage of the good prices and interest rates,” she said. “There’s no doubt that people are looking for deals.”
John L. Scott’s Browning said one of the effects of the downturn has been more of a belt-tightening approach by the island’s real estate firms.
“We’ve had to cut costs and that’s kept the company strong,” she said. “Some of the agents who came into the market when it was easy have washed out, but those who have remained adjusted by working hard within the system. Some of them had their best year ever in 2009.”
Not many, however.Contact Bainbridge Island Review Editor Brian Kelly at firstname.lastname@example.org or 1-206-842-6613.