Demand for island homes shows no sign of slowing down, and prices keep rising.

While the national housing market is showing signs of slowing down after a fast-paced year, the Bainbridge market is still picking up speed.

“I expect the market to be strong in ’06,” said Lois Boubong, a realtor at Prudential’s Winslow office, who recently completed an analysis of the island’s housing market. “No bubble is going to burst anytime soon.”

The average housing price on the island rose 14 percent last year, with the median price increasing by 22 percent, Boubong reported.

Homeowners and buyers can expect more of the same this year – or an even sharper rise. It’s good news for home sellers, but could make for grim house hunting, especially for renters and middle- and lower-income buyers.

“You can never predict the future, but if the economy continues to stay strong – and we think it will – we’ll continue to see a rise in prices,” Boubong said.

Island home prices should continue to swell by double-digit increases, while housing market analysts predict the national average price increase will be just 5 percent to 8 percent.

“We have a very unique market,” Boubong said. “We’re getting a lot of attention. Money magazine listing Bainbridge as the second best place to live in the country is a part of that. But also our inventory (of houses) is very low, but demand is very high.”

Last year’s inventory of houses on the market hovered around 100, according to Boubong. This year, only 80 homes are currently for sale.

The dearth of listings hasn’t made it easy for the 160 real estate agents working on the island, Boubong said.

“It ain’t fun,” she said. “It’s very competitive.”

It’s also very expensive for prospective home buyers.

The median home sale price rose from $467,600 in 2004 to just under $570,000 last year. The highest-priced home on the market last year sold for $3 million. By comparison, the median home sale price for the county, including Bainbridge, sat at $265,000 at the end of last year.

King County’s median sale price was also substantially lower than Bainbridge: $355,00 in December.

Condominium prices on the island rose 37 percent between 2004 and 2005, swelling the median sale price to just over $383,000.

Many of the homes on the market are far beyond the means of most upper-middle-class incomes. According to Boubong, about 30 percent of the homes now on the sale block are over $1 million. Much of the expected inventory growth over the next few years will likely occur in the downtown Winslow condo market.

The Kitsap Homebuilders Association expects the island to see more than 300 completed and sale-ready condos sprout up before the end of 2006.

“Downtown, you can’t go anywhere without running into new condos,” Boubong said.

Sandy Fischer, director of the city’s Winslow Tomorrow planning project, said the spate of new condos fits the island’s desire to focus inevitable growth in its urban core.

As the island’s population doubles every 30 years, Fischer said, residential growth downtown will help preserve the “soft, green character of the (rest of) the island. Dense condo, four-story (buildings) have benefits and leave more of the island open.”

About two-thirds of downtown condo buyers are from Bainbridge, Boubong said, which “could mean people on the island are deciding to downsize and get closer to T & C and closer to the clinic.”

The urban population shift over the next couple of years could make for a more plentiful market outside Winslow, according to Boubong.

“It may follow that they’ll need to sell their old homes,” she said. “But prices are still going to be crazy.”

Prices may be downright maddening for potential homebuyers with middle- to lower-incomes.

“Even a $250,000- to $300,000-unit is hard for some of the people who supply services here, like our teachers,” Boubong said.

According to the island’s Health, Housing and Human Services Council, demand for “reasonably priced housing” for rent or ownership exceeds the affordable supply, forcing many people employed on Bainbridge to seek housing off-island.

According to HHHS data, a household income of nearly $140,000 is required to buy a $478,000 house. However, the island’s median income is just over $70,000, with almost 3 percent of the population living below the poverty level.

Rental prices are also increasing at a fast pace. While HHHS this month reported a typical rate of $881 for a two-bedroom residence, Boubong said she has recently seen few units under $1,000.

“Two-thousand dollars is more typical, with some rents that are outrageous, at $3,000 to $4,000,” she said.