End of year market analysis of Bainbridge Island real estate~

It's been a year with lots of ups and downs for most people in most areas of their lives. That's certainly been true in the real estate world on Bainbridge Island. The good news is that we finished strong, with all the numbers going in the right direction.

The number of listed residential properties dropped to a low we haven't seen since 2006--only 174 home listed as of the end of the year. (January has not yet shown a surge of new listings.) That's down 14.3% from the 203 listed homes in December 2008 and down from the 193 listed in the prior month, November 2009.

That's significant, because supply and demand are always at play here. To search for all properties currently available on Bainbridge Island, click here.

We also saw the numbers of Pended Sales and Closed Sales increase over the end of 2008 by healthy margins. Twenty-two homes closed in Dec. 2009 compared to only 13 in 2008, for a strong increase of almost 70%. Pended sales (those listings in a transaction to sell) jumped from 13 in 2008 to 17 in 2009, another strong 30.8% increase.

However, a single month's activity is only a snapshot, and not a trend, certainly. The following graph from Trendgraphix shows the Listed, Pended and Sold numbers over the course of all 2009:


One interesting correlation that is apparent in this graph is the relationship between pended and sold properties. A 100% correlation would mean that every home with signed paperwork would close--and you can see that we're not there. However, the numbers are getting closer, and my personal observation is that more and more transactions are coming to a happy and successful closing, with fewer Buyer's backing out of their purchases. I was pleased this year to have every transaction I participated in ultimately reach a successful closing. Sometimes the lenders made us all hold our breaths (or our tongues,) but my clients have been able to complete their purchases and sales once we've begun.

There is no question that we are still strongly in a Buyer's Market, which is reflected in the prices properties are selling for. As much as we've gone up and down, we're also going around and around, back to the future. Prices have rolled back to about the 2005 level, in both average and the more reliable median prices. Home owners have watched their equity shrink, and that's a difficult ride to be on, especially since we have become accustomed to expecting prices to continue to rise year after year.

Certainly double-digit appreciation was not sustainable here or anywhere, especially without salaries increasing at the same rate. At the height of the real estate market, which in hindsight seems to have been mid-2006 to mid-2007, most people I knew could not afford to buy the homes they were living in. In that way, the adjustment has been healthy. Unfortunately, you can't take "healthy" to the bank, and it's heartbreaking to see people who need to sell, who can't clear enough at closing to cover their debt load.

I'm an optimistic person, and I believe in both the appeal of Bainbridge Island and the economic health of the Greater Seattle Area. I believe that to sell a home today, the price must be realistic and in line with the current market, it must be well prepared, and professionally represented. Buyers are negotiating from a position of strength, which can be a challenge--one that I welcome representing either side in a transaction. Banks are loaning and rates remain low.

One last item (lots to digest) that I'll write more on another day. The Federal Government has extended the tax credit for first-time home buyers, and for current home owners who meet certain criteria.

Will interest rates go up or down? Will prices stabilize here or take another drop? I'm reading the experts and buckling my seat belt for an interesting journey this year. One thing I know for sure--we'll have more perspective when we look back a year from now. Ironically, my best instinct tells me this is a good time both to buy and sell.