Leaves Fall as The Bainbridge Market Rises
The Big Picture
To paint an accurate portrait of the Bainbridge Island real estate market during this autumn season, it’s important to put it in the context of the broader regional economy. Through that lens, things are looking very good. Estimates for September 2016 through September 2017 indicate an employment increase of 76,100 in Washington. According to the U.S. Bureau of Labor Statistics, the private sector added 61,400 jobs while the public sector gained an estimated 14,700 jobs over the year. Windermere Chief Economist Matthew Gardner backs that up in his Third Quarter Report, writing, “I maintain my belief that the Washington State economy will continue to outperform that of the U.S. Given such a strong expansion, we should also expect solid income growth across Western Washington.”
The Seattle job market continues to be a huge draw for people moving here from across the country and around the world. As the number of residents in the Puget Sound area rises, Bainbridge Island has been and continues to be a viable and attractive residential option. The desirable amenities are obvious: from the rural feel to the vibrant community to the relative ease of a 35-minute commute by ferry versus an hour and a half by vehicle in the Seattle Metro area – just to name a few.
Another factor that affects our market is Buyer fatigue. We’re seeing an increase in Bainbridge Island buyers who are fed up after multiple failed attempts to purchase in Seattle, where real estate market is extremely competitive, and choosing to look in our direction for alternatives. This very real and frequent market dynamic contributes to the health of our local market.
A Positive Price Report
The third quarter of 2017 saw continued upward pressure on prices. As the chart on page two shows, we saw near double-digit price gains in terms of average and median sales prices over the same period last year. This resulted in a dramatic increase in sales activity in the high-end market with a 34% increase in sales between $1 to $1.5 million and a whopping 85% increase in sales over $1.5 million. Having to list sales that exceed $1.5 million in a separate category is solid evidence of our changing market.
Our price growth has been consistent over the last several years. The strong population and employment numbers mentioned above help to move the market, but low inventory continues to limit Buyers’ choices. A nominal but consistent decrease from the third quarter of 2016 inventory of 98 homes on the market to the 2017 third quarter inventory of 92, suggests a continued upward price movement is inevitable.
In a transitioning market, we need to look at data from every angle. Given the positive signs summarized here, Sellers should not assume that they can sell their homes in a matter of days, without regard to condition and elevated prices. This is clearly a Sellers’ market, as 2.4 months of limited inventory would suggest but realistic expectations are critical. While there are multiple-offer scenarios, those have become less prevalent over the course of the year. Instead, we have experienced more price reductions as aggressively high pricing will not draw Buyers or even, perhaps, pass appraisals. It’s important to remember that every house, every neighborhood and every transaction has its own distinct characteristics. A Realtor is essential for navigating the latest market conditions and getting the highest and best price for your home.
Traditionally, real estate activity tends to slow down in the fourth quarter, but this year has been quite different. In October, our office has nearly doubled the number of sales compared to this time last year. Open house activity has been robust, indicating an energized pool of Buyers just waiting for that perfect home to come along. If these trends continue, we could be in for a very exciting close to an already strong year. Here’s to a healthy and hearty season in all corners of our wonderful Island community.
A Bustling Springtime
The first quarter of 2017 didn’t start slowly, it sure felt like it did. The second quarter was a different story. We were flat-out busy between April and June. There were 141 home sales on Bainbridge during Q2, which was a 31.8% increase over last year and a 306.5% increase over 2009. The only second quarter to get even close in the past decade was 2013, when 125 homes sold.
The Mechanics of Price
A curious piece of data accompanies all these sales: the median price of homes sold in the first half of 2017 increased only 3.6% over the comparable period last year. That is the slowest growth of prices since 2012-2013 (when it went down). Here’s why this is significant: although there is healthy demand, buyers are showing restraint and patience. Presentation, pricing and negotiating skills still prevail. You cannot just take a house in any condition, throw a price at it and expect success. This is one of the factors that differentiate Bainbridge from the Seattle market. The flip side is that a major source of new buyers on Bainbridge are frustrated Seattle buyers who are tired of dealing with the city’s growth and market conditions. Our office was involved in 96 Bainbridge transactions during the first six months of this year, 30 of which (or 31.3%) involved Seattle and Eastside buyers. When we expand the circle, we see that out-of-state and Seattle buyers accounted for 51% of our transaction in the first six months.
