Although this past year had its ups and downs, I’m pretty hopeful for positive changes this year. Despite signs of slower sales, Realtors leaving the business, and the credit crunch, 2009 offers some relief in the homebuyers market:
High-end home sales slow
Those who bought during the “boom” years of ’04 through ’06, but now need to sell under present market conditions are in the worse shape of all, particularly above $400,000. Used homes are in direct competition with a still lingering inventory of new homes. Hopefully this will change course in 2009 by the virtual non-existence of new housing starts and interest rates falling. Customers should start buying again.
Home ownership still “best investment”
Local real estate values continue to experience a change to the long overdue correction, with prices continuing a mild drop through 2008. Even with the drop, home ownership is still the best investment over time. Buy a home intending to keep it for the long haul. Flipping right now is not a good investment.
Whatcom County assessor’s data shows median family price appreciation rates of about 20 percent a year in 2004, 2005, and 2006. Median values of homes sold in Whatcom County were $278,200 in 2008, $292,500 in 2007, and $285,000 ’06. Price corrections in our beautiful “4th Corner” remain among the lowest nationwide, thanks to relatively low unemployment, a diverse economy and an abundance of small businesses.
Low interest gives first-time buyers advantage
The price drop has benefited the first time homebuyer, with 441 of 869 Bellingham homes selling for less than $300,000. Mortgage rates averaged 6.3 percent in third Quarter 2008, but going into 2009, a 30-year mortgage can be secured at 4.875 percent. A mini re-finance boom has kept Whatcom County lenders busy at the end of 2008 and into 2009. It is advantageous to buy a home right now, especially if you’ve been waiting a while for your first home. Don’t procrastinate waiting for lower rates. They are fluctuating and you may lose purchasing power when rates begin to climb back up.
Industry survivors more experienced
The industry itself is changing with the times. While the Whatcom County Association of Realtors enjoyed a 100-year birthday last year, Realtor members have steadily dropped as a direct reflection to slower sales. At 880 members during the “boom,” 790 remain active at the end of ’08, with a further departure of licensees from the business in 2009. We expect to see 700 or even 675 in 2009.
The cycle of people entering and leaving the business is as natural as the four seasons. It can be a healthy purge, though. The true professionals weather tougher times, while part-timers and those with less skill move to other occupations. It leaves clients with a more experienced group of agents to choose from.
Federal government may help
Loosening of credit, offering tax credits, help with foreclosures, lower interest rates and hopefully a boost in the employment rate: all will help the industry as government becomes involved in the housing crisis. The National Association of Realtors is actively working to propose legislation in 2009.