Paul's Bellingham Blog

My thoughts on Bellingham, the Real Estate market, and more

2016 Year in Review in Bellingham & Whatcom County, Plus 2017 Forecast

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2016 turned out to be one of the best Real Estate years in Bellingham & Whatcom County’s history. Home sales were up 8%, with the most home sales ever in Bellingham.
And with the lack of new construction to meet this demand, home appreciation was the highest it’s been since 2006-2007. Median home prices rose 11% in Bellingham ($344,000 avg sale price) and about the same appreciation level throughout Whatcom County. Looking at the dollar per sq ft average sale price for Whatcom County, below (which is another indicator) it also shows about a 10% appreciation over the last year.

But home appreciation is always local to your neighborhood and price range. The biggest price jumps occurred in the most popular Bellingham neighborhoods, like Columbia, Cornwall Park and Sunnyland, which saw appreciation of about 15% over the last year. But just about every area of the city and the county saw appreciation of at least 7%.

The condo market in Bellingham, which has been slower to rebound, also finally saw a jump in values, with condos also appreciating about 9%.

Now moving forward, what shall we expect? There is some reasons to assume the hot market could cool down a little bit.
-Interest rates have jumped up from an average of about 3.7% for most of last year, to 4.25% average.
-The Canadian dollar continues to be weak, which impacts the Blaine and Birch Bay market a bit (Particularly the condo market near the border).
-And with prices having gone up, affordability becomes more of a concern.
Zillow has tempered predictions of home prices rising–just another 3% in Bellingham this year. That sounds right on paper, but looking at the 2 charts below, and being in the mix every day with buyers and sellers, I can easily see home prices jumping up more than Zillow’s projection.

The months of inventory (which is: How many months it would take to sell through all of the available homes based on current pending sales pace) is really incredible right now. Normally, being at a 3 to 6 month mark is a sign of a healthy and strong Real Estate market. Higher then 6 months, and prices may be declining, lower then 3 months, and home prices are typically going up.

The Bellingham market is absolutely on fire with just a 1.4 month supply of homes available.

Whatcom County also has a lack of inventory with just a 2.4 month supply.

So the numbers say prices are still going up. And I meet with a network group of top agents every week, and our first meeting of the year, every agent is working with multiple buyers looking for a home right now.. The point being that there is a HUGE back log of buyers still looking to buy this year in Bellingham & throughout the county. So with the lack of inventory and high demand, prices should continue to rise in our area at least through the spring. Very tough to be a buyer right now, but really an ideal time to sell.

New Census and Home Value information for Bellingham

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The population continues to grow in Bellingham, now 83,365 at end of 2015, up 3% from 80,867 in 2010.
That is within the city limits, but the population is an estimated 104,356 when including everyone who lives within the Bellingham address, which includes the community of Sudden Valley and the surrounding unincorporated areas of Bellingham.
And no surprise, with the population growth, lower unemployment rate (now 6.8%), andlack of new construction in Bellingham since 2010.. home values are increasing. Home values are up 7% year over year right now as of April 2016. With less then 3 months of inventory in Bellingham (meaning if nothing new came on the market, all homes would be sold within 3 months at current sales pace), that points to prices continuing to rise at a modest rate for the next year.

Inventory Shrinking in Bellingham & Whatcom County

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The active homes for sale has been steadily dropping right now in Bellingham & Whatcom County. This is always the case in the fall, but see the chart to the right–you can see that compared to October of last year, the active listings in Bellingham (the green line) are down about 40%, yet pending sales (the skinny red line) are up!

Bellingham WA (and all of Whatcom county) home sales have been on a slow and steady increase over the last 3 years. But based on the tight supply and growing demand, there is no question market values (not just sales, but actual home values) are trending up….and at a faster pace.

The momentum  & strength of our local market is definitely increasing every month right now.

Bellingham and Whatcom County Real Estate Market Update

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Through August of 2014, home sales (up 4%) and home values are both up slightly from 2014. The market started out relatively hot this early spring, but through the summer the slight increase in home sales has been offset by a higher inventory and more homes for sales. See chart below for Whatcom County listings, and solds. You will see it is very similar to the 2013 summer months. Except in 2014 July/August, home sales are up (dark green) and more homes for sale (light green).

Unlike Seattle, where values have been sky rocketing and there is a severe lack of inventory, Bellingham and Whatcom County have been experiencing a more predictable, slow and steady housing rebound. I consider this a good thing, as home values seem to be rising at a pace that is sustainable right now.

