Friday, January 22, 2021

New President, Same Market.

Joe Biden was inaugurated on Wednesday as the 46th President of the United States. Generally speaking changes in Presidential administrations has a nominal effect on local and regional real estate markets. Over time presidential policies can have a negative or positive impact on the economy and that can affect the real estate markets. 

Our local market continues to have a low level of resale inventory. Local builders are rather busy building brand new homes which are also having no problem selling. This makes the market very tight for buyers. One thing that buyers must understand is that budget and desire are more separated in this market than just about any other time. Picky buyers may get priced out of the market entirely if they try to find the "perfect house." At $400k the perfect house is probably non-existent and if it does exist it may be $450k before the buyer finds it.

Buyers may have to settle for something less than ideal, but a home is as much a utility device as it is an investment or luxury. Owning your own home comes with additional responsibility but in exchange offers you freedom and the opportunity to grow your net worth over time. The house you settle for will still give you the growth opportunity and utility and a few years down the road the buyer that settles today will have a much better position tomorrow to get much more house than they wanted this go round.

Buyer should be careful not to let the market pass them by. Many more people want to live in our area than want to leave. That is a strong indicator that absent an economic crisis, prices will continue their rapid ascension. 

Friday, January 15, 2021

2021 Trends

New consturction is playing a significant role in the real estate market for 2021. The shortage of resale homes is partially offset by a robust building boom led by 500 single family home building permits issued in 2020. Builders however are not really hitting that entry level price point much. about a 100 townhome permits were issued last year and those tend to tickle the bottom 300s but resale homes in the $300-350k range are definately super hot right now. With rates remaining very low and a likely COVID 19/New Administration economic slowdown, there is another potential opportunity for selelrs int he entry level market to sell at top dollar and perhaps buy a step up house at a less agressive price point as things settle in for the mid 2021 season. Generally the entry level has the longest lifespan of growth as there is nearly always demand at the low end. Mid level and high end homes tend to fall off first. This creates opportunity for the move up buyer. 2021 could be a banner year for the 3 bed 2 bath 1500 SF seller to exchange for a 5 bed 3 bath 2500 SF mid size move. Retiring baby boomers are bidding those smaller ranch homes up through the rood so younger people that are less sensitive to stairs can buy a 2 story hosue without competeing against the retirees and their big cash offers. I am looking forward to a solid real estate year but long term 2022 and beyond is a bit cloudy at the moment.

Friday, January 8, 2021

2021 Could Bring Mixed Bag

I think that we should see a strong real estate market for the first half of 2021 but likely a slowdown at least in the rate of price growth as economic conditions catch up and federal tax policies may change as well. Our market has had a deficiency in inventory for a couple of years now and that keeps prices on the rise, but the pandemic of 2020 and other contributing economic facotrs will likely catch up with us around summertime. At this point I am not suggesting a full correction but rather a bit of a slowdown in the rate of appreciation. There is still tremendous demand for real estate and new people are coming into the area from places like California and the East Coast but also from Portland just across the river. This should keep real estate values moving in the plus direction, but I do not see double digit growth year over year this time round. With interest rates remaining very low buyers are still in position to get a relative "value" in the market even if appreciation slows as rates in the 3s are a long term benefit that tends to outweight any short term pricing issues. Look for a robust spring followed by a seasonal typical summer and perhaps a near neutral market coming out of the autumn later this year.

Saturday, January 2, 2021

Happy New Year!

Well 2020 is toast; here's to a new year and hopefully an end to the COVID-19 pandemic. Although the Corona virus managed to cause a lot of mayhem and disruption in 2020, locally the real estate market just kept chugging along.  

Vancouver and Clark County saw nearly 10% appreciation in in 2020 and 2021 is forecast for low double digits! That is rather robust considering the pandemic led to the highest unemployment rate in decades. But despite our local stellar numbers there are some areas in the country that did even better!

Areas with lower median home values often have the most opportunity for dramatic growth. There are many lessons that corporate America learned from COVID and one of them is that some jobs can be as productive or more productive in a remote or work from home environment, others not so much. 

This potential shift in some economic zones could lead to some dynamic changes in commute patterns, living arrangements and employment. Vancouver USA has undergone an amazing transformation of the Downtown and Waterfront areas and now is attracting new jobs and people. Other cities in a similar demographic and geographic situation have also done so and often with brilliant results. The potential "new office universe" could lead to more people coming to Vancouver rather than staying ion Portland. The "commute" may have less impact if work at home model stays around after the pandemic.

You can see a similar dynamic occurring in other cities including some that have striking similarities to Vancouver-Portland. Covington, Kentucky is a small city on the south bank of the Ohio River and sits just opposite of Downtown Cincinnati, Ohio. Covington has only 1/5 the population of Vancouver but it is part of a group of cities on the Kentucky side of the river that are similar in size to us, collectively. Covington has the "downtown" and "waterfront" that attracts the locals for dining, urban living, and activities. There are three counties in Northern Kentucky that make up the Kentucky portion of the Cincinnati Metro area and they are combined about the same size as Clark County with roughly half a million people. Median home values there skyrocketed in 2020 nearly 15% and area expected to do so again in 2021. The renovations in Covington's downtown including high rise condos, restaurants, park space and events have made it an attractive alternative to the more expensive, neighboring Cincinnati. Hmm, sound familiar?

Covington is an example of a city on a similar path that Vancouver is on and with similar resulting improvements to quality of life, jobs, and incomes. Covington also enjoys a border economics and city symbiosis advantage with Cincinnati as does Vancouver with Portland. Covington was run down and pretty rough until the recent years when new development began to transform the city into a wonderful place that has a bright future.

City leaders here in America's Vancouver are wise to look at other successful cities as they ponder the pathway of our own city.