FHA & VA rates in the low 6s

The government backed loan products are seeing rates nearly a full percentage point lower than Conventional loans in the current market. This bodes well for first time home buyers that have been priced out of local market when rates were at or above 7%. 

We should see PITI payments in the $3000 range on a median priced home here in Vancouver. FHA will allow up to a 50% debt to income with strong credit profiles. That means the local median household income can afford the median priced home for the first time since 2021. 

I have been harping on the fact that we just went through the most affordable housing market in US history. In fact rates were at or under 5% for more than a decade from about 2009 till 2021. This spoiled a lot of buyers into thinking that was the norm when in fact it was highly irregular. Now with rates settling down to about the 50 year average, we should see an opportunity for buyers once again to get into the market.

Incomes are not rising like they were a few years ago, but prices have also flattened out a bit as well. I have said all throughout this recent period that rates around 6% are healthy and we are now right there at least on the government backed loans like FHA and VA. 

Some people that bought a home a year or two ago may be in a position to refinance into a lower payment, but be careful and make sure you understand the costs involved in that process. Sometimes it is a good deal and sometimes it is not. A trusted professional loan officer with your best interests at heart is critical when considering a refi.

So buyers let's get out and start looking and homes and sellers, you may be able to get that next house after all.

Inventory Continues to Increase!

We have been quietly adding inventory over the last couple of years. As interest rates start to settle down a bit, more buyers are entering the market. This should lead us to a neutral market if the trend continues. At this point we remain in conditions that favor sellers, but buyers are able to be choosier than just a few years back.

The latest data from the RMLS show that here in Clark County, we had 1638 active listings and 584 closed sales last month bringing the inventory to 2.8 months which is a still very healthy. The median sales price last month was $550,000 with a high of $2.3 million and a low of $60,000. The average sale price was substantially higher at $623,078 suggesting that activity in the mid-level market may be on the rise.

Rates are starting to settle into the 6s which bodes well for buyers that have struggled to qualify with rates in the 7s. 

The prognosis for the 4th quarter looks promising as rates come down and inventory softens up pricing a bit. We should continue to see very modest appreciation through the end of the year.

Interest Rates are softening up a bit

We are seeing some relief in mortgage rates and likely will see some more over the next several months. Housing prices have remained flat and the median price has fallen off its record highs of a year or so ago. The lower median is more an indication of more activity in the lower end of the spectrum and less activity at the top, rather than actual falling prices. 

We are not seeing much in the way of the classic middle move up market where homeowners sell their entry level  2 bed or 3 bed house to move up to a larger 4 bedroom home. There are two primary reasons driving this lack of middle move up. First, interest rates are much higher now than they were when most of these potential sellers financed the current house. I have harped on the notion that homeowners are married to their 3%-4% mortgage for months now. Second, there is a current trend across the USA of smaller family sizes. The USA is no longer having families large enough for replacement population. We are relying on new immigration to keep growth moving forward. Smaller families means less of a need for a larger house, whether the rates are low or not.

When the bulk of the sales activity is near the bottom of the market, the median will come down, even if prices are rising. Locally prices remain steady, neither rising much nor falling much. If typical interest rates fall into the high 5s or very low 6s, we may see some of that middle move up market return and thus the median would perk up a bit as well. I do not expect to see the middle move up market return to the glory days of yesteryear unless Gen Z decides to buck the Millennial trend of smaller families and start having 2-3 kids each. With our economy in an upward inflationary cycle, the small family trend is likely to continue. 

One thing that could help move those larger 2500+ square foot 4 and 5 bedroom homes in the $600-800k range would be joint ownership by two small families or more multi-generational family living. In the mean time buyers will continue to have a difficult time finding homes in the entry level price ranges due to a lack of inventory, and sellers of larger homes will face pickier buyers and downward price pressure. 

Locally inventory levels are creeping up to about 3 months which remains firmly in favor of sellers, but the trend is slowly moving towards neutral conditions. I suspect we will remain in a low volume market with steady prices for at least the next 6 months. 

Why has the National Median Home Price Skyrocketed?

The national median price for a home has nearly doubled in the last 4-5 years. Locally our housing market hasn't risen much more than 15-20% in that time frame. It's as if the rest of the country is catching up to us. There is a lot more to a median price than just inflation. Few people have actually seen their personal home double in value over just the last 4 years. So how is it then that the median price has risen so much nationally?

The median home price is determined by taking every closed sale in a market or nationally and listing them from lowest to highest price. Then scroll down to the exact middle price and presto, there's the median. For example if 1000 homes closed in a month in a particular market, say for example Vancouver, WA, then we list them by price lowest to highest and look at the price of sale #500. This is very different than doing an average whereby you add up all the sales and divide by the number of sales to achieve an average. Averages and Median are fairly close when looking at large sample sizes such as the national average. In small samples like a local County or City the median tends to be wildly different than the average because averages can be swayed by a couple of abnormal large sales.

Trends in the market place can also affect the median home price. For example let's say an area has a bloated top end market because a major employer with lots of highly paid employees moved out of the area. Suddenly there are not many if any high ends sale in the 1 million plus price range. The local median will drop substantially due to the lack of high end sales. But the bottom and middle of the market may be humming right along. The 3 bed 2 bath classic that was selling for $500,000 before the big employer left, is still selling for $500,000. The lack of million dollar sales hasn't directly affected the sales of entry level and mid-level homes. In this scenario the median price has fallen say, 10% but the actual value of individual homes in the low to mid prices ranges could very well be rising. 

Nationally there has been a trend towards move-in ready homes. Fixers and obsolete homes have been a tough sell to Millennials. This means that many of the fixer homes are not selling and when the bottom of the market stops closing sales, the median moves up even if local prices are softening. You can literally be in a declining market with a rising median and we have seen this play out in many areas of the country. Boomers and Gen Xers were more likely to buy a fixer for the first or second home than Millennials have been. Get Z is not yet fully engaged in the housing market but I suspect they may be more inclined to look at fixers like the grandparents did.

This would certainly explain how the national median price has rose so much faster than the local market here. SW Washington State used to be about double the national median and now we are only about 20% higher. 

Another factor is move rate. There are many parts of the country with low housing costs that tend to have less moving. The higher end markets tend to see more move-ups whereas the lower priced markets have seen longer stays in homes. Many first time home buyers in parts of the country never sell or never move up. This means that nationally most of the sales are taking place in the high end markets rather than the low end markets thus moving the median up.

