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.

Expect Little Till After New Year

This is that time of year where expectations for real estate activity are low, and should be. What the last two weeks of the year lack in volume they make up for in quality. I have said this over and over, people doing real estate activity during the holidays tend to be very serious and ready to act be they sellers or buyers. I am a firm believer in keeping properties listed through the holiday period.

Meanwhile the 2019 year in real estate should end up with excellent numbers. The supply and demand balance in 2019 for properties in the "meat" of the market was at near equilibrium. The core market locally is in that $350,000 - $550,000 price range roughly 95% of median to 140% of median saw good healthy conditions with demand and supply in near balance tipping slightly towards sellers at the bottom and slightly towards buyers at the top. Below this range it was a solid seller's market above the range favoring buyers.

Despite the feeling of things slowing down, the numbers tell a different tale. Year over year numbers for almost every month were better this year than last. But the energy seemed lower. I believe it is due to the balance between buyers and sellers. Up until the middle of last year sellers were in firm control of the vast majority of the market. Buyers were often frantic, bidding up houses in order to get them into contract. it felt crazy. In the last half of 2018 and all of 2019, that craziness subsided and the only time it appeared was when a lower than market value home appeared on the market.

I personally don't like the low price quick sale approach in general, but it does seem to be working at the moment. Sellers that do NOT need to sell quickly are well advised to price the home at market and be patient. Wait for the buyer that falls in love with the house rather than hoping to get the best price in a quick sale bid battle. Typically sellers often wonder if they got the best price after one of those quick sales. that said in the middle of the price range buyers are becoming a bit more choosy.

This is a healthy real estate market, prices are rising but the rate of appreciation has settled into a sustainable pattern. The prognosis for 2020 looks strong. I do wish all of you a happy holiday period and a prosperous New Year!

Holidays are Quiet, But Opportunity Lurks...

I have noticed the market has entered the holiday zone. Things are quiet... too quiet ;) Sellers should not fret the slower holiday period because buyers tend to be scarce but serious and the opportunity to sell can come in an instant.

I have a client that was thinking about writing an offer on a property that had been listed for a while and not sold yet. Just as the client was ready to pounce, I reached out to the listing agent only to be informed two other buyers made offers and the seller accepted one.

Even in the quiet times buyers are out there and during the holidays buyers tend to be very serious about buying. As I have said time and again, sellers are also serious when they decide to interrupt their holidays to allow showings.

The holidays also tend to knock people off the fence. It's as if a voice inside them is saying, "Let's get this wrapped up for Christmas." Buyers and sellers are often on the same page during this period and both can be a bit more malleable at this time.

December is actually a good month for Real Estate. It isn't a high volume month, but it is an excellent opportunity month.

Great Market, a Few Holes Though

This market is starting to get sizzly again, but like the title above suggests, there are some holes. Most segments are seeing a little bit of a seller's advantage, but aside from the entry level sub $325k market, conditions are mostly neutral. 

There is this one anomaly however. Two story houses with 3-5 beds and 2200-2600 square feet, priced in the 400-500k range are in rather plentiful supply. Buyers actually can kick a few tires and even smack the price around a bit on a mid-priced multi-level house.

Builders are 'all in' on this price range and they are producing them in large quantities. This is dragging down the resale market in the size and price range. While the entry level, mid price single levels, and even some of the upper end ranges are smoking hot, this mid priced two story segment is favoring buyers right now.

The market is screaming for single level houses right now. But single level houses, particularly in the larger size ranges like 2000 plus SF require a larger lot to support the bigger 'footprint'. Builders are trying to stay in a price point that is affordable for enough people to support the development projects they are building. Land has become the most expensive element in our market and so a two story design allows builders to build more houses on the same amount of ground. So we are seeing this play out in the market as hundreds of new houses are coming available and many are priced in the $400-$500k range.

So if you are looking for a "value" in this market larger two story homes in that 400-500k range could be your ticket.

Vancouver Rental Surge Impacts Market

I have reported recently that the rental market in Portland has dropped dramatically. In fact the once red hot rental market in Portland has cooled to a healthy pace as tens of thousands of new units came online in that city. Now the typical rent for an apartment in Portland is LESS than similar rent in Vancouver. Portland median home prices are still 20-30% HIGHER than Vancouver, yet rents are lower.

