Whatcom County home values jumped in the fourth quarter, taking part in a state and national trend of getting back to levels last seen before the Great Recession.
Local home values appreciated 7.8 percent in the fourth quarter compared to a year earlier, according to a new report from the Federal Housing Finance Agency. It is the sixth consecutive quarter that Whatcom County has posted a year-over-year increase of 5 percent or more, with this latest jump the highest.
In the past five years, Whatcom County’s home values have risen 12.9 percent.
The Federal Housing Finance Agency uses home purchases and refinance data from Fannie Mae and Freddie Mac to come up with its all-transactions home price index for metro areas.
Two key factors seem to indicate the current housing bubble won’t burst soon: local inventory is much tighter, and it’s much harder to qualify for a home loan.
Home values rose across Washington state, with three metro areas (Tacoma, Bremerton and Seattle) landing in the top 20 of highest home appreciation across the U.S.
Washington state overall ranked third in home appreciation at 10.7 percent, tied with Idaho and behind Colorado (up 10.9 percent) and Nevada (up 12.7 percent).
Across the U.S., home values appreciated 5.8 percent. The national index is now above the previous peak, set in the first quarter of 2007.
“Instability in financial markets did not seem to put much of a drag on home prices in the fourth quarter,” said FHFA Supervisory Economist Andrew Leventis in a news release accompanying the data. “The fourth quarter increase for the U.S. was in line with the extremely steady — but historically elevated — appreciation rates we have been observing for several years now.”
Could rising values mean a bubble is coming like 2007? Lylene Johnson of The Muljat Group in Bellingham doesn’t think so, but she does have concerns.
She points to two important differences compared to nine years ago: local inventory is much tighter, and it’s much harder to qualify for a home loan. Those make it unlikely the current housing bubble will burst, said Johnson, who regularly puts together reports analyzing the local market and has been studying it for more than a decade.
But she is concerned that loan products similar to ones offered 10 years ago may creep back into the market. Some of those products back then led to unqualified people getting home loans, which was a factor in the housing problems of the Great Recession.
“It’s something we’ll need to keep our eye on,” Johnson said.