Condominiums and Land
Our condominium marketplace has had a booming first half of the year. Sales climbed from 38 in 2016 to 50 in 2017 and the median price rose from $404,500 to $499,250, finally surpassing 2007’s previous record of $468,000. It took a decade for these numbers to return, and we’re happy to welcome them back.
Land is now the only remaining soft spot in our market. Sales were down 39% from last year but median prices rose 14%. We attribute this mostly to no new large parcel sales and the possibility that people are intimidated by the new construction process. The planning and designing phase of a new project is exciting, but then comes permitting, the search for contractors and all the costs. With quite a bit of new construction coming on line, people seem to be waiting to see what someone else has built.
A Construction Zone
There is quite a bit of new construction on Bainbridge, which means the development topic is getting a lot of attention among locals. Bainbridge Island is such a great place to live, that the pressure to grow comes naturally. History tells us that restricting growth will push up prices and eventually affect the market’s diversity. However, growth is a concern to existing residents who fear it will spoil what makes the community desirable in the first place. The community stance has been to try to limit development to specific pockets of the island as a way of preserving rural character in general. When we map the major new construction projects, we see that this goal has largely been met:
Winslow: The Grow Community, Wyatt Way, Weaver, Bainbridge Landing, Finch, Freestone Landmark (Wing Point), Freestone Ferryview (Wing Point)
Lynwood Center: The Roost, Pleasant Beach
Rolling Bay: Sunrise Square
These projects are within designated growth areas, with the exception of the project going in at Torvanger/Sunrise Drive; a 10-home project being built on a 12-acre parcel.
How long will this pressurized market last? Anyone who experienced the 2007 market, which was also quite active just before it changed dramatically, is reluctant to make long-term predictions. However, there are some key differences between 2017 and 2007. Today, the lending and banking environments are far healthier. Also, job growth is the primary fuel of real estate growth. And our local economy is far stronger now than then. Windermere Chief Economist Matthew Gardner had this to say about regional job growth in his Q1 2017 report:
“Washington State continues to add jobs at a steady rate. (We) continue to see unemployment fall and I anticipate that we will see this rate drop further as we move through the year. In all, the economy continues to perform at or above average levels and 2017 will be another growth year.”
Ever the Rock
Growth and new construction, but there is diversity in the construction; family homes, homes ideal for downsizers, and homes close to services. Driving around the island, you’ll find most of it untouched by new developments. We also have the best parks, hikes, beaches, bays and communities in Puget Sound. Our region’s star is still rising as a great place to live and work and we are one of the premier neighborhoods in it. Growth pressure will continue; it’s up to all of us to work together to address it in ways that honor the past, present and future of this great place.
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 time frame. On the following chart, 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
Never underestimate the importance of a pretty face.
When it comes to buying or selling a home, first impressions count. While major renovations or additions can affect your home’s value, you don’t need to add a new pool to improve your home’s desirability. In fact, improving your home’s curb appeal through relatively low-cost, but simple, changes, can significantly improve its standing in the market. A curbside “facelift” is always money well-spent, whether prepping to sell your house, increasing its equity-value, or just for your own benefit.
Updated house numbers: Adding new, elegant numbering to your home’s address signage can create a flattering statement. Choose larger numbers in simple, unfettered designs for maximum appeal.
Keep it neat: The first glance at your home should reveal a neat, clutter-free exterior. Remove any standing objects, trash, or items in disrepair, and keep the exterior area as tidy as possible.
Try a new door: Though a new door is a costlier investment than, say, house numbers, it can spruce up your home’s exterior, and even help your home look newer. The cheapest option is to repaint it, and people are getting more adventurous with color choices for doors. Contrast is good, and some homes benefit from brightly colored doors. At minimum, keep your existing door clean and in tip-top condition by replacing knobs, hinges and doorbells if they’re in disrepair.
Lighting: Good lighting can give your home’s exterior a cheap makeover and make first impressions more positive. Try path-side lighting in your entryway, or selective lighting to accentuate particularly beautiful landscaping, such as blooming flowers.
