"The things that will destroy America are prosperity-at-any-price, peace-at-any-price, safety-first instead of duty-first, the love of soft living, and the get-rich-quick theory of life." - Theodore Roosevelt

2006: JUST ONE MORE EXTRAORDINARY YEAR.

This issue reviews and summarizes Whidbey Island real estate sales during the twelve months of 2006 - January through December. With very low inflation (with the exception of energy), interest rates continue close to 41-year lows. Overall residential sales declined dramatically across the board. Prices, in general, however, rose somewhat. During the year, the median home price rose 7.6%. At the same time total sales dollars for all residential real estate island-wide declined. For residential SFD properties, the South Whidbey market area (including Coupeville, Langley, Clinton, Greenbank and Freeland) saw sales numbers decline from 2005. Specifically, all island sales number declined by 29.4% and total dollar flows declined 13%! What has happened in one short year? Plainly, our housing prices have outstripped the ability of many buyers to purchase in our marketplace. A second factor is that the Growth Management Act continues to force most new housing into our "urban" areas, Oak Harbor and Coupeville - and to a lesser extent Langley. A further indication of decreased activity is that "average days on market" (DOM), rose 16.2% throughout the island. Especially impressive was the sales decline in the rural areas of Oak Harbor. All the north-end activity reflects the heavy U.S. Navy influence in Oak Harbor, where Naval incomes based on technical skills are rising rapidly, but insufficiently to met the higher cost of housing. Total sales dollars in the Oak Harbor area declined 33.8% during the year. After reviewing changes in the real estate market, we make some predictions for the first half of 2006, comment on America's Energy Posture, and end with our usual near-term economic predictions.

THE YEAR THAT WAS! For the year residential sales declined from last year's $427.7 mil. to $378.7 mil. Residential sales numbers declined from last year's 1,423 to 1,063. Of these 85 were manufactured homes, 89 were condominiums and 54 were multifamily units within 13 properties; mostly duplexes. Finally, there were a mere 851 Single Family Detached homes sold.

Standard Single-Family Detached Home Sales, and Other Sales, January-December (2006)

Previously Built Homes

	No.	Sales$	Aver$	DOM	% SHR
Northend (Oak.Harbor)	447	$169,746,043	$301,503	73	37.0
Southend (Coupeville & South)	404	$208,338,795	$416,678	86	33.5

New Construction Homes

Northend (Oak Harbor)	72	$23,344,271	$324,226	81	6.0
Southend (Coupeville & South)	55	$23,479,817	$426,906	94	4.6

OTHER THAN STANDARD SINGLE FAMILY DETACHED
RESIDENTIAL SALES(North & South Whidbey 2005)

Manufactured	85	$16,291,850	$191,669	79	7.0
Condominiums	89	$17,144,550	$192,635	46	7.4
Multifamily 92/Units	54#	$5,090,500	$94,269	78	4.5
Residential	1,206	$400,319,888	$331,940	77	100

* There are probably more "manufactured" sales that are counted as SFD
#=number of sales, with number of units/unit price

The Table is very abbreviated, because of some limitations with HTML. Contact us to send you a printed or faxed copy, together with the published Tables documenting fifteen years of South Whidbey and North Whidbey sales, by residential category.

New development lots in Oak Harbor are now so valuable (averaging about $85,000) that successful builders are developing for their own account and selling, at their pleasure, some lots to other eager builders needing ready-to-build parcels. Expect this trend to continue. While "spec" home sales in Oak Harbor have fallen dramatically in both numbers and dollar flows, prices continue to rise. In Oak Harbor new home sales are down 114% and total dollars are down 79%! At the same time new home prices have risen from a median $255,425 to $305,206 stretching the ability of many, including our magnificent military families, to qualify for mortgages. New home sales increased, however, on South Whidbey. Only 55 new "spec" homes were sold on South Whidbey; many of these were larger, rather expensive homes. The appearance of new homes selling for more than $350,000 is a new phenomenon on the island. Expensive "spec" homes (those above $300,000) sell slowly, however, they are selling. Island-wide, new home sales are down 56% and total dollars are down 22.3%. At the same time new home prices have risen from a median $273,074 to $324,777. Custom home construction increased in numbers and average values, even though these do not appear as sales data. Condominium sales have declined as a percentage of the market, and manufactured home sales, also continue to decline. Homes under $100,000 have virtually disappeared (even condo sales average $190,000) - most are on North Whidbey. The number of expensive homes sold rises each year. During the year, 503 homes sold for more than $300,000; and 177 of these sold for more than $450,000. These "upper-tier" sales continue to be intriguing as they document the direction of change as Whidbey Island becomes a "preserve" for the well to do and the truly wealthy. Sales numbers over $300,000 have increased 10 percent, compared to last year.

LAND TRANSACTIONS:. During the year there were 337 land sales; 262 on South Whidbey totaling - $38.9 mil. On North Whidbey there were only 75 land sales, totaling $12.5 mil. Sales for land, island-wide, totaled $51,356,223. This is the first year in the last six, in which land sales weakened dramatically. Total sales dollars were down 34%, sales numbers were down a full 56% and the Days on Market increased from 121 days last year to 135 days in 2006. On North Whidbey the median transaction price, including both lots and acreage¿s, was $120,000. This high price per parcel is based on the fact that there are more, acreages parcels available on North Whidbey; 37 of the 75 sales. On South Whidbey the median land sale was $116,775 (lower because there are still large numbers of buildable lots on South Whidbey). Approximately 42% of all land transactions were acreage's.

Since 1969, our "secret" energy policy with respect to oil has been to burn cheaper oil produced by other nations - consume theirs while conserving our own supplies. In addition, the U.S. has a Strategic Petroleum Reserve (a "rainy day" reserve), now completely filled to its new, expaned capacity of 1.2 mmbls. Nor are our future energy resources so bleak, however there is one serious problem. World-wide exploration for oil now only discovers a single barrel of oil for every four barrels of oil consumed. Fact; the U.S. has the world's largest proven total oil reserves, although Saudi Arabia has "probable" total oil 5-8 times our probable total. Fact: the U.S. has almost 523,000 oil wells (many capped because of high production costs) - almost 65% of all the world's oil wells. Fact: oil at $50 bl in 2004, (and $2.20 at the gas pump) is 32% lower than gas was in 1954, at $5 bl and $0.19/gal. - in real dollars. Fact: oil, today, at $70 bl in the autumn, 2006, (and $3.10 at the gas pump) is 8% lower than it was in 1955, in real terms.

