Strange market has more action near the top than the entry level.

So far the hottest sales activity in our local market is in the move-up market. Homes priced int he $750k-$1M price range are selling well and sometimes even seeing multiple offers. Meanwhile at the normally hot entry level inventory is creeping up and the number of qualified buyers remains tight. It remains a sellers market even at the bottom, but it's close to neutral.  

The lower end of the market range is still suffering from sticker shock with the higher lending rates. Although rates remain very average at the moment, that long extended period of below average rates definitely spoiled buyers. Many that qualified at 5% simply do not at 7%. 

In the higher tiers buyers often are less sensitive to rates than those first starting out. It is also common for move-up buyers to have a large downpayment that makes the actual borrowed amount in some cases less than they borrowed to buy the starter house.

So buyers looking to move-up it might be a little tight finding the house you really want and for those trying to sell a starter home, offering a buy-down for the buyer might be the difference between selling and sitting in the market. Marketing times for median priced homes is around 45-60 days right now.

I'm off to a hot start!

Hopefully my quick start in 2026 is a foreshadowing moment for the local industry. I have had allot of activity with a 150% increase of January of last year in closed transactions. That could just be an anomaly but my pipeline is as full as it has been in at least three years.

Interest rates have relaxed just enough to get some fence sitters to jump in. Inventory has also risen just enough to give buyers a decent selection. Tight inventory is very difficult on buyers who often feel like they are settling rather than getting their 'dream home'. That can be a real turn off for many. 

The entry. level market is giving us no shortage of sub median starter homes. From 2019-2023 it was really hard to find any single family detached, three bedroom, two bath move in ready home under $500k. Today there are hundreds available to buyers and with the downturn in rates they feel even more affordable than the $450k pricing now widely dispersed in the market.

Although the Clark County median home price is still a bit higher than last year the sub median market has widened. There has been a fair amount of mid-tier and high-end homes selling as well and that is keeping the overall median artificially high. 

If you are a first time home buyer, the market has definitely moved in your favor. Reach out to an agent and take a look at what's out there, you may be surprised.

Real Estate Market 2026

Happy New Year! This year is going to be a tough call for projections. We have favorable interest rate trends that should act as a relief valve for slow activity. We also have some instability in in general economic flows and that could move the valve the other way a bit. 

Allot of aging boomers are selling off their larger family sized homes looking to move to warmer climates or just downsize into a smaller one level home. Normally this is a great thing as it provides a boost in the local market. The troubling thing in our current situation in the USA is that demand for resale homes over 2200 SF is falling. Families are notably smaller on average these days and home prices have gotten expensive making larger homes less attainable for families.   

That said, I find that a 2000 SF two story home is often less expensive than a 1500 SF ranch style home. These small to mid sized ranch homes on a single floor are coveted by both new home buyers and older downsize crowds. The down-sizers typically hold a buying advantage often paying in cash or with huge down payments and the ability to outbid entry level buyers. 

Entry level buyers should not hesitate to look at a bigger 1990s-mid 2000's two story home as pricing is often favorable versus competing against retirees with more money for the 1500 SF ranch homes.

Lower interest rates will attract buyers that have been sitting on the fence for the last couple years waiting for more buying power. These buyers, mostly entry level need to be careful because the window to act is often very tight. Once rates establish themselves at a clearly lower level, the market tends to pickup and prices rise. Even with lower rates a higher home price can thwart buyers just as much as a higher interest rate. Picking up a house today at 6.5% can and will payoff later even if rates drop further. You locked in a lower home price and can refinance later at a lower rate when the time is right. 

People looking for a value for money opportunity should look at 15-30 year old resale homes with two stories and 1800-2200 SF. This is the current sweet spot in real estate for entry level and mid tier buyers with $450-600k in buying power.

I feel like the 2026 has potential to see a small to medium increase in activity which would likely start moving prices up again perhaps as soon as this summer. I do not see a boom on the horizon especially if the legislature decides to add an income tax. Do not be fooled by politicians that say only the "rich" will pay the tax, we all pay the tax if not directly, indirectly. Our strong real estate market is driven by the State of Washingtons booming economy. The tax load is already too high and the economy is going to suffer, greedy politicians with egregious spending habits will slow the economy and ultimately act as a counter to the real estate market. 

My best guess is will should see appreciation in the low single digits this upcoming year. 

Water views dominate desirability, but about City views?

