Buyer's Should Consider a Light Fixer

Finance able fixer home sold last year

This real estate market is pretty robust, but buyers are still more interested in move-in ready properties. That leaves fixers as a value proposition especially in the entry level price range under the county-wide median price.

Not all fixers are problems. Buyers using a conventional style loan can by a cosmetically rough house for tens of thousands less than the future market value when fixed up. A little do it yourself action can go a long ways.

FHA and VA buyers are in a little tougher spot when looking at fixers. These are government backed loans and as such the property is scrutinized by the lender a bit more. That doesn't mean a light cosmetic fixer won't fly, it very well may be fine. I have helped buyers on a budget using VA and FHA loans to get into a light to medium fixer. Choosing an experienced local agent that understands the nuances of the various loan programs can go a long way towards getting a home under market that needs a little TLC.

The combination of a cosmetic discount and the ridiculously low rates for a mortgage right now, could lead a savvy buyer to a huge equity gain in the short term. Buyers seeking that perfect move in house may have to fight off some competitors but with loan rates dipping into the 2's for well qualified borrowers, now is definitely a good time to buy a house.

Sellers with a home to sell that is tidy and ready for the market, you are in the proverbial 'catbird seat' with swarms of eager buyers waiting to snatch up you home.

Buyers are Crawling Out of the Woodwork

RMLS graphic

Things are getting rather busy in the local real estate market. I'm not sure if this is COVID-19 pent up demand or just these crazy low rates that have populated all the mortgage ads. In any case I have been rather busy running about showing homes to a frenzied crowd of buyers as well as taking offers on my listings.

Locally we are on the cusp of entering Phase 3. The local government applied for it two weeks ago but a recent mini-spike of cases has them in a holding pattern at Phase 2. What ever the reason be it cabin fever, low interest rates, or optimism about the future end of this pandemic, buyers are out in force writing offers and buying houses. If seller don't start listing more houses we could see a return to rising values. Right now it seems that prices are basically steady.

The local MLS is showing a tightening inventory but prices year over year for June in the Portland-Vancouver Metro Area were up a a few ticks at 2.7%.

As crazy as this year has been, real estate has weathered the storm pretty well, I am certainly thankful for that.

Buyers Leery of Future, Justified?

Some buyers seem to be a bit leery of the future with all the COVID-19, civil unrest, market volatility, and such some might think, :"of course they are!" But should they be, really? Perhaps, but this current situation we find ourselves in is more political than anything else. COVID-19 is a real threat, but governments are on it, taking precautions and things are at least stable for the moment on the health front. As for the civil unrest this will also settle down. Hopefully the people in government can turn to meaningful reforms to resolve these deep rooted problems and social conditions can start to heal. We have been down this road before.

Real Estate however is a commodity. Whether one rents or owns we all need a place to live. Real estate can weather the storms of health pandemics and even civil unrest. So long as our financial institutions are solvent and prepared to provide funding for development and loans for purchases the industry should be OK.

The inventory levels locally are still about as tight as they were right before the pandemic hit. As I have written several times over the last couple of months, listings are down and buyers are down in near equal numbers and that has left the market slower but steady on values. So long as the balance between buyers and sellers does not slip to far in favor of buyers the market should continue to be healthy. Economic conditions are not ideal, but they are still solvent and that means that buyers can buy with some confidence. Even if prices take a dip, which they could, owning real estate is still better than paying rent for the vast majority of people.

Buyers should bear in mind that during the last real estate crisis in 2009-2011, housing prices were low but rents skyrocketed. Once a buyer buys a house the "rent" ie. mortgage payment is fixed. No landlord to raise the rent. Should a buyer encounter difficulty with income, it is generally easier for a landlord to evict a tenant than it is a bank to foreclose. The decision to buy a house should not be put off due to fear of job loss or income reduction because that fear applies to renters and buyers alike.

The real estate market remains sound and the trend does not seem likely to change dramatically one way or the other in the short term. 

Mortgage Lending Seems to be Weathering the Storm

Mortgage rates have managed to stay low and in some cases dip a bit lower still. The combination of a pandemic and now civil unrest has not been too disruptive tot he local real estate market nor seemingly the lending aspect of real estate.

