Is the market tightening up again?

Maybe this is nothing more than an anecdote, but our real estate market last year really felt like it was moving towards neutral conditions. But the market has come out a bit hot in the first month of this year with more buyers and not much extra inventory for them.

Now if you have the coin to toss around for something in the $600,000 plus range, you should have no trouble finding an eager seller. But down in the 'trenches' of the mainstream, things seem a bit tight and sellers are starting to take control again.

Perhaps the fact that interest rates are again dipping down into the 3's for well qualified borrowers, the buyers are swarming again! What ever the case, it will be interesting to see if the spring listing season levels the playing field or is met with an equal dose of hungry buyers.

Marketing trends seem to indicate that inventory levels are steady at a quick clip of around 2 months to a pending sale. Well priced homes will see bidding and overpriced houses may sit, but this market decided that 2020 was gonna be a 'thing.'

Buyers ought check in with their loan officer and make sure they can capitalize on these reduced rates and sellers should get ready for more showings because things are looking good for Q1.

Inflated Local Rents, Drive the Purchase Market

As we move into the spring season our local market is primed to out perform the national market due largely to our puffed up rental market. a recent article in the Columbian newspaper showed that average Vancouver, WA 2 bedroom apartment rents were on par with Seattle and noticeably higher than neighboring Portland, OR. What is odd about this factoid, is that both Portland and Seattle have significantly higher median home prices than Vancouver.

Renting in Portland is far less expensive than buying, but in Vancouver it is actually cheaper to BUY than rent and that is rather anomalous for this region. This may be a fleeting moment however as a massive construction boom is underway with more than 7,000 new apartment units scheduled to come online over the next 12-18 months in Vancouver. Portland had a massive construction boom as well bringing some 20,000 units online recently or in the near future.

Over the last 5 years national trends among the millennials was to rent rather than buy and in fact that generation of Americans has had the lowest rate of home ownership in the post war era. That trend seems to be reversing and new reports show millennials are jumping in to the real estate market at rates not seen before.

I still believe 2019 will have modest growth rather than the robust seller's market conditions of 2016 through mid 2018. All things considered, millennials have market making potential just in their shear numbers. They represent 80 million Americans and are now reaching there prime earning years, the next several years should bring reasonable housing demand, but builders need to get ready to change their direction. The trend locally in new construction has been aimed at retiring baby boomers with one level homes. Other builders are still focused on large expensive homes as well and data suggests millennial buyers are not interested in 5 bedroom houses. This younger segment is having fewer children and is driving a bit of an urbanism movement.

Millennials are interested in modern design, energy efficiency and good use of space. The market is healthy and remains mostly neutral with a slight advantage to sellers in the 120% of median an lower market. Sellers of more expensive homes are at a slight disadvantage.