Rising interest rates usually cool a housing market. Here’s what’s happening in Whatcom
Despite rising interest rates, home prices in Bellingham and Whatcom County continue to increase at what is considered an unsustainable rate.
The median price for a home sold in Bellingham was $738,500 in May, according to Northwest Multiple Listing Service data compiled by local appraiser Braden Gustafson. That’s up 28.1% compared to May 2021. The average days on the market for Bellingham dropped to eight days, the lowest its been in the past 20 years, Gustafson said.
The continued surge in prices is happening even though interest rates for 30-year fixed mortgages are above 5%, up from around 3% a year ago.
“It is somewhat surprising that prices aren’t slowing down at all, but there is still so few homes on the market, so that is the cause,” Gustafson said in an email.
The rise in home sale prices is impacting the overall home appreciation market, according to a new federal report. Home values in Whatcom County were 24.8% higher at the end of March compared to a year year, according to Federal Housing Finance Agency. The report is based on an index that focuses on purchased and refinanced mortgages.
Whatcom County’s home appreciation increase for the first quarter was the 46th highest among 268 metro areas. Several Washington state metro areas were high on the list, including Mount Vernon/Anacortes (33rd highest, with a 25.9% increase) and Spokane (35th highest, with a 25.6% year-over-year increase).
“High appreciation rates continued across housing markets during the first quarter of 2022,” said William Doerner, supervisory economist in the housing agency’s Division of Research and Statistics, in a news release accompanying the data. “Strong demand coupled with tight supply have kept prices climbing. Through the end of March, higher mortgage rates have not yet translated into slower price gains, but new home sales have dropped during the last few months, with a significant falloff in April.”
For Whatcom County, home sales did drop 12% year-over-year in April, following the national trend. However, the average supply remained at around one month; typically a six-month supply is needed for a balanced market.
Gustafson expects price increases to moderate later this year, but it will be slow until inventory rises.
“Affordability is very poor right now compared to other periods and it isn’t sustainable, but there are still so few homes on the market that it is still a seller’s market. We are seeing very small signs of things slowing down,” Gustafson said.
