Friday, September 25, 2020

This Market is Getting HOT!

The crazy rush to snatch up every house has now extended up into the half million dollar price range. These super low rates and a tight inventory continue to push values higher. There is some kind of perfect real estate storm brewing round these parts as buyers are crawling out of the proverbial woodwork to snatch up anything under $500k. There are literal traffic jams leading into neighborhoods with sub-$400k homes as agents scramble to get offers in.

Low rates, tight inventory, and at least a little California and Oregon exodus appear to be more than enough to counteract any COVID-19 related economic slowdown. It has been a while since I saw a mad rush to buy like this, we had a similar run up in 2016-17. It's nuts out there for buyers with budgets under half a million dollars. Those of you qualified to spend a bit more will find a more relaxed experience as the supply of high end properties are more in line with demand at the moment.

Even fixers are starting to show robust activity after a couple of years of buyers snubbing them. This is a smokin' hot market right now and so long as rates stay low a sellers remain in the minority, buyers will have to fight for every deal.

Friday, September 11, 2020

Pricing is a critical element in the mid level price range

Pricing is a thing in this market. The sub $450,000 market is pretty hot right now and it is hard to miss the mark. But as you move into that middle range between $450k and $700k pricing is very important. Now, to be clear, pricing is important in all price ranges, but the market is hot enough right now at the entry point that a seller can get away with a price too low or too high. The starter market will gobble up a deal with multiple offers over asking if it is priced too low and over priced homes will see slightly under asking offers. But the middle range can be a bit dangerous. Price it too low and it will sell but multiple offers may not happen, and that means the seller is leaving money behind. Over price it and it will sit. Many buyer's are reluctant to offer substantially under asking even when the KNOW the house is too high. 

Getting the price just right is a very big deal right now in that middle range $450-$700k. Buyers should not be afraid to offer less if the home is overpriced. Low-balling is not a thing right now and buyers should be aware that sellers are often emotional enough to not even counter you should your offer be insulting. That said, a seller should counter any low ball offer because generally, a person that takes the time to write the offer has enough interest to potentially come to terms that are mutually acceptable. All parties in a real estate deal should try to stay logical about the price and terms, buyers should save the emotion for choosing part of the equation. Once a choice is made switch to logical thinking. 

That can be difficult, but I have had clients wish they had been logical in the negotiating phase after losing a house they later wished they had bought. Another issue is the time on market. This is often misunderstood by buyers and even agents sometimes. When a property has been on the market a long time there are a variety of reasons why, sometimes the house was overpriced for few months and the seller just lowered the price recently to place it more in line with the market. Some buyers may think they can low-ball the seller here, but they may find a solid wall. Often another buyer steps in and snipes the property from them while they wasted their time offering too low. 

There are 2.6 million people in the Portland-Vancouver metro area and some 7000 agents working it. The MLS is interconnected with the world wide web and few deals go undiscovered. If a price looks too good to be true, it probably isn't true :) Buyer's looking for a "deal" should look at fixers. They should be prepared to put 10% or preferably 20% down. This market has not been too cozy to fixers and that means potential value opportunities. Also homes that need enough work to be ineligible for FHA or VA financing are less competitive because at least half the buyers are using government backed loan products. Thinning the competition is a good way to get ahead. Of course buyers that are not predisposed to make repairs may find the local market prices for such work to be very expensive and thus that "deal" may turn out to be not such a great value after all.

Sellers and buyers can both do well in the current market climate. Buyers should be less concerned about price and buy the house that will make them happiest. Loan rates are super low right now and getting the house you want will pay off in the future as the mortgage rate is locked in at historic lows. Every month you get your "deal" when you make that payment. 

Friday, September 4, 2020

Fickle Market Likes Sub 400k

 This real estate market is gobbling up everything it sees under $400,000. Homes that seem to have high-ish prices are snapped up in a matter of days. I wrote "-ish" because this market still tends to ignore truly overpriced homes, but under $400,000 seems to be like under $300,000 was just two years ago.

These low interest rates are bringing new buyers to the market and that is no doubt applying maximum pressure at the entry point to home ownership.Sellers seem to be sitting tight as inventory in this high demand sector of the market remains tight. Any seller sitting on a sub $400k property ought to consider listing and making a move up as the middle of the market is not as hot as the bottom. We continue to see bottom pressure creating an opportunity to sell high and buy low-ish. Again with the "ish" that low is relatively speaking, this market will ignore an overpriced listing but it will swallow whole a "value" priced listing.

If you are sitting on a 3 bed 2 bath home in that coveted $300-$400k price range call me or call your go-to Realtor® today, you may be shocked to see what the market might pay for you little house :)


Friday, August 28, 2020

The Heights is Still a Great Area

Vancouver's Heights has been around for decades and it has remained a solid place to live. The Heights is actually a broad coalition of neighborhoods from the vintage upscale Dubois Park and South Cliff to the more modest areas such as Harney Heights and Northcrest. This area is also the focus of the next great redevelopment zone for the city, simply and aptly named "The Heights District." 

This new district will include the entire Tower Mall area where MacArthur meets Mill Plain east ro Andresan. This will be a new urban center designed to create an effective center of town feel while maintaining the mostly suburban feel of the existing neighborhoods. 

I wouldn't underestimate Vancouver's resolve on this. From the complete renovation of Esther Short, the bold Columbia Shores and the the shiny new Waterfront, Vancouver has been bring its 'A' game to the development of older areas. The existing neighborhoods offer a wide variety of opportunities from multi-million dollar mansions overlooking the Columbia to some classic Kaiser cottages from WWII.

These classic neighborhoods invoke more emotions and charm than many modern developments that tend to strip out native vegetation in favor a more systematic approach to greenery. I like the "mature" neighborhoods with those shady tree line streets and private yards. Vancouver's Heights area covers many neighborhoods and thousands of homes so there is something for every one. And someday fairly soon there will be a new urban district for the Heights as well.

Friday, August 21, 2020

Timing the Transaction is Doomed to Fail

 How's that for click bait? All too often I find buyers and sellers trying to line everything up for the perfect close and move. real estate transactions have lots of moving parts, seriously, internal combustion engine levels of moving parts! Trying to time everything perfectly with a train of buyers and sellers all lined up like the proverbial dominoes, is like herding cats.

I have mentioned this before and it is worth mentioning again. Buyers do not try to time your closing with your move out date for perfect alignment. That is a recipe for drama. You have a seller who is moving and often waiting on another seller at the other end who is waiting on a seller, etc. Pay a few bucks extra rent and give yourself a two week cushion. It's the best money you ever spend because now you are moving slowly rather than in a rush. Even in the best case scenario with the "perfect timing" approach you end up damaging your current apartment/house and or breaking your valuables because you are in a hurry. The worst case scenario is that you have movers show up but your seller can get out! Save yourself the heartache buy giving yourself a two week cushion. You'll thank me later :)

Interest rates remain low and buyers continue to enter the market where as sellers seem to be scarce. This has created a bit of a seller's market despite economic conditions that suggest otherwise. Buyers need to be prepared for multiple offers on well priced homes near or below the median price which is just shy of $400k locally.  

Friday, August 14, 2020

Vancouver is an eclectic mix with something for everyone

High-rise condos

Vancouver, USA is a place that has one of the most diverse residential real estate markets in the entire region. The city proper lies on the shores of the mighty Columbia River where nearly 200,000 people reside within the incorporated boundary. But Vancouver also has another 140,000 or so people living in urban and suburban neighborhoods just outside the official "city." 