Vancouver is also on an apartment building binge and thousands of new rental units are coming online here as well, with many more under construction or planned. Presumably this will soften the rental pricing here as well and that is a welcome change; or is it?

High rents makes owning more attractive. It isn't hard to sell someone on the idea of owning a 'real' house for $1700 a month versus renting a 3 bedroom apartment for the same. Honestly that's just too easy. When rents soften up, it is possible that demand for purchase housing will soften up with it.

There has been much reporting about the trends among millennials to rent rather than buy. Most of the data suggests that mobility is the primary concern. That is fine and well, sure most young people are not certain where they will end up. But the older half of the millennials are now in their 30s. They are settling in to that 'good' job. They are getting married and starting families. That is a stability inducing situation that lends itself to buying a home rather than renting.

Additional data shows that millennials are continuing the trend towards smaller family units having fewer children on average than any previous generation of Americans. Builders are still missing the mark locally producing large 3000 square foot homes with four or five bedrooms for a mass of upcoming families with one kid.

The market is desperate for classic "three 2s" and the builders are not delivering. This is why most of the market is a bit flat with very modest appreciation, but the bottom is still pretty hot with multiple offers on 40 year old 1400 square foot ramblers.

This is a great time to sell your classic ranch house and step up to that larger house or country property if that is your desire since the little rancher will get top dollar and the sellers of larger homes and rural acreage are softened up ready for a discount offer.

 

Market Nearing Neutrality

Our market continues to see new inventory and this is softening the seller's advantage across a variety of price ranges. Even the median price range is offering a larger selection for buyers. Locally it is only the sub-median that remains a strong sellers market, but I am seeing some resistance to high prices even in that tight market.

Pressure in the Vancouver market is still largely external. Portland, OR is still a bit tighter on inventory and is seeing price pressure upwards albeit at a slower pace. Many would be Portland buyers are looking at Vancouver as a nearby alternative. Vancouver has a variety of neighborhood styles, many that resemble popular Portland neighborhoods.

Clark County also offers up a bit of suburbia as well as a bit of country living which is all but Absent in Multnomah County.

The external market forces are keeping Vancouver and Clark County on a modest pathway in median home price appreciation but things are relatively flat compared to the steep spike of a the last few years.

Many projections are flying about from the usual suspects about growth in pricing locally and many have revised things to a much more sustainable 3%-4% for the next year. Clark County continues to add new construction units in both the rental and sales inventory. Vancouver is adding thousands of units across the entire rental spectrum from luxury riverfront apartment properties at $5000 a month to more modest properties with income restrictions in the sub-$1000 range.

Some analysts are a bit concerned about the Millennial age group as that demographic seems more likely to prefer renting than owning and that is a new twist in America's age old "dream." This coupled with increasing inventory could soften the market even more for 2019 possibly throwing us into a full neutral sales condition in the first half of next year.

Business insider had a detailed article about Millennial home buying here. 

Labor Day is Here.

Labor Day marks the unofficial end of summer. Locally the mercury won't notice as we are expecting some very warm temperatures this weekend. As for real estate, this marks the end of the summer seasonal peak for home activity and that means buyers that have been struggling to find a suitable property in their price range may get a little relief.

No we are not going to suddenly plunge into a buyer's market, but it is moving from a strong seller's market to a weak seller's market and that bodes well for frustrated buyers. The back to school time also tends to put some buyers in a holding pattern. Those buyers will to stay in the hunt may find substantially reduced competition from other buyers and sellers that may be willing to work on price or concessions that a few months ago were nigh impossible to negotiate.

Buck up buyers, this could be your moment. Enjoy the holiday weekend, stay cool, and don't give up, there is a home out there.

Local Realtors are Invaluable Assets

I am meeting with new clients this weekend about selling their lovely home. The odd thing is that they just bought this home a few months ago. I do not have all the details as of yet, but I do know that my new clients bought the house site unseen and moved here from 900 miles away. They utilized one of our national consumer real estate websites to buy the home and the listing agent's office was in Seattle 160 miles away from here.

