tag:blogger.com,1999:blog-18389637311833133692024-03-18T11:26:11.913-07:00Real Estate with Realtor Rod SagerMusings on the state of the market with tips, information and a little fun.Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.comBlogger530125tag:blogger.com,1999:blog-1838963731183313369.post-19353693265365535252024-03-15T08:30:00.000-07:002024-03-15T08:30:00.148-07:00Is Real Estate Headed South?<p>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.</p><p>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.</p><p>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. </p><p>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.</p><p>Buying a home is still a very solid way to build wealth and equity over time.</p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-71145035599533281082024-03-08T13:31:00.000-08:002024-03-08T13:31:19.413-08:00Have interest rates made renting more affordable than owning?<p>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?</p><p>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.</p><p>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. </p><p>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.</p><p><table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhPjrx53WeFPmXLZ3seCtcm_k0we6AACVLuTC1-GUFamsdsd4hekwwxp0746eOfEe0MPqm9CuzTvBmIRrVr4EDvmVGmZJyIrKdCJGLygiT-uX-fKRjchy72KOLIbkMMFZYnQIrqwfB1cD4yEUGMniHHRcwzNEIP8-l-eItHYJCehDXc1J6A6Nx4c5GFfVk/s1834/ne96th-4-2.5-2080sf-2850.png" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1408" data-original-width="1834" height="176" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhPjrx53WeFPmXLZ3seCtcm_k0we6AACVLuTC1-GUFamsdsd4hekwwxp0746eOfEe0MPqm9CuzTvBmIRrVr4EDvmVGmZJyIrKdCJGLygiT-uX-fKRjchy72KOLIbkMMFZYnQIrqwfB1cD4yEUGMniHHRcwzNEIP8-l-eItHYJCehDXc1J6A6Nx4c5GFfVk/w230-h176/ne96th-4-2.5-2080sf-2850.png" title="From ForRent.com" width="230" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">ForRent.com</td></tr></tbody></table>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<br /></p><p><table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhbEhou5Dcp4Ld1yv3xNHxwtpiQN6MofNZVQmZwP9D3MJs5bIWKHkgYvEQRfV1Dt626I5IhJtLy7z7dVu4op51GLLTLfV1xtmqJBh-o1fIs1qJoLgjlwYYw8HF8u-_wkl5qiVSZyJUVJUhrPVKl7CJX6yTb9DFbGupTZ5aWfZFKM18qk4BfVTbRRLF0EFM/s1834/comp-1960sf-4-2.5-475k.png" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1408" data-original-width="1834" height="170" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhbEhou5Dcp4Ld1yv3xNHxwtpiQN6MofNZVQmZwP9D3MJs5bIWKHkgYvEQRfV1Dt626I5IhJtLy7z7dVu4op51GLLTLfV1xtmqJBh-o1fIs1qJoLgjlwYYw8HF8u-_wkl5qiVSZyJUVJUhrPVKl7CJX6yTb9DFbGupTZ5aWfZFKM18qk4BfVTbRRLF0EFM/w221-h170/comp-1960sf-4-2.5-475k.png" width="221" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">RMLS</td></tr></tbody></table>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.<br /></p><p>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.</p><p>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. </p><p><br /></p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-60574859122954186522024-03-01T11:56:00.000-08:002024-03-01T11:56:43.176-08:00Homeowners Insurance Getting Complicated<p>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. </p><p>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.</p><p>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. </p><p>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.</p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-21312942974590801982024-02-16T17:04:00.000-08:002024-02-16T17:04:39.365-08:00Can Two Minimum Wage Earners buy a 3 bedroom Home in Vancouver USA?<p>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. </p><p>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. </p><p>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!</p><p><table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgP4FJ0skcW2Osic_cO6zMXoP6Eix5lkyLjemw2RvEZVDjcE0VVu20zmzWDBZbcOFD1_QsqLS-_eqgxOm_odDoS-wBkQVCzC6PdpAj-gm0yAX_T2fmwaj912RV9dTdw9LTDNjmC1E2yAkQuVw5scKAk4pxeBfiC6n2c6lrssFXS3nxPPKuSXV_6klQFaa0/s1920/340k.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1440" data-original-width="1920" height="150" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgP4FJ0skcW2Osic_cO6zMXoP6Eix5lkyLjemw2RvEZVDjcE0VVu20zmzWDBZbcOFD1_QsqLS-_eqgxOm_odDoS-wBkQVCzC6PdpAj-gm0yAX_T2fmwaj912RV9dTdw9LTDNjmC1E2yAkQuVw5scKAk4pxeBfiC6n2c6lrssFXS3nxPPKuSXV_6klQFaa0/w200-h150/340k.jpg" width="200" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><i>3 beds, 2.5 baths, 1378 SF listed at $340,000</i></td></tr></tbody></table>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. <br /><br /></p><p></p><p><table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhXqViEilGAdWNoSpGOhgQpd5kjKzoLmKdwB9REvF3eAz5ctwIWZVoo2VeRdl3Yt0TzPSEfxiOPv3GQAIQxnuNP3azLelqbpFyoq3PVpilRBAVnh7pfopmoeQhrcwmalE6xPJrc0-v4HZ89nVLLH6Jp3nSyh-8NMZeqx2Ty4rClxT9HFK2OSmw0lD27WtE/s1920/420k.jpg" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1440" data-original-width="1920" height="150" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhXqViEilGAdWNoSpGOhgQpd5kjKzoLmKdwB9REvF3eAz5ctwIWZVoo2VeRdl3Yt0TzPSEfxiOPv3GQAIQxnuNP3azLelqbpFyoq3PVpilRBAVnh7pfopmoeQhrcwmalE6xPJrc0-v4HZ89nVLLH6Jp3nSyh-8NMZeqx2Ty4rClxT9HFK2OSmw0lD27WtE/w200-h150/420k.jpg" width="200" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><i>3 beds, 2.5 baths, 1368 SF listed at $420,000</i></td></tr></tbody></table>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.</p><p>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. </p><p>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. </p><p><br /></p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-31044582177600757482024-02-09T20:51:00.000-08:002024-02-09T20:51:51.749-08:00Fed is hinting at Rate Reductions<p>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. </p><p>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.</p><p>I'm looking forward to a nice near neutral market this spring.</p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-78533164609418277532024-01-26T08:30:00.000-08:002024-01-26T08:30:00.128-08:00Interesting Non-traditional Loan Options in Vogue Again <p>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. </p><p>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. </p><p>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.</p><p>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.</p><p>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.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhGFf-XL163t-PTI4HNZFImkkVm6Fvv4VZQq25r5eTm8GXqfoug2FvA16C8gSC7ZZO2oVw9sk5QzoN56CpzrjxpEdmi08wxM0A297zD6WSNGTIBO8u17rjq5azsBTm5yL0Kk-ITsbHjLeXZK9kehxMlRQxXJYXdz6IiUkIJsKxim05SbTPhLxB_uzmf1Ig/s822/rodbrokerweichertbanner.