Published October 15, 2021
Q3 Housing Market Report
The third quarter of 2021 was the second highest recorded quarter ever for sales volume in Whatcom County, coming in just behind Q3 2020*.
Now that it’s behind us, it’s time to take a look at the data for July, August & September and realize that yet again, housing prices are up and year over year appreciation remains strong.
What’s in the Q3 Market Report:
Key data points for local municipalities and Whatcom/Skagit as a whole
Discussion of current inventory
Is the market shifting?
Analysis from Leo
Written by Tiffany Holden and Leo Cohen. Both are licensed brokers with the Muljat Group Realtors in Bellingham.
*Data throughout is from the Northwest MLS, for single family residential homes. For the purposes of this report, condos/townhomes, manufactured homes, commercial/industrial, vacant land, and properties listed as farms-only were not included. If you’re curious about how I processed the data, scroll alllll the way down to the bottom for all the details!
THE DATA
Q3 in 2020 clocked in at 1,027 closed single family homes, breaking 1,000 for the only time in the history of NWMLS data (since 2006). And while the 3rd quarter of 2021 (998 sales) didn’t quite beat it, it was still the second highest recorded quarter ever for sales volume (by number of homes sold).
Bellingham remains the high-priced market in our area (zero surprise there). The county seat has seen extremely low median-days-on-market for the last 19 months. Aside from one month sitting at 8 days on market, the median has ranged from 4 to 7 days on market. In that time a total of 2402 homes closed, meaning that roughly 1200 homes in Bellingham took 8 days or fewer to go under contract. Let’s give that some historical context: in 2011, as our area continued to deal with the fallout from the financial crisis of 2008+, the median days on market over the course of the year was fifty-one days on market. 888 homes closed, so more than 440 them took longer than that to go under contract.
(Median days in 2014 was 32, in 2015 it was 22, in 2016 it was 16, and so on from there to our current situation).
It’s no surprise that the market sped up along with increasing prices. (I mean, if demand is so high that people are racing to put in offers, it stands to reason that those buyers are offering higher prices to stay competitive).
Let’s remember that throughout this whole report, we’re dealing with median prices - it doesn’t mean that every home in Bellingham increased in value by 21% since last year. Some increased by less, and some increased by even more. It’s just a benchmark for gauging the overall market, and we can help measure specific situations by running comps in particular neighborhood & within muuuuuuuch more narrow specifications (that’s really what a CMA - Comparative Market Analysis - is).
Alright, let’s overview other areas in Whatcom County:
Ferndale’s median price point for 2020 was $464,000, and had a median days-on-market of 13. We’re continuing to see serious growth in that market.
As far as Lynden’s sales volume goes, August 2021 tied with June 2017 for the highest individual sales month in NWMLS history. Sales volume this summer exceeded that of 2020, 2019, 2018, AND 2016 - 2017’s summer volume was unusually high and remains the highest recent year for summer sales volume.
Q3 2021 in Blaine saw a similar sales volume to Q3 2020, and days on market were similar (9 in 2020, 7 in 2021). For context, Q3 of 2019, 2018 and 2017 saw median days on market in the 16-22 days range. 
CURRENT INVENTORY
“Current inventory” is a metric used to help understand the speed of home sales in any given housing market. Here’s how it works:
Hypothetically, (1) if no new homes came on the market, and (2) the currently available houses kept selling at the same speed they have been for the last 15 months, how long would it take for us to reach Inventory Zero?
For example, in the last 15 months, 4253 closed homes sales have been recorded on the NWMLS in Whatcom County. That’s an average of 283.5 homes closing per month (rounding to 284). We currently have 288 homes available for sale in our county, putting inventory right at 1.01 month’s worth of inventory. Here’s where key areas are sitting:
WHATCOM COUNTY
SKAGIT COUNTY
Whatcom County: 1.01 months
Bellingham: 0.84 months
Ferndale: 0.93 months
Lynden: 0.89 months
Blaine: 0.8 months
Skagit County: 1.03 months
Mount Vernon: 0.69 months
In general, 5-7 months’ worth of inventory is considered a balanced market, between a buyer’s market and a seller’s market. (As a whole, the Whatcom County housing market has been in some form of a seller’s market for several years).
But there are varying degrees of intensity. Our Dispatches from the Front series shares specific experiences our brokers are having out there in the day-to-day of offer negotiations, homes listings and more.
Anecdotally we’ve been seeing a cooling off of market intensity. A home that we believe would have seen a dozen+ showings within a couple days, and multiple offers within the first week on market, is sitting longer than expected; or it receives one or two offers instead of 5-8 (or more).
