Checking the Thermometer
Every day, we hear news about the cooling real estate market but it’s important to consider all the factors that go into those reports. Yes, our market has chilled slightly from its previously overheated state (although we never reached the same sizzle as the Seattle market) and has settled into what might be described as a strong normal market. The business section also contains reports of ongoing job growth in the Seattle area, especially in the well-paid tech industries. Concurrently, when Seattle’s transportation woes and other urban issues are taken into consideration, the demand for Bainbridge homes, especially for families, will likely continue for the foreseeable future.
Crunching the Numbers
On the whole, most indexes show data that support a steady market in the coming months. If we isolate the third quarter and look at sales, the number of homes sold only dropped 4.4% from 2017 (137 in 2017 and 131 in 2018). In that same period, the median price of homes sold went up from $875K to $912K – a 4.2% increase. If we compare the median price of homes sold during the third quarter, they are up 8.8% from the beginning of the year. Additionally, the Cumulative Days on Market dropped in the third quarter of this year compared to 2017 (44 in 2018 vs. 47 in 2017). Active and Pending inventory numbers are where elements of the cool down show. Inventory is down in total inventory and active (total minus pending sales), which is contrary to what people are hearing. Pending sales are weaker at 40 compared to 57 at the same time last year. Of all the numbers we examine, this 29.8% drop is what supports the slowdown assessment. However, when reviewing the data, we can conclude that the market is healthy and strong. Maybe not as feverish as last year, but it’s still a great time to be selling or buying on Bainbridge Island.
Condominiums and Land
The condominium market has softened compared to 2017, with 73 units sold compared to last year’s 89. There seem to be two parts to the condo market: the affordable (less than $500K) and the higher end, which usually includes a good view. The affordable unit sales are up from last year, with 64 sold versus 45 in 2017. The drop in the higher end appears attributable to a lack of supply rather than a softness in the market. Land is barely lagging behind 2017, with 24 sales year to date compared to 29 in 2017. Buying land with the intention of building is not for the faint of heart these days. Builders are busy while construction prices are still rising. New zoning rules have also added an element of uncertainty and expense.
Taking Everything into Consideration
Multiple offers are less common than last year, and prices have risen but not at the frenzied pace of last year. Our rental market has also calmed down. Our Kitsap County neighbors, Kingston and Poulsbo, are also performing well and benefiting from Seattle’s growth. Buyers do not seem to be concerned with rising interest rates (which, after all, are still quite low), which helps to boost confidence. As we enter the fourth quarter, there are many opportunities for both buyers and sellers.
A WARM REAL ESTATE CLIMATE
Summer has come to Bainbridge Island, and with it our traditional celebratory activities. We had an energetic Third of July street dance, a festive Fourth of July parade, and a successful Rotary Auction that grossed more than $600,000.
When we move our attention to local real estate statistics, everything appears to be equally sunny. Our median price is up 12.5%, home sales over $1,000,000 are up almost 28%, and condominium sales are up 36%! Still, if you talk to the experienced agents, they are detecting a shift. Let’s explore all the reasons why.
BUYERS BEHIND THE WHEEL
We talk all the time about buyers’ markets and sellers’ markets. But it’s really the buyers who drive any market. Even in an ascending sellers’ market, buyers (or lack of) create the excess demand over supply.
Bainbridge is blessed with a sophisticated and knowledgeable buyer pool. They are well educated and disciplined. These days, they’re also beginning to be more cautious. Maybe that’s due to world economics, a possible interest rate hike, or a general assumption that we’ve been on this run for more than a couple of years and we must be close to the top. You might ask, then, why are our statistics are so positive? There are several factors at work; signs that the market is not as heated as last year and is stabilizing. Here are a few specifics:
- Inventory, something we’ve lacked for a while, is creeping up.
- More price reductions and fewer multiple offers, with more buyers saying, “Let’s just wait and see what happens.”
- The number of homes under contract is down 17.3% from last year and hasn’t bounced back in the first part of July.
THE BIGGER PICTURE
We are hearing of a cooling in other markets, both to the east and the west. This is not a cause for great concern, as our market is dynamic, and this sort of shift requires adjustments in strategy rather than extreme actions. Knowledgeable advice will help both buyers and sellers negotiate the changes and still achieve realistic goals.
