Wednesday, August 09, 2006

June Price Update: Bainbridge Average Up, Median Down

Sorry for the late update, but here are the numbers for June '06 compared to June '05.

Average price of a Bainbridge Island home is up 6% Y-O-Y ($558,661 from $525,395).

Median price of a Bainbridge Island home is down 1% Y-O-Y ($481,000 from $485,000).

86 homes were sold in 6/06 compared to 50 sold in 6/05, so sales volume is up.

I don't think there is much to make of this data, other than when combined with the previous two months data, it shows Bainbridge homes are not as "hot" as is commonly thought. This really shows that the old Real Estate Agent maxim of "getting in while you can" is not as compelling as it has been in the very recent past.

Kitsap county homes increased 14% and 10% (average, median) on a Y-O-Y basis. Bainbridge is the laggard for the rest of the county in home appreciation.

My view is that prices are moderating and will start to show consistant Y-O-Y declines. I still hold to my 20 cents on the dollar by 2010 prediction. Once California shows complete inversion of appreciation, you will see an amplified response on Bainbridge (since we are California's 59th county).

Comments are always welcome. If you know any Realtors that can contribute one way or another, please direct them to this site.

Eleua

17 comments:

uptown said...

"getting in while you can" only works if you're planning to get out while you can.

Eleua said...

Well said.

My wife and I were discussing this very thing this morning. We were wondering what the break in the market will look like. At first, she envisioned a slow, relentless leak (ala Japan), but after looking at the various factors holding this market up, it looks like it will be a catastrophic break.

The first markets to turn are falling into a relatively healthy economy, so there is quite a bit of cushion to catch a depreciating house. Boston and San Diego still have low interest rates, good employment, and a general positive outlook on the market.

If Seattle is the last to go (and I believe it will be), it will fall into an abyss of an economy. The X-Cals will be trapped, interest rates will be substantially higher, and the lending industry will be sober. Market psychology will be rotten.

You could literally go to sleep in your $900K Bainbridge house and wake up in a $700K house. It could happen that fast.

Add another successfully hatched plot by the al-Brothers, and you have the ingredients for a real mess.

Anonymous said...

Hey, sailor. I honestly think you are one crazy dude, but whatever.

Here is a $.01 of a thought:

Watch out Eastside's new home sites. 1. Seen more than one new home finished and unsold. These are $799,000 to $1,200,000 babies.

2. Open houses not hugely populated on Saturday afternoons (don't know, may be they all get up early and go, who knows).

3. Builders price new homes $150,000 to $200,000 higher than comparably-sized homes in the same subdivision (3-4 year old, same builder) sold just recently.

Question: 1. From what I heard, it takes $2,000 to $3,000 per home to carry these babies. How long?

2. who in the right mind whould pay $200,000 over recent sale just because it's new?

Anyhoo, sailor. Hold your cool, OK. Armageddon ain't coming. Lighten up on your diversity analysis thing.

Eleua said...

OK, who are you?

Yes, things are coming my way, but they have not arrived yet. Give it some time.

What prompted the diversity comment?

Anonymous said...

What % of new Bainbridge Island residents last residence was California? How does this compare to other parts of Puget Sound? Do you have any data on this or are you handwaving? Your point about the consequences to Bainbridge Island real estate values of a CA value inversion totally depends on how factual a "California invasion" is.

OK, yes, I was California born but I'm only 25% of the family and in our move to Bainbridge after 11 years in Seattle I don't think my CA roots have any bearing on local real estate values or for that matter Island culture. And, no, we didn't buy a new spec house with a 3-car-garage or a new anything...

Eleua said...

I don't have any rock-hard data on the percentage of new BI buyers that come from California.

I do have 4 different RE agents that I trust, and see this housing bubble for what it is. All four say that 60% of buyers are out-of-state.

Of those, the 4 RE agents say that anywhere from 1/2 to 3/4 are from California.

That equates to 30% to 45% of BI buyers are Californians, and that does not include people such as yourself (that move from King County, but are Californian), or Californians that currently live on BI and are upgrading.

Relax. There is no crime in being from California. I have stated over and over that the California equity money is the SINGLE BIGGEST PLAYER in our market. If that player were to substantially drop out of the market, the market would shift dramatically.

That is no more a pejoritave than stating that our winters are wet, due to our proximate to the Aelutian Islands.

Anonymous said...

That our winters are wet is established fact - it can be looked up. It has nothing to do with proximity to the "Aelution" [sic] Islands but never mind.

Comparing documented fact with "4 RE agents I trust say..." is unreasonable. Your "California equity money is the SINGLE BIGGEST PLAYER in our market" seems to fall somewhere between folklore and urban legend.

And talking about "Californians that currently live on BI..." certainly verges on the pejorative. Not to mention having nothing to do with the current health of the California real estate market and its potential effect on BI's market.

Maybe you're right about that "30%-45% coming from CA" number but maybe that's a gross exaggeration. But again I challenge you - get the facts before you quote something as fact.

