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.