The property tax blues--making sense of Bainbridge Island real estate taxes~

My friend and former client emailed me yesterday concerned that her property assessed value is much too high. She wondered if I could help her appeal it. With the bills for property taxes arriving, that's a question lots of folks are asking.

My friend's simple question has sent me on a short but fascinating journey into the web pages and pdf forms of the Kitsap County Assessor's office.

Here's what I've learned:
One, the state has charged the counties to assess your property at 100% of market value.
Two, the assessment for your property was done last year. You pay taxes in 2009 on the 2008 assessment made before the notices go out in June of 2008.
Here's the kicker: Three, The 2008 assessment value is based on sales closed in 2007!

Your assessment and the subsequent tax payment lags behind the market by two years. You're sitting in your house or condominium watching prices drop around you, and you get your tax bill. "No way, Martha," you say, "could we sell this place today for what they say it's worth." Maybe you could and maybe you couldn't, but that doesn't really matter. The issue is, what could you have sold it for in 2007 (at the height of our market)?

The two year lag served us well in times of rising prices. Now, not so much.

Here's the final kicker--in the pants, that is. The time for appealing your assessment is long past. You are allowed 60 days after the Notice of Value was sent out in June 2008--August 2008 was the deadline.

If you feel your assessment is terribly out of line, take a look at the Notice of Value you'll get this coming June. Anyone can go to the county assessor's web page: http://www.kitsapgov.com/assr/appeal/appeals.htm to find all the information you need to begin the appeal process next year. There's a link under "Sales" to all the recorded sales in specific areas and for different types of properties on Bainbridge Island (and the rest of Kitsap County.) Keep in mind that appeals for your 2009 assessment will need to cite comparable properties that sold in 2008.

My guess is that properties that are reassessed in value next year will see a drop, because we've seen a drop in the prices for the last eighteen months.

If you would like help compiling sold data to mount an appeal this summer, I'd be happy to be of assistance. Just give me a call or drop me an email.

Why making your home on Bainbridge Island makes sense~

Today's Seattle PI's front page has two lead stories, the first one saying we have a crisis in the housing market--not enough buyers: http://seattlepi.nwsource.com/business/399873_homeprices13.html.

The second one says we need to get ready for "climate refugees," people will who flood our shores looking for relief from global warming: http://seattlepi.nwsource.com/local/399958_climate13.html.

Interesting juxtaposition to ponder as I finish my second cup of coffee. It has been my experience that the Northwest as a whole and Bainbridge Island specifically appeal to people who are tired of heat, crowds, noise, ugly suburban cityscapes, crime, etc. Not to put a negative spin on it--I could say our temperate climate, peaceful, beautiful and safe surroundings are appealing.

Add to this Tom Friedman's column in this week's NYT:
http://www.nytimes.com/2009/02/11/opinion/11friedman.html
His point is that our country would benefit from opening its doors to the best and brightest from around the world, especially the Indians and Chinese who are seeking to bring their entrepreneurial and brilliant efforts to our shores. I have a son finishing up his MBA this spring, and he's seeing first hand the silliness of educating these bright, willing and able foreign students, and then shipping them back to build the economies of their home countries. It's about creating jobs, not competing for jobs. Look at Silicon Valley.

Back to Bainbridge Island and how this relates. We may be a small, rural place, but folks here live globally, both in their businesses and their philanthropic endeavors. I am Bullish on our long-term ability to be attractive to the best, the brightest, and the smartest folks who see this paradise for what it is.

Windermere Real Estate dominates on Bainbridge Island~

I've just received the latest statistics showing market share on Bainbridge Island. My office, Windermere Real Estate/Bainbridge Island, Inc., has always dominated our market with solid, experienced, full-time professionals.

The new numbers show that the gap between our office and our nearest competitors is widening. In the month of January, the agents in our office were responsible for 42.9% of all closed sales in total dollar amount and for 42% of all units sold, including all types of properties on Bainbridge Island.

