Northwest Living | Bellingham Real Estate Market

Bellingham, WA -  With a strong local economy and favorable home buying conditions this  will prove to be a good time to buy or sell a home. There’s just too many economic conditions in place for home buyers, that are positioned to purchase a home, to ignore any longer.

Now is a good time to buy and sell real estate in Whatcom County, no matter what people may be hearing about the national market. The national media has focused too much on negative things that they only contribute to housing and economic problems instead of help. Thats the news cycle in general though, they tend to focus on negatives and rarely talk about the positive things in life. It’s unfortunate but very much true.

The Puget Sound economy is strong, unemployment rates are low, interest rates are low, local housing inventory is good and the return to good safe mortgage loans are back. It’s not a bad time to sell, especially if sellers will be turning around and buying, but sellers need to be flexible at the negotiating table in this type of market. With rental prices climbing over the last two years with less buyers in the market, It makes more sense to buy then rent currently. Coupled with the fact that home prices have plateaued or declined bodes well for home buyers.

I would have to agree with so many that a lot of the housing problems could be pointed firmly at the media, who are confusing the public by publishing headlines designed to appeal to emotions and reports that use local and national information to distort the truth at times. For them to report about the high number of subprime loans in the south and some how use that for the Northwest is confusing. The Northwest never got into the subprime loans on the scale of a lot of southern states, so no wonder we are doing so much better. But unfortunately that news is not getting out as much as the bad news from other parts of the country.

Limits on Federal Housing Administration loans were recently raised, which should give buyers more homes to choose from at favorable mortgage rates. Hopefully a bill that would lower the down payment requirement for FHA loans from 3 percent to 1.5 percent, making the loans more accessible to first-time buyers gets passed.

This past week both Fannie Mae and Freddie Mac were allowed to lower the amount of funds they kept in security from 30% down to 20%, freeing up two hundred billion for mortgages as well.

The subprime mortgage mess has made lenders return to “old school” restrictions and requirements. Buyers may have to get help from family rather than use a riskier loan. I think in the end it will be much better for buyers who use discipline in budgeting and learn to save for a down payment instead of securing no down payment loans of the past which teaches buyers nothing.

This “normalizing” of the market gives people a chance to take a few months and get their finances in order before purchasing a home.  I think if buyers put more of their own hard earned money in to a home, they will become less likely to fall behind in payments and go into foreclosure.

Jerry Campbell - Muljat Group - Bellingham WA - Bellingham Homes For Sale

The US Government announced Wednesday that it is freeing up billions of dollars at Fannie Mae and Freddie Mac, so that the two companies can help homeowners refinance mortgages on the brink of default. This will have a huge impact over the next year to help homeowners get out from under these tough loans of the past.

The Office of Federal Housing Enterprise Oversight, which oversees the government-sponsored companies, unveiled a plan to ease mandatory capital requirements now in place. It said the plan is expected to result in an immediate infusion of up to $200 billion into the market for mortgage-backed securities.

Now nearly $20 billion for the two - will be reduced by a third under the new deal. The freed-up money will go toward buying mortgages of struggling homeowners to enable them to refinance into more affordable loans.

The announcement is part of a large number of government actions revealed lately aimed helping the financial markets and protecting the economy from recession. The capacity of Fannie and Freddie will permit them to do more in the jumbo temporary conforming market, subprime refinancing and loan modifications areas.

These type of announcements don’t get much headlines with the general public, but are usually the type of decisions that make the most impact. If your a homeowner in our Northwest corner and have been thinking of refinancing or buying a home…there is good news on the horizon. Now we just need a little bit of a trickle down effect from the three quarters percent drop in rates, to home loans.

Once the housing market can get some footing under neath it by stopping the deflation of housing values, is really when we will see a recovery. This news today with the freeing up of capital from Fannie Mae and Freddie Mac was the kind of stimulus that might get the housing market going again.