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="200" data-original-width="822" height="112" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhGFf-XL163t-PTI4HNZFImkkVm6Fvv4VZQq25r5eTm8GXqfoug2FvA16C8gSC7ZZO2oVw9sk5QzoN56CpzrjxpEdmi08wxM0A297zD6WSNGTIBO8u17rjq5azsBTm5yL0Kk-ITsbHjLeXZK9kehxMlRQxXJYXdz6IiUkIJsKxim05SbTPhLxB_uzmf1Ig/w460-h112/rodbrokerweichertbanner.jpg" width="460" /></a></div><br /><p><br /></p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-91104235980110972012024-01-19T10:57:00.000-08:002024-01-19T10:57:28.740-08:00Winter weather can make things seem slower than they are.<p>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. </p><p>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.</p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhrMBTdNuh-G8APyY0UttMh4dze6yYhymYU2xpAiBOlex8U_8H7C-5M8k42Z_c5qdNAZ6KJiEYl0dKNd-IsMlCNm5AIk0TTJtS_1yb5vjNNzdC6-v0uHCCLgoGnI0ge49mpnI1HvCDPQfL_3x-_QjS68GLwC8DvK6XA2b51zsTKWYC8Kag0c0Ce865tis4/s1008/Screenshot%202024-01-19%20at%2010.13.01%E2%80%AFAM.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="1008" data-original-width="936" height="258" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhrMBTdNuh-G8APyY0UttMh4dze6yYhymYU2xpAiBOlex8U_8H7C-5M8k42Z_c5qdNAZ6KJiEYl0dKNd-IsMlCNm5AIk0TTJtS_1yb5vjNNzdC6-v0uHCCLgoGnI0ge49mpnI1HvCDPQfL_3x-_QjS68GLwC8DvK6XA2b51zsTKWYC8Kag0c0Ce865tis4/w241-h258/Screenshot%202024-01-19%20at%2010.13.01%E2%80%AFAM.png" width="241" /></a></div>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.<br /><p></p><p>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. </p><p>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.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiB8sgwo0m-AYLaQr_itk-wFhQL2rcvhu5Yt-1tjRoOlaI5mB9rPahRnKWD7xF__Vqcp-4G1cgZ9KeTIWWkS6b8fHKUF2vmzxgtPuvkr2-4o-SAOeM5h3IJ4jxXfuB_SmkcB5JH5gOAHjWYUaDBQzUga_m0IcooI6HwAu5q9MdYDXYTzp_Egp36QZwxhkI/s2560/basicnewrealestatewithmountain.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="885" data-original-width="2560" height="138" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiB8sgwo0m-AYLaQr_itk-wFhQL2rcvhu5Yt-1tjRoOlaI5mB9rPahRnKWD7xF__Vqcp-4G1cgZ9KeTIWWkS6b8fHKUF2vmzxgtPuvkr2-4o-SAOeM5h3IJ4jxXfuB_SmkcB5JH5gOAHjWYUaDBQzUga_m0IcooI6HwAu5q9MdYDXYTzp_Egp36QZwxhkI/w399-h138/basicnewrealestatewithmountain.jpg" width="399" /></a></div><br /><p><br /></p><p><br /></p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-43120675675200436622024-01-05T14:14:00.000-08:002024-01-05T14:14:00.933-08:00Happy New Year: Market Outlook for Clark County, WA<p>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. </p><p>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.</p><p>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.</p><p>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.</p><p>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. </p><p>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. </p><p><br /></p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-73235094651471684012023-12-15T08:30:00.000-08:002023-12-15T08:30:00.126-08:00Rates Continue to Improve<p>This has been a great month for mortgages as rates have softened nicely offering A rated borrowers an opportunity to lock in the high 6s and more challenging files are locking in the 7's instead of the 8's like they were just a month or so ago.</p><p>Whether or not this will create a bump in the buyer activity remains to be seen but if all of this holds and these new lower rates stick around through the New Year we may see a nice increase in buyer activity. I would also like to see some of the sellers that have been holding off on either upgrading or downsizing start listing their homes. </p><p>Activity has been very slow on both sides of the market. A nice double bump would be well received by the industry. Keep in mind that historically the average mortgage is about 6.5% so we are now just barely above the 50 year average.</p><p>I still doubt we will see rates plummet down to the 2's and 3's anytime soon, maybe never, but 5's could be a reality within a couple years if the economic situation settles down.</p><p>So good news everyone the mortgage gods are giving you a Christmas present!</p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-88916688626981844022023-12-08T11:49:00.000-08:002023-12-08T11:49:57.019-08:00Quiet Holidays this Year? Probably.<p>It seems like we may have a quiet December in real estate this year. There is a lot going on in the market from stable but somewhat high interest rates putting the brakes on buyers, a lack of sellers willing to sell, and a bit of a negative outlook among the public about the state of the economy moving into 2024. </p><p>2024 is a major election year. Generally during these election years politicians are looking to move towards an improving economy because they want to get re-elected. A foul economy is often a tide changer in elections whereby incumbents are vulnerable. I would expect to see action taken by the Administration in Washington DC to curb the economical roadblocks. </p><p>If that happens would could see a nice spring bump in real estate and perhaps even see some sellers decide to come out of their shells, so to speak. Most of the activity in listings seems to be people moving away to be close to family elsewhere, or retirees moving to warmer climate, or mandated by job changes. Of course there is also the usual divorce and death that sometimes facilitates a need to sell the house. </p><p>Honestly a sudden flood of listings would crash the local market so I'd prefer not to see that. But a little relief in rates just a single percentage point could provide the gentle nudge we need to get back to an active market.</p><p>We shall see how things unfold as the New Year takes shape. </p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-82462909713521464932023-12-01T08:30:00.000-08:002023-12-01T08:30:00.128-08:00Interest Rates Improve<p>The last couple weeks has seen a nice measurable improvement in rates. Hopefully this will stabilize and allow home buyers that extra bit of breathing room. I doubt rate will improve a whole lot more but maybe the Fed will settle down a bit and just let these current rates percolate a bit before jumping to any conclusions about inflation.</p><p>Right now excellent borrowers are seeing rates in the range if 7.25% to 7.75% and borrowers with some financial and credit challenges are getting approved in the 7.75%-8.25% range. Although this seems high relative to recent rates just a couple years ago, this is only a little higher than the 50 year average. It would be nice to see some more relief maybe getting the "A" borrowers back under 7% but I am not holding my breath. This upcoming year is an election year so the politicians in power right now will want to hang on to that power so they may pass legislation or use other political maneuvering to try and ease the "pain" so as to stay in power. Perhaps the Fed will hold tight for now.