There are many events, milestones, and accomplishments to reflect on in the past year, and my team and I are looking forward to what’s to come for us and this community in 2018! For some, going into a new year means setting goals, and it is our goal every year to keep you informed about the real estate market. Based on current data and market trends, here are some 2018 predictions for real estate in Whatcom County:
INTEREST RATES: Based on the Tax Reform Bill and new infrastructure, we are expecting interest rates to rise. A climb to 4.0% and 4.5% is probable, but if the economy continues to grow at a quick pace, we could see rates as high as 5% this year. This rise in interest rates will cause some buyers to slow their search, but shouldn’t be enough to cause a strong market shift.
HOME PRICE GROWTH: In Whatcom County, between November 2016 and November 2017, the median sales price grew by 9.8% and in Lynden it grew 16.5%. There were double-digit percentage price increases in many other markets across the country as well last year, but we believe the price inclines will drop below 10% in the busy markets and national prices to only increase about 3.2% in 2018.
NEW CONSTRUCTION: In order to maintain inventory, our country needs about 1.5 million new starts per year. However, since 2009, we have been short a cumulative of almost 6 million units. New construction opportunities are lacking due to local zoning and water rights issues, and the high cost of building supplies has caused further problems. This lack of new construction is one of the primary causes of our inventory shortage and in turn is what’s driving prices up. We expect this problem to worsen in 2018.
HOUSING INVENTORY: There has been progress made with adding new housing units, but it may take years for inventory levels to get back to a balanced level. Also, we predict that there will be more buyers in the market for homes since the economy is strong with low unemployment rates. The national unemployment rate was at 4.1% in November 2017 and we believe it to be in the high 3% range by the end of this year.
MARKET STABILITY: Although prices are rising quickly, we do not foresee a market crash in the upcoming year. The current market conditions are not the same as what we saw a decade ago with the housing bubble. For instance, there is no longer easy access to credit, there aren’t enough new or resale homes to satiate demand, and buyers aren’t overleveraged. Based on the history and current facts, we don’t see another crash happening this year.