Nonetheless, rapid spikes in the price of both oil and gasoline are bad for our national economy and bad for our personal economy. Our major problem is that we are the world's most profligate wasters of energy. We consume 8 mbls per day in our cars and light trucks. If, as a national policy, we decided that hydrogen should be the fuel for all our cars and light trucks, within five years, we would not need to import a single barrel of oil! We have other bizarre energy behaviors, as well. We actually burn oil to generate electricity. Actually, we already have a proven system of electric generation - nuclear power. Nuclear power has problems of waste management, but these are more manageable than those caused by the burning of fossil fuel. Only 9% of our electric power is generated by nuclear power, but if re-implemented, we would have harnessed thermonuclear power, totally waste-free, before we got to 20% of electric generation. Final Fact: there is lots of "oil" remaining to be exploited. We have enormous unexploited resources of oil in America in tar sands, in oil shale; in bio conversion, coal conversion, and wet gas conversion. Simply, we are going to pay more for the exploitation of all these resources. Even this litany, doesn't consider another incredible possibility - abiotic oil; oil that might be recovered from deep sea drilling. There is a theory, now gaining serious attention that posits that the amount of oil already recovered is much too large to have been created by fossil decomposition during the Carboniferous Age. That, in fact, all oil is abiotically-created from methane gas under the enormous pressures and heat at the lower edges of the earth's mantle. If so, the creation of oil may be an on-going process, rather than a fossil creation. Time will tell. In the interim there will be no substitute for planning and implementing a wide variety of rational strategies to restructure our present patterns of energy sourcing and consumption.

Copyright 2007. All rights reserved

This issue reviews and summarizes Whidbey Island real estate sales during the twelve months of 2005 - January through December. With very low inflation (with the exception of energy), interest rates continue close to 38-year lows. Overall residential sales increased across the board. Prices, in general continue to rise. During the year, the average home price rose an astounding 18.3%. At the same time total sales dollars for all residential real estate island-wide rose a remarkable 27.6% from last year. For residential SFD properties, the South Whidbey market area (including Coupeville, Langley, Clinton, Greenbank and Freeland) saw sales numbers barely rise 2.6%, however, in the Oak Harbor/ North Whidbey market area they rose 9.6%; indicating the increasing impact of the Growth Management Act in forcing development into our one major "urban" area, Oak Harbor. A further indication supporting increased activity is that "average days on market" (DOM), fell 29.4% throughout the island. Especially impressive was sales activity in Oak Harbor. All the north-end activity reflects the heavy U.S. Navy influence in Oak Harbor, where Naval incomes based on technical skills are rising rapidly. Total sales dollars in Oak Harbor rose 24.8% during the year. After reviewing changes in the real estate market, we make some predictions for the first half of 2006, comment on the Economics of Wine and America's Energy Posture, and end with our usual near-term economic predictions.

THE YEAR THAT WAS! For the year residential sales rose from last year's $356.9 mil. to $455.5 mil. Residential sales numbers rose somewhat, from last year's 1,347 to 1,567. Of these 125 were manufactured homes, 122 were condominiums and 92 were multifamily units within 24 properties; mostly duplexes. Finally, there were 1296 Single Family Detached homes sold.

Land sales continued the rise begun two years ago after several "soft" years. Land sales numbers, island-wide, were up 12.9% since last year, however, dollar volume was up a dramatic 37.6%; as Days On Market dropped 21.6%, compared to last year. Land sales numbers rose from 466, island-wide, to 526 through December. Sales numbers were roughly balanced between lots and acreage's, 319 versus 207, the larger number attributable to new lots in Oak Harbor for construction. The impact of our Growth Management Act regulations continue - as most development is constrained to Oak Harbor. The "average" acreage sale at $192,300 and the "average" lot sale was $90,700. In all, there were $39.8 mil. in acreage sales and $28.9 mil. in lot sales. Residential sales, of course, remain by far the more important segment of our real estate in numbers and dollar flows, as reflected in the following breakout:

Standard Single-Family Detached Home Sales, and Other Sales, January-December (2005)

Previously Built Homes

	No.	Sales$	Aver$	DOM	% SHR
Northend (Oak.Harbor)	593	$151,262,550	$255,080	49	33.2
Southend (Coupeville & South)	507	$197,391,134	$389,332	79	43.4

New Construction Homes

Northend (Oak Harbor)	152	$41,311,202	$271,784	89	9.1
Southend (Coupeville & South)	44	$15,386,450	$349,692	94	3.4

OTHER THAN STANDARD SINGLE FAMILY DETACHED
RESIDENTIAL SALES(North & South Whidbey 2005)

Manufactured	125	$21,251,375	$170,011	82	4.7
Condominiums	122	$20,063,450	$164,455	30	4.4
Multifamily 92/Units	24#	$7,991,650	$86,866	43	1.8
Residential	1,567	$455,506,926	$290,687	63	100

* There are probably more "manufactured" sales that are counted as SFD
#=number of sales, with number of units/unit price

The Table is very abbreviated, because of some limitations with HTML. Contact us to send you a printed or faxed copy, together with the published Tables documenting fifteen years of South Whidbey and North Whidbey sales, by residential category.

In the above Table, DOM refers to the number of "days on market", while "percent share" means the percentage of all residential sales dollars. As Coupeville has completed its transition into the South Whidbey marketplace, we will no longer include it in our North Whidbey analysis. The Zip code for Oak Harbor (98277); is North Whidbey and everything from Coupeville south is South Whidbey: Coupeville, Langley, Greenbank, Freeland and Clinton. What significant changes have occurred during the year? The impressive rise in the price of all real estate is the most remarkable trend. First, North Whidbey is "booming". Absent dramatic personnel reductions at NAS Whidbey (something that might occur in the next few years but not in this BRAC cycle), the greater Oak Harbor area continues to come into its own as a retirement community. Within the past five years the availability and quality of retail goods has increased impressively. Significant mission changes at NAS into long-range turboprop anti-submarine aircraft with many more officers and senior enlisted personnel per squadron than was the case with previous fighter-bomber basing. Salary increases, those following rising education standards and outside competitive forces in the private sector, along with rising housing allowances (BAH), have stimulated local new construction to record levels (and record prices). Although rental rates are high, many of our splendid military families are unwilling to rent older apartments or the tiny condo units that were built in the past twenty-years. Adding to this Navy impact is the increasing number of retirees who "discover" Whidbey Island, and prefer the small town sense of community and shopping of Oak Harbor. Another factor affecting home buying patterns and new construction is the accumulating impact of the State's Growth Management Act (GMA). Our county is especially impacted. GMA basically inhibits development in the county, except within "urban growth areas". On Whidbey there is only one literal "urban" area - Oak Harbor (though Coupeville (2,300 population) and Langley (980 population) are technically "urban growth areas"). GMA virtually prohibits development elsewhere. Politics have created a vacuum. Oak Harbor has responded.

New affordable development lots in Oak Harbor are now so valuable (averaging about $85,000) that successful builders are developing for their own account and selling, at their pleasure, some lots to other eager builders needing ready-to-build parcels. Expect this trend to continue. While "spec" home sales in Oak Harbor are rising dramatically in both numbers and prices. Such sales continue to decline on South Whidbey. Only 44 new "spec" homes were sold on South Whidbey, but some of these were larger, rather expensive homes. The appearance of new homes selling for more than $350,000 is a new phenomenon on the island. Expensive "spec" homes (those above $300,000) sell slowly, however, they are selling. Custom home construction increased in numbers and average values, even though these do not appear as sales data. Condominium sales have rising slightly, but continue to decline as a percentage of the market, and manufactured home sales continue to decline. Homes under $100,000 have virtually disappeared (even condo sales average almost $165,000) - most are on North Whidbey. The number of expensive homes sold rises each year. During the year, 460 homes sold for more than $300,000; and 169 of these sold for more than $450,000. These "upper-tier" sales continue to be intriguing as they document the direction of change as Whidbey Island becomes a "preserve" for the well to do and the truly wealthy. Sales numbers over $300,000 have increased over 53 percent, compared to last year.