This can make for some interesting transitions between various neighborhoods that have developed over the decades at different paces and under different county guidelines for development. When venturing outside the incorporated boundaries of the city, neighborhoods will take on a variety of different characteristics ranging from near rural to urban densities. Outside of the incorporated city one may find neighborhoods with streets that transition from fully developed suburbia to rural open culvert and back again. This is very rare inside the incorporated city but somewhat common in unincorporated neighborhoods. This is not a problem per se but for those that like a conforming neighborhood the incorporated city is the best bet.

It is mostly in the unincorporated neighborhoods that one can find a suburban home on a large 1/2 acre or even 1 acre lot with a bit of a country feel yet still "in town" with close proximity to suburban amenities like schools and shopping. But these are also neighborhoods where one might notice some quasi rural effects such as livestock, roosters, and other traditional rural and farming type ambiance for better or worse.

Most cities have a variety of transitional areas but Vancouver has 140,000 people living in these unincorporated neighborhoods. Vancouver has more people living in the neighborhoods outside the city than live in any of Portland's suburban cities including Gresham, Beaverton, and Hillsboro. 

At some point over the next decade or so, the city will annex most of these areas and when that happens some conformity changes will occur which in general helps the overall aesthetic, but may cripple some of the charm. 

Rural 5 acres, in close to "town"
People moving in from out of the area are often taken by surprise at the "size" of Vancouver and that is likely because they expected a city the size of the Vancouver described on the Wikipedia page and found the Vancouver of reality which is nearly twice as big. Vancouver has a robust downtown that has become very urban over the last 25 years yet remains notably more navigable than Portland's busier urban core. One can find high-rise condos and waterfront apartments in modern walk-able and sustainable neighborhoods. Vancouver has a large area of vintage classic homes in Norman Rockwell type neighborhoods such as Arnada, Shumway, Hough and Carter Park. The city has a wide swath of neighborhoods with homes dating to every decade of the 20th century. Vancouver is like a time machine of sorts offering a glimpse of neighborhood life across the decades. 

For those that want a house on five acres with horses and such, Vancouver even has a fair bit of that to the east in the Proebstel area. Like the title says, it's an eclectic mix with something for everyone :)

Friday, August 7, 2020

Crazy Market under $400k

 Buyers trying to find a house under $400k are going to meet a lot of other buyers doing the same thing. Down around $300k it is a zoo with multiple offers over asking the norm rather than the exception. With the Clark County Median home price right near $400k that is the new "sub-median" line.

Although COVID 19 has claimed many jobs the real estate market continues to be hot. Lenders are looking closely at buyers but when things align the loan rates are very low and that mean more buyers can afford a house despite the rising prices. This puts pressure on that entry level market.

But for the first time in a fair while, new homes are available in the sub-median price range. A brand new home for under $400k? Yes, not a lot of options, but they are out there. Before you run off to that shiny new subdivision be mindful that new home sin the sub median price range will be attached housing or at best a very small house on a tiny lot. The resale market can still deliver a small house on a big lot, and for many who seek some stretching room, that is the perfect ticket.

Did you ever think you'd see the day that a 800 SF 'Kaiser Cottage' would be fetching $300k? Well that day is here some of then are and they are getting snatched right up at those lofty prices. 2.5% interest rates on 30 year fixed loans will make a market out of thin air!

Friday, July 31, 2020

Home Owners not Selling, Buyers want to Buy!

This whole COVID 19 debacle has left the real estate market surprisingly hot. It's not that there are lots of sales, because there isn't. It is simply that the typical number of summertime sellers didn't materialize this year. Many homeowners are not selling right now whether due to Corona fear or something else altogether.

Meanwhile the downturn in jobs we see as a result of the COVID pandemic has slowed the demand a little, but the supply took a bigger hit. Last summer things were cooling off leaning towards a neutral market. This summer sellers are once again in the driver's seat in top down price ranges from 150% of median to the sub-median market.

This tight resale inventory has the local builders in solid spot as many would be resale buyers are looking at new construction to meet the demand. The local builders have their own issues related to COVID and other market forces like a supply of sub contractors and potential work shut downs every time the case load pops up and the Governor gets the itch.

What a strange and wild year 2020 has been. But at least the local real estate market can benefit from a very respectable demand against a tight supply. The mortgage rates are are helping the fuel the demand as well with buyers seeing rates the likes of which have never been seen before. 

Friday, July 24, 2020

Buyer's Just Got a Big Fat Raise... sort of.

Throughout most of this crazy year we call 2020 mortgage rates have been very low, not the lowest ever, but very, very low. Well now they are the LOWEST EVER. For buyers you just got an effective raise with regards to your home buying power. I have mentioned this in previous posts over the years but a 1/2 point difference in mortgage interest rate can add up to a tremendous amount of buying power.

A $300k mortgage at 3.5% will have a principle and interest payment of $1347 per month. That same loan at 3.0% has a PI payment of just $1265. A buyer is qualified based mostly on the amount of the payment relative to income and other payments. At 3.0% interest that $1347 payment gets a loan of $319,500. That is nearly $20,000 MORE buying power. It's like you just got a big fat raise from your boss.

I have many buyers that are looking about, and now is the time to pull the trigger on these crazy low rates. I have seen well qualified borrowers getting rates on 30 year fixed mortgages in the middle twos!

Buyer's this is your moment. Go out and lock down that dream house with a historic low mortgage.


Friday, July 17, 2020

Buyer's Should Consider a Light Fixer

Finance able fixer home sold last year
This real estate market is pretty robust, but buyers are still more interested in move-in ready properties. That leaves fixers as a value proposition especially in the entry level price range under the county-wide median price.

Not all fixers are problems. Buyers using a conventional style loan can by a cosmetically rough house for tens of thousands less than the future market value when fixed up. A little do it yourself action can go a long ways.

FHA and VA buyers are in a little tougher spot when looking at fixers. These are government backed loans and as such the property is scrutinized by the lender a bit more. That doesn't mean a light cosmetic fixer won't fly, it very well may be fine. I have helped buyers on a budget using VA and FHA loans to get into a light to medium fixer. Choosing an experienced local agent that understands the nuances of the various loan programs can go a long way towards getting a home under market that needs a little TLC.

The combination of a cosmetic discount and the ridiculously low rates for a mortgage right now, could lead a savvy buyer to a huge equity gain in the short term. Buyers seeking that perfect move in house may have to fight off some competitors but with loan rates dipping into the 2's for well qualified borrowers, now is definitely a good time to buy a house.

Sellers with a home to sell that is tidy and ready for the market, you are in the proverbial 'catbird seat' with swarms of eager buyers waiting to snatch up you home.

Friday, July 10, 2020

Buyers are Crawling Out of the Woodwork

RMLS graphic
Things are getting rather busy in the local real estate market. I'm not sure if this is COVID-19 pent up demand or just these crazy low rates that have populated all the mortgage ads. In any case I have been rather busy running about showing homes to a frenzied crowd of buyers as well as taking offers on my listings.

Locally we are on the cusp of entering Phase 3. The local government applied for it two weeks ago but a recent mini-spike of cases has them in a holding pattern at Phase 2. What ever the reason be it cabin fever, low interest rates, or optimism about the future end of this pandemic, buyers are out in force writing offers and buying houses. If seller don't start listing more houses we could see a return to rising values. Right now it seems that prices are basically steady.

