The beginning of 2018 started quietly for Whatcom home sales, but it could be leading to a busy spring season.
Local real estate agents sold 217 houses and condominiums last month, slightly off the pace of 224 sold in January 2017, according to data from the Northwest Multiple Listing Service. While the number of homes sold decreased, the January median price soared 20 percent to $345,000. January is typically the slowest month for home sales, so the median price of those homes sold can vary more widely compared to later in the year.
Inventory is expected to increase and interest rates are expected to rise which will make things interesting this spring, said Darin Stenvers, branch manager at the Bellingham John L. Scott office. The 30-year mortgage rate has steadily risen in recent weeks to around 4.5 percent, the highest level in four years.
“When you are in a rising rate environment, historically you do get a frenzy of sales,” said Troy Muljat, managing director at Muljat Group Realtors. He added that it’s been more than 10 years since the area last saw steadily rising rates.
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Stenvers said if interest rates keep rising it will have an impact, but it hasn’t happened yet. At his office, more than half of the recent local home sales have been all-cash transactions from buyers who are not concerned about a mortgage interest rate. All-cash buyers tend to be people who have sold homes and are making purchases with the proceeds. Rising interest rates will hurt the buying power of first-time homebuyers, who typically need a mortgage loan.
Stenvers expects it to be a busy home-buying spring and summer in Whatcom County, despite the rising interest rates. Stenvers said the high rents, particularly in Bellingham, will continue to motivate people to buy before interest rates go up – he said he expects interest rates to be 4.75 percent by the end of summer.
Inventory remains an issue for Whatcom County real estate – it had 485 active listings last month, down 6 percent compared to January 2017, according to the data.
Stenvers has seen signs that more people are preparing to list homes between March and June.
Muljat agreed, saying a combination of increased home construction and demographics should translate to more inventory this spring. The average amount of time someone owns a home is around seven years, so people who bought at the last real estate peak in 2007 but saw the bubble burst may be ready to put their homes on the market.
Inventory is also a problem across the state, according to the NWMLS. Across the 23 Washington counties it serves, home sales in January were down 9.3 percent while the median price of the homes sold rose 11 percent to $363,500.
“The decline in sales last month can’t be blamed on the holidays, weather or football. It’s simply due to the ongoing shortage of housing that continues to plague markets throughout Western Washington,” said OB Jacobi, president of Windermere Real Estate, in a news release accompanying the data.