Why does this matter to someone looking for an agent? Because the current market is a tough place to be doing business. Sellers need an experienced, well-trained agent who can price their properties competitively, with full preparation and staging, and compelling marketing. Buyers need an agent who is on top of the market values, the latest legal developments, and who can make sure the financing and inspection procedures are properly completed and that the oversight of all terms of the contract are meticulously adheared to.

When an experienced agent performs these functions well, with strong relationship of trust with the client, the transactions will close and properties get sold. This is no time for trial and error.

Current trends in residential real estate on Bainbridge~

We're almost half-way through February, so we have a pretty good idea of how the year is starting out. The news isn't as good as I'd like, nor as bad as I'd feared. Here is a link to the most recent Trendgraphix data and graphs for single-family homes.
http://www.trendgraphix.com/WAS/charts/Z110-01-01-01-0137-1-38-1B0507-200901.htm

The good news is that we're in a better place than we were a year ago. Twice as many homes are in contract and the number of solds is up 33%. Inventory is down. A year ago we had over 24 months of inventory, and that number is down to 15.7 months. The bad news for Sellers is that we are still in a massive Buyer's market and February has started out slowly. That being said, we're seeing good properties coming on the market, and Sellers are beginning to price homes where Buyer's will write an offer. One home waterfront home listed in our office received two offers this week.

We had a local mortgage broker speak to our office on Tuesday this week. Bainbridge Island remains with a ceiling of $417,000 for conforming loans, where the best rates are found. King County is up to $505,000, a fact that doesn't help us here. (The formula is based on median home price of the county, and we're lumped in with Kitsap, although our prices and demographics are more closely aligned with King.) The broker is showing a 30-year fixed rate of 5.375% with no points, and below 5% with the payment of a point. Owner occupied homes can be had with 95% down--something we thought and hoped would go the way of sub-prime lending.
Most of our buyers on Bainbridge have equity from prior real estate sales, which means that when their other property sells, they have over 20% to put down. A 20% down payment will get you a conforming loan on properties under $522,000. The median price of properties sold January 1, 2008, to today is $580,500, which means that more than half the properties sold would need more than 20% down to qualify for a conforming loan. Jumbo (non-conforming) loans are available from lenders like Washington Federal who make portfolio loans, and their rates range from 6 to 7.125 % or more.

The biggest news about residential real estate on Bainbridge remains the large inventory of unsold new construction. Here is the biggest "undropped shoe." With over 50 homes the builders need to sell, this could have a big impact on prices overall. Buchan Homes, a large corporate builder based on the Eastside, sold a home last week for $1,075,000, a $200,000 reduction from the last list price ( almost a 83.5% drop.) This home was listed over $1.6 million at one time. The large corporate builders can take these drops to unload their inventory. It will remain to be seen what effect this will have on appraisers and buyers. My prediction is that prices still have a way to go before we've reached the bottom.

A "moving" real estate metaphor learned on Bainbridge Island~

I started piano lessons a year ago. Last week my amazing and magical teacher Ann Strickland taught me something that has made playing both easier and more pleasant. The fingers of someone new to piano will often hover above the keys with a slight nervous twitch--where do I go next, where should I land? That was me.

What I learned last week was that the best players let their fingers lightly rest relaxed on top of the keys, playing the notes as they come. When it's time to move to another position or octave, the whole hand and arm move lightly and gracefully, fingertips again touching the keys. When I do this, I've found it amazing that the note I need next is so often is right under my fingertip. My stress has decreased and my playing is getting better!

I love metaphors and this one is one of the best for real estate. Too often we're living in our houses, but emotionally we're hovering just beyond making them our homes. Nervous, we're thinking, should I land? Is this house going up or down in value? Is it time to move? Where do I go next? Unpacked boxes clutter our garages and our thoughts and hearts are cluttered, too.