Human beings consistently prefer a view over water, be it the ocean, a lake, or river. Water has a calming effect. The second most "desirable" view tends to be natural landscapes. Views of a prominent mountain or a gorgeous landscape like the Columbia River Gorge. Cityscape views come in third and have the most variability and risk.

Landscape views tend to lose in the night time and sometimes a water view does as well especially in coastal and rural areas. The one view type that tends to shine at night, literally and figuratively, is an urban landscape.

The long standing issue with urban landscapes is the near constant threat of some future urban project rising up to block that city view. Some really high end buildings hyper rich markets have literally bought airspace rights over other structures to create permanent view corridors in dense cities like Hong Kong and NYC. 

Urban landscape views are often at the best at night as bright city lights dance in the windows of urban condos. They are mostly protected from the weather as well. Cloudy days and nights do not ruin the views. About the only natural event that messes with a city view is dense fog.

Vancouver has an interesting trifecta opportunity with many of its urban views. The Downtown area lies on the shores of the mighty Columbia River offering many homeowners a lovely water view that also lights up at night with reflections of the cityscape all through the night. Towering Cascade volcanoes are also visible from many locations as well. Some of Vancouver's waterfront neighborhoods both in the urban core and in the suburbs along the Columbia share this rare trifecta of views.

At the end of the proverbial day, most people will still gravitate towards a water view. This certainly helps explain why waterfront properties tend to sell for substantially more money than other view types or no views at all. City dwellers in Vancouver can enjoy all three view types from the same picture window. You just have to have really deep pockets.
  

Downtown Vancouver Condos

Downtown Vancouver remains a stronger market relative to many other neighborhoods. Downtown has enjoyed a surge in popularity compared to the other urban neighborhoods in Portland. If you want a true city living experience you are limited to neighborhoods like Downtown Portland, The Pearl District, Lloyd District, South Waterfront, and Slabtown in Portland or right here in Downtown Vancouver. Portland still suffers from empty storefronts and a depressed office market in the city center. Vancouver on the other hand is adding merchants and restaurants and has a fairly tight office market that is actually expanding rather than contracting.

The City of Portland has made some major changes in the structure of the local government and it seems like things are starting to improve. They are however going to need allot of time to recover their sagging reputation. Thats the thing about a reputation, it only takes a minute to ruin it, it can take years to gain it back. 

Vancouver has to be very careful here and mindful of its own history. In the 1980s and early 1990s Vancouver's downtown was in terrible shape. The beautiful Esther Short Park was over run with vagrants, drug dealers, and strung out prostitutes. Main Street had more sleazy card rooms and pawn shops than they did restaurants. Even after the beautiful park renovations and the fabulous redevelopment of the old Lucky Lager brewery site Vancouver still clung to the reputation as being a dumpy city. The Mayor continued to push for redevelopment and the city continued to improve. After the recession ended and the Waterfront started to emerge the city started appearing on the news for positive reasons rather than negative stories. Now that the Waterfront is 70% built-out, the city enjoys the reputation for being a destination and the hip place to hang out. It took nearly three decades to crawl out from under the crappy reputation and our local leaders need to be vigilant not to let the homeless overrun it, nor let crime get out of hand. That shiny reputation we have earned over the last 15 years can be gone in an instant. The city needs to reap the rewards of higher tax revenues downtown and if they screw up and let things decline they will never recover the investment they have into the redevelopment. Politicians are rarely smart enough to see that. 

I did a YouTube video that goes over the six condominium developments in the Downtown specifically as a bit of a guide to condos. You can watch that here:

          

Are Lower rates Helping the Local Market?

Mortgage rates have seen a slight drop and low to mid sixes are available to highly qualified borrowers. With a little help from the seller, rates in the 5s are easily attainable. One might expect some favorable movement as a result. So has it helped?

That's tough to quantify at this point. I am seeing an uptick in buyer activity, but we are also seeing an uptick in new listings. If both of those metric continue to rise it will keep the relative market stable. It will be good for agents of course as transactions will go up :) But for buyers and sellers the balance of inventory to buyers needs to change for there to be any movement in values. 

At this point our market remains a little soft on price and enough inventory to keep the buyers busy. technically our inventory levels still slightly favor sellers but certain sub-markets and neighborhoods may be hotter than others. 

