Classic Rules, still Classic!

I'm away on vacation but this past article still rings true!

Originally posted November 9th, 2018, by Rod Sager

Yes the classic rules of location, location, location, and 'curb appeal' are back. Those rules never really went away, but when the inventory was so tight that buyers had to take what they could get, those rules were temporarily ignored.

Inventory levels are starting to return to a more healthy level and that means buyers have choices again. Classic issues like, facing a busy street, outdated, functionally obsolescent design, or bad location are now affecting the price in a more traditional fashion. Some sellers and even some agents, have yet to realize this.

Getting top dollar for a house requires several things to happen. The house must have broad appeal in the market. Great location, quiet street, well maintained, excellent curb appeal, fresh and updated feel, clean and tidy appearance, etc. This brings the most possible buyers to look at the house and then of those one will like it the most and reach a little deeper to buy it. When some of these appeal factors are missing, fewer buyers will look at it, of those that do many will pass on it, leaving a small demand left. That leads to a lower price.

The items I mentioned above are not the only factors, but most of those are controllable. The home owner can't control the location, nor the street, but the others are well within the sellers reach. This market will not tolerate a sloppy house, buyers have choices and they will either pick the nicer house or low-ball the ugly one. Sellers are well advised to spend some effort making their property look as warm and inviting, positive curb appeal, and as fresh as possible.

We are in the transition to a neutral market and neutrality is healthy and sustainable.

Multiple Offers are not Gone...

Well the old rule that a well priced house will get offers in any market holds true. Conditions have moved into neutral territory but a nice little 1400 foot ranch style came up a few days ago and got four competing offers within a day or two. This house is situated right in the thick of the hot spot in the market at around 300k. Clean and tidy, doesn't need a lot of work, move right in. These are the properties that are selling, these are the types that still get multiple offers.

Although buyers in general are taking their time, these types of move in ready sub-median homes are hard to find, and when a nice one pops on the MLS the Realtors® swarm about. Buyers looking for a "deal" will need to look at properties with some special needs. Light fixers are not getting snatched up lie they were at this time last year.

Sellers are wise to spend a few pre-sale dollars to spiff up the house before listing it. Fresh paint and a minimalist look inside will go a long ways in this market. Sellers however ought to be careful not to overspend or over improve their home. One should never be too much better than the rest of the homes in the neighborhood. That is sound advice in any market.

The market continues to favor one level homes or master on the main and tidy homes with a bright look and feel as well as tidy and well kept. These are the properties do the best.

Although most listings are likely to sit around for a few weeks, properties that hit the "spot". Clean, well kept, light and bright, open and minimalist decor, under the median will go quick.

Prepping for Fall

Autumn is here! Officially it starts tomorrow but hey pretty close, right? Those wonderful deciduous trees are just aching to drop a heaping mound of leaves all over your yard, roof, car, and lawn. Although autumn can provide a warm backdrop for you property it is wise to make sure you keep the leaves off the walkways to avoid slipping by you or the people thinking about buying your house.


Autumn is truly magnificent but homeowners need to keep those leaves out of the gutters and off the walkways. Even if you are not selling your home the plugged gutters can lead to damage on the roof, siding, gutters, and even the foundation as the ambulatory nature of water can lead to moisture in places you may not expect.

For home buyers, the fall can be an opportunity to take advantage of sellers that failed to sell in the summer and are ready to look at offers that may be a little less than asking. For sellers bringing a new listing to market, there may be a few less buyers in play but their is generally a lot less listings relative to summertime.

As we approach the holidays, both buyers and sellers tend to be serious about making a deal. Otherwise why would they bother during the hustle and bustle of the holidays?

Local market trends still remain flat. New listings are outpacing new buyers but not at a rate that will quickly turn the market from sellers to buyers favor. In fact I'd say there is still a slight leaning in favor of sellers across most local segments. I like these neutral to near neutral markets. Everyone really has to put their best foot forward on both sides of the transaction and that tends to favor all parties.

Enjoy the very last day of summer and get ready to watch nature's living fireworks. Autumn is on deck.

