Whatcom home values make big jump – is there an end in sight?

Home values in Whatcom County appreciated 10 percent in the third quarter, according to a federal report.
Home values in Whatcom County appreciated 10 percent in the third quarter, according to a federal report. pdwyer@bellinghamherald.com

Home values took a big jump last quarter in Whatcom County, suggesting that low supply and high demand continue to drive the local market.

Whatcom County homes appreciated 10 percent in the third quarter compared to a year earlier, according to the Federal Housing Finance Agency. That increase ranked Whatcom the 17th highest among U.S. metro areas.

Several metro areas in Washington state landed in the top 20. Seattle ranked second with a 12.2 percent increase, followed by Tacoma, which ranked eighth at 10.9 percent. Bremerton ranked 12th with a 10.7 percent increase.

It’s a trend that won’t be letting up in the near term, said Peter Orser, interim director of the Runstad Center for Real Estate Studies at the University of Washington. He said supply is being constrained in two ways. The first is new home construction is not keeping up with demand. As home prices go up, that’s led to a second problem where homeowners who want to move up or downsize aren’t putting their home on the market until they find a place they can buy.

“Even if they can afford (a new home) because of the increased equity, they can’t find one,” Orser said, noting that the three counties around Seattle have a one-month supply.

In October Whatcom County had a housing inventory of 2.7 months, according to the Northwest Multiple Listing Service. A balanced market between buyers and sellers typically has a six-month supply of homes for sale.

The five-year trend has also been strong for Whatcom County and much of Western Washington. Since the third quarter of 2011, homes have appreciated 25.1 percent in the county. In Seattle, the five-year appreciation increase was 49.2 percent.

Year-over-year home appreciation in Whatcom County had been rising around 6 percent in recent studies. Orser said he expects the 10 percent jump in the third quarter to be a blip. Historically home appreciation in Washington is around 4 percent, so at some point down the road he expects a correction will take place.

Dave Gallagher: 360-715-2269, @BhamHeraldBiz