The news is consumed with angst about the mortgage crisis and the declining real estate market. On this, I couldn’t agree more with fellow MI blogger Richard Sprague: National trends don’t count. Richard was referring to teen drinking, and I’m talking about real estate, but both are local phenomena. So let’s check the facts.
Altos Research has gone to the trouble of publishing reports on Mercer Island. Thanks, Altos. Now, first of all, it’s true: the median price of a home has fallen 12% or so in the last 90 days. But isn’t that after about 8 years of run-ups?
I bet you’d be hard-pressed to find anyone who has owned a home for more than three years in Mercer Island who’s lost value. That doesn’t mean that sellers aren’t facing a hard time: days on market has crept up to about 114 days.
And inventory is higher, reinforcing the common- and probably correct- notion that we’re in a buyer’s market.
Right now, Redfin shows 139 homes for sale in Mercer Island. Of these, 121 are houses and 18 are condos. The median home is a 4-bed, 3-bath house with 3,294 sq. ft. on a lot of 12,096 sq. ft. The median price is $1,325,000. A histogram of current list prices is shown below.
If you list your home between $4 million and $4.5 million today, you’ll have that price band to yourself!
You know you want to see it, so here’s the most expensive home: “a commanding mansion palatial in its carriage.”
To sum this up, the real estate market is down and the sub-prime crisis will take some time to work through, maybe years. But in a place like Mercer Island, in between two fundamentally sound city centers, where sub-prime debt is a small problem, the real estate market is not collapsing.
Full disclosure: I’ve recently bought a house on the Island, though more because my fiancé and I wanted to buy a house that we could both commute from, than to time the market. Also, I’m not a real estate agent but my job does depend on the real estate industry. Thoughts in this post are what I actually think, not ads or spin.