The real estate market in 2009 strengthened as the year progressed, ending the year with dramatically higher sales numbers in some areas and categories when compared with 2008. Falling inventory numbers and strong pending sales were the precursors to more sales and relatively stable prices in the county as a whole during the last quarter. At least a portion of this strength can be attributed to the rising number of distressed properties – short sales and bank owned properties (REOs). While homes under $300,000 still constitute over half the market in Bellingham, their overall share of the market dropped in December as a different price point gained new life. Let's look at some details:
The chart below shows unit sales, average sale prices and median sale prices over the past 3 years in Whatcom County as a whole.
As mentioned above, short sales and REOs are making themselves felt, and indications are that they are going to have more impact in 2010. The longer employment numbers stay low, the more people are vulnerable to losing or being forced to sell their homes – and that translates into more short sales and REOs on the market. Look at these numbers:
Short sales and REOs tend to be more aggressively priced than the typical residential listing. As long as they continue to constitute a sizable percentage of the market, there will probably be downward pressure on prices.
The table below shows a major shift in the Bellingham residential market from recent months. While the number of homes sold priced below $300,000 was up in December, it was the $300,000 to $500,000 range that contributed the most to the overall increase in sales. Demand for homes in the lower ranges remains strong - as of December 4th, there was just a 3 month supply of homes available for sale in Bellingham priced below $250,000. The really interesting number, however is that there was just a 4 month supply between $250,000 and $500,000. Over $500,000 there was an 11 month supply, based on the number of total sales over the prior 6 months. A buyer said to me last week as we looked at a home priced at $197,000 that had an accepted contract in 5 days, “Homes in this price range are no lower than they were at the top of the bubble!” That is not necessarily the case, but it certainly is true that continued low inventory could help to counteract the effect of the distressed properties – look at the average price change in the ranges from $300,000 to $750,000 in the table below.
2010 will be an interesting year for real estate. The first 4 months should be relatively strong, but after that the tax credits go away and interest rates may change. If someone wants to buy a house and can find something they like, they would be foolish to wait. They very likely qualify for a tax credit. If the economy does improve, the federal government will draw back in its support of mortgage securities and interest rates are expected to jump 1%. That's an increase of about $65 per month on a $100,000 loan. Will housing prices continue to decline? Possibly, but if you want to buy a home and live in it, you are better off buying when the rates are good than hoping to pick up a bargain at the bottom of the market. In some price ranges, we may already be there.
For ongoing real estate numbers, go to www.JohnsonTeamRealEstate.com/blog. We update the site weekly with everything from interest rates to market conditions to information from Fannie Mae, the FED and the FDIC. Also, feel free to call us at (360) 303-2734 or e-mail Info@JohnsonTeamRealEstate.com if you want to know more about a specific portion of the market – we track a lot more than we have space to report.