LAND TRANSACTIONS: IMPRESSIVEDuring the year there were 526 land sales; 405 on South Whidbey totaling - $50.3 mil. On North Whidbey there were only 121 land sales, totaling $18.4 mil. Sales for land totaled $68,728,702. This is the third year, in the last six, in which land sales have strengthened. On North Whidbey the average transaction price, including both lots and acreage's, was $152,366. This high price per lot is based on the fact that there are more, larger, acreages available on North Whidbey. On South Whidbey the average land sale was $124,179 (lower because there are still large numbers of buildable lots on South Whidbey). About 39% of the transactions were acreage's.

ECONOMIC PREDICTIONS FOR SECOND-HALF OF 2006. Our national economy has come roaring back after almost three years along a bumpy road. Overall the economy is simply performing magnificently, relative to the other major economies of the world (including even those of India and China because while growing fantastically, China still has no infrastructure and India has very decrepit infrastructure). Housing continues to "boom," despite some evidence of developing "bubbles" in seven or eight of the countries major housing markets. The impact of last year's hurricanes, this years anticipated hurricanes, terrorism and utterly unnecessary oil costs - even the nasty and costly situation in Iraq has not stalled the private sector economy. Despite huge tax cuts, the federal deficit will be just over half what was projected in January! Before we recap the current situation, let's note that macroeconomic matters always contain some non-performing elements no matter how well the general economy is performing. For instance, Michigan and Ohio have very challenging employment problems. They have failed to "get modern." Such problems in America, of course, always create political problems, so expect continuing political divisiveness. Also, investor confidence is softening even though the securities markets remains strong; poised even to achieve all time records. Capital investment is still too low, because our tax system too much favors consumers rather than producers. On the other hand, all the 4.5 mil. jobs lost between 1999 and 2003 have been replaced and another million besides. Considering the magnitude of technological change, despite the "kicking and screaming" of labor unions from automobiles to teachers, is changing our nation. Their wishes to drag America back to the 20th-century is almost fatalism. In fact, the average "unemployment" rate in 2005 was lower than the average rate for each of the past seven years - all of them! Job replacement has not been "high-paying, traditional," union employment. That is gone and will not return. Job growth is 75% lower-paying service employment and 25% extremely high-paying technology employment (open only to those with technical, educational and previous employment experience). Our basic economy produces more and more with less and less employment, while our specialized economy requires labor intensity ranging from minimum wage labor to technology workers producing "tens of millions" in added value to the national and regional economies. Positive economic growth continues at about twice the base rate of inflation - almost 4% is projected for the year. And remember given the scale of our huge economy even modest growth represents over $300 bil., annually to our GDP. Inflation remains very low. In fact, were it not for energy "spikes," real inflation so far in 2006 would be under 1/2 percent. Given world uncertainties, this is an excellent record. By way of contrast the rest of the world is struggling with recession, made worse for them by the weakening U.S. dollar and higher energy costs. Consumer confidence is uneven but actual consumption remains strong (very strong), driven partly by very low interest rates. The housing market also rose at an incendiary rate in 2005, and was the second best sales record in history. New construction is slowing down because of overbuilding in some markets and rapidly rising home prices, absent rising incomes. Inexpensive housing mostly exists in areas of the country where we choose not to live; this means that its getting harder to qualify at the recent price levels in many areas of California, Florida, Washington state, Arizona, Colorado and increasingly Nevada. Also, we probably only have another year or so of very low mortgage interest rates. This will reduce further stimulus to the marketplace for homes and automobiles. Federal tax cuts provided substantial stimulus during 2005, but the large federal government expenditures for defense, anti-terror and disaster activities presage rising government expenses, whether from an expanding economy or deficit financing. Even worse, government employment has now become the employment of choice. If you love socialism, this is the path to take. Federal employees are now paid MORE than private employees doing the same work; plus they get fantastic health benefits, can hardly ever get fired and have a huge range of other costly benefits. This, more than terrorism, disaster and Iraq are responsible for growing long-term debt. This is Social Security with problems that may not be solvable if not dealt with soon. So these debt loads are too high and rising. Speculation on the Chicago Merchantile Exchange and nothing else is largely responsible for our temporarily high oil costs. Don't kid yourself. The "spot price" of oil (about 20% of the market) at $75 a barrel has nothing whatever to do with the real price of crude. Exxon pays about $14 per barrel. So the speculation which has made "hundreds of millions" for a small handful of people is fueled by citizen fears that have replaced facts. Oil is in plentiful supply, by year-end overwhelming supply. By autumn all the worlds storage capacity will be saturated and prices will eventually come down with greater impact even as crude prices settle at a higher base price. Just as the airline, travel and hospitality industries have recovered to pre-911 levels, all face the reality of high energy costs. Can all of our "weak" airlines survive when they cannot make a profit even when their seats are full? Probably not. On the strong side, productivity is improving impressively, agriculture is strong, and corporate profits are rising. Stocks have recently exploded but will continue to be volatile, although companies with real earnings should continue to see impressive stock price levels. The bond market is very strong and should continue to be strong. as the rest of the world looks for a safe haven for their investments. It's not gentlemanly to be "jingoistic" but those who cry "EU" are being fools. Simply Europe has larger bond and stock investments in the U.S. than it has investment in itself! As for stocks without earning capability, they will continue to have their prices manipulated by the securities industry and speculators - as they have for the past eight years. We'll repeat this again; we live for many years to come in great uncertainty. Our nation continues to be vulnerable to events over which we have limited control. What you DO control is your family. Teach them to become citizens of the 21st-century; to become educated. Teach them how to work (a skill we as a nation are losing), teach them to "save" in some guise, and teach them to be "underconsumers" - the sure pathway to financial independence and wealth. As we have noted for the past several years, it will be an interesting "ride". Stay tuned!

Copyright 2006. All rights reserved

2004: A YEAR OF CONTINUING RECORDS.

This issue reviews and summarizes real estate activity and the all time record sales year that was 2004. Very low interest rates, dipping below 40-year lows, continue to stimulate real estate activity on Whidbey Island and throughout the country. Overall residential sales numbers, year to year rose across the board, including average prices, sales numbers and total sales dollars. For the island as a whole, total sales dollars rose 37.7% from last year. For residential SFD properties, on South Whidbey sales dollars were up an extraordinary 99.2% due to the increase in high-priced homes. In Oak Harbor/North Whidbey, total sales dollars rose a modest 5.0%, though average prices rose significantly. Especially impressive were sales in the Coupeville area, often called Central Whidbey; where sales dollars rose 27.7% as that area becomes a market area fully common with South Whidbey. All the north end reflects the heavy U.S. Navy influence in Oak Harbor. After reviewing changes in the real estate market, we make some predictions for the first-half of 2005, makes comments on, Democracy: A Legacy, and close with our usual near-term economic predictions.

ANOTHER EXTRAORDINARY YEAR! For the year total residential sales rose from last year's $250.1 mil. to $344.4 mil. Residential sales numbers rose somewhat from last year's 1,236 to 1,347. Of these 88 were manufactured homes, 100 were condominiums and 69 were multifamily units within 18 properties - the remainder were Single-Family Detached (SFD) homes.