I won't opine any further on this specific case, but in general my belief is that national websites such as Zillow, Redfin, Trulia, etc. are excellent tools for people searching for homes especially when looking at far away destinations. That is where their practical benefit ends however. There is no substitute for a local pro that understands the nuances of neighborhoods and the other important issues that face homeowners in a new region.

Once a buyer thinks they have narrowed it down to a few homes they want to see, or even offer on, a local pro should be contacted other than the listing agent. It is important not only to have a local agent that understands the local market, but also an agent unaffiliated with the seller. A listing agents greatest obligation is to the seller for which he has a signed contract with statutory language. The listing agent will pay the buyer's agent commission so the buyer is in much better shape using their own agent.

It is important to take the time to ensure you are buying the best house for you at the best price possible and with favorable terms. Buying a home and then having to sell it three months later is rarely a profitable exercise. Buyers need to be sure they have all the proper information before buying a house.

If you find a home on one of the national websites, there are usually buyer's agents listed. Sometimes there will be a preferred or premier, et al. agent. These agents have likely paid the company money for placement. There may also be a few random agents listed that have a profile on the system and list that area as their area of expertise. Be sure to visit the agent's profile before contacting them.

There is no better asset to a home buyer than a local professional looking out for the buyer's best interests, not the seller's.

Selling in the Mountains in the Winter

Snow on ground at 850 feet, no snow in Vancouver on this day

Here in Clark County we have many neighborhoods scattered throughout the Cascade foothills. Some subdivisions have houses bumping right up against 2000 feet above sea level. In general once you get up above 1000 feet, winter weather is more... well... wintry. Sellers need to be aware that selling property in the foothills up higher than a 1000 feet is not going to produce many showings during the winter months. It is important to maximize the showings by following good showing tactics. Keep the home warm and bright and keep snow clear of the walkways and driveway. But capitalize on winter themes. Often buyers looking up in the mountains during the winter want to have real winter weather. Keep that fireplace stoked and feel free to build a snowman!

Down in the valleys of Vancouver and Portland snowfall is far less common than rain. Locally Vancouver averages about 6 inches a year at Pearson field. But averages are deceiving. There are years that have no snow at all and others that have heaping amounts. Meanwhile, up in the mountains things are more defined. Above a thousand feet it is not a case of if it snows, but rather, how much snow will there be.

Buyers should keep this in mind as well. Many people are looking for a rural home on some acreage. As one moves east generally things start to climb in elevation. Clark County's entire eastern flank is the Cascades with elevations rising up to about 4000 feet before spilling into Skamania County.

When seeking a home up at elevations in the 1000-2000 range which is about as high as you'll find a home in the county, there are a few things to consider. Most higher elevations above 2000 feet are part of the Washington State DNR or the Gifford Pinchot National Forest which do not contain developed neighborhoods.

East County Snow Routes

An important consideration is the property's location relative to primary and secondary snow clearing routes. There are two types of snow events that effect the entire region from sea level to the mountains. The fairly common light snow events in which 1-3 inches of snow accumulates in the valleys and 3-6 inches in the mountains. And then there is the 'snowzilla' events that happen about twice per decade and bring heavy snow across the entire region with days or weeks of cold weather.

Since those monster events are so rare, the county keeps a modest amount of equipment for winter snow removal. Usually most snow events are well handled by the county crews. Those 'snowzilla' events however, will leave the roads snow covered and dangerous. The primary and secondary routes are important if home buyers do not wish to traverse hard-packed, snow-covered roads on a regular basis. Clark County has a published chart showing the snow removal routes for rural areas.

Consider carefully properties that are more than a quarter to half a mile off one of these snow removal routes as travel can be perilous in the mountains when it snows. Remember it may be raining in Vancouver and snowing up in the foothills.

Additional families with school age children should consider school district rules for snow. Generally a wide spread snow event with even modest amounts of snow can trigger a school closure. For mountain dwellers however there will be many days in which schools remain open because it's raining in the valleys and snowing up high. On those days, school buses often run special "snow routes". These will keep buses off the steep terrain and require that parents get the kids to the snow route bus stop on their own. These are things to consider when buying a home above 1000 feet.

