Is buying in Bellingham right now a good idea? (Seattle: bank owned, transplants)

[CoastieTX]

I'm hoping somebody who's familiar with the Bellingham market can give me some honest, non-biased advice.

I'm fully aware of all the economic developments being played out right now and that things are starting to look worse for Seattle. But this Bellingham housing market has to be the strangest thing I've ever seen. It seems all the market fundamentals, like housing values being in line with earnings, the dangers of run-away appreciation, etc. just don't seem to apply here. It's a beautiful, desirable area whose local economy hasn't been able to sustain the house prices here for a while now. And to top it off, the city severely limits growth and this, in turn, keeps the supply low of new construction homes.

What seems to sustain the values here are transplants with a lot of money which aren't affected by the local economy. And it's not just Californians but Canadian investors, too.

I'm looking at homes that sold in 2002 for about $190K. Now, they're in the $330K range. The rational part of me, especially when considering what's been playing out in other parts of the country, is telling me to just forget about buying for now. But as I've said, it seems this place is immune to what's happening in the rest of the country.

This is how short the supply is here: A house came up for sale that seems to fit my criteria and is in the area I'm interested in. It's been months and months since a similar house has appeared on the market, which I was out-bid on by $5k. That's right - I'm waiting months between showings because everything depends on new listings. And I don't think I'm being that picky - one level home, south side of town, about 1500 square feet. Unfortunately, almost all the new construction in Bellingham focused on catering to the rich transplants and their mansions. It's unbelievably frustrating and sickening how this city and the developers COMPLETELY ignored regular Joes (if people buying $300K+ homes can be "regular") like me, but that's a topic for a different discussion. It's just that I've worked so hard and saved to buy a home here, and now that I can, there's nothing to choose from unless I go way up in price and look at mansions. I don't want a big, flashy home - just a regular one!!

Anyway, to get back on topic - if anybody here really understands Bellingham's market, would you advise buying if you find a home you like, or would you not touch any of these properties I've described with a ten foot pole?

I'd hate to miss out on a home I like with a good interest rate because prices *may* start falling here like they are everywhere else. Ugh.

[Heiwos]

I would wait. Not even Beverly Hills or Santa Monica is immune these days; prices there are down 30% from the peak. Washington just hasn't caught up yet. There is a good possibility we're entering another full-on Great Depression. 2002 prices are high now, even with Canadian buyers helping. I won't be buying in Bellevue until prices fall to 2000 levels (and when they get there I'll re-evaluate). After all, the economy in 2000, even after the dot-com crash, was way better than it is now, and the economy is likely to get far worse. Boeing will be announcing lots of Dreamliner cancellations soon, the effect of which will spread outward from Everett. If you really like Bellingham, just rent there for now.

One more thing: don't be swayed by "low" interest rates. The banks are getting gobs of federal money at close to 0%, and lending it out at 5+%. They could lend it out at 2% and still make a nice profit. Consumer rates will go way down like they did in Japan for 10+ years.

[paintdog52]

I've been looking there too, coastietx and am seeing the same thing. I'm also looking at Anacortes and Sequim -- all desirable areas that people will pay the bucks for. I wouldn't mind renting but its hard to find landlords that will accept animals. Good luck and keep trying

[Heiwos]

Keep in mind that Canada's economy is crashing now, including housing. (Like WA, they're just late to the party.) If Canadians have been having an upward effect on house prices in Bellingham, Anacortes etc., that could reverse in a hurry as they sell vacation houses to raise cash.

[CoastieTX]

Update:

The house in question is a no-go. Its layout and size just don't fit my needs, so in a way I'm relieved because the house itself made the decision for me. I would have been really torn on what to do had I loved the house because buying in a declining market is a dicey proposition.

The house was bought in 2002 for $189K and today they're asking $339K. If this house sells for close to that and things don't change in Bellingham, I'm afraid this will be a temporary stop for me and I'll promote and relocate somewhere else. I want to have my house paid off and be retired when I'm 50 and it's looking like home ownership in Bellingham is making that an impossibility.

If anybody considering relocating to Bellingham is reading this, I cannot stress this fact enough:

There is absolutely no newer, modest-sized single family homes in Bellingham. New construction is limited to $500K+ large homes. If you can't spend this much, you are limited to crappy resales which have no business being in the $300K range.

Be forewarned.