Jerry Campbell - Muljat Group - Bellingham, WA - Bellingham WA Real Estate

The Fed’s action lowers the funds rate to 2.25 percent, the lowest since February 2005, and comes two days after the central bank announced the latest in a series of emergency measures to stem a fast-spreading global financial crisis. The Fed has now cut rates by 3 percentage points since mid-September, including 2 points since the start of the year. 

In recent days, the central bank has also offered to help financial institutions as well by providing access to liquid funds. The central bank is pulling out all the stops to provide liquidity to financial markets and put a floor under an economy many analysts believe is in recession. 

The Fed, fearing financial markets would freeze up and send the economy into an sharp downward spiral, has offered cash auctions and direct loans to financial institutions, opening those liquidity avenues beyond the banks that normally deal with the Fed to include other Wall Street firms. 

The good thing is that the global economy is doing pretty good and especially in China where they are experiencing a boom. Our nations steel industry is actually on a rebound and looks to do pretty good. 

Jerry Campbell - Muljat Group - Bellingham WA - Bellingham Real Estate

Puget Sound - It’s the kind of house that a year or two ago would have been snapped up in days: a refurbished rambler in a woodsy residential neighborhood minutes from downtown.

The asking price: $559,000.

But after seven weeks, the sellers had not received a single offer on their Wedgwood home.

The sellers really believed there would be no problem selling, But the whole feel of the market has changed. They might have to drop the price.

These Puget Sound sellers, along with local real estate agents and economists, wonder whether sluggish sales are part of the usual winter slump or a sign that Seattle, a perennial most-livable-city contender, is joining the rest of the country in declining home sales. The question has put many locals on edge.

Right now there’s not that urgency among buyers to pull the trigger, is the feeling among many local real estate agents. We should start to see what will happen early this year.

If sales are sluggish during the traditionally hot-selling months of February through April, then people will have a better idea whether Seattle has joined the national trend.

Of 20 major U.S. metropolitan areas, all but three markets; Seattle; Portland, Ore.; and Charlotte, N.C., experienced a decline in real estate values this October compared with last October, according to the Standard & Poor’s/Case-Shiller composite price index.

Home prices have fallen most in the Midwest, Southwest, Florida and California. In Los Angeles, prices fell 8.8 percent; in New York, 4.1 percent.

Seattle prices increased 3.3 percent, but that was the smallest year-to-year rise for the city in more than a decade. The annual appreciation in Seattle has been slowing for more than a year and a half.

Some economists say it’s only a matter of time before Seattle joins the national slump. Although the city experienced a year-to-year increase, October prices fell 0.9 percent from September, the third consecutive monthly decline.

Gov. Chris Gregoire told residents not to be affected by the gloom. Bad news elsewhere, she said, doesn’t have to translate into bad news here.

“There’s no real reason for it to slow in our state, but for the fact that people are watching what’s going on around the national economy,” Gregoire said during the unveiling of a budget proposal in Olympia.

Seattle, Portland and Charlotte have bucked the trend partly because each has a relatively healthy local economy and all three continue to draw newcomers, which keeps demand steady.

Seattle has three ingredients that work together to keep home prices high, according to Seattle-area real estate blogger Larry Cragun: “lakes, mountains and liberals.”

The lakes and mountains don’t need explaining. The liberals, Cragun said, have created such an anti-development atmosphere that available land for building homes is extremely limited.

“When you only have a certain amount of land to build on, the value of that land tends to run up,” said Cragun, who has been in the local real estate and mortgage business for three decades and blogs at Real­ Esta­teUndressed.com. But Seattle has “experienced the worst of it” already, he said, and will rebound soon.

As for the Dittmaiers, they continue to hold their front door open to prospective buyers.

The holidays have been rough. In addition to the usual hustle and bustle, the Dittmaiers and their two young children have been busy packing their belongings. They have already purchased a new house nearby.

The family has been moving to the new place little by little. But the transfer won’t be complete, Kristen Dittmaier said, until their old house sells. Not to mention that the couple soon will be forced to make two mortgage payments if the Wedgwood house remains unsold.

