Friday, May 25, 2018

New Affiliation, Same Local Independent Ownership

Some of you may have noticed some branding changes around this blog. Equity Northwest Properties a locally owned independent real estate brokerage has affiliated with national company, Weichert Realtors. As a relatively small brokerage Equity Northwest had advantages and disadvantages in the market. Small companies are market mobile and locally focused. These are good things. On the downside, the economy of scale works against them on technology platforms.

Weichert Realtors offers affiliations for independent real estate companies to continue with the gold standard of local professional service but with the added strength of a national giant in real estate and the large scale economy to bring amazing marketing and productivity opportunities to small brokerages.

So as of last week, Equity Northwest Properties is now Weichert Realtors® - Equity Northwest and I look forward to continuing to bring insights on real estate, with both national and local trends. I'll continue with tips and advice to my clients and the readers of this blog. And I am excited to have access to even more information and technology to bring you the best possible information and stronger and more thoroughly researched advice.

Enjoy this Memorial Day weekend and remember the men and women who have sacrificed their lives to help ensure America continues to be the beacon of freedom and hope for the world. 

Friday, May 18, 2018

Local Market Report

The MLS numbers for 2018 are showing some interesting trends. For the first four months of 2018 I am seeing a typical bump in activity on both sides of the market, supply and demand in roughly equal amounts maybe a slight gain for buyers in what has been a stubborn seller's market. Inventory is still tight but not as tight as last year, listed units outpacing sales by 50% will help pad the inventory and is clearly leading to a flattening of prices.

The median sold home price county-wide trails the sold average by roughly $44,000 a 12% gap. With a large pool of over 2000 sales, this is a reasonable indicator that the market is moving from entry level to mid-level buyers.

The entry-level has little inventory and many buyers have been nudged out of the market by the combination of high prices and rising interest rates. The middle market is seeing some traction as mid level buyers are jumping in to lock in a manageable mortgage rate.

There was a buyer's gain in March followed by a seller's gain in April so things seem to be about the same with sellers still holding an advantage in this market.

The both the median and average sold price is fairly flat over the last 4 months. Our market is being influenced by the rising interest rates.

Marketing time remains short with the median less than a week. This bodes well for sellers, but may also indicate sellers are more willing to accept lower price when listing price is "puffed up." Sellers are equally anxious to sell as they have the same rising rate concern as buyers.

Overall I see the market flattening for the rest of the year. Analysts seem to agree that middle single digit price appreciation is anticipated for 2018. If inventory remains tight, sellers will continue to have a slight advantage at the negotiating table. Buyers however, have gained some leverage in the market and the flattening of prices surely is a strong indicator the local market is moving towards neutrality. I like a mild seller's market, it is healthy and most importantly, sustainable.

Friday, May 11, 2018

Buyer's need to be quick on the draw, and pull the trigger.

Well, a little 'old west' parlance in that headline, really drives home the situation that buyers find themselves in. This is particularly in this tight inventory condition our local market is facing. I feel like the pool of buyers is shrinking, mostly due to rising rates and recent rising prices that have 'priced out' many buyers.

Our inventory levels however have remained tight enough that even the shrinking pool of buyers is enough to tip the scales towards favoring the purchase side of the equation. This is particularly noticeable in the entry level price ranges under the median.

Buyer trying to get into a property listed at less than $325,000 in Clark County, WA are facing an uphill battle with so few listings to choose from. Some buyers are taking too much time deliberating on a potential house, that some other buyer writes an offer and gets accepted while they were chewing on a decision.

Here is the situation that buyers are facing. Prices are still rising. The rate of appreciation has slowed quite a bit. But they are still rising. We may end up with 2018 at 6% appreciation. If that hold a $300,000 house will rise in price roughly $1,500 per month! Meanwhile rates have been ticking up all year long averaging about an 1/8 point per month. That means the $300,000 buyer is losing $4,800 in purchasing power every month! So buyers are getting hit on both sides! Sitting on the fence is literally killing buyers, and many have hopped in and are keeping this tight inventory turning.

Some worry about a market correction. This is always a risk that any buyer takes when prices have been on a steady rise. Economic conditions in general are looking favorable. I haven't read too many analytical reports suggesting a serious bubble exists. Most of the professionals seem to feel like a modest slowdown is on tap over the next few years. I believe that is a healthy condition.

I wrote in my 2010 book, 'Don't Panic' that buyers often put to much emphasis on the "investment" value of the home they are going to live in. The reality is that when we buy a house to live in, we are buying the utility of the house as shelter. Improved real estate is not a good investment unless you maximize its income. So if a buyer wants to live in a property and is worried about its "investment" value, they ought to be renting out every inch of unused space in that house, yet so few do.

If a house suits a buyer's needs, has the proper function, utility, style, layout, condition, quality, neighborhood, etc. They should be less concerned about its pure investment value and more concerned about whether that house will serve them well for its intended use, shelter and a feeling of 'home'.  Now that said, any buyer thinking about a short term proposition has to add a little emphasis on the potential for appreciation as selling the house can be difficult if the buyer has a tight equity position. In any case, unless one is buying the property specifically as an investment, a rental, flipper, etc. they should focus on the utility value of the home as that is what will serve them best in the long run.

One thing is certain, buyers need to pull the trigger, or the market may just leave them behind as permanent renters.

Friday, May 4, 2018

Hiatus For the Weekend

I'm taking a hiatus this weekend, I'll be back next week with a new post, in the meantime this is still relevant...

originally posted on February 9th, 2018, by Rod Sager

Bottom Remains Hot!

The entry level of the real estate market here in the Clark County area remains hot with a surplus of buyers bidding on a tight inventory of homes priced below the median. There has been a softening in the buyer pool and that may be due to a combination of higher rates and inflated value pricing people out of the market. However, inventory remains very tight in the bottom half of the market.

The middle and upper price ranges are seeing a serious slowdown in the rate of price growth. I am not seeing negative appreciation, but sellers are reducing their prices that they had up too high as the market has settled in a bit. The rush at the bottom produced a large swath of move-up buyers over the last couple of years, and that helped keep the pressure on at the top in 2015-2016 and part of '17. That wave seems to have subsided a bit and the battle in the upper price ranges has become neutral between sellers and buyers.

Interest rates will be the big story this year. It may be hard to believe for younger buyers that can't remember a time when interest rates were at 6% or more, but historically the average rate in fact hovers in the low 6% range. The treasury yields are a strong indicator for mortgage rates and treasuries are marching higher. This will ultimately result in higher mortgage rates that may reach 6% over the next years or so.

Higher rates tend to dampen the housing market. Our market however is so hot right now that a little cold water might do us some good. Just a little though ;) Buyers that have been sitting on the fence should absolutely get triggered on this interest rate issue. Rates will kill the ability to buy faster than rising prices. A little interest rate heat will also cool the "bubble" and that should help everyone rest easier. Most analysts are predicting much more modest price growth in real estate over the next year or two. This in between period where prices are a bit more stable and rates have yet to get traction to climb could be a great buying opportunity. It is a narrow window and rates will squeeze the buying strength. It's time to get on-board or stay home. The affordable house train is leaving the station.