As interest rates rise, here’s what happened to home values in Whatcom County
Whatcom County home values continued to rise substantially last spring, but the huge jumps are probably over for now.
Home appreciation in the area rose 24.8% year-over-year in the second quarter, according to data from the Federal Housing Finance Agency. The report is based on an index that focuses on purchased and refinanced mortgages.
The year-over-year increase ranked Bellingham 53rd highest among 265 metro areas as most of the nation experienced big jumps in home appreciation. Whatcom County ranked second among Washington state metro areas, just behind Spokane, which ranked 51st highest. Seattle (up up 23.1% year-over-year), Mount Vernon (up 22.7%) and Olympia (up 22.6%) were close behind.
While the rise was similar to previous quarters, increasing interest rates are putting a damper on home sales, which in turn will impact third-quarter home appreciation.
“Housing prices grew quickly through most of the second quarter of 2022, but a deceleration has appeared in the June monthly data” said William Doerner, supervisory economist for the agency, in a news release accompanying the data. “The pace of growth has subsided recently, which is consistent with other recent housing data.”
Prices in the area have been going down as sales have slowed and inventory is finally rising. Braden Gustafson, a local appraiser, estimated the median price of homes sold in the first part of August was down about 10% from the peak earlier this year.
“It looks like it is more than just statistical noise,” Gustafson said in a post on Twitter.
In an email Gustafson said the numbers tell him there is a real price drop since the frenzied spring market, but that the year-over-year change is still positive for homeowners.
“I can see that number going negative in the spring of 2023 because we won’t have that same spike in prices. Homes are just not affordable because mortgage rates are too high,” Gustafson said.
So far this summer, there hasn’t been a sharp increase in new listings. Inventory supply has risen to 2.5 months, which is higher than the spring but is still technically a seller’s market. A balanced market tends to have a home supply of between 4-6 months.
“We shouldn’t see a serious price drop unless that (inventory) increases substantially,” Gustafson said.
In the federal report, the top six spots on the biggest increases list were metro areas in Florida. The Fort Myers metro area topped the list with a 36.2% increase.
This story was originally published August 30, 2022 at 11:35 AM.
