As last year unfolded, we tip-toed into each day wondering when the red-hot market would begin to cool. In March, as the Fed began to start talking interest rate hikes, we could feel the heat begin to temper. And as mortgage rates did indeed go up, the shift started. . . and continued as we closed the book on 2022. Much of my year was spent trying to convince my sellers to list sooner than later. If I could sum up last year’s market in one word it would be Anxious. Sellers were anxious to get their homes sold quickly and buyers were anxious to find a home before rates went up even more.
Last year was divided into two different markets. The first half of the year operated much like a seller’s market, but by summer buyers were wanting to grab the reins on the market. For some homes they indeed had more power in the transaction, but for special or unique homes the sellers retained and still retain the upper hand. In late summer the economy was not oozing optimism, but I listed a charming home and it had multiple offers and escalated by $350K. Unique continues to cause excitement. By year’s end we saw the number of homes sold on the island go DOWN for the second year in a row, this year by 26% (279 homes sold in 2022 versus 377 homes in 2021). The average sales price did go UP by 10% but much of those gains were seen in the first half of the year. The average sales price is now at $1,605,000 versus $1,456,000 in 2021. I predict we are headed into a much saner, balanced market in 2023.
Today, in early January, there are 16 residential listings on the market. Last year we were hovering around 10 listing all winter. Some other markets may start to see too much inventory, but I predict that our inventory will remain lean. The higher interest rates are likely to keep many sellers from making a move so our small market will not be flooded with options. And yes, there is still a hearty backlog of buyers who want to make the island their home. Buyers will have more power in the market but will need to keep their skills sharp (especially for popular homes) and sellers should continue to do smart preparation and have an educated sense of their home’s true value. Zillow’s numbers are based on the past year’s sales and Zillow already struggles to be accurate in our small niche market. A market savvy agent is key to a successful transaction.
2018 was one of my top years in real estate. 2018 was a busy market. 2018 was pre-Covid. If our island market returns to the normalcy of the 2016-2018 market, Bainbridge Island values and home owner equity will remain strong.
In 2023, buyers who were out-bid over the past few years or who just could not stomach the Covid market will have some time and space to venture into today’s market and here on the island that does amount to many buyers. A saner, more normal market where buyers have time to think for a minute and inspect and get a loan is a normal, sustainable market and I look forward to getting back into that space. If loans seem to high, let’s chat about seller buy-down options, where a seller can pay to reduce the rate on your loan for 2 years. A great opportunity to take advanced of a lower home price and a lower interest rate.
If you are considering buying and/or selling in 2023, let’s discuss how you can be successful in this shifting market. I’d love to share my key strategies to help clients find great success in our island market. In 2022 I helped five buyers purchase homes under list price and a seller achieve 40% over asking price. On average, my sellers achieved 11% over list price. Let’s Talk!