Rates a tick better, buyers starting to come back, listings are up as well.

After a solid year of adding inventory to what was a ridiculously tight inventory, we now have a healthy 3-4 months of inventory. I was getting a little nervous as the inventory was rising and new buyers did not seem to be coming to the plate. Well anecdotally for me that seems to be changing as well. It seems the slight improvement on rates and seller's willingness to help buyers with loan costs and buy downs, has brought weary home shoppers back to the playing field.

Activity is up on all fronts which is welcome news for us Realtors® since we have not been as busy this year so far as we expected. For buyers the interest rates at 7% were causing problems in our expensive local market. 

Here is the basic difference between 7% and 5% interest on a median range home in Clark County, WA. A $500,000 house using an FHA loan at 7% with typical closing costs and taxes produces a payment of $3937 per month. This requires under most underwriting guidelines at least $8000 per month in income and that presumes there are no other debts held by the buyer. $8000 a month works out to 96k a year. Drop that rate down to 5% and the corresponding payment drops to $3225 per month. This lower payment requires an income of at least $6500 to qualify, again without any other debt service. This is $78k a year. This means a single person with a better than average job can buy at 5% but needs a partner with income to buy the same house at 7%. This rate differential also allows the buyer with $95k income to still qualify even with a few other debts like a car payment.

Since the slow down in sales has been largely due to the abrupt rise in rates eliminating many qualified buyers, it stands to reason that sellers can entice these formerly qualified buyers with a rate buy down. Having seller's offer a closing credit is nothing new. It seems however that buying the rate dow is more important than standard closing costs.  

Rates have settled into the mid 6s for many buyers and depending on the day $10,000 in buy down moves that rate into the low 5s. This is a game changer for first time home buyers and could also be reason enough to get someone that is currently in a low interest loan to sell and either upsize of downsize. Many people are holding off listing their home due to the fact that they hold a low interest mortgage and do not want to lose that comfortable payment. With the recent rate drops and the notion of a buy down, the difference between the low rates of a few years ago and the attainable rates today is much closer and may make the difference for homeowners ready to move either up or down.

If you are a buyer consider asking your agent about writing offers with a seller buy down to help qualify in our expensive real estate market.

Condo market is slowing down a bit

A large part of my business model in Clark County real estate, is dedicated to urban condos in the city center and along the columbia river. These condos are in mostly high density developments with mid-rise and high-rise buildings. Of course this is a niché market in Vancouver and so the larger portion of my business comes from more 'traditional' real estate such as single family homes and townhouses.

That stated, the city condo market is slow right now. It is usually a little bit slower than the single family home market anyway, but right now it is disproportionately slower. Some say it is all about a more cautious economy what with new tariffs and trade tensions rattling the stock market, but I think it is something else all together.

I think by now most of you are aware the City of Portland underwent a roughly five year period of negative population growth. Much of that growth came at the expense of Portland's greater Downtown area such as the Pearl District and the South Waterfront. Vancouver's city condo market has always held a price advantage over Portland. This is most likely due to the fact that Portland is a larger city and many people that choose to live in mid-rise and high-rise urban condos do so to be walking distance from the core urban attractions. Portland has and still does hold an advantage over Vancouver in this regard.

Vancouver has greatly enhanced the urban living experience in our city core. In fact I rate it superior to the South Waterfront but lagging a tad behind The Pearl when measuring urban living metrics only. Well, the market over the last few years has agreed with me. The South Waterfront has an enormous glut of condominium units. The Pearl also is a little bloated with inventory but not as severe as the South Waterfront. 

The large exodus out of Portland could be blamed at least in part by the excessive amount of aggressive homeless on the streets and the violent demonstrations that got completely out of hand from 2019-2022. In 2023 Portland's Downtown looked like a landfill, trash everywhere, homeless tents lined up all over the place and a violent crime rate that broke every record in the history of the city. 

The residents of Portland made a major change at the ballot box in 2024. This was not just a taking out the trash of politicians, this was a complete overhaul of the government structure. I already see positive change in Portland's city center. It will take years to get Portland back to the 2010 levels of "cool" that it enjoyed and twice as long to get the reputation repaired, but it seems they are on their way.