A savvy buyer should open up the neighborhood range to capitalize on deals that may appear due to more seller activity. Neighborhood turnover can be a sign of trouble, but sometimes it's just a sign of normal turnover. Neighborhoods that were built 10-15 years ago in desirable school districts may now have a lot of empty nesters moving out, not because of any trouble but just the normal retirement move. That can work in the favor of buyers.

Buyers should always do their own due diligence and check things out, check with an agent about the area before making an offer. Things are looking up overall after a couple almost stagnant years. 

Home Prices Rise Despite Less Demand, What Gives?

One of the biggest drivers in price is in fact supply and demand. But the cost of building new homes is going up mostly due to government over regulation. Builders continue to face new laws forcing compliance with various environmental, local infrastructure, and safety that all seem great but absolutely increase the price of construction. Many builders are pulling out of over regulated areas like the three West Coast states. Despite having fewer buyers in the market place, there is also fewer new homes and this drives the price up on the remaining available resale homes. 

The median home price in Clark County currently sits about $550,000 depending on the source of data. That median price buys a pretty solid house, such as a 30 year old two story 4 bedroom house with 2000 SF or a really nice 30 year old ranch house with 1700 SF. New homes similar to these on any kind of decent sized lot are at least $100k more.   

Younger people struggle to afford to buy homes largely based on social tendencies more than actual costs. Homes have appreciated at significantly more than inflation in general over the last 40 years and many YouTubers point this out. But I was a 20 something in the 1980s and can assure you that buying a house back then was more difficult that it is today. Interest rates in the 1980s started out at 18% and dropped into the 11's by the end of the decade. That's a huge hurdle. But the 1980s had much higher costs on most things we buy today. Where the modern homebuyer faces higher education costs, higher healthcare costs, but lower costs on gasoline, utilities, food, electronics, and appliances. We did just come off a high inflation period that has brought some of these "lower" costs to parity with the 1980s but we also are seeing pretty strong wage increases in recent years that match it.

The general gist here is to stop complaining about how hard it is to buy a home, it has ALWAYS been hard to buy a home. I see people complaining about their inability to afford a home and then realize they have a brand new $1000 phone, a brand new car with $500 payment, they are drinking 4-5 energy drinks every day at $2-$5 a piece! They are wondering where all the money goes? 

Buying a house has always required some difficult penny-pinching and that still holds true today. I help young people all the time to get into a house, It is rarely easy unless that young person managed to find a six-figure job, but it isn't as hard as the internet is telling you.

Fed Hints at Reduction for Next Month

There has been tremendous pressure for some easing by the Fed. The Trump Administration has been very vocal about getting some relief on rates. The economy is not the roaring lion it was several years ago when the Fed made some aggressive moves to tighten the money supply. 

I have not been as concerned about Home Mortgages as I have been about the availability of financing for big projects that help boost the local economy. Sure a little softening for my typical home buyers will be greeted with a grin, but more importantly is opening up capital for larger commercial and residential projects that seemed otherwise be stalled waiting for funding. 

Vancouver's Downtown and Waterfront have several very large projects that have made it through all the preliminary approvals for design and zoning. These projects will be valued in excess of $500 million which is a direct injection into the local construction trades and tax coffers for the city. 

The Fed meets next month and there has been some suggestion that a rate drop is likely coming. Should we see some easing we could see mortgage rates dip a little as well. Rates tend to be running in the mid 6's for quality borrowers and a dip to the lower 6s will have a positive impact on the local real estate market. 

Sales volume has been light over the last 24 months and we are seeing a stead increase in inventory as well. Buyers are actually in strong positions right now aside from qualifying. We a reduction in rates the number of qualified buyers will increase and could very well jump start the sluggish sales numbers.

Here's to a solid 4th quarter!

Fed Stays Put on Rates

(Also published on "Retire to Washington State")

The Feds met at the end of July and decided again to stand with the current rate. This annoyed the President, but I am feel like they did the right thing. That runs counter to my own financial prospects as a slight dip in rates could put energy into the real estate market that would directly benefit me personally. But the federal government continues to spend money like drunken sailors and it hasn't;t mattered whether it was the R's or the D's neither can seem to really cut spending. All we get are clever accounting tricks rather than real cuts. 

When the government prints money it tends to artificially inflate the economy in a somewhat unnatural way. The economy is not as hot as the President says it is, but it is not slow enough to justify rate cuts at this time. That is a bit of the ironic part of the desire for lower rates while claiming the economy is hot. You don't get lower rates in a hot economy in a normal universe. 

