Q1 Housing Market Report

We’re through the first 3 months of 2021 and the Whatcom County real estate market is ramping up for another busy season. Here’s what the data shows for the first quarter of 2021 (and scroll to the bottom for the big question: will the market correct?)

Every major municipality in Whatcom County had a median days-on-market under a week (with the exception of Everson at 7 and Maple Falls at 11). This is almost as tight as is practical for this wide of a market, since offer review dates are often 3-7 days after listing (this practice allows for a multitude of showings before an offer is accepted).

The biggest jaw-drop for our team was when Sudden Valley’s median home price hit $500,000 for the first time in recorded history. (Get all the details here)

Significant year over year appreciation does not necessarily mean that will happen every single year. This graph of Bellingham’s median residential (no condo) home prices shows that while overall prices have increased, there are micro adjustments and growth variances (all the little ups and downs are the individual month’s records). Some of this is simply due to how many or how few homes were sold, and what price bracket those homes fit it.

Ferndale’s real estate market saw a double digit percentage growth last year, and we’re seeing the beginnings of another strong year.

Not gonna lie, we ran the numbers a couple extra times on this one! Lynden is seeing a significant price growth. The 60 homes sold ranged between $315,000 and $660,000.

Only 8 of them were built in the last 5 years and 4 were in the last 2, so it’s not an influx of higher-priced new construction homes skewing the sales data.

Up in Blaine, a good chunk of the homes sold this first quarter were newer homes - 11 were built in 2019 or later. Sold prices ranged from $130,000 to $675,000.

What about interest rates? 

Local loan officer Ian Mullen of Caliber Home Loans shared two perspectives on the future of mortgage interest rates in our April 7 housing market update. Here’s the clip:

Anytime home loan interest rates become a question, we have to remember historic context beyond the memory of two or three years. For the last decade, rates have ranged between 2.75-4.5%, but as recently as 2008, they were upwards of 6%. Looking back over the last fifty years, we’ve seen 30-year fixed home loan rates as high as 18%. 

Will there be a market correction?

Of the stock market? Sure, there’s always that possibility. 

Two years ago there was much conversation in our industry about the impending shift to a buyers market. That hasn’t happened (yet). 

Inventory remains low. We’ve been in a seller’s market since roughly 2014 (depending on the specific niche market & metrics), and we don’t see indications of that changing anytime soon. (This video covers 7 economic indicators of a market shift - and answers the “what about the recession?” question).

As inventory remains tight, multiple offer situations turn into bidding wars. Buyers that originally hoped to buy in Bellingham look elsewhere. Lynden and Blaine become more attractive, and Ferndale’s easy I-5 access to Bellingham places it as a great second choice to the county seat. 

• A 2-bedroom home in Sudden Valley closes at $72,000 over asking price.

• A home in Sea Smoke (Semiahmoo) goes under contract in 3 days with multiple offers, closing around $50,000 over. 

• Our buyers lose out on a cash offer at $100,000 over asking price - because two other people each offered more.

Ask any active agent right now, and they’ll tell you stories of submitting 5, or 10, or 15 bids for one of their buyers, before their client finally wins the contract. Or the stories of listing agents flooded with showing requests who have to allot just 15 minutes to each buyer. 

This current, bizarre market constriction may ease up. If lumber costs and supply chain issues ease up, new construction will be a welcome source of new homes. Generational shifts could also gradually make more homes available to the market. Remote work culture may slow down if out-of-area buyers’ employers restrict WFH policies.  And yes, higher interest rates would price more buyers out of the market.

The question is to what extent these and other changes will ease pressure on our housing market. 

If a typical core Bellingham home receives 5-15 offers today, that indicates a slew of buyers who are still waiting for homes. It will take time to work through the population of waiting-to-be homeowners. 

Before reaching a point of market balance, we’ll see a transition period - middle market “hot” homes that used to take a week to sell now take three, and “just” receive one or two offers instead of 10 or more. (Please note: offer count is not a recorded number so we don’t have hard data on what percent of homes receive what offer count).

So based on the data we’re reading, we just don’t see it quieting down to the point where home values drop anytime soon.

That’s our educated guess, today on April 9, 2021. Obviously this prediction is barring huge national, economic, or even local climactic events - the kind that disrupt an entire economy. 

So since we don’t work with a crystal ball, we’re checking the local data every week, month and quarter, and we’ll keep you in the know.