Thanks to everyone who attended the event in Langley, especially while a candidates’ forum was being held. Apologies to those who hoped and tried to attend online. My Windows laptop and Google software couldn’t agree on what “Go Live” meant. Say hello to a spinning icon that spun for most of the hour.
Whether you were there or not, whether you tried online or not, you’re here now. Welcome.
As usual, the presentation is based on sales data and colored with anecdotes. Only presenting the slides can be drier than a desert and harder to decipher than a scribble in the sand. So, here is the presentation as well as some of the narrative. Hopefully, the computers will play nicer at the Freeland and Coupeville events (Freeland 10/15 at 2PM, Coupeville 10/28 at 5PM).
The presentation slides (pdf) – Whidbey Is Changing – Fall 2019
The narrative (you might have to open both, somehow, to make them match up.)
- As the poster says; “Whidbey Island is changing. Thousands have moved here and thousands more are headed this way. Demand for housing is increasing. Homes for sale has been decreasing. Demand growing faster than supply means prices climb, which means affordable housing is decreasing – especially if wages don’t grow fast enough.“
- The news frequently reduces the data to fit the columns or seconds allowed. A simple line on a graph is better, and is useful, but it can miss the details a seller or a buyer or a homeowner needs.
- Housing being ‘up’ or ‘down’ means many things. Prices matter to owners, sellers, and buyers. The number of houses matters to builders. The number of listings matters to real estate brokers. And then, what region and time is the data from?
- A market’s price change is a general number. A house’s value is unique. Ideally, if the answer was purely analytical, various estimates would agree, or only differ slightly. Even billion-dollar companies with teams of mathematicians and statisticians can disagree, particularly in places with low density and infrequent sales – like island. I use my house as an example of how varied the estimates are. Local brokers can insert nuance, but each has their approach. Don’t be surprised if none of the answers match. This is also why it makes sense to check a variety of sources. Eventually, a buyer will define their version, too. Hopefully, that matches what the seller wants.
- Last year, there were worries that a Seattle slowdown would affect Whidbey Island. Now we know. For about a year, Whidbey’s median sales prices flattened, but didn’t fall. Recently, it has begun to rise, at least a little.
- Looking at the price per square foot reduces the influence of big versus small house sales. From that perspective, the median continues to grow with less interruption that the final prices.
- Saying ‘Whidbey Island’s market’ is overly general. Breaking it out into houses built in place versus manufactured houses versus condominiums versus vacant land tells four more stories. Houses built on lot largely mimic the general median sales price. Manufactured houses median prices are rising. Condominiums dropped. Vacant land, however, made a surprising >40% jump from August 2018 to August 2019, then jumped ~10% more in September. One possibility is that buyers who can’t find houses are buying to build.
- The data for Median Days On Market is messier, but the clear message for residences is that residences are selling in weeks while during the Great Recession it typically took months.
- The number and types of properties has changed, too. There are relatively few condos and manufactureds. Ten years ago, houses dominated, but now there are less than half as many on the market – reduced supply. Land and lots have dropped as well, but not as much; hence, there are now more land than house listings. Houses are available for moving into at closing. Land doesn’t ease housing issues until someone builds something on the lot.
- The biggest most recent shift has been a dramatic influx of thousands, probably from the Navy. Unfortunately, there may not have been an analysis to check whether the island can accommodate that many more people. The most recent data is from 2016. An update is eagerly anticipated. An increase in demand.
- Affordability is reflected in availability. The bulk of housing inventory is in houses under $600,000. That inventory has dropped by >50%. Million-dollar houses are affordable, too; but only to millionaires (or people with Really Good financing.) Again, a decrease in supply.
- Regardless of the price, the median days on market has dropped from months to weeks, just as mentioned above.
- But what size of houses are available? There, the bulk of inventory is for houses between 1,000 and 3,000 square feet. Again, fewer of the mid-range houses. The smallest and largest houses (tiny houses and cottages versus mansions and estates) catch most of the attention, but they’re a relatively small portion of the market. Again, a decrease in supply.
- The time it takes to sell houses has dropped, as mentioned above; but the largest houses stand out, taking about twice as long to sell.
- Simplify the picture by looking at the number of bedrooms per house. Inventory for all of them is lower, but the one-bedroom starter house / down-sized house dropped from over 400 units in a month to under 50 units. Two and three bedroom houses dominate.
- The time it takes to sell doesn’t make much of a distinction based on bedrooms.
- Whidbey Island is known for open, rural spaces; but the majority of houses sell with lots less than a half of an acre. Mid-sized lots (0.5 to 3.0 acres) are each less common than larger or smaller lots. It would be nice to see a breakout more representative of Whidbey Island’s parcels (e.g. 0-0.5 , 1-5, 5-10, >10 acres) but the software didn’t allow it.
- In general, the smaller the lot the faster the sale with the smallest lots selling fastest and the largest lots selling the slowest.
- All of that was about Whidbey Island – but in many ways the island can act like three regions: North, Central, and South.
- There is a distinction in the median sales price with South Whidbey being the most expensive. Central and North Whidbey bounce between which is next. In general, though, every region has risen significantly in the last five years.
- Looking at price per square foot reduces the influence of house size and separates the curves. In general, prices rise going from north to south, or prices fall going from south to north. All areas show less hesitation.
- Because so few houses are listed in Central Whidbey, the data bounces more. Despite the larger population, South and North Whidbey tend to have similarly-sized inventories.