Landscaping matters: Landscaping may be the single most important component of a home’s curb appeal. First things first: Plants in poor condition immediately detract from your home’s appearance, as do weeds. Commit to maintaining whatever landscaping you choose in prime condition. If your budget allows, you might consider a professional landscaping service. Homes with more “sophisticated” landscaped exteriors can be perceived as having a larger market value.
Check Your Mailbox
In many neighborhoods, another first curb-appeal object is literally at the curb: the mailbox. It’s often not seen for what it is: an eyesore. You can spend a pile of money for a pile of bricks to dress up your mailbox, but a recent trend is less costly: unique and artsy mailboxes and posts. Visit an arts and crafts show and you may find hand-crafted mailboxes for a reasonable price.
Know your neighborhood: We don’t want to encourage you to worry about the proverbial Joneses, but knowing the context of your neighborhood is important to creating curb appeal. Create an exterior that complements the neighborhood and nearby houses.
Come see this delightful, magical home in secluded, natural setting with an open layout with French doors from living/dining room to new deck and patio space that overlook the serene forest.
Open Sunday May 22nd from 1pm to 4pm
For more information on this home, click HERE
The Same Old Tune
Even as the birds of springtime sing their new songs of the season, we must hit repeat as we report – once again – on our local market’s low inventory. A lack of available homes continues to dictate what’s happening in Bainbridge Island real estate. On April 1st, there were only 47 homes and 5 condominiums available for sale on the island. Within the overall market, certain price points have been more pinched than others (which is a snapshot in time and will change as the year goes on). For example, if you were looking for a home in the $600K to $800K range, you had only 5 houses to choose from and zero condominiums.
How Inventory Affects Sales and Prices
This extremely limited inventory helped drive home sales down more than 20% from last year. There are plenty of buyers out there; there are just not enough properties on the market to sell. The scarcity of inventory has increased competition and bumped median prices up more than 9%. The average, which is more a function of the price ranges where homes closed, was up more than 18%. The median cumulative days on market dropped from 26 in 2015 to 20 in 2016. To put this in perspective, the cumulative days on market in 2012 was 146 days.
The Story on Condominiums and Land
The condominium market is also suffering from lack of inventory. Last year at the beginning of April, there were 16 condominiums available compared to this year’s 5; both of which lie in sharp contrast to 2012, when there were 45 available. Consequently, sales dropped from 19 to 16, but the median price rose 23% to $430K. Land, on the other hand, experienced a 30% increase in sales to 13 parcels this quarter with a 26.8% increase in the median price to $225K.
The View from Inside
One might assume that a market like this, with rising prices and inventory competition, makes our jobs easier. The reality is that there are some basic principles, goals and strategies that any good real estate professional seeks to embrace, all of which must adapt to an ever-changing market. Regardless of the climate, we want our clients to achieve the best possible outcomes – both at closing and in the future. This is sometimes easier said than done, especially when competition is fierce and time is of the essence. Given the complexities of the Bainbridge market, where most homes and locations are unlike any others, things can get even more challenging. It is not like buying or selling in a large subdivision where a product like Zillow has some merit. Here, each house has strengths and weaknesses and the success of a sale can pivot on those subtle nuances.
If you’re a Buyer
For buyers in this market, supply is tight and prices are rising. You almost have to assume you will be competing with others when you find the house you would like to make your home. Is the price fair? How high should you go? The specter of 2006 and 2007 should be in the back of your mind, as the concept of paying “whatever it takes” came back to bite many homebuyers. An agent brings knowledge of the current market, the choices it offers, what might be coming and how an individual house fits into the bigger picture – including the history of the neighborhood and often of the house. An agent will know whether a price is in line or whether the seller is being aggressive. When there are limited comparable properties, this expertise becomes extremely important. No one wants to hear, “You paid how much for your house?!”
In multiple offer situations, there are strategies to employ. You need to line up your resources to be “the best you can be.” Multiple offers often require that decisions be made quickly, so being prepared makes you a stronger buyer and one less likely to be disappointed later. If you are not a cash buyer, there are things you can do to compete with those who are. Get comfortable with the stack of forms you’ll be asked to sign. Ask your Realtor what it means to omit certain forms, how to read building inspection reports and Title reports. Learn how to spot red flags that make certain houses less expensive. Being a buyer in this market can be difficult, frustrating and even scary. A good agent can help you navigate the winding road to achieve the best results and avoid mistakes.