Land sales continued the rise, a phenomenon that began three years ago after several "soft" years. Sales dollar volume was up a dramatic 36.7%, while sale numbers were up 20%, compared to last year. Land sales numbers rose from 384, island-wide, to 461 through December 2004. Sales numbers of 'lots' (parcels smaller than an acre) were 64% of sales, 281 versus 187 for acreage parcels. A large number of new lots in Oak Harbor for new construction were created this year. The impact of our Growth Management Act regulations continue - development is being constrained to Oak Harbor. The "average" acreage sale at $157,400 was over twice that of the "average" lot sale ($66,600). In all there were $29.4 mil. in acreage sales and $18.7 mil. in lot sales. Residential sales, of course, remain by far the more important segment of our real estate in numbers and dollar flows.

Standard Single-Family Detached Home Sales,
Except Manufactured Homes,
January-December (2004)

Previously Built Homes

	No.	Sales$	Aver$	DOM	% SHR
Northend (O.H./Cpvl)	494	$120,528,910	$243,986	79	35.0
Southend (Greenbank-South)	502	$158,400,740	$315,539	111	46.1

New Construction Homes

Northend (O.H./Cpvl)	110	$22,466,840	$204,244	89	6.5
Southend (Grnbnk & South)	35	$10,177,615	$290,789	101	2.9

Other Than Standard Single Family Detached (SFD)
Residential Sales (North- South Whidbey 2004)

Manufactured	88	$13,397,827	$152,248	80	3.9
Condominiums	100	$13,841,975	$138,420	71	4.0
Multifamily 69/Units	18#	$5,640,300	$81,743	52	1.6
Residential	1,347	$344,454,180	$255,720	88	100

* There are probably more "manufactured" sales that are counted as SFD
#=number of sales, with number of units/unit price

The Table is very abbreviated, because of some limitations with HTML. Contact us to send you a printed or faxed copy, together with the published Tables documenting fifteen years of South Whidbey and North Whidbey sales, by residential category.

In the above Table, DOM refers to the number of "days on market", while "percent share" means the percentage of all residential sales. While Coupeville transitions into a market area similar to South Whidbey, we continue to include in our North Whidbey analysis the Zip codes for Coupeville and Oak Harbor; South Whidbey being everything south of Coupeville - Langley, Greenbank, Freeland and Clinton. What significant changes have occurred during the year? The impressive rise in the price of all real estate is the most remarkable trend. First, North Whidbey is "booming". Absent dramatic personnel reductions at NAS Whidbey (something that might occur in the next few years), the greater Oak Harbor area continues to come into its own as a retirement community. Within the past four years the availability and quality of retail goods has increased impressively. Significant mission changes at NAS into long-range turboprop anti-submarine aircraft with many more officers and senior enlisted personnel per squadron than was the case with previous fighter-bomber basing. Salary increases, those following rising education standards and outside competitive forces in the private sector, along with rising housing allowances (BAH), have stimulated local new construction to record levels (and record prices). Although rental rates are high, many are unwilling to rent older apartments or the tiny condo units that were built in the past twenty-years. Adding to this Navy impact are the increasing number of retirees who "discover" Whidbey Island, and prefer the small town sense of community and shopping in Oak Harbor. Another factor affecting home buying patterns and new construction is the accumulating impact of the State's Growth Management Act (GMA). Our county is especially impacted. GMA basically inhibits development in the counties, except within "urban growth areas". On Whidbey there is only one literal "urban" area - Oak Harbor (though Coupeville and Langley are technically "urban growth areas"). GMA virtually prohibits development elsewhere. Politics have created a vacuum. Oak Harbor has responded.

New affordable development lots in Oak Harbor are now so valuable that successful builders are developing for their own account and selling, at their pleasure, some lots to eager builders needing ready-to-build parcels. Expect this trend to continue. While "spec" home sales in Oak Harbor also rose dramatically in both numbers and prices, such sales continue to decline on South Whidbey. Only 35 new "spec" homes were sold on South Whidbey, but some of these were larger, rather expensive homes. The appearance of new homes selling for more than $350,000 is a new phenomenon on the island. Expensive "spec" homes (those above $300,0000) sell very slowly, however, they are selling. Custom home construction increased in numbers and average values, even though these do not appear as sales data. Condominium sales continue to decline, as a percentage of the market and manufactured home sales have also declined. Homes under $100,000 have virtually disappeared (even condo sales average almost $138,420 - most are on North Whidbey). The number of expensive homes sold rises each year. This past year 297 homes sold for more than $300,000; and 96 of these sold for more than $450,000. These "upper-tier" sales continue to be intriguing as they document the direction of change as Whidbey Island becomes a "preserve" for the well-to-do and the truly wealthy. Sales numbers over $300,000 have increased 80 percent compared to last year.

LAND TRANSACTIONS: IMPRESSIVE During the year there were 461 land sales; 350 on South Whidbey (including the Coupeville area). Sales on South Whidbey totaled - $34.7 mil, almost 74% of total land sales dollars. On North Whidbey there were 111 sales, totaling $12.4 mil. Sales for land totaled $47,136,600. This is the third year in which land sales have strengthened dramatically. On North Whidbey the average transaction price, including both lots and acreages, is $111,711, skewed by a few very large sales. Lots sold, on average, for $68,632. On South Whidbey the "unintended consequence" of GMA is to further push the south end toward becoming a "rich enclave of the privileged". On South Whidbey the average land sale is almost $106,735; and 59% of the transactions were acreages.

DEMOCRACY: A LEGACY. We Americans are so troubling to the people of other nations. Our fascination with our republican form of democracy, and the near-religious zeal with which we promote 'democracy' to other nations is annoying to friend and foe alike. James Madison, writing in The Federalist No. 51, observed, 'In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself'. Our ascendancy as a nation state is largely why the 20th century will be called the 'Democratic Century.'

In 1900 monarchies and empires dominated the nation states of the world. An insular America actively ignored emperors and kings, provided they stayed out of the affairs of the 'New World'. Our tenuous experiments with 'empire', because of the Spanish-American War, continue to haunt us to this day: think Cuba, Puerto Rico and the Philippines. Only 25 states (with a mere 12.4% of the world's population) could have reasonably been described as democracies in 1900. By 1950, America had 'once again' made the world 'safe for Democracy' ' finally ending in 1945 the war that actually began in 1914. With the exception of the U.S., the world was exhausted. European Colonialism was in collapse; only our political ineptitude let the Soviet Union smother the Baltic states and Eastern Europe, including the eastern-third of Germany. Despite the manifest totalitarian communist takeovers in Asia, America remained politically committed to expanding democracy with almost religious zeal, as 42 nation states (42.9% of the world's population) lived under at least limited democratic practices. As the last decade of the century ended, the political skill of Ronald Reagan engineered the economic bankruptcy of the already politically exhausted 'Evil Empire.' So, by 2000, electoral democracies dominated for the first time in world history. American energy, money and leadership caused the world to adopt universal suffrage and the 'rule of law' in governance. By 2000 democracies outnumbered the other nation states - 120 of the total 191; representing 62.5% of the world's population. This profusion of 'democratic' states was more than matched by the proliferation of nations: 55 in 1900, 83 in 1950 and 191 in 2000. China is a special case. She has already 'crossed the Rubicon' and can no longer have the political will to enforce totalitarian communism. The other communist states are primarily an annoyance. Only one major problem stifles democratic governance ' the rise of fundamental Islam in control of 26 'non-democratic' nation states with 638.9 mil. people - 10% of the world's population*. It is not accidental that their fanaticism is much focused on the U.S. as a 'great Satan', prelude to the infamy of '911.' The ease with which the Taliban were dispatched should not be confused with the ease with which Afghanistan will adopt democracy ' but they have made a good start. America is now zealously engaged in introducing democracy to Iraq. Together, these two states govern 52.9 mil. people. It may work. If it does the noise of dominoes falling will be deafening!

