Hot housing market in Island County puts chill on rentals

As summer approaches, the weather isn’t the only thing heating up in Island County.

Windermere realtor Dana Hezel

As summer approaches, the weather isn’t the only thing heating up in Island County.

With housing prices continuing a small but steady appreciation in value, the competition among potential buyers within the housing market is also getting competitive, and homeowners are looking to take advantage of a healthy sellers market.

The cost of a median single-family home in Island County rose from $387,000 in March 2015 to $389,450 in March 2016, according to the Northwest Multiple Listing Service (MLS). A median value is the middle number in a series. For example, the median of 1, 2 and 3 is 2. In terms of numbers specific to South Whidbey, the median sales price rose from $250,750 in 2015 to $269,999 in 2016 in a 7.7 percent increase, according to statistics from Windermere Real Estate.

That means it’s selling season for homeowners, as many have held back their desire to sell their homes in recent years due to the poor housing market of the past eight years. As prices continue to appreciate, homeowners’ confidence of making a profit on their homes continue to rise accordingly.

“Many people who haven’t sold their home since the housing market crashed in 2008 are now convinced of selling since the market is good,” said Joe Mosolino, owner of Windermere South Whidbey/Freeland & Langley offices. “What we are seeing is the average price is appreciating, but not at the levels seen in King, Snohomish and Pierce counties.”

Due to the healthy housing market, sellers throughout the area are listing their homes and then quickly finding themselves entertaining multiple offers, according to Mosolino. What that means for potential buyers is that inventory, or the supply of housing, has dropped both statewide and within the county.

“Active listings almost have a 30 percent drop in inventory,” Mosolino said.

With competition for housing so high in Island County, there have been some adverse effects on the people of South Whidbey. Locals may feel priced out by incoming buyers who may be willing to splash some extra cash to land their desired island home. Additionally, the high housing prices may impact small businesses on South Whidbey as the high cost of living may steer potential newcomers elsewhere.

“A strong local economy is a diverse one,” said Ron Nelson, Executive Director of the Island County Economic Development Council. “The same is true for housing. If housing is not ‘affordable,’ then people entering the workforce will either rely more on government assistance or move where housing is affordable.”

As for the rental market, the options are even slimmer. Homeowners who have been waiting for the right moment to sell are now putting their homes up for sale. Many of these homeowners became “landlords by default,” according to Ben Robinett, a licensed property manager at Windermere South Whidbey, as they rented out their homes while waiting for the market to recover. Generally, the rental market functions opposite of the housing market: when sales are doing well, rentals go down, due to a decrease in inventory.

“It’s a supply and demand issue,” Robinett said. “Furthermore, homeowners can be selective with their tenants, making the market that much tighter for those looking for rentals.”

According to Robinett, renters are frustrated. When comparing the rental prices of today with the rental prices of five years ago, the change has been drastic. Still, Robinett is hopeful for the trajectory of rental prices.

“In my opinion, we’re at the height of the market,” Robinett said. “I don’t see rental prices going any higher.”

On a statewide level, the housing market mirrors that of Island County, excluding King, Snohomish and Pierce, which have experienced much higher levels of appreciation. According to Northwest MLS figures, inventory fell sharply among the 23 counties it compiles data on —down more than 25 percent. That imbalance helped spur a 9.4 percent escalation in prices area-wide, with 12 counties reporting double-digit increases, according to the listing service.

 

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