Will rising interest rates finally cool off a hot Whatcom real estate market?
Whatcom County’s real estate market has a “where do we go from here” feel to it heading into the peak home-buying season.
The first-quarter numbers locally indicate more of the same: With very few homes on the market, prices continue to skyrocket as many buyers resign themselves to offering more than the listing price in order to have a chance of being the top bidder.
Interest rates are on the rise, however, with a 30-year mortgage loan rate recently passing the 5% threshold. That’s a level not reached since 2011, except for a couple of days in 2018, according to a Tuesday, April 5, MSNBC article. The 5.02% on April 5 is up significantly from a year ago when it was at 3.38%.
Rising interest rates generally put a damper on a housing market as some buyers who rely on mortgages get priced out of the market. Will this increase throw some cold water on what has been a hot Whatcom real estate market?
Given how few homes are on the market despite skyrocketing prices, it’s unclear whether things will cool, said Troy Muljat, owner and president of Bellingham’s Muljat Group Realtors.
“This is such a unique time, I don’t know what to expect,” Muljat said in a telephone interview with The Bellingham Herald.
His report on the first quarter, which uses data from the Northwest Multiple Listing Service, shows what new heights prices have reached in Whatcom County. The median price of Whatcom homes sold in the first three months of 2022 hit $600,000, a 20% increase compared to a year earlier.
In Bellingham, the median price for homes sold hit $689,000, up 13.4% year over year. Half of the homes sold for more, half for less.
Muljat said several factors are keeping the real estate market hot even with higher interest rates. This area continues to attract buyers willing to make all-cash offers, so interest rates would not impact them.
Another factor: If there aren’t many homes on the market, it doesn’t take many buyers to get into bidding wars. In past years, spring was a time when hundreds of homes would hit the market as the weather improved. On Wednesday, April 6, there were 32 homes for sale in Bellingham, according to the multiple listing service data. Only five of them were for under $500,000; two of those five had less than 1,000 square feet of space.
“This continues to be a story about supply and demand. There is very little inventory, so it is just a battle for buyers,” Muljat said.
Low inventory and rising prices for homes mean more people are staying in the rental market. Even with all the apartment construction around Bellingham in the past year, vacancy rates remain low. Despite several student housing facilities recently opening around Western Washington University, single-family homes that used to be rented to college students still have few vacancies, Muljat said. Those former student single-family homes are more likely to be rented to families who aren’t able to buy a house yet, he said.
A tight market in Bellingham also means rising prices in other Whatcom County communities. Each community experienced double-digit sales price increases in the first quarter. Ferndale had the biggest jump, rising 29.6% over the past year to a median price of $659,500.
This also means homes don’t stay on the market very long. The average number of days on the market for a home in the first quarter was lowest in Sudden Valley (11), Bellingham (18) and Lynden (20).