</p><p>Prices on homes continue to be flat and stable. The median price in most local sub markets remains about what it was a year ago maybe a tad less or a tad more depending on the specific area. </p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-77363464376448387032023-11-24T12:09:00.000-08:002023-11-24T12:09:23.351-08:00Happy Thanksgiving and Black Friday<p>Well it's Black Friday today and that means all the stores will be extra crowded today, oh goodie ;) I do hope you all enjoyed your Thanksgiving. Those of you thinking about buying or selling from this point forward to the end of the year, remember that it can actually be a good time to be either a buyer or seller in during the holidays. I know, I know, I harp on this every year. But look-loo buyers tend to go away during the holidays, people have too much going on to waste time poking around at houses they are not going to buy. So seller's can capitalize on a smaller group of serious buyers. Meanwhile fewer sellers are in the market because let's face it, it's already a pain in the backside to have your home on the market and during the holidays that pain is much worse. Many sellers choose to wait till after the holidays to list their home or they pull it off the market until January.</p><p>All the rules still apply, keep the driveway and front walk free of slippery leaves or snow and ice. Salt the walkway on cold days and keep the rain gutters clear. Minimize clutter and don't make it difficult for buyers to show the home. Buyers you can take advantage of the fact that sellers during this time period tend to be a bit more motivated.</p><p>All in all our local market still favors sellers but only modestly so, sellers cannot count on multiple offers any longer so if you write something reasonable on a listed home, there is a solid chance you will get the home. </p><p>Happy Holidays!</p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-66660120705375539222023-11-17T08:30:00.000-08:002023-11-17T08:30:00.146-08:00Holidays and Winter Weather Lie Ahead.<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjAFLLbHionui0BOKfKVWkvGB6Flc0qY6Cfa4Ft5DvGkp054cW0yuphDU3L4_LRabM5ClJBJSzMxwsOtoTCWdeeSmv3QUvB1I_bvtGPVTyclKQEBW9md6Ns_E6rhyrW4bluNaI0wfr-mXwZksAG8K_r_ynwJNtJKCPGvC7DWbYkE0tc313wBE1b481HAFo/s1200/randomtwittrpics-3.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="1200" data-original-width="750" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjAFLLbHionui0BOKfKVWkvGB6Flc0qY6Cfa4Ft5DvGkp054cW0yuphDU3L4_LRabM5ClJBJSzMxwsOtoTCWdeeSmv3QUvB1I_bvtGPVTyclKQEBW9md6Ns_E6rhyrW4bluNaI0wfr-mXwZksAG8K_r_ynwJNtJKCPGvC7DWbYkE0tc313wBE1b481HAFo/s320/randomtwittrpics-3.jpg" width="200" /></a></div>Yes the holidays are upon us once again and so my annual advice for listing homes in the holidays and winter months is due. I have said many times that the Holidays can be a good time to sell because often competing properties are either delayed until January or withdrawn for mt eh Markey until after the holidays. Buyers tend to be serious during this period of time as do sellers, so it's a good time for both buyers and sellers.<p></p><p>During this period of mid-Fall sellers need to be sure to keep the leaves clear on the driveway and walkways leading to the house. Be sure to keep rain gutters clear as well to avoid clogged downspouts that back up water and leave a wet dripping mess for your would be buyers. Leaving the nice leaves with their Autumn hues on the lawn is fine, but make sure your clean them up when they start to turn brown or get mushy. That which is beautiful can quickly become an eye-sore. </p><p>As the season progresses and we start seeing winter weather, be sure to keep the driveway and walkways clear of snow and other debris that accumulates after big storms. You want your listing to be enticing and you don't want to lose out on a potential buyer because they feel they can't traverse the slippery surfaces that can arise in Autumn and Winter.</p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-65354581516683687372023-11-10T08:30:00.001-08:002023-11-10T08:30:00.124-08:00Will this Winter Season, Bring a Return to Neutrality?<p>I have been writing about the strange market conditions over the last year now where we have a combination of low demand and low supply. This has led to a massive slowdown in the sales of homes, but not a massive slide in prices. The market correction many have suggested is eminent, is currently being stayed due to a lack of inventory. Inventory however, has been slowly creeping up. As of the close of October local inventory levels are at 2.8 months. This is still an indicator of a mild sellers market, but it doesn't feel like a sellers market, it feels neutral. The old school rule of thought is that six months of inventory is a neutral market, anything less favors sellers, anything more favors buyers. </p><p>This market is starting to feel neutral. We are still well into sellers market inventory and that is what makes these conditions seem weird. The recent run up on interest rates seems to have the remaining qualified buyers much more cautious. I have noticed that Millennials in general have been a more cautious group of buyers than their predecessors in Gen X and Boomers. Those two previous generations had a tendency to borrow as much as the bank would allow whereas Millennials have shown a tendency to be more conservative and not rush to borrow every last cent. </p><p>So I think that is playing a role in having sellers market inventory levels yet neutral feeling conditions. As a RealtorĀ® I certainly would prefer buyers borrowing every last cent, right? But it is also very comforting to see younger people using money wisely. Price pressure right now is downward at a time it should still be rising. The local median has been close to flat over the last twelve months. Sellers need to price their home competitively and the notion of floating a higher price for the first few weeks is no longer a winning strategy. Sellers need to be competitive from day one.</p><p>Buyers meanwhile should understand that interest rates have averaged in the mid-6s over the last 50 years. We had all time high interest rates back in the late seventies and early eighties and then after the 2009 crash, rates plummeted to all time lows. It is always a difficult adjustment coming from super low rates into more average and now slightly higher than average rates. I am confident that we are unlikely to see rates reach the horrific levels of 45 years ago, but they could creep up a little more before they start coming down. I would not expect to see another long term period of sub five percent rates anytime soon. </p><p>Buyers obtaining a mortgage loan in the upper 7s to low 8s will likely have a refinance option in the low 6s at some point over the next five years. Of course life offers no guarantees, it is not an unreasonable assumption that we will see a softening in interest rates in the next several years. </p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-3344488174301622752023-11-03T08:30:00.052-07:002023-11-03T08:30:00.136-07:00Market Crash? Should I Buy or Wait?