As we cross the anniversary of Covid-19 being declared a national emergency, we in the real estate industry cannot believe what has evolved in the residential home market. In Blaine, especially, the impact of a near total shut down between closing of businesses and more significantly the closing of the border caused realtors and their clients to question whether 2020 would be both a health and financial disaster.
The first few weeks were reminiscent of 9/11 when real estate came to a standstill and the border was closed for a short period of time. But much like a replay of 9/11, homes overnight became more than just shelter, quickly evolving into a sanctuary that provided a sense of security in an uncertain time.
Within a month, smaller communities offering what some see as a better quality of life than urban cores became highly sought after by those seeking a better place to work, raise a family or retire.
Whether it was commerce disruption; threats to safety from protests morphing into riots in downtown Seattle, Portland and other West Coast cities; or the rising tax burden of states like California; an exodus began very quickly and continued to escalate through the summer and fall of 2020.
Initially, Bellingham got the attention of the new out-of-area buyers causing prices to jump nearly 1 percent a month. While Birch Bay and Blaine saw more modest gains, the wave was most certainly headed our way.
Once Bellingham’s inventory of available houses started drying up and competing offers creating buyer fatigue became the norm, Blaine and Birch Bay became the next best … or perhaps better option.
Fast forward to 2021 and we are now seeing multiple offers, declining inventory and more and more digital nomads (those who can now work from home indefinitely from anywhere) stake their claim in Blaine and Birch Bay as prices are closing in on Bellingham’s numbers.
The likelihood that prices will continue to rise in our community through 2021 and beyond depends on a few key factors: Low interest rates, low inventory and relatively low prices compared to other areas that drive prices. A sudden shift in any of these categories could slow the market faster than it took off in 2020, but the federal government is not likely to tinker too much with rates through 2021.
Building permits, while up, are still well below market demand and the cost of construction will keep rising. The literal backbone of houses is lumber, where prices have risen 170 percent since April of 2020, adding an average $24,000 to a new home, according to the National Association of Home Builders. Add the implementation of new energy codes and other building material costs and a more accurate number is a $40,000-$50,000 add to a typical home.
Remember, we are squeezed by the border, the Georgia Strait and mountains. Unlike the Sonoran Desert in Arizona, we can’t just create sprawling home developments as needed. Also, one day (and hopefully by summer), Canadians will return, and vacation homes will be on their shopping list once again, along with cheap milk, gas and other goods.
California will still have high taxes driving people our direction and former urbanites will not be anxious to go back to the 10th floor, traffic and the trappings of big city life, especially if they no longer have to in order to make a living.
So, a few words of advice, if you’re thinking about selling … don’t! While some of my real estate colleagues who are scrambling for listings may cringe at that suggestion, you as a seller are living in a great investment that is increasing in value well ahead of inflation each day. If you do need to sell, there has literally never been a better time, just make sure you have a place to land when your home gets a great offer within 24 hours of listing.
In the meantime, we need more housing opportunities like Grandis Pond in Blaine and other sizable developments to prevent housing prices from going so high that the last round of Borderite grads cannot afford to live here.
Mike Kent is a realtor with Windermere Real Estate. Every Saturday at 10 a.m., he hosts the weekly “Radio Real Estate” program on 790 KGMI.