When rates dip low that reveals a wonderful opportunity for buyers to get a lower payment or to afford a larger or nicer home without paying more money for it. Generally low rates lead to an uptick in activity for buyers and thus a rising price condition. However, COVID-19 has managed to keep a lid on prices. The recent civil unrest may also help keep prices in check. For buyers this is good news a combination of low rates and stable pricing is always a good thing.

Buyers thinking about a home should get started now because rates will only remain low while investors are leery of equities. Furthermore as COVID-19 response restrictions are eased more buyers are likely to emerge and the market could potentially see a return to upward pricing.

Mortgage lenders seem to be handling the COVID-19 well in underwriting. The tendency in a downward job market is for lenders to become more tight with buyers. So far it seems only marginal. Other lending lines like credit cards and car loans are getting real stingy.

This is a strange set of conditions we see now so buckle up and enjoy the ride.

The Natives are Getting Restless

Washingtonians are getting a bit restless these days. The Governor's iron-fisted lock-down is losing support faster than the devil on Sunday morning. Several of Washington's counties are already in Phase II of the Governor's planned re-opening ahead a schedule due supposedly to favorable new cases and such. Locally Clark County is now eligible for an early move to Phase II making us the first of the urban counties to be so granted.

Governor Inslee is up for re-election and I can only imagine he intends to win. Pissing off 75% of the voters is not an ideal way to win an election that is but five months away. The governor has to balance public safety with the will of that public to comply and compliance is starting to run thin on patience.

Phase II will allow for a partial reopening of restaurants with strict guidelines to keep with the notion of social distancing and general safety. This move into Phase II will definitely help economic conditions and that of course will help keep real estate stable through the summer.

Our market continues to be stable despite a massive overall slowdown in activity. I have been on about this since the dawn of this pandemic. Real estate is not unlike most economic models in that it is largely driven by supply and demand. In a typical economic cycle demand is the driving side that moves the market up or down. A slow economy tends to slow the demand for housing by reducing the number of qualified buyers. But this pandemic has actually led to a reduction in both willing sellers as well as qualified buyers. When both the supply and demand drop simultaneously then the market tends to be flat rather than drop. Real estate agents are feeling it because there are less sellers and less buyers which in turn reduces the number of transactions taking place in a given month. But buyers should not expect to strut around like a rooster in the hen house because sellers are holding their ground. Well priced homes are still seeing multiple offers.

So long as this remains the case we have a very good chance of seeing a nice recovery in real estate because the the end of COVID-19 will likely lead to a rise on both sides of the supply/demand chain.

I really hope that this Corona virus settles down so we can all get back to work and back to being productive and in a healthy environment.

Well Priced Properties Go FAST!

For nearly a year now, the real estate market has been in a state of near neutral conditions, favoring  the buyers or sellers with a sliding scale from entry level slightly favoring sellers to upper end slightly favoring buyers. That has not changed even with the COVID-19 pandemic. A well priced property will sell and if that property is priced below the local median it will sell quickly. Local median prices fluctuate in Clark County between $350k and $450k depending on the area.

There is an opportunity for sellers and buyers in that the overall market is slower than normal, there are fewer homes being listed and fewer buyers bidding. So pricing is steady but the atmosphere is a bit more relaxed. It's a good time to be a buyer or seller because your agent should have a little extra time since volume is down.

There is always opportunity in real estate when you keep your eyes peeled for it. One part of the market that seems to be softening up is the fixers. Most buyers right now are looking for something turn key, move in ready. So looking for something that needs a little TLC could produce an opportunity to get a bargain. Don't expect a crazy bargain though, this market is too large to let a good deal go unnoticed.

Stay safe and let's hope the Governor's phase 2 plan gives us a little more room to stretch out.

Governor Expected to Announce COVID-19 Revisions

* Note of correction: I mention below Governor Inslee is up for reelection in 2022 he is actually up for reelection in 2020

Before I make comments on the upcoming information from the Governor's office, real estate is still chugging along at a slow but measured pace. The slow down is seems to be equally distributed between buyers and sellers keeping the market in balance and prices steady. This is good news for real estate at a time that many industries are seeing hard times in the face of this pandemic.

