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The Relationship Between Housing and Wealth



According to a report from Muljat Group Realtors, Bellingham housing continues to have the highest median and average prices in the Whatcom County housing market. The difference across the county is quite stark. “The median, or midpoint, sales price for homes sold in Bellingham [in the second quarter of 2022] was $785,000, while the average price was $900,038. No other Whatcom community had an average sales price above $665,000[...].”


In a recent Whatcom County Business and Commerce Committee Meeting, advocates for a full range of housing types here in Bellingham asked, What happens to future generations? Will our kids be able to afford to live here? As Dave Fearing of Kulshan Land Trust explained, “[If] We don’t have homes that people can afford, then our businesses won’t thrive.” This is true on a number of levels, namely with homeownership being a major factor in how Americans get their wealth. As Port of Bellingham Commissioner Ken Bell concluded in the recent Committee meeting, “[...] really individual wealth is created through your home value. For the average American, your biggest investment is a home.”


The Implications of Homeownership


Habitat for Humanity conducted a study focused on low-income households and households of color in America and found, “home equity accounts for over half [these households’] net wealth.” The exact numbers vary based on additional factors including income, gender and race/ethnicity, but overall, Habitat for Humanity explains, “Sustaining homeownership allows homebuyers to recoup the transaction costs associated with the purchase of a home and to weather home value fluctuations.” Homeownership can contribute to wealth across income levels, but it particularly benefits low-income households and families.


Generational wealth is tied to homeownership. Habitat for Humanity’s research finds that “children of homeowners transition to homeownership earlier - lengthening the period over which they can accumulate wealth - and have homeownership rates 25 percentage points higher than the rate of children of renters.”


In the brief, Habitat for Humanity breaks down the ways that the benefits of homeownership can be seen more dramatically over time. Besides the capacity for sustaining wealth, “homeownership promotes wealth building by acting as a forced savings mechanism and through home value appreciation. Homeowners make monthly payments that increase their equity in their homes by paying down the principal balance of their mortgage. Home value appreciation also helps homeowners build wealth by enabling them to realize greater proceeds if they sell the home or borrow against the additional equity.” It’s significant then to note that homeownership rates according to the US Census Bureau remain lowest for Americans under 35 years of age, a statistic that will likely become more drastic if the barriers to homeownership like the disproportionately high home prices in Bellingham continue to increase.


New Housing Options


Affordable housing developments like the newly opened Telegraph Townhomes are critical to sustainable growth in Bellingham. According to the Cascadia Daily News, the Telegraph Townhomes project is going “to consist of 52 permanently affordable homes, meaning there is a long-term price ceiling at which the houses can be bought and sold.”


Habitat for Humanity is an upstanding and necessary part of the housing solution; however not all families make 30-60% of the median income to qualify for their programs. According to 2020 Census data, the median household income in 2020 was $56,198. Kulshan CLT helps support individuals and families making 80% of median income, yet again working middle class families who make $57K per year still have difficulty purchasing a home for $785K.


As Governor Inslee said at the opening, “We have more homelessness per capita than similar states… because we have not built enough housing in the state of Washington [...]. We have to build more housing of all types and income levels.”


The responsible development of environmentally sustainable new homes in new neighborhoods will reduce the market cost of housing, allowing more of Bellingham’s citizens to become homeowners. Increasing homeownership will promote a heathy community and offer more citizens an economic stake in Bellingham’s future.



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WHAT CAN YOU DO TO HELP?

Contact your Bellingham City Council representative and tell them you support a proactive plan for sustainable growth.

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