If you’re interested in moving to Bellingham, Washington, or even if you already live here but want to know more about the 2023 real estate market and how to successfully navigate it, this page is for you!
Source: Northwest Multiple Listing Service (NWMLS)
What’s So Special About Bellingham?
Bellingham is one of THE MOST enjoyable and interesting places to live not only in the Pacific Northwest… but in the entire USA.
The abundance of easily accessible trails through magical landscapes, many with jaw-dropping views, world class boating opportunities on lakes and saltwater, proximity to mountains and snow sports, countless parks, brewpubs, restaurants, access to higher education and good health care, a mild climate that supports the year-round outdoor lifestyle, an international airport, proximity to two of the most renowned cities on earth (Seattle & Vancouver, BC)… the list goes on.
It’s natural, then, that in this age of instant, global communication and sharing of our lifestyles through social media, more people have discovered Bellingham’s charm, and they — perhaps YOU — want to live here!
Hi, We’re BNP Realtors… And We’re At Your Service!
It is an honor and a pleasure to meet you and help you! My name is Brandon Nelson and I’m the owner of BNP (Brandon Nelson Partners) Realtors. Our team at BNP lives, eats, drinks, and breathes real estate in Bellingham and Whatcom County. On average we help our clients close a sale about every 2 days, so we are tuned in, geared up, and ready to help you understand and succeed in your quest to buy a home here!
Our goal throughout our relationship with you is to educate you well enough about the market and “what’s working now” in the buying process that you are comfortable and can make good decisions throughout. With that in mind, let’s begin with a look at the current Bellingham market.
Bellingham Is Growing
Even before Covid, according to the City of Bellingham Housing Statistics website Housing Statistics website (which is a fascinating read if you’re a data nerd like me), the City of Bellingham was growing by approximately 1350 to 1400 people per year.
That trend is (was?) predicted to continue for the next 20 years.
But then Covid hit, and with employers offering WFH (work from home) options, super-attractive lifestyle towns like Bellingham (and Bend, Boulder, Boise, Bozeman, etc.) topped many people’s relocation lists.
The result was that growth here kind of spiked.
Per the City’s data webpage, year over year growth from 2021 to 2022 was triple the predicted amount with over 4000 new residents, bringing our City population to 93,910.
Meanwhile, as the population grew at an accelerating rate, the real estate market in Bellingham saw dramatically declining inventory.
Below is a graph that reflected available inventory in Bellingham over the past decade, up until late 2021. (The troughs are winter lows and the peaks are summer highs of supply.)
Source: Northwest Multiple Listing Service (NWMLS)
For years, it was a (CRAZY!) strong “Seller’s Market”
As the graph above shows, inventory fell to almost nothing.
In June, 2021 there were a paltry FORTY single family detached homes for sale in the City of Bellingham.
That’s 1 home available for sale for every 2350 Bellingham residents.
Buying a home had become a matter of offering tens (sometimes hundreds) of thousands of dollars above list price, waiving practically every contingency, and often being beat out half a dozen times before successfully having an offer accepted.
Sellers had a strong upper hand, and yet with the astonishingly low interest rates buyers were lined up to get into the fray.
What About Prices?
Economics 101 would dictate that when supply goes down and demand goes up, prices will rise.
That was very much the case here in Bellingham and across all of Whatcom County.
To track median prices, we focus on the largest category of homes, which in Bellingham is the 3-bedroom, 2-bath home of roughly 1800 square feet.
There are more “3/2” homes in Bellingham than all the other configurations combined.
The median price of the common 3/2, across the City of Bellingham and its immediate outlying areas, has increased year-over-year as follows:
Source: Northwest Multiple Listing Service (NWMLS)
Notice the *asterisk next to 2022’s numbers.
That was the year-to-date median price as of this writing…
HOWEVER, what has changed is this important fact: It is no longer rising, and by 12/31/2022 that number will be edited downward.
That was then. Now it’s different.
We wrapped up 2021 with the median price for a Bellingham 3-bed 2-bath home hitting $640,500 in the final 90 days of sales.
By the end of the first quarter 2022, we’d seen another nearly 8% appreciation with seemingly no end in sight.
Following the running 90-days’ median sale price, it tracked as follows:
- 90 days of sales ending May 1, 2022: $710,000
- Ending June 1: $728,000
- Ending July 1: $765,000
- Then… for the 90 days ending August 1: $765,000 again.
- Then September 1: $750,000.
- October 1: $702,000
- November 1: $695,000
The decade-long increase in Bellingham home prices, the longest bull market in history, or certainly in memory, had finally tapered.
The declining inventory graph, at long last, reversed course and started to gain supply.
In mid-November, 2021 there were 49 Active listings in Bellingham.
On the same date in 2022, there were 138.
Still low by historical averages, but a significant 282% year over year increase.
What caused the change in the market?
Interest rates.
To help avoid recession during Covid, the Federal Reserve lowered interest rates to never-before-seen lows.
Borrowers could get a 30-year fixed loan at or even below 3% and that made their monthly payments incredibly low.
Even if buyers paid $100,000 over list price, their monthly payments remained inside the realm of affordability.