[Victapp]

CoastieTX, I know exactly how you feel. We have been here for over a year and I am still amazed at what homes sell for here. For a one income family without a local home to sell (therefore no huge equity to cash in on) we do not stand a chance on buying here and we make decent money! I have never understood how people can afford to have 2000+ mortgage payments and still have any kind of life.

What I would like to know is how the current purchase prices are comparing to the asking prices. Basically, if I found a house listing for $350,000, what can I expect to REALLY pay? Are the great deals in the asking price or are people still getting close to those outrageous listing prices? If you ask a realtor I am afraid that the answer would be biased. OH well, I guess renting will have to suffice for now.

[West coast at heart]

Wow! I knew the market was crazy out there, but I did not realize just how much. My wife and I want to move to WA or OR next year and I have started looking at areas to live but not the housing prices. I had no idea that they were that far out of control.

We were also looking at the Sequim, Mount Veron, Bellingham, outskirts of Seattle, and coastal parts of NW Oregon. This thread paints a pretty bleak picture.

I seem to remember a thread that thought that the NW was hot due partly from the location of the next Olympics (Just across the border in Canada). That land and houses were being bought in order to capitalize on the inevitable surge to the area.

I guess we will have to wait and see which area offers what we are looking for in a year.

wc@h

[Dendrite]

Originally Posted by Victapp

What I would like to know is how the current purchase prices are comparing to the asking prices. Basically, if I found a house listing for $350,000, what can I expect to REALLY pay? Are the great deals in the asking price or are people still getting close to those outrageous listing prices?

Good Morning Victapp:

I'm not a realtor but my wife and I have bought a couple dozen properties in western Washington in the past several years, including Bellingham.

The answer to your question is honestly: it depends. It depends on the part of town the home is in (I know... location, location, location) whether or not it has a view (water, mountain), how motivated (desperate) the seller is and whether or not the home needs work (distressed). Many people have bought homes in the past several years that were probably a bit of a stretch for them financially and now they are simply sitting on them until they can sell for the asking price or (hopefully) things get better for our economy, rather than lock in a financial loss.

300-400K is a pretty typical price range for your average middle of the road home in non-prime places of western WA (unless we're talking any sort of water view or setting and then things get really crazy price wise).

So my bet would be you'd probably expect to pay at or near that 350K number. Sure, if the seller is very motivated you might knock off 10K or so. The other part of the equation not addressed here is of course financing. Many lenders are being pretty stingy in who they approve for a mortgage right now.

Not trying to be the wet blanket here. Just the experience from someone in the ring!

Good Luck!

[Ira500]

Bellingham, and many other parts of Western Washington, have home prices that are dropping at a rate of about 1% per month...Interest rates? Who knows, but my guess is that they'll stay low for a while.
I'd sit tight for the time being, or try to find REO ( Bank owned) property that is discounted, or short sales where the lender is willing to accept less than what the borrower owes on the property...In any event, keep your eyes open. Prices are coming down.

[CoastieTX]

Victapp:

Regarding asking prices and sold prices - I recommend doing your own research and not relying on what a realtor may tell you. Start keeping notes of original asking prices of listings that interest you. After they sell and the deal is closed, you can see what the home actually sold for at the Whatcom County Tax Assessor's website:

Whatcom County Assessor - Bellingham, WA

A word of caution: What you see will sicken you - people asking almost twice what they paid for their homes just a few years ago.

The Bellingham Herald also runs a real estate section weekly that lists all the homes that were sold recently and their prices, but again, this information is useless if you didn't record the original asking price. To my knowledge, there's no way a non-realtor can access things like original asking price, days on the market, etc. in the MLS.

As far as answering your question about people still getting their outrageous asking prices: I've been seeing a little bit of everything. Now and then, a gem will appear in the low $300K range and it will sell quickly, but overall the market is saturated with a lot of garbage in this price range, too. It seems $300K is the base-line price everybody is asking, no matter what. And no, these folks, from what I'm seeing, are not getting their $300K. I've seen some homes reduce their price by $50K and their listing expired without the home being sold. I can't tell you what's happening in the other price ranges, because I don't keep tabs on them, but things are really slowing down according to this article:

Bellingham, Whatcom County Local News | Bellingham Herald

I'm hoping there's a silver lining to this recession and the housing market here just keeps on correcting...