Slow But Trending Upward… Bellingham Real Estate Market Update

The Whatcom County real estate market continues to improve. There is a bit of stuttering from one month to another and from one area to another, but the overall trend is up in both number of sales and pricing. Let’s look at some details.

For the most part, the number of units sold is higher than any time since 2007, whether we compare just the month of June or the first 6 months of the year. Pricing, on the other hand, is still going through the “two steps forward, one step back” process, as is demonstrated below by the fact that all prices were up a bit compared with the first half of last year, but primarily down a bit if we look only at June.

If we go back to 2007, the last year prices didn’t fall overall in Whatcom County, we find that the average sale price today is 14.7% below 2007 and the median sale price is down 13%. At the rate we are going, it will take a few years to get back to those values, but at that point they should be “real” rather than “bubble” prices.

While the recent rise in interest rates may be a cloud on the horizon, it is also possible it will stimulate more buyers to enter the market due to fears that they may go even higher. Inventory is still very tight in many price ranges, with overall residential inventory in Bellingham down about 8% from the same week last year, while pending sales are up almost 29% over a year ago. There are major disparities in price ranges, however, so one number, as usual, doesn’t tell the whole story. The most active price range as of June 29th was from $200,000 to $300,000, in which 49% of all the signs in yards at that price range were pending. Note: 171 signs in yards; 84 under contact. On the other hand, in the $600,000 to $650,000 range, 38% were pending, but there were only 13 homes for sale, and 5 of them were pending. The only price range with nothing under contract at this point is from $900,000 to $999,999, with just 10 homes listed for sale.

The number of short sales available has been declining steadily and is now about half what it was in 2011. On the other hand, the number of bank owned properties has stayed fairly consistent. The number of all distressed home sales in June was 14.2% of the Bellingham market, down considerably from the 29% in January, but considerably higher than last summer’s single digit market shares.

The downsides of 3 months ago are still with us. Appraisals are much tougher. For the first time in years, I have had appraisers ask for inspection reports because underwriters want them. Underwriters are also requiring documentation for the source of the down payment money and sometimes requiring financial reserve amounts of the borrower. Buyers are getting frustrated because of the competition for homes of certain types. Sellers are getting frustrated because they may still have to bring money to the table to sell. And there are still homes that go off the market unsold, or sit on the market for months, because the price is too high for the product.

My overall feeling about the market right now is good. There are still a lot of people hurting from the recession and the housing bubble, but the market is moving. It is quite stable, lenders are doing their job of qualifying both the buyer and the property, people are moving here from other areas, additional jobs are available, and Whatcom County is a great place to live.