I have a client that lives in the South Waterfront who wants to move over to Downtown Vancouver but is disappointed in the price variance. The South Waterfront is way cheaper! I suspect the Pearl will be the first condo market in Portland to shore up as it has many advantages over the South Waterfront. The latter is difficult to get in and out of, has more limited public transit than the Pearl as well as less in the way of amenities.

Vancouver still has many advantages to either the South Waterfront or the Pearl District. We enjoy a superior tax profile and a much better traffic situation as far as getting away by car. We are just as close to PDX as anyone in the Portland urban core, and our waterfront is arguably the best in the region. Downtown Vancouver is also much more navigable than Portland with its offset grid that creates terrible diagonal intersections. The bridge and freeway ramps are awkward, only the locals can remember where they are so the city is filled with 'out of towners' getting lost.  

Even as Portland works to bring back people to the city center, Vancouver will still hold some advantages as well as some disadvantages, but right now for the entry level city condo crowd we are priced too high. At the high end $750k and up, we look good against our competitors south of the Columbia.    

Vancouver May Finally Finish Her Annexations

Vancouver is way behind on annexing large swaths of urban density unincorporated neighborhoods. It seems the council is seriously considering a one time "go big or go home" approach that would swallow the entire urban growth boundary. 

I am actually in favor. The State of Washington in 1990 passed legislation aimed at doing just what Vancouver may do now. Many years ago Mayor Pollard attempted to complete the Orchards annexation and ended up in a duel to the death with the County. The whole thing stalled out. Since then Vancouver has been taking little bites out of the large UGB slowly and well behind schedule. 

The council is looking at four options the last of which is aunt just nibbling away like they have for the last 20 years. The other three are big chunk acquisitions, one adding 75,000 residents to the city, another adding 95,000 residents to the city, the third and my personal favorite the full enchilada, the entire UGB adding 171,000 resident to the city.

Keep in ming the City isn't growing new residents, they are in fact already here simply outside the city boundary. It is essentially a jurisdiction change. Cities are much better suited to managing urban areas and counties are really supposed to run the rural areas. The Vancouver UGB is no longer rural, it is mostly suburban housing areas with a few commercial sections.

If they select option three, and they should do just that, the city would officially have 380,000 people placing it ahead of well known "big cities" like, Pittsburgh PA, Cincinnati OH, New Orleans LA, Cleveland OH, and several others. 

This annexation option would put Vancouver on the radar on par with big cities including our neighbor Portland as far as companies looking to expand or relocate. It would be a boon to the local job market.

Vancouver has done an effective job increasing housing density and that will help younger people get into the homeownership market.

Late Season Chill Putting a Damper on the Spring "Bump"

I am seeing so new activity on listings but this late season cool period seems to have slowed the buyers dow a bit. I suspect that by mid April we will start to see real spring weather and that will bring the buyers out in force. 

Many people including some agents continue to blame the interest rates, but honestly these rates are only slightly higher than the 50 year average and they are likely to settle in for a while. I do not expect to see historic lows like we had a few years ago anytime soon. As the rates continue to stabilize in this somewhat average range, buyers will return. Sellers that have been unwilling to list because they are locked in at sub 4% rate will eventually succumb to their own needs and sell. They will downsize or move to be closer to family, etc.

The 10 year period of super low, below average rates has truly spoiled American homebuyers. Younger people never saw rates above 7% in their entire adult life. It is a shock to the system and it has eliminated some people from qualifying to buy a house. Over the years banks and government agencies have always worked to create opportunities for middle income families to own a home. 

Before assuming you do not qualify talk to a licensed loan officer to see what programs are available to you. You may have more buying power than you realize.

Own to Rent Ratio?

What is the own to rent ratio? At different times in the economic cycle it is sometimes more expensive to rent and sometimes it is more expensive to own. Even when the latter is the case, it is often still better to own. The ratio between the monthly expenses of owning vs. the monthly expenses of renting is what I am calling the Own to Rent Ratio. What is it right now? Let's find out. I decided to avoid the AI intervention and do so old school research. Using public sites such as Hotpads and Zillow I want to find out what the cost ratio between owning and renting is.

For most people the most difficult part of buying a house is the downpayment. The majority of loans issued to first time home buyers is an FHA product that has a downpayment requirement of 3.5%. There are a few other costs involved in purchasing a house as well. These up front costs are a burden to ownership. In the world of rentals typically the cost of entry is roughly 2.5 times the rent. That is much lower than the cost of entry for ownership. There are some who may qualify for a no down payment loan to buy a home, most notably is the VA loan which is available to veterans. 

