Friday, August 30, 2013

Real estate is a local business.

(I wrote this for the Equity Northwest Blog and thought I would re-post it here.)

How often have you heard the expression, "real estate is about location, location, location"? If we are to take this idea at face value, then real estate is a local business. Local companies are much more in tune with the neighborhood trends, community developments, municipal and county regulatory and legislative agendas, and other important facts about the area. It stands to reason that working with a local real estate professional in a local company is a good idea.

This blog has been established to get good real estate information out to the public. We often post tips about home care, and local market trends. Today we will talk about the importance of local businesses and local professionals.

When choosing a real estate agent, buyers ought to think about the local aspect of real estate. Will this person understand the immediate market they are interested in? Is the company they represent a locally owned company or a national franchise? If the latter, then are they at least locally focused. Purchasing a home is most likely the single most expensive thing most people will ever buy. It seems obvious that care and attention to whom trust is placed to represent that transaction is paramount.
Local is critical because the difference between a "house" and a "home" is local. Building a home from a house is done with family, friends, neighborhoods, schools, churches, clubs and services. Local, local, local is as important as location, location, location because knowing the right location requires a local awareness.

If moving from Portland, OR buyers should consider carefully before using a dual licensed Portland agent for a Clark County home purchase. Although Portland is just across the river, it is a state away. Real estate in Oregon is conducted in a similar fashion but there are many different facets and nuanced subtleties that can be significant enough to bring about pause.

It's been more than a decade since Gene Thompson left one of America's largest national real estate firms to open his own brokerage here in Vancouver U.S.A. Equity Northwest Properties has always adhered to Gene's idea that real estate is a local business. One of the advantages to large national chains has always been resources. But national chains are typically run from a corporate office in some far away place. Local branches are often force fed a staple diet of the latest corporate headquarters buzz program. As we turned the century over to a new millennium many of those "resources" began to become widely accessible through the ever present internet technology. Now smaller, local companies have similar access. The resource edge offered by the big national brokerages has eroded significantly since 2000.

That has allowed companies like Equity Northwest Properties to thrive. Local Realtors® working local markets with a local corporate policy is pure bliss. This local minded business model has allowed Gene's company to evolve into one of the region's largest independent brokerages with offices in Vancouver, Camas and Kelso. Between the three offices are affiliations with the two largest multiple listing services in the Pacific Northwest, both the RMLS and NWMLS. That makes Equity a very local company with a regional reach. This is a powerful combination.

In conclusion buyers and sellers should strongly consider the local aspect of real estate when deciding upon whom they will hire to represent them. The best decisions are made with the best information and real estate information is local to the core.

Friday, August 23, 2013

Why Autumn is a good time to buy a house

Today I would like to offer up a good reason that frustrated buyers may find the proverbial light at the end of the tunnel as the fall season approaches.

During the summer months, most real estate markets enjoy a surge in sales activity. Many home buyers are families with children and the idea of moving in between school years is very attractive. It also does not hurt us locally that we have fabulous summer weather with which to enjoy touring homes. In any market the law of supply and demand is ever present. The summer months are yielding more buyers and thus the market experiences buyer pressure. If that sales pressure is not alleviated by increased supply (listings) then prices will nudge or even surge upward. We have seen this effect locally and around the nation this summer.

As our summer comes to a close many buyers have left the market. These buyers may only be out temporarily to get the family adjusted for the new school year or perhaps they feel that next year will be better for them to buy. Of course some of those buyers became purchasers. For the patient buyers this could be a small but significant bonanza. Those buyers that have left the market represent a relief of sales pressure. My experience has been that more buyers tend to leave the market in the fall than sellers. This creates an opportunity to buy that may not have been available in the height of the summer sales madness.
Current Listing in the Felida area of Vancouver $274,900 

Some of the run up in price is caused by multiple offers becoming an auction like frenzy driving up the price. Sometimes its less exciting than that, but houses seemed difficult to find this summer. The autumn tends to soften that just a touch and that could be the edge a buyer needs to get the house they want at a price they can live with.

Buyers should not be discouraged as the cooler days of fall settle in. Rates have settled down a bit and still remain very low by historical standards. The Fed is indicating they will be backing off the support of these low rates as the year closes. This could be the opportunity some buyers have been waiting for to own the home they have always wanted. The window could close in the next few months as interests rise and buyers become panic prone bidders. Call your favorite Realtor® today and happy hunting.

Friday, August 16, 2013

July's MLS sales figures for Clark County were stellar

The numbers are in for July from our local multiple listing service and they look great. Looking back first at last year, July 2012 was healthy but not stellar. Inventory was starting to tighten up and demand was strong enough in certain segments to generate multiple offers. 499 transactions were closed in July 2012 for Clark County against this year's total of 696. We are still well off the frenzied pace of 2005-2007 but clearly the best we've seen since "the crash".

Evaluating numbers is never as easy as just looking at the one or two "big" stats. Often people, including some Realtors®, look at median price or total unit sales as an indicator that all market segments are moving equally. Just because the median price is up 21% by no means suggests that any random house that was sold last year is now worth 21% more this year. The real estate market is very complex with neighborhood fluctuations, locations, home size, price range, and styles often performing independent of each other based on market demand or supply.

The chart below shows the "big" over all county stats for this local market and then breaks the numbers down a little further to show some broad segment trends. The big question for John and Sally homeowner is often geared towards, "can I sell MY house right now"? If John and Sally own a condo they may not be much better off this year than they were last year in market appreciation. The condo market is almost always late to recover.