<p>Some doomsayers are predicting another serious market correction is eminent. Now this is certainly a possibilty. Many of the conditions that precipitate a market correction are in fact in place right now. </p><p></p><ul style="text-align: left;"><li>Slightly higher than average lending rates. </li><li>Tightening of consumer credit by large lending institutions.</li><li>Below average pool of qualified buyers.</li><li>Hyper inflated prices after long aggressive rise.</li><li>Unstable economic conditions.</li></ul><div>These are all indicators of an eminent market correction. However there are also several counter conditions that are keeping the market stable in spite of the above bullet points. This certainly applies to our local market if not the market nationally.</div><div><br /></div><div><ul style="text-align: left;"><li>Extremely tight inventory levels driven by owners married to a low interest rate.</li><li>High positive growth rates as more people moving in than out (Local Clark County).</li><li>Continued high demand for rentals with inflated rental rates.</li><li>Unstable conditions in other markets can drive investors back to real estate.</li><li>High interest rates attractive to institutional investors buying mortgage paper.</li><li>High overall quality of existing mortgage debt. Minimal sub-prime paper.</li><li>Strong local economy helps us locally.</li></ul><div>So the real news is that there is no news. Other economic conditions need to change for a traditional "crash" type correction. What we are witnessing right now is a very soft landing with prices flat or ever so slightly declining.</div></div><div><br /></div><div>For buyers the decision should really be based on how long they intend to live in the house they might buy. If someone buys a house today and then decides or must sell it a year later, that is not a favorable situation and renting would definitely be the better option. In an uncertain market with a high probability of at least a modest correction I would recommend a five year commitment to any house purchase din the current market. </div><div><br /></div><div>I do not think a major hard crash like we saw in 2009-2012 is eminent. That situation was much bigger than real estate. Banks had been making really sketchy loans for over a decade and that led to a near collapse of the banking system. Those aggressive types of loans have been almost non-existent since the federal revisions were made by Congress in 2011. </div><div><br /></div><div>I'll play Devil's advocate and suggest that we have a repeat of 2009. What would that look like? Well suppose buyer Jones bought a house in 2008 for $300,000. By the time the market hit bottom around 2012 the house was worth about $175,000. Not good, not good at all if you had to move. The house returned to $300,000 in value around mid to late 2014. For the sake of being conservative let's say it was 2015. That is a seven year period from top to bottom and back to par. That my friends was the worst real estate crash since 1929 and the Great Depression. There is no reason that couldn't happen again, but it is extremely unlikely. </div><div><br /></div><div>Buyers willing to commit to a five year stay can rest assured that barring a catastrophic economic failure, they would be in position to sell with enough proceeds to clear the note and exit the property at the end of that period with maybe the exception of putting less than 5% down. Low down borrowers should add a year or two to the commitment window just to be safe. But in a mild correction even low down and no down borrowers would be able to sell and clear the bank note after five years. </div><div><br /></div><div>In general I wouldn't let higher rates or the threat of a possible correction stop me from buying a home so long as I am prepared to stay in that home for a minimum of five years. When rates settle down, and they will settle down eventually, buyers will have an opportunity to refinance the loan into a lower rate and save money in the long run.</div><p></p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-64481065928961214582023-10-27T12:18:00.001-07:002023-10-27T12:18:48.761-07:00The Market is Really Slow, but Prices Remain Steady<p>This market is one I can't remember seeing before. There has literally been a slowdown in sales to about 50% of what they were just two years ago. Generally when the real estate market sees a slowdown that severe it results in a substantial correction in pricing. But that has not happened here. Why not?</p><p>Well I have touched on this before but it serves well to bring it up again. When rates rose from the low 5's to the mid 7's in the short span of a few weeks in the summer of 2021, we lost about half of all the buyers that were looking. Normally when demand drops in half prices follow. But this time was different because sellers were not selling either. </p><p>We have a strong job market here in the Portland-Vancouver metro area and people are coming here in higher numbers than are leaving. Sellers have been staying put because they are sitting on a historically low interest rate and either can't financially afford to move or simply do not want to move. So just as the demand fell to half, so did the supply. </p><p>What is left is the same 2000 agents selling half as many houses every month. So you will no doubt hear agents whining about how slow the market is, but in reality it is about the same as it was in late 2021. Prices have been mostly flat and things are just treading water, so to say.</p><p>You may see allot of these price reductions happening, but they are mostly from overzealous sellers that have their property overpriced and eventually realize that the market won't support the puffed up vision of their home value. I believe that this unusual dynamic is the only reason we have not seen a major price correction. I fear that the Fed wants a major price correction and will continue to raise rates until they get it.</p><p>The Fed is either not run by the smartest people or they are run by people with an agenda that is unfavorable to the middle class. That is brilliantly evident. But they do hold an enormous amount of monetary power. If their intent was to slow the economy on soften housing, they would have got their wish had they raised rates more slowly. Sellers would trade a 2.9% mortgage to buy a new house they like better at 3.5% but asking them to move from 2.9% to 6% or 7% is a tough ask. Baby Boomers and older Gen Xers are in the downsize mode but many of them can't justify exiting a sweet 2.9% rate to buy a smaller less expensive house and pay MORE on the mortgage payment. That doesn't make sense at all. So much of our transactions right now are either cash or super large down deals where the interest rate isn't really that much of a factor.