Paul's Bellingham Blog

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

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.

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