Market is settling in

I like a more calm and sensible market. When the market is at one extreme or the other, the greedy side of humanity can sometimes rear its ugly head. 6 years ago when the market was down and sellers were desperate, buyers could kick the sellers in teeth with the swagger of an old west outlaw. Then as the market turned into gold the sellers got revenge as the 20016-17 market was difficult for buyers. Sellers tactics were often skirting the fine line of ethics.

Now we see a market that has settled in a bit. Values are still on the rise, but inventory has also risen bit. The median priced home throughout the Portland-Vancouver metro is now barely affordable by the median income earner. This has led to a more sensible market.

We are not in a declining situation but rather the rate of growth is just a little slower. We will probably experience a modest and more "normal" rate of appreciation this next year, perhaps in the 4-6% range. This represents a very healthy and sustainable market. These jack-rabbit hops in prices due tend to create bubbles when they last too long. I am relieved to see than the run up in values has subsided and we are calming the pace to sustainable levels.

Zillow Graph for Vancouver, WA

Buyers should beware however that strong economic conditions in the future could lead to another 'hop' in a year or two. I am not a modern Nostradamus however so who knows what the near future holds. What we do know is that things have indeed settled in and that is actually good for everyone in real estate.

Open House Season is Upon Us

Well my friends it is March! But I trust you already figured that out. March here in the Pacific Northwest is a very fickle month. It can be an extension of winter or an entrance for spring. Sometimes it's both. In real estate it tends to be the month that things begin to pick up in advance of the traditional summer home buying season.

For sellers it is time to start prepping for that spring curb appeal. My lawnmower has spent the last 4 months hibernating in the garage; but at some point this month, it will likely make its first appearance of the year. Springtime tends to get people in a good mood. Buyers that have been frustrated with the tight inventory and multiple offers on overprice listings may start to soften up and start looking again.

Who doesn't like taking a spring drive to look at houses on that first sunny and warm weekend? I love that first true Spring day. We had a tickle last month when 60° popped up in the thermometer. But March can and may bring us an extended stretch of nice weather. That will bring the buyers out of the dark-gloomy-funk they tend to fall into in Winter.

Sellers still need to exercise basic principles in real estate marketing even in this "seller's" market. The better that house shows, the more likely it will fetch the highest possible price. The buyers will come out of the cave, and sellers need to be ready. Get that mower ready for the first warm weekend and spruce up that bleak winter yard. Spring is coming and real estate waits for no one. Get ready we will sell some houses this year!

Autumn Is Near

Ah September, the waning days of summer. Here in the Northwest, Autumn comes quick. We can feel the temperatures plummet as fall approaches in the middle of September. Soon the leaves will turn and fall off the trees. For people selling homes in the Autumn it is important to keep the driveway, side walks and rain gutters free of leaves and debris. Slippery and messy leaves are both an eyesore and a potential hazard.

Leaves look beautiful when they first fall on the ground. All those brilliant colors scattered about, make for a storybook setting. But quickly the rain and wind will break them down into a mushy mess. Curb appeal is important and sellers are advised to keep the home as tidy as possible.

On the sales side of thing, this can be a good time to buy. The rush of summer buyers starts to wane a bit and less competition is always good for buyers. often sellers are motivated to get their home competitively priced if it failed to sell over the summer. yes even in a robust buyer's market like this one, sellers sometimes price their home a little too optimistically and find themselves in a September slump. This could be a buyer's opportunity to strike.

Sales in out local market seem to be nearly identical to last year with the exception of prices running about 8-10% higher. The market has been more of a lack of sellers than a flurry of buyers and that doesn't look to be changing anytime soon. Medium demand and very tight inventory is still the state of affairs in the Clark County real estate market.

Summer Real Estate Trends

Local trends in the market place show a continued healthy market here in Clark County, WA. July showed a slight dip in sales but new listings stayed a bit flat so that gave us a much needed boost in inventory. It was not a big boost but it helps. With 2.1 months available it is still tight and the market still favors sellers. I am finding that the multiple offer feeding frenzy is occurring less often and only on homes that are really well priced. Agents marketing homes at close to fair value are seeing quick turn around but not the craziness of a month or so ago. Sellers looking to puff up their price are finding some market resistance.