Speaking of the vitality of the market, statistical charts show vivid changes. In the first half of 2012, 48 homes sold in the 0-$400K price range. By 2014, that number was halved to 24 and has plunged all the way to 4 this year. These homes didn’t disappear; they just moved up into another price range. Right now, there is only one home for sale for less than $400,000 on Bainbridge. In 2014, 78 homes sold for less than $600K, while this year that number is only 19. Here is what’s happening at the other end of the pricing spectrum: In 2014, only 31 homes sold in the $800K-$1.5M range and this year there were 101 sales in the same price range. So as our market stabilizes, we must acknowledge that it has appreciated dramatically.
A BUSY CONDOMINIUM SEGMENT
With 62 sales in the first half of this year, you’d have to go back to 2007 to find a more active January-June period. The median was up 13.6% to $468K; matching the all-time median condominium price set in 2007. The condominium market has lagged the single-family residence market in price recovery from the peaks set in 2007, but the market has shown steady strength in the past year and a half. The condominium market benefits by offering residence on Bainbridge for less than most homes. It’s also shown an active upper end as people have downsized; which has been driven by success in the upper end of the house market. This success has happened despite low inventory.
The median price of land sales for the first six months also finally matched this segment’s 2007 peak. In 2007, the median was $406K and in 2018 it was $400K. As with condominiums, it has been a long road back to our previous highs, but they have arrived. The volume of 22 sales exceeded 2007’s 18 sales in the first six months but fell shy of 2015’s peak of 33 sales through June.
A POSITIVE TILT
All in all, we are giving our first six months of 2018 a very high grade. We detect some stabilization and cooling off in the home market, but Windermere is prepared to employ our strategies to guide both buyers and sellers toward their goals – regardless of shifts taking place.
2018 1st Quarter in Review
THE SPRING BOARD
Things We Know Are True
In the real estate business, we know never to count our proverbial chickens. Offers aren’t made until directed by a client, offers aren’t successful until they are accepted, inspections aren’t completed until everyone is satisfied, and we never take a transaction closing for granted. Every step forward is a cause for celebration. We view the market in the same way, especially after 2008. When we say that the first quarter of 2018 had many similar challenges as the first quarters of the past few years, we mean that there was strong demand, some supply, affordable interest rates, and a solid outlook.
This is particularly true of inventory, which experienced new lows. At the beginning of April, there were only 40 available (active) single family home listings on the island. This includes all prices, pre-sale homes (which haven’t even been finished yet), and your typical cadre of homes that are woefully overpriced or in a condition or location the typical buyers shy away from. (Bainbridge is different from Seattle, where these types of things tend not to deter buyers.) Nevertheless, 66 homes sold in the first quarter, which surpassed our sales from the past two years! Those additional sales also confuse the lower inventory numbers because homes were essentially selling faster (some might call it “velocity” or “higher turn”) so there would have been more homes left on the market if we sold homes at last year’s rate. (The average cumulative days on market fell from 85 in 2017 to 70 this year – a 17.6% drop!) Combined with a 20% increase in both average and median prices (for the first time, our average price for a quarter is over $1 million), you would have to conclude that our market is very strong. Granted, buyers are paying more with fewer choices, but we are still seeing buyers looking west from Seattle and finding a far saner market with much better values. This surge is not limited to single family. Condominium sales matched last year (technically, up by one) with the median price growing 12%, from $515K to $575K. Land sales, unimpressive last year, burst out of the blocks in 2018 with a 50% increase in lots sold and a 100% increase in median price ($217,500 to $435,000)!
The Supply Chain
We know that demand is strong this year, but what about supply? The construction behind Harbor Square (between Cave and Ferncliff) called Bainbridge Landing will consist of about 107 rentals and 25 residential condominiums. The DR Horton project on Sunrise and Torvanger (11 homes) is about 50% complete. Quadrant is building 19 homes on Weaver (the model is under construction). The Reserve at Winslow on Finch Road features 12 homes, Madison Grove off Duane Lane includes 8 homes, and Madison Landing will feature 24 condominiums. The Roost has begun their second phase of live-work structures and The Residences at Pleasant Beach Village is going in for permit on their second tier of 12 homes. These projects are being built within the geographic boundaries of our current comprehensive plan, which has pushed density into specific neighborhoods on the island, leaving a majority of our landmass with its much lower density zoning. Beyond these projects, it becomes a bit muddy with the city’s moratorium and impending changes to design rules. It is still unclear what the result of the moratorium and new restrictions will be, but it appears building will be more difficult and expensive; likely having an impact on the affordability of housing on Bainbridge.