It should be noted that most of the time areas between 800-1200 feet don't get huge amounts of snow all at once unless it's during one of the every five years 'snowzilla' event. What happens up around 800-1200 feet is that there is simply more snowy days. 1-2 inches in Vancouver might equate to 3-5 inches at 1000 feet. But there will be 3 to 4 times as many snowy days and as the elevation rises so rises the number of times per year snow falls. Also up above 1000 feet the snow tends to stick around longer than it does down in the valleys.

I would like to note that none of Clark County's incorporated urban areas exceed 800 feet in elevation. The high spot is probably Prune Hill in Camas at just under 800 feet. It is the rural country areas in the Cascade foothills that can be up close to 2000 feet. Buyers worried about snow but looking at traditional suburban or urban neighborhoods need not worry about heavy snow outside of the rare events.

Bottom is still tight, the rest of the market is settling in.

This article from last year is still resonating in the current market. The prices are all up about 10-12% from the time when this was originally published but it still seems to be the case that the bottom of the market remains tight on inventory and flush with eager buyers. The middle and top however are actually close to a neutral market only favoring sellers a little bit.

Houses under $250,000 are still pretty hot and under $200k it is nigh impossible. As the buyers look up the price ladder they will find less competition in that $350-450k range and that means sellers have to try and play ball.

Originally published, January 9th, 2015, by Rod Sager

"Have you felt trapped in your house over the last few years? Biding your time waiting for the real estate market to correct so you can sell? 2015 may be the year for you. Over the last two years here in Clark County we have seen a roughly 20% increase in the median sale price. Many people that were not able to sell now may find themselves in a positive situation. We very well could be at a turning point of opportunity. For people that are making a move up in price, selling their less expensive house now for a slightly lower amount than they might get next year could prove advantageous. The more expensive house they want will also likely be more expensive. So selling a small house for less to get a big house for less sometimes makes sense.

I saw prices on entry level houses flatten a bit in the second half of 2014. I believe that the market for the 40 year old 3 bed 2 bath home is just about as high as the economy will support right now. Barring any dramatic improvement in the overall economic condition 2015 is a great time to sell an entry level home. Where the market continues to see improving prices is that middle move up. Last summer I ran into situations where a simple 1400 foot ranch home would sell for $220k and a gorgeous 2100 foot home in the same area was fetching just 10% more. I believe that the gap in those market segments should widen this year as the entry level could be flat and the middle will continue to swell in values. Selling the little house to get a big one is prime for 2015. Some people may even find that their house payment is only marginally higher since rates are quite low right now.

Generally a real estate market rebound will begin at the bottom. The bottom of the market can drive the middle. If the bottom is soft so will the middle be. When the bottom begins to move up in value the middle is going to trail behind for at least six months. So that leaves a window to move from the bottom to the middle with the move up house feeling like a bargain. Once the bottom hits the high plateau then there is only a six month window of opportunity to capitalize on the middle lagging behind on growth. This is the gap between the market segments. As an example, entry level homes that were fetching $160,000 two years ago are now selling for $200,000. But the middle houses that were getting $220,000 two years ago are running about $260,000 now. The 25% gain at the bottom and a 16% at the middle translates into a relative deal for the move up buyer. This year there is a good chance the $200,000 house will only rise a little maybe to $210,000 but that middle market is showing signs of activity suggesting the 260,000 house will get to $285,000 this year. So holding out for an extra ten to buy a house that will cost an extra 25 may not be the best approach.

Keep an eye on the real estate trends. Have your favorite Realtor® send you listings so you can keep your finger on the pulse of the market. I can only see trends, I am no Nostradamus, so anything can happen. Real estate is however a very trend based market and it typically follows modestly predictable patterns. Let me know if you have any questions and feel free to comment below."

Buyers Need to be READY!

Buyers are facing the dilemma of missing out on houses. The Realtor® sends them a prospective listing, they look it over and call back in the morning only to find out it already went pending! When they finally get inside a home and make an offer they often get outbid. It can be frustrating. This market is so hot right now our local MLS now offers hourly email updates for us Realtors® to send out automatically informing our clients the moment a new listing meeting their criteria hits the system!

Buyers have to suck it up if they want a shot at their dream house because this market is most unforgiving to the lackadaisical buyer. According to the local MLS roughly 650 residential properties closed in May (some may not have been updated yet) and of those 314 were on the market less than 10 days.

