The statistics from the second quarter of 2018 are in and Bainbridge Island homes continue to gain value as the number of homes for sale and average days on market decline downward.
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Real Estate News
The past year proved to be successful for our local real estate market. Realogics Sotheby's International Realty compiled an extensive look into neighborhoods across the region, and I am proud to share some statistics for Bainbridge Island.
SOTHEBY’S INTERNATIONAL REALTY IS NAMED AMERICA’S MOST TRUSTED RESIDENTIAL REAL ESTATE BROKERAGE FOR SECOND CONSECUTIVE YEAR
For the second year in a row, Lifestory Research named Sotheby’s International Realty America’s Most Trusted® Residential Real Estate Brokerage. The study, which compiled the opinions of nearly 6,300 participants, was conducted over the course of 12 months in the United States. Results where then compared to peer organizations “of like size and complexity” in order to garner highly reliable statistical rankings of home builders, laundry appliances, faucets, paints, kitchen appliances, residential real estate brokerages, HVAC systems, and active adult resort builders.
The numbers are here, folks, and they don't lie. We are officially in a spring market in the middle of winter. I can't think of another time when the numbers looked like this - it's been a long while. The good news is that if you are even remotely considering selling your home and have been waiting for the market to be in your favor (aka Seller's Market) well, wait no longer.
Bainbridge Island Community Report
Single-family residences and condos on the island have been a seller’s market since January 2015 and monthly supply remained below two months from September 2015 through May 2016.
As in many other exurban locations, prices tend to be more volatile on Bainbridge Island. While the island benefits as a bedroom community to Seattle, growth slowed within the past year. In 2016, the median price rose by 5.2% year-over-year; slackening from the double-digit growth in the preceding two years but still 131.1% higher than the Kitsap County median.
Read the full Market Report here.
In a recent article on Think Advisor, "Global Wealthy Want More Real Estate," Michael S. Fischer breaks down the latest Savills/Wealth Briefing survey, which reveals that "private bankers and wealth managers found that 91% of global high-net-worth [HNW] investors were looking to increase or maintain the real estate holdings they own directly, and 87% intended to increase or maintain indirect holdings."
Some key statistics, indicated by the chart below, show that 72% of wealth managers' clients plan to purchase residential properties in the next five years and that "North America was the choice investment destination of investors."
Harriet Davies, who wrote a statement for the survey, said "demand for property is not only being driven by low interest rates," which are bound to increase in the current climate, but "structural shifts mean that real estate is likely to grow in importance for HNW investors." Thus "it is crucial that advisors understand the evolving role of real estate in portfolios," and for the real estate industry to embrace these market trends.
It happens: an all-but-irresistible real estate investment crops up when you’re least expecting it. You may have been actively searching for your next family home when you happen across a particularly good bargain—but it’s not a good fit for your own family. “Holy cow,” you think to yourself, “that’s a ridiculously great property at an absurdly low price!”
That can start the wheels turning. If you have the financial resources (or enough experience to know how to corral them), it can be the genesis of a lucrative real estate investment in Kitsap County. There is, however, one question to be asked before taking the idea to the next level.
It’s a question familiar to experienced investors in all walks of life. Whenever a phenomenal opportunity presents itself, it’s the first question that venture capitalists, stock market analysts, even small business entrepreneurs automatically pose. There are scores of ways this question might be worded, but they all boil down to pretty much the same kernel of an idea—which is to question the assumptions that make this new venture so seemingly irresistible. In short, at its core the question is simply, “What’s wrong with this picture?”
Applied to any real estate investment in Kitsap County, it’s a valuable opening question. Finding a great property at an unbelievable price—one that unmistakably flashes ‘profit!’ for either renting or reselling—does happen, of course. But it’s never wrong to take a step back for a reality check. Remember, there are alert competitive forces at play in the local market. Other real estate investors are constantly on the lookout for the next promising town real estate investment opportunity.
You may well be among the first to notice a prime offering, but even so, you’ll be well served to look hard for a reason why it hasn’t already been snapped up. The fact is, there is a well-developed, reliable mechanism at play that should lead a seller to have a good idea of what his property is worth—and therefore, what to ask for it. The comparable property value numbers—the ‘comps’—make the market fairly well ‘regularized.’ They make greatly underpriced offerings rare.
Asking yourself what’s wrong here? is a shorthand way of reminding yourself to curb your enthusiasm as you exercise all the due diligence steps: verifying the condition of the property inside and out and spelling out title and lien issues and location, neighbor, neighborhood and historical matters. The curbed enthusiasm should last until those inquiries come up with the right answers…at which point, even the most jaded real estate investors tend to put the pedal to the metal. When everything begins to check out, they know a crowd will soon be forming!
It’s my job to help facilitate every phase of a good real estate investment—from discovery and investigation through offer, negotiation and all the documentation steps. It’s what happens when the answer to, “What’s wrong with this picture?” turns out to be, “Absolutely nothing!”
The previous decade’s burst of the real estate bubble, with its plummeting local house prices and accompanying economic dislocations, made a lasting impression. For most homeowners the damage was strictly psychological: the majority weren’t even tempted to sell while Kitsap County home prices were dropping (or hovering below what they darned well knew were way beneath reasonable values).
That was a half-decade ago, and since then, prices have been in recovery mode—with gusto. In fact, last year the rises across the nation were so steep that we began to hear grumblings about a new real estate bubble starting to form.
The numbers did suggest a rambunctious market: a 20+ month streak of double-digit year-over-year U.S. price appreciation (by August of this year, a 6.5%). For homeowners, any rise in home prices certainly comes as relief from the emotional distress of seeing sale prices below common sense levels. But having so recently experienced the ‘bubble’ burst, it was easy to begin to worry about the same cycle already in progress…again…?