The rolling 54 year average for mortgage rates sits at 7.71% according to Freddie Mac, the leading tracker of mortgage rates. We are well below that average right now at about 6.8% Even if we do a rolling 30 year year average to get the 1980s high rates out of the equation we still are close to average right now. It has been a difficult transition for younger home buyers that never saw rates this high during their adult lives. But it is a bit more psychological than economical at this point. 

The economy is good right now, not great, not terrible just OK, and perhaps the Fed is on the right track. Having a slight downward adjustment would have been nice as a gesture to get housing back on track, but I do not expect the Fed to make any substantial adjustments. When the current chairman's term is up next year, I would not be surprised to see him replaced. That new chairperson might decide to bend to the President's will and cut rates a bit. That would likely happen mid-2026. If the economy starts to stagnate before that, the current Chair, Jerome Powell might adjust rates toward on his own terms.

Buyers looking to buy in this market will find willing sellers. The best "deals" are on larger two story homes that are mostly owned by aging boomers looking to downsize and get rid of the stairs. Younger buyers can get a lot of house, like a 2500 SF 4 or 5 bedroom home 20-30 years old at $600-$700k. The price per foot on these now unpopular styles of homes is only $240-$260 per foot. Compare that to the typical 1250 SF ranch house that fetches $450k and a whopping $360 per foot. Saavy young people can rent rooms out in the large house to offset the mortgage. Yes you have to qualify in the first place, but you can go in halfsies with someone if need be. There is risk in these arrangements but it could get you in the housing door where you might not otherwise be able to be. 

Peek you head up over the box lid and look around, there are some opportunities out there for clever buyers.

The Market Just Needs a Tiny Little Push

The real estate market just needs a nudge to get things rolling again. The market feels stagnant, not a crisis but just mulling about like grounded child pacing his room. Interest rates don't need to fall much, just a half point to actual rate and things would perk up nicely. But if rates must remain where they are, which may be the case since the recent Fed decision to hold suggests they will. Other market nudges could be an improved job market, local downward pricing pressure, or perhaps some of those folks hanging on to a 3% rate retire and downsize.  

The market does not need a major stimulus. The federal government could also improve the mortgage deduction to make it a bit easier. Getting homeownership back up and on track will also result in lower rents as rental pressure will shrink. 

In the mean time both buyers and sellers are experiencing near neutral conditions. Well priced homes will sell in about 30-45 days, Below market prices will bring multiple offers, and overpriced listings will sit for months and months. Listing agents need to actually do some marketing in these conditions. Some do some don't so prospective sellers will need to ask direct questions of their potential listing agent.

Buyers should keep in mind that rates are not likely to see much relief other than standard fluctuations as the federal government continues its drunken spending binge that keeps pressure on the Fed to keep things on the proverbial leash. 

Let's hope we see that nudge soon. 

Is the sky falling?

Real estate has slowed to a crawl in some sectors and many people are hesitant to buy or sell in this weird market. I have beaten to death the idea of stubborn homeowners holding on to their 3% loans, I am among them actually. But buyers continue with trepidation. Rates seem high, they are not, but it sure feels like it and buyers are faced with very high prices all over the nation relative to what they were ten years ago and relative to current wages. There is also a lot of negative commentary and videos about how difficult it is for young people to buy a home. I feel that that is way overplayed in politics and on YouTube. 

I just sold a home to a young man who qualified with his own income. He saved up substantial cash to put down by avoiding the trap many young people fall into. The buy a new car, buy cool stuff you can't really afford, and then complain about houses costing too much. He does not have a college degree nor does he have an exotic job. He works in a local factory. He saved some cash drove an older inexpensive car and bought a house in one of America's most expensive housing markets.  

Let's be clear this young man SAVED the money. He did not inherit the money nor get cash from his parents. He did it the way his parents and grandparents did it, by not wasting all their money on stuff they can't afford. He did it the Dave Ramsey way for the most part.

So the sky only seems like it is falling because talking heads on the internet say it is so. The sky my friends is just fine, houses were really easy to buy for about 8-10 years after the Great Recession and now they are back to the way they have always been, hard to get but easily attainable, even in Washington State which has the fourth highest home prices in the USA.