</p><p>Let me cite an example. Ms. X bought a 2500 SF 5 bed house in 2002, she refinanced it in 2018 at 2.9% and paid off a home equity line in the process. So now she has a $310,000 loan on a home that was worth $500,000 at the time. Her payment is only $1750 PITI. Fast forward to the fall of 2023. She would like to downsize as she is a classic empty nester and would like to eliminate the stairs in the home. The house is now worth about $625,000 and she owes a little less than $300,000. </p><p>Well she has a large equity position but she can't buy a comparable quality 1500 SF ranch for much less than $500,000. So she needs to put down $275,000 on a $500,000 purchase and has to borrow $225,000 at 7.5% to make the deal go. Her new PITI mortgage payment is $2100. Unless she is physically unable to use the stairs, it is unwise to make this move. Frankly installing a stairlift for $2000-$3000 makes more sense if she has trouble with stairs.</p><p>This is the state of the market right now. I must admit, my personal situation looks similar contextually to Ms. X situation. Why give up a nice large home for a smaller one at a higher monthly payment. Hey how about you trade your 2017 Cadillac in on a 2017 Chevy and pay us more 20% more money for it? Uh, no thank you.</p><p>Now one solution would be to rent the current house out. Ms. X is paying $1750 for a house she can rent for $3500 a month. That will provide some cash flow that is enough to more than make up the difference in payment on the downsized home, right? Of course now she is looking at a more modest down payment of 3.5% for an FHA loan on a $500,000 house. This payment is going to clock in at around $4000 a month minus the $1750 cash flow from the rental. Wait a minute... That's worse!</p><p>The Fed is NOT doing middle class America any favors here. It sure seems like they are in bed with the hyper wealthy and everything they are doing is specifically tailored to make the billionaire class richer. Keep that in mind when you vote each election. The rich and the ruling class have never liked it when the peasants own property :)</p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-44664706303943872332023-10-20T08:30:00.001-07:002023-10-20T08:30:00.142-07:00How has Buying Power Diminished in the Current Economic Climate?<p>The real estate market has undoubtedly softened up under the burden of higher interest rates. Locally interest rates for 30 year conventional mortgages are hovering in the low 8s. These are rates we haven't seen since the turn of the 21st Century. Of course old guys like me remember the late 70s and early 80s when mortgage rates were close to 20%! Let's hop the knuckleheads in Washington DC don't let that happen again.</p><p>Higher interest rates tend to rob buyers of purchasing power. This his typically the hardest pill to swallow. How much has a buyers purchasing power actually eroded since the October of 2020 when when most borrowers could get a loan in the low 5s. For the sake of easy math I'll compare 2020 prices and 5% mortgage rate to 2023 prices and 8% mortgage rates.</p><p>October 2020 the median priced home in Vancouver was about $372,000 and rates at 5% were possible although most people were a tad above that. With 20% down ($74,400) a buyer would borrow $297,600 @ 5% for a principle and interest payment of $1,598. Of course loan payments often include taxes and insurance so the real total payment would be higher but this is a comparison of the loan costs and housing prices. </p><p>October 2023 the median price in Vancouver has been flat over the last year and remains at about $490,000 and rates a bit above 8%. So our buyer has to come up with 20% down ($98,000) and borrows $392,000 @ 8% for a principle and interest payment of $2,876.</p><p>That is a striking difference of nearly 90%. But a few other things have happened that at least slow the bleeding a bit. In 2020 the median family income in Clark County, WA was $77,184 today it is estimated at $91,000. Well the cost of buying a house has definitely outstripped the increase in income, but the real world difference is a little closer than just the payment suggests.</p><p>October 2020 median family earner buys median priced house and payment is 26% of gross income. October 2023 it is 38%. In order for parity where today's house only costs 26% of gross, current rates would need to be 4.5%. If housing prices remain steady and incomes continue to climb, then by 2027 we would be back where we were in 2020 as far as debt to income ratios are concerned.</p><p>I believe the Fed over reached by allowing rates to climb above 8%. A healthy number that would have slowed the economy enough to reduce inflation but not stagnate the real estate market, would have been 7%. Rod for Fed Chair ;) </p><p><br /></p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-50619361097105561672023-10-06T10:24:00.008-07:002023-10-06T10:24:48.161-07:00Quietly and Slowly Inventory Is Creeping Up<p>The September 2023 MLS report is out and it shows what we all feel. A shrinking market with stable pricing. Interest rates have chased away a large portion of buyers and they have also led to a large portion of potential sellers to stay put. We have a shrinking inventory and a shrinking pool of buyers. In the traditional economic terms of supply and demand both are shrinking and so we are basically treading water. But rates have pushed up high enough locally that now the ecumenic thumb is on the demand side of the scale.</p><p>Despite sellers general unwillingness to depart from their sub 4% interest rate, some still have to sell. Retirement, moving for job, estate sales, divorce, etc. Now these listings are starting to outpace sales and inventory in September reached the highest point in nearly five years. Don't get too excited, though it stands at two and a half months which is still comfortably in the sellers advantage when looking at traditional neutral markets with four to six months of inventory. </p><p>The meat of our local market in Clark County remains the $400-$700k price range where nearly two thirds of last month's transactions fell. A little less than 10% of transactions were above $1 million. Overall closed sales are running at about half what they were 12-18 months ago and one would think that type of slowdown would lead to crashing prices. But those were the days of ten offers in ten minutes. Now we have a market that is settling in to a nice 15-30 day marketing time and less of those multiple offer scenarios. The market is healthier now. We still have fewer houses than buyers so sellers retain a small advantage in this market. But sellers that insist on listing at above market value are finding stiff resistance from buyers. I suspect we will slowly slip into neutral conditions and if the boneheads at the Fed stop raising rates, we may escape this without a severe market correction. </p><p>It remains for now that our local market is slow and steady, but most importantly, stable.