This my friends is what a healthy market looks like. Well priced listings attract multiple offers, properly priced listings go pending in less than a month, and over priced listings dangle in the breeze until the market catches up to the puffed up price. 

Clark County is sitting at a median sales price of just over 300,000 and growth is showing about 0.4-0.5% monthly gains, which is a healthy annualized number of about 5-6%. Anything higher is not sustainable.

Builders continue to produce new homes, The modern trend of big house on small lot continues as land values and increased state and local regulations push costs higher on land development. Homes in the sub-median price ranges will continue to see robust activity and multiple offers. Above median still seems to be a healthy market with a leaning towards seller favor between the median and $450,000, swinging to neutral from $450k to $750k and still favoring buyers, although only slightly, once above $750k for the most part.

This is a solid and sustainable market and if it continues we will see slight fluctuations between slowing to 2-3% growth then perking up to say 7-10% briefly. All of this based on local and national economic trends.

It's a good market my friends.

Back to School Brings Opportunity

As we approach the month of August many sellers and buyers are becoming nervous as they continue their efforts to either buy or sell a home. Worry not opportunity still knocks after the peak summer season subsides.

Originally posted August 15th, 2014

There is typically a nice little summer boost in the number of real estate transactions. June and July enjoy a robust seasonal perk up as many families prefer to move in the summer while kids are out of school, and while the weather is fair for moving. The summer month's totals are usually about 20% higher than the average month. Mid-August tends to see a slight slow down in activity that is most likely due to families with children in "back to school" mode.

This slight reduction in buyers, means a little less competition for the remaining listings. Buyers that have not found their ideal home or that have been outbid may find a reprieve from the craziness. Likewise, sellers that did not sell over the summer may be ready to take that slightly lower offer that would not have been accepted a month ago.

Sellers with homes that are not selling of course should consider evaluating the price but also other factors that might help sell. One problem that is all too common among sellers is the availability to show the home. Selling a house that is lived in is a difficult pain in the rear end. But the more easily an agent can show the house, the more buyers will be able to see it. More showings will directly translate into more or faster offers. The next 3-4 weeks will mark the end of our late summer sun and making listed properties available until 7 or 8 o'clock can be the difference between sold and sitting.

Buyers should revisit homes they passed over in June and July. If they are still on the market the price may now be reduced or the seller may be softened up and open to a lower price offer.

We continue to see appreciating prices but the rate of appreciation has slowed dramatically from the skyrocketing prices of 2013 to more modest upward trend in 2014. There is no guarantee that prices will continue to move up. The economy is fair and interest rates are a major factor in the recent real estate turn around. Sellers should not assume that they will get a better price next year. They might; in fact they probably will, but it is by no means set in stone. A good solid offer today that generates the cash needed to do what the seller wants to do should not be underestimated.

Don't worry if you missed out on the peak summer sales cycle, there is plenty of opportunity as the Autumn approaches.

A New Year with New Opportunities is Near

As I look back at 2014, I have to smile. This past year was very solid in just about every way one can measure a real estate business. Sales up, volume up, income up. All good stuff. There are many analysts that are quite bullish on real estate for 2015. Some are reserved but many are making like a rodeo star and riding the bull.

One of the trends among those in the "know" is the idea that interest rates will be creeping up in 2015. The economy is beginning to show some promise and the feds are starting to get serious about easing their "manipulation" of mortgage rates.I don't see a spike coming, no that would end the bull ride rather quickly. I don't want the rodeo clowns cleaning up a mortgage disaster. But a gentle upswing in rates could prove to be just what the market needs. Investors could loosen their grip a little on underwriting guidelines if there is more profit in the form of interest earnings. Buyers that are still dangling their feet over the edge of the "I might buy a house soon" fence should start jumping in when they see a rising trend in rates. As they jump in the sales pressure of new buyers entering the market might be partially offset by the tendency for rising interest rates to slow real estates. The result could be another year of very healthy and smooth 6-8% appreciation. Rapid appreciation is great when you on the gravy train of equity, but it tends to lead to harder crashes. A nice gentle slow and steady rise is sustainable and definitely safer for the overall economy. I have attached and article along with a link to it directly online that talks about potential trends for 2015.