How about our neighbors to the west and north? The North Kitsap market (Hansville to Poulsbo) is also active and fast-moving. There, 167 homes sold in the first quarter, with an average of 46 days on market, and at a selling pace 34% faster than ours! Since 2015, the median price (currently $385K) has risen 23%, almost 17% of which was this year over last. Things are popping across the Agate Pass Bridge!
The Value of Local Knowledge
If the first quarter is an indicator of the rest of the year, it appears we are in for an active year in Bainbridge Island real estate. To keep things moving in the right direction, our local experienced real estate agents bring a lot to the table. In an environment when buyers need to make decisions on sometimes short pressurized timeframes, a good agent will have sellers’ listings prepared in a fashion where the potential buyers feel more comfortable stretching their budgets. When representing buyers, it’s as much about preparing them to be able to act as it is about advising on locations, limits and putting things in the proper perspective. This guidance to both sides may sound “simple” but often makes many thousands of dollars’ worth of difference in transactions (to say nothing of the peace of mind it provides all parties).
Overall, the outlook good – occasionally stressful, but good. We need to celebrate this current strength and not take it for granted. While we do, we’ll enjoy the beautiful flowers and the sun’s warmth as temperatures and optimism rise together!
CELEBRATING THE NEW YEAR
As we welcome a new year, let’s explore some dynamics that played out while we marched through the 2017 calendar. Our market saw a decline in the total number of residential sales for each year between 2013 and the start of 2017. Despite healthy buyer demand, the lack of inventory caused buyers to become wary of over-paying and weren’t confident that they wouldn’t get caught in another correction. As the new year progressed, we saw a shift in buyer confidence and people were willing to spend more to get what they wanted. The result was an 18% increase in the number of homes sold last year. There were 435 residential home sales in 2017; the first time we’ve seen more than 430 sold on the island in any year since 2005’s record 442 sales. (The low was 187 in 2008.)
Even with an uptick in sales, we are not experiencing the same craziness as our Seattle neighbors. Our average cumulative days on market was 52, well more than double Seattle Metro’s 20-day average. Our average price increased by a healthy, but not record-breaking, 10.7%, compared to Seattle’s 17%. (The record was set at 26.74% in 1990, followed by 21.5% in 2005.) There were many homes that experienced substantial price reductions and others that failed to sell at the sellers’ desired numbers. But when homes were properly priced and presented, buyers were willing to act – even if it meant spending more than they originally anticipated. This willingness can only come from a place of confidence of good value and a sound investment. We were assisted by strong buyers from Seattle and California, a rising stock market, smooth financing and appraising with rates that have remained “comfortable,” even with a rising prime rate.
A prime beneficiary of this strong market were luxury homes. There was a 44.6% increase in sales of homes over a million dollars and sales doubled for homes over $1.5M (133 total with 52 over $1.5M). Home sales increased 49% in the $800-$1M range. On the flip side, affordable homes were further scarce, and sales of homes priced less than $600K decreased 34.7% from last year. This overall shift in the market pushed our median price up more than the average (>13%) and our condominium market was affected by these market forces as well. This certainly illustrates our trend away from affordability; which Bainbridge struggled with in the early- to mid-2000s until the 2007-2011 correction.
The condominium market benefited from these improved conditions in a couple of ways. The number of sales grew more than 21% (from 104 in 2016 to 126 in 2017) and the median price jumped 31% (from $400,750 to $525,000). Though sharply higher, the median price of $525K was substantially below the 2016 single home median of $838,000. Consequently, we saw more individuals and families coming to the condominium market. Condo sales were also helped by the strong upper-end residential market. Many residents have been waiting on the sidelines for their homes to get to a price point where they felt comfortable selling and downsizing to smaller, more manageable and easy care, i.e. condominiums. Complexes such as The Grow Community, Residences at Pleasant Beach and the Roost all experienced strong sales last year as they completed with condominiums for market share. A majority of condominium buyers stress the desire to be closer to Winslow for the walkability, an interest in a complex that offers a sense of community, grandparents following their adult children and their families to the great Northwest, and those who want the easy care and affordability of condominium living. Fortunately, we have had some good choices for our buyers this past year and experienced a total of 126 condominium sales in 2017. The only sector of our market that struggled last year was raw land. This category was hampered by a lack of choices, financing difficulties, hurdles with building permits, and the escalating construction costs.
