With home prices skyrocketing in the first 4 months of 2021 in Bellingham and throughout Whatcom County, many of our clients are asking when we expect to see a slowdown in the rise of home prices. Right now, we can look at seasonal cycles, and assume to see increased re-sell inventory this summer, and therefore expect a slowdown in the multiple offer frenzy in the coming months, as buyers have more options to consider.
Looking more long term though, the major concern for housing affordability for our market is supply. And supply starts with new construction.
I took a look back at the last 15 years, and then the last 5 years of new construction starts in Bellingham and throughout Whatcom County. New construction is so critical because our population continues to increase, and demand has been growing due to remote workers moving into our market (out of Seattle and out of California predominantly). And supply and demand is the key factor for home values.
See chart below for the last 15 years new construction (Single-Family and Condo) sales in Bellingham.
Note the large gap during the Housing Bubble of 2006-2008. And compare that to 2021, where the light green (new construction For Sale) is almost out of sight.
Now let’s look closer at new construction throughout the entire Whatcom County over the last 5 years.
This is where you can really see it. When the pandemic began, new construction basically came to complete stop. Meanwhile, home buyers began to jump back into the housing market with a fury-like demand beginning in late summer of 2020.
We are now at the point where pending sales of new construction are nearly doubling the pace of the supply available. Meaning we are virtually sold out of new construction single family homes at this time.
There is some relief in store. Ferndale continues to build with several new developments in the works. Blaine has a small new construction project available now, and hundreds of new construction homes are planned over the next 2-3 years. Lynden and Everson have several projects underway, and even Maple Falls has a large new development planned.
But in Bellingham proper, the majority of the current new construction is apartments. On the Northwest MLS, Bellingham has 2 For Sale new construction homes (both near $1 million), and only 11 single-family new construction pending sales.
In the short term of 2021, supply and demand will continue to be an issue causing upward pressure on pricing –throughout the county. Particularly if interest rates remain low (currently near 3.0%).
Forecasting into the future, new construction starts throughout Whatcom County will help a great deal with the lack of supply, and perhaps bring us into a more balanced market in the years to come.
But in Bellingham, single-family new construction is well behind demand, with no relief in sight. To me that is a clear sign that Bellingham home values will continue to rise in the short term, and a lack of supply should continue to keep home prices on solid ground.
-Paul Balzotti, Broker/Owner of John L Scott Real Estate
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