This article was published in U.S. News and World Report

By Susan Johnson, December 9th, 2014
As housing recovers, prices in many markets across the U.S. have shot up. In fact, RealtyTrac reported that the median sale price of U.S. single-family homes and condos in October had reached its highest level since September 2008. Price appreciation and the lure of foreclosures created a feeding frenzy for real estate investors willing to pay cash and made it harder for traditional buyers to compete.

But experts say that 2015 will be marked by a return to normalcy and balance for real estate marketsacross the country. Stan Humphries, chief economist for Zillow.com, predicts that home value growth will slow to around 3 percent per year instead of the 6 percent seen recently, and that will make real estate less attractive to many investors. “It's been a tough market for buyers," he says. "I think it's going to get easier in 2015. Negotiating power will move back to buyers and away from sellers. It will be a much more balanced market." (Too many buyers and too little inventory, or the opposite, contribute to an unbalanced market.)

Redfin.com's chief economist Nela Richardson agrees. "It's been a clear pattern that the investor activity has been shrinking over time," she says. "Investors like to go in where they can buy low and sell high. Price growth is starting to slow dramatically, so they can't sell much higher than what they buy. Investment property is less compelling in 2014 going into 2015."

More inventory and less competition from investors means even traditional buyers are becoming “more picky, and they're willing to let a home go if they don't think it's a good fit for them," Richardson adds. "Buyers are less worried that they'll miss out on something. Houses are more like buses now. If you miss one, another one will come along." Whereas buyers might waive contingencies in the recent past to make their offer more attractive to sellers, they're now more likely to insist on contingencies for financing and inspections.


That said, foreign investors may still find high-end American real estate appealing because of economic turbulence in their home countries. For instance, the U.K. is toying with a so-called "mansion tax" that would apply to those who own properties worth more than 2 million British pounds (or over $3 million), and China has placed restrictions on homebuying in large cities. Some foreign investors also worry about currency fluctuations devaluing money they hold in their home countries. "That section of the market is still all cash – people buying up these huge places because it's safer here than in their own countries," says Herman Chan, real estate broker with Bay Sotheby's International Realty in San Francisco.

Buyers from outside the U.S. may use their properties as a rental, a pied-à-terre (a secondary residence used for travel) or a residence for children studying at American colleges. But for buyers looking for more moderately priced homes, 2015 could offer a respite from bidding wars and all-cash offers. "People who've been on the fence about selling are finally going to pull the trigger, which is great for buyers [because it creates more inventory]," Chan says. "Now people with regular jobs and 20 percent down finally have a chance to get into the market."

For years, many millennials have postponed homeownership in favor of renting, but that may also change next year as a growing number of Gen Yers start families and seek more stability. "By the end of 2015, millennial buyers will represent the largest group of homebuyers, taking over from Generation X," Humphries says. "They prefer smaller units closer to the urban core, so it will be interesting to see whether they follow the time-honored path towards the periphery of the metro."

Baby boomers are also likely to make a move in 2015. Chan says he's "gotten so many calls from baby boomers recently saying, 'We’re downsizing, and we're moving to be closer to our grandkids or our son or daughter.'" With fewer homes underwater, they're finally in a position to sell.

While mortgage rates may not remain at the historic lows seen recently, more people may qualify for home loans as issues like foreclosures or short sales age out of their credit reports and Freddy Mac and Fannie Mae ease mortgage eligibility. Freddy and Fannie recently announced a new mortgage program for buyers with a down payment as low as 3 percent. "Freddy and Fannie have always been the industry leaders, and they're saying, 'It's OK to lend to people who don't have 5 percent down. It's OK to extend credit in a reasonable and safe manner," Richardson says.

Latest Market Trends

Data from RMLS

The real estate market continues to pluck along at a nice healthy pace. Although prices are not rising nearly as fast this year as they did last year conditions remain healthy. Part of the reason resale homes are seeing a big of a flat spot in the otherwise upward curve, is the influx of new home construction. Prices seem to be leveling off but slightly rising and that bodes well for the long term prognosis.

