Why is Bellingham Real Estate so Expensive?

Having been a Realtor in Bellingham, WA since 2014 and a resident of this vibrant city since 1998, I've observed the real estate market undergo significant fluctuations, ranging from thriving as a strong Buyer's Market to a raging Seller's Market. The local housing market's ups and downs are influenced by a myriad of factors, and here, I'll shed light on some crucial indicators that impact potential buyers and sellers.

Bellingham, Washington, is a haven of natural beauty, boasting a harmonious blend of outdoor wonders and cultural scenes that cater to artists and outdoor enthusiasts alike. The Pacific Northwest's allure as a desirable living destination has led to a substantial increase in people seeking to call Bellingham their home, triggering a surge in housing demand. As the demand outpaces the limited supply of homes, this heightened competition has inevitably driven real estate prices upwards.

Moreover, Bellingham's strong sense of community further adds to its appeal, fostering a cohesive and inclusive environment that draws individuals to settle down here. The city's unique combination of natural splendor, cultural richness, and community spirit has significantly influenced the surge in real estate costs.

In addition to these factors, Bellingham's strategic location between major urban centers like Seattle and Vancouver has played a pivotal role in driving demand. The accessibility to urban amenities, coupled with Bellingham's serene and picturesque setting, makes it an attractive option for homebuyers looking to strike the perfect balance between city conveniences and natural beauty.

Understanding the 7 dynamic factors listed below is essential for comprehending the local housing market's current state and predicting its future trajectory. As Bellingham continues to flourish, the combination of its breathtaking landscapes, vibrant culture, strong community bonds, and strategic location will continue to contribute to the ever-increasing expense of real estate in this sought-after city.

The following factors have lead to expensive housing in Bellingham:

1. Limited housing supply

2. Strong local economy and sense of community

3. Close to Vancouver and Seattle

4. Influence of foreign buyers

5. Tourism and Lifestyle Appeal

6. Development and Permit Costs

7. Market Speculation and Investor Activity

1.) Limited Housing Supply:

One of the primary factors driving the expensive real estate market in Bellingham is the limited housing supply. This was due to a lag between population growth and home construction. As high-paying jobs became more available in the region there was a population growth. According to the City of Bellingham, “Between 2000 and 2020 the population for both Bellingham and Washington State grew by more than 30%.” Additionally, the preservation of natural areas and strict zoning regulations further restrict the availability of land for new construction (Bellingham Comprehensive Plan).

2.) Strong Local Economy & Community:

Bellingham boasts a thriving local economy, fueled by industries such as higher-education, healthcare, technology, and outdoor recreation. The presence of Western Washington University and a robust healthcare sector, including St. Joseph Medical Center, contributes to the city's economic stability and attracts job seekers. Plus the opportunities of remote work has increased by 27% in 2023 allowing high-income jobs from all over the country to dominate in Bellingham’s market. As a result, the demand for housing has increased, putting upward pressure on prices.

The city fosters a strong sense of community through its vibrant local culture and active engagement in outdoor activities, bringing residents together to share common passions and interests.

3.) Proximity to Vancouver, BC, and Seattle:

Why would you live in a big city when you have the I-5 corridor a hop, skip, and a jump away? Bellingham's strategic location, situated between Vancouver, British Columbia, and Seattle, makes it an attractive destination for residents seeking a balance between affordability and proximity to urban centers. Live in nature, work in the city. Bellingham’s accessibility to these metropolitan areas has fueled demand, as individuals opt to live (and play) in Bellingham while working in the nearby cities.

4.) Influence of Foreign Buyers:

Bellingham's proximity to the Canadian border has attracted significant interest from foreign buyers, particularly from Vancouver. Economic factors, including favorable exchange rates and comparatively lower housing costs, have led Canadian investors to seek real estate opportunities in Bellingham. This increased demand has further driven up prices, contributing to the expensive housing market. (Whatcom County Urban Growth Area Review)

5.) Tourism and Lifestyle Appeal:

Undoubtedly, Bellingham stands out as an exceptional place to live, offering an abundance of recreational opportunities spanning from picturesque mountain summits to inviting ocean waves. Its thriving downtown community hosts remarkable events, attracting both tourists and residents alike, making it a highly sought-after destination. With Mount Baker and the San Juan Islands gracing its backyard, Bellingham's appeal as a place to call home is unmatched.

6.) Development and Permitting Costs:

Regulations, fees, and other expenses associated with land development and construction in Bellingham contribute to higher costs for builders and developers. These expenses are eventually passed on to homebuyers, contributing to the overall expensive real estate market in the city.

7.) Market Speculation and Investor Activity:

Bellingham's appeal as a growing city with a strong rental market has attracted investors seeking long-term rental income or potential property appreciation. According to the 2016-2020 American Community Survey 5-Year Estimates, more than half of the housing units in the City of Bellingham are rental units. (City of Bellingham Housing Stats) This investor activity can contribute to increased competition for properties, driving prices higher (source: The Seattle Times).

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In Summary —

The expensive real estate market in Bellingham, Washington, is influenced by a combination of factors, including limited housing supply, a strong local economy, proximity to major cities, foreign buyer interest, tourism, development costs, and investor activity. These dynamics have led to increased demand and limited availability, resulting in elevated housing prices. While the high costs may pose challenges for homebuyers, they are indicative of the desirability and attractiveness of Bellingham as a place to live, work, and explore.

But don’t be discouraged! Myself and a team of folks in the real estate industry are standing by to help you! By acknowledging the complexities shaping Bellingham's real estate market, we can collectively work towards your real estate goals whether you are considering buying or selling. It’s important to discuss the current state of our market and not focus on the times when prices were rising at a record pace. If you have more questions about what all this means for you and your home please feel free to reach out!