We do not know whether 'democracy' is the final form of government for a world approaching 200 nation states. Possibly not, for democracy implies first and foremost equality, not necessarily followed by responsibility! In a relative sense John Adams was probably correct in observing, 'Democracy never lasts long. It soon wastes, exhausts, and murders itself.' If G. W. Bush is able to pull off elections in Iraq as he has been apparently successful at doing so in Afghanistan, he will likely be remembered in history as our most 'mis-underestimated' President.

*This figure is based on our inclusion of countries with more than 50% Muslim populations and non-democratic governments: Afghanistan, Algeria, Azerbaijan, Bahrain, Brunei, Burkina Faso, Egypt, Eritrea, Ethiopia, Iran, Iraq, Kazakhstan, Kuwait, Maldives, Morocco, Oman, Pakistan, Qatar, Saudi Arabia, Somalia, Sudan, Syria, Tunisia, Turkmenistan, United Arab Emirates and Uzbekistan

ECONOMIC PREDICTIONS FOR FIRST-HALF OF 2005. 2004 began with lumpy and conflicting economic data; though it was clear that we were close to recovering fully from the economic impact of '911'. Despite the third-quarter impact of four major hurricanes, the year closed on a strong note. The impact of '911' on our airlines, hospitality and travel industries is gone; finally fully recovered; now gone on to record levels. Airlines have all-time passenger traffic (though the impact of high energy costs remains a very real threat ' especially to two of our major carriers: Delta and United). Through fresh entrepreneural energy, re-thinking and 'creative destruction', Southwest Airlines has become the nation's biggest domestic carrier; while total domestic passenger bookings rose from 439.6 mil. in 2003, to more than 631 mil. this year ' a whooping 43.6% increase! The travel industry is once again booming. Cruise ship sales are 12.5% ahead of even last year's decent bookings and 'passenger days' (time aboard a cruise) increased 9% in 2004. Disney's Resorts set all-time theme park and lodging records. Our national economy has turned around with a vengeance. Investor confidence is rising, even 2.3 mil. jobs have been restored in the past 15 months. Still these are mainly the traditional jobs easily measured by government ' manufacturing jobs, agricultural jobs and urban wage-earner jobs. Past 'union' employment is gone and will not return ' outsourced, overseas ' victim of change into the 21st-century global economy and the "Third Wave." Since 1999 more jobs have actually been created in the entrepreneurial areas of self-employment and small business than were lost to the 'unemployment' counted by government. The economic phenomenon of our century is the flood of self-employment. The product of these new jobs is the engine driving our incredible GDP. New employment growth is about three-quarters lower-paying service employment and about a quarter extremely high-paying technology employment (open only to those with technical educational and previous employment experience). There are no more "jawbs"! Our basic economy produces more and more with less and less employment, while our specialized economy requires labor intensity ranging from minimum wage labor to technology workers producing "tens of millions" in added value to the national and regional economies.

During 2004 economic growth continued at twice the rate of inflation - about 4% for the year. We believe that when final year-end data are available in March or April, our GDP will have grown 4.2% to almost reach $12 tril. Keep in mind that given the scale of our huge economy even modest growth represents almost $450 bil., annually. Given world uncertainties, this is an excellent record. By way of contrast the rest of the world is foundering, Japan and the EU especially, their circumstances made worse for them by the weakening U.S. dollar and high oil costs which effect our economy much less than other developed nations. Europe is fully in cultural decline - victim of its proud 32-hour workweek with 6-week vacations, poor productivity and runaway public expenditures. Meanwhile, our consumer confidence is uneven though actual consumption remains strong, driven partly by very low interest rates. The housing market continues to be strong, now representing 15% of GDP, however, it is unlikely that 2005 will match 2004's record of 8.1 mil. sales. New construction is headed for a significant slowdown simply because recent rapidly rising prices, absent rising incomes, means that qualified buyers are falling along the wayside. Also, beyond another year at most, very low interest rates will not continue to stimulate as the marketplace for homes and automobiles becomes saturated. Federal tax cuts provide further stimulus, but the large federal government expenditures for defense and anti-terror activities presage rising government expenses, whether from an expanding economy or deficit financing. Also on the strong side, productivity is improving impressively, agriculture is strong, and corporate profits are rising. Stocks have recently exploded but will continue to be volatile, although companies with real earnings should continue to see impressive stock price rises. The bond market is very strong and should continue to be strong as oil prices stabilize and decline and the rest of the world looks for a safe haven for their dollars. Even "whiney" Europe has larger bond investments in the U.S. than it has investment in itself! As for stocks without earning capability, they will continue to have their prices manipulated by the securities industry and speculators - as they have for the past nine years. We'll repeat this again, we live for many years to come in great uncertainty. Our nation continues to be vulnerable to events over which we have limited control. With luck and effort, we will tame the "Barbarians Inside the Gates". As we noted last year, it will be an interesting "ride". Stay tuned!

Copyright 2005. All rights reserved

This issue reviews and summarizes the all time record sales year that was 2003. Very low interest rates, near 40-year lows, continue to stimulate real estate activity on Whidbey. Overall sales numbers, year to year are up across the board, except for extreme South Whidbey which saw a drop in residential average prices and sales numbers for the year. In general though, prices continue to rise. Dollar flows for all real estate sales island-wide are up 7.7% from last year. For residential SFD properties, on South Whidbey sales numbers were down 6.5%, while they rose 3.7% in Oak Harbor/North Whidbey - a slight rise in sales numbers overall. Especially impressive are sales in the Coupeville area, often called Central Whidbey; these rose over 10% as that area becomes a market area common with South Whidbey. All the northend reflects the heavy U.S. Navy influence in Oak Harbor. After reviewing changes in the real estate market, we make some predictions for the year 2004, makes comments on new "high-tech" housing communications technologies, and close with our usual near-term economic predictions.

ANOTHER EXTRAORDINARY YEAR! For the year total residential sales rose from last year's $234.3 mil. to $250.1 mil. Residential sales numbers rose somewhat from last year's 1,187 to 1,236. Of these 70 were manufactured homes, 75 were condominiums and 89 were multifamily units within 13 properties - the remainder were Single-Family Detached (SFD) homes.

Land sales continued the rise begun last year after several "soft" years. Dollar volume was up a dramatic 45%, while sale numbers were up 34%, compared to last year. Land sales numbers rose from 287, island-wide, to 385 through December 2003. Sales numbers were roughly balanced between lots and acreage's, 203 versus 183, despite the large number of new lots in Oak Harbor for new construction. The impact of our Growth Management Act regulations continues - development is being constrained to Oak Harbor. The "average" acreage sale at $121,600 was over twice that of the "average" lot sale ($60,800). In all there were $22.3 mil. in acreage sales and $12.3 mil. in lot sales. Residential sales, of course, remain by far the more important segment of our real estate in numbers and dollar flows.

