Third quarter market analysis Bainbridge Island real estate~

We're just now getting the statistics for the end of September, and we're about to start on the final quarter of 2009. Everybody I talk to wants to know the same thing--how's real estate doing on Bainbridge Island.

One bit of information I've analyzed this past week is helpful. It's an Excel spread sheet that shows the listing/pending ratios that we've been tracking on Bainbridge for the last several years. Some real estate analysts believe that comparing the number of total listings to the number of listings in contract will give you a good view of the health of the marketplace.

At the end of September we had 289 total residential listings, with 47 of those houses in a contract to be sold. That's a 16% "absorption rate," which is significant for two reasons. The first is that conventional wisdom is that 16% is seriously a Buyer's market, and that's not news to anyone.

But, the other significance is that the last time we were close to 16% was July of 2007 at 19%. That's when we had crested the top of the market and had our skis pointed downhill. Little did we know then that this was going to be a black diamon run with moguls! By October of 2007 we real estate agents knew the market had dropped; few of us understood that it had fallen off a cliff. When we look back at the numbers, that free fall is apparent. The absorption rate in May of 2007 was 27%, and by October it was 9%. In one quarter we went from 52 homes in contract to 23 . We've pretty much been bouncing along that bottom ever since.

It was hard to know in the period from the summer of 2006 to the summer of 2007 that we were at the very peak of the marketplace. Some indicators were apparent, and looking back now we can see all the signs. It took courage and vision during that year to sell when everyone else was buying, when prices seemed to be rising with no end. But, nothing has no end.

It is hard now to know if we are at the bottom. Prices are still dropping. It takes courage and vision to buy when few are buying. But, prices are at 2005 level, or lower, interest rates are low, and Sellers are eager to sell. Perhaps a year or two from now we'll all know if indeed this is the bottom. If it is, those who buy now will be congratulating themselves.