Save your money, keep your credit scores up, and avoid spending hundreds of thousands of dollars on an education that will not net you a deep six figure job. If you are not smart enough or dedicated enough to get a STEM degree, take up a trade, they pay better in the trades these days than most undergrads make anyway. Over the coming decades wages in the trades will continue to outpace salaries in the white collar world, this has been the trend for over a decade.

Our country needs electricians, plumbers, framers, iron workers, welders, and many other tradespeople. The best part is, most of the time you can apprentice these jobs. This is being paid to learn rather than paying to learn. 

Homes have always been difficult to own with a few exceptions throughout the last 100 years. They are however very attainable. 

Happy Independence Day

I think I'll take the day off and soak up the celebration. There are things likely to change in the next few weeks or months as the passage of the "Big Beautiful Bill" will have ramifications for the market. It remains to be seen whether it will be a net positive or net negative on housing.

I'll see you back here next Friday. enjoy the holiday weekend.

Friday the 13th... Boo! Prices are softening.

MLS Listed Home 4/2024 C. Rod Sager 2024

It's a spooky Friday the 13th for real estate. Our markets are in a soft slide which means sellers need to price their homes well. There is no tolerance in the market for overpriced listings. Seller's should price their homes in the bottom half of the comp range. There is a thing called "chasing the market down" and it is a real thing. Pricing high and waiting for the "ideal buyer" is an effective play when the market is rising, but it can end in catastrophe in a declining market. No one shows up and you lower the price, but by the time you respond to the market you are still too high. Buyers are looking for value more than ever before and in the entry level market there are value opportunities everywhere. Well priced homes are often seeing multiple offers, so the buyers are out there, but they are not offering on overpriced listings. 

I believe we are going to coast to a gentle landing as the market adjusts to a more normal interest rate range. We just came off one of the longest periods of below average rates in decades and it takes a while for the market to compensate for it. Keep in mind that certain homes will always have the upper hand in the market place. Modern homes or older homes that have been updated to modern styles and themes in good condition will always sell first over unusual layouts or non-conforming builds. No matter how nice a place is, people tend to gravitate towards tradition floor plans with good flow and an updated look. 

Having good curb appeal is a great idea in any market and as things tighten up for sellers curb appeal gets more and more important. You generally want the first three impressions of the house to be positive. Curb appeal, the front porch, and the first rooms visible upon entry should all be as perfect as possible. If a buyer gets three good impressions right off the bat, they will be naturally inclined to accept other negatives about the house. The adage of Kitchens and Bathrooms should be the first upgrades and look as good as possible also holds true.

I do not want to sound the alarms of a doomed market. That is not where we are at all. There is currently about three months of inventory and that still is considered a mild seller's market. But inventory levels have been rising all year long and we could see dead neutral conditions by autumn. Keep your property clean and tidy, make it shine as best you can while showing, and price it in the bottom half of the comp range. You will sell it in 30-45 days at or near full price. 

Are we in a market slide?

The query in the title of this article is a wiggly mess of answers depending on who you ask. Overall I would say we are in a slide in several key sub-markets. I mentioned that Portland's glut of city condos, particularly in the South Waterfront are pushing prices down on Vancouver's entry level and mid-tier condos Downtown. 

The entry level has been plagued with a lack of qualified buyers in the market. Up till recently, perhaps the last 12 months, inventory was tight enough that the lack of buyers was not causing any real downward pressure on prices int he entry level. But alas, now we have more than 3 months inventory, which is by no means considered allot of inventory, but it is way more than we have had and now the lack of buyers is noticeable.  

The other weird aspect of our current market is in the process of correcting itself, but we have been in a slightly declining market but the median home price has continued to rise. I alluded to this in previous posts, the entry level has been slow but the mid-tier has been busy. Prices have been falling on home in the sub $600k market due mostly to that lack of qualified buyers. Meanwhile houses in the middle tier from $700k-$1.2m have been selling well and that has pushed the median price up rather than down. Prices have been coming down across the board but we are simply selling more of the expensive houses relative to the entry level and that creates a literal mirage that prices are rising. They are not.

This market has been fairly flat with prices in a slight decline. Sellers have to be careful here. If a house has been on the market for 90 days with no offers, the first offer could be the best offer. I would say it is more likely the best offer than not. 