Yet another factor has been the West Coast and New England exodus to lower cost markets. These people have sold their often modest yet relatively expensive homes and then used that cash to purchase very nice homes in traditionally cheaper locations. This can add much higher than normal activity into the high end market thus moving the median much higher and faster than the actual market appreciation for existing homes. 

The last 4 years of hyper inflation has made the cost of building new homes much more expensive, and that certainly has played a significant role in the rise, but these other factors have exaggerated the median on a national scale.   

Keep in mind that just because a particular town or area has a higher median price, it does not necessarily mean that the type of house you want to buy or sell is higher. Here is a local example. Vancouver WA has a local median home price around $500,000 right now and next door to the east, Camas, WA has a median price of around $800,000. At first glance one might think that houses in Camas are 60% more expensive than they are in Vancouver. Well, that is simply not true. Camas has an up pressure median and Vancouver has a down pressure median. What does that mean? Camas has a large percentage of its real estate inventory in high-end expensive homes on the hill with a view. It might be safe to say that half or more of Camas is large view homes built in the last 30 years. This means that the bulk of sales in Camas are in affluent expensive neighborhoods thus driving the median higher. Vancouver sits on a massive inventory of 80 year old 2 bed 1 bath "Kaiser Cottages" that sell for less than $450k. Vancouver has just as many and probably a lot more high end view properties, but relative to the total inventory available these high end properties are a small percentage well under 20%. You see, Vancouver has 15 times the population of Camas. Access to all these entry level and sub-median prices homes pouts downward pressure on Vancouver's median price. The only way to actually tell which is more expensive is to compare like properties. A 30 year 3 bed 2 bath home in a classic middle class neighbor in Camas will run about $600k whereas that same house in Vancouver will run about $500k. So Camas has a median price 60% higher than Vancouver, but true comps will reveal that Camas is only about 20% higher than Vancouver. In the case of Washougal which has a similar lopsided hillside mansion ratio as Camas, Vancouver is actually more expensive on average for that classic 3/2 than Washougal despite Washougal's median being nearly 50% more.

The bottom line is this, your personal home or a type and style of home you may be looking for has almost certainly not doubled in price over the last 4 years, what has doubled is the median price for a home sold in the USA and much of that is based on the types of homes currently selling and the locations they are selling in. You can still find a lovely home in many parts of the country for under $200,000, just not here in SW Washington State.

Washington State is Bucking the West Coast Exodus Trend

Over the last few years, there has been notable news about California's shrinking population. It has been well known that California has had a massive exodus over the last several decades, but recently they have not had enough newcomers to offset those fleeing the state. The Californication of other states is a well known topic of discussion even here in Washington State.

Another less discussed but equally disturbing trend is the fact that Oregon has now seen a statewide population decline. Much of that is likely driven by the mass exodus in Portland, many of whom fled to Southwest Washington. 

But Washington State has continued its impressive population growth. Although Arizona is growing at a faster clip than we are, we are still growing. Seattle is still growing, despite its problems of late. In fact, Seattle for the first time ever, has a larger population than San Francisco. This is a culmination of strong growth in Seattle and San Francisco's rapidly shrinking population.  

So why is Washington State the ONLY west coast state growing? It's the economy. Many people know that California has a strong economy, but on a per capita basis, Washington's is even stronger. California's economy is growing through mostly inflation at this point as businesses are fleeing that state in mass. Meanwhile, in Washington State new business is arriving to our state. Unfortunately the idiots in Olympia are passing laws that look allot like the failed laws that were passed in California and have led to that state's decline. 

Will Washington continue to grow or is the Californication complete? It is hard to say at this point but locally here in Southwest Washington we are likely to remain in a strong growth mode as we siphon off more and more business and people from Portland.

What does all of this mean for real estate? It means, that outside of a major national recession, we should continue to see favorable growth trends and rising property values. 

Just a little more rate relief is all we need.

After we enjoyed years of sub-market rate interest we have to get used to higher rates. The government as usual displayed poor execution not he rate increase int he summer of 2021. Rather than a gradual climb they did a massive fast increase that startled the real estate market and apply emergency braking in a situation that only needed gentle braking. 

Our market would make a nice mild comeback with a couple of 1/4 point reductions in the average mortgage rate. If we can get a typical 30 year fixed mortgage down to the low sixes, then AAA credit would drop into the high fives and mediocre credit buyers in the upper sixes this market will enjoy more sales. I do not think we will go into a hysterical frenzy, but we certainly will get a much needed boost in volume.

The Fed has moved cautiously towards a rate reduction plan and I believe this will lead to improved volume without any real upward price pressure. Let's hope they don't screw it up like they did in '21. We are moving in the right direction.

SW Washington Market still pretty warm.

Our local market isn't on fire like it was a few years ago, but it remains toasty warm. Inventory levels are creeping up but see favor seller's. The tight lending market however has put the squeeze on buyers so even though inventory is tight the supply of qualified buyers is almost equally tight. It's a bit of a standoff.

Buyers looking for some leverage should look at houses that are a little odd. That house on the flag lot with the bumpy driveway might be a value since most buyers have a difficult time looking past basic curb appeal problems. 

I have a fantastic listing right now well under market but it has an odd entrance and basically no yard. But 2100 squares on one level with 4 beds and 3.5 baths at four and a half is a steal. Some buyers just can't get out of their own way.

Buyers look for these types of properties, they are your ticket to an affordable option in this crazy real estate world we are living in right now.

Think outside the box and you will find a house that gives you most of what you want at a price you can afford.

Fed hints at rate drops.

The Fed Chairman hinted that it may be time for the rate relief. This will be welcome news to our beleaguered first time home buyers. It is an election year so I wouldn't be surprised if the Fed is getting a lot of pressure from incumbent politicians in Washington DC.

I would not expect a big drop nor would I expect a series of small drops rapidly accumulating. Rates are sitting right around 7% for a 30 year fixed mortgage and that is just a tick or two higher than the 50 year average. If the average gets down to the low 6s we should see a nice bump in buyers coming back to the market.

The problem getting sellers to list there homes will still be a problem as there is a large quantity of homeowners sitting on nice juicy 3% loans. I think we would need to get back down to the low 5's before we see any significant number of the 3 percenters making a move.

Meanwhile housing prices locally are steady. We are not seeing any real change in pricing. There are more price reductions but generally these are overpriced listings from sellers that were a little too ambitious with their price and the market kicked them in the soft area.

