By Emily Hamann
Is 2019 finally the year that Whatcom County’s housing market cools down? After years of seller’s market, with low inventory and ever-higher prices, there are some signs that market might start to balance out in the coming year.
The end of last year held a clue. Prices in the fourth quarter of 2018 actually decreased over quarter three.
“That’s the first time that’s happened in several years,” Troy Muljat, managing broker of the Muljat Group Realtors, said.
“We have been in a bit of a hyper market, somewhat of a frenzy the last couple years,” Muljat said. That market was fueled by low interest rates, solid demand and low inventory. But that’s finally starting to shift, Muljat said.
“We are seeing signs that that is starting to change,” Muljat said. “Which we feel is healthy for the market.”
Over the past 70 years, Muljat said, home prices have increased, on average, just 4 percent a year.
Recently, they’ve been going up much faster. This year and the next, however, there are a few factors that could begin acting on the market, bringing back into balance.
Last year interest rates began to rise, which reduces every homeowner’s buying power.
“Rising rates is a headwind for real estate in general,” Muljat said.
At the same time, Whatcom County wages haven’t increased at the same rate that homes have.
“The increases that we’ve had, when you graph them out and look at them, they’re just unsustainable,” Muljat said.
The coming year could be a turning point, which brings the market more into balance.
While prices might level out, Muljat said, inventory will still likely be an issue.
“We still have very low amounts of inventory in Whatcom County and that has driven values up,” Muljat said.
Since the recession fewer homes have been getting built. Many developers went out of business during the recession, and even fewer could get financing to build projects. That caused a lag in new construction. At the same time, land is getting scarcer and more expensive, so fewer projects are penciling out for builders.
“We have to go up and not out,” Muljat said.
That low inventory will probably keep prices strong, if just increasing at a slower rate.
“I expect some increase in 2019 in home values still,” Muljat said. “But not the increase we’ve seen.”
For the past several years, the rental market has been much the same story as the homebuying market.
“The rental market is a lot of the same,” Muljat said. Muljat also owns Landmark Real Estate, a property management company.
The rental market has also had to deal with low inventory for a while, but a few major apartments complexes built in Bellingham in recent years have helped move the needle slightly.
“We’ve seen a lot of supply of rentals built in the market,” Muljat said.
Nationally, Muljat said, about 37-38 percent of the population rents. In Bellingham, half of the population rents. That’s a lot of demand for rentals.
“I think we’re seeing more supply come into the market,” Muljat said. “And so we’ve seen the market soften in places in some parts.”
A slowdown in the homebuying market can also loosen up some inventory in the rental market, as more people are able to buy a homes and move out of their rentals.
“We see more opportunity for first time homebuyers coming into the market,” Muljat said.
For the past three years, Muljat said, it has been difficult for first-time homebuyers to enter the market. There has been so much competition, with many properties getting multiple offers.
As the market slows down, it might actually loosen up more inventory, as people will be more willing to sell their house, because they’ll be easier able to find a new house to move into.
“It froze some of those people from selling because of the frenzy in the market,” Muljat said. “A more normal market is better for everyone.”
“We expect 2019 and 2020 to be a good time for people buying a home and selling a home,” Muljat said.