Friday, June 29, 2018

Waterfront Real Estate will be Hot!

The waterfront project continues is forward march into the summer opening of the first restaurants and residential units. As this amazing project adds units there could be an buy opportunity in the Esther Short and Downtown areas as some may choose to sell there and move to the waterfront. In the long run I believe the waterfront will be much larger than the sum of its parts and will elevate the whole core downtown area.

Keep an eye on units in the following key buildings downtown. There could be a brief dip over the next few years as the new units come online.
  • Vancouver Center 2: Entry to mid-level condos floors 1-7
  • 500 Broadway: Luxury condos floors 5-6
  • Vancouver Center 3: Mid-level to luxury condos floors 8-11
  • Heritage Place: Mid-level condos floors 1-4 
I do not believe there will be any kind of crisis in these well established condo buildings in downtown Vancouver, just a chance that enough owners will want to upgrade or simply move to the waterfront that a brief surplus of downtown units may create an opportunity buying window.

A great many rental units are coming online right now from the brand new Uptown and Heroes Place projects to several other high density projects recently completed in Uptown and Downtown. But there hasn't been a lot of condo development just yet. Kirkland Tower on Block 4 of the water front will offer some 40 units on floors 2-12. These will range from 1000-3000 SF and that coincides well with the units downtown that range from as little as 600 SF all the way up to larger 3500 SF units in Vancouver Center 3 at 700 Washington Street. Kirkland broke ground recently and construction will begin starting with a giant hole in the ground similar to those we saw last year for blocks 6 and 8.

The City of Vancouver is working with Gramor Development to build out the city's Block Ten into a mid-rise mixed use building with a large grocery store on the main level. Downtown Vancouver should be seeing a serious increase in its 'city buzz' with these thousands of units adding to the local resident population. Instead of a downtown that buttons up after dark with the exodus of the business community, downtown is already starting to emit a more cosmopolitan community vibe. The city is also seeking a location downtown for an elementary school to educate the children of the thousands of new residents flocking to the area.

Below is a recent drone video produced by Dean Sorenson.

Friday, June 22, 2018

Overbuilt can be a problem...

The city of Vancouver has been pushing for infill development for many years but the high cost of development has home builders in a pinch. Building a luxury home in a neighborhood of starter homes tends to be counterproductive for the builder.

Buyers should always be aware of the location of their prospective property. Location has always been a cornerstone to real estate value. In general it is always better to buy the worst house on the street rather than the best house. I often have people ask me, "Why do I want the 'worst' house?" That sounds negative, but the reality is that neighborhoods drive value either up or down depending on what's happening in the area.

Buying the best house in the neighborhood is fine if all the houses in the area are similar and yours is just a tad bigger or on a larger lot. But an overbuilt house would be something like a 5500 foot English Tudor built on a street filled with 1950s 1200 foot ranch homes. That would be way over built and frankly the house would stand out in a negative way. The neighborhood of 1950s ranch homes might support values in the $300,000 range and the 5500 foot house could cost $500,000 to build. The market ceiling will tug the price down on the overbuilt property. That is counterproductive.

The opposite however can be quite favorable. A lone 1950s 1200 foot ranch surrounded by 5500 foot luxury homes allows the potential value to be very high on the little house. An addition or a serious remodel with the highest grade of materials would add more value to the home than it costs to do the work. The market ceiling in this neighborhood could be $600,000 and that leaves a great deal of potential upside for the 'underbuilt' house.

With the drive for infill development Vancouver USA is seeing this kind of neighborhood mix of properties more and more often. Development costs are so high the builders feel compelled to puff up the houses a bit with luxury designs and materials but sometimes they are pushing the neighborhood too far. There are curable problems and incurable problems and neighborhoods are often incurable. Having a house next to an interstate highway is an example of an incurable problem. Likewise there are good things about a neighborhood that could be lost in the future. For example a gorgeous stand of trees that fill an adjacent area to a neighborhood could someday be gone should that land be developed. A home next to that forest might look attractive and maybe experience a bump in value for the aesthetic value provided by the trees, but that is out of the homeowners control and may someday be gone. Paying too much of a premium for it is not wise.

