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If You Are Waiting for the Bottom of the Market…
You Missed it.

Indicators of an improving real estate market have been getting stronger over the past few months, and in looking at 2012 as a whole, it is obvious that the housing market in Whatcom County has come back.  For the first time since 2006, the number of homes sold, the average price at which they sold and the median price at which they sold over the course of 2012 are all higher than the prior year.

Whatcom County Residential Sales – Full Year

 

2011

2012

% Change

Units Sold

1841

2077

12.8%

Average Sale Price

$272,642

$282,671

3.7%

Median Sale Price

$242,310

$250,000

3.2%

This growth has been building throughout the year, and has been particularly strong in the last quarter, as shown below:

Whatcom County Residential Sales – 4th Quarter

 

2011

2012

% Change

Units Sold

445

542

21.8%

Average Sale Price

$256,144

$290,242

13.3%

Median Sale Price

$227,000

$259,500

14.3%

Another positive sign is that the number of days homes are on the market before selling has dropped.  When combined with continued low inventory and interest rates, 2013 may be a very good year for real estate in Whatcom County.

There are some individual areas where the numbers might raise questions, but for the most part, they do not raise a concern when considered more closely.  As examples,
            While Lynden sales numbers were up by 24.6%, average and median prices were down around 2%, which has more to do with fewer sales over $400,000 than with overall declines in price. 
            Birch Bay/Blaine sales were down 9.5%, but average prices were up by 18.7% and the median increased by 11.9%.  These numbers reflected several factors which might actually indicate the market is much stronger there than it would appear at first glance.
                        Sales for more than $400,000 were up by 41%
                        Sales of bank owned properties were down by 5.3%
                        Short sales were down by 15%

Numbers are always interesting to me, and since they are measurements, they seem more reliable than opinions or stories from the street.  However, as we see in the Blaine numbers, unless one digs below the surface, the picture they give may be skewed.  From a purely anecdotal perspective, in the first 3 days of the New Year, we have been contacted by 5 new or returning clients who have decided it is time for them to buy.  While we certainly don’t expect that rate to continue, it is one more indicator of an uptick in the housing market.

So let’s assume the housing market in Whatcom County is going to be rosy in 2013.  This is wonderful news in many respects, but it brings another set of challenges.

  • Greater demand, fueled by great interest rates and increasing confidence, will put more pressure on inventory levels.  While inventory should increase somewhat as prices strengthen, there are still many homeowners who cannot afford to sell due to their debt level.  In addition, spec construction financing for builders is tight, which tends to limit the number of small builders who can contribute to the new home inventory.
  • With greater demand, prices will start to float up and begin to shrink the pool of qualifying buyers. 
  • Perhaps the larger immediate concern of higher prices is the issue of appraisals.  Appraisers can only use sales to establish a home’s value for the purpose of a loan.  If all the sales are subject to financing and all the financing is subject to past sales and if the past sales prices do not reflect the current market…we get low appraisals.  What breaks the cycle?  Some cash sales, some owner financing sales, some buyers bringing higher down payments to the transaction, very gradual price increases…and in the meantime we will be chewing our nails over whether the appraisal is going to come in at value.

Advice for buyers and sellers to navigate this changing landscape:  Be Realistic.

  • Sellers, you still need to have the best house available if you want to sell.  The houses that sell look the best, smell the best, are in the best locations and are priced to beat the competition.  Starting with a higher price gets you less money in the long run.
  • Buyers, do your homework so when you find the best house, you won’t need to think about it, because you if you do, you will probably lose it.  Have your financing set up before you even start to look; sellers with choices don’t take offers from unqualified buyers.  Face the fact that if it is the best house in the market, you will probably need to pay full price or very close thereto.  You will get what you pay for.  
 

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.