Sometime today Governor Inslee is expected to make an announcement regarding the May 4th revision to his COVID-19 response plan. Although the governor's office has suggested some loosening may come, it is highly unlikely that any changes will be that significant. This is where the governor will make or break his entire career.

This virus is a genuine threat and measures were needed and still are needed to protect the health and safety of Washington residents. Finding the balance is not easy but as they say, that's why he gets paid the big bucks. It is times like this that truly test the leadership of government executive officers. I do not envy the position Governor Inslee is facing. This could go so very wrong that voters anger lingers all the way to the 2022 election or worse yet, a recall of the Governor.

Washington residents have been fairly patient these last 6 weeks under a fairly heavy handed approach to containing this virus outbreak. Now with news circulating out of New York that this virus is not quite as deadly as originally thought, the governor best tread carefully. If he goes too strict he may face a challenge for recall or maybe worse. But if he goes too soft and there is a relapse of the virus he could face equal scrutiny. The governor needs to show an understanding of the health risks measured against known risks of economic collapse on the health and well being of the state at large. Trading a million or more Washington residents livelyhood and or lives, though economic loss of job, health care, housing, and other fundamental life necessities in exchange for "potentially" saving a few thousand lives to COVID-19 may not sit well with voters of either party.

I hope the governor sees fit to allow the bulk of the workforce to return to work with some COVID-19 safety conditions. I do not think any kind of close quarters events should be allowed yet, but there is no reason restaurants and other establishments should not be able to at least operate at partial  capacity allowing for social distancing and with proper staff precautions to minimize potential spreading. Factories and the like need to get back to work ASAP.

The amazing economy we had rolling in Q1 was able to absorb this 4-6 week shut down, but the government does not have the resources to continue floating aid for much longer. Let's all hope Governor Inslee and other leaders around the nation can get this call right. If we crash this economy so hard we enter an actual depression, people will wish they died from virus rather than ride out what there ancestors had to endure from 1929 to 1941. There is no sugar coating a depression. It will make the "great recession" of 2009-2011 seem like a economic boom. This is not a place we ever want to go and certainly we should not trust a government that would deliberately take us there. The people who are suffering under this lock down are the poor and the middle class, the rich are doing just fine so keep that in mind.

Things are still fundamentally sound and smart planning from our leaders can help us recover by the end of the year. For real estate, things are still solid, slow, but steady. Putting people back to work will do wonders for the morale of the nation, will energize the economy, and most likely save lives.

That's my two cents, anyway.

We are Still Doing Real Estate in Washington

Real Estate is still alive in Washington State. Governor Inslee has provided guidelines as well as a few mandates for the Real Estate industry. Seller may still list their homes for sale, Realtors® can still show them. We have some operational adjustments to ensure we do not spread the virus around and that's fair and good.

I have noticed that both buyers and sellers have slowed down of decided to wait out the pandemic. That may be fine and well but I believe that buyers and sellers should only do that if they want to do that and not because they think the Governor said they can't. Governor Inslee has provided a pathway for real estate to continue to operate under the pandemic control measures he has in place.

I have seen a roughly equal loss of buyers and sellers so the market conditions remain neutral and pricing is stable. This is a still a good time to buy or sell your home. Banks are still lending money and closings are still happening. I just closed a transaction for a seller that has greatly enhanced their retirement plans as they got an opportunity to get into a senior retirement place they have been waiting for. Don't let COVID-19 disrupt your retirement, moving or any real estate plans, we can still help people with all their real estate needs.

Stay healthy, follow that social distancing, and soon we will all be able to move towards a more normal lifestyle.

Let's Keep Up the Good Work, Almost there...

COVID-19 is hopefully starting its backward slide and that means the Governor will be able to look closely at softening the stay home restrictions imposed until May 4th here in the Evergreen State.

