Is Urban Living Returning to America?

originally posted in The Couv Life 7/17/2023 by Rod Sager

Decades ago the post war boom started and a new type of neighborhood emerged with cute culdesacs and curvy streets. Homes were built with oversize lots and everything was centered around the automobile. American's ate it up and millions of these houses in suburbia were built and are still being built today. In the 1980s and 90s America's Downtown areas were in rough shape. The age of the suburban shopping mall and highway bypasses left many cities with an urban core in serious decline. The once happy Downtown excitement became a dismal study in urban decay. It was sad really, as some of our nation's most spectacular architecture was on display in the old city center in nearly every town.

But these days I am seeing a massive resurgence in Downtown Living. Not just here in America's Vancouver but all across the fruited plains of our nation. I saw it in Lafayette, IN and Covington, KY. I am seeing it in many places as people are now flocking to the hustle and bustle of the city, even in smaller cities and towns.

Vancouver USA is all over this trend. Not just Downtown and the Waterfront, but the new Palisades development on 192nd and the New Heights District that is under design right now. It seems a new generation of Americans may be longing for that old world city life and communities across the land are building it from high-rises to more modest mid-rise buildings. A new era of urban living is spreading like wildfire. Dense urban development tends to foster a community bond as people walk around the neighborhood, shopping and dining while on foot rather than driving. There can be no doubt this is a big deal to a large group of Americans as Vancouver can't get enough of these modern mid-rise and high-rise residential projects. Vacancy in the city center locally is in the low single digits. 

So it seems, America is returning to the old urban living model and Vancouver USA is all over the scene. To follow Vancouver's urban living check out Urban Living in the Couv here.

Ah the Couv life; it is good.

The market is humming a healthy tune

The numbers were published for last month by the MLS and data shows Clark County, WA was rather healthy. 750 new listings were posted against 610 new pending sales. A total of 1073 units were active and 497 units closed. The inventory remains stable at 2.2 months which still favors sellers. The MLS reported the median home price for new listings in March at $560,000 with the median sold price at $525,000. Despite the advantage to sellers, the median price has remained steady. Buyers are rather limited as rates and incomes are not lining up as nicely as they did a few years ago. 

Most of the activity is in the median price range about plus or minus 10% of the median. This means the sellers looking to part ways with homes between $450-$600k are in really good shape. There are plenty of buyers looking to get a home in this range. Most of the sellers in this range however are selling due to a career change to a new area or older folks retiring to warmer locales, people passing, etc.

The higher price ranges are definitely struggling a bit since that move up market is stifled a bit. There are many homeowners sitting on those 3% loans in their three bedroom two bath house that would love to make the move up to something bigger or nicer, but the new loan will be at 7% and they just can't swing that new payment.

There are ways to make it happen, especially for those with large equity positions. Potential sellers should not presume they can move up. Check to see where your equity position is, what you need to borrow to make that next move up. Maybe you can, maybe you can't, but it is worth a shot.

We do not know if we will see higher or lower prices next year. But if there is a correction, then that can chew up your equity position. Sometimes it is best to stay put, sometimes there is an opportunity to move up. It is wise to avoid assumptions.

Overall the numbers from last month reflect a healthy market that should be sustainable over the long haul.

Mortgage rates are stable, Buyers agency in jeopardy

The mortgage rates over the last few months have stabilized with the usual fluctuations in the market but a generally flat trend curve. Stability is almost as important as the rates themselves as buyers do not have to make rush decisions to try a lock a low rate. 

Recent legal matters based on a proposed settlement between the NAR and Federal regulators could lead to poor representation for buyers. Buyers may find themselves in a situation where they have to choose between paying an agent for their services or going it alone with the seller or listing agent. 

As is typical in these types of suits the plaintiff either doesn't understand the arrangement and purpose of the MLS or they don't care. In a nutshell an antitrust suit was filed against the NAR and it seems some of the plaintiffs accusations were true. But rather than simply fixing the problem this settlement is an egregious overreach and will ultimately end up hurting buyers and sellers alike.

There were apparently several areas of the country where the NAR had a fixed commission requirement for the buyers agent rather than a negotiable amount. If this is true and it seems like in some areas it was, then the antitrust suit on that charge has merit. The settlement however as proposed is likely to make things worse, not better. Here in Washington State for example, commissions have always been statutorily mandated as negotiable. We should not have to make any changes here. Yet we may have too. 

The idea of the MLS was to move away from the car dealership style of home selling that was rampant in the early 20th Century. People would go to a broker's office and look at houses they had, if they didn't like them they would go to another broker and so on. It was tedious and it often led to aggressive behavior by agents just like we see at car dealerships. The MLS idea was to have brokerages share their commissions with other brokerages. Under this arrange a Weichert Realtor could show properties listed by other brokerages such as RE/Max and still be paid for their efforts. The buyer was now represented with their own agent that at the least had a fiduciary responsibility to work in the best interests of the buyer. In Washington State it is not only a fiduciary responsibility it is a statutory responsibility. 

The plaintiff's claim was that the seller should not have to pay for the buyer's broker. That seems logical until you dig deeper. The seller is paying indirectly. The commission is solely the listing brokerages fee. The listing broker chooses to share it with another broker to help sell the home faster and for the highest possible price. The listing broker could keep the whole commission for himself and try to find a buyer on his own. In our county we have nearly 2000 agents. Why would I want to keep that property from those agents. They may have the buyer that loves the property so much they are willing to bid it up higher than any other buyer.

The seller agrees to pay a fee that is fully negotiable to the listing brokerage. The seller is not paying the buyers agent fee, they are paying the listing agent's fee. The listing agent is choosing to share that fee with another broker if they bring the highest and best offer to the table. How the listing agent chooses to use that fee is her business. She could donate the entire fee to charity, she could go on vacation to Hawaii, she can put it in her retirement account. It is hers to spend as she sees fit. Most listing agents choose to place the property on the MLS and share their fee to help get the highest price and best terms for their client. On the MLS the home will sell faster and for more money almost every time.

Feel free to reach out in the comments section if you have any questions about how agency works in the state of Washington. You can text "waloa" to 360-364-5621 to receive a link to the Washington State Law of Agency official pamphlet.