We are seeing some upward price pressure on homes in the median price range and some softening on homes priced in the upper ranges. A downtick in rates will be a boon to the upper price ranges as well. 

Why have home prices risen so much more than wages?

I hear and read lots of chatter mostly among frustrated young people about the cost of housing versus wages since 1980. It is true that a house in 1980 was substantially less money relative to the typical wages of the era. But how much of the complaint is real? Let's take a closer look.

I'll start with the basic facts using national averages and an FHA loan:

June 1980:

Median home price in USA $57,133 (CPI adjusted $216,614)

Median Household Income: $21,020 (CPI adjusted $79,665) 

Average Mortgage Rate: 14.5%

PITI Payment: $679

% of monthly income: 38.8%

June 2024:

Median home price in USA: $414,800

Median Household Income: $80,200

Average Mortgage Rate: 7%

PITI Payment: $2663

% Monthly Income: 39.8%

The point of using 1980 in these arguments is interesting as they always look at the purchase price of the house versus the annual income. In 1980 the purchase price of a typical house was 2.7x the typical annual income. Today it is 5.2x the typical annual income. But 1980 had the highest mortgage rates in history so the house wasn't any more affordable than it is today in fact it was is just 1% difference in the payment. We just came out of one of the most affordable housing periods in history in 2019when rates were in the 3's the median payment was less than 30% of income. 

Housing takes twists and turns and there are times when housing is more expensive and times when it is affordable. The people complaining now are mostly the same people that wouldn't pull the trigger and buy when rates were low and are now priced out. But hopefully when conditions are ripe again and they will be, they will take action and capitalize on favorable market conditions.

1980 was a better time for rich people to buy property as the high interest rates actually stagnated housing prices a bit which allowed cash buyers an opportunity to get great prices where as those using a loan paid much more in interest over time.

The most interesting thing about the higher cost of housing in America is the root cause. Do you know what the largest increase in line item expense has been over the last 40 years? Materials? No. Labor? No. Land costs? Close, but no. Development costs and that is code-speak for GOVERNMENT! Government mandates and development costs have skyrocketed more than 1000% since 1980 and it is the single biggest increase in expenses to build over that time. Here in Washington State lot development costs are nearly equal to the cost of the raw land per acre. The local and state governments continue to squeeze the proverbial turnip with developers and that leads to more and more expenses that have to be passed on to the consumer. 

The government blames the developers but they are the biggest culprit in rising housing costs. Keep that in mind when you vote. Remember a lot of local races are held in off years, Vancouver Mayor and City Council for example are held in off election years where voter turnout is low. We the people need to vote in EVERY election otherwise the government will continue the insatiable lust for revenue at our expense.

The financial information for this article were sourced from the US Census, Freddie Mac, Federal Bureau of Labor, and the IRS.

Clark County Zip Codes Tell Stories

Clark County has 20 residential zip codes of which 11 are located in Vancouver and two spread into other counties. The US census keeps track of the population in a variety of boundaries including zip codes, political districts, counties, cities, and school districts among others. We can learn a thing or two about the make up of our neighborhoods by the population totals and densities in these zip codes.

So here is a list of the 2023 US Census estimates for Clark County and her 20 zip codes.

• 98660  13,146  Vancouver
• 98661  49,910  Vancouver
• 98662  37,064  Vancouver
• 98663  15,365  Vancouver
• 98664  23,995  Vancouver
• 98665  27,947  Vancouver
• 98682  66,821  Vancouver
• 98683  31,504  Vancouver
• 98684  36,931  Vancouver
• 98685  30,534  Vancouver
• 98686  20,158  Vancouver
• 98601    2,952  Amboy
• 98604  37,212  Battle Ground
• 98606    9,528  Brush Prairie / Hockinson
• 98607  34,877  Camas (includes a small piece of Vancouver)
• 98629    9,783  La Center
• 98642  25,005  Ridgefield
• 98671  23,871  Washougal (includes parts of Skamania County)
• 98674  15,679  Woodland (mostly Cowlitz County)
• 98675    7,198  Yacolt

Map from USPS

Keep in mind that these zip codes often include people living outside of the cities in rural areas. Battle Ground has a population of about 22,000 people but her zip code more than 37,000. Think of all those people out in the countryside surrounding Battle Ground. The same is true for Ridgefield which only has about 10,000 people but her zip code has more than 25,000.

In the case of Vancouver her zip codes add up to more than 353,000 people when the city proper sits at about 200,000. The discrepancy shows the extent of Vancouver's urban sprawl outside of the city boundaries.

If you live in Clark County what do you think about the stats in your zip code?

Is it really as rainy as they say?

Washington State has a damp reputation for soggy weather. Often the local Chamber of Commerce will chime in about how we get less rain than most cities in the USA east of the Rockies. This is true and for the nation as a whole we really do not get much in the way of precipitation. Those people originating from a state west of the Rockies will find us much wetter than they are. 

But even when we compare our Western Washington cities to Northern California, we are not that much higher on rainfall than they are, particularly within 50 miles of the ocean. The real issue is that we tend to have a lot more cloudy days than most of the western US. We however are no worse off than states like Pennsylvania, Ohio, and New York on the sunshine scale.

Anchorage, AK; Portland, OR; Buffalo, NY; Pittsburgh, PA; and Cleveland, OH round out the top five "gloomiest" cities in America in a climate survey done by Move.org. Seattle and Spokane were 6th and 7th on that list.

So cloud cover is a thing and Washington gets allot of cloudy days. But often coastal areas in California are overlooked in the "gloomy" category despite having a heavy marine layer that tends to make for foggy and cool weather in the summertime. 

But what about actual rainfall? How rainy is it really. Typically rainfall is measured two ways by climatologists. Inches or Millimeters of rain measured in a rain gauge and number of days with measurable precipitation. When measuring actual rainfall volume we are lower than the national average, but when measured by number of days with rain, we are near the top. I created two lists below ranking Washington cities against other notable locales around the country for both rainfall and days of rain.

Here are the same four charts with a list of several cities from each region of the country. Each chart ranks the cities by a different metric starting with annual days of precipitation, then annual rainfall in inches, then the percentage of sunshine, then annual snowfall.

Here we rank near the bottom with 157 days on average with measurable precipitation. It should be noted that we get a lot of days with light drizzle that is just barely enough to register in a rain gauge.

