As expected, May and June have both been slower than typical for this time of year, in large part because of the expiration of the tax credit. Pending sales were respectable (82) in June, but inventory of available homes for sale continues to rise. (see below)
With inventory rising, the supply of homes is increasing to it’s highest level in Bellingham since January. The current inventory level is 9.8 months–which means that for every 1 home that sold in June, there was about 10 for sale. Once the supply of housing rises into the 9 + month range, that indicates downward pressure on home prices.
The surprising statistic is the List Price to Sales Price Ratio, which is UP to 94% (see below). At the same time, the average dollar per square foot that homes have been selling for in Bellingham is down ($155 per square foot average). What that means, is that sellers had to be more aggressive in there price reductions to sell there home last month. Once a home was priced “right” buyers are showing a willingness to pay closer to asking price. But it’s easy to recognize that the bar has been rising on what buyers see as a “value” in today’s market.
With lower rates (under 5%!) and lower prices, I expect sales in Bellingham to improve slightly in July, but home prices will continue to stay soft in the short term.
It is still an incredible time to buy though, because what a buyer may hope to gain in lower prices, may be more than offset as interest rates rise. Remember that for every 1% interest rates go up, the buyers purchasing power reduces by 9%.
