The Bellingham Real Estate Podcast
The Bellingham Real Estate Podcast
EP: 0054 - 2025 Market Recap and 2026 Forecast for Bellingham & Whatcom County with Justin Nelson
Spring came in hot, fall cooled it down, and somehow Whatcom County finished the year right where it started. We unpack how a classic seasonal surge ran into a wall of rising inventory and sticky mortgage rates, leaving both prices and sales flat year over year. Justin Nelson joins Paul Balzati to break down the quarter-by-quarter story: multiple offers in core neighborhoods, longer days on market across the board, and a four-month supply that changed the pace without crashing values.
We get specific about buyer and seller behavior. Buyers finally had time to compare homes, revisit favorites, and negotiate on terms. Sellers had to recalibrate: a sharp first weekend is still possible for well-priced listings, but patience and realistic pricing became the norm. We also split the market by price point. The high end is carrying a heavy load of inventory and longer absorption times, while low-to-mid price bands continue to see steady demand, especially in in-town neighborhoods where convenience and condition drive action.
Then we look ahead. If mortgage rates drift toward six percent, expect more transactions in 2026 as buying power recovers and fence-sitters reenter the hunt. We explore how Bellingham’s comprehensive plan—ADU expansion, potential lot splits, and broader infill—could unlock supply and attract local investment. We also discuss the potential impact of a 50-year mortgage on affordability, sales volume, and pricing dynamics, especially for entry-level and move-up buyers. Our take: modest spring appreciation followed by a plateau, more sales overall, and a high-end segment that may lag until inventory thins.
Want the playbook for your next move—price strategy, timing, financing, and neighborhood selection? Tune in, subscribe for more local market insight, and leave a review with your 2026 prediction so we can revisit it next year.
Hello and welcome to the Bellingham Real Estate Podcast. I'm Paul Balzati. I'm here with Justin Nelson. Welcome, Justin. Thank you. Thank you. Thanks for having me. Yeah, and today we are talking about how 2025 went for the Waukham County real estate market. And so we'll touch on all the things that went on this year and a forecast for 2026 as well. So should be should be great. So, Justin, you've been in b the business how long now? It's 12 years now. Twelve years. So you've seen some things. Yep. And I want to first off not only thank you for joining me, but also for knowing to wear a sweater with the collar with the collared shirt. And so like I was thinking about this earlier when I saw what you're talking about. But it's a little bit different and it's different color scheme and stuff.
SPEAKER_00:If you're working with a quarter zip, it's a quarter zip.
SPEAKER_01:Yeah. Yeah. I have several V-neck sweaters and I it was a V-neck day. Yeah, I should have I should have known. But thank you for matching me that way. But um yeah, anyway, okay, getting to it. Let's get right into it. So 2025, why don't you take us through um the year as far as how the year has gone in real estate?
SPEAKER_00:Yeah, absolutely. So 2025 year in review, essentially you can break it down by quarter. You know, we start off in the dead of the winter when things are the quietest, and then like usual, you know, once that pre-spring market started kicking in, it really took off.
SPEAKER_01:Yeah.
SPEAKER_00:Because rates had been hiring, you know, hovering above sevens, we saw them come down a little bit, and then that usual demand that gets pent up for the springtime kind of takes off. So we hit we hit end of February, first of March, and we just launched and it kind of kept going. So that second quarter really took off uh into that late spring, early summer, that third quarter, and then per usual it tapered off. But during that time, we saw a lot of multiple offers. Uh, we saw a lot of homes hitting the market, just you know, ready to sell quickly. But then that seasonality shift kicks in, supply meets up with demand mid-summer, and then things start taper tapering off as they usually do. So, like, you know, we we saw prices up, but then we saw prices shift a little bit. So, you know, if we're if we're looking at the totality of it, year over year, your sold prices, your sold levels, your pending levels, and your prices are basically flat for the year.