I have found both a current rental listing and a recently sold home in the Ogden neighborhood of Vancouver. Ogden is a very reasonably priced area in Vancouver, not the least expensive but slightly below the city median price. 

Just a few months ago a house sold in Ogden for $459,000 it had three beds, two and a half baths, with 1700 SF on a small lot. I also found a current rental listing just a couple of blocks away for a similar home built around the same time with slightly less space at 1557 SF and also on a small lot. These are similarly equipped homes that would have sold for similar prices had they sold at the same time.

The rental house is listed at $2599 per month with $2599 required as a deposit along with a handful of typical fees. Cost of entry is about $5500 and $2599 per month on a one year lease. 

The advantages of renting are the ease of moving should you not be committed to this area or that neighborhood. Generally maintenance is handled by the landlord. The renter is not obligated to make repairs unless renter was the immediate cause of damage. 

The disadvantage of renting is that the rent can and most likely WILL rise over time. The renter does not receive any equity in the property. As the value of the home rises, the landlord benefits from that rise the tenant typically faces increasing rents. The tenant is usually unable to make any significant changes to the structure of the house and may be completely excluded from any changes including paint. When the tenant moves out the only thing they get back, and only if they met the lease agreements terms is the deposit(s) they made at the beginning. Upon exit tenant likely receives the $2599 deposit int he original upfront costs of entry. The particular home shown here had a rent escalation clause if you sign a lease longer that 18 months. That close was a 3.5% annual increase. So the rent would go up about $90 the first year and slightly more in each successive year.

So let's say you stay in that house for five years. You are a good tenant and get your full deposit back. When you leave the rent will be $2982 and you will have paid a total of $167,190 and will leave with $2599 returned. That represents a net cost for the use of the property of $164,591 over the five year period.

OK, how about a purchase? I found a very comparable home that is slightly larger at 1700 SF and sold for $457,000 in the latter half of 2024. This home is just a few blocks away with the same tax rate, schools, etc. This is a true comp. I could not find a house between 1500-1600 that was comparable in age, design, and location. This is the best comp and would likely have a similar rent if it were on the rental market. Maybe $50-$100 more at most. I'm using 459,000 as current price.

Cost of entry is higher. Using an FHA loan and buying the rate down at sellers expense, records show that a seller credit was issued on this property.  Buyer used 3.5% downpayment along with another $1500 in upfront pre-purchase costs. (Inspection, Appraisal, etc.). Total upfront cost of $17565. Monthly payment including taxes, insurance, principal, and interest at a seller paid buy down to 6.675% (presumed 700 FICO score) is $3517.71 per month. Obviously this is a much higher monthly payment. Keep in mind if you have more down payment you can avoid PMI which in this scenario is $184 per month. PMI goes away after 132 payments and can be refinanced away likely at a sooner date. Refinancing is not always a good idea but that's another post. 

Advantages to ownership. Owner gains equity in property. Owner will get strong boost in credit score over time maintaining a mortgage. Owner has more control over the property. Owner has options in the future after moving to sell or to keep property as investment. although taxes and insurance may fluctuate (up or down) the loan payment is fixed indefinitely.

Disadvantages to ownership. Owner is responsible for all maintenance and repairs on the property. Owner will need to keep property in like condition to maintain its value over time. When choosing to move owner may have to wait a bit to get property sold. Owner assumes risk of market decline and difficulty selling in that scenario. The longer owner remains in the house the less likely a decline will cause trouble. 

Real estate values in Vancouver continue to see upward pressure, although the prices are settling into a more modest growth rate around 3% annually for homes in the this price and age range. We will use an assumption of 2.5% to remain conservative. 

After five years the homeowner decides to move. It will take on average 45-60 days of marketing to sell the house. Seller can speed that up with a lower price if needed. The likely list price five years in the future at market value would be $519,000. We will operate under the assumption that the homeowner did not make any significant improvements to the property but did have some maintenance expenses that would not have been required in a rental scenario. I'll use $5000. That of course could be less or more depending on the random circumstances. 