I am seeing a lot of overbuilt homes for the area and buyers need to be cautious as these overbuilt homes are the first to slide in price in a down cycle. Buyers should always go in eyes wide open when considering a property. I have touched on this before including this article here.

Friday, June 15, 2018

Washington State Biggest YOY Increase in Nation

The Evergreen State indeed led all comers in real estate appreciation last year according to NAR reports circulating around. This is no surprise to locals but some relief for buyers in in sight as projections for 2018 by the typically optimistic NAR is more like 6% for this year. Sellers will still enjoy appreciation in the market but buyers can feel a little less exasperated as things are settling in.

Washington State had a 12.6% year over year increase only edging out Nevada by a fraction which was also 12.6%. Sellers looking to squeeze the most out of their resale may find a hilltop coming as rates continue to march upward and downward pressure on pricing is inevitable. Double digit market appreciation is never sustainable over the long term and we have had just about enough of it to stay healthy. I welcome a softer climb with modest average price growth in the 4-6% range as healthy and sustainable.

As reported right here recently, the market in the higher price ranges is already switching over to a buyer's advantage while the entry level sub-median range remains a sizzling hot plate of multiple offers and up-bidding. In the final analysis pricing homes properly yields the best results and sellers are well advised to not play games with over pricing or under pricing. Get it where it ought to be and the market will deliver a top dollar buyer in 30 days.

Friday, June 8, 2018

Dads, Grads, and Houses

June is often a big jumping in point in real estate. Typically the market sees a bit of an uptick in listing activity in late April and May which translates into buyer activity in late May and June. Well, hear we are on June 8th, sun is setting at 9 o'clock and things feel about the same actually. Inventory remains very tight under $400k, softens up a bit up to $600k, and up above that things turn in favor of buyers rather quickly!

This is HOT (less than 2 months inventory
In our local market, a seller with a home to sell under $400k that plans to move up to $600k; NOW is the time. You will get top dollar on your current house and be able to reasonably negotiate on the purchase of the new one. One of the recurring themes in my 2010 book, 'Don't Panic' was to buy low and sell high and sellers under $400,000 can sell high and above $600,000 they can buy low, well sort of low ;)
This is NOT more than 12 months inventory

This is a great move up opportunity that may evaporate if rates continue the upward march. rate pressure can soften the entry level market so this window of opportunity to sell in a seller's market and buy in a buyer's market at the same time may not last long.

You didn't see that coming... did you?

Friday, June 1, 2018

Market has become a mixed bag...

June is the start of the summer season for real estate and sellers that want to move out this summer in time for a new school year or just during the fair weather, now is the time to list. Typically the local market sees a modest boost in activity during the summer months and that can be good for both buyers and sellers. Sellers get a few more buyers looking and buyers get a few more houses to consider. It's a good thing all around in a market that has tightened up especially int he sub 400k range locally.

Despite what people may hear watching local and national news outlets, not every sector of our market is a raging seller's market. In the median to sub-median price ranges under $400k seller's are controlling the market with multiple offers and little room for negotiation by buyers. Seller's are still in a favorable position on homes priced up to $500k but above that inventory starts to get flush.

Clark County is sitting on 6-7 months of inventory in the $500 - 750k range which is neutral leaning a bit towards buyer's favor. From $750k - 1M things get worse for sellers with roughly a year's worth of inventory and buyer's are in control. Above one million dollars we have a bloated inventory that would take more than four YEARS to deplete if no new listings are added at the current rate of consumption. Seller's in this price range are truly at the mercy of buyers. 

News media outlets tend to focus on the entry level and mid range prices that are still very hot, but many sellers in the upper range are a bit disillusioned about the market and some are shocked to find unfavorable conditions. This bodes well for entry level and mid range sellers that can still get top dollar for their small house and capitalize on a flush inventory for their larger move-up home.

The real estate market is a moving target and sellers are wise to consult a local pro with experience in the neighborhood they live in. Real estate is a local market and conditions can vary widely between price ranges, housing type, and location.