| 98110 2015 Third Quarter In Review ~ Fall 2015 A GRADUAL TRANSITION
Numbers Game This year’s third quarter provides a great illustration of individual market forces, but what you see on the surface does not necessarily provide the whole story. So let’s look behind the scenes at what’s going on. At the end of June when we closed out the second quarter, the number of homes sold was up 14% from 2014. July was a good month but in August the number of homes sold was down 31% from 2014 and by September sales were down 25%! By the end of September, the 14% increase over 2014 had shrunk to a 1.7% increase in homes sold over 2014. This begged the question: has our great recovery already begun to falter?
Motivated Buyers If demand was cooling, then we would expect to see fewer multiple-offer situations on individual homes. In the second quarter, 50.4% of our sales sold at or above their original list prices, which is a lot for Bainbridge. Then, in the third quarter, that already impressive number of sales “at or above asking price” went up even higher to 53.2%. This tells us that there were plenty of motivated buyers, so the reason for the decrease in sales is not demand.
A Middle Market in Demand The largest number of buyers looking on Bainbridge are seeking homes priced between $500K and $1M. They are sophisticated, knowledgeable and aware of their alternatives (both on and off the island). As illustrated above, there are still many potential buyers for homes on Bainbridge, but market forces here on the island are forcing them to wait or even go elsewhere. Of the 58 sales at list price or above, 64% closed between $500K and $1M. So if there is so much demand, why have sales tapered off? Choices are fewer and prices are higher.
Low Inventory + High Prices = A Slower Pace Regular readers of this newsletter will notice that we’ve been complaining about lack of inventory since 2014. In the third quarter of 2014, the average available inventory (homes not under contract to be sold) was 135 homes as compared to 2012’s 162 homes (and don’t even ask about 2008). This year, there were only 73 average available listings – just over half of the number available in 2014. On September 30th of this year, there were only 32 available homes priced between $500K-$1M, the segment where 60% of the total sales of this year occurred (178 homes sold). The bottom line: there are just not that many choices. Exacerbating inventory woes is the fact that prices are climbing higher, which takes many potential buyers out of the running. The middle price band has seen some of the best price appreciation, getting back to and in some areas exceeding our peaks of 2007. Buyers have financial limits and are more cautious than in the go-go years of 20052007 where misplaced optimism rationalized spending more in anticipation of the “forever” ascending market. These days, not only are there fewer choices, there are only so many of those choices that are financially feasible. And, of course, buyers have to like a house to want to go forward. In combination, all of these factors mean that buyers are often waiting or going down other paths.
Jackie Syvertsen Managing Broker 206-790-3600 | Jackie@windermere.com Jackie98110.com