Owner sells house at full price but offers buyer a $7000 closing credit. Owner facings their share of closing costs, plus the seller credit back to buyer, and retires the loan on the home. Owner has paid the following over the five years: $219,462 in payments including PMI, property taxes, and homeowners insurance plus the cost of repairs/maintenance. The taxes and insurance all went up during the period and those increase are accounted for. The homeowner paid $145,623 in interest payments and $32,442 in principal. The loan balance is now $410,492. Homeowner also cost to sell including Washington State excise tax (1.6%) and a real estate commission of likely 4.75%. Obviously the commission is negotiable and may be more or less denying on the route the they went. After close the homeowner receives $476,044. Taking out the upfront costs and the payments plus expenses the homeowners cost to use the property for 5 years is -$42,987. The homeowner enjoyed the use of the property and was paid back $42,987 MORE than the total amount of outlays to own it. Yes they actually made a profit and since they lived in the house as primary residence they pay ZERO in capital gains taxes.

Buying is better than renting. Now if you choose to rent the house above and then take the difference and invest it in medium risk investments. (Real estate is considered a medium risk asset). Let's call it $900 a month plus the extra $12,000 upfront difference. What would that look like? Medium risk assets in the stock market with a small but significant amount of digital assets like Bitcoin would likely produce an 7% annual rate of return. Just like real estate these assets can and do occasionally lose value.  If you did rent that house above and invest the difference in similar risk assets you would have this scenario: Total paid over the five years $221,190. You would have $81,269 in the investment account plus the $2599 deposit back for a total cost of the use of property of an outstanding $83,868. Keep in mind if you have the discipline to do this it is financially more rewarding. 

The power of real estate is not its rate of return. The typical long term appreciation on residential real estate is about 5% annually. There are much better market assets for a similar risk that will get you 7% annually. Those assets however for ordinary Americans require a much larger risk of capital. If you want to buy $459,000 worth of stocks and bonds you have to lay out the cash upfront... ALL OF IT! If you are already wealthy you can buy on margin at 50% but that has a whole lot of its own issues and typically middle class Americans are not fishing in that lake ;) 

The power of real estate is the ability to acquire a large appreciating asset with a minimal upfront risk. This concept is called leverage. The homebuyer puts up $17000 and gain the appreciation on a $519,000 asset that is free of capital gains up to $250,000 per individual and $500,000 per couple. Even at the paltry rate of 2.5% which I used in this scenario and is VERY conservative the real rate of return on the real estate is much higher than the stock market scenario above. Over short periods the rent plus investment model is better. Real estate is now and has always been a LONG TERM investment. The longer you own the real estate the less it costs to hold since interest on loans is amortized with the bulk paid up front. Even at today's mid level interest rates, leveraging a $500,000 appreciating asset for a 5% cost of entry is unattainable any where else in the middle class world.

Hello March, see you in the Morning

Yes today marks the final day of February and March begins a few hours from now. March is a month we tend to consider springtime and for those in the southern latitudes it certainly is. For us up above the 45th parallel it is a transition month that can be warm and delicious or cold and snowy. Often it 's a bit of both.

March however is the typical time that real estate picks up in our local market. Buyers start peeking at new listings and sellers decide it's time to go on the market. I suspect we will see activity increase over the next several weeks. Tis cycle may just be a tell about the summer months ahead.

The new administration in Washington DC is definitely stirring things up. This tends to lead to market insecurity. One way or another markets will settle down regardless of the success or failure of incoming federal changes. 

I am mildly optimistic about this year's market. I feel like we will see a small drop in interest rates maybe down to the low sixes and mild appreciation. We are headed towards a 4 month supply of homes which tends to slow down the price pace a bit. I think we will see near neutral to full neutral market balance between buyer and sellers. This will lead to healthy home buying decisions as well as a more fair playing field for everyone.

Let's not get to out in front of that prediction, it is still a challenge to buy in our local market with the median price well above 1/2 million dollars, but with a plan buyers can execute and get it done.

Average list price in Vancouver well above $600k

As of today the average price for a home listed in the past 30 days in Vancouver is $626,995. But an interesting note is that the average sold price in the same time period is much lower at $539,736. The market activity is in the lower half of the price range. Price reductions are up over this last 30 day period as is the listed price per square foot. 

It is not at all unusual for higher end listings to require more marketing time than lesser priced homes. This can be a big part of why the discrepancy is so wide between average list price and average sold price.

We have been slowly picking up inventory over the last year or so. This past 30 days saw 315 new listings and 284 sold properties. That is actual a very healthy ratio considering it does not include new pending sales. Sales are up over the previous 30 days.

