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The number of homes sold through the Northwest Multiple Listing Service in Whatcom County dropped dramatically in May 2008 as compared to May 2007. Hardest hit was Sudden Valley, where 62 percent fewer homes sold in 2008. The Bellingham market showed a decline of 41 percent, while the county as a whole sold 38 percent fewer homes.

Average sales prices were down as well, with Bellingham dropping 8 percent (the median sale was down just 5.7 percent) and the county’s average sliding 9.5 percent.

Breaking the Bellingham numbers down into price ranges gives a better view of what happened in May’s local real estate market.

  • A growing percentage of the market is under $300,000 (49% compared with lat year’s 38%) and the average sale price increased 1.3%.
  • The $300,000 to $500,000 range decreased to 39% of the market compared to last year’s 45%, and the average sale price increased 1.8%.
  • The $500,000 to $750,000 range dro-pped to 10% of the market compared to last year’s 13%, but the average sale price increased 4.1%.
  • There was just one sale of $750,000 compared to 4 last year, so the average price dropped by 28% (a good example of why averages need to be taken with a grain of salt).

So what is coming

Inventory levels are still down throughout the county – by 4 percent in Bellingham. Pending numbers are down as well, although that seems to be leveling off, from a drop of 52 percent in mid-January to 27 percent less in mid-May (compared to the numbers in those months of 2007). Rents are up, interest rates are still very good and the tax benefits of home ownership and investment have not changed. Depending upon your personal situation, this could be a very good time to buy a house.

Rich and I attended a conference in Seattle several weeks ago where John Tucillo, a nationally known economist with a specialty in the real estate industry, was the speaker. A point he made was that money follows returns. Right now, returns are offered by commodities and the trade in them is driving up prices. As with stocks and real estate, that cannot go on forever, and he sees the money moving to real estate when the commodities bubble bursts.

His advice If you want to make money in two years, don’t buy real estate. If you have an outlook of 5-10 years, now is the time to buy real estate. Strange, that’s the advice we’ve been giving clients for years.