The condo market in Bellingham continues in the doldrums this summer. A snap shot of this market shows what few transactions are occurring are for larger, low priced units. Quantity over quality is clearly what folks are picking up.
Issues remain in the condo market due to a high number of short sales and (now) bank owned units. Financing is also a big challenge for many buildings. A combination of law suits and high ratios of rentals furthers the problem. There are entire buildings where financing is not practical.
Owners face a double challenge with low prices and tightening rules related to rentals. What do you do if you can’t sell and can’t rent? I believe HOA’s need to relax their rental rules if the building is facing serious equity challenges. They should also adopt a hardship resolution committee to help fellow owners in trouble or relocating. If people don’t work together the only option may be a short sale, this hurts already depressed values in their building.
The bright spots: There are some for sure. State Street to Blvd and Fairhaven is very active with great pricing, locations and views. Harris Square is rebounding nicely. Smaller buildings have fared better. Look at Fairhaven Square, Fairhaven Heights. The Drake Condominiums in Barkley are very solid as well. The Drake is one of the few FHA approved projects left and has held values exceptionally since its construction in 2008.
What do these top performers have in common? Strong balance sheets and a well-run HOA. They usually have solid “problem resolution process” as well. Basically…. good management. They all have great locations in some of our very popular neighborhoods. Is it a surprise that Barkley is leading the way to commercial construction recovery? Barkley is building on every corner with some of the largest and best commercial projects in the last 5 years? No Surprise.
The numbers summer 2012:
· 293 Active condos in Whatcom, 123 Active condos in Bellingham
· Last 30 days: 30 Sold in County and of which 18 were in Bellingham
· This means 10 months of inventory overall and 8 months in town. Think of it as 300 days on market verses 204 in Bellingham
· What is selling on average?
o 1275 s.f. units (larger units)
o Price per foot avaerge = $148
o Average time on market = 6 months
o Older units
o 2 plus bedrooms
o Average price $188,000
In summary, quantity over quality is ruling the day. Higher quality and smaller units need to be patient and let the noisy market quiet down this fall. Serious buyers still appreciate quality and location.
My Favorite Buildings
· Small: Fairhaven Heights, Fairhaven Square
· Medium: The Drake
· Large: Harris Square
I know a few great deals out there both on and off the market. Send an email to doug@dhfoster.com
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