Friday, February 19, 2016

Our Healthy Market

Despite some media claims to the contrary the current real estate market in Clark County and the greater Portland Metro Area is not as hot as it was pre-crash. Don't get me wrong, the market is hot, but we are not seeing double digit growth across the whole of the market. Some areas are hotter than others and certain segments are crazy right now. The entry level market is a 'dog-eat-dog' situation with a frenzy of multiple offers on well priced homes under $240k.

Data for the local MLS for Clark County, WA reveals a healthy market. Remember, the robust boom is exciting when prices are rocketing into the stratosphere, but those conditions often suffer a hard landing. Real estate pricing is limited to the market's ability to pay. Incomes only rise so much. We are in a nice healthy situation where home prices are rising nicely, providing equity for homeowners but also staying somewhat in check with incomes. Right now the median household income in Clark County will buy a house priced at 85% of median. Although this is a little less than ideal, it is very healthy especially when compared to markets in California such as Sonoma County where the median household income buys a house priced at only 55% of median.That is not healthy at all. The quality of life in a community where only the wealthy can afford homes is miserable. That is also not sustainable, and this is why those types of markets suffer a boom-bust cycle that is often severe.

We are very fortunate here in the Portland-Vancouver Metro area to have reasonably high incomes and moderately high home prices. Yes this real estate market is more expensive than markets such as Spokane, Boise or Salt Lake City, but we are within 10% of the income in most California markets yet have housing that is anywhere from 20-70% less expensive. That is in a word... "Healthy". Affordability is the key and it remains important to keep housing available to working class people here in Clark County. 

Our local government may have to back off the heavy development fees imposed on builders willing to build in the sub-median market. Governments can be greedy and that is no way to serve the people. I can't help but notice that much of the building boom in new residential construction is coming in well above the median pricing. This is largely because development fees are so high builders simply cannot make a profit building $250k houses. The demand for these homes is astronomical. It will be interesting to see if the local governments can help pave the way to retention of working class home ownership.

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