The summer season is typically one with higher inventory levels along with higher buyer demand, so I’m curious to see how seasonality plays out this year - will we see a tightening of the market (last December Bellingham shrunk to 0.5 months’ worth of inventory at one point) or will the associated buyer demand have lessened proportionately?
Time will tell.
The interest in any specific home will vary by:
- Location (area or city)
- Specific location (neighborhood, proximity to road noise, visual nuisances, etc)
- Property characteristics (flat fenced yard versus steep lot)
- Size, age, and maintenance condition of home
- Listing broker competence
For example, 11.7% of the available inventory in Bellingham (12 homes out of 102 listed currently, Friday morning October 15) are priced between $460-$800,000 and have all been sitting on the market for at least two whole months. 8 of them have been sitting for 3 months or more.
Remember that the median closed price for Bellingham for this quarter was $610,000, meaning that these “should” be in a popular price bracket for the home buying pool. And yet, for any number of reasons, they haven’t sold yet.HISTORICAL CONTEXT & A MARKET SHIFT
“Wait...so does that mean prices are going down?”
No:
Example: Median sales price was $5,000 higher than it was last month. for the last 30 days of closed residential sales in Bellingham, the median sales price was $5,000 higher than the median original listing price and $10,000 higher than the median last listing price.Yes:
Example: In March 2021 in Bellingham, the median sales price was $38,000 higher than the median listing price.These last 30 days, the median sales price was ONLY $5,000 higher than the median original listing price. And the fact that the final listing price was below the original listing price, means we’re seeing PRICE REDUCTIONS!
- What’s the context? Over the last 18 months, I’ve heard so many stories of:
- homes pending in 24-48 hours
- showing schedules filling up in hours after going on the market
- multiple offers and prices soaring $100,000 to $200,000 over asking price
- home buyers beat out of two, or four, or eight homes before they finally win a contract to buy a house as-is and make it work
As an industry we’ve had to build the calluses and quick response times that were necessary to guide both our buyers and sellers in that type of frenzied market.
You, our clients, have had to jump into the fray and hang on for dear life as you made housing decisions with just 15 minutes onsite, or left your home for hours upon hours while strangers tramped through your home.
And now we are seeing indications of a change. But we have to remember that a change does not mean a race to any other extreme.
Along with data-only analysis, we can also take into consideration the larger world context:
Along with a national housing shortage, Bellingham is facing its own housing shortfall. The city needs about 600 new home units permitted to keep up with housing demand, and over the last 10 years, has averaged around 430.
This includes both rental housing (e.g. apartments) and homeowner housing (condos, single family) and per the COB website, the homeowner market ”has been slower to catch up”. (Source, under “How long will it take to get there?”)A LETTER FROM LEO:
I think we can all agree that our culture glorifies certain aspects of being a homeowner and a real estate investor! Real estate is about risk and reward: not going outside of our means but sacrificing today for tomorrow and ultimately understanding that it is a long term game all while remembering that we don't have to live in each house forever. It is not always about buying the biggest fixer on the block and flipping it, buying land and building or landing your dream home with a first time homebuyer budget.
This graph shows a couple of trends:
1. Since the market crashed in 2008 and rebounded slowly starting in 2012/2013 there have been many ups and downs. Weekly, monthly and quarterly. There will always be ups and downs.
2. Overall the graph trends upwards.
The person that "overpaid" for a house in 2011/2012/2013 has gained an average of 126% in equity! That median $300,000 house in 2011 would now be purchased for $678,000. Year over appreciation will vary - under 10%, up to 20% sometimes, but the people who hold a good asset in a healthy location will see that asset’s value grow.
If you're buying in Bellingham or anywhere else in Whatcom County, you're not going to jump on the real estate train at the start - but the train is still moving, and fast at that.
The tracks are long, the ticket is quickly becoming unaffordable and the ride is not going to be perfect. Your finances do not determine the market and what is fair. You either figure out your way on the train, play the game and prepare to play it for a long time or are left at the station.
In Whatcom County, over the last 12 months, 3276 people have purchased homes.
1402 people purchased homes in Bellingham. If our median home price is $610,000 and the market slowed to 10% appreciation (half of what it was for Q3 YOY), this homeowner’s wealth would increase $61,000 a year + mortgage interest deduction (not to mention that the mortgage payment is paying into an asset that you control).
It's scary, it's messy, moving sucks and there is a ton of paperwork... but it's worth it.
Additional Resources
Past Reports
2021 Q2 Housing Market Report part 1 and part 2
A Buyers Market? 7 Indicators to Watch For
Local Housing, Housing Affordability & Development
Whatcom County Land Capacity 2016
Bellingham Comprehensive Plan (Housing Chapter) 2016
Action Plan 2020
Comparative Fees (City Council) 2014
Bellingham Housing Stats (interactive map) 2021
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