The current condition of Bainbridge Island’s real estate market could be considered robust when compared to what is occurring nationally, or even elsewhere in the Northwest, but total sales on the island for the first four months of 2008 are down more than half compared to 2007.
According to Northwest multiple listings reported this week, 71 residential and condominium sales have been reported for the first four months of the year, compared to 157 sales during the same period in 2007. The condo market has been hit particularly hard, with only 18 sold compared to 59 through April 2007.
The island’s market has been gradually descending since a record-setting sales performance in the first half of 2007, according to real estate brokers, with the downward cycle solidifying during the last seven or eight months. It is officially being called a buyer’s market these days and, depending on who’s talking, most agents and brokers don’t see a quick turnaround.
“I don’t see a change in the short or interim future,” said Craig Clark, broker with Johansson Clark Real Estate. “Maybe we’ll be out of it in 12 to 14 months. It has slowed down along with the economy and it will take time for it to get started again, going upwards again. It’s not all doom and gloom, especially here on the island where we’ve got it better than most. But it’s definitely a step back from the high point of 2006 and early 2007.”
Island brokers say potential buyers are waiting to see how low prices will drop before they act.
“What we’re finding,” Clark said, “is that the active buyers here identify properties, watch the price points, develop a striking point and when it gets there, then they get interested in the property. They realize that if they can buy in this market, then they can drive a pretty hard bargain. Compared to last year, the buyer is now more important than the seller in meeting the criteria for a sale.”
Prices remain high on the island, especially when considering average prices, which are often skewed by the sales of expensive properties. During the first four months of this year, for example, multiple listings reported that the average price of a residential sale was $1,077.022 — up about $95,000 from a year ago. But two individual sales of $6.2 million and $4.3 million in February definitely skewed the average number.
A more accurate measure of the market is the median price, which has leveled off after rising dramatically almost every year since 2002. There was a brief slowdown after Sept. 11, 2001, but the average price jumped 13 percent in 2003, 14.5 percent in 2004 and a whopping 21 percent in 2006 before dipping to 12 percent in 2006 and 9.1 percent last year. The median price for residential sales in April was $607,000, compared to $598,000 a year ago; for the first four months of 2008, the median price is down $9,450 from a year ago.
Part of the adjustment in the market, brokers say, is that the seller has been slow to adapt to its changing dynamic.
“Our market has been a very strong, very consistent appreciating market since the second quarter of 2002,” said Windermere broker Jim Laws. “But the movement is downward now, and people who want to sell their house look at the median or average sales and say things are still going up. Not so. The seller’s biggest tool is presentation and the market being on the rise, but these days price is critical and it’s tough for us to establish an appropriate price when the numbers have changed from last year.”
Laws said the current market of houses in the $400,000 to $600,000 range is indicative of what’s happening. “In that range there are 83 listings right now,” he said, “and 14 are under contract (offers made and accepted, but not yet closed). So your competing with 70 homes and that’s a buyer’s market. They are being very disciplined. On the whole, we’re not feeling the sense of immediacy like we used to have around here. When a house came up for sale you jumped on it because the inventory was down. Now it’s huge.”
Brokers said about 300 residential and 130 condo properties are currently listed for sale. Still, Laws said, sellers are human and they often expect more for their houses than what they are worth on current market. “You’re telling them what they don’t want to hear over their expectations,” he said. “In the long term it works out okay because wherever they go it’s going to be the same. A lot of the buyers are waiting for their houses to sell elsewhere, so it’s a bit of a waiting game. Everybody is waiting.”
Clark said the downturn has forced real estate professionals to essentially work longer hours for less money. “You need to spend more time working with sellers, making sure their presentation is good, the listing price is realistic with the market, and all that,” he said. He’s also worked with a couple of small area banks, helping them move property they acquired through foreclosures, which he said have increased of late. “We have 22 foreclosures on the island and that’s probably increasing,” he said. “That’s the highest since I’ve been watching them during the last seven or eight years.”
But there’s no reason to panic since he sells real estate on Bainbridge Island. “We’re spoiled here,” he said, “because we have dynamics here in our market that nobody else has. People are still coming here, whether it’s a job moving them here or just the area, the environment. A lot of people are coming here for a year and renting, maybe leasing their old houses out until they can find what they want. People aren’t feeling a sense of urgency. But there’s still a pull for them to come here, so I can’t complain.”
Neither can, Judy Nieukirk, the broker for Prudential Real Estate on the island, who thinks sales will pick up during the warmer months of the year.
“For people who have been in their houses for at least five-plus years,” she said, “this is a good time. Maybe they won’t get as much for their house as in the past, but they won’t pay as much for a replacement property. It all equals out.
“The positive sign is that people are still looking and there’s so much inventory to pick from right now,” she said. “I think things are waiting for interest rates or house prices to go down, but there are some wonderful buys out there. And the interest rates are still down under six, so we’ll be okay.”
She said that prices of most of the houses that have sold on the island this year have been within 10 percent of the first listing price, “so we’re beginning to get close to reading the market accurately, coming out with what prices should be.”