Waiting for the weekend, may not always be the best option. Buyers should also be ready for sellers that are not very responsive. I have wrote about this foolish phenomenon but it is happening. Some sellers have gotten cocky. They only hurt themselves, but none the less buyers need to persevere to get the home they want. Heck, perseverance is needed to get any home right now.

Worry not buyers, inventory will start to come back and things will settle down, buy in the mean time be ready to pounce and ask your Realtor® about hourly updates :)  

Holidays are Here, You can Still Sell your Home!

Every year I have this conversation with my sellers. If sellers are willing to tolerate the intrusive nature of listing a home during the holidays, it can pay off with handsome rewards. My experience is that the volume of buyers drops off during December but the number of listings tends to drop more. I see a great deal of "withdrawn" listings begin to appear around Thanksgiving and through the New Year. These are likely sellers that wish to have some peace and tranquility with their families during this period.

The buyers that remain during this time of year tend to be serious about purchasing a home.The looky-loos are at office parties and family gatherings. With a temporarily tighter inventory, and serious buyers, the opportunity for sellers is magnificent. There is no sugar-coating the facts here, selling a home requires a great deal of effort on the part of the homeowner. The home needs to be kept tidy, it needs to be available to show on short notice, and the seller can anticipate a fair number of showings.It will be disruptive, but it will likely be profitable.

As I always mention every year as our weather turns wintry, follow a few key rules to keep a listed home appealing and safe. Keep leaves clear of the rain gutters and off the sidewalk, walkways, and driveway. Keep snow and ice clear of the driveway and walkway as well.If the home has a fireplace, have a fire going during showings and if you like to bake, bake something. One can also find lovely scented candles to add a warm and enticing feel to the property.

Have a great holiday season!

Thanksgiving in Six Days? Yikes!

Sellers often choose to forgo listing their home until after the holidays. It is understandable since most of us would like to take this time of year to spend with family and such. Having a home on the market can be most disruptive. But inventory remains tight, especially in the bottom half of the price range.

People that are out looking for homes during the holiday season are generally pretty darn serious buyers. Looky-loos and tire-kickers are doing the whole holiday thing. Having a home listed during the holidays can yield strong offers from serious buyers. Really, who is out in the rain and snow looking at houses when they could be inside hanging out with family and friends or at the company party? Real buyers, that's who!

I have offered up tips in the past about prepping a home for a holiday sale, you can look through the archives of Novembers and Decembers past to find useful information on the matter. In general, keep the clutter to a minimum, keep the leaves off the walkways, out of the rain gutters, and off the drive way. If it snows, be sure to keep snow and ice off the walkways and driveway.

Keep pet orders under control. Burn a scented candle with a holiday theme, bake some cookies, and if possible have a fire going during peak showing times. Some people are looking for a very specific house. If your house isn't it, then chances are no amount of warm and fuzzy presentation will sway them. But most buyers are less picky. If your house feels like home, they might just write it up!

I find buyers to be more focused and serious about their purchase during the holidays. Sellers are wise to keep that in mind when making the decision about whether to list now or wait till next year.

Happy holidays, may yours be warm and fuzzy all around.

Low Interest is keeping Upward Pressure on Home Values

The market continues to move along at a healthy pace. Here in the Portland-Vancouver Metro Area values seem to be rising at a pace of 5% to 10% year over year. Local fluctuations and market conditions can vary a bit from neighborhood to neighborhood. Low interest rates will always help drive sales in real estate and robust sales will typically lead to increased price pressure on buyers.

Inventory remains tight and many would be sellers seem to be waiting before they list. Holding out for more money? Waiting for equity position to grow so they can make their move up? Still upside down from the crash? All of the above my friends. Buyers are going to continue to feel the pinch of higher prices so they are well advised to consider whether waiting any longer will benefit them. In general this pace of say 7% price appreciation will almost certainly outpace income growth. Some people might be waiting on a career promotion which could launch them into a much higher income, but for those in a job with a steady rate of growth, buying now will make more sense than waiting.