SPEAKER_01:Yeah, and I think this is the first year in my real estate career where I've seen both flat. And and when we talk about the real estate market, when you hear people talk about the real estate market, whether you're in real estate or you're you're interested in buying or selling, it's always important to pay attention to when you're reading a report or seeing something in the news, are they talking about home sales or home prices? Yes. And so we're covering both.
SPEAKER_00:Yes.
SPEAKER_01:So and and and no, and you and you did explain that, right? And and it's just interesting that we've finished the year, we're finishing the year with home prices flat and home sales flat. Yeah.
SPEAKER_00:Like almost exactly even year over year, we looked at the numbers and review them. It is it's really interesting to see that. Uh one thing we talk about here at John L. Scott, that I, in my 10 years prior to coming over here, never heard just that idea of premium pricing. How in the springtime, when there's so much more demand, you do pay that premium price. So we do see a little elevation in in pricing during that time, but then demand creeps up to it and meets it. So then you kind of get those prices that they don't come down, they just kind of level out.
SPEAKER_01:Well, typically, except for this year.
SPEAKER_00:Yeah, exactly.
SPEAKER_01:Exactly. Except for this year, right? Because and that it and that's exactly the thing that was different this year is that in the last few years we've seen the prices go up in the spring and then flatline to your point. Now this year is the first year where so normally we're up five percent, we're up seven percent on home values. This year, home prices went up five or seven percent, but then this fall went right back down.
SPEAKER_00:Well, and part of the reason they came back down is our inventory levels are up above like levels we haven't seen since like 2016. You know, where we have uh yeah, just the amount of homes we have for sale are really giving those buyers options. And so because of that, we're seeing longer you know days on market. I think we're up at about like almost 23% year over year. Uh, you're seeing those homes just sit a little longer. Um, you know, and then rates, what those are doing, you know, we anytime we see them drop a little bit, mortgage uh applications go up. But yeah, it's it's nice to see kind of as we get into the end of the year that you know prices did hold steady, things held steady, and like we didn't drop, and some parts of the country really did, but we didn't at all.
SPEAKER_01:Yeah, and with with home prices, it's like you have supply and demand, and then you have interest rates. And you know, the there's a certain segment of the market, I think, of people that thought, okay, this year home prices are gonna go down more, sales are gonna go down more. There's other forecasters this year who thought, okay, as inventory is rising, we should see more sales, and sales will be up. So there was a lot of people predicting that home sales would be up, and it kind of ended up somewhere in between where inventory was up. There's a lot more listings for sale, a lot more people trying to sell. But because rates had stayed kind of stubbornly, at least into the high sixes throughout most of the year, um, and we have so many people locked into those pandemic rates and the twos and threes that are really holding out for the perfect place, the perfect move, or um lower rates to move uh or lower prices, or all you know, all the above that um we we didn't end up seeing a big jolt one way or the other. It ended up just being flat. And we're experiencing for realtors, we're experiencing three of the slowest years in many, many years. So um, you know, it's it's been three flat years. Normally there's more people moving um in a in a given year for the per the population we have than what we've had, and that's for our local market too. There's been less overall sales, but but year over year, um flat.
SPEAKER_00:Yeah, and it's really interesting when you we pull up the graphs, we pull up the statistics and all the numbers, like the graph is almost level. Like some cases it's dead on exactly the same, and that's that's crazy to see. Yeah. Um yeah.
SPEAKER_01:Well, so the next thing I want to touch on is so we you prices went up, then they went down. Right now we're at a um we're at we're at December, we're at a four-month supply of inventory. Um when you hear four month supply, tell the folks listening or watching like what does that mean to you? Like, right if you have a buyer or seller in the market for the next two months, yeah, what does that look like to you versus what does that look like to you like in six months?
unknown:Yeah.
SPEAKER_00:No, I that's that's one of those interesting things we are dealing with right now that we haven't dealt with so long is the the months of um you know, the the amount of inventory we have. And to, you know, buyers that don't understand what that means, we just measure the amount of homes, you know, and how quickly they're going under contract. We measure that by months, but you know, for the longest time we were in that uh supply amount where there was less than two months. Homes hit the market, they were going contract under contract right away. Where now, you know, that four months number we're seeing buyers are having the ability to wait a little bit, be a little patient. But sellers, it's interesting. We're having conversations with our sellers, we haven't had a long time. Like, no, it's okay for your place to not go under contract right away.