As we enter the final month of winter we will see an uptick in new listings, but barring any economic slowing we should see new buyers to the market as spring generally picks up steam for real estate. Interest rates have stabilized hovering around 7% with dips into the 6's and as is typical, credit profile can create a spread of a 1/2 point or more. Solid credit can get you under 7% bumpy credit will be in the mid to upper 7s. 

The 50 year running average for mortgage rates has been around 6.5% so currently market conditions are just a little high. For all the media bluster about rates being high, they really are close to average right now. We just came out of a ten year period with the lowest rates in the history of the 30 year mortgage that dates to the mid 1930s. We maneuver see sub 3% mortgage again and that is a big part of why people in homes with mortgage rates under 4% are so hesitant to move.

Anyone that is confident they will remain in the local market for at least 5 years ought to strongly consider owning rather than renting. Rents are very high right now and I do not see any significant relief over the next few years as demand continues to outpace supply. Even if you have to buy something that is not as nice as what you can rent, building up equity over time is worth it.

I see young people on social media complaining about how unaffordable houses are today. I assure you they were equally unaffordable in the 1980s when I was in my 20s and mortgage rates were 15% or higher. My wife and I started out in a tiny little one bedroom condo and worked our way up to a 4 bedroom house. This is still a viable path for young people today. 

Some on social media are angry that their parents have a 2000 square foot home with a mortgage of only $1500 and they can't even rent a dumpy apartment for that money. That is why they bought a home when they were young. The mortgage payment stays the same even as home prices rise. When they bought the house back in the day it was just as expensive relatively as it is now. You have to get into the market in order to get something out of it. Like most worthwhile endeavors it is hard to get in and many will have to make lifestyle sacrifices to do so. In the end it is worth it.

It's Snowing Today, Time for a Winter Reminder

When the weather gets wintry, homeowners and listing agents should be mindful to keep the driveway and walkways clear of snow and ice. Not only is it courteous, it sets a great first impression of the home. The potential buyers will feel positive about the owners and their willingness to care for the property. 

Sellers and listing agents should not be lulled into thinking no one will show the property during winter events. It will definitely be slower than typical, but many agents including me, will and often do show property in the snow. It is always positive to see a properly cleared home during these weather conditions.

A cleared walkway is inviting and adds tot he buyer's positive first impressions of the house. Locally we only have a few winter events each year but I can say I have sold properties many times where the client viewed the home on a day with snow cover. You should always be thinking of ways to make your home as warm and inviting as possible. Psychologically it can and will help your home stand out among the rest.

Mortgage Outlook for 2025

I used an AI to summarize the mortgage market and project for the rest of 2025 and it produced an interesting article which I will post here unedited after making some personal notations and insights the AI may have missed.

In the following AI article, it mentions tariffs as a possible cause for rate increases due to the inflation tariffs sometimes have on the market. In essence this is true, when tariffs are added to imported goods, those tariffs are passed on to consumers in many cases. But using interest rates to control inflation isn't about the cost of goods as much is it is about the amount of money in circulation. Over the last several years the US Government flooded the market with cash along with low interest rates created a hot market that led to hyper-inflation. Tariffs tend to slow the market down. As prices rise, demand lowers. Tariffs will often motivate buyers of goods to seek products made domestically or from countries not exposed to the tariffs. In the case of Tariffs on Chineses goods, the Chinese government has long been known to manipulate their currency to counter tariffs keeping pricing relatively cheap against its competitors worldwide. I therefore do not believe that tariffs will have a substantial impact on rates and it is more likely to lower rates than raise them. With all that stated, let's move on to the AI generated article below.

As of early February 2025, mortgage interest rates remain a focal point for prospective homeowners and investors. Over the past few years, rates have experienced significant fluctuations, influenced by various economic factors. Understanding the current landscape and future projections is crucial for making informed decisions in the housing market.

