Housing market is hot, but new apartments could change price-to-rent ratio

The price and number of homes sold in Whatcom County climbed higher in May, outpacing numbers for last year and last month. At the same time, the amount of new listings on the market decreased. Those conditions have led to a seller’s market with declining inventory.

Whatcom County’s housing market is down to 3.69 months of inventory. That number has been declining all year, and is down from 5.98 months of inventory in May 2014.

The Northwest Multiple Listings Agency considers four-to-six months of inventory a balanced market. If that’s the case, then the local housing market has swung from a buyer’s market to a seller’s market in the last year.

The number of sales that closed in May—325—is a  25 percent year-over-year increase from last May. The average and median sale prices for those homes were both up about 6 percent from last May, according to the latest date from the Northwest Multiple Listings Service.

“The lack of inventory and the amount of qualified buyers is creating a feeding frenzy out there,” local Windermere Real Estate broker Bliss Goldstein said about the market.

Goldstein said buyers need to be more prepared than ever to make an offer. Properly priced homes in good condition are going quickly, and in some cases, for more than their asking price, she said.

Goldstein said she’s even seen some buyers waive their inspection contingencies—the buyer’s window to have the home inspected. This is a risky move, but buyers are looking to make their deals sweeter, she said.

“Inspection contingencies are one of the most important contingencies,” Goldstein said. “That’s not something we typically would recommend.”

Goldstein and other local real estate brokers said they’ve seen an increase in first-time home buyers in the last year. Goldstein attributes this in part to rising rental prices and low interest rates, which make mortgages compare favorably to rental prices.

The comparison between rent and mortgage could change in the next few years as new apartment buildings pop up in Bellingham. Giovanni Isaksen, a Bellingham apartment analyst with Ashworth Partners is tracking 1,850 apartment units in Bellingham that were either already completed this year or are somewhere in the planning, permitting or construction stages.

Those new apartments include a 154-unit project for seniors off Telegraph Road east of Meridian Street called Affinity at Bellingham, the Village at Baker Creek’s 122 units that are also near Telegraph Road, and CA Ventures plans for 230 units near Lincoln Street.

The City of Bellingham estimates there are about 15,000 rental units in the city, so 1,850 more units would be a 12.3 percent increase in the number of units in Bellingham.

That kind of change could change the apartment vacancy rate and the rate of increase in rental prices, Isaksen said. Bellingham rentals currently have a vacancy rate of less than two percent, according to an estimate on the City of Bellingham’s website.

Whatcom County housing by the numbers, May 2015:

Closed sales—Units: 325 (Annual change: 25.0 percent increase); Average sale price, May 2015: $317,706 (Annual change: 5.9 percent increase); Median sale price, May 2015: $277,000 (Annual change: 6.0 percent).

Active listings—New: 520 (Annual change: 12.9 percent decrease); Total active: 1,198 (Annual change: 23.0 percent decrease); Months of inventory, May 2015: 3.69 percent (Annual change:

Pending Sales—Units: 444 (Annual change: 10.5 percent increase).

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