If you’re a Seller
Sellers may think they have it easier, but the reality is that a seller’s quest is the same in an ascending market as in a descending one. The two primary goals for sellers are to get the home sold in the timeframe desired and to maximize net proceeds. Buyers will be more attracted to, and will ultimately pay more for, a house that is optimized to appeal to a buyer and priced in a manner that a buyer feels is reasonable in the current market. Knowing the current market, as well as past and future markets and how a particular home fits into all of them, is essential in achieving the seller’s ultimate goals. But the work is just beginning when buyers first express interest. You have to know which of them will have the greatest possibility of actually achieving a closed transaction. It is surprising how many transactions fall apart in this market. Negotiating inspections, Appraisals, Sellers’ liability; what do all those forms mean and what are your responsibilities? There are many steps between deciding to sell and achieving your goals. The reality is that sellers don’t always get everything they hope to get out of a sale – even in a sellers’ market. But an experienced agent will help you prepare, present and respond so you can get the most out of any market.
Real estate markets fluctuate all the time, sometimes favoring buyers and sometimes favoring sellers. This is simply the nature of the business. But in the midst of all those ups and downs, one thing remains consistent: the beauty and livability of Bainbridge Island. At Windermere Bainbridge, we celebrate our island community and all it has to offer.
Good weather should be enjoyed to its fullest extent. To do that you have to actually go outside, but if your home lacks an enticing outdoor living space, there’s little incentive to venture out.
Outdoor living is seeing a bit of an explosion lately: Adding a deck is one of the most requested home projects today, and demand is steadily rising. New durable outdoor materials, furniture and accessories plus unique shade options and smart tech that lets us watch movies and have full kitchens have no doubt fueled the interest. So if you’re hoping to make the most of good weather in your area, a new deck has likely crossed your mind. Here’s what you’ll need to know about finally getting one.
Project: Adding a deck.
Why: To extend living space and enjoy the outdoors with an area for dining, grilling or lounging.
First thing to consider: You’ll want to decide whether your property is good for a deck or patio — or a combination of both.
Deck. A deck is a platform with decking boards, usually made of either wood or a composite material. A deck is ideal for sloped yards where you want a flat area. It’s also good for homes that sit high above the ground or atop a basement, because they can be built as high as you need. If your home sits higher than about 14 inches off the ground, a platform deck is probably for you.
Patio. A patio is on flat ground and is usually made of concrete, pavers, flagstone, wood or another hardscaping material. Doing a patio on a sloped lot is costlier and much more difficult, because retaining walls must be built to create a level surface. If your door opens right at the ground level, then a patio is the option for you.
What do you want your deck to do? Typically, people want a deck that’s multipurpose, with areas for eating, cooking and hanging out. But, as with most things, the sky is the limit. So depending on your budget, consider things like a fireplace or fire pit, a hot tub, a kitchen, a water feature and more.
Figuring out what you want your deck to do will also help determine its size, safety measures and traffic flow. Do you host a lot of parties, or is it just you and a partner? Do you have a lot of kids? The last thing you want or need is a deck that’s too small or too large for your needs.
Also consider privacy on your deck. If you don’t want to feel like you’re on a stage performing for your neighbors, you’ll want to think about adding an arbor, a pergola, latticework or something else to create privacy.
How will you access the deck? If you currently have a door that leads outside to where you’ll want your deck, then congratulations — you’re in good shape. But if you’re adding a deck to a portion of your house that doesn’t have a door, then you’ll have to add an opening, which can increase costs drastically depending on whether you’re planning for a door in a load-bearing wall or not.
If you’re using your deck for dining al fresco, you’ll want it located as close to your kitchen as possible.
Consider how it will look. When adding a deck, it’s best to consider the style and architecture of your house so that the addition either blends in with or at least complements your home. A trained professional will be best suited to make recommendations on deck style, materials, color and more.
Know Your Material Options
The two main options for decks are wood and composite boards. Historically, wood has dominated decks, but lately composite boards are more in demand. There was a time when many home owners associations didn’t allow composite decks, because they didn’t look realistic and had other problems. Now it’s the complete opposite. Many developments don’t allow wood decks because without proper care, they can start to look bad in five or six years when they start to weather.
