January and February brought a resounding increase in the number of calls, the number of property showings and the number of people looking at listings online. That is normal after the relative quiet of the holiday season.

When the dust settled in 2007, we found that the number of homes sold in Bellingham was up slightly (for the first time since 2004), average prices were up slightly for the year, inventory was down a bit from the end of 2006 and houses were taking longer to sell than they had in 2006.

In Bellingham, January 2008 saw home unit sales of 14.5 percent less than January 2007 and average prices slightly less during the same time period. This seems to continue a trend that began in the latter part of 2007.

Hopefully, our market is going to end this year in a stronger position than it currently is because of the adjustments it is experiencing. The number of homes sold will probably decline, because only people who are financially strong enough to buy a house will be able to do so. Lending money to people who have a history of poor credit and no money of their own to put into a property is not good for the buyer, the lender or the market because in many cases it sets the buyer up for failure. Lending money to people who are buying multiple properties expecting that values will increase dramatically in the short term creates an unstable market. Allowing people to pull equity out of their homes based on unrealistic appraisals leaves them nothing when they want to sell.

As a country, we are now working through the effects of bad financial decisions on a number of levels.The underpinnings of our local real estate market are still sound. Interest rates are good, financing is available for qualified buyers and there is enough inventory available to provide choice in the marketplace. Out of curiosity, I did an analysis of Bellingham homes sold in 2005 and 2006 that have been resold since then. What I found was that in most cases, individual homes sold for more in 2006 and 2007 than they sold for in 2005. If the owners of these homes bought with zero down, pulled money out in a refinance, or otherwise altered their equity position, they may still have to bring money to the table if they want to sell just now. That’s called a normal market.