Paul's Bellingham Blog

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

Is there jobs to support home values in Bellingham?

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With home prices increasing at double digit rates over the last 2 years, and rents increasing at similar rates, I often get asked questions about where the money is coming from to support these price increases. Questions like:

Where are all these people coming from that can afford Bellingham’s prices?

And are rents and home values over-inflated?

After all, it’s well known that Bellingham does not have an Amazon or Microsoft like Seattle does to boost the economy. But as a Realtor, meeting and talking to buyers every day, you do get a better feel for where the money is coming from. And the money is here!

First, we have to look at the fact that there is a local economy that has been improving.

Second, while Bellingham does not have as many large corporations, it is home to many affluent small business owners, who operate business’s that serve customers nationally and internationally. And with many large tech companies in Seattle allowing more and more employers to work from home, Bellingham has seen a sharp increase in the number of professionals relocating to Bellingham-tele-commuting to their Seattle jobs. Indeed, there is more and more Microsoft and Amazon employees relocating to Bellingham.

Third,  Bellingham continues to be a sought after location for retirees, and this is in fact a huge segment of the upper end Real Estate Market. Retirees are coming from everywhere from the East Coast to California, with huge equity from their home sales elsewhere.

Last but not least, our neighbors from Canada still play a role. Despite the exchange rate hurting the Canadian dollar, Canadians still buy and rent in our market, and contribute to the local economy.

Bellingham does have some big employers with relatively high paying jobs. Namely St. Joseph’s Hospital, WWU, BP Cherry Point Refinery, Zodiac Interiors, Intalco, The Family Care Network, Alpha Technology’s and the Anvil Corporation.

But the local job market has not played the biggest role. It is indeed the tele-commuters and the retirees relocating to Bellingham that have been the biggest factors in the rise in demand in Bellingham.

And then we can’t forget about the supply issue. Bellingham has very little new construction happening, relative to the growth. And new construction was almost non-existent from 2009-2012.

So the demand is coming from a diverse populous, and yet the supply is not even close to catching up.

And while the demand for housing in Bellingham has made it less affordable. It has helped many local industries. The Real Estate industry (there is now over 1,000 Real Estate agents in Whatcom County), the financial sector is growing, & Bellingham has seen a huge rebound in construction jobs.

I would love to see an increase in the area of in-fill and affordable housing in Bellingham. And some of that is happening near and around downtown. But we can also consider that Bellingham is surrounded by Ferndale, Sudden Valley, Blaine, Everson, Lynden…communities that are more affordable, and still boasts good schools, some great neighborhoods, and relatively short commutes into Bellingham.

So this is a diverse economy, and the housing market is indeed strong and stable. It will be interesting to see if prices continue to increase in the spring of 2019. My best guess is that they will.

The Eleanor Apartments on N. Forest st in downtown Bellingham. This is an 80 unit apartment complex just completed to provide affordable senior housing. Another similar project is happening nearby, as the city has worked to provide incentives to developers to provide affordable housing downtown. 

6 Reasons we are not in a Real Estate bubble in Bellingham Washington

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The housing market and economy have cycles in Bellingham, just as they do nationally, and so there is no question there will be a downturn at some point in the coming years.. But many are asking if they are buying in a “bubble” right now in our market of Bellingham & Whatcom County. A bubble implies home prices over inflated, and a “pop” to happen where home prices drop substantially. Here is 6 reasons I don’t see that happening.

#1 Lack of Supply
From 2009-2012, there was very little construction happening in Bellingham & surrounding areas. As the market improved over the last 4 straight years, apartment and housing permits have increased again.. but construction is still not meeting demand. Rental rates have been rising because of this. And while there may be some relief in the apartment market soon with so many apartments going up, if your looking for a single family home in Bellingham, the lack of supply has no end in sight. The costs to build in Bellingham (permits costing upwards of $30k), the watershed requirement costs to build near Lake Whatcom, and the well moratorium in the surrounding areas of the county, will continue to create an environment where construction of single family homes will not meet demand.

#2 Pre-foreclosure Rates are Down
In the 2005-2007 bubble, there was loan programs called “no doc”, meaning no documentation needed to prove your income. Incredible to think that was happening, but it was! Huge mortgage companies out of Seattle were offering home loans with zero down to buyers with credit scores in the 500′s. Clearly that was not going to end well.
After the downturn, Fannie Mae tightened guidelines & banks became more conservative. Borrowers getting home loans now have been double & triple checked to verify they have solid jobs & good credit. And although low down sub prime loans still exist, they are more difficult to qualify for. There is also a much higher percentage of buyers purchasing with cash or at least 20% down.
So homeowners are in a stronger position to weather the storm of an economic downturn. Foreclosures and pre-foreclosures rates are down to the lowest point on record in Whatcom County.