The local MLS is showing a tightening inventory but prices year over year for June in the Portland-Vancouver Metro Area were up a a few ticks at 2.7%.

As crazy as this year has been, real estate has weathered the storm pretty well, I am certainly thankful for that.

Friday, July 3, 2020

Mortgage Rates Dip to Lowest Ever!

The Associated Press released an article I found in the Columbian yesterday indicating that America's major mortgage indices had bottomed out to the lowest levels in history. 30 year fixed rates in the very low 3s and even some high 2s are available to highly qualified borrowers. This is a great time for even those with weaker credit profiles to jump in, as rates across the board should be lower. Rates that were reserved for the 750+ FICO crowd a few months ago are now garden variety rates available to average credit score individuals.

A rate change from 4% yields a principle and interest payment on a $300,000 mortgage of $1,432 versus a 3% payment on the same mortgage of $1,265 a $167 per month savings and a savings of more than $60,000 over the life of the loan! Another way to look at these low rates is the buying power. A borrower limited to a principle and interest payment of $1,432 per month can borrow $300,000 at 4% but at 3% they can borrow $339,750! Nearly $40,000 MORE house for the same payment! 

Buyers be aware that rates vary around the country and a borrowers credit and financial profile can lead to a wide range of rates spanning at least a 1/2 percent for a borrower with an average to below average score and other loan related financials. Where a "golden" borrower might get a rate at 2.875% someone with a more typical 680 score and tighter monthly budget might be at 3.375%. Always check with your trusted loan professional before making any decisions but remember even if you can't get the LOWEST rate out there the rate you CAN get now will be the best it could possibly be since rates are lower than ever before, right now!  

Buyers that have recently felt priced out of the market, may have just been priced back in. Mortgage raters can be fickle and that means buyer on the pricing bubble need to act quickly. Even a 1/4 point rate bump might price some buyers out again.

Friday, June 26, 2020

Solid News on Real Estate

Real estate activity remains positive across the broad American market. This runs in the face of a slowing economy and difficulties facing businesses as they cope with COVID -19 related restrictions. I mentioned in previous posts that pricing remains steady due largely to the fact that both buyers and sellers are in short supply and that has kept the relative inventory balance similar to conditions prior to the Corona Virus pandemic.

Real estate sales in Clark County are down but not because of a lack of demand, but rather a lack of inventory. Pricing is steady and buyers are still facing a multiple offer environment on homes priced well or nearly anything under the local median price.

This economic slowdown may go down in history as the weirdest recession ever. Buyers seem to think the slowdown has made their bargaining position stronger, but they are finding out the market is still rather tough on buyers in the sub $350,000 price range. Buyers need to be willing to lead with a strong offer when bidding for sub-median priced homes.

Meanwhile up at the other end of the pricing spectrum, buyers with more than $600,000 to spend are seeing more malleable sellers. A well priced high-end home will still attract multiple offers, but most pricing at the top of the range seems to be neutral or high and buyers can expect some room for negotiation on these types of listings.

Overall we are fortunate to have a warm market during an otherwise cool economy.

Saturday, June 20, 2020

Another revisit to Vancouver's Gentrification

originally published 11/30/2018, by Rod Sager

Gentrification has become a 'dirty' word in some circles. For those unaware of this term, it is used to describe the redevelopment of older run-down areas into more vibrant and affluent neighborhoods. There are always going to be growing pains when this type of real estate turnover happens.

The funny thing about it is this: when neighborhoods are run down they tend to produce less income and thus less taxes for local governments. They also typically have a higher drain on local services funded by those taxes. People are often complaining about all the issues associated with these types of neighborhoods, increased crime, vagrancy, drugs, etc.

After the neighborhoods start to get redeveloped the local area often becomes more expensive and sometimes people that live there can no longer afford the rents / prices. This creates a whole new layer of complaints from constituents.

When old industrial areas are converted to residential, this is less of a problem since no one "lived" in the abandoned industrial areas. One might think of Portland's South Waterfront or Vancouver's new waterfront. But ultimately these areas create a sphere of affluence around them putting upward pressure on rents and property values in nearby neighborhoods.

It can become the classic scenario of pleasing one group by pissing off another. For local governments chasing tax revenue the choice is easy, gentrification benefits the community at large so long as the local elected officials use the new found tax wealth to benefit the community at large. Sometimes that happens other times not so much.

In general Vancouver USA will benefit from the gentrification of Downtown and surrounding areas. What is most important for those who feel they may be on the pricing bubble is to buy while you can. As values push upward, those who bought will benefit greatly where as those who continue to rent will find themselves on increasingly thin ice. Soon they who choose to rent will become the voices against gentrification. Yet often they were the voices against the run down, crime infested neighborhoods that are being fixed.

The moral of this tale is that if you want to be able to stay in an area that is rising up, you better buy while you can. In these rising value scenarios, renters have to move, owners choose to move. That is a big difference.

Friday, June 12, 2020

Buyers Leery of Future, Justified?

Some buyers seem to be a bit leery of the future with all the COVID-19, civil unrest, market volatility, and such some might think, :"of course they are!" But should they be, really? Perhaps, but this current situation we find ourselves in is more political than anything else. COVID-19 is a real threat, but governments are on it, taking precautions and things are at least stable for the moment on the health front. As for the civil unrest this will also settle down. Hopefully the people in government can turn to meaningful reforms to resolve these deep rooted problems and social conditions can start to heal. We have been down this road before.

Real Estate however is a commodity. Whether one rents or owns we all need a place to live. Real estate can weather the storms of health pandemics and even civil unrest. So long as our financial institutions are solvent and prepared to provide funding for development and loans for purchases the industry should be OK.

The inventory levels locally are still about as tight as they were right before the pandemic hit. As I have written several times over the last couple of months, listings are down and buyers are down in near equal numbers and that has left the market slower but steady on values. So long as the balance between buyers and sellers does not slip to far in favor of buyers the market should continue to be healthy. Economic conditions are not ideal, but they are still solvent and that means that buyers can buy with some confidence. Even if prices take a dip, which they could, owning real estate is still better than paying rent for the vast majority of people.

Buyers should bear in mind that during the last real estate crisis in 2009-2011, housing prices were low but rents skyrocketed. Once a buyer buys a house the "rent" ie. mortgage payment is fixed. No landlord to raise the rent. Should a buyer encounter difficulty with income, it is generally easier for a landlord to evict a tenant than it is a bank to foreclose. The decision to buy a house should not be put off due to fear of job loss or income reduction because that fear applies to renters and buyers alike.

The real estate market remains sound and the trend does not seem likely to change dramatically one way or the other in the short term. 

Friday, June 5, 2020

Mortgage Lending Seems to be Weathering the Storm

Mortgage rates have managed to stay low and in some cases dip a bit lower still. The combination of a pandemic and now civil unrest has not been too disruptive tot he local real estate market nor seemingly the lending aspect of real estate.

When rates dip low that reveals a wonderful opportunity for buyers to get a lower payment or to afford a larger or nicer home without paying more money for it. Generally low rates lead to an uptick in activity for buyers and thus a rising price condition. However, COVID-19 has managed to keep a lid on prices. The recent civil unrest may also help keep prices in check. For buyers this is good news a combination of low rates and stable pricing is always a good thing.

Buyers thinking about a home should get started now because rates will only remain low while investors are leery of equities. Furthermore as COVID-19 response restrictions are eased more buyers are likely to emerge and the market could potentially see a return to upward pricing.