</p><p><br /></p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-40863769656043065732023-09-29T10:24:00.005-07:002023-09-29T10:24:58.222-07:00Bankers Think Some Rate Relief is Coming<p>According to US News and World Report the trend for the next few months is a softening in rate pressure. Rates should start to ease a bit providing some relief for weary buyers that have been priced out of mortgages over the last couple years. Locally rates have been running at nearly 8% well above the national average. The chart below shows the national trend and the rates on the chart or prior to any fees or points that banks are in fact charging. Rates that borrowers are actually seeing or will see based on this chart would be 0.5% to 1% higher. Rates also vary based on the lending program, down payment amount, credit profile and other important financial details of the borrower. The good news is they seem to think it is starting to trend favorably for borrowers.</p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEgJqSpUOsXvgZNU1BrQHzS2A1XnBeWvXHoqEFRHVcdNLgx0RJ57Li5mkFakUul3uqJxXiM42-9S_bHN1qBJtrmS_20PTsBEPqZD-nX2TFa4ITOf9y7RH5tkgKOA4W6iEJmlBZfIZofnOAWkm-a-3o5UYtpYRiUW0Jg4lTTKRXI8xcZ0Esn_wBBpR0cUaD0" style="margin-left: 1em; margin-right: 1em;"><img alt="" data-original-height="1344" data-original-width="1572" height="325" src="https://blogger.googleusercontent.com/img/a/AVvXsEgJqSpUOsXvgZNU1BrQHzS2A1XnBeWvXHoqEFRHVcdNLgx0RJ57Li5mkFakUul3uqJxXiM42-9S_bHN1qBJtrmS_20PTsBEPqZD-nX2TFa4ITOf9y7RH5tkgKOA4W6iEJmlBZfIZofnOAWkm-a-3o5UYtpYRiUW0Jg4lTTKRXI8xcZ0Esn_wBBpR0cUaD0=w380-h325" width="380" /></a></div><div class="separator" style="clear: both; text-align: left;">Well let's hope they are right. I do not expect a return to the ridiculously low rates of a few years ago. That was unprecedented. The 50 year average has been around 6.5% and I find that the market responds well to rates under 6%. If we can get rates back into the mid 6s the real estate market will come around. Right now we are in a stalemate as we have neither allot of buyers nor allot of sellers. Pricing is stable but softening and transactions are way down as a result of inactivity. Sellers are holding on to the low rate they have now and buyers can't afford the high rates currently available. </div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">This trend if it materializes could be good for current buyers. Sellers are getting motivated and that means a negotiating edge for buyers. Buyers may find themselves able to refinance their 8% purchase not in a year or so at a more comfortable rate in the 6s. </div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">If that chart holds up, things should perk up a bit next spring.</div><br /><p></p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-62188040595616900102023-09-22T10:24:00.001-07:002023-09-22T10:30:12.964-07:00Vancouver's City Center Continues its Crazy Growth<p>Downtown Vancouver started on an epic journey of urban renewal some 25 years ago with the restoration of Esther Short Park and surrounding redevelopment of nearby blocks that were dilapidated. The plan was highly successful and Vancouver continued uninterrupted until about 2010 when the height of the recession slowed things to a crawl everywhere. After the recovery things picked up where they left off and began to accelerate to the frenzied pace we have seen over the last five years. Vancouver's skyline has had at least one tower crane up continuously since 2015. We have had as many as seven simultaneously during this nearly seven year stretch. Vancouver's built up skyline has tripled in size and there is no end in sight.</p><p>All of this development has brought a tremendous amount of revenue both public and private into the area. This has helped make Downtown Vancouver one of the most popular destinations in the metro area. For real estate it has opened up opportunities for urban living by making Vancouver's city center more electric and exciting as well as more walkable and bike able with increased services for residents and workers alike.</p><p>Condos in high rise and mid rise buildings remain strong in the market and neighborhoods in uptown that were previously struggling are now thriving. This economic revival has spread all over Vancouver and we have become the hot spot for the region. Below is a video showing the Downtown and Waterfront areas. Vancouver has plenty of room to grow Downtown as many blocks remain underdeveloped. With good leadership the boom can continue and even weather a recession well. That's up to the peeps we elect on the city council and the mayor.</p>
<iframe width="460" height="259" src="https://www.youtube.com/embed/lvLJ5YQTlzU?si=f2Dj9PE5YaU9Ays4" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen></iframe>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-81812643478880290542023-09-15T09:30:00.002-07:002023-09-15T09:30:46.474-07:00What to do in a tightening market?<p>Our real estate market has been in this weird funk the last few years since we saw the interest rates pop up back in mid 2021. Prior to that we had a combination of low inventory and screaming demand for housing that had prices shooting up at near record pace in the double figures annually. </p><p>Now we find ourselves two years post Fed meddling and rates are around 8% and most of the buyer demand is now gone because so many buyers are priced out. As is typical with the Fed, they tend to be behind the market and as such they often overcorrect. They have in fact over corrected. Markets will only rise to the point that consumers can afford or still desire the product. Had the Fed left rates where they were demand would eventually fall off when the prices got too high for the local economy to support. That however tends to lead to drastic market corrections and we don't those either. </p><p>The only thing keeping our market from hitting a substantial correction is that sellers are parked in their homes sitting on 2.5-3.5% mortgages and they don't want to sell. We literally have a horse and carriage market right now. There is very little for sale and there is very little demand. That means flat prices and a fairly neutral market. If lots of sellers decide to list all of the sudden we will see prices fall. If sellers remain stubborn and rates drop back down to around the 50 year average say mid 6's we will see prices jump again. </p><p>I believe the Fed has effectively achieved what they wanted to achieve, frankly they achieved it when rates hit 7% they were just too far behind the market to realize it. Those guys at the Federal Reserve are not the sharpest knives in the drawer.