The median price in Clark County, WA is now pushing up above $260,000 and that could easily make its way to $300,000 over the next few years if this trend continues. Sellers should also consider the benefits to selling now rather than waiting. Whatever home will replace the current home will be more expensive later. Those that are downsizing may wait to gain a larger down payment for the next house. Those that are moving up however will only get further behind the longer they wait. The three bedroom starter home is in seriously high demand right now so the move up seller should get listed now before that larger four bedroom house slips out of financial reach. No one knows what tomorrow will bring but we do know what is happening right now; that is low inventory and lot's of hungry buyers.

Seller's Keep Your Home Cool!

It's hot outside. All across the fruited plain, this is the warmest time of year. As we begin to celebrate our great nation's independence seller's should remember that an uncomfortable buyer will stick around in the showing to soak up the nuanced greatness of your home. To put it another way, buyers are not interested in purchasing a home that feels like a sauna or steam room. For crying out loud if you have A/C use it! Buyers will linger in the glorious bounty of a cool home when the mercury outside is popping those 90s. Sellers need not cool the house to ridiculous expense. Even a setting of 78 degrees will provide a comfortable recompense in 90 plus heat.

No A/C? No problem, sellers need to follow those classic cooling tips. keep windows open till the temp starts to get warm. Then close up the house and run the furnace fan (if you have forced air) or ceiling fans, etc. In the evening when the temperature settles down, re-open the windows to bring the cooler evening air in. Furthermore, if blinds horizontal are employed in the home, angled them down towards the ground at about a 45 degree angle. (further south in California they can be at 20 degrees) This blind trick allows indirect light to enter the home but keeps direct sunlight from hyper-heating the house. On all but the hottest days this should suffice to keep the home bearable.

I know some sellers and agents are thinking it's a seller's market so why do all this effort. Buyers are still picky and they won't buy a home that makes them feel uncomfortable. Nor will they stay in the house long enough to determine if it is a good home for them. In a seller's market the same rules apply, the more presentable and attractive the listing, the more money it will yield at closing.

Happy Birthday, America! You're a spry 239 years old tomorrow.

Buyers Want it Move-In Ready

I have broached this subject before and I'll do it again. The market is robust but buyers seem to be gravitating towards the well maintained, fresh and ready homes. I have a listing that is 40 years old and pretty clean but needs some minor maintenance. The buyer is playing hard-ball on the inspection. This is not something one would expect in a so called "seller's market". But our seller's market has the caveat that the seller have a nice move-in ready home.

Seller's with the fixer or needs TLC home would be well advised to clean up the property prior to listing in this market. Sometimes sellers may not have the resources to do that so they need to be prepared to take a hit on price. This market is good but it has its limits.

Locally the new home construction market seems to be booming. This tends to support the idea that the current buyers in the marketplace are supporting the move-in ready house. Brand new of course is about as move-in ready as it gets.

It also seems that inspection reports are being heavily scrutinized by buyers. This is a good thing for buyers but can be challenging for sellers that are not in a strong financial position. It is always a good idea to give any listing as much 'curb appeal' as possible. When prospective buyers drive up the house should shine and the first room in the home, the entry and the kitchen should sparkle.

This is a solid and healthy market and both buyers and sellers can benefit from the current conditions.

2015 Becoming a Serious Seller's Market

I wrote this post late last year that 2015 could be the last chance to snatch up a "deal". Things seem to be leaning towards a full throttle seller's market. There are still great opportunities to buy but mainly due to great interest rates. Remember buying a house in an appreciating market means that equity grows faster.

Originally posted 12/26/14

That headline should have got your attention. We have seen modest to robust appreciation across the USA over the last two years in the real estate market. The mortgage rates have been ranging from really low to ridiculously low and the economy has been slowly moving towards full recovery.

This has kept real estate as a value. Prices have run from the basement in 2010-11 rising to the point now that they are about where they were in 2007-08. Rates are the real story however. They unprecedented long run of sub 6% rates has kept housing active despite and overall economy that has run from dismal to fair.

2015 could represent a turning point however. If this economy gets into full swing, we very well could see the Fed back off the loan guarantees and rates could end up where they really should be in the 6% range. Coupled with the last two years of appreciation that would move the home affordability index much higher and lock out many buyers that can buy today but couldn't with 6% mortgage rate.

As an FYI 6% is still a very good rate and well below the 50 year historical average of 6.8%

Buyers should take care of their finances and get ready to buy in 2015 if they want to secure a housing "deal". The deal may not be so much a price deal but a rate deal. I have said it many times before and I will say it again here, rates kill buyers much more than price.

2014 has shown us that the entry level clean house was king. These little 1400 square foot 3 bedroom 2 bath homes have pushed up towards the $200,000 in the local market while just 10-15% percent more money buys a house nearly twice as large. These low rates have brought out the entry level buyers in force. Any upward movement in rates will "thin the herd" at the bottom and that could mean a serious appreciation slowdown at the entry level. I have seen the starter houses already showing signs that the economic ceiling has been reached. The middle however should continue to move up in appreciation with a modest but healthy rate of growth.

The real estate market doesn't just move in broad based motions. There are subtle differences for neighborhoods, price ranges, style, etc. Prices can be moving up in mid size house while remaining flat at entry level. That is my prediction for 2015 if we see interest rates move up into the 6% range. The market a few years ago allowed two minimum wage earners to buy the median priced home in our local market (Washington minimum wage at $9.32/hour). That is off the table now and that means a lot of buyers can no longer afford a house. This is why the bottom of the market has seen a leveling on appreciation. As the economy ramps up, middle income earners are getting back on the job, better wages, etc. that will help push the gap between entry level and mid-level back into proper proportion.

I believe the value proposition for 2015 will be in the upper middle and lower high end homes. Locally that means $350-500k. That is probably where the "deals" will be found. I am no Nostradamus, but that is where things appear to be headed. 2015, it's time to jump in. 

Real Estate Photos are More Important than Ever Before

One of the things that chaps my hide as a Realtor® is finding listings on the MLS with lousy pictures. Sellers are paying real estate firms a handsome fee to market their homes. I understand some "discount" brokerages that offer limited service, but I am talking about traditional "full service" brokerages. I come across full service brokerage listings with crummy photos made with a phone. I have even seen, albeit at a lesser frequency, high end homes with poor quality photos.

Today's buyers are more likely than ever to utilize public online real estate services prior to actually engaging an agent. My friends, Google and the National Association of Realtors® performed an extensive study that showed an amazing statistical fact that cannot be ignored. 90% of home buyers shopped or researched homes online during their home buying process.

Sellers, can you afford to have your home look shabby with poor photos when 90% of the buyers are looking online? A quality Realtor® will either utilize good camera gear and make quality images of their listings or they hire a photographer to do so. Sellers are well advised to insist their real estate agent provide quality photos. If the agent can't deliver on the simple idea of presenting a property well to marketplace, then that agent is not the seller's best choice.

As a Realtor® that participated in 30 closings last year, I can say bad photos are often hard to overcome for buyers. I often look past poor photos and will preview listings that have bad photos. I find these homes to be opportunities for my buyers to get a value. Listings with poor photos will get shown less often. Less showings means a longer marketing time. More time on market substantially increases the chance a seller will take less for the home. This is good for my buyers, bad for the sellers.

Manufactured Home in Park
$55k sold in a month!

This is not to say the Realtor® needs to hire a high end photographer that charges hundreds of dollars, but they can either invest in good gear or hire an reasonably priced photographer. They are out there charging less than $100 for a good set of listing photos. Photos should be well exposed with properly controlled lighting and sharp detail.

The photos need not be masterpiece museum quality. Just clean, clear and sharp. The home shown here was a property that was difficult to sell. Manufactured home in park and at the top of the price range. The photo isn't spectacular but it is well exposed, clean and sharp. It makes a difference. Too many agents fail to take good photos, especially with the less expensive listings. All listings deserve to have a great set of photos.

Sellers should also insist that the listing agent utilize all 16 MLS photos (Local limit is 16). Raw land and one room flats may take less but a traditional house should have a full set of interior and exterior photos. Failing to show the interior will conjure up visions of dilapidation in mind of the buyers. They will assume the interior is so bad the Realtor® didn't want to show it.

Sellers should insist upon great photos because today's buyers are discriminating and 90% likely to find the home they buy online whether sent by an agent from the local MLS or on a public site! Photos are more important than ever before.