Mortgage lenders seem to be handling the COVID-19 well in underwriting. The tendency in a downward job market is for lenders to become more tight with buyers. So far it seems only marginal. Other lending lines like credit cards and car loans are getting real stingy.

This is a strange set of conditions we see now so buckle up and enjoy the ride.

Friday, May 29, 2020

Vancouver Blossoming into Big City

Vancouver is transitioning well into "city" territory rather than it's traditional role of suburb. Not since WWII has Vancouver really been this far ahead of all the other regional cities in the Portland-Vancouver Metro Area.

The census 2020 should show the City proper at close to 200,000 people and in the 14 zip-codes that make up the whole of the 'Couv' the count should roll in around 335,000. Just completing the pending Orchards annexation alone will put Vancouver well into the top 100 cities in America ahead of Buffalo NY and they have an NFL team!

Vancouver is living up to the challenge with a robust commitment to urban development from high density projects in suburbia right to the core of the city with the new waterfront and increased density in the downtown area. Our skyline is transforming before our eyes with a sweeping panorama from the Interstate bridge to the midway point of the waterfront. But the waterfront has just begun to grow and over the next several years our urban skyline will feature a contiguous row of high rise buildings from downtown all the way to the port.

Real estate opportunities abound for commercial, residential and even industrial applications. This town is tearing away from the tether to Portland and although our symbiotic relationship will not likely ever go away, we are out of the nest and starting to soar.

Business opportunities continue to provide excellent jobs and the desire for employees to avoid commuting to Portland ensures Washington employers the best pick of local talent. Living and working in Clark County is the dream scenario as employees avoid Oregon's brutal, soul crushing income tax, lousy highway system, and Portland's aggressive homeless population. Meanwhile employees over here enjoy superior schools, less busy highways, and overall better quality of life.

Vancouver has an opportunity when this COVID crisis is over to make serious plays for employers in Portland fed up with the excessive regulation, constant protests disrupting business, homeless camps destroying the environment with litter and human waste, and unhappy employees eager to leave for greener pastures elsewhere... like Vancouver.

Hopefully the Mayor is up to the challenge and we can continue this amazing urban transformation. For residential real estate the options in Vancouver are across the full spectrum from 10,000 square foot mansions on the water to multi-million dollar riverfront condos and everything else right down to a bargain value on one of those darling 'Kaiser Cottages' one can still find under $300,000.

Things are still looking up in America's Vancouver and all across Clark County.

Friday, May 22, 2020

The Natives are Getting Restless

Washingtonians are getting a bit restless these days. The Governor's iron-fisted lock-down is losing support faster than the devil on Sunday morning. Several of Washington's counties are already in Phase II of the Governor's planned re-opening ahead a schedule due supposedly to favorable new cases and such. Locally Clark County is now eligible for an early move to Phase II making us the first of the urban counties to be so granted.

Governor Inslee is up for re-election and I can only imagine he intends to win. Pissing off 75% of the voters is not an ideal way to win an election that is but five months away. The governor has to balance public safety with the will of that public to comply and compliance is starting to run thin on patience.

Phase II will allow for a partial reopening of restaurants with strict guidelines to keep with the notion of social distancing and general safety. This move into Phase II will definitely help economic conditions and that of course will help keep real estate stable through the summer.

Our market continues to be stable despite a massive overall slowdown in activity. I have been on about this since the dawn of this pandemic. Real estate is not unlike most economic models in that it is largely driven by supply and demand. In a typical economic cycle demand is the driving side that moves the market up or down. A slow economy tends to slow the demand for housing by reducing the number of qualified buyers. But this pandemic has actually led to a reduction in both willing sellers as well as qualified buyers. When both the supply and demand drop simultaneously then the market tends to be flat rather than drop. Real estate agents are feeling it because there are less sellers and less buyers which in turn reduces the number of transactions taking place in a given month. But buyers should not expect to strut around like a rooster in the hen house because sellers are holding their ground. Well priced homes are still seeing multiple offers.

So long as this remains the case we have a very good chance of seeing a nice recovery in real estate because the the end of COVID-19 will likely lead to a rise on both sides of the supply/demand chain.

I really hope that this Corona virus settles down so we can all get back to work and back to being productive and in a healthy environment.

Friday, May 15, 2020

Well Priced Properties Go FAST!

For nearly a year now, the real estate market has been in a state of near neutral conditions, favoring  the buyers or sellers with a sliding scale from entry level slightly favoring sellers to upper end slightly favoring buyers. That has not changed even with the COVID-19 pandemic. A well priced property will sell and if that property is priced below the local median it will sell quickly. Local median prices fluctuate in Clark County between $350k and $450k depending on the area.

There is an opportunity for sellers and buyers in that the overall market is slower than normal, there are fewer homes being listed and fewer buyers bidding. So pricing is steady but the atmosphere is a bit more relaxed. It's a good time to be a buyer or seller because your agent should have a little extra time since volume is down.

There is always opportunity in real estate when you keep your eyes peeled for it. One part of the market that seems to be softening up is the fixers. Most buyers right now are looking for something turn key, move in ready. So looking for something that needs a little TLC could produce an opportunity to get a bargain. Don't expect a crazy bargain though, this market is too large to let a good deal go unnoticed.

Stay safe and let's hope the Governor's phase 2 plan gives us a little more room to stretch out.

Friday, May 1, 2020

Governor Expected to Announce COVID-19 Revisions

* Note of correction: I mention below Governor Inslee is up for reelection in 2022 he is actually up for reelection in 2020

Before I make comments on the upcoming information from the Governor's office, real estate is still chugging along at a slow but measured pace. The slow down is seems to be equally distributed between buyers and sellers keeping the market in balance and prices steady. This is good news for real estate at a time that many industries are seeing hard times in the face of this pandemic.

Sometime today Governor Inslee is expected to make an announcement regarding the May 4th revision to his COVID-19 response plan. Although the governor's office has suggested some loosening may come, it is highly unlikely that any changes will be that significant. This is where the governor will make or break his entire career.

This virus is a genuine threat and measures were needed and still are needed to protect the health and safety of Washington residents. Finding the balance is not easy but as they say, that's why he gets paid the big bucks. It is times like this that truly test the leadership of government executive officers. I do not envy the position Governor Inslee is facing. This could go so very wrong that voters anger lingers all the way to the 2022 election or worse yet, a recall of the Governor.

Washington residents have been fairly patient these last 6 weeks under a fairly heavy handed approach to containing this virus outbreak. Now with news circulating out of New York that this virus is not quite as deadly as originally thought, the governor best tread carefully. If he goes too strict he may face a challenge for recall or maybe worse. But if he goes too soft and there is a relapse of the virus he could face equal scrutiny. The governor needs to show an understanding of the health risks measured against known risks of economic collapse on the health and well being of the state at large. Trading a million or more Washington residents livelyhood and or lives, though economic loss of job, health care, housing, and other fundamental life necessities in exchange for "potentially" saving a few thousand lives to COVID-19 may not sit well with voters of either party.

I hope the governor sees fit to allow the bulk of the workforce to return to work with some COVID-19 safety conditions. I do not think any kind of close quarters events should be allowed yet, but there is no reason restaurants and other establishments should not be able to at least operate at partial  capacity allowing for social distancing and with proper staff precautions to minimize potential spreading. Factories and the like need to get back to work ASAP.