</p><p>So what do we do in this type of market. Well if you are a seller and you are planing on leaving the area for a job change, to retire somewhere, or whatever, you need to recognize neutral market requirements. You can't just post a sign and expect 10 offers, unless you are giving the place away for a stupid low price. Now why would you want to do that? You have to make the property presentable. Even in a hot market, curb appeal, a little cleaning and staging go a longs ways. But in the boom times you can get away with out those things. In this market they are mandatory. You need a good experienced agent that knows how to sell house in a flat or down market without you giving away the farm. </p><p>Buyers need to be patient but when an opportunity arises they need to act quickly. opportunities will not go unnoticed by other buyers and other agents in the area. When you see it, buy it! Interest rates eventually will come back down and refinance will become an option, rates could rise more before that happens, so now is a good time. In a volatile interest rate market it is hard to make a bad decision because if rates go higher, you are ahead of the game, if they drop back down to 6% in two years you refi. Buyers have become afraid of the rates, and as I guy who has lived on this wet rock for nearly 60 years, people bought lots of houses back in the days of double digit mortgage rates. Owning your house is one of the easiest ways to build wealth over time. I purchased my personal residence in 2002 it has tripled in value since I bought it, I could rent it easily for double what my mortgage is. In fact I pay less for my large spacious house than most people pay for a basic two bedroom apartment. Buying a house hurts your wallet for several years and then if you avoid taking the equity out you quickly discover you're getting a bargain relative to renting and building equity and wealth along the way.</p><p>Don't let higher interest rates scare you off, if the bank says you're good to go, you are good to go. Just don't get yourself into finical trouble elsewhere. </p><p>The market is fine a bit slowish for us RealtorsĀ® but it is still a good time to buy or sell. We have that classic neutral market. You need a good agent in these types of conditions.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhfQxDtV-m1WVgvTUBjjTOGOYvmK7bbYY1mwiQEiFD4Tsgjd84TAYiwRdHJBqUE7po6nOop24ThN4BAwKa6EIHYRwImYpfbYTloUjc2rS8ktEguzTSjZGrshgpBmNPf-aN-WhqA7kpd5qgR9dkFNwEvS9dpv5k_wRKB7EIT-dBZRTq3rh3jtxoj_1CaNH0/s2577/blog-banner-ad%20copy.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="445" data-original-width="2577" height="70" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhfQxDtV-m1WVgvTUBjjTOGOYvmK7bbYY1mwiQEiFD4Tsgjd84TAYiwRdHJBqUE7po6nOop24ThN4BAwKa6EIHYRwImYpfbYTloUjc2rS8ktEguzTSjZGrshgpBmNPf-aN-WhqA7kpd5qgR9dkFNwEvS9dpv5k_wRKB7EIT-dBZRTq3rh3jtxoj_1CaNH0/w409-h70/blog-banner-ad%20copy.jpg" width="409" /></a></div><br /><p><br /></p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-38950206041877762822023-08-25T12:12:00.002-07:002023-08-25T12:12:50.384-07:00Are Prices Falling in Clark County?<p>The data suggests that home prices are pretty stable. All of the negative data about sales volume are really based on our lack of inventory. You can't sell allot of houses when you have no inventory to sell. This lack of sales volume has led to doomsayers in the media claiming that the market is in decline. The market is neither hot nor cold right now. We are truly in a middle market that would be dead neutral if we had more people willing to sell their homes.</p><p>If we were to see a rapid rise in new listings, then perhaps a market downturn could happen but I suspect that new home construction would suffer more than resales in that scenario. New homes have been taking up the slack in the resale market lately. New homes also represent a ceiling in the resale market. Generally a buyer is willing to pay 5-10% more for a brand new house versus a resale all else being equal. </p><p>There has also been chatter in the media about price reductions that are occurring in the marketplace right now. Yes sellers are reducing their prices when they start out too high. In a neutral market buyers tend not to overpay for homes. Overly ambitious sellers will find themselves without offers if they keep the price above market. One only needs to look at the results when sellers are properly priced in the market to see that there is plenty of demand. We still see many homes selling in a matter of a few days when priced right.</p><p>Overall this is a good time to sell and for buyers it is a challenge. Rising interest rates are slowly squeezing buying power and sellers remain reluctant to exit their low interest loans by selling and buying another house. It is a bit of an economic stalemate right now but to answer the title query, no prices are not falling.</p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-39193573732142806202023-08-18T11:29:00.005-07:002023-09-05T11:10:47.363-07:00Mortgage Rates Hit 20 Year High<p>That sounds like an ominous thing. It really isn't as bad as it sounds however. The last 20 year cycle saw the lowest 30 year mortgage rates in the history or 30 year mortgages. We spent most of the last 15 years with rates under 5.5% So the headline sounds terrible, which is why every news outlet is running this very headline. They however do not take the time to cover the context, so I'll do that for you here.</p><p>According to Bankrate.com over the last 50 years the average mortgage rate has been 7.81% Yes 7.81%. During that 50 year period we had both the highest and lowest 5 year stretches ever recorded. From 1980-1985 the average rate was 14.32% From 2017-2022 rates average 4.17%. Here we sit today with a national average mortgage rate at 7.09% well under that 50 year average but painfully higher than the recent lows of just a couple years ago.</p><p>The rates had a rather rapid climb and that creates a psychological shock which tends to makes things seem worse that they really are. Sure many homeowners have decided to stay put and enjoy their 2.9% 30 year mortgage they got back in 2021. This has created a scenario whereby there is a lack of homes for sale at a time when we should see lots of activity. Generally the period immediately after a rapid rise in home values leads to a bit of an equity grab as people sell their homes and move up or downsize. We are not seeing that nearly as much as we should. This may actually be staving off a market correction that should have happened right about now.</p><p>So the good news is home values are holding up well, the bad news is, it is tougher to buy in to this market right now. don't let a 7% mortgage scare you away from buying a home. It may limited your buying power but rates will come back down and an opportunity to refinance into a lower rate will arise in the future.</p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-64170647144747204982023-08-11T08:30:00.020-07:002023-08-11T08:30:00.148-07:00Why so many mid-rise buildings?