The National Association of Realtors sees evidence of the beginnings of improvements in the real estate market nationally. Anecdotally, brokers, including me, say they are seeing more buyer activity in the local markets too. These two facts made me want to determine if this is reason for optimism in the part of the market I specialize in, waterfront and water view properties and the area I focus on, at the north end of Hood Canal.  

 Sales of Waterfront and Water View Properties

East (Kitsap County) Side of Hood Canal

Year             Overall Unit Sales      Q4 Sales        Percentage of Sales in Q4

2010                        25                    4                          16.0

2011                        26                    10                        38.5

West (Jefferson County) Side of Hood Canal

Year             Overall Unit Sales      Q4 Sales        Percentage of Sales in Q4

2010                        16                    3                          18.8

2011                        15                    5                          33.3

Is there reason to believe that the data represent a trend and not an anomaly?  I believe so. Many of the buyers I have been talking to say they have been moved to action by the lower prices. I also believe that buyers are beginning to feel that prices have bottomed out, or at least that future price declines will be minimal. And, the local selling prices have largely borne that out.

With the more upbeat mood, the increased buyer activity and the upward trend in what is usually a slower quarter, there is reason to be optimistic about the local waterfront and water view home market in 2011.

The graphs reached through the link below show the average market time, average list price and average sales price for homes over the past several years for North Kitsap County (NK), Southeast Jefferson County (SEJ) and Bainbridge Island (BI). At the time these graphs were created, the average sales price increased to 85 percent of the average list price for all listings in NK, decreased to 67 percent for SEJ and increased to 65 percent for BI. For just those properties that sold in NK, the average selling price was 99 percent of the asking price at the time it was sold. For SEJ it was 95 percent and for BI it was 99 percent.

The market time for all homes on the market continues to climb for all three markets, typical for this time of year. The time for all properties in all three markets is over 160 days. In SEJ, it is 243 days. These are record highs for NK and SEJ. The market time for just those properties that sold is about one third lower in all three markets, demonstrating that appropriately-priced homes are selling while the rest languish on the market.

The graphs show that NK average selling prices continue to hover at levels last seen in 2005. Following some relatively sharp swings around those levels they have remained relatively flat for the past 12 months. Early in 2011, the SEJ average selling prices began a decline that by mid- year reached levels last seen in 2004. More recently the average has trended upward, but is still at about late 2004 levels. The downward trend of average selling prices on BI has reversed and they are now at levels last seen early in 2005.

The sales rates in NK and SEJ were down over the same period last year. For BI it was up dramatically compared to last year, although the magnitude was exaggerated by the fact that those statistics are based on a single week. The sales rates in December were down compared to November in SEJ and NK . They were up for BI.

In 2011 nearly 650 bank owned homes sold through the MLS system in Kitsap and Jefferson Counties. Several new programs are aimed at helping home owners like those 650 who lost their homes in the last year.

The Washington Foreclosure Fairness Act, which went into effect this last July, is one such program. In a recent article, the Washington Association of Realtors described it as "ambitious legislation aimed at forcing major lenders to engage in conversation and problem solving with borrowers. These conversations and problem-solving efforts should have been occurring all along, but they were not. The result encountered by most borrowers who attempt loan modifications and other negotiations with their institutional lender is frustration and never ending run-around."  This legislation is designed to change all that.

The Washington Association of REALTORS® now has joined forces with Washington state's

Attorney General Rob McKenna, industry attorneys and HUD-approved counseling services to provide comprehensive consumer education through a video that explains consumers' rights and options under the Act.

The video consists of three parts and can be viewed below:

Short Sale and Bank-Owned Property Listings 

                                    Percent of unit listings            Percentage of unit sales 

Kitsap County                               
2010                                              10                                            19
2011                                              24                                            31 

Jefferson County

2010                                               6                                             17
2011                                              10                                            27 

Not surprisingly, the number of short sale and bank-owned listings and sales has increased significantly in both counties. The percentage of sales is still significantly higher than the percentage of listings, indicating that the lower prices of the short sale and bank-owned properties are attracting buyers away from "conventional sales."  

Breaking the data down further another pattern emerges.  

                                    Percent of unit listings            Percentage of unit sales 

Kitsap County                               

2011 short sales                            15                                             8
2011 bank-owned                           8                                             23

Jefferson County

2010 short sales                             4                                              5
2011 bank-owned                           6                                             22

It is clear from the figures above that bank-owned properties sell at a much higher rate than short sale properties. There are two factors that I believe are causing that pattern. First, short sales can be very time consuming and frustrating. Many buyers avoid them because of that. Or if they do make an offer, buyers often get tired of waiting for the lender to make a decision and cancel their offer. Second, many short sale listings do not sell before the lender forecloses, even if there is a ready and willing buyer. The process of getting a lender to approve a short sale can take months, and it is not uncommon for one department at a lender to be working on a short sale while another department forecloses on the property.

In contrast, buying a bank-owned property is relatively easy. The purchase agreements do tend to favor the lender, giving fewer protections to the buyer than conventional transactions, and lenders are not likely to make repairs that might be needed. But the process moves forward at a fairly predictable pace, and once the bank has accepted an offer, which usually takes only a few days, it is very likely that the lender will go through with the transaction.

If you are considering properties that are short sales and bank-owned, the properties owned by banks are a less stressful alternative. But if the property you want is a short sale, it can work. Just be ready for a bumpy ride.

*A short sale is a sale in which the proceeds of the sale will be less than the amount owed and the lender is being asked to accept that lower amount.

The graphs reached through the link below show the average market time, average list price and average sales price for homes over the past several years for North Kitsap County (NK), Southeast Jefferson County (SEJ) and Bainbridge Island (BI). At the time these graphs were created, the average sales price increased to 82 percent of the average list price for all listings in NK, 75 percent for SEJ and 58 percent for BI. For just those properties that sold in NK, the average selling price was 98 percent of the asking price at the time it was sold. For SEJ it was 95 percent and for BI it was 100 percent. The market time for all homes on the market continues to climb for all three markets, typical for this time of year.

The graphs show that NK average selling prices continue to hover at levels last seen in 2005, with some relatively sharp swings around those levels. The NK average selling prices have recently flattened again. In SEJ, the average selling prices had declined to levels last seen in 2004. A more recent upward trend has flattened. They are still below early 2005 levels. The downward trend of average selling prices on BI has flattened. They are now at levels last seen  briefly in a 2004 price drop.