Business - Business News

POSTED: Tuesday, Nov. 24, 2009

Whatcom County home prices drop 5 percent

Whatcom County has seen a significant decline in home prices, but depreciation has been steeper in many other Washington communities, according to a new federal report.

Local home values dropped 5 percent in the third quarter compared to the same period in 2008, according to the Federal Housing Finance Agency's all-transactions house price index. While the depreciation was steeper than in previous quarters this year, the Whatcom County price slide wasn't as bad as other nearby communities: Seattle, Tacoma and Longview saw year-over-year drops of 10 percent or more.

While the early part of the national real estate downturn a few years ago appeared to be caused by a price bubble burst, the current economic woes appear to be impacting prices now.

"Most of the decline in house prices from the peak (in Bellingham's metro area) has occurred over the last four quarters," said Julia Hansen, an economics professor at Western Washington University, in an e-mail. "That suggests that unemployment and economic uncertainty have played a central role in explaining the price declines here locally."

The all-transactions index includes data from Fannie Mae and Freddie Mac mortgages used for home purchases and refinancings, which gives a good indication of repeat sales. In the U.S., the all-transactions index declined 4.1 percent year over year.

Unemployment and foreclosures will continue to impact prices in the coming months, and there are still issues with resetting interest rates for existing mortgages, said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University.

High-end homes are expected to see the biggest challenges in the coming months, Crellin said. The homes in the first-time homebuyers' price range appeared to have stabilized, in part because of the $8,000 federal first-time homebuyer tax credit. However, it hasn't translated into the sellers moving up into more expensive homes yet.

"It's led to a huge oversupply of higher-end homes; I think there will continue to be price weakness, especially in that part of the market," Crellin said.

In Washington, the purchase-only house price index fell 8.7 percent, worse than California, which saw a 7.7 percent year-over-year decline. California had been one of the hardest hit areas of the real estate crash. Only Idaho, Oregon, Utah, Florida, Arizona and Nevada saw steeper year-over-year declines than Washington.

The purchase-only index does not include refinancings.