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.
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.
Considering that New Year’s is a pretty hot-ticket holiday, it’d behoove you to let your friends know sooner rather than later that you’ll be hosting a party at your place. Paperless Post is a good alternative for those who don’t want to track down friends’ addresses, go out to buy a roll of stamps, or leave the house. For those on a budget, there are several free invitation designs to choose from.
Hire a carpool so no one has to drive home. This is best done by using a traditional car service that can be scheduled for pick up and home delivery. Other ride share companies like Uber and Lyft offer similar services but they cannot be reserved and on a busy night you might find your friends coming in late and leaving far later than desired.
For a refreshing alternative to Champagne, try Prosecco. For nonalcoholic selection try Twelve, a fizzy blend of fruit and herbal tea. It’s delicious and certainly more elegant than sparkling cider. Pellegrino and Perrier are also very nice to keep people happy and hydrated.
Don’t let people get hungry! Make it easy on yourself and your wallet. Get some fabulous, frozen pre-made appetizers and keep them rolling from the oven. Cheese and cracker, charcuterie and veggie platters that require no cooking and can be made ahead of time are always crowd pleasers. These can even be purchased from your local deli if time is more important than slicing and arranging your own cheese.
We’ve all been eating way too much sugar all December but if you want to do a small dessert and make it look special, dust some edible glitter onto your store bought cookies or cake. Yes, edible glitter is a thing.
Set up Pandora at a volume where you can hear it – but don’t have to raise voices to hear each other. Hipster Cocktail Party is a great one. Don’t let the name turn you off; the music they play is terrific. Bill Withers, Nina Simone, Van Morrison and Aretha Franklin are some regulars you’ll find on this station.
In honor of Earth Day, I thought I would have a little tribute to the color green. While a pale, almost neutral green is common in design, it takes guts and color savvy to really sock a punch to a room with green. These are a few great examples where the designer is a green maven.
This room has such a fun vintage feel without the burden of all of grandma's clutter. Keeping all of the other major pieces a stark white really showcases the green color.
I LOVE this room; my eye was immediately drawn to the Egg Chair in that gorgeous shade of green!
I think I'm drawn to this room because it looks like it was inspired by the Farnsworth house. The green accent mimics what is going on outside the structure.
The designer of this bathroom understands color and balance. The green is allowed to shine against the white while a little punch of orange provides great contrast.
Speaking of orange and green – being fearless with color can be intimidating but rewarding and well worth it when done properly. The balance of the orange and green is so refreshing and exciting.
Also, chocolate brown looks fantastic with green.
This calm traditional room probably would have seemed like the same old, same old without that brilliant hit of green provided by the duvet and throw pillow.
Here the green tiles add a bit of whimsy to an otherwise very modern kitchen.
And finally, who says wreaths are only for Christmas? A living wreath planted on a moss ring provides lovely greeting at your front door.
4479 Pleasant Beach Drive NE
Bainbridge Island, WA 98110
Offered at $1,150,000
Luxury seaside living in the heart of Pleasant Beach Village, just steps to restaurants, arts, theater and parks. Incredibly light this beautiful home features open gracious living with 9 foot ceilings, hardwood floors and propane fireplace. Wonderful low maintenance, single-family home features 3 bedrooms including Master bedroom with private balcony overlooking the water, sweeping views, walk-in closet and Jacuzzi tub. Incredible amenities include a bright gourmet kitchen with pantry and private patio, skylights throughout, central heat and cooling and a 2-car garage. NWMLS #893331
Singing a Familiar Song
In 2015, we watched as a trend that began in 2012 continued. For the past several years, we’ve had a steady decrease in available homes accompanied by increased values. In 2015 we saw more of the same – or less of the same, depending on one’s perspective. We are living and working in an ongoing environment of real estate scarcity. Still, we keep our eyes on the future rather than the past to see what the market will do next.
