One important thing to consider is that the conversation between home sales, and home values are two sets of numbers, and each has its own dynamics.
In June of 2022, home sales were down year over year, compared to June of 2021 (for both Bellingham and Whatcom County), but home values were up 15-20%.
And June was the peak for home pricing for 2022 thus far.
Interest rates began to rise early in the year. In April and May, we reached the peak of the market frenzy, as inventory was at record-low numbers for the spring…and while rates were rising, many buyers were trying to lock in a home before rates rose even higher.
And higher they went. We have gone from a 3.0% interest rate to 6.75% over the last 8 months. That has slowed down sales for Bellingham homes by a substantial margin.
You can see in the charts below the peak in Bellingham home prices in June. You can see that home prices are still up 13.2% year-over-year, but down about 7% since June.
Whatcom County home prices are up year-over-year at a more modest rate of 8.5%. But also down 6% over the last 4 months.
Home Value Outlook for Bellingham and Whatcom County
So what is next for home values in Bellingham and Whatcom County? There are two metrics to consider (and neither one is home sales).
One is the months’ supply of inventory (supply and demand), and the other is interest rates.
Based on supply and demand in our market, we are on solid footing. We still have a 2-month supply in Whatcom County (less in Bellingham).
In normal interest rate conditions, that would indicate home values are still rising. Normally, home prices don’t fall until you near a 5-month supply.
But see our current supply below.
Notice how the supply of available homes is still much lower than in 2019 and 2020, and those were strong markets with home values appreciating.
But, due to rates rising dramatically over the last 9 months, and rates now sitting at near 7%, there is still downward pressure on home values. That means it is a relatively balanced market. A seller’s market is based on a lack of supply, but a buyer’s market is based on higher interest rates (and a constant flood of negative news surrounding housing). We’re currently experiencing both.
So there is a decent chance home values in Whatcom County and Bellingham will stay soft through the season and potentially fall further. But be aware that our market can rebound fast when rates drop again.
So, given all of this information, when is the right time to buy a home? When rates are higher, but you have more negotiating power? Or when rates are lower, and the market tightens up again (and prices likely start increasing)?
We still believe the best time to buy, is when it’s best for you.
Reach out to us directly if you have any questions about buying or selling.