SPEAKER_01:Yeah.
SPEAKER_00:I I hate using the word normal, but it's almost normalizing a little bit. It's kind of slowing it down a little bit. Yeah. And so, you know, projecting out and looking forward, I think because we have so much inventory on hand and rates are kind of staying the same. They're not really going up, they're not really coming down. I I think we can see this level of inventory for a little while. Like if we're looking forward six months, even a year down the road, I wouldn't be surprised if we still have maybe a little less. Yeah, it maybe the inventory level will be down a little bit if you know we do see rates kind of drop two six or stick around there a little bit. I I could see it biting into that a little bit.
SPEAKER_01:Yeah, that's a really good point because you know what the average liaison market is what?
SPEAKER_00:Uh I think it's 49 days right now, Chris Walcombe County. And that's single family and that's condo both.
SPEAKER_01:Okay, so 49 days. That's that's a that's a lot more than it's been. And but we still we still also track the percent that are going pending. I know you do a housing update every month um on your social end um the that monthly percent that goes pending every single month, that still matters because there's still a lot of there's still intensity around that opening weekend. Yeah, and so you know, even though many homes are sitting for 40, 45 days, there's still or 49 days, there's still 15%, 20% of homes that go pending in the very first week. And so it's it's interesting when you're talking to a seller in today's market because for the last three, four years, it's been like, okay, you list your house and you're pushing all the chips in for it to sell that opening couple weeks. And then if it doesn't sell in the opening couple weeks, it's a little bit of a panic, and you know you have to price reduce or whatever. Yeah, you are absolutely right that it does feel like a little bit more of a normal when we say normal, going back to pre this kind of a super low inventory seller market.
SPEAKER_00:Well, 2018 started taking off a little bit, but like about that 2015, 2016, 2017 timeline.
SPEAKER_01:Yeah, yeah. And then previous to that, like pretty much any time you're not in the middle of a major market change, where you have periods where yeah, it's there's houses that sit for a month or two, and it doesn't mean necessarily that it's like way overpriced just because it did sit on the market for a month. It could be that you know, buyers are just simply because there's a little bit more selection and because they're seeing that that only 15 or 20% are selling in the first week and not 60 or 70 percent. Well, we have that they're more willing to like, they're more wanting to wait and make sure it's the right home and go look at it a second time and go go look at the competition. And so yeah, as a you're right, as a as a we as a listing broker, we're sitting there and having to kind of coach up our sellers on on on uh on kind of being more patient.
SPEAKER_00:Well, and this is where experience really comes into play too when you're talking to those sellers, like, no, this is okay. Yeah, like this is quite all right. There's nothing wrong with your home. There's probably nothing wrong with the price. We have those backlog of buyers, which in those first 30 days, you know, they're gonna see your home in the first you know, week, two weeks, but then hey, uh the buyer for your home just hasn't showed up yet. Yeah, and that's sometimes all it is.
SPEAKER_01:Yeah. Um, okay, so let's talk about that's where we're at right now. Four-month supply, flat market. Yeah. Um, what are you hearing and what are you projecting for uh 2026? Because I know you've got the crystal ball.
SPEAKER_00:Yeah, the crystal ball, absolutely. No, I mean, if we we look at the numbers that the NAR is kicking out, they're they're being a little more bullish. They're saying we could see up to 13% increase in sales year over year, which hey, I I would take that any day. I'm I'm curious to see how we're gonna get there. Uh I I think I think a lot of people are getting used to the uh idea and concept of a six percent interest rate, uh an interest rate above five and not three that we are so used to seeing. Yeah. So I think if if interest rates kind of stay the way they are, maybe kind of uh slowly decrease to sub-six or even at six, I think things are gonna pick up. And I think that's how we're gonna get to 13% year over year growth for sales.
