The West Sound home sales for May are out and, as I predicted in last month's report, Bainbridge Island home prices continue to slide.
Average home prices dropped 13% Y/O/Y ($548,941 from $630,306), and median home prices tanked 16% Y/O/Y ($467,500 from $559,000). This sample is based upon 38 sales in the month of 5/06.
Kitsap County, as a whole, was up 9% on average and 17% on the median.
The data are over a relatively small sample, so we can expect to see wild swings. It is interesting that the sample size for Bainbridge is the second highest in the county, and is starting to show the slide that just about everyone said would never happen.
There is much work to be done on the downside, as the Seattle area home prices are still relatively bullet-proof, and the economy is still relatively healthy, and interest rates/creative financing heavily favor mindless borrowing.
When Seattle home prices get clubbed, the economy slips, the stock market tanks, interest rates rise, and lending standards come into some form of fiscal sanity, we can expect Bainbridge Island homes to suffer a thorough beating. Ferry tolls and excessive building will also weigh on home prices.
Here is another thought...if there were 38 sales on BI last month, and assuming that 76 different agents split all the commissions, that means that 70% of the RE agents didn't get a payday in May 2006. Of those that did, $16K was the payday prior to marketing costs, and paying their broker.
Average DOM for a BI home last May was 117 days, and that was in a white-hot market. How long do you have to market a home this year?
5 comments:
Agreed--when the "unbustable" markets show signs of weakness, the psychology will drop out of the neighboring communities. I suppose many Seattle locals consider their city unbustable, but it's happened there before--"turn out the lights" anyone? Same goes for SF, another uppity, overvalued city. I suspect it will take a long time to reverse psychology, as much as a whole real estate season, where reality hits hard by Spring '07.
You are quite a cheerleader, sailor.
If BI home prices are down almost $80K in one year, and annual income (before taxes) is around $75K, that means the "median" BI household worked all last year, lost $5K and then paid income taxes on $75K. I wonder how much longer this "reverse wealth" effect will keep from killing retail.
The blog at Housing Crash 2006 appears to have been hijacked.
http://crash2006.blogspot.com/
This has also happened to Overvalued Real Estate
http://overvalued.blogspot.com/
Not quite sure why the owners can't (don't want to?) get them back.
MjM
Post a Comment