Market Tips and Trends
News from Orcas Island Realty

Welcome to 2012

Real estate trends in the San Juan Islands are closely following what is happening in the rest of the country -- we have new buyers looking for great deals, we have sellers with a fresh perspective, priorities and prices and we are seeing the return of our active real estate market. Orcas Island does, however, offer a different twist. Buyers don’t have to buy here, they choose to join our community for the lifestyle and benefits of island life. This contributes to the slow pace of sales when buyers don’t need to move or invest. In the last few months there seems to be renewed consumer confidence. We are seeing the number of offers increasing and buyers are scheduling trips to the island to shop in greater numbers than at this time last year. Late winter is starting out with a healthy amount of showings, pending sales and closings.

Once again, Orcas Island offers a slightly sunnier forecast than the region that surrounds it. Our homes and properties are selling at rates that meet or exceed the closings in neighboring communities where population and density numbers are higher than ours. It’s important for all of us to remember that there are certain trends that are unique to the Orcas Island market. For one, properties tend to have longer marketing periods (days on the market), even in the best of times. Secondly, a smaller portion of our inventory is bought and sold as primary residences, which can minimize the time-sensitivity of listings and extend the duration of their marketing phases. Due to these and other factors, the average length of time that properties spend on the active market has stretched. Where most Orcas Island real estate used to sell within 12-18 months, it is not uncommon for properties now to stay on the market for as long as 36 months.

Facts and figures
In 2010, 50 homes sold through the Northwest Multiple Listing Service (MLS) on Orcas. The same number of homes sold in 2011, but the sales volume showed a decrease of approximately 10% in the sales price. Of the 50 residential closings in 2011, nine were bank owned homes and of these nine, eight sold for under $300,000. There were five sales over $1 million, six closings between $600,000 and $1 million and 34 sales under $600,000. Of these 50 properties, five were condominiums.

Land inventory continues to be high with 128 current listings and two sales currently pending. In 2011, there were 17 closings of vacant land. Of the 17 sales, 13 were cash closings and four sellers carried private notes.

Land sales
When it comes to land, there are great deals and lots of inventory for the savvy investor. Sellers are offering aggressive terms to entice buyers to bring offers, and prices are lower than we’ve seen in many years.

Thoughts for sellers
Pricing properties for sellers is challenging as the bank owned properties and short sale inventory will take several years to move through the sale cycle. Sales of these distressed homes and land put downward pressure on all pricing so it can be difficult for sellers who aren’t in a distressed situation to accept these drastically lower comparable values for their properties too. The good news is we are seeing fewer new foreclosures and a much improved efficiency with bankers’ willingness to put deals together and close transactions. Even though the time from an owner losing their home to it being on the market and selling is about half of what it was at the beginning of this cycle, we believe it will be several more years before we return to a “normal” market.

Pricing strategy continues to be the key to selling success. We are advising clients to price aggressively if they want to close a sale, as buyers are waiting for the best possible deals. For some people, this means going outside of a comfortable range. But the listings that are selling most consistently are those with asking prices that reflect current comparable sales. Those sellers who keep prices at “yesterday’s” levels will most likely find themselves and their properties riding out this downturn for as long as it lasts. The good news is that many completed transactions are cash offers that close quickly.

Thoughts for buyers
People shopping for Orcas Island homes in the $300-$500K range or land in the $100-$300K range have an unusually high number of options these days. Buyers are benefiting from fierce competition among sellers (many of whom are banks or owners in a short sale situation) and are getting some great deals as a result. Since the numbers indicate that we are at or near the bottom of this curve, buyers who have been waiting are advised to make their move now if they want to take advantage of the best values. Inventory in the low end of the market is not being replaced as quickly as it was just a few months ago, which implies the beginning of a leveling trend in pricing.
Waterfront buyers appear to be back and are looking for that special retreat. This is a great time in the market and Buyers are finally making offers on appropriately priced waterfront homes.

ORCAS ISLAND CLOSINGS
as reported by the NWMLS
January – December 2011

RESIDENTIAL (45)
Under $200K (2)
$200K - 300K (18)
$300K - 400K (6)
$400K - 500K (4)
$500K - 600K (5)
$600K - 800K (4)
$800K - $1 million (2)
$1 million+ (5)

LAND (17)
Under $100K (6)
$100k – 200k (5)
$200k – 600k (6)
$600k+1 (0)

OTHER (6)
Commercial (1)
Condos(5)

Orcas Island Realty has maintained its strength and solidity throughout this difficult phase. Long-time clients stay with us because they know we deliver the personal attention and integrity they need, along with the tenacity to see their transactions through to closing. Newcomers call on us because of our genuine interest in welcoming them to the community, along with our commitment to helping them find their place here. We are enormously grateful to our clients for their ongoing business and the referrals they send our way, and we will continue to work hard for every buyer and seller who trusts us with their real estate dealings.

Our central location in Eastsound provides unparalleled marketing exposure as well as a warm welcome for walk-in visitors. We are devoted to our island community, its character and its residents and we will be here long after this market dip has passed.