Current Mortgage Rate Landscape

In January 2025, the average rate for a 30-year fixed mortgage was approximately 7.11%. This rate has been a point of concern for many potential buyers, as it remains elevated compared to historical standards. Despite efforts by the Federal Reserve to reduce interest rates on loans and credit cards, mortgage rates have not seen a significant decline. This resistance is primarily due to their close correlation with the 10-year Treasury bond yields, which have remained high due to ongoing inflation concerns. 

noradarealestate.com

Factors Influencing Mortgage Rates

Several key factors contribute to the current mortgage rate environment:

1. Inflation Concerns: Persistent inflation has led investors to demand higher returns on bonds, directly impacting mortgage rates. Proposed policies, such as increased tariffs, could further exacerbate inflation, maintaining upward pressure on these rates. 

   noradarealestate.com

2. Economic Policies: Government policies, especially those related to fiscal spending and trade, play a significant role. Expectations of increased government spending can fuel inflation, leading to higher mortgage rates as lenders adjust to anticipated economic conditions. 

   noradarealestate.com

3. Market Sentiment: Investor confidence and market sentiment influence demand for mortgage-backed securities. High levels of economic uncertainty make investors cautious, leading them to seek higher returns, which in turn elevates mortgage rates. 

   noradarealestate.com

Projections for 2025

Looking ahead, experts anticipate a gradual decline in mortgage rates throughout 2025, though rates are expected to remain above 6% for most of the year. Here are some projections:

• Early 2025: Rates are likely to hover between 6.5% and 6.8% as the Federal Reserve maintains a cautious approach to interest rate cuts.

• Mid-to-Late 2025: Mortgage rates could fall to the 6.0% to 6.5% range, with some forecasts suggesting a decline to 5.8% by Q4 2025. 

  myperfectmortgage.com

Major financial institutions have provided the following insights for Q4 2025:

• Fannie Mae: Expects the 30-year fixed mortgage rate to average at 6.2%.

• Wells Fargo: Projects rates to average around 6.3% by the end of the year.

• Goldman Sachs: Predicts rates will remain above 6% through 2025. 

  nbcnewyork.com

Impact on the Housing Market

Elevated mortgage rates have a direct impact on housing affordability. Higher rates increase monthly mortgage payments, which can deter potential buyers and slow down the housing market. However, a gradual decline in rates throughout 2025 may provide some relief, potentially stimulating buyer interest and activity in the housing sector.

Conclusion

While mortgage rates are expected to decline gradually in 2025, they are likely to remain above 6% for most of the year. Prospective homebuyers and investors should stay informed about economic developments and be prepared to adapt their strategies accordingly. Consulting with financial advisors and mortgage professionals can provide personalized guidance to navigate this evolving landscape.

Understanding the Price Ceiling

Many people that decide to sell make mistakes in "prepping" their home for sale. These mistakes can be either spending money to spruce up the home that will not return in increased offers or a better price, and or not doing things that will definitely increase offers or home value.

There are many scenarios but broadly they fit into the notion of a neighborhood price ceiling. Neighbor hoods do have a ceiling. It is very possible to over improve your home. It is also possible to leave money on the table by not bringing your home up to the neighborhood standard. 

If you are intended to sell your house as a "fixer" you have to decide whether or not you want it financeable. There are essentially three tiers of finance in this regard. The best is government financeable. These homes meet the more strict standards of the FHA and VA lenders. Having your home qualify in this tier means the entire market is available to purchase the home. This is a cosmetic fixer at worst and is move in ready. Next is conventionally financeable. This means the home meets the Fannie Mae and Freddie Mac standard. The home can have a few issues like a roof that is nearing the end of life, or a bad deck in back but still is livable. These loans typically require a larger down payment by the borrower or more expensive mortgage insurance if less than 20% is put down. It tends to eliminate most first time buyers or those with tight finances. The final tier is cash or alternative financing. In this tier you are more likely to get offers from flippers or investors at lowball amounts. You might get an ambitious person that wants to live in the home but you won't be anywhere near top dollar.

If you find yourself in the cash only tier it is typically a waste of time to do cosmetic fixing since the home needs much more serious attention anyway. If you are in the Conventional tier it can be worth some cosmetic work to attract non investor buyers who tend to bid up higher. It is generally better to be in an inferior home in a nice neighborhood than the superior home in an undesirable neighborhood. 

If most home in your neighborhood are in average to below average condition and few of them have modern updates, it's better not to over improve. Cleaning up and doing some fresh paint and or making minor cosmetic repairs is fine. Don't do a 50k kitchen remodel however as you likely will not see that money at closing. If your neighbors home are all noticeably nicer than yours, then you can definitely make a handsome gain doing upgrades that bring your home into alignment with the neighborhood.  