Eleua said...

OK,

Just how would you get a "fact" of how many people move from California? How?

Conduct a poll at every closing?

Does the government keep such stats?

What do you think is the most reliable, and easily accessible source for such information? How about 4 BI RE agents with a combined 70 years of experience, with 3 of the 4 working for the largest two agencies on the island? In addition, I have always given a range, thus implying an imprecise "stat." The entire real estate market is just one big assumption and a series of guesses. Show me the EXACT median price of a house on Bainbridge. Show me the EXACT median house, for that matter.

WTF do you care? Show me it isn't that way. Go to just about any large gathering on the island and chat people up and see if more people moved from California than just about anywhere else.

Second, my comparison of the source of our winter weather pattern, and the immigration trends of Bainbridge Island was not based upon relative scientific precision. It was based upon drawing a moral equivalency. I thought I made that abundantly clear with my "that is no more a pejoritave than stating..." prelude to the Aleutian Island analogy.

Why are you so testy about a someone observing that quite a few people on the island originated in California? So what? Many Floridians are from Jersey. Many couples in Seattle don't have children. Many Canadians like hockey. Many pilots are white. BFD.

How is saying that someone moved from California a pejorative? Are you THAT thinned skinned? I must admit, even by Bainbridge standards, that is really remarkable.

You don't think that the "current health of the California real estate market and its potential effect on BI's market" has any basis in fact? Go to ANY news article on the PNW real estate market, and it will tell you that the net influx of primarily Californians is keeping things aloft. Where they get it wrong, is they think it will last forever, and ugliness down South will have no consequence in our pristine, highly educated, high wage, hip-n-trendy housing market.

So tell me, what do you think is the single biggest player in the Bainbridge housing market?

20-somethings moving from Houston?

30-something cube-farm workers making a combined $71K/yr?

Real Estate agents/spec builders trading homes with each other?

40/50-something aging hippies that cash out from California and buy huge chunks of their BI home for cash?

Yeah, I thought so.

Just ask any of the APPROXIMATELY 280 Bainbridge RE agents what would happen if California equity money dried up. When the color returns to their face, see what they say.

Call a suburban Dallas RE agent and ask them the same question. I guarantee their response will be, "What California equity money?"

BTW, since we are correcting spelling around here, both of us botched the spelling of the chain of islands that extend Westward from Southern Alaska to the Kamchatka Peninsula.

I transposed the "l" and the "e." Typo.

You completely FUBARed the spelling with your "Aelution" rendition, and then falsely credited it to me [sic].

If you want to make me look like a dumb-ass, I have given you plenty of original material. You don't have to make stuff up.

dash_point said...

Eleua-

Just an observation, take it for what you will. I too see you throwing "Californian" around with a somewhat pejorative usage.
Perhaps that's what people are reacting to: a little too much "us vs. them" in your content.

So, for the record, how long have you resided on BI? Or conversely: where are you originally from?

Perhaps CA has been a big player in this market. But I bet there's a good portion of local investment that has pushed up prices too.
I have no reason to trust anecdotes from realtors, because they're too often pointing the finger of blame elsewhere. And most of us know how easy it's to point at California. But, of course you're not doing that!

I appreciate your blog because you really make an effort to poke a hole in the local assumptions and insanity. Let's hope real estate gets more reasonable, but doesn't come crashing hard down on our local economy.

Eleua said...

Fair enough.

I was born and raised here (late 60s). My mom and grandparents lived here as early as the early 50s. 12 of my 16 great-great grandparents lived Washington - primarily the Olympic and Kitsap peninsulas.

Mrs. E is a Californian, and she is a first generation American from England.

I went to college in California, and then joined the Navy. I spent almost two decades away.

I have lived here - (split between here and Dallas) - since '02.

OK, now that we have that out there, let me say, for the umpteenth time, that there is nothing wrong with being from California. Also, let me say, for the umpteenth time, that the biggest player in the local housing market is the X-Cal that transports a boat-load of equity to buy their "Bainbridge Dream Home."

I guess I could try to find a more scientific source for the number of X-Cals that are driving our market, but how much more effective would my argument be if I could refine the number from, say 40% to 38.45628%?

Could someone please show me how my reference to someone being from California is mean spirited? I know that I speak of X-Hippies in highly negative terms (I even have a "Hippies Use Side Door" sign on the front of my house). Many of our aging hippies are from the Golden State, so absent that, where do I mercilessly beat on people from originating from California?

Californians are the gold bearing ore in this gold mine of a real estate market. The same thing will happen to our market when the Cal equity money vanishes that happens to a a gold mine when the ore runs out. That is all.

Eleua said...

If the median household income is between $70K/yr and $75K/yr, how do we float a $600K average house?

The way that is done is with equity buy-down.

When East Palo Alto, California is just as expensive as Bainbridge Island, Washington, is anyone surprised that California money is very capable of floating our market?

