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With rising interest rates stymieing buyers and not much inventory for lower-priced homes, the Whatcom real estate market slowed down last month.
The number of Whatcom County houses and condominiums sold in October totaled 313, down 8.5 percent compared to the same period last year. The median price for those sold was $369,000, up 16.8 percent compared to October 2017. That’s according to the latest data from the Northwest Multiple Listing Service.
The drop in sales was even stronger in the Seattle area, according to the data. King County house and condo sales in October were down 17.5 percent year-over-year, while Snohomish County was down 20.7 percent. Skagit County was down 10.5 percent.
The slowdown may represent more of a balancing of the market, said Darin Stenvers, Bellingham branch manager at John L. Scott in an interview with The Herald last week. He noted that there was more activity among the “move up” buyers who are buying bigger homes after selling a starter home. That could help explain Whatcom’s big one-year jump in the median price of homes sold last month.
The recent rise in interest rates are impacting sales, especially in the lower end of the market, said Troy Muljat of Muljat Group Realtors. He noted the half-point rise in interest rates not only impacts buying power for the purchase, but the monthly mortgage payment.
“It is a definite headwind right now,” he said.
This slowdown can be helpful in creating more inventory in areas like Bellingham. The shortage remains critical: In looking at the 154 homes for sale in Bellingham last week, only 16 were available for under $350,000. The median price for the homes for sale in Bellingham was $599,450. That’s actually down from $617,000 two weeks earlier.
That kind of shortage of homes for under $350,000 is making the rental market a stronger option, even as rental prices remain high. According to a study by HomeArea.com, Bellingham is a better place to rent than buy.
The study used 2017 U.S. Census data to determine a price-to-rent ratio, with any area under 20 being a good place to buy. Bellingham’s ratio was 32.2, putting it in the better-to-rent category, along with Kirkland (34.2), Bellevue (38.5) and Seattle (39.1). The best places to buy in Washington cities (with a population more than 60,000) is Kennewick (ratio of 20.6) and Spokane Valley (21.6).
November through February tends to be a slower time for the real estate market as people turn their attention to the holidays. That is when Stenvers expects inventory to start building again.
By the time spring rolls around, he expects the market, which has leaned toward sellers the past couple of years, to become more balanced. The demand will remain, because there are still many buyers interested in this market, he said.
Muljat said it may depend on what happens to the interest rate. If the U.S. Federal Reserve continues to raise rates to keep inflation in check, Muljat expects it to further slow the real estate market. On Thursday the agency decided to keep the rates the same, but is leaning toward raising them in December, according to an article in The Washington Post.