Last year the sales figures were heaviest in the entry level market. Those $125-150k three bedroom ramblers were being snatched up and as such, supply tightened up and prices soared. This year that market segment was priced high enough that demand slowed down a little, but the middle market surged with larger four bedroom houses seeing significant increases in unit sales. Those bigger mid sized homes saw a massive 59% increase in sales but a more modest 13% increase in median price.

Last year I said that the bottom has to tighten up first before the middle can take off. Well, the bottom did tighten up and now the middle is taking off this year. That is driving the increase in median price. The smaller two bedroom houses have peaked with only a 1.3% increase in median price despite a large surge in unit sales of 46%. Even the bread and butter three bedroom market that was red hot last year, is showing preliminary indications that the buyers are nearing their limits. The 18% increase in median against a large surge of 29% in units sold is still quite robust, however. The sellers in the entry level often move up to that bigger house and as they sell their 2 and 3 bedroom homes they move into the middle market. The 59% increase in unit sales in that segment will likely produce more impressive median increases when we check the numbers in a few months.

Of course this discussion has to hinge on keeping other complex variables favorable, such as the general economy, jobs and the ever critical mortgage rates.

The big takeaway for homeowners is the fact that their home that may have been upside down or too tight to sell, could in fact be a seller today. Contact your favorite Realtor® for a Comparative Market Analysis on your home. Most offer this service for no charge, I certainly will.


Tuesday, August 13, 2013

CoreLogic: Rapid Rise in Home Prices 'Remarkable'

This just in from the National Association of Realtors®


During the first six months of this year, home prices jumped 10 percent, the fastest pace in 36 years, CoreLogic reports. Mark Fleming, chief economist with CoreLogic, called the 10 percent jump "remarkable."

In June, the latest data available, home prices were up 11.6 percent year over year, according to CoreLogic’s home price index, which reflects distressed sales as well. June marked the 16th consecutive month of increases.

The pace of home price appreciation is showing signs of slowing. In June, prices rose 1.9 percent compared to May -- a slower pace for increases than in recent months. From April to May, prices rose 2.6 percent, while they rose nearly 2.8 percent in April from March.

Some analysts point to a slowing due to rising mortgage rates, fewer investors making purchases, and a rise in inventory levels of homes for sale. The National Association of REALTORS® reported that inventories of existing homes for sale rose to 5.2 months in June from 5 months in May. A six- to seven-month supply is considered a balanced market.

Still, prices are not showing signs of stalling. CoreLogic analysts predict that home prices will be up 12.5 percent year over year in July.

The five states with the highest home price appreciation year-over-year, according to CoreLogic’s June stats:
  • Nevada: +26.5%
  • California: +21.4%
  • Wyoming: +16.7%
  • Arizona: +16.2%
  • Georgia: +14.3%

Source: “Home Prices Rising at Fastest Pace in 36 Years,” Mortgage News Daily (Aug. 6, 2013) and “Home prices rise again, but at a slower pace,” USA Today (Aug. 6, 2013)

Rod's two cents: I think we will continue to enjoy a robust and healthy appreciation over the next 12-18 months.  I don't think it will continue at these break neck speeds, however. Interest rate volatility and a slow surge in new resale inventory as homeowners right the ship financially will balance things back to a healthy but modest rate of growth in the middle single digits.

Monday, August 5, 2013

Keeping an Eye on the Market

I wrote this article for the Equity Northwest Properties Blog this morning and decided to re-post it here for you.

There is a huge inventory of homes that were purchased at or near the height of the market from 2004-2008. The average homeowner moves every seven years so many of these homeowners that bought at the peak are getting towards that "time to move" point. The problem is that values for many of them are still not quite high enough to clear the loan obligation. Many of these would be sellers are sitting on the fence patiently waiting for the market to yield the price they need to exit clean.

For Realtors® and sellers this is a 'watch the market' time. We enjoyed a robust 8-12% gain in values over the last twelve months. If this upward pricing trend continues, many homeowners will finally exit the proverbial tunnel and be able to sell their home and clear all liens and fees.

Our local market and many other markets around the nation are seeing tight inventory, especially in the entry level price range. This is driving an increase in price. Low interest rates are also helping to keep demand relatively high. As these 'top of the market' homes become viable to sell again, we will see less of a squeeze on inventory. This can be a bit precarious, too much inventory may cause prices to flatten out if demand does not keep up. So long as interest rates remain at or below 5%, I believe the market will continue its growth, even if inventory levels fatten up. A combination of higher rates in the more normal range of 6-7% and bulkier inventory would likely cause the prices to stop rising or at least severely slow down.

What does all this really mean? For buyers that really want to own, rather than rent, now is truly the time to buy. Rates are low and there is no guarantee they will remain low. Prices are rising but still relatively low. For sellers, things are a little dicey at the moment. Selling now could be the genius move of the decade or it could be one of those "oops" I should have waited situations. No one really knows what this fragile market will do. If you are a owner occupant seller and you actually want to move then selling as soon as possible makes sense. If you are selling based on an investment then you are forced to gamble a bit. Wait or sell? For an investor I would wait a little longer but of course that may or may not pan out. In the end, I believe real estate should be a long term investment and waiting will rarely cost you money, it may just cost you some time.

Sellers and would be sellers should remain 'market engaged'. In other words, pay attention. Things are moving in generally positive directions and the opportunity to sell will present itself soon. Potential sellers should stay in contact with their favorite agent or broker and 'keep and eye on the market'.