2015 Could be the Last Chance for Deals

That headline should have got your attention. We have seen modest to robust appreciation across the USA over the last two years in the real estate market. The mortgage rates have been ranging from really low to ridiculously low and the economy has been slowly moving towards full recovery.

This has kept real estate as a value. Prices have run from the basement in 2010-11 rising to the point now that they are about where they were in 2007-08. Rates are the real story however. They unprecedented long run of sub 6% rates has kept housing active despite and overall economy that has run from dismal to fair.

2015 could represent a turning point however. If this economy gets into full swing, we very well could see the Fed back off the loan guarantees and rates could end up where they really should be in the 6% range. Coupled with the last two years of appreciation that would move the home affordability index much higher and lock out many buyers that can buy today but couldn't with 6% mortgage rate.

As an FYI 6% is still a very good rate and well below the 50 year historical average of 6.8%

Buyers should take care of their finances and get ready to buy in 2015 if they want to secure a housing "deal". The deal may not be so much a price deal but a rate deal. I have said it many times before and I will say it again here, rates kill buyers much more than price.

2014 has shown us that the entry level clean house was king. These little 1400 square foot 3 bedroom 2 bath homes have pushed up towards the $200,000 in the local market while just 10-15% percent more money buys a house nearly twice as large. These low rates have brought out the entry level buyers in force. Any upward movement in rates will "thin the herd" at the bottom and that could mean a serious appreciation slowdown at the entry level. I have seen the starter houses already showing signs that the economic ceiling has been reached. The middle however should continue to move up in appreciation with a modest but healthy rate of growth.

The real estate market doesn't just move in broad based motions. There are subtle differences for neighborhoods, price ranges, style, etc. Prices can be moving up in mid size house while remaining flat at entry level. That is my prediction for 2015 if we see interest rates move up into the 6% range. The market a few years ago allowed two minimum wage earners to buy the median priced home in our local market (Washington minimum wage at $9.32/hour). That is off the table now and that means a lot of buyers can no longer afford a house. This is why the bottom of the market has seen a leveling on appreciation. As the economy ramps up, middle income earners are getting back on the job, better wages, etc. that will help push the gap between entry level and mid-level back into proper proportion.

I believe the value proposition for 2015 will be in the upper middle and lower high end homes. Locally that means $350-500k. That is probably where the "deals" will be found. I am no Nostradamus, but that is where things appear to be headed. 2015, it's time to jump in. 

Some Sellers are Reaching for the Heavens

2013 saw a robust increase in housing prices. In fact the median price rose 12-15% over that year. 2014 has seen a dramatic slow down in the rate of increase however. It is likely that this year will end up somewhere in the 3-5% appreciation range. This is by no means a negative. Appreciation is one of the core values to owning real estate. I believe we still have the same seller's market conditions as we did last year but prices are being held back by an overall sluggish economy. Sustained double digit growth requires a roaring economy. We haven't heard an economic 'roar' in quite a while. We are seeing a bit of a 'purr' however.

Some sellers in the market place are beginning to price their listed property 3-5% above the market. That tactic worked last year but is not a winner in 2014. Buyers are plentiful but they are limited to their financial ability to borrow money. Sellers that overprice their homes in this current situation will likely do nothing more than delay the sale of their house. The trick in this market is to have the home between 98-102% of market value. Above market should be for a truly move-in ready, updated or modern home. Bear in mind that some sellers are overpriced out of necessity. Many homeowners that bought near the top of the market found themselves horribly upside down and are just now closing in on positive loan to value. Sometimes overpriced listings are driven by greed and sometimes by financial necessity.

Buyers need to recognize that these move-in ready modern or updated properties will fetch high prices and if they are under market they will likely get over asking offers. A good buyer's agent is critical in these kinds of modest growth markets. An experienced agent can help buyers determine where to come in on offers to get the best deal possible and still acquire the home.

The most important thing to keep in mind is the mainstream media. These guys love to take subtle changes and turn them into a catastrophe or a rampaging bull depending on the conditions. In most cases things are much more modest than the big circus media makes them out to be.

Despite the current "seller's market" it is still a good time to buy a home. Low interest rates and modest appreciation still favor buyers. This current real estate market is very healthy and favors both buyers and sellers. Get out there and find your dream home.