- Live on the island for more than a year and the seasonal differences are obvious. Inventories drop in the winter and rise in the summer. One thing to watch for is whether the market is reaching a minimum. When supply can’t drop any further, and demand stays high, then prices rise. The island may be experiencing that in each region, and heightened in the winter.
- Median days on market has decreased, most particularly in North Whidbey about the time that those thousands came to the island.
- People may live in regions and areas, but the town concentrate populations. Each has something that distinguishes the market.
- Clinton’s image is dominated by the ferry, even though there’s much more going on there (as is true in each of these cases.) For a comparison, look across the water to Mukilteo with its much higher median sales price and somewhat higher price per square foot. Taken simplistically, living in Clinton is almost a $200K savings for the price of using the ferry. That may eventually be noticed by folks on the mainland.
- Langley’s image as a tourist town can mask the larger part of the city as well as the postal area. Downtown sways the numbers despite very low inventory. Prices and prices per square foot are significantly higher for downtown properties, with a ramp kicking in about two years ago. Whether a recent data drop is representative of demand or simply a small dataset will only be resolved by more data, which takes time.
- Freeland may be seen as the shopping center for locals, but it also includes significant waterfrontage along Holmes Harbor and those west side views. The difference can mean a tripling of house prices and a doubling of price per square foot. Two communities with one zip code.
- Coupeville is a multi-layered story, with noise currently the loudest issue. The Navy’s practice field has become controversial, and is associated with the influx mentioned above. Looking at the properties inside and outside the noise zone would suggest a drop in prices closer to the field; yet, except for the same flattening seen by other areas in the last year, prices continue to rise. Whether that continues as flights increase or represents people feeling that they can’t sell their houses there by diminishing supply is hard to assess. Anecdotes exist for every argument, but for now, the data seems more stable than expected.
- Oak Harbor heavily and proudly identifies with the Navy. It’s current story is dominated by that increase in population and demand, without a similar increase in supply. Until they balance, median prices are likely to climb.
- But enough about what’s happening on and in Whidbey Island. What about the rest of the world?
- As Whidbey Island deals with affordability issues, it continues to have the lowest median sales prices by hundreds of thousands of dollars. That may increase demand from mainlanders hunting for affordable housing, or at least more affordable housing.
- Look at the mainland and see Seattle’s documented price drop, though more of a droop than a drop. The island, Bellingham, and Everett witnessed a pause, but haven’t experienced The Big City’s drop/droop. Again, Whidbey Island is relatively affordable.
- Seattle is the largest market. No surprise there. Seattle’s price drop occurred about the same time as a flood of new housing became available. The rise is larger any of the markets just described. That increase in supply may be one of the few moderating influences as Seattle buyers have more to pick from before considering looking farther out.
- Whidbey has affordability issues, but is cheap relative to Seattle. Seattle has affordability issues, but is cheap relative to much of the Pacific Rim. Demand for Seattle indirectly influences demand for Whidbey, and those influences may persist as long as the other areas experience such high levels of unaffordability.
- Affordable housing isn’t just about housing. People and how they live and use those houses are important.
- Except for Oak Harbor, Whidbey Island has an older population than the rest of the state; and even Oak Harbor is aging. The largest shifts, however, are in Langley were the median age was about 48 in 2000, rose to about 58 within 10-15 years later. The next census should update those numbers, but a dramatic reversal is unlikely. This influences the sources of income (e.g. investments and pensions versus income and wages) as well as how the money is spent (i.e. younger people spend money as they build households while older people may spend less as they downsize.
- Incomes are rising as quickly as housing prices. In 2015 in Island County (not just Whidbey Island) a buyer could afford a median house with a median income if the price was about five times their income. In 2000, that was ‘only’ about 3.7 times their income. Now? Anecdotes suggest it has worse.
- Affordable housing frequently inspires conversations about increasing the number of houses, but the vacancy rates suggest outside of Oak Harbor there are thousands of houses that are empty – except for a few weeks each year. Building new houses may be directed at providing housing for locals in need, but a house in the open market can also be bought for a part-time house. A new term ‘ghost houses’ is being used to describe houses bought to be vacant most of the time, or even all the time. For some, a vacant house is an investment, an asset. Using it as a rental may provide income, but it can also increase risk.
- Ghost houses are a global issue. Several major cities are initiating experimental taxation and regulation to curtail the phenomena. Not just a Whidbey Island issue. Possible role models?
- There may be thousands of empty houses. The number of homeless is harder to assess. The underestimate is about two hundred homeless individuals, but that probably doesn’t account for couch-surfing, nomadic living in RVs, etc.
- Whidbey Island’s growth has been limited by local resources: water, septic, transportation. Each of these have technological innovations that may uncap that growth. There’s a demand for housing, as well as there’s a demand for preservation. There’s going to be a lot of discussion (hence presentations like this one.)
- An anecdote: People don’t want to sell unless they can find something to buy, but there’s little to buy because so few are willing to sell.
- Summary – Think back forty or fifty years to when Whidbey Island was so remote that Seattle-ites didn’t know where it was. Now, the Clinton ferry run is the second busiest, Langley and Coupeville regularly appear in tourist magazines and shows, and several movies used the island as a setting. Access is easier (despite frustrations with a two-lane bridge and a couple of ferries), pressure from the mainland is growing, and our resources haven’t substantially changed. It looks like demand will remain high, supply can’t grow fast enough, and wages aren’t keeping pace. Whidbey Island’s affordability and real estate trends are likely to continue – at least for now.
See the poster for the other events.
Thanks to the various Sno-Isle Libraries and their librarians for hosting the presentations.