Some good news, and a convincing analysis, has just been produced from one of our most reliable sources. The author, Mark Liu of CoreLogic, released “Another Look at U.S. Housing Market Conditions” late last month. He thought it time to examine “suggestions that a housing bubble is reemerging” following the release of the latest figures that continue to show improving house prices. Others have discounted the ‘bubble’ formation idea, but this time, Liu brought some unusually clear logic to the discussion.
Simply put, he reasoned that since homeowners use their income to pay for home mortgages, in any local market, house prices over the long run can’t be sustained if they grow faster than income. If house prices rise faster than income for a long time, an unstainable ‘bubble’ will have formed (and, of course, will eventually pop).
During the last bubble years—January 2005-November 2007— in the largest 50 markets, home prices were more than 10% above sustainable levels. During the bubble’s ‘pop’ (from late 2010 to mid-2013), home prices fell to “levels of less than 10% below the sustainable price.”
And even by August of this year, house prices still remained 6% below the long range sustainable price. Not only is this not what anyone would call a bubble, instead it seems to lead to the conclusion that prices will have to rise faster. Local homeowners will be even more pleased at Liu’s forecast through the end of 2016: prices will still remain 3% under sustainable levels—in other words, nothing like a bubble!
Whether you’re looking to buy or sell a local home, rising prices at sustainable levels is a pretty encouraging action scenario.
When you hear the word “drone,” you’re more likely to think military target than residential listing. But drones could be the next big thing in real estate photography—that is, if they don’t run afoul of the law.
Technically known as Unmanned Aerial Vehicles (UAVs), drones have swooped and dived into the public consciousness in a big way within the past year. In addition to the amusing tiny model helicopters that have been found under many a Christmas tree over the few holiday seasons, their more ambitious cousins, remote-controlled, lightweight flying vehicles have begun to be used by firefighters, filmmakers, and the military. And as the technology becomes less and less expensive, everyone expects to see drones in more applications than you could imagine—for instance, CBS’s 60 Minutes report that previewed Amazon.com’s plans to test online purchase deliveries via driveway drop-offs by creepy four-rotor drones.
What’s the connection with Bainbridge Island real estate? Just ask commercial photographers, who think the lightweight vehicles would be their key to the perfect high production value property shots. Think of it: instead of chartering an expensive helicopter flight to photograph a site from the air, a real estate photographer could use a much cheaper and more easily controlled lightweight drone. The result? Dramatic, breath-taking shots that used to be only rarely seen in listing video tours (and then, only in million-dollar listings). With more than 90% of prospective home buyers now using the Internet, those kinds of shots could make the difference between a stagnant listing and a quick turnaround.
But don’t hold your breath for the rise of drone-based real estate photography—at least not yet. The Federal Aviation Administration requires a permit for each flight whose goal is the “commercial use of airspace”—even by small devices like photography drones. As a consequence, the National Association of REALTORS® is advising real estate pros not to use drone-based photography until next year, when new FAA guidelines will be announced. Until then, a special FAA waiver has to be obtained for each flight (and you can bet a local property would have already been sold long before that came to pass!)
While we may heave a sigh over the exciting drone videos that might have been, the real possibility that drones will become a factor in Bainbridge Island's residential real estate reinforces the importance of having your home sale-ready from all angles. Imagine the fallout if drone photos revealed a leaky roof—or an unkempt backyard!
Bottom line: it’s always going to remain vital to prep a property to shine in more than just the “curb appeal” photo. That planning can start with a call to my office for a no-obligation review of how to set into motion a proven marketing plan that gets your home sold!
When it comes to making the most of Bainbridge Island real estate, knowledge is power. The schools didn’t teach us anything about selling a home or how to decide which home to buy, yet those are subjects that have lasting impacts on our lives. When such key decisions are in our immediate future, we come face-to-face with the importance of making the right choices, asking the right questions—and engineering the best deal.
Whether or not you’re about to head a foray into Bainbridge Island real estate, here are a number of excellent recent books that will help arm you with actionable knowledge:
100 Questions Every First Time Home Buyer Should Ask
This book is a general go-to reference for buyers (and I think for sellers as well: being able to put yourself in the shoes of potential buyers is essential for intelligent marketing). Answers to the “100 Questions” are provided by top brokers from around the country, so every detail won’t necessarily answer our Bainbridge Island real estate specifics; but on the whole, this book is concise and informative. The questions are arranged in an easy-to-read format, separated into chapters like “Putting Together the Deal” and “How Do I Know What I Can Afford to Spend.” Readers rate it very highly.
Smart Essentials for Selling Your Home
Solid, practical information that can be invaluable for homeowners about to enter the Bainbridge Island real estate market. In the same way that 100 Questions book is also useful to sellers, this one would make excellent reading for itinerant home buyers who’d like to know what’s important to sellers…thus being one step ahead when it comes to striking a win/win deal. Smart Essentials is mercifully short: just under 100 pages.
Buying a Home: Don’t Let Them Make a Monkey Out of You
Newly updated and with the highest reader reviews, this one is most appropriate for potential buyers with little or no previous real estate experience. As author Musgrave puts it, the object here is “to convey to the reader only the necessary information—and not one word more.” The extremely easy-to-read, informal approach is a welcome departure for first-timers: no wonder readers are almost unanimous in agreeing that if first-time home buyers read just one book, this is a worthy choice.
Investing in Real Estate
A newly written follow-up to the 2008 best seller, this is an accessible starter book that addresses most of the key issues that successful real estate investors learn to evaluate. The index is especially useful for locating individual topics quickly (something eBook readers don’t need to worry about: they just highlight a search term).
Thinking of buying or selling real estate on Bainbridge Island? Knowledge truly is power—and I’m here to share what I know and to bring it all to bear on your behalf!