Here we are right in the middle with our paltry 36.9 inches of annual precipitation. It should be noted that in fairness, the Portland International Airport is the official NWS reporting station and it is notably drier than the surrounding area. Our real precipitation is between 40-50 inches depending on location.

Sunny days are hard to find in the winter months and it takes a toll on our annual numbers. But sunshine is in abundance from mid June through mid September. Summertime is sunny almost every day and little to no rain at all.

Snowfall is another category we do well in unless you like snow. Our 6.5 inches a year average is pretty tame even for those who hate the snow. 

When I look at the locations people are moving to I can't help but notice our weather is better than a lot of them overall. South Carolina and Tennessee are popular spots but those places have hot and sticky summers. Tennessee doesn't get quite a much snow as we do but they get three shower a day humidity in the summer. The Carolinas have those pesky hurricanes.

So in closing, yes it is as rainy as they say but not as rainy as you think.

How to move up in this market

Many people that bought smaller starter homes a few years ago when rates were in the 3-5% range would love to make a move up, but the higher interest rates are scaring them off. For some staying put makes sense, but many could be in a position to move up to a larger home despite the higher rates.

Starter homes are selling well right now, and move up homes are not doing as well. The price difference between a 20 year old 1400 foot 3 bed two bath and a 2200 foot 4 bed 2.5 bath home is less than $100,000 in the current market.

The thing holding many potential move up sellers back is the higher interest rate they will need to pay on the new house. When the market was hot and fueled by low interest rates, larger mid level homes were a lot more expensive relative to the starter homes. But now the higher rates have pinched the mid-market and the gap between them is pretty small. 

For buyers who have improved their finances over the last 5-8 years and have the benefit of a large pool of equity in their current home could make the move now rather than waiting. These buyers may be enjoying a nice low payment say $1800 and the new payment even with a large down payment on the move up house would likely be closer to $3000. But if they wait until rates drop again, that will drive pressure to the move up market and we will see a disproportionate price growth int he mid-level market. The entry level market has bloated prices due to the higher rates making them more desirable. Fewer people can afford the larger homes at these modern rates so those homes are effectively "on sale." 

The benefit to moving now is that your basis in the new house will be lower and if rates come down, a refinance could lower the payment later. Waiting until later IF rates come down could end up being more expensive as the savings in interest could be gobbled up my the increase in prices. People in an FHA loan paying 0.55 monthly mortgage insurance will be able to buy the new house with a conventional loan and no MI using the sizable equity in their current home.

It is worth doing analysis and for some it may be surprising to find out that a move up now might be better than waiting. As I mentioned above however, for some waiting could actually be better. every situation is a little different and the numbers play out differently as well.

Contact Rod or your trusted agent for information for your situation.

Clark County Median Home Price Eclipses Multnomah

Recent trends have the median home price in Clark County about 7-10% higher than Multnomah County. Portland proper still edges out Vancouver proper with slightly higher home values. Washington County continues to lead the region as the most expensive among the four urban counties making up the metro area.

If Portland doesn't stop the bleeding Vancouver will pass it up as we are attracting growth and Portland has been shedding people faster than new arrivals for the last several years. Vancouver really needs to keep a sharp eye on the social woes of Portland that seem to be finding their way over here. A large piece of the attraction Vancouver has is most of the city negatives happening in Portland have been mostly absent in Vancouver. Some of that is starting change a bit. City leaders are often too concerned about their public image or what some extremist group thinks to make the best choices for the city. This has happened in Portland over the last ten years and we can all see how that worked out for them in RipCity.

We may need to make some ballot box changes this November.

Meanwhile Clark County is still the hot spot in the metro area for real estate and that is at least a good thing.

Market Activity is Healthy

Chart from RMLS

Over the last few years we have had a very strong seller's market. Inventory levels were so tight in 2022 that supply was listed in days rather than months. In 2023 we saw inventory levels slowly creep up. Last month the MLS showed us at 2.5 months of inventory. This is a still a seller's market but new listings are steadily outpacing new pending sales. 

We should see resale inventory numbers continue to increase as the summer approached and progresses. A market with 4 months of inventory is healthy for both buyers and sellers. For sellers they control how fast or slow their home sells through pricing. As inventory increases sellers make the decision to either hold out for the ideal buyer that wants to pay a premium for their home, or to come in competitive and get in contract quickly. This is actually normal behavior in any market, but it becomes critical as we move towards inventory neutrality at 5-6 months.

For buyers they can now decide to hold out for the perfect house and pay a premium or to maybe make a few concessions in order to capitalize on a seller's desire to sell quickly. Here relative bargains can be found. A seller that wants to sell fast, will work with a buyer to gt the deal done.

I have always liked markets in the neutral range where neither buyers nor sellers hold an advantage. This is where true negotiations can happen and both parties tend to feel like they got what they wanted. 

As for buyers they should be prepared to have at least 3.5% down and an enough income to keep the house payment less than 40% of monthly gross income. Also total debt to income should not exceed 50%. Now credit score and financial strength allow these numbers to be somewhat fluid, weaker borrowers will need to drop that payment to 30% and the debt to income down to 40%. Super strong borrowers may be able to creep those numbers up a tad. Talk to a professional mortgage agent to find out where you stand before making any decisions.

Keep in mind that one of the advantages to owning real estate using a fixed rate loan, is your payment remains constant throughout the term of the loan. As rents increase and wages increase your payment begins to feel smaller and smaller. 

In my personal scenario, my house payment is now less than half what my house would rent for. Get in early while you are young and within ten years there is a very high chance you will be in my position with a low mortgage payment. It won't be easy and you may have some lifestyle changes, but your financial position will get stronger.

If you have really strong income, try to resist buying too much house. Start out with something you can afford even if you loses some income. That is not always possible in a high value market like SW Washington, but if possible spend less than the bank says you can. 

It should be a good summer for local real estate.

Looks like Spring will Perk up the Market

Both buyers and sellers seem to be coming around a bit. We are seeing a nice Spring bump with new listings popping up on the MLS. Buyers also seem to be getting excited as well. I do not foresee any crazy rampage of buying but Clark County might be able to see 500-600 closings a month this summer which is pretty decent.

New home builders seem to be dialing back on larger developments. New Homes are hard to build at or below the local median and current rates have cut the number of eligible buyers. Fewer new homes competing with resale homes will help sellers with a softer landing on price should we see a resurgence in inventory levels.

