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.