It's a Strong Market!
The teasing indications of an improvement in the local housing market throughout 2012 have really kicked in over the past 2 months, and the cumulative results of that can best be seen by comparing sales in November 2012 to sales in November 2011. Let’s start by looking just at Bellingham via the table below.
|November 2011 Price Ranges in $1000's||Total 2011 November $ Sales||Total Units Sold||Average Sales Price||% of Market||Changes in November Year to Year Distribution of Residential Sales in Bellingham|
|300 to <500||$3,423,400||10||$342,340||16.4%|
|November 2012 Price Ranges in $1000's||Total 2012 November $ Sales||Total Units Sold||Average Sales Price||% of Market||Unit Change||Average Price Change|
|300 to <500||$8,043,900||22||$365,632||24.7%||120.0%||6.8%|
First, note the number of homes sold: 61 in 2011 compared to 89 in 2012. Then, note the distribution of those sales: over half the increase was above the $300,000 price point. Note the average price changes within the price ranges under $750,000: up 6.8% to 8.3%. These are strong numbers.
Now let’s look at what has happened in Bellingham over the past two years via the chart that follows:
Click table to see a larger view....
The number of sales with average price and median price show as points on the chart for each of the past 25 months. They bounce up and down. The solid lines are an analysis of the individual points that smooth them into a trend, and the trends are up. Note that the units sold trend is steeper than either of the price trends, with the median showing the least change.
Obviously more homes are selling, but it is questionable whether prices are actually going up. As noted in the first table, we are seeing more houses sell in the higher price ranges. This lifts both the average and median sale prices because they are calculated on the total mix, but does not necessarily mean the prices of individual homes are increasing.
Inventory levels have a major impact on pricing, although it can take a while for that impact to show up. If we look back to the high point of the market, in 2006, inventory levels were very high yet prices didn’t start to drop until the next year. Right now, Bellingham has fewer homes for sale than at almost any month in the past 7 years. If it stays low going into the spring, however, individual prices will most probably increase. As always, individual sale prices will be dependent on the area and condition of a property.
Another indicator of potential price increases is how quickly homes are selling. In November, 52% of Bellingham homes sold in less than 60 days, and they sold at over 98% of their listed price. This indicates more competition for the best homes, as indicated by location, condition and price. Sellers who get ahead of the market in their pricing will stay on the market.
How About the County?
The county had a weaker November than did Bellingham in number of sales, with all areas except Lynden dropping double digit percentages. Prices, however, increased substantially for the most part in both average and median. Sales year to date were up in all areas except Birch Bay/Blaine.
So What is Coming?
I see demand continuing to rise. U.S. consumer debt is down, savings are up, and interest rates are still phenomenal, making the cost of home ownership competitive with renting. As real estate news continues to be positive, people who have been on the fence will start to see they have missed the bottom of the market and had better get in. Lower end homes will continue to be the bulk of the sales, but those sales will open up purchase money for the next levels of the market.
I see prices creeping up in select segments of the market. As demand rises, particularly in the lower price ranges, demand will push up prices for homes in really good condition, with specialty features, in great neighborhoods, priced to the market. The best strategy for sellers will be to price such that buyers will push up the price, rather than pricing ahead of the market.
Appraisals could be our biggest problem in 2013. As a market starts to climb, the comparable sales often don’t support the new pricing, and lenders are demanding more documentation from appraisers. One advantage of a very gradual increase in pricing is that the appraisal problem may be less severe.
www.JohnsonTeamRealEstate.com also includes a constantly updated list of newly listed properties and a list of properties being offered as short sales & foreclosures (REOs), as well as the entire listing database of the Northwest Multiple Listing Service, fully searchable to your specifications.