SPEAKER_01:So you you're you're you're you're you're agreeing with the NAR prediction.
SPEAKER_00:Is that I'm agreeing it's a number that I can go with. I mean that's the that's such a PC answer, but no, I I I think we're gonna have more uh sales next year. I think they're just gonna because we are already loading loading the market with inventory.
SPEAKER_01:Yep.
SPEAKER_00:And you know, some people are sensitive to the interest rate more than others. So I think that is going to just help demand, which never went away. Like demand has always been there. Right. So, you know, you kind of get interest rates back towards six, and people are gonna start looking to the future. Plus, we have a lot of people that are aging, uh, you know, their kids are graduating, you've got a big baby booner population that's sitting onto you know their their homes, they want a downsized lot of ethics. Yeah, so I think you can have a big shift in the market that way too.
SPEAKER_01:I I agree. I think you're you're spot on. I agree with all those points as far as you have more inventory, and if you have rates floating around six percent instead of about half of this year, rates were closer to seven percent. Yeah. So if if prices haven't gone up, and if anything, they're they're even softening a little bit more right this minute, and then you have rates averaging closer to six, because they're kind of about as close to as low as they've been all year right now. So it's like if they're around close to around six, how could you not have more sales when you have you'll have just as much inventory next year? Yeah. So if you have lower rates as far as like as an average throughout the year, you're gonna have more people with more buying power throughout the year. So you should have more sales. And as far as like home values go, um, one thing, there's a couple things, a couple we didn't talk about this before, but one wrinkle could be if this 50-year mortgage thing comes out. Yeah. If that comes out, I mean, whatever you think. That's a whole yeah, I think that's a whole other discussion. But if if that actually does go through, that would no doubt um, you know, give a boost to probably both sales and values because all of a sudden it kind of makes everything kind of more affordable for a segment of the market, which uh on the low to medium price ranges, not necessarily on the high end, it wouldn't necessarily well, no, I guess even on the high end, if you're trying to get up to that, you know, on a jumbo loan and you've always wanted this one house and all of a sudden a 50-year mortgage is available to you, it'd be a really, really um, it'd be a big shift.
SPEAKER_00:Yeah, I think it's gonna open up the possibility for some people.
SPEAKER_01:Yes, and so that would be a big shift locally in Whatcom County. Um, another thing that could give sales a little bit of a bump, other than just what you pointed out, just the just lower rates, is um the comprehensive plan. Bellingham's coming up with their comprehensive plan. Oh, yeah, that's all coming out, and um and you know, with the zoning changes with where you can, you know, build two ADUs, where you can um you can possibly they're talking about lot splits that you could, I mean there's a lot of a lot of things that are gonna change, but basically a lot of lots are gonna be more developable than they are now. And my prediction would be that that'll bump up investment um and developer sales a little bit.
SPEAKER_00:Do you think we'll see more people get into that investor type position because of the type of home and property they have?
SPEAKER_01:I have to think that like you, you know, if you're if you've been holding off on becoming a real estate investor, if you haven't really got into investing, um, and you want to keep your investments local, right? Like in Whatcom County, um, if all of a sudden, you know, you could you can do more with the property, potentially split the lot or split eventually either hire a builder or develop the lot yourself to build on and build add an ADU, add two ADUs, whatever, um, split it into make it a make it a triplex, um, you know, those kind of things, or convert an existing garage into kind of a studio apartment. You know, if all those things are a little bit easier to do now, um, I know ADU permits are up. Yeah. So um, some of that's for people who already live in the home, of course, but I would just think that that's gonna spur more local investment.
SPEAKER_00:Yeah, I imagine those people that already, you know, own maybe, you know, an investment or two. They have that property they've been sitting on forever. Maybe it's a bigger lot over in the birchwood neighborhood or Sunnyland or somewhere, and all of a sudden, like, oh, I can do X, Y, or Z on this property, put in a second unit, put a third unit. I think it's really gonna open up potential there. And I think that could have potential, like you were talking about, to really add to some of that growth we see next year, to where some people say, Oh, I've been looking to sell my property, but all of a sudden, hey, someone could split this into one or two other parcels now, so it just becomes worth more there.