It is hard to find any economist predicting a substantial slowdown in our area’s economy or real estate in the near term; not to say that there aren’t clouds. The new federal tax law is not beneficial to a higher-end market like ours; financing interest and property tax deductions now have limitations. The prime interest rate will undoubtedly rise and even though mortgage rates have been incredibly low, rates will probably go up but stay below 4.5%. In the midst of all this activity, one thing remains constant: Bainbridge Island is desirable and a great place to live.
Values are high, and our inventory is at an all-time low. If you are considering selling your home this year, let’s get started now so you are not competing with the typical spring rush. The days are getting longer, we have buyers, and this is the traditionally the best time to sell your home. Call me, I will help you prepare your home and get it listed as soon as possible.
A Seller’s Market : Out of approximately 9600 Island households, there are currently only:
42 HOMES FOR SALE
6 RESIDENTIAL CONDOMINIUMS
20 LAND LISTINGS
Don’t get stuck in the annual competition:
Let’s get your home ready and on the Market before the usual Spring Rush.
Call Me, I would love to work with you!
Just because the Christmas decor is put away and the festive mood of the holidays is over doesn’t mean we have to stop creating a snug and cozy home. It’s a good time to embrace winter Hygge! If you aren’t familiar with Hygge, it’s a Danish word for feeling content and cozy.
Here are seven ways to bring Hygge style comfort to your home, even during the dreariest winter month of the year!
Even if you feel like you’re lacking in the cozy department, simply addressing your lighting will make a huge difference. Layers of lighting make every room feel more welcoming. In the daytime, natural light is ideal. But for evenings, it’s nice to add a cozy glow. A good rule of thumb is to try to have a least three light sources in every room. Use a mix of table lamps, floor lamps, task lamps, and overhead lighting. Consider using warmer light bulbs for the coziest ambiance.
Your home will offer a sense of comfort when you incorporate some favorite photos of loved ones, treasured hand-me-downs, antiques or flea-market finds, eye-catching conversation starters, art that inspires you, special mementos, or simply things that make you smile.
AN INVITING AROMA
What aroma feels ‘cozy’ to you? Set the tone for your home by filling it up with winter scents that inspire you.
The coziest homes contain a variety different textures that delight the eye. Incorporate different touch-worthy materials through pillows, drapery, throw blankets, rugs, lamps, and furniture. The fabric possibilities are endless: velvet, woven, knit, embroidered, grain sack, faux fur, tweed, etc. You can also consider creating contrast with varying materials like metal, wood, glass, rattan, mirrored, painted, and more.
A PLACE TO CURL UP
Make yourself a special cozy place to relax. A reading chair will be extra cozy with some good books nearby in a basket, a lamp, a footstool, a side table to set a cup of tea, and a soft blanket you can curl up in.
A BIT OF WARMTH
Every home can benefit from warmth. No matter what your color scheme, you can add warmth through natural tones like wood, leather, jute, warm metals, etc.
A room comes to life when an organic element is incorporated into the decor. Every room can benefit from having at least one plant, bouquet of flowers, or even a sprig of greenery like eucalyptus to remind us that spring is on its way.
In many ways, the first quarter of 2017 reflected the past two years of the Bainbridge Island real estate market and the markets of most of the neighborhoods around us. Seasonably low inventories limit buyers’ choices early in every year. Meanwhile, inclement weather tends to dampen the enthusiasm of sellers getting homes ready as well as buyers who would rather stay in than venture out to look at properties. Finally, there’s a perception that the market doesn’t really “begin” until spring. These factors all conspire year after year to make the first quarter the quietest.