Before doing any expensive renovations talk to your trusted real estate pro to be sure the market will be attracted to the changes and whether the expected price will benefit from those improvements.   

2025 Clark County Real Estate Outlook

Clark County's real estate market in 2025 is expected to remain resilient despite potential economic headwinds and ongoing shifts in housing preferences. Key drivers shaping the market include sustained population growth, changing interest rate dynamics, and a continued demand for diverse housing options.

Population Growth and Demand

Clark County continues to attract residents due to its relative affordability compared to most of Portland and Washington County, OR. Our desirable quality of life. Proximity to urban amenities, a robust job market, and scenic surroundings make it a magnet for families, retirees, and remote workers. As the population grows, the demand for housing is expected to keep pace, particularly in suburban and semi-rural areas. So long as our legislature and new Governor don't get greedy, we will continue to offer a superior tax profile than our southern neighbors in Oregon.

Home Prices

Median home prices in Clark County are likely to see modest appreciation, continuing trends from 2024. However, price growth may be tempered by affordability challenges and higher borrowing costs. As of late 2024, the median home price hovered around $540,000, and projections suggest a moderate annual increase of 3-5% in 2025. I feel like the projections for appreciation are a little ambitious. Unless we see a 1/2 to 1 point drop in rates, appreciation will likely be more like 2-3%

Interest Rates

The Federal Reserve's stance on interest rates will significantly influence the market. If mortgage rates stabilize or decline slightly from their 2024 levels, buyers may return to the market in greater numbers, boosting sales activity. Conversely, persistently high rates could cool demand, especially among first-time buyers. it is important to keep in mind that current rates are only slightly above the 50 year rolling average. Having just exited a long period of well below average rates, younger borrowers are not accustomed to the "real normal." The fifty year average mortgage rate is in the mid sixes and we are currently averaging around 7%. 

Housing Inventory

Inventory levels in Clark County are expected to remain tight, as new construction struggles to meet demand. Rising construction costs, labor shortages, and regulatory hurdles continue to constrain the pace of development. However, several new housing developments, particularly in Ridgefield aim to address these shortages.

Market Segments

• Single-Family Homes: Continued strong demand, especially for homes priced under $600,000. The classic median priced single family home remains firmly in the grip of sellers with about three months of inventory available. 
• Multifamily Housing: Increased interest in apartments and townhomes as affordability pressures push buyers toward more budget-friendly options. This segment has been ferociously competitive over the last decade but saw some taming in late 2023 and early 2024. The end of the year saw things tighten again however.
• Luxury Market: Demand for high-end homes may stabilize but remain a smaller segment of the market. Vancouver's luxury condo market is just a bit saturated with inventory at the moment, but sales are steady enough to keep prices stable.

Key Challenges

1. Affordability: Rising home prices and higher borrowing costs remain significant barriers for entry-level buyers. Our area is one of the most expensive in the country, yet a significantly more expensive market in the Seattle Metro is driving substantial numbers of people to our local area.
2. Inventory Shortages: Limited availability continues to frustrate potential buyers and drive competition. That situation however showed a great deal of improvement in 2024 and 2025 could see inventory levels rise a bit more. Seller's may yield a bit of the market back to buyers this year but I doubt we will move beyond a neutral market in 2025.
3. Economic Uncertainty: Broader economic conditions, including job growth and inflation trends, could influence housing demand. Inflation has finally calmed a bit but remains slightly above average. A new incoming administration at the federal level and state level could move the market one way or another.

Opportunities

1. Urban Growth Areas: Expansion in developing areas like Battle Ground and Washougal offers opportunities for affordable housing. Vancouver's Urban Growth Area still has large areas of available land for suburban and urban scale development.
2. Remote Work Influence: Remote workers continue to drive interest in Clark County, where they can enjoy suburban living with proximity to a major metropolitan area. All four of the Portland Vancouver metro area counties provide this amazing synergy of a fast transition from rural to suburban to urban. This dynamic is typically only found in mid tier major markets like Portland-Vancouver, Sacramento, Las Vegas, Cincinnati, Nashville, etc.

Overall, the 2025 housing market in Clark County is expected to balance modest growth with ongoing challenges. There are opportunities for every price range locally so buyers need not be discouraged just know that in times of high housing costs, some buyers may have to settle for something a little less than ideal. But these are stepping stones to getting the perfect house.