Last month I compared our market to ping pong balls, sometimes up, sometimes down, sometimes both…just depends on the area.  In October

  • Bellingham unit sales up from October 2010 (to 75 homes from 65) & almost equal to last month (to 75 homes from 77).
  • Ferndale unit sales down from October 2010 (to 14 homes from 27) & down further from last month (to14 homes from 37).
  • Birch Bay/Blaine unit sales down a bit from October 2010 (to 13 homes from 15) & down a lot from last month (to13 homes from 28).
  • Ferndale unit sales dropped substantially from October 2010 (to 14 homes from 27) & from last month as well (to 14 homes from 37).
  • Lynden managed to about break even - up 3 homes from 2010 and down 3 from September.  

But how about the prices, you say.  They were bouncing too, with average sale prices in Bellingham and Birch Bay/Lynden down in the double digits from September while Ferndale, Sudden Valley and Nooksack Valley saw double digit increases.  If we compare to October 2010, Ferndale and Mt Baker home sale averages were up by double digits, while Birch Bay/Blaine and Lynden were down by those amounts and Bellingham and Sudden Valley were close to holding their own.  Want more specifics?

  • Bellingham prices October 2011 to 2010:  average -3.7%; median -12.1%
  • Whatcom County prices October 2011 to 2010:  average -15.8%; median -18.8%
  • Bellingham prices October to September 2011:  average -12%; median -2.4%
  • Whatcom County prices October to September 2011:  average +.4%; median -1.9%

The Bellingham market moved even more strongly into the lower price points, with 64% of the sales below $300,000.  Obviously, as prices have dropped, more homes have moved into this category, but it is interesting to note that 4 of the past 6 months have had over 60% of sales at or below $300,000.  This is atypical, even as far back as 2006.  It certainly isn’t because it is now easier for buyers in the lower price ranges to get loans!  During the frenzy, this part of the market was heavily dependent on sub-prime loans.  Now, standards for even FHA loans are higher.

There are several speculative explanations for the shift:

  • Prices for homes at all price points have fallen, moving more of the inventory below $300,000.
  • As prices have fallen, fewer owners of lower priced homes have been able to sell and take sufficient equity out of their current home to move into the next bracket.
  • As prices have fallen in areas traditionally providing our incoming purchasers (California, Seattle), our market has localized so our buyers have local incomes and less equity.
  • Buyers (and lenders) are more aware of the hazards of “over-buying”, so they are purchasing more conservative homes.

  The table below shows the change in market distribution from last October.

October 2010 Price Ranges in $1000's

Total 2010 October $ Sales

Total Units Sold

Average Sales Price

% of Market

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











300 to <500






















October 2011 Price Ranges in $1000's

Total 2011 October $ Sales

Total Units Sold

Average Sales Price

% of Market

Unit Change

Average Price Change















300 to <500





















And now the required comment on distressed properties…and a bit more.  In trying to forecast the market, my primary focus is on inventory and pending sale levels.  Even if demand stays the same, lower inventories can cause prices to rise.  More pending sales should mean more closings down the road.

The inventory figures in Bellingham have been 10% to 14% lower compared to the same month in 2010 since February.  The percentage of those listings that are distressed has stayed pretty consistent at 10% to 14% of the total.  Of these distressed listings approximately 75% are short sales and the rest have been foreclosed and are bank owned.

The number of pending sales, however, has increased consistently over the same months of the prior year, with double digit increases since July, but the number of sales has been pretty flat.  Why aren’t these increases in pending sales showing up as increases in closed sales?  The answer seems to be that short sales are not closing at a rate typical of a traditional sale.  At the end of October, 50% of the pending sales in Bellingham were distressed.  ¾ of those were short sales – 44 transactions.  On the other hand, just 2 short sales closed.

In my opinion, short sales have created an artificial sense of activity, making the gross pending sale numbers meaningless for the purposes of sales projections.  If we pull pending short sales out of the total pending numbers, the number of pending sales are lower than 2007 and 2008 levels. 

So what difference does all of this make?  I don’t know any reason why our experience with short sales should be any different than other areas of the country, so when you hear reports of increasing pending sales, remember they may not be “real”.  It also has individual impacts. 

If you or someone close to you needs to sell a house which is “underwater”, think it through carefully before listing it with the intent of doing a short sale to which the lender will contribute.  Find someone (ideally an accountant and/or attorney who is familiar with the process), research online, call your lender, talk with several real estate agents and, most of all, learn about ALL your alternatives.  There may be a better one than a short sale.     

           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.