The amazing economy we had rolling in Q1 was able to absorb this 4-6 week shut down, but the government does not have the resources to continue floating aid for much longer. Let's all hope Governor Inslee and other leaders around the nation can get this call right. If we crash this economy so hard we enter an actual depression, people will wish they died from virus rather than ride out what there ancestors had to endure from 1929 to 1941. There is no sugar coating a depression. It will make the "great recession" of 2009-2011 seem like a economic boom. This is not a place we ever want to go and certainly we should not trust a government that would deliberately take us there. The people who are suffering under this lock down are the poor and the middle class, the rich are doing just fine so keep that in mind.

Things are still fundamentally sound and smart planning from our leaders can help us recover by the end of the year. For real estate, things are still solid, slow, but steady. Putting people back to work will do wonders for the morale of the nation, will energize the economy, and most likely save lives.

That's my two cents, anyway.

Friday, April 24, 2020

We are Still Doing Real Estate in Washington

Real Estate is still alive in Washington State. Governor Inslee has provided guidelines as well as a few mandates for the Real Estate industry. Seller may still list their homes for sale, Realtors® can still show them. We have some operational adjustments to ensure we do not spread the virus around and that's fair and good.

I have noticed that both buyers and sellers have slowed down of decided to wait out the pandemic. That may be fine and well but I believe that buyers and sellers should only do that if they want to do that and not because they think the Governor said they can't. Governor Inslee has provided a pathway for real estate to continue to operate under the pandemic control measures he has in place.

I have seen a roughly equal loss of buyers and sellers so the market conditions remain neutral and pricing is stable. This is a still a good time to buy or sell your home. Banks are still lending money and closings are still happening. I just closed a transaction for a seller that has greatly enhanced their retirement plans as they got an opportunity to get into a senior retirement place they have been waiting for. Don't let COVID-19 disrupt your retirement, moving or any real estate plans, we can still help people with all their real estate needs.

Stay healthy, follow that social distancing, and soon we will all be able to move towards a more normal lifestyle.

Friday, April 17, 2020

Let's Keep Up the Good Work, Almost there...

COVID-19 is hopefully starting its backward slide and that means the Governor will be able to look closely at softening the stay home restrictions imposed until May 4th here in the Evergreen State.

Home buyers and home owners looking to sell will be happy to see at least a slight softening on the COVID-19 response and I think Governor Inslee may be feeling the same. I guess we will just have to see in the coming weeks.

I am not seeing a slide in prices or any kind of real estate adjustment and I still believe that is largely due to the fact that both the supply side and the demand side are slower so the overall market seems steady.

Locally as Realtors® we can still show homes but have to follow strict guidelines including limiting people in the house and using sanitation and distancing guidelines. i take that part very seriously and understand we must try and keep this thing from having a relapse.

Buyers can and should make an offer on any house they like as the seller will likely try to accommodate them. Everyone is a bit edgy about the future. People are thinking how long is this going on? will I keep my job? These types of thing and seller are worried about that too. Will this buyer still have a job when the loan is done?

Hopefully we can start getting a large chunk of the workforce back on the job and some of this can subside. We will likely have a quasi-normal at best summer as this thing will lurk in the background as we prepare for a possible resurgence in the fall.

Get ready the pent up demand for real estate might be unleashed tsunami style if things start to improve heading into May.

Friday, April 10, 2020

Steady as she goes, Captain

Throughout all the doom and gloom COVID 19 this and that, the local real estate market chugs along. Volume is way down but it is down on both sides of the market, supply is down and demand is down and it seems in a nearly equal fashion.

Prices are holding steady and the market will survive this providing we can get back to work in May. I am holding out hope that the Governor here in Washington State will hold the line at the current "stay home" mandate till May 4th and then relax things so people can return to some sense of normality as well as normal income flow.

Everything set on the shoulders of america's governors and the Feds as they decide whether to extend the "crisis" or put us back to work. Stay tuned America, this is big.

Friday, April 3, 2020

Governor Modifies and Clarifies Executive Order

Here in Washington State, Governor Inslee made a few modifications to the Executive Order "Stay Home" originally issued last week. The governor modified the real estate profession requirements to allow limited showings and generally loosened up the industry restrictions during the "stay home" order. He also made some "clarifications" about the construction industry that has sent home the majority of construction industry workers. Construction is effectively shut down as of now except for critical infrastructure and emergency projects.

I appreciate the governor giving some latitude to real estate but I think some of that latitude should be extended to the construction trades as well. I am familiar with construction activities and most construction projects have workers space at 6 feet or further 90% of the time and the systems in place could be modified by project managers to gain 100% compliance.

I do not envy the position of the president or any of our state governors as they have to make important decisions that can be a matter of life and death as well as the cause economic calamities. I still believe the governor is a bit heavy handed here with the COVID-19 response. Now this is an important and dangerous situation so I am not of the mind to suggest the governor should not have taken decisive action, in fact to the contrary, I think he had to. But the economy is also import as it is the lifeblood for healthcare, well being, and ultimately funds the government's operations.

Governor Inslee needs to keep as many people employed as possible in any position that can honor the 6 foot distancing. Where the governor can be heavy handed is in the enforcement of that 6 foot rule and any other COVID-19 mandates. Project managers do not want to face heavy fines or a shutdown over workers failing to comply, so site supers would be more than willing to crack down and keep everyone safe.

Factories and other operations where stations are close, could be modified to run half ops with half the stations closed and other modifications to the systems to keep workers employed should be considered. Even restaurants could have been open with 1/3 to 1/2 cap restrictions but I know that is unlikely to be approved.

The bottom line is that buyers and sellers can still execute their transactions and the governor is to be commended for seeing that real estate procedures can be modified to comply with the government safety mandate for COVID-19. Irregardless of one's personal political views, we should all support the governors of every state as they try and deal with this difficult situation. This is not the time for petty politics.

Friday, March 27, 2020

Governor's Lock-down and Real estate

On Monday the Governor here in Washington State, decided to go to a stay home policy that has more or less shut down all 'non-essential' business and services. For real estate that means we as realtors cannot show property to prospects nor can we engage in things such as an open house. For the home inspectors, they are linked to the "essential construction industry" and as such can with some limitations perform home inspections for pending transactions. It also seems that appraisers are still able to do their thing as well. So pending transactions should be OK during this shut down.

However the buying and selling process is going to be slowed down for all active listings in the area until such time the government returns to a more "normal" status. If we can get this thing under control soon, say in the next 30-45 days, we should be right back on track for a reasonable real estate market. I believe that at least some negative fallout in the form of some layoffs and such will result. For buyers in the entry-level price ranges this could be a blessing in disguise as that potential "fallout" would soften the number of qualified buyers seeking homes and make life a little easier in the hunt once it resumes hopefully before May.

Whatever the outcome economically there are going to be some winners and losers. The losers are those that unfortunately lost jobs or opportunities due to this government lock-down. They will get their chance to return after things perk up. The winners need to be ready to strike when the lock-down is lifted. 

Friday, March 20, 2020

Virus versus Housing

Last week I mentioned that the Wuhan Corona virus and associated economic issues might lead to an influx of cash for real estate. That has not materialized yet. Bonds, Gold, Hard Money, all of the normal flow points for equities in distress are also down. That means the wealthy "market makers" are holding onto cash. This is very surprising to me because there are few if any places on this planet where cash is earning money, in fact in many countries cash COSTS money.

I believe that investors are genuinely spooked by this virus and are waiting for the cases to start declining rather than continuing upwards. Once the dust settles they will likely move that cash back into equities, bonds, gold or where ever they think the best opportunity is. Until that happens mortgage interest rates will continue to climb, the stock market will remain flat or possibly dip lower. We really have to wait to see what the "big financial fish" do before we can get a handle on the long term market effects for real estate and other sectors.

