Friday, September 17, 2021

Local Government Policy Impacts Neighborhood Values

All too often Americans tend to focus on the big National Elections like every fours for President, and six years for US Senators and the bi-annual election of US House Reps. But the Mayor, City Council and State legislators are every bit as important and sometimes MORE important.

Pay attention to those local candidates and what they are saying, because your property values can be significantly moved for better or worse depending on the things local officials try to mandate or eliminate. For example the homeless situation. Many governments are making decisions that seem to encourage homelessness rather than discourage it.

Your neighborhood values will crash faster than car with its brakes failed if the homeless start camping nearby. Cities often tend to push the homeless out of nicer areas and into more modest neighborhoods which is neither fair nor appropriate. yet they do it. It seems the wealthy donors can get rid of the problem by dumping it into someone else's neighborhood.

Government officials that claim to be "compassionate" to the homeless are often the ones passing regulations that enable people to live on the streets rather than incentives for them to get a job and have a more stable housing situation.

I certainly do not have all the answers, but I will say one only need to travel around in Portland to see what NOT TO DO.

Here in Vancouver USA we have our mayoral election in off years including 2021. Unfortunately odd year general elections have much lower turnout. Madam Mayor Anne is up for reelection in November. I suggest everyone living in the city proper pay attention to all the candidates positions on various issues. No matter what happens at the State or National level, your property values are most affected by local officials and your property is likely the largest asset you have. Pay attentional and for heaven's sake VOTE! 

Friday, September 10, 2021

Looking for Value in this Crazy Market?

In a large real estate market within a major metro area like ours, good deals are hard to find. When they are found they are found by many other people and the 'good deal' quickly escalates into a bidding war that ultimately tends to lead to a much less better deal. Frankly there are no bargains in this type of market.

But value is not necessarily driven strictly by price. Often I find buyers and sellers hooked on the notion of price per square foot. I even see experienced agents caught in the trap. Read my article on Price Per Foot here. Price per square foot is not a good comparative measure of value at all unless the the properties compared are very similar. A two story house is not similar to a one story house because it is the same size. A fancy house with decadent finishes is not comparable to a similar sized house with cheap finishes. An immaculately well maintained home is not comparable to a run down fixer. Yet people are fixated on price per foot.

When considering price per foot however a value proposition does manifest in the numbers. Ranch homes are expensive for several reasons. First a ranch home has a larger foot print on the lot. Land values locally are very high and represent a very expensive fixed cost. Smaller houses on expensive lots will have a much higher price per square foot than a larger house on the same lot. This is why you will find brand new construction scenarios all over the area where a 1400 foot ranch is $500,000 and a 2000 foot two story is $535,000. The better deal is CLEARLY the larger house. One story homes are also in higher demand because older buyers are often seeking to avoid stairs. In the entry level market smallish one level homes are getting heavy interest from first time home buyers and older retirees downsizing from the family sized house they selling. This creates more buyers for ranch homes, thus inflating their price and price per foot even further.

First time homebuyers that are looking for as much footage as possible inside a tight budget will often find that two story houses are the best way to get more feet for less dollars. There are downsides to small two story homes. If you have a two story house with 1700 square feet it is common to have space upstairs over the garage. In many cases there may be as little as 700 squares on the main level and 1000 squares upstairs. First floor space is more valuable than upper floor space a traditional single family home. That means in general you have a lower price per foot and thus a "value" relative to a one level home. Furthermore, a two story house with equally square footage has a smaller footprint on the lot so you get more yard space on the same sized lot. Again, more "value." Pricing on two story houses in the entry level market are better in general for these reasons and the fact that older people are not interested in these houses. 

There is a disadvantage to small two story designs, mostly in the fact that they can sometimes feel a bit cramped on the main level. If you can get past that, the best deals are going to be on small two story homes with less than 2000 sf. 

Friday, September 3, 2021

Just when I thought things were quieting down

I listed a house in Battleground this week at a price I thought was fair and on point. It was NOT priced for quick sale or to create and auction environment. I figured we would have a steady drip of buyers looking and pick up an offer or two in a week. Sure I put my blitz marketing on as hard as usual, but the tsunami of buyers and offers was rather amazing. 

This market still has a frenzied group of buyers looking for nice clean homes in the mid-price range. Locally a half million dollars is still a mid-range home, but that is quickly slipping towards the entry level.

A thick stack of offers is a good thing and I suppose the "slowdown" was all in my head. Buyers will swarm to clean, move-in ready homes and this house is proof positive our market is still sizzling. 

Buyers you have to be ready to make concessions and not just coming in with a bigger price. Sometimes the terms matter. Letting the seller have a few bonus days to get out after close, or coming in with shorter contingency periods for inspections and loan closing. As hard as it is to be a buyer right now, sellers are in the same predicament when they sell they typically become a buyer.

So here's to the second half of 2021 and a continuation of our robust market, hopefully some extra inventory will fill in the gaps and take some heat off of buyers.