this the right time to sell?
Stacee Sledge, for The Bellingham Herald
bubble, toil and trouble.
We hear a lot
these days about a national real estate bubble.
But before you capitulate to increasing reports of a
potential market burst, look at Whatcom
County’s real estate records — and take heart.
After two or
three years of record-low
interest rates, resulting in record-high new construction, home
sales in Whatcom County show no sign of slowing. Market value, too, is holding strong
— the area has seen
appreciation in housing prices every year of the past 21, when
they began being tracked, except in 1991, according to Realtor
Larry Humes of John L. Scott Real Estate.
Realtor with Muljat Group Realtors, underscores the strength of
our local real estate market. “This is an excellent time to
sell a home in Whatcom County,” he said, “and that’s especially true for
rates have been at historic lows for the past few years. They
have begun to creep up, but are still incredibly attractive to
buyers may be motivated by a fear of steeper interest rates by
summer’s end, when many analysts believe the Federal Reserve
will begin raising interest rates — a situation that will
affect real estate nationwide.
their motivation, “we have a record number of buyers looking
in Bellingham, and a much lower than normal inventory of homes to choose
from,” said Ghio. “When demand exceeds supply, prices have
for such a limited inventory of homes on the market right now is
that so many homeowners took advantage of the low interest rates
and refinanced their homes over the last couple of years,” he
people made a commitment to stay in their homes for a while to
benefit from the lower payments, and to recover the upfront
costs of refinancing. As time goes on more people will be ready
to sell, bringing supply more into balance with demand.”
reason for the continued clampdown on inventory is the
increasing popularity of Bellingham. “It seems like every magazine you open has
Bellingham on a list of top places to live, retire, raise a family, golf,
whatever,” said Ghio. “Our prices seem high to us, but
relative to the rest of the West Coast we’re still a
an influx of buyers willing to plunk down excess equity on Whatcom
Wielick, vice president and manager of Washington Mutual Home
Loans Center, agrees that interest rates remain near historically low
levels. “Back in June of 2000, the average 30-year conforming
fixed rate was 8.375 percent, with no loan origination fee,”
he said. “In May of 2003 it was 5.25 percent with no loan
origination fee. That rate today is 6.375 percent.” Even with
recent upward creeping, Wielick said his office currently has
more than 150 customers — many of them first-time homebuyers
— who are pre-approved and working with Realtors to buy new
homes. “The purchase market is still incredibly hot, and
although the refinance activity has slowed significantly, it
still accounts for about 25 percent of our business.”
to say that higher interest rates don’t have an effect. As an
example of the power lower interest rates can have on a
customer’s ability to purchase a home, he explains: “At a
principal and interest payment of $1,199 per month, a homeowner
could afford to borrow $200,000 at today’s interest rates of 6
percent. At a rate of 8.25 percent, which was common for much of
2000, the homeowner could only borrow $160,000 and maintain that
same $1,199 payment.”
Ghio, economists for the National Association of Realtors expect
that mortgage interest rates will rise above 6.25 percent by the
end of this year, with some predicting rates reaching 6.4
percent and others as high as 7 percent.
numbers are still below Wielick’s example, and shouldn’t
cause a significant cut in buyers’ borrowing power in the near
future. Our local market may
dampen slightly, but those in the real estate industry say it
will not be distinguished.
ago it wasn’t uncommon to do a comparative market analysis for
a seller who had been in their home for five or six years, and
find that the value had barely changed from when the home was
purchased,” said Ghio. But home prices are now rising at a
Michael Barr lived in their cozy Columbia cottage for just more than five years. The couple recently
decided to sell for a variety of reasons, but their main motive
was a common one: space. They found a perfect next property, and
wasted no time having their Realtor plant a “for sale” sign
in their yard in December.
While it used
to be typical for a house to be on the market for 90 days before
a “Sold” banner was slapped across the “for sale” sign,
the Barrs saw an immediate bidding war on the first day their
house hit the market.
in the first few days on the market have become routine,
according to Ghio. Aggressive buyers will put an “escalator”
clause in a purchase and sale agreement, automatically
increasing the purchase price above the next highest offer.
Homes frequently sell above the listed price, sometimes for
home from work that day to a half a dozen people staring in our
windows,” said Michael Barr. “Our place hit the market on a
Tuesday and we got a full-price offer on Wednesday.”
Realtor suggested they accept offers through the following
Sunday, and then make their decision. They ended up with eight
offers, four of them with escalation clauses.
clause worked against the other, which drove the price up, up,
up,” said Barr. “It was pretty astounding. One potential
buyer even had their agent tell us that they would help us
The offer the
couple chose included a massive nonrefundable earnest money
check and waived every contingency. The buyer also agreed
to let the couple stay in the home rent-free for a month after
closing, while they waited to finalize the close on their next
“At the end
of it all, we sold the house for nearly double what we bought it
for and got more than 112 percent of asking price,” said Barr.
It was more
than the couple dreamed they’d see for their beloved bungalow.
“Truly ridiculous,” said Barr. “But it was the only way we
could have gotten into our new place — we needed every
course, is not to a buyer’s advantage.
a time for either side to have amateur representation,” said
Ghio. “More than ever, it’s important that both buyer and
seller have an experienced, professional Realtor on their
Ghio said he
believes that while it’s a great time to sell, there’s no
cause for panicking and selling “before it’s too late.”
going to continue moving in and I think prices are going to
continue to rise,” he said, “just maybe not as steeply as
they have been lately.
will cool down and marketing times will lengthen, but I think we
will still continue to see high numbers of sales and strong
appreciation. Bellingham is just too nice an area to stop growing.”