Growing demand. The pandemic is allowing more people to choose where they want to live (with many working from home now permanently). And we have seen an incredible surge in buyers relocating from throughout the country…with the highest numbers coming from California and Seattle.
Low-interest rates and expanding loan limits. Rates averaging around 3.0% for the majority of the year, and Fannie Mae raised conforming loan limits in Whatcom County to $647,000 for conventional loans.
What do we expect for 2022?
We are predicting home appreciation of 10-14% this year, with the bulk of that appreciation occurring in the spring. We expect home sales in total units to be slightly down, but that is coming off of a record sales year. The market will continue to stay strong, due to a few factors that are impossible to ignore.
Most notably, the monthly supply of inventory is staying around 1 month, month after month. So the backlog of buyers is still tremendous. So demand heading into the spring will certainly outpace supply. This is going to lead to multiple offers across most price points.
See chart below of the last 3 years in Whatcom County. Note the light green (homes for sale). The light green needs to jump up substantially verse the pendings and the solds, to even get us back to 2 years ago (which was still a seller’s market!).
Here is another chart showing the supply of inventory. Decembers numbers will be out in the next few days, but they are still the same. Inventory has sunk down to 1 month supply, and that should be how we enter the spring.
So, expect another spring frenzy.
But a few factors should create a more balanced market by late summertime.
- New construction (particularly in the east and north county) will be increasing, giving more buyers a slight increase in supply to consider.
- The fed has made it very clear they plan to raise interest rates several times in 2022. This will no doubt affect affordability for both first-time and move-up buyers.
- With forbearances & Covid stimulus money drying up, more homeowners that have been in distress will need to sell in 2022, though, very few are likely to make it to foreclosure. Even if they are not making payments and are in “pre-foreclosure”, the vast majority of these homeowners have enough equity to sell quickly in this market.
A late-summer sales slow down may not occur in all segments of the market. Our last prediction is that the high-end in Bellingham ($1 million+) should continue to be a growing segment of the market. And should see record sales numbers in 2022. The majority of the relocation buyers are coming from California and Seattle, bringing equity with them that brings many into this price segment. And Real Estate investors are still bullish on Real Estate in the Pacific Northwest. Rental prices have been steady and increasing historically, and Real Estate remains the safest hedge on inflation.
So it remains an excellent time to sell -now, or in the spring. There is no bad time to sell in these conditions!
So when buying….conditions will remain very competitive- really a frenzy market through the spring. Meaning you absolutely need to be ready to go…and you need a GREAT broker representing you to make it happen. At JLS Bellingham, we are using multiple techniques & tools to help our clients make their move.
And by the late summer, we believe (and hope) to see a slightly more balanced market.
We would love to hear from you with your Real Estate needs.
By Paul Balzotti, Broker-Owner of John L Scott Real Estate