According to the latest news reports the NAR's settlement offer is likely to be approved and will create some changes in the disclosures as well as changes in the way property is listed.  Buyers may find it a little more difficult than before but should be prepared for a new approach when working with an agent. 

It remains important for buyers to be represented by a professional agent that will negotiate on their behalf and separate from the seller's interests. Buyers will have to sign an agency agreement before an agent can show them property. Keep in mind this is all going to be mandated by law and according to the courts it is an effort to protect buyers.

Contact your trusted agent for more details on these upcoming legal changes in the real estate industry.

 

Spring Season is Here

This is that time of year where activity perks up in real estate. New listings will come online at a faster clip. Buyers will start 'kicking tires' and looking at homes. This can be a good opportunity for sellers to get out in front of the market surge the may be coming as we progress deeper into spring. 

Our local market tends to see a 20-25% bump in activity during the spring and summer months usually starting in April or May. The current situation with mortgage rates is such that buyers are starting to make the adjustments to the current rates. We have been pretty stable on rates since the big hike in 2021. Buyers will adapt, banks will adapt, sales will occur. 

For buyers banks are already creating opportunities for buyers. Buyers can be optimistic about the sales cycle this years as prices are holding steady. Banks are trying to create opportunity. Seller's are more motivated.

It could be a good year after all.

Is Urban Living Returning to America?

originally posted in The Couv Life 7/17/2023 by Rod Sager

Decades ago the post war boom started and a new type of neighborhood emerged with cute culdesacs and curvy streets. Homes were built with oversize lots and everything was centered around the automobile. American's ate it up and millions of these houses in suburbia were built and are still being built today. In the 1980s and 90s America's Downtown areas were in rough shape. The age of the suburban shopping mall and highway bypasses left many cities with an urban core in serious decline. The once happy Downtown excitement became a dismal study in urban decay. It was sad really, as some of our nation's most spectacular architecture was on display in the old city center in nearly every town.

But these days I am seeing a massive resurgence in Downtown Living. Not just here in America's Vancouver but all across the fruited plains of our nation. I saw it in Lafayette, IN and Covington, KY. I am seeing it in many places as people are now flocking to the hustle and bustle of the city, even in smaller cities and towns.

Vancouver USA is all over this trend. Not just Downtown and the Waterfront, but the new Palisades development on 192nd and the New Heights District that is under design right now. It seems a new generation of Americans may be longing for that old world city life and communities across the land are building it from high-rises to more modest mid-rise buildings. A new era of urban living is spreading like wildfire. Dense urban development tends to foster a community bond as people walk around the neighborhood, shopping and dining while on foot rather than driving. There can be no doubt this is a big deal to a large group of Americans as Vancouver can't get enough of these modern mid-rise and high-rise residential projects. Vacancy in the city center locally is in the low single digits. 

So it seems, America is returning to the old urban living model and Vancouver USA is all over the scene. To follow Vancouver's urban living check out Urban Living in the Couv here.

Ah the Couv life; it is good.

The market is humming a healthy tune

The numbers were published for last month by the MLS and data shows Clark County, WA was rather healthy. 750 new listings were posted against 610 new pending sales. A total of 1073 units were active and 497 units closed. The inventory remains stable at 2.2 months which still favors sellers. The MLS reported the median home price for new listings in March at $560,000 with the median sold price at $525,000. Despite the advantage to sellers, the median price has remained steady. Buyers are rather limited as rates and incomes are not lining up as nicely as they did a few years ago. 

Most of the activity is in the median price range about plus or minus 10% of the median. This means the sellers looking to part ways with homes between $450-$600k are in really good shape. There are plenty of buyers looking to get a home in this range. Most of the sellers in this range however are selling due to a career change to a new area or older folks retiring to warmer locales, people passing, etc.

The higher price ranges are definitely struggling a bit since that move up market is stifled a bit. There are many homeowners sitting on those 3% loans in their three bedroom two bath house that would love to make the move up to something bigger or nicer, but the new loan will be at 7% and they just can't swing that new payment.

There are ways to make it happen, especially for those with large equity positions. Potential sellers should not presume they can move up. Check to see where your equity position is, what you need to borrow to make that next move up. Maybe you can, maybe you can't, but it is worth a shot.

We do not know if we will see higher or lower prices next year. But if there is a correction, then that can chew up your equity position. Sometimes it is best to stay put, sometimes there is an opportunity to move up. It is wise to avoid assumptions.

Overall the numbers from last month reflect a healthy market that should be sustainable over the long haul.

Mortgage rates are stable, Buyers agency in jeopardy

The mortgage rates over the last few months have stabilized with the usual fluctuations in the market but a generally flat trend curve. Stability is almost as important as the rates themselves as buyers do not have to make rush decisions to try a lock a low rate. 

Recent legal matters based on a proposed settlement between the NAR and Federal regulators could lead to poor representation for buyers. Buyers may find themselves in a situation where they have to choose between paying an agent for their services or going it alone with the seller or listing agent. 

As is typical in these types of suits the plaintiff either doesn't understand the arrangement and purpose of the MLS or they don't care. In a nutshell an antitrust suit was filed against the NAR and it seems some of the plaintiffs accusations were true. But rather than simply fixing the problem this settlement is an egregious overreach and will ultimately end up hurting buyers and sellers alike.

There were apparently several areas of the country where the NAR had a fixed commission requirement for the buyers agent rather than a negotiable amount. If this is true and it seems like in some areas it was, then the antitrust suit on that charge has merit. The settlement however as proposed is likely to make things worse, not better. Here in Washington State for example, commissions have always been statutorily mandated as negotiable. We should not have to make any changes here. Yet we may have too. 

The idea of the MLS was to move away from the car dealership style of home selling that was rampant in the early 20th Century. People would go to a broker's office and look at houses they had, if they didn't like them they would go to another broker and so on. It was tedious and it often led to aggressive behavior by agents just like we see at car dealerships. The MLS idea was to have brokerages share their commissions with other brokerages. Under this arrange a Weichert Realtor could show properties listed by other brokerages such as RE/Max and still be paid for their efforts. The buyer was now represented with their own agent that at the least had a fiduciary responsibility to work in the best interests of the buyer. In Washington State it is not only a fiduciary responsibility it is a statutory responsibility. 