Locally our housing market hasn't reacted that much to this condition. There does seem to be a tad less buyers out and about house hunting, but well priced homes seem to be getting traction despite the doom and gloom. Hopefully Washington's governor will not go too far with the draconian wand like they have in California, Oregon, and New York. Yes, we need to keep people safe, but there are also practical limits to this thing and I believe the aforementioned states have already tread into those murky waters of over reaction.

That said, we should all be mindful of the call for some social distancing and limit excursions to solo activities and necessary outings. Looking at houses is necessary :)


Friday, March 13, 2020

Stock Market Tanks, Is Housing OK?

Wall Street is having a hemorrhage over the Corona virus (COVID-19) and the broad stock market has managed to shed more than a quarter of its value in just two weeks time. Is this as bad as it looks? The short answer is: "not really." In my estimation the stock market was a bit overvalued and all it needed was a trigger event to cause some major adjustment. This sell off is an overreaction to a near non-event. However the over reaction may be deliberate on the part of the major market players, the uber rich.

In contrast to the so called "Great Recession" that began at the end of 2008, this event is not being "triggered" by an underlying financial crisis like we had in 2008. Leading up to the last recession, back in '08 there were several real and identifiable problems including a fair bit of corrupt behavior in the mortgage lending business as well as a few government fails on SEC regulations and banking. The 2008 crisis was real. This crisis is simply an excuse for super rich billionaires to take massive profits on what was largely considered to be a puffed up stock market.

The core economic indicators are still much stronger than they were in 2008. That said, this could potentially become something to worry about if the actual job market starts to soften as a result. I still think that isn't going to happen just because of this Corona scare and the recent Wall Street sell-off. A broad economic downtown will require other issues than an overblown virus. Make no mistake, the Corona virus is being exploited. As of this writing less than 5,000 people have died from this COVID-19 virus, on a planet populated by 7.6 BILLION. This year's influenza season (flu) is expected to take the lives of some 700,000 people worldwide. 

Although Corona virus is more aggressive in its spread and in certain risk categories it is more deadly, it however is not a big enough problem to warrant the market response we see here. It has become political in nature and that has created as much a problem as the actual virus itself.

It is important to remember that the rich billionaires that sold early in the market slide are sitting on massive piles of cash. These guys sold off $6.5 trillion last week, this week all of the small investors were in a panic and sold off their positions making matters even worse for them and BETTER for the rich guys. The billionaires will come back into the market after the dust settles and buy back their positions for 60 to 70 cents on the dollar. They will make all the money back again plus a tidy bit extra. Right now about $10 TRILLION in stock market cash has exited the Wall Street equities market and now is circulating in other markets.

What is important is that there is idle cash in the marketplace right now. The billionaires don't like idle cash. Even if the super rich start buying back stocks soon, they will ultimately have surplus cash and some of that cash will likely find its way into the economy via lending, capital investment, and venture capital. Much of this will drive real estate projects that often need large chunks of up front cash to get started.

Treasuries are not yielding much at the moment so investors will look to bonds, mortgages, and other real estate funding for better returns over the long haul. Again the investors will come back to the stock market after the panic subsides and when that happens some of this potential cash for real estate development will go away. Developers should be jumping on this opportunity for financing NOW!

In the current marketplace we still see strong employment, rising wages, low mortgage interest rates, and healthy investment in real estate. The housing market still looks pretty rosy for the rest of our spring season. I am seeing a tightening in inventory and more aggressive offers from buyers and that is also an indicator at least for the short term that conditions in housing are solid. 

Friday, March 6, 2020

Low Rates Spur Refinances, Caution is Advised

Many people may see super low interest rates on mortgages and think about a refinance. I spent an entire chapter in my 2010 book, "Don't Panic" about the math behind a refinance and that sometimes, a refi isn't as good as it looks. Mortgage interest is "front loaded." This means you pay the bulk of the interest in the first 10 years of the loan. When you refinance you often end up paying MORE interest even if your rate and payment is lower.

I am not saying that a refinance is "bad" but rather a refinance should be carefully thought out, especially if the homeowner is taking out cash. I have done many mortgage refinances over the decades with numerous properties. I have done them wrong and I have done them right. One should be cautious of what they use the money for when doing a refi. I absolutely DO NOT recommend taking cash out of a primary residence to fund things like cars, boats, or vacations. This is always a bad idea.

I am also very cautious about taking cash out of a primary residence to consolidate short term debts. If the debts are manageable the homeowner may be better off just whacking those debts down with heavy payments. The only thing that hurts a consumer more than a high rate of interest is a long term of payment. So a car payment at 7% interest with 3 years to go is better left alone than refinancing that debt over 30 years and taking valuable and secure equity from your home. Lets say the car was 0 down, $40,000 originally financed at 7% for 6 years. If the car is halfway through the loan cycle, the bulk of the interest is already paid. The balance is down to $16,408 after three years. There is only $1,100 remaining in interest on the loan. Refinancing that $16,408 over 30 years even at 4% will cost the debtor TEN TIMES as much interest! $11,792 in interest over 30 years. If money is tight and the car payment has gotten difficult to manage, it is often possible to refinance the car.

I am a strong proponent of using mortgage cash to improve the property. That doesn't mean buying furniture by the way. Remodel the kitchen, put in new landscaping, new siding and paint, etc. This improves the value of the house and thus helps to maintain the homeowners equity position despite increasing the balance owed. If the homeowner uses credit cards to purchase the home improvements, then refinances to pay that short term debt off, that works fine. Doing the improvements up front will at least result in a better property appraisal and possibly a lower rate on the new mortgage due to a potentially lower LTV.

Typically a cash out refinance will cost the homeowner either up front fees or a higher interest rate. Often that rate can be 1/4 to 1/2 percent which adds up to thousands of dollars over the life of the loan.

Ultimately if a homeowner intends to stay in the house for more than 5 years and can improve the rate of interest by a full percentage point, a refinance makes good sense particularly if doing a rate and term loan with no cash out.

Remember that every situation is unique and I am only suggesting that careful thought and study goes into the refinance decision. Furthermore find a local loan professional you can sit down with and go over the facts and figures. Don't do something as important as a mortgage with some shady online firm that teases you with a seemingly low rate. Mortgage rates are simply not that far apart in the real world. Mortgages are traded on wall street and investors are not paying a very big spread so when one bank shows a rate that is 1/2 percent lower than most others, you WILL be paying for that somewhere in the fee tree! There is absolutely NO FREE LUNCH in the lending business, no matter what the sleazy spokesperson says. Mortgages are highly complex devices and as such it is easy to "pull the wool over the eyes" of even the most brilliant people.

When I refinance a house, especially my primary residence, I look at more than just the rate. I look at what my current principal payment is each month at the time of refi, what the new principal payment will be, how much total interest did I add to the end of loan. Why am I concerned about principal reduction? Because home equity is the VERY reason buying is better than renting. When a home owner erodes the equity in the home, they erode the value of ownership, it should not be taken lightly.

Remember that when someone refinances a house they are in a loan already and they have paid that loan down to some extent. If someone is 5 years into a mortgage and they refi at 30 years they are postponing the eventual payoff by another 5 years. That adds total interest to the mix. When I do a rate and term refi, I also calculate the amount of time the new lower payment takes to cover the expense of doing the loan. If the loan fees are $3000 and I am saving $100 per month then I recover those fees after 30 months. If I refi the house again or sell it in less than 30 months I lost money on the refi! A good loan officer will go over these types of details with every prospect and that is worth far more than any slight difference in rate one might pay at a less quality firm.

