Housing prices on Vashon dropped nearly 10 percent in 2011, but with interest rates at record lows and signs of a recovery on the horizon, real estate agents say they’re feeling optimistic about their industry for the first time in years.

More sales took place on Vashon in 2011 than 2010 — 102 compared to 97, according to several agents. More importantly, some note, January, typically a slow month in the industry, has been active. Some agents say they even saw multiple offers on houses last month, unheard of in recent years.

“We have a lot of buyers in the marketplace right now. They’re in it to buy. And they want to buy now,” said Denise Katz, an agent who works for Vashon’s Windermere office.

“There’s an edge of optimism out there,” said Ken Zaglin, owner of the John L. Scott office on Vashon. “I think we’re on track to do a little bit better this year than last year.”

Home prices are still quite low, and it’s not clear, agents say, when they’ll start trending upwards again. According to several Vashon agents, foreclosures and short sales — when a seller owes more money to the bank than his or her house is worth on the market — continue to pull prices down. Those hardship sales, said Emma Amiad, a buyer’s broker, have become the comparables — the prices appraisers use to determine a house’s fair market value.

“More than ever before, the appraisers are calling the tune,” Amiad added.

But the low prices have created a remarkable buyers’ market on Vashon, agents said — one that continues to amaze even those who have been in the industry for years.

Katz, for instance, noted that one can now get a house on the Island for $200,000. “That used to get you a shed,” she said.

Added Zaglin: “It’s a fabulous time to buy.”

Prices on Vashon have fallen hugely since the market’s peak in 2007 and 2008. According to a newsletter by John L. Scott agents Jean Bosch and Leslie Ferriel, the median sale price on Vashon has fallen 42 percent over the past three years, after climbing by double digit numbers between 2004 and 2007.

The median price on Vashon dropped 24 percent in 2009, 9 percent in 2010 and another 9 percent in 2011, they report.

Regionwide, according to NWREporter, a Kirkland-based industry publication, sale prices in December 2011 were nearly 12 percent less than in December 2010.

But the hesitation some potential buyers felt a year or so ago to make an offer seems to be ebbing, some agents said. Many, they noted, think prices have finally hit bottom or are close to doing so. Add interest rates at 4 percent or less, and buyers, Amiad said, are becoming much more motivated.

“There’s actually a pent-up demand,” she said. “We actually have buyers chomping at the bit.”

The result is that some people are finding fantastic deals on Vashon, dream homes at prices that might have been out of reach a couple of years ago. Dennis Bryant and his wife Mary O’Leary-Bryant bought a spacious house on 10 acres for $400,000 in November. Salmon-bearing Judd Creek runs through their backyard, creating a remarkable natural environment, Bryant said, for their 5-year-old daughter to experience.

The house had been on the market for six months and was owned by a bank because of a foreclosure when the couple made their offer, Bryant said. The house, neglected because of the foreclosure, was in need of considerable cosmetic work, he added.

What’s more, he said, the process of purchasing the house was difficult. It took nearly three months to close, and they might have walked away from the deal had Katz, their agent, not helped them through the complex process, Bryant said.

Now, however, he and his wife are thrilled to be in the house, a comfortable home built by Vashon builder Ed Palmer. “For us, with our daughter, it’s a magical place,” he said.

The question of whether the price might drop more didn’t matter to Bryant and his wife, he added.

“We didn’t buy this property for speculation,” he said. “We bought it because this is where we want to live.”

But those who have been on the other side of the bargaining table have found Vashon’s tumbling prices difficult, agents say, especially those who were forced into short sales or had to walk away from homes with mortgages they could no longer afford.

Of the active listings on Vashon last month, 28 percent were bank-owned or short-sale properties, a little lower than the region as a whole but still a considerable slice of the market, according to Bosch.

Like other agents on Vashon, she’s worked with clients who were facing foreclosures or “under water,” meaning they didn’t have enough equity in their house to pay off their mortgage upon the house’s sale.

“It’s grueling,” she said. “It’s grueling for them and for us. It’s very painful.”

One Islander who recently lost the home she and her husband bought during the height of the market said it was a heartbreaking process.

“I cried for a year and felt totally alone,” said the woman, who asked to remain anonymous.

She battled “every phase of grief,” she added, from denial to clinical depression. But the Islander said she and her husband were ultimately able to move into a much more modest home and the process of making that happen — of digging up beloved plants at her old house before the bank took it over and replanting them at her new place — was “an incredibly healing exercise.”

“I’m finding joy every day in rebuilding,” she said, “which is something I thought I’d never feel again.”

Meanwhile, some agents believe prices won’t reach those 2007 levels for several years. And as a result, Bosch said, many homeowners who bought when the market peaked are currently “under water.”

“There are a lot of people who are in a bad way,” Bosch said. “They just don’t show it yet.”

But like many, she believes the free fall in housing prices has ended.

Dick Bianchi, an agent at Windermere, agred. “What I’m seeing is stabilization,” he said. “I think we’ve finally leveled off.”