#3 Relocation to Bellingham Continues to Grow
Thus Demand will only Increase. Bellingham is a highly desirable coastal city, that continues to be written about nationally as Best Places to Retire (Forbes), Best Places to Live and Work (Sunset), for Outdoor Lifestyle (Kayak), and is featured annually in dozens of publications. Realtor.com published an article in March listing Bellingham as the 3rd most searched city internationally… behind only Miami and L.A.

#4 Bellingham’s Unique Position between Vancouver BC & Seattle
From an affordable ownership standpoint, Bellingham is positioned to continue to be an outpost for those who can work from home or are retiring, who want relief from home prices in Vancouver BC (50 miles north of Bellingham) and Seattle (80 miles south). Median homes prices in Vancouver are $878,000. While Seattle median home prices are $653,000. Bellingham by comparison is $356,000. Even if Bellingham home prices continue to increase, it’s going to stay incredibly affordable in comparison.

#5 Western Washington University
Much has been written about how University towns and cities tend to hold their Real Estate values…and it makes sense. Universities attract a new population into the city every year with an incoming class of freshmen (and their parents). The college provides steady jobs for the local economy, and the university also provides energy & vibrancy to the culture & downtown areas as well.
College housing also provides an excellent opportunity for investors, looking for steady rental income property.

#6 Bellingham Waterfront Redevelopment
This has been talked about for 20 years, but it’s finally starting! Cleanup projects are underway cleaning the pollution in the bay. And the Granary building is being renovated, along with waterfront access surrounding it, providing the first of many renovations that will be happening at the Bellingham waterfront in the years to come. This will not only bring new jobs to Bellingham, but also provides a vital new waterfront access to the downtown area. This certainly will have a positive impact on home and condo values in and around downtown.

Search Bellingham WA neighborhoods here

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.

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.

Why I am still with John L Scott Real Estate after 12+ years

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I am often asked why I don’t start my own Real Estate brokerage, or create a bigger team, or move to a larger company. I have stayed at the same office, with the same company, and kept just 1 office assistant for over 12 years. This is rare!

Most agents change companies at least once (if not multiple times). Then as they start to become highly productive, they will hire a sales team (buyers agents and/or multiple licensed assistants) or start their own real estate company. While I totally respect the agents who expand their business this way, there are several reasons I have stayed my course.

1) When you hire Paul you get Paul.
The idea of leveraging your time with a team or even a company does have its appeal. However for me I love having a direct relationship with my clients. I very much enjoy the skills involved in managing the inherent complexity of making a Real Estate choice. Buying or selling Real Estate is not a walk in the park, and I want to be there every step of the way for my clients.

2) My association with John L Scott enhances my brand, and my ability to deliver top-notch services to my clients. John L Scott Real Estate is a great company, with millions invested in marketing, the website, and even an awesome Real Estate android/iPhone app. Being a part of a large company gives me (and in turn my clients) access to the most innovative Real Estate tools available. Smaller companies cannot always provide and invest in this kind of technology.

2) My office: Not too big, not too small…
Our office in Bellingham is big enough to create a great team environment for networking, but small enough (about 40 agents) to have a boutique / big family feel. I get amazing support from the office staff and branch manager Darin, allowing me to again, focus my time on marketing & showing property.

So in sum, by not spending my time building a real estate team or a company of my own; by staying with a company like John L Scott; by not moving around to different offices looking for greener pastures; I have been able to focus ALL of my time and energy on simply working with my clients; focusing my time and talents at getting better at what I do; mastering the craft of being the best Realtor I can be for my clients.

It’s also helped me have a balanced life. Having some free time still with my family (we have 2 little kids 3 and 5!) and friends, is important to me.

This is not to say anything negative about agents who build teams or small companies. Some of the agents I have the most respect for have gone this route (even my Dad did!). It is just an explanation of why I personally choose to work the way I do.

Maybe one day I will be more interested in the building a Real Estate empire of my own. Right now I still love working with clients and helping people buy and sell houses. Keeping it simple.

Webcast about Bank Owned Homes and Short sales

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I was just interviewed about foreclosures and short sales, here is the video below: