I would like to give you my opinion of our current market and what it means to you. First of all, the doom and gloom you're hearing on the news is largely referring to areas such as Las Vegas, parts of California and much of Florida. These markets are seeing corrections of prices that skyrocketed to unjustifiable highs. Easy access to mortgages and strong local economies had some of these markets posting 50-100% appreciation in one year periods. That is not sustainable!
In Bellingham and Whatcom County, we had a strong run also, and some parts of our market became overpriced. Duplexes are a good example of this. People were buying rental property that lost money each month because they were told if they didn't buy quickly they would miss out on huge profits. Does this sound anything like the stock market of ten years ago? "Who cares if Amazon.com doesn't make a profit, just buy it before it doubles again!" This is speculating, not investing, and leads to inflated prices.
However, single family home prices are a different story. Record low interest rates and easy access to mortgage loans encouraged renters in our local market to become homeowners. Others decided to sell their existing home and upgrade to a newer/larger/more expensive one. This obviously increased the demand for housing. With that new demand, prices rose sharply, in the ballpark of 10-20% per year for several years in a row. 2004, 2005, and 2006 had many of us feeling like real estate geniuses. Fast forward a few years and here we are. Less people are qualifying for mortgages. There is a general hesitation among buyers, whose emotions have swung from exuberant and frenzied to a more cautious stance. Much of that caution is encouraged by the media, the same folks who helped to create an irrational buying frenzy just a few years ago.
So now you are likely saying, "That's all very interesting Dan, but please get to the point." Here's my point. Now is a great time to buy. Interest rates are still quite good, 6 to 6.5% is typical. And there are some bargains to be had. I recently saw a Bellingham 1 bedroom house listed for $159,000 in a good neighborhood, and it took 25 days for them to get an acceptable offer! In 2005, I saw similar homes receive 10 offers, IN THE FIRST DAY! So if you're thinking of buying in the next 5 years, I would strongly encourage you to consider doing so now. This is an opportunity that historically comes around every 7 to 10 years, a great buyer's market. On top of that, recent legislation offers a hefty tax credit to first time home buyers.
So what about selling in this market? If you want to sell in the next two years, this summer is a good opportunity to sell before school starts up, the weather turns, and the presidential election could have any number of effects on the housing market. You can sell in this market, but you need an experienced agent and realistic pricing. Fancy websites and color flyers on the sign post are great, but buyers have time to shop around now, and you have to be competitively priced. You need to look at homes for sale similar to yours and try to see them from a buyer's perspective. It really is as simple as asking yourself, "If I was a buyer, which homes would I be interested in?" If after four to six weeks on the market you have not received any offers, it is time to revisit the price.
In conclusion, the market is what it is, we can't control it. The key is staying informed, and not letting your emotions control your actions. Many buyers, and sellers are getting good results right now, and you can be one of them.
Dan O'Donnell, 360-220-7157
www.HelpInWhatcom.com
RE/MAX Whatcom County, Inc.
