Paul's Bellingham Blog

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

City of Bellingham will now require you to register all rental properties

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The City of Bellingham has enacted into law a rental registration program. Fees will be $10 to register each rental unit for up to 20 units, $8 a unit for over 20 unites, and registration will begin July 1st. The city will be inspecting all rental properties every 3 years (that is the plan at least). And the registration will require landlords to post the registration in rental properties, and comply with a check list of safety and hazard compliance measures (things like carbon and smoke detectors install and no safety hazards).

It will be interesting to see how this works out. Some homes that are run down will have a hard time complying, and landlords will need to put money into these homes, and then ultimately raise rents to account for that. This should create some benefit in many cases for renters (to be renting a safer home that is to code and compliant)…But it may also create an even bigger shortage of affordable rentals in town. Many of the most affordable rentals are once where landlords have slacked on the maintenance, but kept rents low. As owners go in to make updates and comply, there is no question some rental rates will rise.

So like it or not, it’s happening. You can find more information at cob.org/rentals

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.

Why You Should List Your Home Priced Right, Move-In Ready

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Many sellers I meet with often want to list at a price slightly above market value, to leave negotiating room and see if they can make more money on there home sale. Other sellers have a hard time spending money on repairs and updates hoping to sell “as is”. This is not always a bad strategy, but the numbers provided by the NW Multiple Listing Service and recent research, indicate that the odds are against you if you list your home in below average condition, and/or overpriced.

For listings taken from January 1st, 2013 to February 28th, 2014 in NW Washington:

Homes Sold in first 30 days: 42%.  Sold in 31-60 days, 14%, Sold in 61-90 days:  7%, Sold in 91-120 days 5%.

You can see that if you do not get your home sold in the first 30 days on the market, your odds of getting an offer drop off significantly. That is a good reason to list your home priced competitively from the beginning.

For sellers who do not want to put money in to the home, research indicates the best return is ALWAYS getting the home in good condition prior to listing.

A recent survey by the PulteGroup revealed that 65% of home buyers prefer spending more money on a home that is move-in ready, compared to doing renovations. In addition, homes that are “staged” also have been shown to sell for as much as 8% higher then non-staged homes.

So getting your home in good condition and priced right pays off.  And you don’t need to do everything on your own. For sellers in Whatcom and North Skagit county, we have great resources to help you coordinate repairs/landscaping/cleaning/staging to prepare your home for sale.

We help you position the price right, but also help get it show ready to help you get top dollar. We know what repairs will give you a maximum return and what updates are not worth doing prior to listing.  Contact me today for more information.

(below is a staged home listed and sold in 2014 in Burlington)

2 Free Real Estate Apps for your Phone or Tablet

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Here is 2 apps I recommend that you can find in the Android Play app store or Apple store.  Both apps are free!

HomeSnap:

HomeSnap is an innovative app that allows you to take a picture of a home when you drive by or arrive, and it will instantly provide you the listing detail information, or the tax information. It does this by taking the GPS coordinates that your camera provides, and locating the information on the home based on that. This can be extremely helpful to even just get the tax information on a home that off the market as well.  You can also add friends and family to your home search, so you can share pictures and listings with them easily. It also has categories to search, including “see expensive homes” or “see great investments”.

John L Scott Real Estate App

The John L Scott application shows ALL listings, from all Real Estate companies. And unlike Zillow, it has a direct feed from the lcal MLS, so you are getting accurate information updated multiple times a day, showing all available listings. It sounds bias coming from a John L Scott Realtor, but this application is a good one. John L Scott was the first local/regional company to come out with a Real Estate application for Washington state, almost 2 years ago.

The GPS tracking works perfect, so when driving around you see all homes for sale around you. You can also specify a search, and if your using a Realtor (like me hopefully) you can register with an account and link up with your Realtor as well.

A First Time Home Buyer Tax Credit that could save you over $10,000

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The National First Time Home Buyer tax credit that was available a few years ago got a lot of press, but very few are aware of the tax credit available in Washington state to first time home buyers today. This credit is called the Mortgage Credit Certificate, and the savings can trump the savings in the Federal Tax Credit offered in 2010 of $8,000. I have had multiple clients in the last 2 years take advantage of this, but virtually none of the buyers are aware of it before I bring it up. Part of the reason for that is a lack of press about this credit. The other reason is that many banks and lenders do not participate in this program. You do need to use a lender or bank that participates, and those participating lenders can be found on the MCC website.

The only criteria is you need to use a participating bank, be a first time home buyer, and make less then $90,000 gross per year. The tax credit features a 20% tax credit on the interest you pay on the loan. On a $250,000 house purchase, the average tax credit is about $175 a month. Over a 5 year period, that ends up being $10,500 in tax credits! You can find out more by contacting me at www.paulbalzotti.com or 360-920-5901, or go to the Washington State Housing Commission website at www.wshfc.org/buyers/MCCprogram.htm .

New USDA Maps for Whatcom County, Bellingham, Ferndale and Lynden Rural Housing Loan

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USDA (The Rural Housing Loan) has been the most popular Zero down loan program on the market in recent years, and starting October 1st, the areas you can buy a home with USDA is going to be shrinking. What USDA will define as being “Rural” moving forward will not include the city of Ferndale as well as the city of Lynden, along with the city of Bellingham.

Attached I’ve included copies of the new boundaries for Bellingham, Lynden and Ferndale.

USDA Map – BELLINGHAM 2013

USDA MAP – Ferndale

USDA Map – LYNDEN ineligible area

You need to stay outside of these areas if you want to consider a Zero Down USDA loan after next month.

There is however a conventional loan program that is zero down that has arrived through the Washington State Housing Commission. Contact me for more details.

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.