<p>You may have noticed a trend in mid-rise development from small cities to large cities all across the fruited plains. Even larger cities with extremely built up city centers featuring 30-50 story towers are seeing a lot of developments with mid-rise structures. Builders are often choosing these shorter towers even when local zoning allows for high-rises. So what gives?</p><p>As buildings get taller, they require more and more engineering to ensure the tower is stable and can support its own weight. This is why skyscrapers are so expensive to build. But high-rise buildings in the 10-15 story range are low hanging fruit for engineers and architects. We have been building these for 150 years. Why would a developer choose to build a mid-rise project on an expensive property when zoning allows for 10-15 stories? Well, it often comes down to cost and construction time. Current building code allows for residential wood framed structures of up to 5 stories so long as the height is 85 feet or less off the street. There is some minor wiggle room but that is the general idea. Mid-rise structures of 6-8 floors can typically fit into an 85 foot height envelope. Anything taller than that generally requires more traditional concrete and or steel framed structures. </p><p><table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh9JSVhLkM5XHo1kK7ORXJtrQX4DD45c6IQ4snpGXZErHoli9b6cWnPC8TUfEw9_6W7Jj8Ea4qlFDCD1WHJZv7CB8GOArftB0tV1OWx-qUeDFUHc6GC5fqSfTu_46sRjYoXqhMfgBggzKZHkGF6MDsKxMiQrQ4P9jEeP_fX9Myd-KicLJnMIiOMLyHSsPk/s2360/aria-june19-2020%20(1%20of%201).jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1968" data-original-width="2360" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh9JSVhLkM5XHo1kK7ORXJtrQX4DD45c6IQ4snpGXZErHoli9b6cWnPC8TUfEw9_6W7Jj8Ea4qlFDCD1WHJZv7CB8GOArftB0tV1OWx-qUeDFUHc6GC5fqSfTu_46sRjYoXqhMfgBggzKZHkGF6MDsKxMiQrQ4P9jEeP_fX9Myd-KicLJnMIiOMLyHSsPk/w270-h225/aria-june19-2020%20(1%20of%201).jpg" width="270" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><i>The Aria on West 6th, June 2020. <br />2 level type one podium under <br />5 levels of wood frame</i></td></tr></tbody></table>So the trend has been to build a podium of concrete and or steel to a height of 1-3 stories above ground and then add 5 stories of wood frame up top to stay under that 85 foot envelope and squeeze as much as possible onto the land. This modern mid-rise formula is much less expensive to build for a few reasons. The engineering and design required to support the structure is far less complex and the wood frame portion can be built with a more readily available labor force. Wood framing also goes up faster in general than concrete. To build a 10 story building versus an 8 story is much more expensive and time consuming and thus may not be a financially rewarding for the developer. This is largely why you are seeing high-rise residential buildings going a bit taller to the 12-16 story range to maximize the land use and balance the greater expense of type one concrete construction.</p><p>You can see this decision making in a recent development proposal here in Vancouver on Block 11 of the Waterfront. The FAA height limit for the block is more than 140 feet which would easily accommodate a 12-14 story residential tower. Holland Partner Group, a Vancouver based developer of urban residential proposed both a 12 story and 8 story tower with the latter being a wood frame over podium design. After running the numbers they decided to pursue the mid-rise option with 100 fewer units. There is some formula these developers use to determine how long it takes to recover the extra costs of type one construction with the extra units gained and in this case Holland felt the numbers don't add up for the high-rise. Of course another developer might think it pencils fine for the taller structure. Short game, long game, high risk, low risk it all goes into the mix and many developers these days are liking the mid-rise option. </p><p>Other advantages to mid-rise designs include a less intrusive build that in smaller cities might be easier to sell to citizens wary of a large built up landscape. Daylight can filter down to the street easier with shorter towers even if the building rises straight up off the sidewalk. This lends itself to creating a more walkable neighborhood. </p><p>I believe we will continue to see more mid-rise wood frame over podium projects in cities of all sizes all across the country as we attempt to increase our housing stock which is pretty low in some areas, including Vancouver, WA.</p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0tag:blogger.com,1999:blog-1838963731183313369.post-38985489911266979792023-08-04T08:30:00.001-07:002023-08-04T08:30:00.145-07:00New mid-rise condos proposed for the East side.<p><table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEijcL0YluR3XagTX1eMKpvNO_x84q-sX0LFYVAFwg1Gks_QcXAQTr6B9jX0kleOHtgLhOkHL1wfiv89bSoOplpg5x1FU6KTjYQmU-ok4QuygGwMbomkVloEgyqLQWpPfMrjHSlvBPJMibKMh4loxtaoTvfPD2aA1qb3P07xcX3wep0ccTeZAXU4OqWxgCI/s2293/A64F7BE7-5FD8-45EB-A590-EE0205871900_1_201_a.jpeg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1481" data-original-width="2293" height="207" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEijcL0YluR3XagTX1eMKpvNO_x84q-sX0LFYVAFwg1Gks_QcXAQTr6B9jX0kleOHtgLhOkHL1wfiv89bSoOplpg5x1FU6KTjYQmU-ok4QuygGwMbomkVloEgyqLQWpPfMrjHSlvBPJMibKMh4loxtaoTvfPD2aA1qb3P07xcX3wep0ccTeZAXU4OqWxgCI/s320/A64F7BE7-5FD8-45EB-A590-EE0205871900_1_201_a.jpeg" width="320" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><i>Graphic from Cascadia Development Partners.</i></td></tr></tbody></table>A recent article in the Columbian outlined plans by developers to build hundreds of new housing units at the Columbia Palisades area at 192nd and Brady Road. Although the entire area is in the City of Vancouver, it is immediately adjacent to Camas and feature Camas' zip code. The new residential buildings will rise up 5-7 stories each and two of them will be condominium towers available for purchase. <br /></p><p>The plan is to have an urban campus type layout with a little bit of a waterfront style vibe. The density will not be as high as the waterfront, but the general vibe will be urban. Getting in and out of the area should be easier and more convenient as the 192nd corridor at SR 14 has plenty of capacity.</p><p>There is no word on pricing as this is in the early development stages. I would imagine these will be mid to upper priced condos. Columbia Palisades and its neighboring HQ development on the west side of 192nd will feature a city center style layout offing a little city style in the suburbs. Vancouver is also pursuing this theme with the Heights District that is also going to provide an urban oasis in the suburbs there as well.</p><p>We are still several years out from having a vibrant and busy area here, but things are moving and structures are rising up. Its exciting to watch the former rock quarry be put to good use.</p>Rod Sagerhttp://www.blogger.com/profile/01520948285606672002noreply@blogger.com0