Friday, February 28, 2020

Wall Street Takes Profits, Mortgage Rates Dive Lower!

This has been a brutal week for stocks with the Dow Jones shedding more than 4000 points since Monday. Investors are taking profits and covering margin calls, but enough money flew towards mortgage securities to show a significant improvement over the course of the week. I wouldn't be surprised if loan officers all across the fruited plain have sore fingers from clicking the "rate lock" button all day today.

If you are a buyer your purchasing power improved this week and that means either more house or a lower payment, maybe even BOTH! My two cents is that the stock market was a bit over valued , and adding the Corona virus fears was the proverbial straw that broke the camel's back. Once the Corona situation settles down the market will return to a robust improvement. The basic economic indicators are very solid and that should lead to a recovery in the markets by the middle of Q2. If I'm right then mortgage rates may start to creep up again around late May or June.

I don't expect to see any dramatic mortgage rate increases at all in 2020, but even a slight upward tick can drop a buyer's purchasing power by several thousand dollars. Sellers still hold the advantage in the local market under $500,000 so buyers need all the help they can get. Wall Street just handed buyers a an early Christmas present.

Friday, February 21, 2020

Spring Activity can be a Harbinger for Summer

The first teases of spring are in the air round these parts. Yesterday the temp climbed up into the mid 50s and the sun was ablaze in a clear blue sky all day. My listings all got extra action this week under all that sunshine. That is sometimes a sign of what is to come when the "real spring" arrives later in March.

The early question is whether or not we will see a rush of listings to fill the demand of a hungry market. Analysts seem to think 2020 will be a solid if not modest marketplace for Clark County, WA. New construction continues to add inventory but most of that is in the middle market with pricing between $450-$600k.

Buyers in that sub $450k market typically have to buy a smallish new house or a larger resale home. The resale market has been tight with fewer listings than buyers and that makes things a bit nerve racking for the buyer in that starter price range. Buyers in the middle to upper end of the price range can relax a bit as inventory exceeds demand at the moment. It isn't that there is a glut at the top, just a slight advantage for the buyers. Once you breech the seven figure market buyers tend to be a bit picky regardless of market conditions. 

If March and April bring an above average boost to the inventory we might settle in for a neutral summer. If owners continue to hold on to their homes it could be a long summer for those beleaguered buyers. Only time will tell, but March is just around the corner and if the 3rd month is warm and springlike, we could see the rush early this year.

Friday, February 14, 2020

Non-Local Firms Listing Properties

There has been a disturbing trend with out of area brokerages listing local properties. Although a brokerage anywhere in Washington State can list a property anywhere in the state, this business is very local. Many of these so-called discount brokerages are listing properties and not putting them on the proper local multiple listing service. A broker in Seattle is likely a member of the NWMLS that serves a large portion of Washington but does NOT serve as the local MLS for SW Washington and Vancouver. This area uses the RMLS. If a local house in Vancouver, WA is listed on NWMLS and NOT the RMLS it will not get the proper exposure in the local marketplace. In fact it is safe to say that 90% of the local Realtors® will not see it. 

This is a gross disservice to the seller who is likely to get far less attention than their home deserves. Furthermore this area is uniquely different than other areas in Washington state. I have seen homes horribly priced that sold for tens of thousands less than they should have fetched because a Realtor® based 150 miles away didn't price it right. That seller may have saved $5,000 on the commission but they left $30,000 on the proverbial table.

Real estate is a highly localized business and sellers are well advised to hire someone local. Sellers ought to make sure their home is at least listed on the local MLS. In the Clark County, Vancouver area we use the Regional Multiple Listing Service (RMLS) which has its SW Washington office in Downtown Vancouver.

Some of the worst offenders of this out of area listing debacles, are large national internet companies who are simply interested in churning commissions and not giving the seller the best opportunity to receive the highest and best offer on their property.

The old adage that you get what you pay for is alive and well in the 21st Century. Sellers often step over the proverbial quarter to pick up a nickel. With real estate that is not a 20 cent mistake, it can be a twenty thousand dollar mistake. Seller beware, a good Realtor® does not come cheaply, but that Realtor® will represent your best interest and help you have a much better outcome.

Friday, February 7, 2020

Downtown Condo Market Feeling the Squeeze

Downtown condos are becoming a scarce commodity. 2019 saw a steady tightening of the condo market in the urban core of Vancouver. Now as of this writing, there is only ONE urban condo listed in Downtown Vancouver. There are roughly 500 condo units in Vancouver's Esther Short neighborhood (Downtown & Waterfront) and just ONE is listed. One can visit my Urban Living in the 'Couv' site and track the activity over the last 12 months to see that this time last year there were dozens listed.

Downtown Vancouver is on a serious upswing. There is a positive transformation happening and many people, young and old, are looking to be a part of the sustainable lifestyle of urban living.

There is a robust level of new construction in the Downtown/Waterfront area but most of it is apartments. Thousands of new units are under construction. These new units will bring fresh residents to Downtown and many will decide to stake a claim and buy a condo.

At the moment there is one building going up on the waterfront that will offer condominiums for sale, the 12 story Kirkland Tower which is slated to have 40 units in the upper reaches of pricing. Gramor Development has plans for a 14 story condo tower with 80-82 units. That is still in the early planning stages however. It seems Vancouver is on the brink of a serious shortage of condo units downtown.

Buyers are flocking to downtown but there is nothing to buy. Now is a great time to list your urban condo in Vancouver, WA. As a specialist in the urban condo market, I have never seen it this tight. Call me if you have a condo Downtown and are thinking about selling. 

Friday, January 31, 2020

Is the market tightening up again?

Maybe this is nothing more than an anecdote, but our real estate market last year really felt like it was moving towards neutral conditions. But the market has come out a bit hot in the first month of this year with more buyers and not much extra inventory for them.

Now if you have the coin to toss around for something in the $600,000 plus range, you should have no trouble finding an eager seller. But down in the 'trenches' of the mainstream, things seem a bit tight and sellers are starting to take control again.

Perhaps the fact that interest rates are again dipping down into the 3's for well qualified borrowers, the buyers are swarming again! What ever the case, it will be interesting to see if the spring listing season levels the playing field or is met with an equal dose of hungry buyers.

Marketing trends seem to indicate that inventory levels are steady at a quick clip of around 2 months to a pending sale. Well priced homes will see bidding and overpriced houses may sit, but this market decided that 2020 was gonna be a 'thing.'

Buyers ought check in with their loan officer and make sure they can capitalize on these reduced rates and sellers should get ready for more showings because things are looking good for Q1.

Friday, January 24, 2020

Condo versus House

Many people ask about the differences between owning a condo versus a house and this is a very important question. There are multiple differences and they impact ownership on a legal level as well as a personal utility perspective. Neither is actually better or worse they both have a place in our system and one may be definitively better depending on your situation.

Owning a home versus renting is a different issue. Both houses and condos offer the equity opportunity and the ability to own outright the property. The value of the property will most likely increase over time and this adds an investment angle to the utility of a house. Condos are no different in this regard than a house.