Meanwhile, Dittmaier said, she has not seen the latest home-price report in the newspaper. And it’s just as well: “I don’t need to read a report to know houses are not selling as quickly as they used to.” via Herald net

Bellingham, WA - Even though the economy seems to have tanked It’s been reported that local Whatcom County household incomes keep rising. Whatcom County median income is currently at $53,573 as job growth continues locally. When it comes to household income growth, Whatcom County has been doing great compared to the rest of the state in the last two years, according to a new state report.

The median household income in Whatcom County is up 4.7 percent from the preliminary 2006 numbers and up 12.2 percent from 2005, according to the Washington state Office of Financial Management.

Household income is determined by a variety of revenue streams, including salaries, dividends, rental income, retirement and disability income. The median measures the point at which half the households have more income and half have less. Statewide, median household income is up 4.2 percent year over year, and up 8.9 percent from 2005.

Hart Hodges, director for Western Washington University’s Center for Economics and Business Research, believes there are a variety of factors at work for the increase in wages. One is that the same increase in income will look like a bigger percentage change because Whatcom County has a smaller base. In addition, the impact of higher-wage jobs being added to large employers such as BP, Alcoa Intalco Works and WWU is being felt.

“We seem to be seeing a slight improvement in the job mix as the local economy gets larger,” Hodges said. “For example, larger economies tend to have relatively larger finance and information sectors, and we’ve seen some growth there. The job mix is slowly changing.”

Whatcom County has seen a steady rise without any year-over-year decreases in household income since 1989, when the median number was $28,367, according to the report.

Hodges expects wages to continue to rise in 2008 because of a continued tight labor market and a relatively low existing wage base. The local unemployment rate has been under 5 percent since January. Many economists consider anything under 5 percent to be full employment.

Skagit County has also done better than the state average. Year-over-year household income there rose 5.8 percent to $56,163. “Both (Whatcom and Skagit) counties have seen a few good years of job growth in manufacturing and work at the refineries,” Hodges said. Partially via bham herald.

The Federal Reserve dropped the federal funds rate to 4.25 percent today. The street however was hoping the Fed might instead lower rates by a half point but chose not to. This key rate is what governs overnight lending between the nations banks.

In another move the Fed also lowered the discount rate it charges for direct loans to banks by matching a quarter point here as well to 4.75 percent. Since September the Fed has now lowered the overnight rates by a full percentage point in an attempt help the nations economy and lower the risk of falling into a recession. 

Most of todays decision was based on the nations condition with the housing sector.  With so many banks exposed to subprime loans, especially in the southern part of the country from California to Florida, that the banks are reluctant to extend credit.  The Northwest is not spared from the subprime mess, but were at least fortunate to have a much lower rate of subprime loans outstanding per loans on the market. One look at the national map of subprime loans shows that the Northwest should at least be feeling like we will get through this. 

But because the nation as a whole has several areas of concern with housing and subprime loans, it affects us all, and so the fed had no choice but to step in and react.

Outside of the housing and financial services sectors, the U.S. economy has exhibited resilience. In addition to a steady labor market, many retailers reported stronger than expected November sales and a slumping dollar helped boost demand for U.S. exports.

Also, the risk of a inflation, which the central bank had cited as a reason for monetary restraint even as financial markets clamored for rate cuts, appears to have
eased slightly. Productivity has been strong and core inflation gauges, which exclude volatile energy and food costs, have remained tame.

However, after a period of relative calm, credit markets are showing a level of strain not evident since August, when mounting defaults on U.S. subprime mortgages first led to a
worldwide pullback in money markets.

Does this mean that interest will drop in lock step, not necessarily, because interest rates are connected to long term bond rates.  Subprime borrowers will not gain from this cut, because those type of loans are keyed with LIBOR rates which actually have been trending up in recent weeks. Because of the liquidity issues in global financial markets, LIBOR rates have actually increased at the same time that treasury and other benchmark yields have been declining. The rate cuts today will however benefit those that are looking for lower rates on home equity loans, because those are tied in with the prime rate that borrowers pay on such loans.

