A big slowdown in home sales at the end of 2018 is suggesting Whatcom County’s real estate market is changing for 2019.
The median price for homes sold in Whatcom County was $382,800 in 2018, a 12.2 increase compared to the end of 2017. However home sales were down 6.6 percent, with much of that slowdown happening in the final three months of the year, said Troy Muljat, manager broker of Muljat Group Realtors. Muljat puts together a quarterly real estate report based on data from the Northwest Washington Multiple Listing Service.
“The slowing has started,” Muljat said, adding that residential real estate is now heading back to a normal market after three years of “unsustainable” activity.
The slowdown in sales during the final three months of 2018 was dramatic, happening at a time when mortgage interest rates were rising. Across Whatcom County homes sales in the fourth quarter were down 21.6 percent, Muljat said in an interview Thursday. In Bellingham, the drop was 22.2 percent.
Muljat believes rising interest rates had a direct impact. At the beginning of 2018 a 30-year mortgage rate was at 3.99 percent, according to Ycharts.com. By mid-November, the rate was at 4.94 percent.
The rise in median home prices, particularly in the fourth quarter, also has more to do with a changing market. According to Muljat’s data, the number of homes sold for more than $1 million increased by 18 percent in 2018, while the number of homes sold for under $400,000 decreased by 26 percent.
Home sales were down in all of Whatcom County’s major communities in 2018. Lynden had the biggest drop, down 16.9 percent compared to 2017. Muljat said Lynden’s home sales were actually comparable to 2016, suggesting that 2017 was an unusually strong year.
Bellingham tallied 966 home sales last year, the first time it has been under 1,000 units in three years, Muljat said.
What does this mean for 2019?
Darin Stenvers, a branch manager at the John L. Scott Bellingham office, agrees that change is happening, leading to what he thinks will be a more balanced market between buyer and seller. He expects a slow winter period where inventory builds and that the spring/summer will be active because there are more choices for buyers than in previous years.
“Buyers will also be in a better position because there won’t be as many multiple offers,” Stenvers said Thursday in an interview with The Bellingham Herald.
What happens at a national level will continue to impact the local real estate market, Muljat said. With the recent stock market volatility, mortgage interest rates have dipped. If the stock market continues to be volatile, that could keep mortgage interest rates low, increasing buying power for some. A volatile stock market may also attract more buyers to invest in real estate, Stenvers said.
If the economy slows, or interest rates rise, neither Muljat or Stenvers think there will be a real estate bubble burst like 2008. The difference in today’s market is inventory remains very low and lending standards are stricter now, suggesting a soft landing, Muljat said.
If it ends up being a more balanced market, it’s good news for buyers.
“A return to normal means buyers no longer have to chase the market,” Muljat said. “That’s a little less stressful.”