First difference between a condo and a house is the legal difference. How ownership is held is very different in a condo than in most detached houses. When you own a condominium you have two types of ownership. You own the physical interior space in a condo much like you own the entirely of the property with most detached homes. However the physical structure and the underlying land property in a condo is co-owned collectively by all the homeowners. In most situations there is a home owners association with elected board members that manage the property including the maintenance of structures and common areas outside of the units themselves. This collective ownership has benefits and consequences that effect the use of the property. With a tradition house, the owner owns thee land and structures as well as the land rights beneath the surface and the airspace above (with a few government exceptions). With a condo you have limited ownership rights outside the interior walls of the unit.

Legal benefits to condo ownership:

  • Limited personal liability outside of your interior space 
  • Voting rights to the control and use of common areas, effectively allowing for some limited control of neighbors external use of property.   
Legal consequences to condo ownership:

  • Limited legal control over exterior use and utility of property
  • Severely limited structural use of property
  • Reliance on external ownership body for structural and external maintenance.
Second difference in a condo versus a house is the utility of the property. this is touched on above in the legal differences, but utility is the owners use of property. Inside the walls of the unit a condo has the same utility as a detached home. Outside the building however is a more cooperative setting whereby you have a fractional ownership and thus a shared usage of the exterior property.

Utility benefits to a condo:

  • Little or no exterior maintenance or yard work for homeowners
  • Shared ownership of entire community (within condominium complex or building)
  • Homeowners Insurance is typically less expensive since structural fire damage is covered by the HOA
Utility consequences to a condo:

  • HOA has control over the use of exterior and common areas that may limit owners use of that space.
  • Maintenance of structure subject to HOA timelines, funding, and efficiency.
These are just a few concepts but the biggest advantage to a condo is the ability to have the equity ownership in real property without the structural maintenance and exterior yard work. The primary disadvantage is the opposite whereby wanting a garden or yard, or to make exterior modifications is usually difficult or impossible with condo.

There is something to be said for both and each has a welcome place in the real estate universe.

Friday, January 17, 2020

Infill Continues in Vancouver's Older Neighborhoods

Vancouver has been pushing urban infill for years now and the trend of tightening up older areas and vacant lots has not slowed. It has continued at a blistering pace. The city is pushing developers to build more units per acre and is quite ready to authorize high-rise and mid-rise apartment and condo buildings to help keep the city growing without gobbling up the remaining open space in Clark County.

The city is also allowing a fair number of ADUs (Accessory Dwelling Units) in town including many of the older neighborhoods such as Rose Village.

These accessory dwelling units are not intended as multi-family but in fact act a bit like it. Housing, particularly affordable housing for young people and elderly people is very tight in out local market. ADUs are generally something that is ideal for an elderly parent or an adult child either of which prefer to remain close to "home" but independent. Often an ADU is built for that specific purpose but later on when the family member no longer needs to ADU often it becomes an affordable rental for someone.

Vancouver has been reasonably loose on issuing permits for these types of structures and in the current state of our local rental market it is a good thing. The city has been concerned with urban sprawl and ADUs are one way to help combat it.

One only need to drive around the city to see that density has been the modus operandi for much of the new development, especially in the greater Downtown area. with current trends, and ADU can significantly increase the value of a property. Whether the value will increase commensurate with the cost of improvements depends largely on the type of improvement needed to pull it off and the local governments continued support of ADUs as rental units.

An ADU can be as simple as a converted garage, of attic over the garage to a completely detach and separate structure. The latter is likely a fair bit more expensive. Before any homeowner starts hammering away, a check with the local government to be sure any proposed project is in compliance is a must.

Depending on a homeowners circumstances and ADU may solve a personal family dilemma while improving the vale of the property.

Friday, January 10, 2020

State of the Market 2020

Last week I gave brief outlook on the market for 2020 but today I will dive into the "state of the market" at the moment. Right now we have a bit of a tale of two markets if you'll pardon the Charles Dickens reference. In fact it may be a tale of three markets.

Breaking down conditions by relative price points will show that conditions vary wildly depending on price range. Now locations and neighborhood specific variables always play a big role in the real estate market, we tend to have broad market indicators that typically effect most segments similarly. But not so much right now. I will rate the market conditions based on a 20 point scale 0 is dead neutral. 1-10 Seller's market and -1 to -10 Buyer's Market. Take a look below:

Single Family Detached housing

  • < $300,000 +5 Seller's Market multiple offers common on well priced properties, overpriced listings linger but ultimately sell.
  • $300,000 - $400,000 +3 Seller's Market multiple offers on well priced home under $350k not so much above that. Marketing time @30 days
  • $400,000 - $550,000 0 Neutral Conditions are prevailing with neither side seeing an advantage. Even well priced homes may require some marketing time. Typical days on market 30-45
  • $550,000 - $700,000 -2 Buyer's Market. Buyers have the upper hand here due largely to an expanded inventory and a fair amount of high end new construction filling the space. Marketing time in this price range for properly priced homes is likely to exceed 60 days.
  • $700,000 - $1,000,000 -4 Buyer's Market. Although pricing in the range is holding steady inventory exceeds buyer capacity at this price range. Buyer's have many options. Marketing time in this segment will approach 90 days for properly priced properties, well priced properties will sell faster, of course.
  • > $1,000,000 -6 Buyer's Market. This segment is notoriously slow due largely to the limited number of qualified buyers in this upper range of pricing. Again like the last segment, pricing is holding up, but demand is weaker in the lofty price range so marketing time can be quite long.

Often times news media will present broad market conditions and as such this broad market is neutral with neither buyers nor sellers holding the advantage. But looking more closely at individual segments tells another story. So broadly speaking, it is neither the "best of times", nor the "worst of times" pardon again the Dickens reference. But buyers in the bottom pricing segments will still find a competitive environment, mid range is neutral, and high end buyers can kick a few tires before buying.

Generally these conditions are healthy and sustainable. Pricing appreciation should remain in the 2-5% year over year range and that is long term sustainable that allow incomes to keep pace and homeowners to gain needed equity.

2020 is looking good.

Friday, January 3, 2020

Happy New Year: 2020 Real Estate Outlook

Well here we are again in the US another presidential election cycle... yay... you feel the lack of enthusiasm? I will not venture into politics here but I will encourage everyone of legal voting age to vote. So presidential election years often lead to flat economic conditions. It seems the closer we get to the election the more reservations in the financial markets. This has stood the test of time immemorial. This is not to say that recessions result, rather quite the contrary, things tend to stay in the status quo. So the 2020 economic outlook is more or less the same which has been fairly strong of late.

Residential real estate however is a notable exception. Most residential real estate is individuals buying or selling their own private property. They are impacted by supply and demand as well as capital markets such as mortgage banking and construction finance, but residential buyers and sellers decisions are based on their personal needs and situation at that moment in time, elections be damned.

The outlook for real estate in SW Washington remains positive with 2020 quite likely to continue this trend of near neutral market conditions and modest year over year price growth. Sales volume has been rather brisk over the last 12 months almost as if the market were favoring sellers, yet the market favors neither sellers or buyers in a broad sense. Individual macro markets are all over the board with high end properties facing more buyer resistance and entry level properties still firmly in favor of sellers.

The trend over the last several months has been running between 650-750 closed transactions every month in Clark County, which is rather healthy. I think we may see a slow down in overall new construction in the single family homes market, but a continued build up of urban properties like apartment towers and condo towers downtown and on the urban corridors.

Expect interest rates to be relatively flat and sales to continue at a brisk pace. 2020 ought to be a strong year in real estate that should be positive for both buyers and sellers.

Happy New Year!