Real Estate Market 2026

Happy New Year! This year is going to be a tough call for projections. We have favorable interest rate trends that should act as a relief valve for slow activity. We also have some instability in in general economic flows and that could move the valve the other way a bit. 

Allot of aging boomers are selling off their larger family sized homes looking to move to warmer climates or just downsize into a smaller one level home. Normally this is a great thing as it provides a boost in the local market. The troubling thing in our current situation in the USA is that demand for resale homes over 2200 SF is falling. Families are notably smaller on average these days and home prices have gotten expensive making larger homes less attainable for families.   

That said, I find that a 2000 SF two story home is often less expensive than a 1500 SF ranch style home. These small to mid sized ranch homes on a single floor are coveted by both new home buyers and older downsize crowds. The down-sizers typically hold a buying advantage often paying in cash or with huge down payments and the ability to outbid entry level buyers. 

Entry level buyers should not hesitate to look at a bigger 1990s-mid 2000's two story home as pricing is often favorable versus competing against retirees with more money for the 1500 SF ranch homes.

Lower interest rates will attract buyers that have been sitting on the fence for the last couple years waiting for more buying power. These buyers, mostly entry level need to be careful because the window to act is often very tight. Once rates establish themselves at a clearly lower level, the market tends to pickup and prices rise. Even with lower rates a higher home price can thwart buyers just as much as a higher interest rate. Picking up a house today at 6.5% can and will payoff later even if rates drop further. You locked in a lower home price and can refinance later at a lower rate when the time is right. 

People looking for a value for money opportunity should look at 15-30 year old resale homes with two stories and 1800-2200 SF. This is the current sweet spot in real estate for entry level and mid tier buyers with $450-600k in buying power.

I feel like the 2026 has potential to see a small to medium increase in activity which would likely start moving prices up again perhaps as soon as this summer. I do not see a boom on the horizon especially if the legislature decides to add an income tax. Do not be fooled by politicians that say only the "rich" will pay the tax, we all pay the tax if not directly, indirectly. Our strong real estate market is driven by the State of Washingtons booming economy. The tax load is already too high and the economy is going to suffer, greedy politicians with egregious spending habits will slow the economy and ultimately act as a counter to the real estate market. 

My best guess is will should see appreciation in the low single digits this upcoming year. 

Water views dominate desirability, but about City views?

Human beings consistently prefer a view over water, be it the ocean, a lake, or river. Water has a calming effect. The second most "desirable" view tends to be natural landscapes. Views of a prominent mountain or a gorgeous landscape like the Columbia River Gorge. Cityscape views come in third and have the most variability and risk.

Landscape views tend to lose in the night time and sometimes a water view does as well especially in coastal and rural areas. The one view type that tends to shine at night, literally and figuratively, is an urban landscape.

The long standing issue with urban landscapes is the near constant threat of some future urban project rising up to block that city view. Some really high end buildings hyper rich markets have literally bought airspace rights over other structures to create permanent view corridors in dense cities like Hong Kong and NYC. 

Urban landscape views are often at the best at night as bright city lights dance in the windows of urban condos. They are mostly protected from the weather as well. Cloudy days and nights do not ruin the views. About the only natural event that messes with a city view is dense fog.

Vancouver has an interesting trifecta opportunity with many of its urban views. The Downtown area lies on the shores of the mighty Columbia River offering many homeowners a lovely water view that also lights up at night with reflections of the cityscape all through the night. Towering Cascade volcanoes are also visible from many locations as well. Some of Vancouver's waterfront neighborhoods both in the urban core and in the suburbs along the Columbia share this rare trifecta of views.

At the end of the proverbial day, most people will still gravitate towards a water view. This certainly helps explain why waterfront properties tend to sell for substantially more money than other view types or no views at all. City dwellers in Vancouver can enjoy all three view types from the same picture window. You just have to have really deep pockets.
  

Downtown Vancouver Condos

Downtown Vancouver remains a stronger market relative to many other neighborhoods. Downtown has enjoyed a surge in popularity compared to the other urban neighborhoods in Portland. If you want a true city living experience you are limited to neighborhoods like Downtown Portland, The Pearl District, Lloyd District, South Waterfront, and Slabtown in Portland or right here in Downtown Vancouver. Portland still suffers from empty storefronts and a depressed office market in the city center. Vancouver on the other hand is adding merchants and restaurants and has a fairly tight office market that is actually expanding rather than contracting.

The City of Portland has made some major changes in the structure of the local government and it seems like things are starting to improve. They are however going to need allot of time to recover their sagging reputation. Thats the thing about a reputation, it only takes a minute to ruin it, it can take years to gain it back. 

Vancouver has to be very careful here and mindful of its own history. In the 1980s and early 1990s Vancouver's downtown was in terrible shape. The beautiful Esther Short Park was over run with vagrants, drug dealers, and strung out prostitutes. Main Street had more sleazy card rooms and pawn shops than they did restaurants. Even after the beautiful park renovations and the fabulous redevelopment of the old Lucky Lager brewery site Vancouver still clung to the reputation as being a dumpy city. The Mayor continued to push for redevelopment and the city continued to improve. After the recession ended and the Waterfront started to emerge the city started appearing on the news for positive reasons rather than negative stories. Now that the Waterfront is 70% built-out, the city enjoys the reputation for being a destination and the hip place to hang out. It took nearly three decades to crawl out from under the crappy reputation and our local leaders need to be vigilant not to let the homeless overrun it, nor let crime get out of hand. That shiny reputation we have earned over the last 15 years can be gone in an instant. The city needs to reap the rewards of higher tax revenues downtown and if they screw up and let things decline they will never recover the investment they have into the redevelopment. Politicians are rarely smart enough to see that. 

I did a YouTube video that goes over the six condominium developments in the Downtown specifically as a bit of a guide to condos. You can watch that here: