By Isaac Bonnell
The local real estate market didn’t get any better last year, but the good news is that it didn’t get any worse.
In fact, more homes were sold last year in Bellingham and Whatcom County than during 2008. Year over year, single family home sales were up 3.3 percent in Bellingham and 0.5 percent for the whole county, said Lylene Johnson, a Realtor with The Muljat Group who compiles monthly statistics from the Northwest Multiple Listing Service.
“I’m surprised by how strong the market was in November and December,” Johnson said.
Sales were brisk in the fourth quarter, she noted, as buyers rushed to take advantage of the homebuyers tax credit that was scheduled to expire in November — which is now scheduled to expire in April of this year.
Though sales were up slightly, the median price of homes sold in Bellingham and Whatcom County continued to slide in 2009. The median price of homes in Bellingham was $288,444, down 3.5 percent compared to 2008. And the median price for homes throughout the county was $258,950, down 6.5 percent.
But statistics can be misleading. Falling home prices suggest that the market is still suffering, while an increase in the number of sales suggests otherwise. So what’s happening?
A closer look at the numbers shows that sales of homes above $300,000 continue to lag while home sales below $300,000 are still going strong, Johnson said. Lending is still an issue for more expensive homes, so people are not putting those homes on the market.
Basically, there were more properties for sale last year under $300,000, Johnson said. In 2008 in Bellingham, 50 percent of the market was under $300,000. This year 54 percent was under $300,000, which helped bring down the median price.
This has given some buyers a false sense of confidence when negotiating the purchase price, Johnson said.
“We’ve got a lot of bargain hunters out there right now, and I get a lot of people who feel like they can offer a much lower price and that the seller will be grateful,” Johnson said. “That is not always the case.”
Short sale, long process
Distressed properties such as short sales or bank-owned homes are also a large factor in declining median prices. As of Dec. 31, 2009, there were 86 pending home sales and more than half of them were distressed properties, Johnson said.
“Distressed properties tend to be more aggressively priced than the typical residential listing,” Johnson said. “As long as they continue to constitute a sizable percentage of the market, there probably will be downward pressure on prices.”
Short sales also skew market statistics because the transaction can take up to six months to complete, during which time they show up as pending sales. Thus, the number of pending sales last year was inflated by these long transactions.
But that could soon change, said Tom Follis of Wm. T. Follis Realtors. Foreclosure rates in Whatcom County during the last quarter stabilized, meaning that fewer short sales are on the horizon.
In fact, Follis said he is confident that the market is nearing a turning point. Sales were fairly stable and flat in 2009 and there weren’t any major changes in the county as a whole — at least compared to 2008 when the number of homes sold dropped 26 percent.
“There’s almost no new residential housing stock coming into the marketplace,” Follis said. “My fear is that as the listing inventory continues to diminish and as properties sell, if they’re not replaced, there is going to be an upward pressure in the marketplace and values will rise quickly.”
In other words, the demand could soon be much greater than the supply, which could be the start of another housing bubble.
The market for commercial property took a big hit in 2009 and it probably won’t get any better this year, Follis said. Office and retail vacancies are up and taking longer to lease or sell.
“The commercial and industrial market will continue to lag behind the residential market,” he said. “It will probably be another year until the commercial market starts to show signs of good health.”
The good news is that if you are in the market for commercial space, there is a lot of property on the market right now and “you can make some really good deals,” Follis added.
So what can we expect for 2010?
The tax credit is still enticing people to buy homes, Johnson said, but there will have to be some improvement in the overall economy for any significant change to happen.
“I don’t expect 2010 to be a whole lot better than 2009,” Johnson said. “Maybe there’ll be some incredible breakthrough and the economy will pick up and people will have jobs. But that’s the key: people need to be working.”
2009 real estate snapshot
Whatcom County: Median sales price: $258,950, down 6.5 percent from 2008. Total homes sold: 1,992, up 0.5 percent. Average days on market: 102, up 1 percent.
Bellingham: Median sales price: $288,444, down 3.5 percent from 2008. Total homes sold: 910, up 3.3 percent. Average days on market: 92, unchanged from previous year.
Lynden: Median sales price: $268,850, down 9.5 percent from 2008. Total homes sold: 154, down 15.4 percent. Average days on market: 108, down 10.7 percent.
Ferndale: Median sales price: $262,950, down 9.7 percent from 2008. Total homes sold: 247, down 4.3 percent. Average days on market: 98, down 4.9 percent.
Blaine/ Birch Bay: Median sales price: $223,600, down 10.6 percent from 2008. Total homes sold: 251, up 5 percent. Average days on market: 131, up 72.4 percent.
Sudden Valley: Median sales price: $231,700, down 9.4 percent from 2008. Total homes sold: 152, up 7 percent. Average days on market: 108, up 4.9 percent.
Source: Lylene Johnson, The Muljat Group