Standard Single-Family Detached Home Sales,
Except Manufactured Homes,
January-December (2003)

Previously Built Homes

	No.	Sales$	Aver$	DOM	% SHR
Northend (O.H./Cpvl)	542	$108,504,910	$200,194	84	44.7
Southend (Greenbank-South)	303	$79,660,166	$262,905	141	32.7

New Construction Homes

Northend (O.H./Cpvl)	128	$27,840,768	$217,506	121	11.4
Southend (Grnbnk & South)	18	$4,933,692	$274,094	183	2.0

Other Than Standard Single Family Detached (SFD)
Residential Sales (North- South Whidbey 2003)

Manufactured	70	$9,498,860	$135,698	125	2.8
Condominiums	75	$9,600,728	$121,968	103	3.9
Multifamily 89/Units	13#	$3,541,746	$39,795	98	1.4
Residential	1,236	$250,051,140	$205,207	118	100

* There are probably more "manufactured" sales that are counted as SFD
#=number of sales, with number of units/unit price

The Table is very abbreviated, because of some limitations with HTML. Contact us to send you a printed or faxed copy, together with the published Tables documenting thirteen years of South Whidbey and North Whidbey sales, by residential category.

In the above Table, DOM refers to the number of "days on market", while "percent share" means the percentage of all residential sales. While Coupeville transitions into a market area similar to South Whidbey, we continue to include in our North Whidbey analysis the Zip codes for Coupeville and Oak Harbor; South Whidbey being everything south of Coupeville - Langley, Greenbank, Freeland and Clinton. What significant changes have occurred during the year? The impressive rise in the price of all real estate is the most remarkable trend. First, North Whidbey is "booming". Absent dramatic personnel reductions at NAS Whidbey (something that might occur in the next few years), the greater Oak Harbor area continues to come into its own as a retirement community. Within the past four years the availability and quality of retail goods has increased impressively. Significant mission changes at NAS into long-range turboprop anti-submarine aircraft with many more officers and senior enlisted personnel per squadron than was the case with previous fighter-bomber basing. Salary increases, those following rising education standards and outside competitive forces in the private sector, along with rising housing allowances (BAH), have stimulated local new construction to record levels (and record prices). Although rental rates are high, many are unwilling to rent older apartments or the tiny condo units that were built in the past twenty-years. Adding to this Navy impact are the increasing number of retirees who "discover" Whidbey Island, and prefer the small town sense of community and shopping in Oak Harbor. Another factor affecting home buying patterns and new construction is the accumulating impact of the State's Growth Management Act (GMA). Our county is especially impacted. GMA basically inhibits development in the counties, except within "urban growth areas". On Whidbey there is only one literal "urban" area - Oak Harbor (though Coupeville and Langley are technically "urban growth areas"). GMA virtually prohibits development elsewhere. Politics have created a vacuum. Oak Harbor has responded.

New affordable development lots in Oak Harbor are now very valuable. Expect this trend to continue. While "spec" home sales in Oak Harbor also rose dramatically in both numbers and prices, such sales continue to decline on South Whidbey. Only 18 new "spec" homes were sold on South Whidbey, but some of these were larger, rather expensive homes. Expensive "spec" homes (those above $300,0000) sell very slowly, however, they do sell. Condominium sales continue to decline, as a percentage of the market and manufactured home sales have also declined. Homes under $100,000 have virtually disappeared (even condo sales average almost $122,000 - most are on North Whidbey). The number of expensive homes sold rises each year. This past year 165 homes sold for more than $300,000; and 50 of these sold for more than $450,000. These "upper-tier" sales continue to be intriguing as they document the direction of change as Whidbey Island becomes a "preserve" for the well to do and the truly wealthy. Sales numbers over $300,000 have increased over 40 percent compared to last year.

LAND TRANSACTIONS: IMPRESSIVE During the year there were 385 land sales; 215 on South Whidbey totaling - $21.4 mil. On North Whidbey there were 168 sales, totaling $13.1 mil. Sales for land totaled $34,525,488. This is the first year in the last five in which land sales have strengthened. On North Whidbey the average transaction price, including both lots and acreage's, is $77,956. On South Whidbey the "unintended consequence" of GMA is to push the south end especially toward becoming a "rich enclave of the privileged". Here the average land sale is almost $100,000; and 56% of the transactions were acreage's.

WHIDBEY ISLAND AND BROADBAND COMMUNICATIONS. The "soul" of the New American networked information economy is faster, more effective communications technology. As these technologies are all electronically-based, speed requires wider bandwidths of electro-magnetic force, so is referred to as 'broadband'. Recent studies estimate that wide broadband deployment just to residential customers would generate 1.2 million new, currently non-existing jobs that (almost redundant to add), would be among the highest paying jobs in the nation. Broadband technologies provide for easier more thorough access to goods and services, information, entertainment, health care delivery, continuous distance-learning opportunities and new more effective ways to interact with government, colleagues, friends and family. This is only a marginal part of the larger economic opportunity, however. Improved information technologies are responsible for most productivity gains and it is these gains that let us do more with less resource, fewer people - cheaper and faster than previously possible. The awesome American economic engine is so resilient precisely because of our broad acceptance of technology.

Washington State, especially Puget Sound, is a world center for telecommunications, software, wireless telephony and broadband technology. Whidbey Island is especially well endowed with these new technologies. Our local telecommunications providers are at the leading edge of telephony and fiber optics. The average Whidbey Island new home has 2.7 active lines not counting satellite or other wireless connections. Though a small customer base, we have more miles of fiber optic cable in the ground, per capita, than any other residential place on earth. One wonders why larger businesses have not located here; analogous to the dozens and dozens of smaller software, telecom, ISP and specialized technology development firms now here. Please ask us questions about the local quality and availability of advanced communications technologies. They are important and we pride ourselves in having specific training for all our consultants. When your previous real estate advisor responds, "what is 'broadband'?", you'll understand.

Copyright 2004. All rights reserved

Copyright 2003. All rights reserved

Land sales rose in sale numbers for the first time in four years, however dollar volume remained similar to last year. As our smaller land parcels; those created before our 5-acre zoning regulations, are absorbed by the marketplace, they cannot be duplicated. Therefore increasingly our land sales represent higher-priced acreage properties rather than lots. Residential sales are, of course, by far the more important segment of our real estate in numbers and dollar flows.

