Whatcom County Market Forecast for 2021

Many interesting market forces in Whatcom County are currently at play: a global pandemic and corresponding job losses, an influx of residents due to wildfires and retirement planning, and a shift from the office to working from home. How do we see this playing out in Whatcom County's real estate market in 2021?

Northwest MLS data confirms what Compass brokers are feeling: record low inventory in homes for sale. Inventory is less than 30 percent of what it was one year ago. Fewer choices for buyers are driving up prices; multiple offers have become commonplace. Median home prices are up 11.3 percent from January 2020.

Will this pace of appreciation continue? I see no reason why not. Interest rates are still at historic lows with a commitment from the feds to remain that way throughout the year. And employment numbers in Western Washington continue to improve. Unemployment rates currently sit at 8 percent, down from April's 16.6 percent. In addition, many people moving to Whatcom County have new workplace flexibility and aren't relying on the local economy for employment. In fact, Bellingham has recently become dubbed a "Zoom town," in part because of its proximity to the Seattle tech hub. Many people are moving from more expensive markets with impressive equity in-hand. For these reasons, I’m anticipating similar market appreciation in 2021 and for it to remain a seller’s market.

Is the real estate market slowing down?

My clients and friends keep asking me if the market is slowing down.

The answer is...yes and no.

Being a regional company with offices from the Portland area to a Bellingham is great because we get regional market updates that help us anticipate market shifts.

In this morning’s meeting, our CEO, Mike Grady, said, “We are still a long way from being a balanced market. We are still leaning towards being a seller's market over a buyer's market.”

Coldwell Banker Bain CEO Mike Grady in Bellevue on the big screen at a sales meeting in Bellingham.

What does a “balanced market” mean exactly?

A balanced market is one that doesn’t favor buyers or sellers, and has about 5-6 months of inventory.

Across the NWMLS, we had 1.9 months of inventory in June, and it was up to 2.9 months by September. By the end of the year we anticipate 3.5 months of inventory. So... inventory is creeping up giving buyers more options.

In Bellingham, our inventory has been inching up slightly throughout the year—but the key word is slightly. We’re still well below the 5 or 6 months mark that a balanced market requires.

I’m personally competing against fewer offers when representing buyers lately. But I’m not sure we’re headed for a significant market correction.

Why? A big influencer is that the economy is still strong. Washington state is adding about 10,000 jobs per month. And only 3,000-4,000 building permits are being issued per month. The demand for housing is still there.

However, interest rates are ticking up, currently sitting right around 5%. There is no real way of knowing exactly what rates will do, but most lenders expect about a 3 rate increase over the next year. That could mean a rate of 5.5%, some say 5.75%, in 2019. Rising interest rates definitely reduce buying power so it it will be interesting to see how that impacts the market.

So, will it be as hot of a market as early 2018? Probably not. Will it drastically change? Probably not. According to Grady, “In Portland and Seattle and the entire I-5 corridor, we anticipate that it will be mostly the same kind of market through the end of 2018 and throughout 2019. Right now there’s no logical reason to believe we won’t lean more towards a seller's market for the next 18 months or so.”