Home Prices Bounce Back Above $1 Million in April

Despite a relatively depressed housing market elsewhere, sales and median prices of single family homes on Mercer Island are experiencing a modest increase this spring compared to last year.

The median closing price for a single family home in the Mercer Island last month reached the $1 million mark on 26 homes sold, which marks a 24 percent rise from April 2010, the Northwest Multiple Listing Service reported.

The last time a single family house price was higher than $1 million was earlier this year in January, when the median number was $1,024,000 but on just 11 homes sold. 

After in local real estate, local brokers sound relieved reviewing the seasonal spring increase in activity they once took for granted. Broker Cynthia Schoonmaker said 46 Mercer Island properties were pending sales under contract last month, 44 percent higher than last year. She expected most of those agreements to translate into sales in the coming months.

"That's a really nice number," she said. "We had an incentive for sales last year — the tax buyers credit — and this year we see an increase this year without that benefit. It's really encouraging."

Last year, around this time, the U.S. government was offering a first-time homebuyer tax credit of $8,000. In recent years, however, pending sales sometimes fail to close due in part to more restrictive terms from lenders. Last year, one-in-three pending sales in King County failed to result in a closed sale. Schoonmaker, however, said several other signs pointed to Mercer Island's relative success during tough economic times.

"It's an interesting market," she said. "Homes priced under a million have more activity, and tend to have quicker sales. Above the median price, things move slower but we're still getting interest in those homes, such as waterfront properties … It's a good time to buy if you have the ability."

Last month, Mercer Island recorded 31 closed sales overall (condo and single-family homes) at a median price of $850,000 — an increase from 18 overall homes sold at a median price of $773,000 in April 2010.

The year-over-year 9.9 percent increase in Mercer Island's overall closed sales price in April was also better than the 1.2 percent price increase for the Eastside, according to the listing service.

The King County Department of Assessments also points out in an that waterfront homes have, for the most part, kept their "premium" values.

"We have a bottleneck of buyers right now," said Schoonmaker. "And when that happens there are buyers who know every single house in their price range in the market ... You get the best buyers and the most exposure after a couple of weeks. If you're lucky you can sell in the first couple of weeks. After that you're waiting in a different kind of way."

The number of homes for sale on Mercer Island is also significantly lower than last year, creating another bottleneck in local real estate supply. Last year in April, there were 185 properties for sale. This year, there were only 136 — a 26 percent drop. Inventory in King County was also down by more than 13 percent.

The median sales price means that 50 percent are higher and 50 percent are lower. The median sales price is not the average sales price.

In a statement,  J. Lennox Scott, chairman and CEO of John L. Scott Real Estate said these real estate market conditions on Mercer Island and across the Puget Sound market are spurring demand.

"With healthy sales activity over the last several months, a shortage of homes coming on the market and low foreclosure activity, the stage has been set for a multiple offer market," he said.

Darin Stenvers, of John L. Scott's Bellingham office, believes several indicators show the housing industry is recovering on its own. Acknowledging it is a slow process, he said he expects it will continue for the balance of 2011 and into 2012.

Many of today's buyers are not seeking loans that stretch their budgets as in the past, prompting banks and the secondary market to regain confidence, and eventually loosen their credit guidelines and roll out new loan programs, Stenvers suggested. He expects buyers will have to look at making their first offer their best offer, even on bank-owned homes.

"The days of lowball offers will soon fade and short sales losses will tighten," he said.

As prices stabilize and inventories drop, Stenvers warned buyers will "feel the chance at home ownership at bargain prices slipping from their grip."