Although foreclosures on Mercer Island cannot compare with other Seattle-area communities, the Island is not immune to the nation’s real estate woes. According to a report released last week by RealtyTrac, a California-based company that compiles foreclosure data nationwide, there are currently three properties on Mercer Island in foreclosure. Yet Island brokers admit that there are nearly twice that many on the edge of foreclosure.

All three of the Mercer Island homes listed in RealtyTrac’s May 13 report are condominiums. Two are up for auction this summer, and the third is bank-owned.

The homes are located in the 2900 block of 76th Avenue S.E., the 3600 block of 93rd Avenue S.E. and the 2500 block of 81st Avenue S.E. The condos were entered into foreclosure in April 2009, the report shows.

But according to John L. Scott Associate Broker Kerry Sussex, there are several more Island properties — and megahomes, not just condos — at the brink of foreclosure. These houses are listed as being under “short-sale,” which basically means that, rather than foreclosing, the bank will sell the property for much less than it is worth.

“I know that there are at least five houses listed under short-sale, starting at $500,000 and going up to $869,000,” Sussex said, adding that four more properties were pending short-sale.

In each of these cases, the difference between the homeowner’s asking price and the realistic selling price is drastic. As an example, Sussex mentioned a mega-home on East Mercer Way, listed as a short-sale, that dropped from $4 million to $2 million. Other homes fell to the bank for one-eighth this amount.

Stormy climate

It’s not hard to find an Island neighborhood with not only one or two, but several “For Sale” signs posted in front lawns. Many of these signs are already weathered from weeks, if not months, of exposure to an unforgiving climate.

A beautiful lakeside view. State-of-the-art kitchen. Walking distance from Washington’s best public school system. These days, it’s still a hard sell.

“It’s really bad out there, even on Mercer Island,” Sussex said. “There are 195 [Island] properties on the market right now. We’re back to 2005 prices, and it might take that long to bring them back up.”

The realtor said she knows out-of-state parents who enrolled their children in Mercer Island district schools, planning to buy a house on the Island, and were forced to rent instead. Despite the fact that “we’ve got more money here, so we’re a little more immune,” the real estate crash still affects Island shoppers, she said.

“There are so many questions out there. Has my house gone down in value? Shall I wait this market out? Have we hit bottom? When we look at all the variables in the equation, everyone’s in limbo,” Sussex said.

Still, Mercer Island’s foreclosure numbers are paltry in comparison to neighboring cities such as Seattle, which saw 355 foreclosures in March; Bellevue, which saw 61; Issaquah, with 38, and Redmond, with 18.

Foreclosures in all of these cities have jumped from last year, according to RealTrac. Bellevue increased by 46, Issaquah by 25, and Redmond by 6.

These numbers come as little surprise, given current media hype over the nation’s besieged real estate market. While cocktail party conversation buzzes over 20- and 30-somethings who, whether through blind naivety or prudent calculations lost their dream homes last year, there is another demographic — the baby-boomers stepping into retirement — that is often overlooked by headlines. Yet this generation arguably faces a much more daunting situation.

A distant retirement

Dozens of Island couples whose children have long since moved away are left with homes that become more of a burden — as far as upkeep and property taxes — than a luxury. And so they make the sound decision to sell their property and relocate to an accommodating retirement home, preferably one on the Island. An easy transition 10 years ago, but an exhausting task today.

The Aljoya Retirement Community is a perfect example. After opening its doors in September 2008, the newly constructed retirement community in downtown Mercer Island is only at 60 percent occupancy. Why? Because many of the couples who have already made deposits on Aljoya simply cannot sell their homes.

“This has certainly impacted our business. Our audience is the sellers of homes,” said Jena Owens, vice president of marketing and sales for Era Living, the parent company of Aljoya. Yet she emphasized that the problem was expected when Aljoya began leasing its spaces.

“We knew when opening that we wouldn’t fill up right away, that people would move in when they could — once they sold their homes. It’s just taking longer than we thought. But we’re fine,” she said, adding that there are ways to help retired couples sell their homes more quickly.

“There are lots of options to help seniors — whether equity lines or auctioning off homes. It comes down to education. Also, it is important [to differentiate] your perceived value of a home versus its realistic value.”

Sussex, who has worked with many clients in retirement, agrees with Owens. It is important, she said, for couples to carefully evaluate their circumstances and prioritize their needs before making real estate decisions.

“I know a lot of older people who anticipated moving a few years ago when Aljoya was being constructed. They’ve had to either stay put or they moved in while renting their homes. The general consensus is, if you don’t have to sell, don’t. But if you’re in your eighties, you better move now. You have to look at your needs,” Sussex said.

The residents of Aljoya, along with other Island seniors, are now face-to-face with this difficult decision. Often, it is an emotional one.

A number of Island couples struggling to sell their homes were contacted for this story. All of them declined to share their experiences.

William Swearingen, director of sales for Era Living, is not worried about filling Aljoya’s empty rooms. Rather, he is concerned about the individuals themselves. He is concerned about the fate of those entering retirement today.

“We know from watching the market that anyone on Mercer Island is likely to have a longer challenge than someone in Bellevue. And it’s something that we’re concerned about — absolutely. It’s a sign of what’s to come in retirement living. Younger retirees are making decisions well in advance to what their parents did,” he said.

And while every resident of Aljoya has “a connection” to the Island, according to Swearingen, be it that they grew up in the community or they have children living here, making the retirement transition — even within one’s own neighborhood, with plenty of family support — is still daunting for many. And this, most would agree, is a reality more upsetting than facts and figures. It is a stark reminder of the nation’s economic crisis, which runs deeper than million-dollar foreclosures. Because in the end, it’s not about houses. It’s about people.