Home buyers and home owners looking to sell will be happy to see at least a slight softening on the COVID-19 response and I think Governor Inslee may be feeling the same. I guess we will just have to see in the coming weeks.

I am not seeing a slide in prices or any kind of real estate adjustment and I still believe that is largely due to the fact that both the supply side and the demand side are slower so the overall market seems steady.

Locally as Realtors® we can still show homes but have to follow strict guidelines including limiting people in the house and using sanitation and distancing guidelines. i take that part very seriously and understand we must try and keep this thing from having a relapse.

Buyers can and should make an offer on any house they like as the seller will likely try to accommodate them. Everyone is a bit edgy about the future. People are thinking how long is this going on? will I keep my job? These types of thing and seller are worried about that too. Will this buyer still have a job when the loan is done?

Hopefully we can start getting a large chunk of the workforce back on the job and some of this can subside. We will likely have a quasi-normal at best summer as this thing will lurk in the background as we prepare for a possible resurgence in the fall.

Get ready the pent up demand for real estate might be unleashed tsunami style if things start to improve heading into May.

Governor Modifies and Clarifies Executive Order

Here in Washington State, Governor Inslee made a few modifications to the Executive Order "Stay Home" originally issued last week. The governor modified the real estate profession requirements to allow limited showings and generally loosened up the industry restrictions during the "stay home" order. He also made some "clarifications" about the construction industry that has sent home the majority of construction industry workers. Construction is effectively shut down as of now except for critical infrastructure and emergency projects.

I appreciate the governor giving some latitude to real estate but I think some of that latitude should be extended to the construction trades as well. I am familiar with construction activities and most construction projects have workers space at 6 feet or further 90% of the time and the systems in place could be modified by project managers to gain 100% compliance.

I do not envy the position of the president or any of our state governors as they have to make important decisions that can be a matter of life and death as well as the cause economic calamities. I still believe the governor is a bit heavy handed here with the COVID-19 response. Now this is an important and dangerous situation so I am not of the mind to suggest the governor should not have taken decisive action, in fact to the contrary, I think he had to. But the economy is also import as it is the lifeblood for healthcare, well being, and ultimately funds the government's operations.

Governor Inslee needs to keep as many people employed as possible in any position that can honor the 6 foot distancing. Where the governor can be heavy handed is in the enforcement of that 6 foot rule and any other COVID-19 mandates. Project managers do not want to face heavy fines or a shutdown over workers failing to comply, so site supers would be more than willing to crack down and keep everyone safe.

Factories and other operations where stations are close, could be modified to run half ops with half the stations closed and other modifications to the systems to keep workers employed should be considered. Even restaurants could have been open with 1/3 to 1/2 cap restrictions but I know that is unlikely to be approved.

The bottom line is that buyers and sellers can still execute their transactions and the governor is to be commended for seeing that real estate procedures can be modified to comply with the government safety mandate for COVID-19. Irregardless of one's personal political views, we should all support the governors of every state as they try and deal with this difficult situation. This is not the time for petty politics.

Governor's Lock-down and Real estate

On Monday the Governor here in Washington State, decided to go to a stay home policy that has more or less shut down all 'non-essential' business and services. For real estate that means we as realtors cannot show property to prospects nor can we engage in things such as an open house. For the home inspectors, they are linked to the "essential construction industry" and as such can with some limitations perform home inspections for pending transactions. It also seems that appraisers are still able to do their thing as well. So pending transactions should be OK during this shut down.

However the buying and selling process is going to be slowed down for all active listings in the area until such time the government returns to a more "normal" status. If we can get this thing under control soon, say in the next 30-45 days, we should be right back on track for a reasonable real estate market. I believe that at least some negative fallout in the form of some layoffs and such will result. For buyers in the entry-level price ranges this could be a blessing in disguise as that potential "fallout" would soften the number of qualified buyers seeking homes and make life a little easier in the hunt once it resumes hopefully before May.

Whatever the outcome economically there are going to be some winners and losers. The losers are those that unfortunately lost jobs or opportunities due to this government lock-down. They will get their chance to return after things perk up. The winners need to be ready to strike when the lock-down is lifted.