POSTED: Thursday, Dec. 24, 2009

Whatcom County home prices are expected to keep dropping in 2010

Whatcom County home values are expected to decline in the coming year, even as prices start to flatten out across the rest of the country, according to a new national report.

After falling 8.6 percent between October 2008 and October 2009, Bellingham home prices are expected to fall another 4.5 percent by October 2010, according to First American CoreLogic, which puts together a home price index for metro areas across the country.

Nationally, home prices are expected to decline in the first half of 2010 but then start to bounce back in the second half of the year. By October 2010, the 45 largest metro areas should see a year-over-year increase of less than 1 percent, according to the report.

Also of interest in the report is the impact distressed sales - such as foreclosed homes or short sales - are having on the Whatcom County market. According to the report, the 8.6 percent year-over-year drop locally would have been only a 4.5 percent decrease if the distressed sales had been excluded.

The increasing level of delinquencies in this state is a bigger concern these days, said Glenn Crellin, director for the Washington Center for Real Estate Research at Washington State University. He believes the $8,000 first-time homebuyer tax credit has helped spur activity recently but doesn't see the extension and expansion of that credit having the same impact in the coming months.

"I would expect low levels of sales until we start to see some employment gains," Crellin said. "The market can't start to turn around without the jobs."

One other concern Crellin has is the loan modification program. So far it has been largely ineffective in Washington, as many of those who take part in the program still end up defaulting. While Crellin doesn't do price forecasting, he said CoreLogic's prediction of a 4.5 percent drop locally by October "would not be a surprise to me," he said.

Overall CoreLogic's national home price index declined 7.8 percent in October compared to the same month in 2008. This was an improvement over September's price index, which was down 9.5 percent year over year.

Since the home price peak of April 2006, home prices nationally have plummeted 30.1 percent. Excluding distressed properties, the national home price index fell 21.5 percent.