By Steve Gray
For The Bellingham Business Journal
When I moved to Bellingham more than 30 years ago to attend Western Washington University, I knew that I would settle down here. Drawn to the outdoors lifestyle, easy access to vibrant cities and overall high quality of life, I’ve since raised my family in this community. I joined Peoples Bank eight years ago as a real estate loan officer, and I truly enjoy helping others secure their dream homes.
As anyone who’s read the headlines knows, the real estate market in our area has been on a boom. The Seattle Times recently reported that the greater Seattle area has led the nation in home prices for 20 months in a row, tied for the second-longest streak. The last time we saw record-breaking prices like this was in the mid-2000s, and home buyers are understandably nervous. The real estate market in Whatcom County takes some of its cues from Seattle, but there are important differences. Here are a few things I think you should consider given current market conditions.
Be patient. The most important piece of advice I can give is to not panic. I strongly believe that unless we see a dramatic wage increase in the community to support the bulk of the market, real estate prices simply can’t continue the way they are. The real estate market in Whatcom County is driven primarily by supply and demand, and we’re already seeing signs of a leveling-off.
Lending and credit are available. Banks still want to lend money, and rates have been stable and very low. Fannie Mae is doing everything possible to create an environment where banks can provide loan approvals, while keeping the customer’s best financial interests in mind and making responsible lending decisions.
Consider bridge financing. Bridge financing allows homeowners with equity to have more control over timing when they are buying another property. This way, they don’t have a pending sale before they close on their new house. It’s a good idea to check with your bank to see what kind of bridge financing terms are available which would allow you to pay cash for a new property.
New construction isn’t always the better option. I get many requests for construction loans, and in theory the logic makes sense: To solve the inventory issue, why not build your own house? While I steer clear of dissuading people from building their dream home, it’s important to have a full consideration of what’s involved. Building permits and materials are expensive, and supply for builders is low. You may not be able to find a qualified construction crew for almost a year right now. Overall, it’s probably more expensive to build than buy something currently available, so it’s important to crunch the numbers first.
Be prepared. Given the constant fluctuations in the market, loan pre-approval is imperative. I’ve seen an increase in calls in the past year from listing agents with questions about a customer’s finances, because that agent might have several offers they are considering. Getting your financing squared away first, so you can act quickly when needed, is a must in today’s market.
Build a team you trust. Surround yourself with a team of experts who have your best interests in mind. I try to work with agents who operate at a pace I’m comfortable with, and who are good partners. Don’t be afraid to shop around for an agent and a lender who will advocate for you. You’ll know when it’s the right fit.
The real estate market in Whatcom County is already showing signs of slowing down. We’re beginning to see reduced prices and inventory sitting longer, which indicates we’ve likely seen the top of the curve. In the next year or two we should expect to see more affordable housing that is line with Whatcom County wages. In the meantime, I encourage potential buyers to be prepared, be patient, and find trusted partners to help you navigate the current market.
Steve Gray has been in the financial service industry for over 25 years and is assistant vice president and senior real estate loan officer at the Peoples Bank Bellingham Real Estate Loan Center. He holds a degree in management from Western Washington University’s College of Business and Economics.