Additionally, supply and demand in Bellingham and Whatcom county remains steady. A “hot” market would be definied by less then 3 months supply of inventory on the market. A “slow” market would be defined by 8+ months supply of inventory on the market. Whatcom county has had between 5 and 7 months supply of inventory available for the last 15 months, very consistently. See chart below:

For home owners and investors a like, this should be considered good news all around. Bellingham and Whatcom County continue to have a strong housing market, with much less volatility and much more predictability then many areas around the state and country.

2013 Mid-Year Market Update (ALL Positive!)

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Looking at the numbers for the first half of 2013 in Bellingham and Whatcom County, there is nothing but positive news to report!

Sales are up and inventory is down, thus supply and demand is kicking into effect, and home values are finally beginning to rebound.

Unlike the Seattle area, the Bellingham market has not exactly caught fire, but Whatcom County home values have increased by approximately 2% on average, and Bellingham home values have increased by approximately 5% in the first half of 2013. Our local market is showing a sustainable, steady and consistent trend of home values increasing and the general market improving.

The average dollar per sq. foot has increased to it’s highest level on average in 6 years ($154 a square foot county wide and $177 a square foot on average in Bellingham).

With interest rates rising slightly recently, it will be interesting to see if the market continues to rebound at this current pace. There is no question though the market is on the upswing in our area.

To chart shown is of stats through May. Stats updated through June will be updated soon on this blog.

Take Aways from Economic Forecast from Lawrence Yun

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I was fortunate to get to attend a 2 hour economic forecast seminar with Lawrence Yun.

Yun is the chief economist for the National Association of Realtors, and he has been listed as one of the top 10 economic forecasters in the country by USA today, and one of the most influential people in Real Estate by Inman News. From nearly 2 hours of economic forecasting, here is the most important predictions:

-Iinflation could rise to 4% to as high as 6% a year in 2014 through 2015. But Yun projects inflation around 2% in 2013.

Interest rates should remain low for the short term future. The Fed will continue to borrow at zero percent through 2015 if unemployment remains above 6.5%, (which it is expected to stay above 6.5%).

Yun projects rates to rise to 4.5% by summer of 2014, and 5.5% by summer of 2015.

-Median home values projected to rise 10 to 15% total over the next 3 years (National average).

-Rental rates expected to continue rise locally, and nationally.  Home values and rent rates are expected to climb primarily based on lack of supply and a growing demand. Household formation overdue to climb up since many young people have been living with their parents and others living with roommates. As job growth continues, people will be looking to get into move into buy their own home or apartment.

Supply will stay low due to new home inventory being at a 50 year low. New home construction has been way below the historical average for 5 years. So the population is growing, and new home construction is not keeping pace. This is especially true in the Northwest.

-The forecast was very optimistic, with it a clear message from Yun that “now is the time to buy”. Below is a chart Yun presented showing that home values are still low. This is based on a long term average of 4% home appreciation.

See this link for chart. 2013+NAR+Economic+Forecast++-33

Bellingham and Whatcom County Real Estate Market Update: Homes Sales Up in 2012

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No silver lining needed in reviewing the numbers from 2012. Home sales were up, inventory was down, and all indicators were absolutely POSITIVE for Whatcom County Real Estate over the last 12 months. 2,077 single family homes were sold in 2012, which is the best year for Bellingham and Whatcom County Real Estate since 2007 (5 years!). Home values also began to stabilize. Home values remained basically flat throughout most of the county. However Bellingham saw median home values rise 3.8%.

Home values around the county should continue to stabilize (where as they had been slowly dropping in value over the last 5 years), while Bellingham has really turned the corner. There is approximately only a 3 month supply of homes available in Bellingham, and when the supply level falls below 4 or 5 months, that usually means that supply and demand will push home values up.

I am optimistic about 2013, but for this trend to continue, the foreclosure rate will need to continue to drop, and interest rates need to remain low to keep home ownership at the affordable level it is right now.

See the chart below to review home sales for Whatcom County over the last 14 months.

Under $300,000 and Over $300,000 are Two Different Markets

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86% of the home sales in Bellingham and Whatcom County in the last 30 days have been homes under $300,000. And in Bellingham, inventory and selection is very low in this price range. The smallest selection we’ve had in over 5 years! That means if you are considering making a move this winter, you need to recognize there is two different markets. If you are interested in buying under $300,000, you really need to recognize it’s a very solid market (possibly on the upswing), especially in Bellingham. The best deals in the best locations are going to sell fast. And if you have a house to sell and you’re waiting until next spring to list, it might makes sense to list your home this winter instead. Lack of selection means lack of competition for sellers.

If you are looking to buy or sell a home over $300,000, it’s very different. Sellers should be more motivated because there is very little activity happening right now. If your buyer, there is some excellent values available.