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As is often the case, the real estate news in January 2012 was a mixture of good news and bad news.  The good news is relatively easy to explain, but the bad news is a bit more puzzling.  We’ll start with the easier question and move from there to the more difficult one.

The number of homes sold in Whatcom County was up strongly (20.4%) from the number sold in January last year.  In fact, more homes sold than in any January since 2008.  The areas contributing to this increase were Ferndale, Sudden Valley, Birch Bay/Blaine and Nooksack Valley.  Sales in those areas increased from 67% to as high as 80% over a year ago.  Only two areas (Bellingham and Lynden) sold fewer homes than a year ago. 

Sales compared to December were down for the most part, which is typical.  The two areas in which that was not the case were Nooksack and Sudden Valley, where sales were stronger than they have been for several months.

Prices from January 2011 to 2012, for the most part, were a different story, with the average droping 9.4% and the median dropping 6.3% for the county as a whole.  The average price of a house sold in Whatcom County during January 2012 was $236,389 and the median was $223,000.  In Bellingham, the average price was $255,190 and the median was $235,000.  This continues the trend of the past 6 months. 

Inventory is still down significantly from a year ago and the 2 year trend lines for unit sales continue to show a slight upward tilt, while the price trend lines are definitely dropping.  The question, of course, is Why?

First let’s look at number of sales.  The reality is that it’s a great time to buy and people are doing so.  Interest rates are really low: how does a 30 year fixed rate mortgage sound with ¼ point and an interest rate below 4%?  Lenders are competing to make loans – we’re seeing offers from lenders to help pay closing costs.  Prices are down.  For those people who were wishing they had bought before prices went up…those prices are back, and interest rates are lower. 

Buying power has increased substantially and we’re seeing the strongest activity in the first time buyer and first move up buyer price ranges.  Note the price range distribution below:  No sales above $500,000, compared to 5 in January of 2011; over 75% below $300,000 in 2012 compared to 58% in 2011.

January 2011 Price Ranges in $1000's

Total 2011 January $ Sales

Total Units Sold

Average Sales Price

% of Market

Changes in January Year to Year Distribution of Residential Sales   in Bellingham

 

 

 

 

 

<300

$5,684,974

26

$218,653

57.8%

300 to <500

$5,220,950

14

$372,925

31.1%

>500

$2,830,000

5

$566,000

11.1%

>750

$0

0

$0

0.0%

 

 

 

 

 

 

 

January 2012 Price Ranges in $1000's

Total 2012 January $ Sales

Total Units Sold

Average Sales Price

% of Market

Unit Change

Average Price Change

 

 

 

 

 

 

 

<300

$6,340,800

31

$204,542

75.6%

19.2%

-6.5%

300 to <500

$3,622,000

9

$402,444

22.0%

-35.7%

7.9%

>500

$500,000

1

$500,000

2.4%

-80.0%

-11.7%

>750

$0

0

$0

0.0%

0.0%

0.0%

That was the easy question.  Now is the harder one:  why are prices dropping if demand is good and inventory is low?  A good share of the answer is in this number:  40.5%.  That is the percentage of homes sold in Bellingham during January that were either short sales or bank owned.  If you have been out looking at houses, you know the short sales and bank owned properties are typically the least money.  Over each of the past 3 months, there have been more sales of these property types than has been typical, even though the number available for sale has declined.  Perhaps lenders are acting a bit more efficiently to process their short sales.  Not only do their lower prices bring down the average and median, but they also influence prices of non-distressed homes.  So how long will this continue?  The number of short sales and bank-owned properties on the market in Bellingham has dropped a bit since the summer, although the number of short sales under contract but not yet closed is still very high.  Even if no more enter the system, between those for sale and those under contract, we have about 10 months of short sales in the pipeline right now.  That does not bode well for any increase in prices in 2012. 

What does this mean for buyers and sellers?  If you are a buyer, it is a great time to buy.  Prices will probably soften more, but if demand holds firm and inventory and interest rates stay low, you may miss the sweet spot.  Base your decision on how well a house fits your needs, not just whether you can get a steal or your rate may go up or down.  If you are a seller, and selling is optional, this is probably a good time to hold.  On the other hand, if you really want to move within 6 months, it may be better to get it on the market sooner, rather than later.    

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.