The plaintiff's claim was that the seller should not have to pay for the buyer's broker. That seems logical until you dig deeper. The seller is paying indirectly. The commission is solely the listing brokerages fee. The listing broker chooses to share it with another broker to help sell the home faster and for the highest possible price. The listing broker could keep the whole commission for himself and try to find a buyer on his own. In our county we have nearly 2000 agents. Why would I want to keep that property from those agents. They may have the buyer that loves the property so much they are willing to bid it up higher than any other buyer.

The seller agrees to pay a fee that is fully negotiable to the listing brokerage. The seller is not paying the buyers agent fee, they are paying the listing agent's fee. The listing agent is choosing to share that fee with another broker if they bring the highest and best offer to the table. How the listing agent chooses to use that fee is her business. She could donate the entire fee to charity, she could go on vacation to Hawaii, she can put it in her retirement account. It is hers to spend as she sees fit. Most listing agents choose to place the property on the MLS and share their fee to help get the highest price and best terms for their client. On the MLS the home will sell faster and for more money almost every time.

Feel free to reach out in the comments section if you have any questions about how agency works in the state of Washington. You can text "waloa" to 360-364-5621 to receive a link to the Washington State Law of Agency official pamphlet. 

High end market seeing cash deals

I have noticed many high end properties closing with cash listed as the payment method. With mortgage money costing about as much as investment earnings, some well heeled buyers are choosing to part with cash in the short term rather than borrowed funds. Someone earning 4% to 5% on conservative investments may rather invest that cash into real estate which may not earn 4%-5% in the current climate but will still be better than borrowing at 7% or more. The stock market has been somewhat volatile lately and that may be part of the cash movement in high-end properties lately. Cash has always been common in deals where someone is downsizing a large home into a smaller home. This is typical in retirement. Lose the giant house on the huge lot and move into a smaller condo or townhouse to eliminate a large portion of the maintenance. 

There can be advantages to borrowing however. Mortgage interest is deductible in most cases from income tax. Sometimes this makes strategic sense. Carrying a mortgage does encumber the property and thus makes it a bit more difficult to sell if market conditions soften up, but generally in the high end market larger downpayment are common. 

Cash is king and people choosing to use cash to purchase can always do a loan against the property later should they need access to their cash. There are a many different angles when making a real estate purchases and it seems that cash is just popular right now for those making purchases of more expensive properties.

Is Real Estate Headed South?

Many people are concerned that real estate values may take a dive as some analysts are bearish on real estate. The way I see it, the analysts pulling the alarm on real estate are the usual suspects. The same people that are always trying to promote other investment vehicles, like precious metals, looking at you Robert Kiyosaki.

Most industry insiders feel that the market will experience a soft landing correction and so far that is exactly what it is doing. Inventory is gradually creeping up and buyers are seeing some relief on pricing. Although prices are not falling locally the asking prices are lower and that may lead to lower median prices as the year wear on.

Presidential election years traditionally have some economic turbulence as investors react to polls and predictions about what the future administrations and congress will do. Typically once the election is over and the results are in things settle down. If we follow this pattern real estate will likely continue its soft and gentle landing with eventually median prices dropping by 5%-10% over a year or so. 

Of course it is important to note that massive corrections can and occasionally do happen. We had just such a scenario back in 2009. That correction came on the heels of many different issues with the stock market, lending markets, and housing. A great deal of legislation was enacted to keep that trifecta disaster from happening again. There has not been a significant relaxation of those laws, so I think we are unlikely to see that level of collapse in the near future.

Buying a home is still a very solid way to build wealth and equity over time.

Have interest rates made renting more affordable than owning?

Back a few years ago when we had all time lows for mortgage interest rates it was absolutely more affordable to own than rent. The numbers were very convincing, but now with interest rates in the 7s is it still the more affordable approach?

I have spent some time on the rental websites looking at rental properties advertised locally and have found very recent sales of similar homes in the same neighborhoods to see if I can tackle that question. Affordability comes down to more than just the monthly payment. Renters generally do not have to pay for repairs and upkeep whereas homeowners do. These are expenses that should be calculated in to be fair. But homeowners also have the benefit of building equity through a combination of reducing the monthly principle on the loan and through market appreciation over time.

The number one advantage of renting is mobility. Typical lease commitments are one year. When choosing to buy a home you should be committed to at least four years. The disadvantage to renting is you run the risk of not getting a new lease at the end of your current lease. The owner may choose to sell the property. With apartments, this is rare, but with houses it happens fairly often. 

So operating under the notion that we are committed to staying in the property long term and we have a small to medium sized dog. Let's crunch some data.

ForRent.com

The first property is a rental house about 25 years old and nicely updated in NE Vancouver. The home is a very common house that many builders built in that time period. It has 2080 SF with four beds and 2.5 baths. It sits on a typical 6000-7000 foot lot. It is listed for rent at $2850 per month. The upfront cost is two months rent and a security deposit. Pets are allowed but with a larger deposit of an extra $500 and an extra $100 per month.  So we have to come in with $6200 and our monthly payment is $2950. This home has a classic 1990s two story floor plan with the living room up front, kitchen, dining and family room in back with a 1/2 bath down and all four beds and both full baths up. Renters insurance will run between $50-$100 depending on how much coverage for loss you choose. Total monthly expense is $3000

RMLS

The comparable home to purchase closed late last year at $475,000 and the seller paid $7000 in buyers closing costs. This home was also updated but not quite as nice on the inside as the rental house. The exterior is a little nicer and it is located just a few blocks away in the same neighborhood. Its floor plan is a near clone of the rental but with slightly less space at 1960 SF and four beds with 2.5 baths on a 6000-7000 foot lot. For the sake of comparison I'll assume an FHA buyer with 720 credit score, 3.5% down, and $7000 in closing costs. Buyer will need to come in with $16,625 and will have a $3887 monthly payment including taxes and insurance. I found several similar homes currently for sale a little further away but less than 2 miles in this general price range. This home had a newer furnace and newer roof.