Jerry Campbell - Muljat Group - Bellingham, WA - Bellingham WA Real Estate

 Over the last eight years I’ve accumulated the total homes sales on a monthly basis and have been using them in my own bellingham real estate business in order to watch monitor the local Whatcom County housing market trends.  The chart below shows the total number of sales for the first ten months of each year since 2000. At the end of the year I’ll post the final sales for 2007 compared to 2006 and subsequent years back to 2000.

The graph below shows sales numbers in four different Whatcom County sales groups.  The top line shows the number of sales of resale homes in the Bellingham, Washington market for the first ten months of each year back to 2000. The next line shows the number of sales for resale in the Ferndale, Lynden, Blaine, WA real estate markets.

The bottom two graph lines show the total number of new homes that sold in Bellingham with the blue line and in yellow for the Ferndale, Lynden, and Blaine markets.

It’s very clear that the resale market was displaying some big numbers around Whatcom County from 2001 through the end of 2004.  It’s my belief that as the prices within the Bellingham WA area started to get to high for most buyers, they started to look more at markets like Ferndale, Lynden, and Blaine because home prices were more affordable at the time.  That’s why if you look at the graph above, the up market extended into 2005 for most of the county markets outside of Bellingham. 

The market peaked over all for Whatcom County around August - September of 2005.  That’s about when we started this big change and a downward trend in sales numbers. We have shifted to more of a buyers market during the last two plus years, but it appears that the Bellingham market might have finally hit a low.  If you look at the two Bellingham graphs, we have slightly out performed 2006 sales numbers through the same time period of 2007.  We will need to look at the November and December 2007 numbers to really get a much better idea of where were at in this market.

I think the biggest thing thats affecting us currently is all the negative chatter over sub-prime loans from that boom period.  Even though most of those type of loans are no longer being marketed by the banks and mortgage companies, the fallout from foreclosures can still have an effect on the market place.  The Northwest really came out pretty well from the sub-prime mortgages.  I say this because if you look at the US map in the post on Northwest Counties With Highest Subprime Loans we have one of the lowest amount of loans in sub-prime loans compared to many areas of the country.

So, we should be able to come out of this period better than areas in California, Arizona, Nevada, Texas, and the Southern states.  The Northwest economic conditions are pretty good with low unemployment rates, Interest rates are historically low, retail sales numbers are strong, and we live in a very desirable area of the country.  For us up in Whatcom County we also are enjoying good retail, tourism, and travel spending from our Canadian neighbors due to the parity between the US Dollar and the Canadian Looney.

I will post several more in depth articles on the housing market in January 2008, once I receive the final Whatcom County sales numbers for November and December 2007.  I tend to not look at average sales price of homes because those numbers can be manipulated way too much.  I like to look at total sales numbers in the market, because it’s much better way to get a feel for where our local markets are heading.  In most cases you really don’t know your in a down market or up market until your well into it.  That’s why having complete sales numbers over a long period of time, allows one to clearly study the over all Whatcom County real estate market and have better capabilities to forecast trends more accurately.

Jerry Campbell - Muljat Group Realtors - Bellingham, WA 98225 - Whatcom County Real Estate

 I normally don’t like to post to many interest rate articles, but wow interest rates are down under 6% again and the trend is looking good for the foreseeable future.  That’s got to help our local Bellingham WA real estate market.  Here’s some stats I want to pass on. 

Long-term mortgage interest rates were down Monday, and the benchmark 10-year Treasury bond yield dropped to 3.83 percent.

The 30-year fixed-rate average sank to 5.82 percent, and the 15-year fixed rate fell to 5.4 percent. The 1-year adjustable held at 5.53 percent. The 30-year Treasury bond yield was down at 4.29 percent.

Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.  But one still needs to check with one of our local banks or mortgage company’s here in Northwest Washington.

Anyone that might be looking to lock in some decent rates and buy a home in this buyers market might have just gotten an early Christmas present with the new interest rate news.

Jerry Campbell - Muljat Group Realtors - Bellingham WA - Search Bellingham real estate

It seems like more and more these days I’m getting questions about buyers wanting to purchase foreclosure homes. So I did some research the other day and found a few web sites and blogs that had some very useful information on the subject of foreclosures.  One of the best sources I found was on the Austin real estate blog which had a lot of useful information.  Ki Gray is the owner of the site and he’s using a map that he found on the New York Times showing county by county where the highest percentage of the subprime loans were taken out.

click the map below to open a new window with the full interactive version and our Northwest viewers can checkout the areas in the Northwest with the highest subprime loans.  That will give one an idea where you could pretty much predict where one would expect to find loans going into foreclosure.

subprime mortgage map

The interactive map showed that for the Northwest corner of Washington State, Skagit County showed that 27% of all mortgages are in subprime lending, 19% in Whatcom County, 18% in Island County, and only 10% in San Juan County. As high as those numbers might seem at first glance, those numbers are not to bad when compared to many of the other counties in the State of Washington.  Most of the other counties range from 25% to 35% overall.

This map is a good indication why the Northwest has done so well versus the rest of the country.  The light shade areas are the areas in the US that have the lowest subprime loans per county, and the darker areas are the worse hit by these tough loans. Looking at that map it appears that many areas in the midwest and especially the south and southwest have really been the hardest hit.

Click that link above the map and you can really zoom in and get a good idea of whats going on across the united states.  I really think if buyers and sellers in the Northwest could see this scenario, it would give a much more positive attitude towards are market here.  Especially when one factors the low interest rates under 6%, low unemployment rates (down to 3.8% in Whatcom County), and pretty good retail numbers.  In Whatcom County we also have the benefit of having almost three million citizens of British Columbia just over our border and with the parity of the Dollar and the Looney, Canadians are shopping here more. 

Next week I’m going to post the sales numbers for the Whatcom County housing market and it will show that the Bellingham WA housing numbers for the first ten months of 2007 vs 2006 are actually up year over year. I have the total sales numbers for the last eight years on a monthly basis and I’m going to start sharing them here on my Northwest real estate blog.  Look for the stats next week. I tend to look at the number of sales instead of prices, because I feel its one part of statistics that can not be easily manipulated. Price increases only tell you about what properties are selling for, but what about the homes that tested the market and didn’t sell.  That’s why I look at sales numbers comparisons instead. Tells a more true story.

Jerry Campbell - Muljat Group - 510 Lakeway Dr - Bellingham, WA 98225 - Northwest Living

 Washington State will experience a cut of about $132 million from the states expected income due to the housing market slow down over the last two years.  The State of Washington actually had a surplus of $1.4 billion, so this actually just reduced the surplus instead of the state being short any funds.  Lawmakers in Olympia are currently preparing to update the state’s budget for the next fiscal year.

Washington States chief economist, ChangMook Sohn, said the drop in income was the first time in about five years that the state saw any setbacks in quarterly revenue projections. Still, Sohn called the lower income numbers “clearly a very minor fine-tuning, rather than a major change.”

Strong real estate and construction markets have pushed the state’s economic fortunes in recent years, and the state has been relatively insulated from national housing-market weaknesses that have stung mortgage lenders.

Most of the weakness in income numbers was due to the fact that we had less sales of homes in the state over the last two years.  When ever a home sells in the State of Washington, property owners have to pay the state an excise tax on the sale ranging from 1.25 to 1.80% of the property sale.  In Whatcom County the rate is 1.78% excise tax on the sale.  Here’s a link to find the Washington State real estate excise tax rates for each county in the state.

Jerry Campbell - Muljat Group - Bellingham, WA 98225 - Bellingham WA Real Estate