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.

Search Bellingham WA neighborhoods here

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)

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 .

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.

Buy with Zero Down in Bellingham

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Buying a home with Zero Down in the city of Bellingham and throughout Whatcom County just became an option for an expanded group of buyers beginning Monday July 2nd.

Previous to this announcement, the lowest down programs have been:

Inside city of Bellingham, Conventional 3% down and FHA 3.5% down. No income limit.

Outside of city of Bellingham, USDA zero down, income limit applies.

What this new program offers is a loan for down payment assistance. So if you qualify for an FHA 3.5% down loan, or another low down loan program, you can borrow up to 4% of the purchase price to assist with the down payment.  This can effectively make the loan Zero Down.

This opportunity buy with zero down in the city is now offered to ALL buyers (not just first time buyers) making up to $97,000 a year.

This also provides a zero down option for those looking in the county that did not qualify for USDA (because they made too much money to qualify USDA) but now may qualify if they are between approximately $78,000 and $97,000 a year.

More information can be found at  http://wshfc.org/. You can also contact me direct if you or someone you know is considering buying and want more information about how to get signed up to qualify

Underwater on your home? You may be able to refinance now.

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Harp 2.0 has been rolled out over these last few months, and this program is definitely the real deal! With this new Federal program, you can be as much as 125% underwater with your mortgage and still refinance. This could be a home or condo, and also can include your investment properties.

The previous program Harp 1.0 was mostly a failed program. About 10% of those that applied ended up getting approved. This new program is designed to allow most people to qualify who have a job and decent credit.

The other nice difference with Harp 2.0 is the lenders are actually setup for it at this point. Last year if you called your bank they often did not have anyone available to help you inquire about this. Now that Harp 2.0 has been in effect for a few months, most big banks have departments setup to help you.

There is 2 programs available.

1) A basic refinance: You may have an interest rate in the 5% range, and have a loan of about $240,000 on a $220,000 home. As long as you are underwater by less then 125%, you can very possibly refinance into a rate close to 4.0%. Rates change every day but this is just an example. This can also include wrapping a 1st and 2nd loan together.

2) A loan modification: This is where they modify the principal amount owed on the loan, and not only lower your interest rate, but reduced your mortgage amount all together. It is now easier to qualify for this program, but it’s definitely not for everyone. This is for those that just lowering the interest rate will not be enough to make the home affordable for them. This is for those that this is the ONLY option, short of letting the home foreclose. Be aware also that loan modiciations may indeed effect your credit.

If you are underwater (or owe about what your home is worth) this is a unique window of opportunity to captilize on this program and on the all-time low rates. For more info go to www.makinghomeaffordable.gov, or look for a link to Harp 2.0 on your lenders website.

Senate Passes Extension for Tax Credit deadline for Pending Deals

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Update 7/1/2010 -Obama has passed into law the extension, so it is official!

For those that entered into a purchase and sale in April, and still have not closed, all of that stress about the looming deadline may not be needed.. The Senate has just gave you more breathing room to qualify for the $8,000 tax credit. The deadline has been pushed back 3 months, from the end of June, until the end of September.

This still needs to go through the house and then approved by the President, but I can’t see a reason why this won’t go through. The Senate passed it with an overwhelming majority, and we need it!

This is potentially great news, since the National Association of Realtors estimates that nearly 1/3rd of the buyers trying to close by the end of June will not close on time. I have clients buying homesand condos in Bellingham that are trying to close later this month as well, and lenders have been totally behind all year long. So safe to say it would have been a disaster if 150,000 to 200,000 would-be buyers lost out on the $8,000 credit because there loan got delayed beyond there control. Bottom line is this was a necessary bill and will definitely cover everyone that had got an offer in by the end of April.

Keep in mind this would not extend the credit for new offers-only existing pending contracts.

Home Sales Up in April, Prices remain flat

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With the Tax Credit expiring, it is no surprise that April was a huge month for home sales in Bellingham and around the country. You can see from the chart below that out of 574 homes on the market in Bellingham, 142 were pending at the end of April! That is a huge jump in sales year over year, but the big question is: Will the market continue it’s rebound without the tax credit? Going into the summer, it’s easy to predict a stable local market. Families will be moving, many parents will buy condos and homes for there Western Washington University kids, and Whatcom County will continue to see a steady growth in population as buyers will be relocating to Bellingham and Whatcom County.

What it comes to pricing, it is much more difficult to predict. There is still a lot of inventory to absorb before prices can come back up, and you can see in the lower chart that the price per sq foot in Bellingham was actually down.
So in summary, we have a stable market with mutiple months of sales growth, but the there is still no clear trend on what will happen with home prices over the next 1-2 years. What is clear is it is still a buyers market, with interest rates down around 5.0% and buyers finding great deals from motivated sellers, bank repo’s and short sales.   (click on chart’s below to enlarge)