Friday, May 31, 2024

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 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.

Friday, May 24, 2024

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.

Friday, May 17, 2024

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.

Friday, May 10, 2024

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.

Friday, May 3, 2024

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.