Standard Single-Family Detached Home Sales, Except Manufactured Homes (2002)

Previously Built Homes

	No.	Sales$	Aver$	DOM	% SHR
Northend (O.H./Cpvl)	558	$98,131,950	$178,305	80	41.9
Southend (Grnbnk & South)	323	$94,655,622	$293,051	114	40.4

New Construction Homes

Northend (O.H./Cpvl)	88	$17,053,080	$193,785	114	7.3
Southend (Grnbnk & South)	19	$5,013,625	$263,875	196	2.1

OTHER THAN STANDARD SINGLE FAMILY DETACHED(SFD)
RESIDENTIAL SALES(North & South Whidbey 2001)

Manufactured	73	$8,459,097	$116,289	85	3.6
Condominiums	60	$6,858,508	$114,308	107	2.9
Multifamily 66/un	14#	$4,160,870	$56,998	147	1.8
Residential	1,187	$234,332,752	$215,578	99	100

* There are probably more "manufactured" sales that are being counted SFD
#=number of sales and number of units/unit price

In the above Table, DOM refers to the number of "days on market", while "percent share" means the percentage of all residential sales. North Whidbey includes the Zip codes for Oak Harbor and Coupeville; South Whidbey is everything south of Coupeville - Langley, Greenbank, Freeland and Clinton. What's going on with home sales? Other than the impressive rise in all residential sales last year, trends are a continuation of events we have discussed over the past four years. Oak Harbor area is coming into it's own as a retirement community. Within the past three years the availability and quality of retail goods has increased impressively. Salary increases for the Navy, have stimulated local new construction to record levels (and record prices). Although rental rates are high, many are unwilling to rent older apartments or the tiny condo units that were built in the past decade. Adding to this Navy impact are the increasing number of retirees who "discover" Whidbey Island, but prefer the small town sense of community in Oak Harbor.

New affordable development land is so valuable that successful builders are developing for their own account and selling, at their pleasure, some lots to the many eager builders needing ready-to-build parcels. Expect this trend to continue. While "spec" home sales in Oak Harbor rose quite dramatically in both numbers and prices, such sales continue to decline on South Whidbey. Only 19 new "spec" homes were sold on South Whidbey, but some of these were larger, rather expensive homes. The appearance of new homes selling for more than $350,000 is a new phenomenon on the island. Expensive "spec" homes (those above $300,0000) sell very slowly, however, they are selling. Custom home construction increased in numbers and average values, even though these do not appear as sales data. Condominium sales continue to decline, as a percentage of the market and manufactured home sales have also declined. Interestingly, average sale values continue to rise, quite independently of changes in transaction activity. Homes under $100,000 have virtually disappeared (even condo sales average almost $115,000 - but most are on North Whidbey). The number of expensive homes sold rises each year. In 2001, 118 homes sold for more than $300,000; and 35 of these sold for more than $450,000. These "upper-tier" sales continue to be intriquing as they document the direction of change as Whidbey Island becomes a "preserve" for the well-to-do and the truly wealthy. Sales over $300,000 increased almost 30 percent during 2002.

The above Table is very abbreviated, because of some limitations with HTML. Contact us to send you a printed or faxed page, together with the published Table documenting 12 years of South Whidbey and North Whidbey sales, by residential category.

Those readers interested in previous discussions of these trends, or past articles on real estate and American culture should visit our main real estate "Website":www.whidbey-realestate.com/whidinv.htm.

UNIMPROVED LAND TRANSACTIONS: ANOTHER DOWN YEAR. During 2001 there were 249 land sales; 107 on South Whidbey totaling $14.3 mil., and 142 on North Whidbey totaling $12.0 mil. Those land parcels sold, were, in the aggregate, $26.3 mil. This is the third successive year that land sales numbers have declined. However, while they declined 11 percent in sale numbers, sales rose 17 percent in dollar volume, driven by still rising average prices. On North Whidbey the average transaction price, including both lots and acreages, rose impressively to $84,832 from last year's $76,807 even as total sales fell. Forty-six percent of these were lot sales. Lot sales averaged $54,918, while 54% of sales were acreages that averaged $110,809 per parcel. Both were all time average price records. On South Whidbey the "unintended consequence" of GMA is to push the south end further toward becoming a "rich enclave of the privileged"; the average land sale was $133,453; and 46% of the transactions were acreages. The very high average price is skewed because of three acreage land sales that aggregated to more than $6.3 mil. (one appears in the database as a home sale, but was a "value in land" transaction). In all, 59 lots were sold, at an average price of $59,259. One reason for the decline in lot sales is the complete collapse of sales at the once vigorous Holmes Harbor Golf Course.

OUR FAILING OCEANS. Oceans are probably the birthplace of life. As such, they are us. When we were few and our technology was primitive, the oceans generously provided protein-rich food for mankind. Now our numbers are large and our technologies are devastatingly efficient so life in the oceans is suffering. In addition to over fishing we wantonly poison our seas with detritus trash, sewage, hydrocarbons and many other bioactive substances that are changing ocean environments. It is a shame, but many large cities, even among the industrialized nations, still today release raw sewage into our seas. What are the symptoms of over exploitation? First, declining fish populations, then similar arguments can be made of marine mammals, then depletion of food sources such as the collapse of the Pacific anchovy, also declining numbers of large individuals and loss of older females with gigantic egg capacity to mention some. Then there the destruction of biogenic reefs, egregious ongoing violations of catch limitations and international agreements, finally manifest in trash fishing in the last 30-years pollock, dogfish, pilchard and monkfish - today even barnacles and jellyfish. Through overfishing we have decimated the once vast resources of the sea, and are perilously close to upsetting the balance of nature. Where even forty years ago we caught 1,500 lb. swordfish, and 1,000 lb. Bluefin tuna, today 200 lb. fish are giants. Ah, but if fishing were regulated won't the juveniles just grow into the giants of yore? The answer in population ecology is no. Habitats have been modified or destroyed. The food chains of carnivores especially, have themselves been modified by over exploitation. And its not just fish, sea mammals and other aquatic life have for some species been lowered to total numbers too low to effectively maintain populations. Though the oceans are vast to we humans, the vastness, along with the lack of sovereignty, has them out of sight and mind. Finally fishing is regulated, that's not the solution, that's part of the problem! In addition to rules that force adjustment to politically motivated, unscientific, unsustainable yields, we have illegal, unregulated and unreported fishing, derelict fishing (abandoned nets, pots and jigs and other fishing debris). Millions of tons of such debris haunt the world's oceans and continue to kill needlessly, not to mention cyanide fishing in Asia and Africa and so forth. Let's examine this vast commons from the perspective of international fishing and the destruction of sea environments.

The Problem: Over Exploitation. Approximately 80% of the world's populations occupy coastlines, so the exploitation of food resources from the sea is natural. However, from primitive technologies the spear and the fishhook, we now exploit the seas with huge sea-going factory ships, drift nets that ensnare and kill indiscriminately, and long liners with mile after mile of line and thousands of hooks baited not only to attract target species, but sea mammals, turtles, birds and other life. Millions of seals and several hundred whales are killed each year. Seals as by catch, trapped in drift nets or trawls and whales, in their lawful and unlawful taking by Japan, Korea, and Norway, now Iceland. Tens of thousands of birds, often penguins in southern waters, are drowned, hooked on baited long lines. Then there's the great trawler rape, more heinous than drift netting. Trawls don't just catch fish; they modify environments by bulldozing sea bottoms. Common sense tells us that the cold arctic has slow recovery from environmental damage. Tracks on the tundra are erased by nature in as little as 60 years. Witness, trawling off the coasts of Norway that today destroy in one pass, coral beds that have been constructing themselves in that cold water for 4 million years. In some cases the corals are 4,500 years old! Many fish stocks are so depleted they will never again be bountiful: orange roughy, white marlin, North Atlantic cod, blue marlin and the Bluefin tuna. Bluefin, historically often over 1,000 lbs., now so rare but so fashionable in oriental cuisine that a large fish (today a mere 100 lbs.) is worth $20,000-$30,000 on the wholesale Asian market this for a single fish!