A Snapshot of Activity
Looking back to 2016, there were 72 residential transactions in the first quarter, compared to 129 in the second quarter, 156 in the third and even 117 in the fourth (also perceived as a slow quarter). So we were prepared for the “slow time” this year. We hoped for more inventory because we knew there was demand. As it turned out, in spite of the weather, we got a little bit of what we wanted. We had 83 residential home and condominium sales in the first quarter of 2017, up 15% from last year’s 72. It should not be a surprise that our active inventory was up 29% from last year when measured on February 2nd. In a sellers’ market, inventory is the fuel that pushes the machine (as opposed to buyers being the fuel in a market they control). But there’s a footnote to these numbers: the condominium market had 27 sales – the best first quarter we’ve had since 2007 – and condominium sales were up 68.8% over last year’s first quarter figures. If we set aside the increase in condominium sales, our first quarter sales were essentially flat.
As home prices continue to rise, condominiums are becoming an important option for people who are being priced out of single family homes and those who are downsizing. In the first quarter, there were 13 homes sold for less than $600,000; there were 14 condominiums sold in the same price range. The median price of condominiums was $517,000 and of homes was $755,000. Condominiums represented 37.5% of the residences sold in the first quarter, compared to 22% last year. This is also not lost on developers, which is evident when you look at the new construction both underway and in the pipeline, where condominium products are strongly represented.
Perception versus Reality
The media has painted a pretty rosy picture of our market for sellers: just put up a for-sale sign, set any price you want and wait for multiple offers to roll in! In reality, while a strong market can make it easier to sell a home, there are certain goals that need to be in a seller’s mind regardless of the market.
- The first is to sell the home within an acceptable timeframe. On the chart below, you’ll see the “active” inventory is higher than it’s been since 2013. Also, even if you have an interested buyer, it doesn’t mean that buyer will end up purchasing the home. This quarter, there were 16 “failed sales” or homes that fell out of contract, down from 37 last year. Sales fail for all sorts of reasons: buyer’s remorse, which can come from price; realization of property condition; and reality checks are the most common. Getting the home sold in an acceptable timeframe is important to most sellers. In this past quarter, the average days on market was 71. Some homes sell right away, but they are usually the exception.
- The second goal is to maximize the net yield to the seller. Condition, disclosures and presentation all affect buyer perception and price consideration. Buyers are smarter than ever and they are conducting their own market research with their Realtors. Buyers need inventory to choose from. They will not buy home at any price, and their price ceilings are dictated by their perception of value. There are some multiple offers, but only 29% of homes sold in the first quarter went for over asking price (which may be fewer than some people would think) and the percentage of the overage was a scant 3%. The boom of 2007 was not that long ago and most buyers (and their agents) clearly remember the risks of overpaying.
We are in a sellers’ market with multiple offers and prices are rising but our market is smaller, less active and has a smaller buyer pool than Seattle. To gain maximum benefit from this market, sellers should keep this in mind. It’s important to consider the buyer’s perspective, where there is another labyrinth to negotiate. About 40% of Bainbridge sellers end up on the other side of the table when they later become Bainbridge buyers, so they eventually experience the flip side of our market. Working with an experienced professional will help you achieve the best result and understand the many nuances, of the Bainbridge real estate market. So let’s dive together into this busy season. It’s going to be an exciting ride.
Bainbridge Island Single Family Homes Sold January 1 through March 31
While still in its infancy, the number of smart home products—devices that let you control lighting, thermostat, or even your crock pot from your smartphone—is rapidly growing. These are products and whole ecosystems that help you control your home via a single iOS or Android app. You can pick and choose your favorite technology gadgets to assemble an affordable, intelligent abode on your own terms, or opt for an entire smart home system that does all the work for you.
While home automation is becoming more prevalent, naturally there are more and more products becoming available as “smart devices”. Here are some of the more diverse home gadgets we have found, beyond thermostats and security cameras:
GE WiFi CONNECT WASHER AND DRYER
Check washer progress with an app that lets you monitor cycles and settings, extend drying times, monitor levels of Smart Dispense tanks, download custom specialty cycles and receive alerts when clothes haven’t been removed.
