Millennials want in but pricing pushing them out

Apartments and Condos Overlooking
Esther Short Park, Vancouver, WA

The younger crowd is energetic about moving into the "city" but high pricing is pushing them towards the peripheral areas. It is a classic real estate scenario that has played out time and again. How far is one willing to commute to get a nice place they can own or even rent at an affordable price?

Portland and Vancouver have become expensive with rising rents and the gentrification of older areas once run down lead to some younger people seeking the urban lifestyle in a more affordable locale. Some people on the north side of the Columbia are being pushed all the way into Cowlitz County to find a place they can call home without being married to the landlord so to speak.

Generally, real estate prices in areas where there is good employment, high paying jobs, and lots of infrastructure are expensive and areas with less opportunity are more reasonable. This is not an absolute of course, but it does hold true most of the time.

Down in the San Francisco Bay Area before the big market crash in 2008, it was not uncommon for people to buy a house in California's Central Valley in cities like Lodi, Stockton, and Manteca and then commute into the Bay Area some 100 miles away. This of of course is a terrible drag on ones lifestyle.

Here in the Metro Portland-Vancouver area we haven't seen that kind of crazy. In fact people around here tend to think 20 miles out is the Moon. But more and more people seeking a house with a little elbow room are finding themselves a bit further and further away from the core city. Places like Longview and Kelso up in Cowlitz County have had depressed pricing for a long time, but they are starting to see a surge in activity as people seeking to own, move further North form Portland and Vancouver.

Vancouver WA Waterfront development including
apartments and condos overlooking the Columbia River

Millennials meanwhile are biting hard on the urban apartments going up in Downtown Vancouver, Vancouver Waterfront, Portland's Pearl District and other areas with urban gentrification happening. Hipsters have gobbled up all the classic 1920s houses in Portland and Vancouver pushing values out of reach for many.

If our city leaders do a good job and attract high paying employers to our clearly desirable area, we can all benefit from this surge. Keep that in mind when you vote for City Council and County Commission positions. 

Spring has Sprung... Real Estate should follow...

Yes it is spring and the real estate market generally likes the springtime! People start thinking about moving. Buyers want to get out and look at the homes on a nice spring day. Sellers want to get their house on the market before everyone else does. The cycle repeats in some form or another every single year.

The market tend to warm up in the spring. This spring seems to have the added braking effect of interest rate creep. Yes those pesky rates have been inching higher and that can take a bite out of the buyer's wallet. But I don't think that will stop the market from doing its fresh spring dance. Inventory should increase a bit and buyers may jump in as well.

I still feel strongly that 2018 will be a much more modest market in terms of price appreciation. The tug of higher rates will likely keep things under a sustainable growth pattern. Vancouver is bringing hundreds and hundreds of new apartment units to market over the next couple of years and that will ease some pressure on housing in general.

The real factor in whether this local market can continue to sustain solid growth will be int he job arena. Will the area continue to add good paying jobs across a diverse sector of business? If so we will continue to see a great and healthy real estate market. If not, then things will slow down abruptly.

The market is showing signs of a slight softening, not a pull back mind just a slowing in the rate of price appreciation. Buyers with tight budgets need to make their move now as the double jeopardy of rising prices and rising rates in in play.

Things are looking healthy and bright for 2018.

Thousands of Condos and Apartments Coming...

Vancouver and Portland are both bringing thousands of new condo and apartment units online over the next few years. The local rental market has been as tight as the local housing market and these units should help to ease the puffed up rents, particularly over in Portland.

These new units coming online locally in Vancouver are by no means limited to the massive waterfront project that has phase one under construction. The first series of units should be available sometime this summer at the waterfront.

A great deal of new units has come online in greater downtown very recently including a sizable project called 15 West apartments on Mill Plain between Esther and Columbia, another project at 13th and Columbia, Senior apartments at Mill Plain and Esther near VanVista, and the Uptown building recently complete at 17th and Main. Also under construction is Our Heroes Place at Mill Plain and E Street.

Apartments are under construction all over Vancouver in an effort to keep up with an increasing demand. The waterfront apartments and condos are not likely to be in the "affordable" range. The city will have a certain number of units for "affordable housing" as part of development package, but most of these units will be more expensive as this is a desirable location with Columbia River waterfront exposure.

These waterfront and downtown mid-rise and high-rise apartments and condos will be a little more expensive but they will take the pressure off of the rents in more modest apartment complexes that have been pushing the boundaries ever higher on rent. A 2 bedroom 1 bath apartment in a suburban east Vancouver complex was easily had for $600-700 in 2007 at the peak of the market before the big "crash". While housing values plummeted, apartments suddenly became scarce as owners became renters in large numbers. Those same $600 units are now nearly double that amount. I would love to see a little rental pressure release to soften prices in older and less well maintained complexes and put a proper spread between the values of a more luxury complex against a more modest development.

Now that the city has opened up this floodgate of apartments, it is time to open up the floodgates for employers to come in with good stable, high paying jobs. Vancouver USA needs to aggressively go after employers from all over the nation looking to move to the Pacific Northwest. Our area is currently very popular all around the nation, we are a bit of a "hot spot" and this is the time to capitalize on it by getting medium and large employers to locate here.

Having rents moderate a bit will also take a little pressure off the purchase market and that might be a good thing. Inventory has been so tight that buyers are being squeezed to the last drop. A little less buyers would moderate the market and help keep a sustainable appreciation rather than marching towards a "bubble."

Things are looking good in America's Vancouver.

Vancouver's Aggressive Apartment Construction, What does it Mean?

Vancouver is undergoing a major construction boom on apartments with some 800 units under construction and another 3700 in the pipeline. What does this mean for local real estate? The rental market in the greater Vancouver area has been under severe pressure as neighboring Portland has also had a huge crisis in the apartment market. That city is also pushing a fat pipeline of some 7000 units under construction and 15,000 proposed. The Portland crisis has spilled into neighboring cities like Beaverton, Gresham, and Vancouver driving demand higher here as well.

Rents were out of control for several years recently and that helped push the entry level real estate market to the brink of un-affordability. Now with some of the pressure off the rental market the housing resale market will likely settle in a bit. Frankly this is probably a good thing. As it is now, appraisers are a month out and lending may tighten a bit after the election.

Sellers in the entry level market under median ought to sell now and capitalize on a mini-peak in the sub-median market and get that mid market home while these super low rates are still in play. Renters still can buy a small house for not much more per month than the price of a two bedroom apartment. This is still a good time to buy with these low FHA and VA rates in the low to mid threes.