Mercer Island Real Estate Update, Part 1

It’s time for a look at the health of the Mercer Island real estate market. Windermere said, “September 2009 Awesome for Mercer Island!

But was it awesome? Homes were indeed selling this summer:

Mercer-Island-Home-Sales-Map-Summer-09

With the exception of two bigger sales, $4 million was about the top of the market– Mercer Island’s biggest and blingiest homes either weren’t selling or were selling for much less than normal.

Comparing 2009 (YTD) to 2008

More interesting is to look at what homes have been selling for. Here I’ve broken it down by month and neighborhood.

Mercer-Island-Home-Prices-2

Some interesting findings:

  • Prices down: Though it’s hard to see in the line chart, prices have declined from 2008 to 2009. On the Island as a whole, the average price per square foot dropped from $440 per square foot to $341.
  • Especially in South Island: South Island houses saw the biggest decline, from $485 per quare foot to $323 per square foot.
  • Lower offers: As you might expect with these drops, owners were getting less than they listed their houses for. Average sale-to-original-list price dropped from 91% Island-wide to 87%. This means that in 2008, when an owner put a house for sale, the ultimate price would be on average 91% of the list price (excluding any price drops), but in 2009 the ultimate price would be only 87% on average.
  • Volume down: 262 homes sold in 2008 and 176 have sold year-to-date in 2009, with about two months to go.
  • More condos: Already 41 condos have sold on the Island vs. 27 last year, probably due to the new developments in the business district.

Methodology & sources: I downloaded the last two years of home sale records from Redfin and did a bit of analysis with them with Tableau Software. Areas are somewhat arbitrarily designated as North Island (north of SE 40th St), Mid Island (north of SE 60th St), and South Island (south of SE 60th St). And by the way, I’m not affiliated with any real estate organization, just a homeowner.

In part 2 we’ll look at listings: homes currently for sale on the Island.

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5 responses to “Mercer Island Real Estate Update, Part 1

  1. “Prices down” is imprecise. It could mean that prices for equivalent value houses have declined by 20%, or it could mean that the housing “mix” has changed and that more lower-value houses have sold. Given the difficulty of obtaining jumbo financing and recognizing that the government is now the largest home lender, the change in “mix” is probably a larger factor.

  2. mercerislandblogger

    You’re absolutely right, Keith. What would be ideal is a kind of Case-Schiller index of Mercer Island, where prices of the same house are tracked as it’s sold over 20 or so years.

    MI’s price declines over last year and ’07 are almost certainly due to smaller homes getting sold, with less waterfront or views or other premium features. With the summary above you can see that the average # of bedrooms per home went down just slightly in South and Mid Island, but that’s a rough estimate of they type of house that sold. In general, I agree: jumbo financing conditions and the overall market probably did contribute heavily to a different mix of houses getting sold.

  3. I actually have a fair amount of respect for King Co Assessor estimates – they don’t factor in “curb appeal” and they have historically lagged the market (and then there’s the recent 20% de-rating!), but they could be used to show that homes sold in 2008 sold for x% of their 2008 assessed value versus homes that sold in 2009 sold for y% (of the 2008 assessed value).

  4. Thanks for sharing some of this great information on Mercer Island and what it has to offer. So many people outside of the area have no idea what the Island has to offer and this is great stuff.! good luck in 2010

  5. Pingback: Mercer Island Real Estate Update, Part 2: Listings « Surrounded By Water: A Mercer Island Blog

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