It is quite evident that the cost to buy a single family detached home is substantially higher than the cost to rent it at the moment. But let's fast forward ten years. Trends in rental properties over the last several years have shown increases of roughly 2-3% annually but are tracking a bit less lately so I'll operate at 1.5% annually so rent would be roughly $3500. Property taxes will fluctuate based at least partly on the market. Vancouver is currently experiencing very modest price appreciation and will likely remain flat over the next couple of years. The historical post war (WWII) appreciation over a ten year period has been about 70%. Since we are currently trending lower than the historical average I'll run the next 3 years flat and then historical average for the remaining 7 years. That would yield a 50% price appreciation over ten years for the owned home which is conservative barring a recession with the severity of 2009-2012. The only likely increase in the mortgage payment would be in taxes so that payment would look like $4100. Home value at $712k with equity at about $280k. Repairs and maintenance costs would run about 1% annually on this house as most of the expensive bits are new. Much of that could be performed by the homeowner to save money, yard work, minor repairs, light painting, etc. Over tens years assuming half of maintenance DIY would be $25,000 so net equity is still more than $250,000. If interest rates were to drop during that decade a refinance could lower the payment and eliminate mortgage insurance. The payment after six years if rates are 5% could be lowered to $3000. Obviously there is no way to know if rates will go back down or go the other way. If they do the latter then the homeowner is sitting pretty with a sub market rate.

The moral of the story is that long term home ownership will benefit the buyer immensely but for short term, renting is often the superior option. I have lived in my home since 2002. I paid $200k for it with $40,000 down. I could sell it now for $600k. Over the 22 years I have put roughly $50,000 into the house for maintenance and upgrades including a roof, furnace, and kitchen remodel. All told I have paid into the house including said maintenance, upgrades, and principle, interest, taxes and insurance, $441k. This includes three refinances one of which had cash out to clear a home equity line I used to pay for some upgrades. My first loan was at 7.5%, the second loan was at 5% the final was a rate and term refi at 2.9%. All those payments including my down payment over the 22 years and the maintenance costs adds up to $441,000. If I sell the house today I would walk away with $274,000. That means I lived for 22 years in this house for a total real cost of $167,000 and that works out to $632 per month. This is why long term, buying is the only way to go. It's not all peaches and cream, as the market can be volatile at times and early on in your homeownership, it can be expensive to move. Sometimes you can feel trapped in the house when the market is soft or when rates are much higher than your current rate. If I sold my home for $600k and used the 274k as a down payment on a smaller house at say $450k my payment would be about the same because the smaller mortgage at a higher rate works out about the same as my current larger mortgage. So I am staying put, for now. 

Homeowners Insurance Getting Complicated

In the aftermath of a series of really bad claims cycles insurance companies have tightened their belts in the Western US. The biggest claim culprit has been wildfires particularly in California. Insurance companies are now using fire line data to determine eligibly and/or cost for insurance. Most of California, Eastern Washington, and Easter Oregon have high fire line scores that affect insurability of homes in the area. Generally homes in cities and suburbia have manageable fire scores but once you venture out in the countryside things can get dicey. 

If you are buying a home with a bank loan you will be required to have adequate homeowners insurance. This can get very expensive and your qualifying for the loan includes the cost of insurance. Flood zones will require additional flood insurance which can be expensive. If you are buying a home along a creek or river be prepared to encounter more expensive insurance and keep in mind it could affect your ability to qualify for financing.

As for the fire line ratings you can go to risk factor.com and enter your address or an address you are interested in to see the rick factors from flood, pollution, fire, etc. Fortunately here in Clark County the vast majority of homes even in the mountains are below fire rating of 6 which is the number that starts making insurance companies nervous. The scale is 1-10 with ten being severe. Here in Western Washington we have a long wet season that provides for a lot of fuel for fires, but the dry season is short enough that our fire season is pretty short. We tend to stay green for most of the year and that provides some protection from major out of control wildfires. We are by no means immune but I have't yet found an address with a rating above 5 in Clark County, let's be clear I have only run a couple of doezen dresses through the system. Up high on Rawson Road in the cascade foothills was brings 4's and 5's where as my suburban Vancouver home is a 3. Washougal River Road address were also bringing 4-5's. 

I'm not saying there are not any high risk addresses because there probably are some. But I would recommend looking into this when you are deciding to write an offer. You don't want to be blindsided by an insurance problem after you have paid for an inspection, appraisal, etc only to have to kill the deal over insurance.

Can Two Minimum Wage Earners buy a 3 bedroom Home in Vancouver USA?

Well that's a loaded question? Although our market is not yet officially a neutral market we do have significantly more inventory than we did 18 months ago. Interest rates remain mostly in the low 7s right now for government backed loans. Rates have been a bit volatile this year so far and clever lenders can get locks near 7 flat at times. Let's use a 7% FHA loan as our example and see if two minimum wage earners can in fact buy a home in one of America's most expensive housing markets. Washington State ranks third behind California and Massachusetts for median home price. Vancouver is about 15% below the statewide median making us relatively affordable. Vancouver however is well above the national median of $392,000. 

Well I intend to answer the title query with some local facts and available homes as of writing this post. As of January 1st, 2024 Washington State's minimum wage is $16.28 per hour. At this wage two full time earners will bring in $5500 a month income. Now credit is always a concern and in our market an income of $5500 a month is going to need some credit help. A 720 or better score for both borrowers. Also a low amount of debt. People earning minimum wage cannot expect to have a brand new car payment and still qualify for a mortgage. Some patience will be in order as well since a 7% interest rate will need to be locked as soon as it appears or rates could swing back the other way and become unfavorable. 

Let's look at borrower(s) A: Two earners at $16.28 full time $5500 per month, 720+ scores, < $150 in monthly credit debt, and 15,000 in the bank. At $320,000 buyer brings in $11,200 down, will likely have $8,000 in closing costs that we will ask the seller to pay. Keep in mind that the FHA will allow gift funds for the downpayment from an immediate relative. With a total PITI payment of $2660, this is a doable transaction even if there is a small < $100 HOA fee. Yay!

3 beds, 2.5 baths, 1378 SF listed at $340,000

OK great, can I find a house that is clean enough to qualify for FHA financing at this price point in Vancouver USA? After a short research period, the immediate answer is "No." The closest I got was an end unit townhouse with a small but usable backyard and priced at $340,000 with $250 in dues. So how much more income does our borrower(s) need to qualify for this home? About $1000 more. The dues for the HOA are killing us here. I have seen townhouses in this price range with HOA dues under $100 but there just weren't any listed right now. If I found such a place then the extra income required would be $800. Still that is difficult to overcome. 

3 beds, 2.5 baths, 1368 SF listed at $420,000

What does that look like then? Well if our two earners made $20 an hour then no problem. Here is where the issue is. That $250 HOA fee is worth $38,000 in purchasing power. So our buyer could look at detached homes with no HOA and pay $378,000. In fact at $20 and hour they could qualify for about $430,000 so long as they keep their other debt service under $200. Well the house on the left is currently listed for $420,000 and it is in good shape, easily financeable as is, and offers 3 beds, 2.5 baths and 1368 SF.

