"How is real estate on Bainbridge Island these days?"~

"How's real estate on Bainbridge?" If I had a dollar for every time I've been asked that in the past year, my personal economic situation would be lots brighter. It's a question I'm constantly analyzing for myself and my clients. I have pages of statistics and the news has lots of analysis.

Two studies came to my attention today regarding the real estate economy in the Greater Seattle area. One is a study reported in Forbes Magazine regarding the cities most likely to rebound and Seattle came in number one. http://www.forbes.com/2008/10/29/foreclosure-recession-cities-forbeslife-cx_dp_1029realestate.html The Urban Land Institute asked 700 real estate professionals about the best place to invest in commercial real estate. Our strong employment position put us at the top, and the assumption Forbes makes is that where the jobs are, residential real estate will rebound. That seems like a solid assumption.

I also think that our proximity to Seattle via the ferry gives us a strong opportunity. The South Lake Union development of the Gates Foundation and Vulcan (deep pockets both) and the growing biotech industry provide diversity beyond WaMu & Boeing. I think Bainbridge could offer much to new employees in the South Lake Union hub, and I expect to see more buyers next year coming from that locale, which could help offset what could be a sell-off from WaMu executives. That's the upside.

On the downside (because balance and reality are both good if sometimes painful things), the Seattle Post Intelligencer today ran a story showing that Washington was at the top of another, albiet less delightful, list. http://seattlepi.nwsource.com/local/388344_housing19.html It reports that the state's home sale price drop is the largest in the country.

Here's my take: We came late to this party/wake. I don't think we'll stay as long than other parts of the country and I think we'll go home earlier and likely more sober--and maybe feel better in the morning. We're having a tough time on Bainbridge right now because our prices rose too high in 2006 and early 2007 because of easy credit, scarce inventory and a strong second home market. We're now dropping because of high inventory in part driven by the over-build of condos and new homes, and because the majority of our homes require good equity and/or jumbo loans. The credit crunch has dried up the jumbo (over $417,000) loan market and slow markets elsewhere have dried up our pool of buyers. When credit opens up, when consumer confidence increases and when prices show signs of going up, the real estate market on Bainbridge Island will improve.

Which translates into this being a great time to buy, especially one of the new homes that is selling for far less than construction cost. Buying up in a falling market is always a good idea. And Bainbridge Island remains an amazing place to live.