Thank you to all my guests that were able to join me at my Annual Economic and Housing Forecast event with Matthew Gardner, Windermere Chief Economist sponsored by Evergreen Home Loans. In case you missed it, below are my top 10 takeaways, with all of the slide information linked HERE.
BELLINGHAM METRO AREA LABOR MARKET
1. Matthew began the evening discussing jobs and unemployment. Employment rates are directly tied to housing markets so this is always a good place to start. Of the 15,500 Bellingham jobs that were lost due to the pandemic, 14,900 have been recovered….Matthew says this translates nationally to “everyone who wants to work, has a job”.
2. I know, these two words have been somewhat of a “dirty word” these past 9 months… Gone are the days of the sub-3% interest rates. They were so unheard of, Matthew even went as far as to say they were “fake.” Matthew believes that our average Mortgage rate for a 30-year Conventional Loan with be 6% for 2023 – other expert’s expectations range from 5.2 % to 6.4%, so Gardner lands pretty close to the middle.
3. The increase in supply last year (due to buyer’s halting their searches when interest rates went off the charts) took us back a mere 18 moths in time. We’re still experiencing very low inventory levels in our area, hitting at about 300-400 per quarter compared to our long-term average of about 900.
4. Whatcom County experienced major population growth in 2022 compared to recent years – not because of babies born (natural increase), but because of people moving to the area (net migration). I felt this in my own business and continue to have new clients every day reach out to me to move to our beautiful county from other areas.
5. While the average home prices have fallen in the last few months, they really are just reverting back to the long term trend, having been artificially inflated due to the extremely low interest rates.
RICH IN EQUITY
6. Right now in Whatcom County, 67.2% of homeowners have more than 50% equity in their homes. This means EVEN WITH the pricing reversion we experienced last year more than half of homeowners still have more than half the value of their mortgage balance in equity in their homes!
WHO’S MARKET IS IT ANYWAYS?!
7. As a whole in the county we are still in a Seller’s Market, we have a long time before we see ourselves in a Buyer’s Market… or will we ever? (there is a whole category in-between: the Balanced Market). When buyer demand outweighs the homes we have for sale, the number of months it will take to sell all the homes we have available quickly shrinks. This is how we determine who has the power in a market.
When I look closely at specific markets for clients some did dip into a Balanced Market over the last few months, but buyer demand is trending in a way that seems like we will be back to a strong sellers market VERY SOON, if not already, in all markets.
PRICING PREDICTIONS FOR 2023
8. Average sales price will be close to flat from 2022 for most markets… which is still SUBSTANTIALLY above 2021. Home prices in our area rose 22.7% in 2021, and up 8.8% from 2021 in 2022, and are predicted to fall just slightly at -.07% this year. That’s right… you will still have the same value you did in 2022 which is still FANTASTIC!
9. Only one market in Whatcom County ended the year with a LOWER median sales price from 2022 to 2021… ALL THE REST WERE UP!
HARD TO GROW
10. It has been 17 years since Whatcom County has pulled the average number of new construction building permits… Why? 26% of the cost to build here is JUST IN FEES. Not the land, not the labor, not materials… FEES!
With all this said, our biggest challenge remains AFFORDABILITY.
Let me know if you would like to dive deeper into any of these topics, or have any questions. For those of you with housing goals this year, I hope this brings you some insight on what to expect.
If you’ve been on the fence if this would be a good year for you to make a move (buy or sell), give me a call and let’s schedule a consultation. I would love to help.