Clark County has been the Portland-Vancouver metro area's only strong growth county for several years now. We have been riding a wave of Portland migration that is now starting to slow a bit. We are also seeing more out-migration than has been typical. Some are fleeing our expensive home market, others are leaving the State of Washington for political reasons. Washington has always been a blue state but it has seen a drastic change in the recent ten years seemingly mimicking California. Washington has become a wet version of California, that may be pushing some of the moderate and conservative people out. This could explain the increase in inventory running against the trend of sitting on those 3% mortgages.   

Our current Governor seems to be determined to destroy the Washington tech economy as well as the broad economy. This is not a blue-state vs red-state issue. It is a California issue. Emulating a failed state is a bad idea whether that state is red or blue. We seem hell-bent on chasing the "golden" state over the edge and into the abyss. I am not here to advocate for any one political world view, quite the contrary actually, but politics has been a driver of real estate as voters sometimes vote with their feet, we have seen it in California and now it could be happening here.

Hopefully the legislators in Olympia will see the cliff, and steer us back to the good ole Washington we all know and love. If our state starts to see an exodus like California and Oregon have seen, we could be headed for a market correction.

Strange Market Conditions, Middle and High End outpacing Entry Level

Our local market conditions over the last two years has clearly and concisely shown an increase in the median home price for Clark County. However the entry level market has slowed down substantially. A house that would easily sell for $500k two years ago now sits on the market for several months or the inpatient owner lowers the price. Meanwhile the middle and top of the price range remains hot largely due to a lack of inventory and increased demand from migrating Portlanders, and some Californians. 

I have beat this to death over the last couple years, but the reality is the middle and high end market loves the fact that they are sitting on a 3% mortgage and they just don't want to sell. People that have $700k or more to spend will outbid others to get the house in the upper end low inventory scenario we see now.

This is the weird state of affairs where the top half of the price range is in higher demand than the bottom. This is rare probably less than 10% of the time. I believe we are about to shift away from this trend as wages have crept up a bit and entry level buyers are returning to the market. For now, the top half rules the roost and it won't last long so those of you sitting on a house worth more than $600k, now could be the time to sell. There is a ceiling on how high end, super lux properties are still going to sit awhile since people with more than $2 million to spend remain few and far between.

Another anomaly in the local market is condominiums. The local condo market is getting negative pressure from across the river in Portland. This is particularly strong in the city center of Vancouver. Portland's South Waterfront and to a lesser degree the Pearl District is seeing a virtual glut of urban condos and prices have fallen sharply in the entry level Sub $400k range. This has made the now very popular Downtown Vancouver a more expensive alternative, whereas we used to be the value leader in city condos.

This soft entry level market will almost certainly, barring a major economic downturn, turnaround and return as the driving force of the housing market. Any first time homebuyers that qualify for $400-$500k should saddle up and go get a house before we return to a busy low end. It is already showing signs of recovering.

Strange market anomalies are often the best time to act, not always, but often, I believe for entry level buyers in the sub $500k range and upper end seller's between $700k-$1.5m, now is the time.

  

Homes Don't Appreciate, Land Does.

Yes you read that right, homes do not appreciate, in fact they depreciate. Many of you may already be thinking, this guy put whiskey in his coffee this morning ;) No just good ole black coffee today friends. A house is a physical structure and physical structures depreciate for various reasons. Of course the primary source of depreciation is wear and tear. But homes also lose value as they become outdated either in fashion or practical use. This is why a 50 year old house in very good condition but not updated will fetch far less than the exact same house that has had the windows upgraded, the kitchen remodeled, and modernized, etc. This upgraded house did not appreciate it was brought up in value by spending money on it. Appreciation is when the value rises due to external factors mostly involving demand. 

Land does not depreciate, it does not "wear out" and in general it never goes out of style. Its value can rise and fall with external factors such as demand or damage such as environmental damage or neighborhood decay. The thing that pushes home values higher is demand for housing but older homes will not appreciate as fast in general as newer homes because the older homes become less desirable as they often have minor to major functionality issues, designs that are no longer popular, and they are more likely to need major repairs than a newer home. This makes them generally less attractive to buyers. 

Sometimes a trend happens that makes a certain era of homes desirable again. A few decades ago it was all the rage to take Victorian style homes and fix them up into gorgeous homes. More recently there was a hipster movement to buy up mid-century homes and fix them up. Mid-century homes were among the least "sexy" designs ever, but they were practical and functional. 