We are in an "echo-bubble" of California. Just as Arid-zona, Vegas, Reno, Bend-Oregon, and Hawaii.

I find that anyone can't see this to be a wonderment.

marin_explorer said...


When East Palo Alto, California is just as expensive as Bainbridge Island, Washington, is anyone surprised that California money is very capable of floating our market?


After looking through BI listings, I think EPA is in fact more--at least in better parts. People have totally lost any sense of value w/Peninsula RE, where old 2BR tracts often clear $1M. It's completely stupid.
Thanks for graciously giving Calis the benefit of the doubt. I too grew up on the Sound, and may move back someday. In the meantime, I hope the economy won't be dragged down as much as California's inevitable bloodbath. Well, perhaps enough to cream the investors; they've screwed up California too.

Eleua said...

marin,

I LOVE YOUR BLOGS!!!

Your concept of Marin POS is just priceless (no pun intended). I have thought about bringing that concept to Bainbridge Island, or as I refer to it, The 59th County of California.

I can understand when most of Marin, San Mateo, and Central Co-Co Counties sell higher than nice neighborhoods everywhere else. However, I fear that abject stupidity has completely overrun most of America when an absolute hell-hole, an annual favorite for murder capitol of the nation, and the place that they are going to stick the hose when California gets an enema is priced higher than an actual nice place to live.

One day, there will be many budding yuppies that will be asking themselves "WTF was I thinking?" when they discover they owe $500K on a former crack house.

Your blog should be in a museum.

E

Eleua said...

early 90s. Her gardener was a 300# - all muscle - Samoan, who lived in EPA.

He told us that he needed to move to Mountain View, because - in his words - "there are more white people." (actually, there are more Japanese/Koreans/Chinese)

Apparently, he, his wife, and their 5 kids were in their 2 bedroom apartment in EPA, and taking in an evening of TV, when 4 diverse youth presented themselves at his door. The door was removed with a shotgun, and the local youth informed him that he is now participating in a mandatory electronics recycling program.

That was enough for him.

To think that people are going 10-15x income to buy in EPA is really very scary.

marin_explorer said...

Your concept of Marin POS is just priceless (no pun intended)

Hey, thanks...but the real credit goes to Marinite, the guy who runs the Marin blogs.
I contribute once and a while, with a few PoS posts and notes on Marin geology/flooding conditions. (as I live on the bay).

EPA: you're right--people are trying to yuppifie the place; they've even built an IKEA and a big remodeling store there.
This nonsense won't go on forever, because more favorable job/business opportunities elsewhere.

newtoislandlife said...

You may want to consider that not all ex-Cali's are stupid enough to sink all of their "found" money into inflated Bainbridge Real Estate, or any other market for that matter. Many of us Californians lived through the early nineties and have good memories. In any market, good values exist and some of us will take advantage of acquiring great "renewable" properties in excellent locations on the Island, not really worrying about what celeb architect or builder cranked it out. We are here to get out of the insanity. Don't judge us because we were just lucky enough to be in the right place at the right time in California Real Estate. The thing to remember is that Bainbridge is a microeconomy, where there is truly a finite amount of land to develop, especially given the political climate; supply and demand will prevail. The real estate market is simple. Buy undervalued, well located real estate in markets where demographics are rapidly changing (for the better), and long term you won't lose. Many Californians are holding their cash, and buying much more modest properties and investing for the long term. I don't think many of us are here to flip a house in 2 or 3 years. I think no matter where you buy in the country, if you think you are going to trade out or up from any real estate you buy in the next 24 months, you are out of your mind. However, real estate is still the single best tax shelter available, and locking in an interest rate which is still relatively low, will protect the downside in the longrun.

Eleua said...

newtoislandlife,

I don't think I understand your post. I don't think that every X-Cal comes here to flip a piece of pretentious, bucolic, paradise.

I do beleive that the X-Cals that are here are here because California is FUBAR. My point is they are FUBARing this place. Cultural habits are not constrained by lines on a map; they travel with the people. This is why I think Thrid World immigration is really, really bad for the US.

I'm glad you find the real estate market to be "simple." It is simple when it only goes one direction. Everything is. I believe it will become significantly complex, once the downside gets going. BI will not be an exception.

Two things prop up BI real estate: zany financiing, and X-Cal equity. Both of those will dry up in the near future. BI will drift-down to the normal (pre-bubble) price/income ratios that prevail in neighborhoods like BI. Those ratios are in the 2X-3X range. That puts the median BI home in the $180K-$250K range.

BTW, where did I "judge" anyone for being in the right place at the right time?

Also, I don't know where you get the idea that most Californians are holding cash. From what I see, the entire Western US is being propped up by X-Cal money, and California leads the nation (and it isn't even close) in neg-am ARM financing.

I'm glad you found your Bainbridge Dream home, have stacks of cash, great timing, and the mental firepower to see the real estate market as a simple cash generator. You should do very well.