Now looking at the median wage in Vancouver shows a different story. The median wage is $25.17 per hour or more accurately $52,363 annually. Median means half of the people make more and half make less. So two people making the median can buy these homes. In fact two people making the median can look at homes with payments at around $4000 a month. That will buy a $485,000 house which is pretty close to the median in Vancouver, maybe a touch lower depending on the data source. 

We may have gotten a little spoiled back a few years ago when rates were in the 2's and 3's. Two minimum wage earners could if fact buy a modest three bedroom house. But with rates now closer to the 50 year average it takes a little more than two minimum wage jobs to buy a house. The good news is that incomes have been rising locally and means more people will qualify soon. When rates relax a bit and settle into the high 5's of low 6's we may see two minimum wager earners once again qualify for an entry level home. 

Fed is hinting at Rate Reductions

Surprise, Surprise, it's an election year and all those politicians want to get reelected! Seems the Fed may be under some pressure to let up a bit on the money squeeze. For real estate some easing would be nice. I'd like to see rates come down a point or so. I wouldn't expect to see the all time lows again anytime soon, but just a nice gentle 6% would add tens of thousands of buyers to the pool and help real estate start moving again. 

Inventory levels continue to creep up and we are still at a very healthy 3.2 months supply. But we don't have enough buyers to keep things moving. We have a lot of potential sellers sitting on loans at 4-5% and if rates get back down to 6% many of those sellers may consider selling. I have been on about how so many sellers are literally parked in their ultra low mortgages in the 2-3% range. They aren't likely to be swayed at 6% but the thousands sitting in those 4-5% loans just might.

I'm looking forward to a nice near neutral market this spring.

Interesting Non-traditional Loan Options in Vogue Again

Lenders are trying to revitalize their sagging business models with more flexible loan options to help buyers across the wide spectrum. HECM loans which are often referred to as "reverse mortgages" although these are not the old reverse mortgages of yesteryear. These loans are for older Americans looking to use the equity in their home as a source of income or to eliminate a house payment. 

Another popular blast from the past is the seller second. Lenders are once again embracing sellers willing to carry a second to help a buyer get into a property. Sellers with strong equity position can offer to carry back a second mortgage at a rate and term favorable to both parties. This can help a buyer qualify for a house they otherwise could not. The seller makes 6-7% on their investment. 

These types of programs are not for everyone, but for some it can be the golden ticket. Buyers struggling to find the right home with the right terms should talk to their mortgage professional and see what alternative financing options are available to them. Older Americans above age 62 can also see if a HECM loan is a good product to consider.

Real estate is an important piece of the wealth puzzle and buyers historically have found a way to buy even when rates were in the teens back in the early 80s. The rates we see now are very comparable to rates we had just 15-17 years ago in the mid 2000s. Lenders had more tools in their toolbox back then and some of those products will never return, and that's a good thing honestly. But some of those products are returning and they are welcome in this challenging market.

Don't give up buyers, new solutions are arriving often and it is wise to stay in touch with your lender as we move forward into a little less hectic market this spring.

Winter weather can make things seem slower than they are.

We just had a nasty snow and ice event that has had road conditions in bad shape in the local neighborhoods where real estate showings typically happen. The snow and ice have been treacherous in some areas and I have seen many showings cancelled and rescheduled then canceled and rescheduled again as the cold weather has been a little more persistent than is typical. 

This will certainly result in fewer pending sales over the next week or so. It will make the market seem slower than it really is. Likewise after the weather clears out this coming week, a flurry of showings is rather likely which may make the market seem busier than it really is.

Overall the market has been slow and steady with interest rates slightly improving over the last month or so, buyers are starting to settle in to this new reality of rates at or around the 50 year average. Although we still have fairly tight inventories levels that favor sellers, it is no where near as tight as it was 18 to 24 months ago. The chart shows how inventory has been creeping up slowing and we do not have enough qualified buyers snatching the properties up quickly like we did before. Generally when inventory levels get in the 4-6 months range we move into neutral conditions. More than six months favors buyers, less than 4 months favors sellers.

Buyers should find sellers to be a little less resistant to offers requiring help with closing costs or in some cases a lower offer price as marketing times have increased from a matter of a few days to a more typical 30-45 days. Some sellers are more motivated than others. Buyers can take advantage of these situations. 

Overall I am enthusiastic for a possible neutral market that allows prices to rise slowly and parties can negotiate terms on even ground. It's been a long while since we had that kind of market. I foresee that in the near future.

Happy New Year: Market Outlook for Clark County, WA

It seems like mortgage interest rates are stabilizing in the 6.5-7.5% range with credit and other lending qualifications delineating to upper and lower ranges. Historically mid 6's have been very healthy for the real estate market. 

The real estate market has been rather slow with both supply and demand being weak. Prices remain stable without any significant changes some markets a little up others a little down. If interest rates continue to be stable and maybe even dip a little bit more leading into he spring, we may very well see an uptick in demand. Supply however will likely remain tight as we still have thousands of homeowners sitting on their 3% mortgages. It may take four or five years before we start to see the turnover from all the first time buyers that bought in the last two years at 5-7% start making their move up.

Meanwhile our local economy continues to produce high paying jobs that are attracting people to the area. If that trend continues we very well could see an uptick in demand from that. Locally Clark County is still seeing significant demand for homes coming from Portland transplants. According to the Oregon Government, Portland has lost roughly 30,000 people since the 2020 census. Washington and Clackamas counties have seen little or no growth in that same period whereas Clark County has seen an increase of some 30,000 people since the 2020 census.

This means that we could see a drop in Portland home values and an increase in Vancouver over the next few years. Over the last few decades Multnomah County housing prices have tended to be a little higher than Clark County, but they have been inverted at least once in the last 25 years. I believe that may happen again if Portland leaders can't stop the proverbial bleeding south of the Columbia.

Another potential issue for Clark County that favors existing homeowners but could be detrimental to renter is the potential for a slowdown in new construction. I believe Vancouver will continue pushing high density apartment projects that ultimately will result in lower rents for entry level and mid level apartments. But single family homes and condos could very well see spikes in value in builder slow down on the construction of new homes. 

The overall outlook for the local real estate market is for a small uptick of activity in the first half of 2024. The second half is a crap shoot at this point.