LOGITECH HARMONY ELITE, UNIVERSAL REMOTE CONTROL
More than just a TV remote – the Logitech Harmony Elite offers all-in-one control of up to 15 home devices including your TV, satellite or cable box, Apple TV, Roku, TiVo, Blu-ray player, game consoles, plus connected lights, locks, thermostats, sensors and more. There’s even a free app that turns your smart phone into an additional remote.
PETZI TREAT CAM
Missing your pet while you’re away? The Petzi Treat Cam provides a way to connect with them through your smart phone from anywhere. Dispense treats, watch live HD video and speak with your pet using the 2-way audio.
FRIGIDAIRE SMART WINDOW AIR CONDITIONER
A wifi connected air conditioner that you control through an app on your smart phone allows you to turn the unit on or off, change temperature, control modes and adapt fan speeds – especially handy if you want your home cooled off before you get home!
SAMSUNG FAMILY HUB REFRIGERATOR
A few years ago, having a French door refrigerator with cameras, wifi, and a gigantic touchscreen would have been the stuff of dreams. Today it is a reality. This high-end fridge will let you peek inside it while grocery shopping, search for recipes on the 21.5 inch display, mirror your smart TV so you can keep watching your movie while you grab a drink, share calendars, photos and best of all – it even keeps your food cold.
Now that the days are a little longer, the sun a little warmer, and blossoms are starting to pop, you may suddenly have the urge to do some spring cleaning. Spring cleaning is a time-honored tradition; an opportunity to sweep the cobwebs from your home, clear out the dust that accumulated during the winter, and let the sunshine in.
For many people spring cleaning may seem tedious but it doesn’t have to be! Crank some tunes, get some room decor inspiration from Pinterest, and get out the garbage bags because it’s time to get cleaning.
- Make a list of what needs to be cleaned in each room.
Lists can help you stay organized — especially if you have a huge project on your plate. Walk through each room and write down what needs to get done. Writing a list will ensure you have all the cleaning materials you’ll need before getting started.
- Make your playlist.
Listening to music while cleaning can make things go by faster. Of course, you don’t have to make a playlist; you could always just turn the radio on to your favorite station.
- Get three bins and label them: trash, recycle and donate.
As you go through each room, make sure to declutter. Recycle old magazines and papers from the previous year. Put items you no longer use or need, like that book you bought 10 years ago but never read, in the donate box. Itemize your donate pile when finished because you may be able to deduct those donations on your taxes.
- Work on one room at a time.
It’s easy to get overwhelmed when you want to clean your entire home all at once. Refer to your list in step 1 and check each one off as you go. Tracking your progress will keep you working in an organized fashion and keep you going when you start to get tired.
- Set an amount of time to work on each room.
It’s easy to get distracted, looking at items you’ve forgotten or old photographs, and before you know it you’ve spent the entire day cleaning just one single room. Set a timer so you don’t fall into this trap and to give yourself small breaks throughout the process.
- Get some help.
Don’t do all the cleaning yourself! Recruit your kids, significant other or roommates to help out. Anyone who contributes to the mess should also help clean it.
- Start from the top and work your way down.
Use the law of gravity and clean from the top of the ceiling to the floor. Knock all the dusty cobwebs from the corner, wash the curtains, clean the windows, dust/vacuum the furniture, and finally vacuum the floor.
- Consider using natural cleaners.
Many chemical-based cleaners emit hazardous fumes. Some cleaners when mixed together can even emit toxic fumes that can seriously hurt you. Vinegar is a great substitute to use as a general household cleaning solution, and it is not nearly as expensive as packaged cleaning solutions.
- Be patient.
Take your time and let grimy surfaces, like the ones in your bathroom and kitchen, soak in your cleaning solution. Work on something else on your list while your cleaner does the hard work.
- Reward yourself at the end.
Having something to look forward to at the end of a long day of cleaning sure makes things go a lot faster. Plus, you worked hard and deserve it. Treat yourself.
Each year the Pantone Color Institute declares a color of the year that ultimately influences trends in all facets of design; including architecture, interior design, graphic design, and fashion. This year they chose Greenery which is shade #15-0343 in the Pantone color spectrum.
A symbol for fresh, new beginnings it also has a feeling that reflects the mindfulness of healthier food resolutions, growing vegetarian trends, and an appreciation for the outdoors.
Here are some ways the 2017 Color of the Year can be incorporated into spaces within your home: