There are more Whatcom homes on the market, but closing the deal may be tougher

August 1, 2022, 7:00 AM

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Those looking to buy a home in Whatcom County are finding more choices this summer, but they still may have trouble closing the deal at current prices and with higher interest rates.

The number of active listings in Whatcom County has more than doubled in the past two months, rising from 345 houses and condominiums in mid-May to 740 for the week ending Monday, July 25, according to Northwest Multiple Listing Service data collected by Windermere Whatcom.

Inventory is also building in the city limits of Bellingham. Local appraiser Braden Gustafson posted data on social media showing 215 homes were for sale in Bellingham on July 25, up from 36 in February and the highest total since October 2019.

“Buyers finally have some options and they don’t have to buy homes like they are at an auction house,” said Gustafson in an email, noting that only 40% of homes were bid up so far in July, about half of what it was when the market was really hot.

The buildup in inventory the past few months has changed strategies for buyers and sellers, said Jason Lee, a broker at Windermere. Instead of just looking at what similar area homes sold for and naming a price when the market was hot, sellers are now competing with other neighborhood homes that are currently on the market.

While there can still be multiple offers on a home that’s for sale, Lee said buyers can feel more comfortable making contingency offers like asking for a home inspection, something that was harder to do during bidding wars a year ago.

The buildup of inventory has come as interest rates rose for 30-year mortgages rose from around 3% at the beginning of 2022 to the current rate of around 5.5%. That’s made homes less affordable for those who take out loans to make a purchase.

The number of Whatcom County homes being sold has remained steady, with year-over-year sales down 6.9% in June but higher than May 2022, according to the listing service data. The median price for those houses and condos sold in Whatcom County last month was $610,000.

The number of homes coming on the market has increased, perhaps as sellers try to time the market or are ready to move after more than two years of the COVID-19 pandemic, Lee said.

The rise in interest rates has slowed down the year-over-year price increases, but they haven’t started falling. Gustafson estimated that the home price per square foot was up 9% year-over-year in June.

“I don’t envision values dropping. The market is not as hot, but homes are still selling. As we exit summer we will likely see a decrease in the median price due to seasonal patterns, which is typical,” Gustafson said. “But the months of supply (currently around two months) would have to increase substantially for a meaningful loss in value for homes in the area.”

While tough to predict where things go next, as the Federal Reserve continues to hike benchmark overnight interest rates, 30-year mortgage rates will likely also go up, said Paul Cover, real estate loan origination supervisor at WECU. That could make adjustable rate mortgages more attractive as the year goes on and create more choices for buyers looking for less competition.

The Federal Reserve announced its latest hike in interest rates on Wednesday, July 27, raising rates by 0.75 of a percentage point. Following the increase, mortgage rates dropped because the rate increase was already priced in, according to Peter Boomer, executive vice president at PNC Bank, in a July 28 article posted online by NextAdvisor. Boomer also said in the article that mortgage rate volatility would not be surprising as the U.S. navigates bringing down inflation and trying to avoid a recession.

Whatcom’s buildup in the number of homes for sale appears similar to national trends. According to data on the website Calculated Risk, inventory across the U.S. has more than doubled since March but remains historically low.