Composite boards. Composite boards, seen here, are engineered products that are a mixture of wood fibers and plastic; a lot of the material comes from recycled plastic grocery bags. Some companies use old shredded carpets for wood fillers. Newer composite boards are wrapped in a thin plastic layer so they won’t stain or fade. These are more expensive than wood boards but often come with a warranty of 20 to 25 years, are low maintenance and can be made to look almost identical to any species of wood out there. Plus, they stay the same color as the day you installed them.
Wood. Many wood species are less expensive than composite but can weather over time and drive up maintenance costs. If you don’t take care of the wood, it can rot, dry out, warp, crack and splinter, and nails can pop out. But if you’re willing to maintain it, wood decking is beautiful, especially up close. Shown here is an ipe deck, which is a Brazilian hardwood known for its natural durability and for being weatherproof.
Keep in mind that the availability of certain woods varies across the country. Redwood and cedar are popular deck choices on the West Coast but check with your HOA about any restrictions on using wood or composite decking.
Shade. If it’s too sunny or raining, you won’t be enticed to use your new outdoor space unless you have some shade or some sort of covering. There are endless options here, from large umbrellas and retractable awnings to pavilions, gazebos and screened-in porches. Of course, the more elaborate, the more expensive it will be. You can have a deck porch with finished ceilings, fans, TVs, heating and A/C, fireplaces and more. If your deck will be raised 8 or 9 feet off the ground, consider converting the space below into a dry area for entertaining or storage. To do this your deck builder will integrate panels beneath the decking so that water falls through, gets collected and is sent to a downspout. That way you have a dry, shaded extra patio spot.
Lighting. A good lighting plan will greatly extend the time during which you can actually use your deck. Consider ambient lighting for lounging, task lighting for things like cooking and grilling, and safety lighting for stairs and railings.
Who to hire: A professional deck designer-builder is recommended for this project. A pro will meet with you, take measurements and photos of your site, and talk with you about your needs. He or she can make suggestions on blending the deck in with your existing home, and is knowledgeable about local building codes and obtaining the proper permits. A professional will also map everything out in 3D software and look at traffic flow and placement of furniture, to gauge whether the deck is too big or too small. What’s more, if you’re doing a deck, try to find someone who specializes in decks. If it’s a patio you’re looking for, look for someone with patio experience, as different approaches are required for each. If you’re adding an outdoor kitchen, you’ll need someone to do the plumbing and gas lines. If you’re adding an entertainment system or lighting, you’ll need an electrician as well.
Permitting and codes: If your deck is more than 200 square feet, you’ll likely need a permit. If your deck is more than 30 inches off the ground, you’ll need a permit. If you’re doing retaining walls that are higher than 3 feet, you’ll need a permit. Higher than 5 or 6 feet and you’ll need an engineer.
Plus, every county has different building codes for decks. Some places allow cable railings; others prohibit them. If you’ve got a septic tank or well on your property, that can affect where your deck can go. Deck builders will be able to read your site plan, assess where the setback is and if there’s a well or septic tank, and create the drawings to submit for a permit.
When to do this project: When the weather is nice is obviously a good time to build a deck, but adding a deck is also a good opportunity to think about your backyard as a whole. Many deck builders work with landscapers, pool companies and other outdoor professionals to create a full-package makeover.
How long it will it take? An average deck that’s between 300 and 500 square feet will take about one to two weeks to build. If you’re adding a porch, pavilion or gazebo, it will take at least another week. A simple townhouse deck without many corners that’s 100 to 300 square feet could take as little as three to four days. But it all depends on where you live. Other factors include whether you’re in a flood zone, whether you’ll need to cut down trees and whether you have a septic tank or well on your property. A good deck professional will be able to look at your site plan and determine these factors.
Join us June 27 and 28 as we showcase some of the finest waterfront homes in Western Washington. Have you dreamt of owning a little piece of Pacific Northwest paradise on the water? This is your opportunity to take a peek at what's available. From 10 a.m. to 4 p.m., June 27 and 28, over 125 waterfront homes throughout Western Washington will be open for you to view – just look for the blue balloons. To see what will be open in your area visit www.waterfronthomeswa.com.