More Market Cooling Expected in Washington State
Three years of soaring home prices, low housing supply and multiple offers finally came to an end last year in Whatcom County, Wash., prompting home buyers and sellers to ponder what it all means for 2007.
According to the Bellingham (Wash). Herald, they will find out in the next few months. Spring is the traditional kickoff to selling and buying homes and could set the tone for when homes sales peak in the summer months.
In Bellingham last year, nearly 60 percent of home sales took place between March and August, with the highest number sold in May-June, when Washington mortgage demand is traditionally highest.
Those in the real estate industry expect Whatcom County is in for more of a typical year, where home mortgage costs might rise as prices appreciate by slight amounts and overall sales remain similar to 2006. Those sales were about 20 percent lower than the previous three years.
“I believe 2007 will be a run-of-the-mill, regular market when it comes to home sales,” said Gragg Miller of Coldwell Banker. “The bottom has not fallen out of this real estate market, but we won’t be going back to the high demand seen in the past few years, either.”
If 2007 is a relatively flat year when it comes to home sale prices, it will continue a historical trend that local economists have noticed in recent decades.
Hart Hodges, the director of the Western Washington University Center for Economics and Business Research, likens the trend to a staircase, where a few years of a hot market are usually followed by a few years of flat home sales.
The last two times the Washington housing market has seen significant price appreciation (late 1970s, early 1990s) were followed by about five years of flat levels of home appreciation.
For some real estate agents, the expectation of a flat year means it will be a more balanced market between buyers and sellers.
Mike Kent of Windermere Real Estate said business has picked up since the end of January, but the number of days on the market is still over 100, compared to the 18-day average seen in the summer of 2005.
“Price is the critical component in this kind of market,” Kent said. “If someone is selling a home to try and get as much profit as they can, the home will sit. If the seller is motivated because they need to move or something, a well-priced home can still get multiple offers.”
The type of home also will become more important for sellers. High-end homes did particularly well in Whatcom County, as well as first-time homes priced under $250,000. What will be a challenge for home sales are properties in the $350,000 to $500,000 price range, where an oversupply exists.
At the end of 2006, experts estimated the county had a 7-9 month supply of used single-family homes in that price range, and an eight- to 12-month supply of new homes - reflecting how hard it has become for many buyers to afford mortgage loans for homes that pricey.
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