SPEAKER_01:Yes, exactly. Potentially. And probably the last thing that we should probably touch on is the different price points. So, you know, on the high end, inventory is way up right now. Yeah. And um, and so, you know, if you're in the county and you have a two million dollar house right now, you know prices are kind of softening at the moment. So it'd be interesting to see, and I don't really have a prediction for this because it really depends on what happens with the rent interest rates and the whether a 50-year mortgage comes out and all these things, but it'll be interesting to see there's a possibility. I could see a world where sales are up, prices are up across most price segments, but the upper end maybe is still um maybe, maybe still prices still drop a little bit more um in 2026 because if you have a 10-month supply right now, 12-month supply, you know, that's a real buyer's market on the upper end. But on the low to median price ranges, you know, like you mentioned earlier, there's so much supply, uh built-up demand still.
SPEAKER_00:And you know, well, in some of those core neighborhoods too, like the the demand is is there, yeah, it's been there, and it's always been there. Yeah so though those hot ones come on and it's you know under 850. Like it's still gonna go.
SPEAKER_01:Yeah, I mean, we when we look at the we we also as an office, we look at the stats every single week and we look at the pending chart, and even in a market like this, which is a little bit more of a buyer's market this winter, yeah, for sure, right? Um, even in the winter when seasonally you brought up the seasonality of it, we're still seeing 20% of the of the pending sales still be multiple offers. So, like in those core neighborhoods, like you mentioned, especially core neighborhoods um like that, um, any of the most desirable in-town neighborhoods, if it's priced really well, it can still have multiple offers, even in this kind of a market.
SPEAKER_00:Because this time of the year, though, you don't get those looky loos. Like the people that are out there that they need to buy, like they're gonna buy. Yeah, they're on the timeline, they're looking to buy, or even a seller, like, hey, took a different job, something happened, they have to move out of the area. Those have to's. Yeah. So there's still a lot of stuff happening this time of the year. So you do get this seasonality in it like clockwork every year. It looks it almost looks the same.
SPEAKER_01:Yeah, where right now it's looking slower, more buyers' market, more of a buyer's market.
SPEAKER_00:Yeah.
SPEAKER_01:But we're both expecting a little bit more of a flip on that in the spring.
SPEAKER_00:Yeah, I think so. I think where we're starting with more inventory, where the rates we're starting at going into 2026. I think it's just it can only be it only head that direction.
SPEAKER_01:Okay, yeah. So I'm gonna I'm gonna agree with everything. I'm gonna say I think sales will be up like I'm gonna say 7%. Okay. So that's my recorded prediction for 2026. You said you're gonna go with any of the things.
SPEAKER_00:I'm sticking with their tape.
SPEAKER_01:You're gonna go and then I'm gonna say I'm gonna say home values will be up five percent next year because I think they go up five percent in the spring and then do what they normally do, what you mentioned earlier, which is then they stay flat the rest of the year after that.
SPEAKER_00:Yeah, I think it's a good call. I think we're we're transitioning into that appreciation level that's more sustainable, like that that three to seven percent. Somewhere in there, that ballpark.
SPEAKER_01:Yeah.
SPEAKER_00:You know, and and that's what, you know, that's that's why real estate is always that steady, you know, investment.
SPEAKER_01:Agreed.
SPEAKER_00:Yeah.
SPEAKER_01:Okay. Well, thank you for uh joining, Justin. I appreciate the conversation.
SPEAKER_00:Happy to be here to talk about 2025 and looking forward to 26. I can't believe it. I can't believe we're we're already having that conversation. I know.
SPEAKER_01:Yeah, I know, I know. We're there. We're there. We'll reach out to Justin if you need anything. Thank you for watching or listening, you guys. Yeah. Cheers. Thanks.