Off the chart - More buyers chase fewer Island homes
November 24, 2008 · Updated 4:45 PM
By Mary L. Grady
Affordable is a word seldom heard in a discussion about Mercer Island real estate. This summer, with even fewer Island homes for sale and those that are becoming more expensive, the word is ``hurry.''
The existence of the ``bubble,'' used to describe a market of rapidly rising prices, shows no sign of dissipating in the Seattle area or Mercer Island anytime soon.
Real estate sales and activity here have been higher due to many reasons, according to John Deely, managing broker of Coldwell Banker Bain Associates.
The most important reason of the equation is inventory. More buyers are chasing fewer and fewer homes at the lower end of the Island price spectrum.
``Most buyers are not convinced that the real estate bubble talk is true in the Pacific Northwest and Mercer Island,'' said Deely.
The number of active Island listings so far this year is down, as is the number of home sales that are pending and final. According to Deely, the inventory of homes for sale in June was the lowest number for that month since 1998. Inventory of available homes usually peaks in summer, Deely explained. This year the number peaked in April with just 135 homes and condos on the market.
In May, there were a total of 124 homes and condos on the market, down from 186 listed for the same month a year ago. Pending and closed sales for the month were also down nearly 30 percent but prices increased. The trend continued in June with just 129 homes and condos on the market. The average price of the 59 homes that sold in June was more than $2 million.
As of July 7, there were 105 single family homes listed for sale on Mercer Island and nine condominiums. The least expensive home is priced at $539,000 and only seven have asking prices under $750,000. The remaining 83 homes were priced at $900,000 and above. The number of days on the market for homes listed now ranges between 15 and 116.
Another way to look at the numbers and see the real impact of the dearth of lower-priced homes is to look at the median price. The median price is the dollar amount where half the homes sold below and half the price sold above that amount.
Last month the average sale price of homes on the Island was $1,043,064 up just 3.3 percent over the June 2004 price of $1,009,718. The median price for this past month, however, moved up 30 percent to $851,000 over the June 2004 median of $655,000.
People are rushing to buy up the homes that are available leveraging what they have to buy the most house. And interest rates remain relatively low.
``Rates are great and there are many, many options out there for mortgages,'' Deely said.
Despite fewer homes that are being bought and sold, Deely said that his agents are busy. ``Many homes have multiple offers.''
Deely said builders and some individuals are buying homes to tear down, rebuild and sell for profit.
Analysts point to increasing constraints on the amount of buildable land available and the simple fact that there are more and more people within Western Washington, as the primary drivers of the hot housing market.