The Ebbs and Flows of an Island Market
As with all markets, we are subject to demand (buyers) and supply (sellers). The majority of our buyers come from two sources: island residents seeking to change their Bainbridge addresses (>40%) and people moving here from the Seattle environs (~30%). We are all aware of the craziness of the Seattle marketplace. Seattle is experiencing phenomenal economic and job growth, a lot of it right downtown. Seattle Metro real estate is also a fairly closed system, with little room for additional housing unless you want to live in an apartment tower or spend a lot of time on the freeways going east/south/north. The consequence of this growth has created some serious traffic issues and prices (for those who succeed in the multiple-offer frenzy) are a lot higher there than here. Once you factor in the great reputation of Bainbridge schools, it is little wonder families of downtown workers look to the island as a real estate alternative to Seattle.
Movement on the Rock
Then there are the Bainbridge buyers. Many island residents have been holding on to their homes purchased between 2006 and 2008, waiting for prices to come back up so they can move without taking an equity hit. In general, prices have gradually risen since 2012, which has brought home values closer to the peak prices of 2007. (Prices have grown >35% since the beginning of 2012 but certain areas/locations/amenities have outpaced appreciation relative to other island neighborhoods.) At the current rate, we should surpass the average price peak of 2007 at some point during 2016. (The average price in 2007 was $820,569; in 2015 it was $790,534.) The “upper end” segment (>$800K), which has been the slowest to recover, had a strong 2015 with sales up 35.6% from 2014 (137 versus 101). It is interesting to note this segment accounted for 36% of all the sales in 2015.
The Challenge of Choices
The only apparent impediment to local people moving around the island is a lack of choice. Bainbridge residents are reluctant to put their homes on the market because they cannot find alternatives that justify moving (and their current homes appreciate the longer they stay in them). The current demand is outstripping current supply, which creates price increases and buyer frustration. The demand comes from the fact that Bainbridge is a pretty great place to live so people want to move here. As long as Bainbridge Island is perceived to be a desirable community there will be demand from people wanting to live here. There aren’t many alternatives for families wanting great access to downtown Seattle, fabulous schools and a more relaxed lifestyle than Seattle provides.
Low Supply and High Demand
The effect of this demand will be continued buyer frustration, higher prices and a demand for more inventory (growth of the number of homes available, otherwise known as new construction and development). If our demand stays the same (and there is no reason to doubt that it will, at least in the mid-term), prices will rise more than if there is new inventory. For those of you who have been here for a while, you’ll remember how quickly our prices appreciated in the last decade (2002-2007).
The good news is that there are new construction projects being built and being planned. As home prices and demand have increased, builders have re-emerged. We had 68 land sales last year (with a median price increase of 27%, from $185K to $235K), the most in over a decade (and a long way from 2008’s 15 sales). Some of these are for single family; some are for developments. Grow Village, developments on Wing Point, Wyatt Way and Lovell, Weaver, Sunrise Bluff on the mid to north end are actively being pursued by builders. Pleasant Beach and “The Roost” on Point White in the south end want to move forward and will, just as soon as some issues with the local sewer infrastructure are answered. Some of these projects will come on line this year, and some in 2017. Last year, we recorded 21 new construction sales, a 31% increase over 2014 and a 420% increase over 2013.
The Word on Condominiums
Condominiums were dramatically affected by the lack of inventory. Active listings (listings not under contract to be sold) went from a peak of 16 in May down to only 4 in mid-December. That’s right. In mid-December, there were only 4 condominiums available island-wide. With that in mind, it is surprising that sales were only down 11% (90 versus 101). The median price, however, grew 11.2% ($372,500 versus $335,000) which surpassed the single family median increase. This was due primarily to sales between $400K-$500K increasing from 19 to 25 in 2015. (In both years, 86% of all sales were less than $500K.)
A Fresh Take
We expect 2016 to be an interesting year. There is little evidence to a slowdown in demand so the challenges sellers and especially buyers experienced in 2015 will probably not abate. There is a “buzz” that more people are thinking about selling this year, which will help. However, there appears to be a resurgence of a “no growth” attitude, which will drive prices higher. The trick is enabling growth so it maintains the qualities we currently have and allows Bainbridge Island to retain its distinct personality and charm.