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Forecast | We can be bullish on San Juan Island real estate
By John Dunning
Let’s not mince words. The real estate market on San Juan Island during the last half of 2007 and all of 2008 has been, activity wise, in a deep recession. Realtors and sellers of real estate have found this to be the case through personal experience.
Based on data supplied by Northwest Multiple Listing Service, in 2006 there were 121 sales of residential properties (those with houses) compared with 93 in 2007 and only 54 in 2008. Over the three-year period, this represents a 57 percent decline in the number of sales, a dramatic downturn in activity by any standard.
Vacant land saw a similar volume decline, from 62 sales in 2006 to 45 in 2007 and 26 in 2008, a 48 percent fall-off over the period.
What is interesting, given this dramatic shift to less activity, is how well the market has retained its value. In 2006, the average sale price for homes on San Juan Island was $735,350. During 2008, the average home sale price was $709,536, only a 3.5 percent drop from 2006 to 2008. In the vacant land category, the average sale price actually increased from $321,128 in 2006 to $394,423 in 2008.
An excellent indicator of real estate market health is how much time elapses between when the seller lists property for sale and when the sale occurs. This period is referred to as “time on the market.”
For homes sold in 2006, on average it took 203 days to achieve a sale, while in 2008 it took 305 days, a 50 percent increase. For vacant land, the average time required to sell was 250 days in 2008, up from 175 days in 2006, a 43 percent longer time period.
That’s the past. So what is happening now?
Since ringing in the New Year, we have seen a very encouraging increase in buyer interest. Obviously, it’s far too early to draw any definite conclusions, but escrows are opening and sales are being made. This makes sense, given we now have the lowest mortgage rates in over 30 years available to qualified home buyers. In addition, given the declines in investor stock market portfolios, the value retention evident in island real estate looks mighty attractive.
This apparent increase in buyer activity is also not surprising given the unique attributes these islands offer. They have been, and will remain, very desirable to a broad range of real estate buyers. Whether it’s second-home buyers wanting a peaceful place to visit, or baby-boomers looking for a quiet environment to retire, the islands are without peer in the Northwest.
I cannot deny that 2009 will likely remain a buyer’s market for real estate in the San Juan Islands. However, accurately priced properties will sell. But, achieving proper pricing can be a Realtor’s biggest challenge. Through our access to volumes of statistical sales information, we have an amazing analysis capability at our disposal. We also know what home features, location attributes, and other characteristics help listed property sell. Likewise, buyers start to understand the components of pricing too, after being toured around the island by their Realtor.
Unfortunately, sellers of property may not have a similar exposure to the competitive marketplace and personal emotion often inhibits their ability to accept “the hard facts.” Nobody likes a price opinion below what they were hoping to hear, but the truth is that selling property in today’s market requires realistic pricing. Any other approach will not only lengthen the time a property remains on the market, but will likely fail to obtain a sale. If you are a seller, listen to the statistical information provided by your Realtor. You and they are partners in this selling process.
If my perspective seems a bit blunt, that’s because I believe it must be in order to have value. However, the fact that the market is challenging for sellers may be the very reason buyers are beginning to return. They sense this is an excellent time to look at the investment opportunity island properties represent.
Nobody has a crystal ball showing the future and we are definitely in uncharted territory economically as a nation. But, I do have continuing confidence that real estate will remain a valuable asset, universally desired. That’s why I’m still bullish on local real estate.
— John Dunning is the owner of Windermere Real Estate/San Juan Island and Windermere Real Estate/Orcas Island.