Finally, facing >8% inflation, the Fed began increasing rates, and homebuyers’ monthly payments climbed to more sobering levels – in some cases pushing the buyers completely out of approval status of even getting a loan.
This graphic shows the power of a doubling interest rate and its effect on monthly payments and therefore prices:
As of this writing, rates are still increasing and may do so until inflation is back under control.
Those higher monthly payments created by the new higher interest rates have more effect on home prices than any other factor in Bellingham’s market.
Roughly 80% of buyers obtain a home loan to buy a house, and what they can pay on a monthly basis is the number one most important factor determining what the median seller can sell for.
The range of Bellingham prices
Let’s take a moment and look at the general distribution of sales by price range, so you can get an idea if your chosen range exists here and in what proportion.
Per the table below and the median price, most sales here occur in the $600K to $700K range, with the bell curve tapering outward from there.
Homes in the less-than-$400K realm certainly exist, but with a heavy emphasis on shared-wall townhomes, manufactured homes, condos, or extreme fixer-uppers if a detached single family is your goal.
Options in the lower range may very well expand as the market undergoes a softening.
Source: Northwest Multiple Listing Service (NWMLS)
Is it still competitive for buyers?
It is certainly much less competitive than it has been for the past few years.
Inventory is up.
Interest rates are up.
Median days on market have increased from 5 or 6 to 15 for these past 90 days of sales.
These all point to a slowing market.
But buyers don’t suddenly hold all the cards.
Bellingham has, is now, and likely always will be characterized by a relative shortage of supply because it is, even in a softening market…
- So desirable for so many people, and
- So difficult, time-consuming, and expensive to build here.
There is a very heavy level of regulation surrounding the building permit and planning departments in Bellingham and Whatcom County.
That is awesome for those of us loving outdoor spaces, trails and parks.
But it counters those who would wish for greater housing supply, selection, and affordability.
In general, as we consider the 2023 market, we are absolutely seeing:
- Less multiple offer situations on most (but not all) listings
- Less escalation over list prices
- More sellers willing to accept offers with contingencies
- More price drops before pending
- More sellers willing to negotiate on price
- More willingness for sellers to make some repairs or concessions after inspection.
With some particularly attractive and/or aggressively priced listings it is still a battle between multiple buyers, but that is far from the norm now.
If you do fall in love with a “hot listing” that has other buyers competing for it, rest assured we’ll make sure you know all your options to strengthen your offer, while always honoring your own personal comfort level.
What About Nearby Towns & Areas?
Many people moving here are happy to learn that there are multiple areas within 20 to 30 minutes of Bellingham where prices are lower for a similar house or condo. These include Ferndale, Sudden Valley, Lynden, and other Whatcom County small towns. Make no mistake: these outlying areas have bustling real estate markets as well… but you can generally get more house for the dollar outside of Bellingham proper.
Source: Northwest Multiple Listing Service (NWMLS)
A Note About Drive Times
Don’t be surprised if the locals grimace at the idea of a 20-minute drive to get “allllll the way out to Sudden Valley.”
When my wife and I moved here almost 20 years ago, we fell in love with Sudden Valley and lived there for an enjoyable 10 years, never once minding the beautiful drive into town or back home.
With high demand for Bellingham’s “Core Neighborhoods” (those are all in-City neighborhoods that are west of Interstate 5) a willingness to give up the walk-score and spend a few extra minutes driving can open up many new doors in your home search.
So what should your approach be to getting your house?
You’ve heard someone say, “The three most important words in real estate are: Location! Location! Location!”
As a buyer in 2023, the three most important words are “Be Here Now!”
That means having clear expectations and keeping in mind the following key points as you begin and travel your home-buying path:
You still absolutely need to be pre-approved with a quality lender, or be able to show “proof of funds” if you’re paying cash, before we submit any offers and ideally before we start touring homes.
Meet several of our favorite local lenders at this link.
You will fortunately have more to look at now than in the past several years (accounting for the seasons), though inventory is still quite low overall.
You should plan to follow new listings closely and move quickly, as the best listings are still getting a lot of attention and can sell fast.
Cash is and always will be highly desirable for sellers, though it does not guarantee a discount or necessarily an easy win over financed buyers.
Competition does still exist between buyers for the best listings.
We at BNP are still closing a sale every other day or so, on average.
We have ALL the referrals and resources you may need for all the research, due diligence, financing, and logistics of buying a home.
We also have all the referrals you may need during the ownership of your home, including maintenance, repair, upgrading, remodeling, expanding, whatever the case may be.
As before, all of our clients who are committed to buying have ultimately found and bought a home!
(You can read over over 500 reviews from our past clients on this page on Zillow.)
Still want more information?
Many of our blog posts speak specifically to buyers.
Here’s a link to that section of our blog.
A Final Word
At BNP, we have the tools, techniques, strategies, connections, and track record, to be successful together. Again, we do it successfully once every two days, on average, with buyers in every price range and with every set of criteria.
You undoubtedly have a lot more questions. Take action right now, and reach out to us by phone or email. Here’s a link to our entire team and each person’s contact information.
Any one of us would be excited to hear from you!
Sincerely,
Brandon Nelson
Broker/Owner
Brandon Nelson Partners Realtors