The demand for food from the sea is enormous today. The U.S. alone consumes 9.2 bil. lbs. of ocean-caught seafood annually, of which an estimated 80% is imported. This level of consumption cannot be sustained. Such fishing involves 3 mil. active fishing vessels of which 1.2 mil. are trawlers. Together they account for about 99 mil. tons of targeted catch and almost 30 mil tons of by catch (the 30% of life that is destroyed but unused for consumption). What happens in a fishery where other sea life is caught by accident? Say a trawl brings aboard 20 tons of life from a single set. Further let's even say that an international observer is aboard. When unloaded, the trawl contains on average six tons of life that is out of season, unfished, protected or endangered. What happens to this bounty? This may be difficult for the reader to believe. It cannot be processed because of treaty regulations, so is returned to the sea, dead, to become a product of decay and pollution - no service to humanity. Unbelievably, this happens even in U.S. fisheries waters! Wild shrimp are trapped or trawled in a travesty of waste in which for every pound of shrimp, 5.2 lbs. of other life is destroyed and unused. The most egregious example: Asian prawns. For every lb. of Spot prawns retrieved for market, there are 10 lbs. of by catch. What are the alternatives to this frightening waste?

Neither aquaculture nor fish farming will in the short run make up for the food now supplied by the oceans. Total estimated aquaculture production was 39.6 mil. tons in 2000. Presently the technology of fish farming has serious environmental challenges because of the accumulations of waste and the large amount of food stock from other animals necessary to sustain higher food chain fish and shellfish. Further, there is too much emphasis on salmon raising (species altogether well on their way to being man-made). Someday undoubtedly these efforts will produce better results, alternative protein sources will be exploited and the world will stop the senseless wasting of sea protein that is not even consumed. Until then?

The Solution: Abstinence. What can arrest this appalling waste? Attempts to regulate greed never work unless there are consequences. Commissions on Ocean Policy don't work. International agreements haven't worked. Ignored regulations can't work. The United Nations won't work. The bungling agreements negotiated by the unelected, inept and corrupt organizations of the United Nations have not and will not work because there is no sovereignty in the world's oceans. What will work is to close the world's oceans and seas to all harvesting for three years; all harvesting, three years. By this we mean the seas covering lands under international treaty seas over land that does not belong to a sovereign nation. This could be achieved by the U.S. organizing and leading agreements among willing nations and thereafter simply announce than all pelagic fishing will cease. In that three years the world's marine scientists will be better able to assess habitat conditions and oceanic fishers will have left the business. The U.S. could lend its magnificent naval skills and technology to track, board and seize all violators everywhere outside national territorial waters. The seized catch would be processed if possible and sold in the international marketplace, the crews being imprisoned and brought before maritime tribunals, and the confiscated ships and all gear sold to partially off-set the costs of enforcement. It would not be long before fishing our commons became too expensive.

ECONOMIC PREDICTIONS FOR FIRST-HALF OF 2003. Our national economy struggles following the loss of investor confidence in new business investment, together with fairly large-scale employment layoffs. However, modest positive growth continues - probably about 4% when the data are assembled by March. Given the scale of our huge economy even this represents almost $350 bil. in growth. Consumer confidence has declined but actual consumption remains strong. The housing market is especially strong, hovering near an all-time record of 6.6 mil, housing units. Forty-year low interest rates have provided a major stimulus to housing and to automobile sales; also near record perfomance. Unfortunately, beyond another year, very low interest rates will not continue to work as the marketplace for houses and automobiles becomes saturated. Federal tax cuts will provide some further stimulus, but the large federal government expenditures for defense and anti-terror activities while a short-term stimulus, tends to create longer term complications. On the weak side, unemployemnt will continue to rise and the travel and hospitality industries (and their affected cohorts) will remain weak for the foreseeable future. On the strong side, productivity is improving impressively, agriculture is strong, and corporate profits appear to have "turned around" and are rising. Stocks will continue to be volatile although companies with real earnings will see significant recovery in their stock prices in the months ahead Others without earnings will continue to have their prices manipulated by the securities industry and speculators - as they have for the past five years. We live now and probably will for many years to come in great uncertainty.

Copyright 2003. All rights reserved

A National Association of Realtors study indicates that second home purchases have increased dramatically and that the equity increase of such purchases has risen 27 percent from 1999 to 2001, from an average of $127,000 to $162,000 (including timeshares!). This price rise is more than twice what "family homes" have appreciated. Eighty percent have been vacation homes, the remainder investment homes, stimulated by the tax law changes of 1997. Second homes may be simply defined as those where the owners reside elsewhere. Such homes could be weekend getaways close to home, seasonal houses (often to escape snow or heat), homes purchased based on retirement planning, or sometimes "investment" homes purchased in anticipation of retirement and rented until then or until plans change. In many cases these homes are condominiums, even timeshares. Here on Whidbey Island, there are relatively few investment homes, no timeshares and virtually no condominiums; all are single-family homes (SFD). To create a foil for comparison, we'll call other SFD homes, "family homes".

It might surprise many to discover that just how large a segment of the marketplace second homes are on Whidbey Island. When compared with "family homes", they are more expensive on average and tend to cost more per square foot, primarily because they occupy more valuable land (view and waterfront). The largest numbers of second homes owned are located, in order, in Florida, California, Texas and Michigan. The highest ratio of second homes to population are, in order, Maine, Vermont, New Hampshire, Alaska, Delaware, Florida, Arizona, Wisconsin, Montana and Hawaii, with Washington estimated to displace Montana during 2002.

CURRENT WHIDBEY ISLAND REAL ESTATE ACTIVITY. Real estate activity on Whidbey Island is stronger than last year and may be expected to accelerate through year-end. As last year was our record year, we predict that 2002 will finish with a new sales record. Most of our residential properties (more than 85%) are Single-Family Detached (SFD) homes. Land sales, after declining for the past four years, also show increased activity this year. Increases have been stimulated by low interest rates (now at 40-year lows), and the continuing "flight to sanity"; an escape for many from both urban and suburban problems.

Through June, we have had 466 SFD sales, averaging $179,270. These sales are for all Whidbey Island, north and south. They were on the market for an average 102 days. Last year (2001), through the half-year, we had 413 such sales, averaging $182,078. These were on the market 105 days on average. Thus far this year the SFD sales aggregate to $80.7 mil., versus last year's $77.2 mil. Thus sales are running about 4% higher in dollar volume and over 12% in sales numbers.

WHIDBEY ISLAND'S SECOND HOME MARKETPLACE. Second homes here range from weekend "getaways" close to home, to seasonal homes (to escape heat or snow), to planned retirement homes. While there are no firm data on which specific sale by sale determinations can be made, we estimate that so far in 2002, 39% of SFD sales are "second homes". The sales averaged $302,903. These homes sold for $148 per square foot of finished living space, and averaged 2,031 SF in size. Last year 38% of sales appear to have been "second homes", averaging $281,000 per home, 1,987 SF, and selling for $132/SF. In contrast, "family homes" sold this year average 1,867 SF, selling for $1