Bellingham and Whatcom County Real Estate Market Update

March 2012 – Whatcom County Real Estate Numbers

 Things are looking up a bit in the Whatcom County Real Estate market.  Let’s look at some examples:

  • March was up strongly over February in both units sold and prices in most areas of the county.  This is a typical spring occurance.  Bellingham sales increased 63%, average prices were up 15.8% and median price rose 7.2%.  Whatcom County sales increased 50%, average prices 18.5% and the median was up 11.2%.  All good.
  • Compared to March of 2011, the numbers were a bit more mixed, but still not too bad.  While Bellingham sales numbers were down 4.6%, that will probably change with some late reporting.  Whatcom County sales overall were up 9.7 %.  Average sale prices in Bellingham were up 7% over last March, while the median dropped 4.6%.  All of Whatcom County saw averages up 6.3% and the median down 0.4%.  Indications are that the market is holding steady relative to a year ago, with changes being relatively minor in most areas.
  • The first quarter relative to 2011 clearly showed the increased demand in areas outside Bellingham, with increases in number of homes sold from 15.0% in Blaine/Birch Bay to 51.7% in Lynden.  Bellingham sales were down 11.3% from the first 3 months of 2011.  Pricing was mixed, with the county as a whole, including Bellingham, down 4% in average prices and 6.3% in the median.

 So, to summarize, the shift of activity from Bellingham to the county seems to be continuing, prices have softened since a year ago, but are showing a bit more strength over the past 2 months.

 Sales numbers and prices are giving us some positive market indicators, and there are other factors worthy of attention. 

  • Last month we noted the decline in the number of short sale and bank owned properties listed for sale.  That continued in March.
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  • Inventory levels are remaining extremely low.  As sales increase, there could be upward pressure on prices. Throughout the county, the average number of days a property is on the market before an accepted contract is down by 10.4% from last year, to 146 days.  23% are selling within 30 days, at almost 98% of list price. 
  • While interest rates have bumped up a bit, they are still extremely low.

 

  • The distribution of sales in Bellingham in March showed more strength in the ranges over $300,000.  While the past few months had 70+% of sales in the under $300,000 range, March was back to a more typical under $300,000 percentage of 58.1%.  That could be the result of move up buyers as well as more incoming population.

 

In summary, underlying conditions are supportive of a stronger market through the spring.

To read the complete article and view additional charts and graphs on the local Bellingham Real Estate Market visit The Johnson Team’s Real Estate Market Report

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Bellingham Real Estat Tip: What the Medicare Tax Means When Your Sell Your Home

Bellingham Real Estate TipsThis morning I received my Home & Wealth Newsletter from Sidney Stonecypher at People’s Bank, and came across an article in it that I would like to share.  The following is courtesy of Sidney at People’s Bank:

The Truth about the 3.8% Medicare Tax
What it Means When You Sell Your Home

The new health care legislation includes a 3.8% Medicare tax that may apply to certain real estate transactions in certain very specific circumstances. Unfortunately, this has been misreported all over the internet in some alarming ways. For example:

“The new health care legislation imposes a 3.8% tax on all home sales.”
“If you sell your home for $400,000, you’ll pay a $15,200 ‘sales tax.'”
“Middle-income people will pay the full tax even if they’re only ‘rich’ the day they sell their home.”

Please note: Every one of the above statements is COMPLETELY FALSE.

What the Law Really Says

One of the provisions of the Patient Protection Affordable Care Act (PPACA) health care legislation makes so-called “high-income” households subject to a new 3.8% Medicare tax on investment income beginning in 2013. All the misreporting arose because this provision is contained in a complicated section of a complicated piece of legislation. But here are the facts:

The Medicare tax is not a 3.8% “sales tax” on all real estate transactions. In truth, it is not a sales tax at all and it does not apply to all real estate transactions. The 3.8% Medicare tax is a tax on investment income (which may or may not come from the sale of a property). And it is for persons who earn more than certain amounts specified in the bill.

When you sell your home, there is still a capital gains threshold of $250,000 per individual or $500,000 per couple. This is profit NOT subject to capital gains tax. However, you will be required to pay the added 3.8% Medicare tax on any gain you realize above your applicable threshold.

Most Home Sellers Not Affected

Experts tell us most people selling their homes won’t be impacted by this new regulation. Your home sale would have to make you a so-called “high earner” and here’s what that would take. For example, a couple will be subject to the 3.8% tax only if they made MORE THAN $500,000 profit on the sale of their home. And if they did, the 3.8% tax would apply only to the part of that profit that was ABOVE $500,000. So, if their profit were $600,000, they would have to pay $3,800 of that as tax–3.8% of the $100,000 profit above the $500,000 threshold. Their net profit would still be: $596,200.

We hope this clearly explains how the 3.8% Medicare tax is not a tax on all real estate sales. Instead, it is a tax on investment income that may result in an extremely small percentage of home sellers paying additional taxes on their home sale profits above the designated threshold amount that applies to them ($250,000 for individuals, $500,000 for couples).
 
It has been estimated that the bill’s definition of “high earners” includes less than 5% of all taxpayers. In addition, as of March 2011, the median existing home sale price was $159,600. So, mathematically, only a small percentage of home sales will likely be affected when the Medicare tax is implemented in 2013.

As always, consult with a professional tax advisor before making any decision with tax implications. And for home financing or refinancing, please feel free to call or email us with any questions. We’re always glad to talk…. Have a great day!   Thank you People’s Bank for the great article!

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