As an example I will use my own home that I bought 23 years ago. My house was 10 years old at the time and priced about 10% less than a similar brand new home in the area. My house was basically all original when I bought it. Today it is about 25% less than a comparable brand new home. It's now 33 years old. I have spent tens of thousands of dollars modernizing it with sleek wood flooring, fresh paint, new roof, new furnace, updated kitchen, and baths, etc. But all that money hasn't really let me keep up with values of newer homes because the floor plan and layout reek of early 90s. I have 8 foot ceilings and there really isn't a cure for that. Now in all fairness I can sell this house today for more than three times what I paid for it back in 2002. I have no complaints, but I did spend at least $150,000 on keeping it updated over the years. Had I just left it all original but also kept it in good shape, I would be at a 40% disadvantage versus a similar brand new house. If I had let it go and it needed expensive repairs, then I would be at least 50% under the value of a comparable new home. 

What does all this mean? Well the land underneath my home has appreciated dramatically but my actual house has depreciated drastically despite my best efforts. The moral of the story here is to keep your home in good shape even if you can't afford to modernize it, take good care of it. When looking to buy, pay attention to the neighborhood, try to buy in the best looking neighborhood you can afford, but go ahead and buy the worst house in the best neighborhood. Neighborhood degradation reduces demand and inhibits overall property appreciation. Neighborhood is way more important than the house itself when it comes to property values and potential appreciation. 23 years ago my wife and I had our eyes on a lovely home in a neighborhood nearby. It was built in 1999 and was at the time very sleek and modern. It was a little better house than the house we have now but the same size and bed bath count. It was just a tad bit more expensive, but was situated on a much smaller lot. We ended up buying our house because I felt the neighborhood would hold up over time better. The neighborhood for the first house was fairly new, but it was cramped with narrow streets and small lots. The house I bought had wide streets and larger lots. Both neighborhoods seemed comparable at the time. As the decades rolled by the my neighborhood remains more or less the same whereas the other neighborhood became filled with rentals, and clutter and basically fell apart. My house would almost certainly sell for more today than that house would, had I chose it. I likely would have moved out of the neighborhood 10-15 years ago. 

In general if you want a "deal" on a house you generally want to buy an older home in good shape with outdated decor in a nice neighborhood, as nice as you can. If the neighborhood is older and yet still nice, that is often better than a brand new neighborhood that already feels crowded. The older neighborhood has weathered the storms of turnover and maintained itself, whereas the newer neighborhood can be a gamble unless it is strongly regulated by an HOA or it's a very expensive neighborhood. As a 25+ year veteran agent I have become very good at detecting neighborhoods with a high chance of stability or instability. This is a critical factor for long term success in your chosen home.

Remember as the house ages it loses value, the land is what drives the appreciation and that is mostly driven by local demand. Local demand can be external to the city itself, but also internal as a desirable neighborhood or area of town. Desirable areas can fluctuate over time but some neighborhoods are always popular. These are ideal spots to own for an extended period of time. 

 

Washington State Tinkering with Rent Control

The state has decided to intervene in the high cost of rental units in Washington. As is typical with these types of legislative bills, the results are nearly always worse. Rent control invariably leads to investors bailing out of the local market often selling off assets. The short term effect is usually a slower rate of rent increases but the longer term result is a lack of inventory. 

The state has been the largest culprit in rising costs due to the ever increasing mandates for waste water control, green efficiency, and local infrastructure improvements that rapidly raise the construction costs of new units. The entire West Coast has been caught in this trap. Yes we all want greener projects, and better environmental outcomes, but that comes at a cost and that higher cost results in exclusive rents that are out of reach of lower income and even middle income families.

If the state actually cared about this subject, which I fear they do not, they would allow low income properties to be built with waivers for many of the strict regulations and government development fees. That could provide thousands upon thousands of new units aimed at lower income families. The state however is not interested in waiving these development fees because if we are really honest, it's a cash cow for Olympia, Salem, and Sacramento.

In all fairness, many of these development costs are imposed at the local level. Cities and Counties rake developers over the proverbial coals with excessive fees that all get passed on to the buyers and or renters of these properties. The legislature could certainly pass a law that requires local governments to provide discounts or waivers for projects that will provide low income access to real estate in the form of sub-market rents or regulated sub-market pricing for purchase.

Whether you are on the left or the right, affordable housing is probably something you have some concerns about. Let your legislature know, that rent control has failed nearly every time it's been tried and they need to DO BETTER.

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.