Here's my recommendation. Until you make a firm decision to move, settle in, make your house a true home, rest lightly there at peace. And when it's time to sell, a great real estate agent will help you have a graceful, grace-filled experience.

Land on Bainbridge Island~

My folks always believed in the value of land. I grew up on a farm that had been in the family since my great-grandfather homesteaded it in the 1800s, and I watched its value appreciate in my lifetime in an incredible fashion. "Take care of the land," my dad always said. "They're not making any more of it." True words unless you live where accretion makes you its lucky beneficiary--remembering always that Nature gives and can take away.

Here on our island rock, that's not likely to happen. The trees grow taller and the ocean's force is mostly tempered. Every so often the eastern cliffs along Puget Sound grow a little steeper, but satellite maps show clearly that we've been here since glaciers scraped their way south. (That's why our hills and valleys tend to run east to west. If you want a flat walk, head north or south.)

The value of vacant land on Bainbridge Island isn't doing very well right now, however. That's consistent with the trends, of course, but land is particularly struggling. I did a price analysis on some property this week, and decided that we've had so few sales that the only way anyone can gage the value of a piece of land is to see what shakes out in a negotiation.

The driving force for land sales on Bainbridge has always been builders looking for a place to build their next custom or "spec" home. For now, those days are over. Builders are unable to sell what they have built, and they aren’t buying land. The MLS shows over 40 homes currently listed on Bainbridge in various stages of construction. Some houses are being sold as is, only partially completed, and several more are being offered as presales. Other builders have put renters into their unsold properties.

A buyer for vacant land or new construction could do very well right now. Prices are low and dropping, and one builder is even offering to pay a buyer's mortgage for the first year.

Someday they'll be building more homes, but we still aren't making any more land. It seems like a good time to buy.

Great business plan discovered in Bainbridge Island business~

I just had a soul-satisfying moment sitting in the sun, surrounded by orchids and bromeliads, enjoying tea & friendship. Flowering Around, that Bainbridge Island long-time floral establishment, has a most glorious new spot on west Winslow Way, and they've expanded next door with a little tea and coffee shop, Flowering Around Espresso. The tea is lovely, the windows are huge and east-facing so you can do your best cat-like stretch into the sunshine if you're there early enough. The surroundings are the best part. I felt like Eve in the garden! Well, I was Eve in a garden of plants and glorious pots and other garden embellishments.

Remember what Hannibal Lecter said. We covet what we see. My former client and current BBF and I coveted the plants like mad. Before parting, we strolled through Flowering Around, resisting everything until I spotted a glossy lipstick plant in full bloom. I have the perfect place for it on my mantle where my left-over poinsettia refuses to die. Time for a swap.

So here's the best business plan of the week: $1.50 for tea, $24 for a take-home plant. I resisted the peanut butter cookies.

Lives and real estate coming out for some sun on Bainbridge Island~

There's something about a day in February on Bainbridge Island that dawns with the hope of sunshine. You believe spring will happen. You believe that the gray days, smudgy like yesterday's mascara, will bloom into full color.

I'm not alone. We don't have ground hogs on Bainbridge, but I'm seeing yards being raked and more folks out walking, their hair glowing with backlighting. Yes, the sun is still low in the heavens, as it is all winter long in the north, but the outdoors is calling to us who have been burrowed in for far too long.

The real estate market is showing signs of life, too (after being pronounced DOA for several months.) I heard some pundit say recently that the decline of real estate proceeded the huge economic crash, and its revival will proceed the general recovery as well. That would be good and I believe it to be true.

We still have a flatline "pending" statistic, and enough inventory to make this the strongest Buyer's market seen in over a decade. But, I'm also hearing Sellers get real about what their home will sell for and begin to understand that there won't be a quick fix. I'm hearing Buyers say, this may not be the bottom, but it's time to buy.

One thing that hasn't changed: Bainbridge Island is a wonderful place to call home.