Springtime Brings Signs of Real Estate Growth

Positive sales indicators.  Here at Windermere Bainbridge, we are quite encouraged by the numbers from the first quarter of 2010. The month of March was the seventh in a row in which our “unit count” (the number of closed sales) surpassed the previous year’s.  We ended the month with a whopping 57% more transactions than in March 2009 (22 vs. 14). These important market improvements were seen island-wide across all types of real estate: condominium unit sales were up 50% (9 vs. 6); even land sales, which have really been in the doldrums, were encouraging (5 vs. 3). In our previous newsletters, we have stated that the quantity of sales must show stability and improvement before we can envision any “recovery.”  These latest numbers are certainly pointing in that direction.

On the horizon.  We get more good news when we look at pendings (homes under contract). We currently have 40 pendings compared to 33 at this time last year. This signals continued unit strength (since we rightfully assume that most pendings will close). The inventory has grown, although most sellers are in the market because they need to be, not because they want to be.  Still, there is a nice balance between supply and demand. This greater inventory offers buyers more choices – essential in a weakened market – but not so many as to create a level of competition that results in severe downward price pressure.

The money behind the market.  Amidst all this market sunshine, there are a few dark clouds still hanging around related to financing. The “middle” of our market ($600K to $1M) has improved, but only slightly because people are still having difficulty obtaining loans that fall into the “jumbo” category up to $1 million. For high-end real estate transactions that exceed $1 million, we often see buyers offering all cash or large amounts of cash, requiring them to finance very little of the purchase. Those buyers who need financing in the middle range are continuing to find the jumbo borrowing process rigorous and the costs frustratingly high.  Unfortunately, interest rates are predicted to rise, which could price some borrowers out of the market. 

The low-down on prices.  From a seller’s perspective, prices are still unfavorable. Most sellers are confronted by numbers that require them to wipe out large amounts of equity or even sell for less than they owe.  Our unit count may have stabilized, but it has been at the expense of the sellers who have bitten the bullet and priced their homes to sell. As the average and median prices have decreased, buyers are getting a lot more house for those lower numbers, which means the values of individual homes have decreased more than the average or median prices. Prices are still low and may fall again if (when) interest rates rise so we’ll continue to keep an eye on these market dynamics.   

Bainbridge Island Single Family Homes Sold January 1 through March 31