The chart at right shows the median and average sales price in the greater Portland-Vancouver metro area since 2012. the first half of 2013 saw a spike in pricing and then a flat spot and we seem to be nudging back on the upswing again. Pricing will be limited in its ability to surge based on a variety of other economic factors. Most notably is the fact that the economy in general is not exactly booming.

Data from RMLS

The chart to the left shows the year over year change in median price. This is a direct comparison to pricing exactly one year earlier. Overall the future looks promising for real estate values in general. Interest rates remain favorable and as the broad economic conditions improve the housing market will be able to open up a little more. This will be especially welcome in the mid to high end price ranges that are still just a little flat. Buyers looking to get into the entry level may find a highly competitive marketplace with multiple offers and above asking prices.

It is a very good time to be buying or selling real estate.

More Multiple Offer Scenarios Bode well for Appreciation

I have become very busy these last few months and the market is showing increased aggressive behavior from buyers. This has moved from the bottom which has been hot for over a year, into the middle and upper end of the market. Homes that are "move in ready" and priced right get snatched up quickly and over full price. Just last night I had clients make a generous offer on a home priced at $350,000 which had been listed for just one day. My clients were outbid and the house went pending this morning.

For those folks that are sitting on a home they either bought or refinanced in 2006-2008 this could be the year you pop up above the surface of debt into positive equity. There are few real estate agents that "enjoy" short sales and those may become fewer and fewer as the appreciation generated by all this activity pushes values up.

For buyers, appreciation is a double-edged sword. The rising market gives confidence that they will enjoy a strong equity position over time but the pressure is "on"; as prices rise faster than income, they lose buying power and may have to settle for less home.

I have had a few buyers that didn't pull the trigger last year and now find themselves on the brink of being priced out of the market all together. The moral of the story is that we are moving further into the seller's market and buyers need to jump in now to take advantage of current pricing and these low interest rates. Rates will not remain low once the market shows an ability to sustain growth. Sellers that have been waiting for the market to come to them, need to contact their favorite Realtor® and have their home evaluated. The time may have come to make that move they have had to put off due to the depressed prices of 2010-2012.

I see a confidence in the market that has been lacking since early 2008 and that bodes well for the short term health of the market. Long term will ultimately be driven by interest rates and that is an area where change in the upward direction is inevitable.

Early Spring Often Sets the Tone

Looking back over the years I find that the early part of spring has proven to be a pretty good Nostradamus act for the real estate market. Like the famous 16th Century prognosticator, the indications are not 100% accurate and may require a little creative imagination to confirm.But in general if sales and new listings get a early spring bump the rest of the summer selling season tends to do well. Of course the market has many economic influences such as interest rates, legislation, overall economy, etc.

So my anecdotal view is that this spring is starting off quite nicely. Bare in mind that the industry experts are suggesting a more modest level of growth in values this year in contrast with 2013 which was quite robust. I am seeing well priced properties selling quickly and at very near or even over full price. Overpriced listings are not selling or are getting low offers closer to market value. We are not seeing the bid it up to the moon craziness of 2005-2007. Buyers are shrewd and seem to do a good job of sniffing out a deal when they see it or coming in soft on an overpriced listing.

This market still seems to favor the turn key move in ready homes. Light fixers or extremely dated homes take much more time to sell. Heavy fixers however, that are not financable are selling quickly as investors seek to find properties in a market with tight inventory.

All of this bodes well for the forthcoming months that are considered "prime time" for real estate. I am looking forward to helping many families find their ideal home in this solid and seemingly stable market.

Why Listing a Home in March Works

In most real estate markets there is a sales curve that peaks in the summer months and bottoms out in the dead dark of winter. I believe that this cycle is as mental as it is anything else. People tend to be less active in the winter, especially in northern latitudes with cold and miserable weather. It is no surprise that e-commerce performs well in the winter and bricks and mortar retail does not with the notable exception of December holidays.

Information data and chart sourced from RMLS

Our real estate market locally has a modest sales spike in the summer months of roughly 10% above the annual monthly average and about 10% under in the middle of winter. That represents a total swing of roughly 20%. In some markets where winter weather is truly brutal, I would imagine the spread is significantly greater and in sunny SoCal it is probably a flatter curve. The chart above shows this annual trend with a notable exception in 2010 where the fall off came early. The 2013 curve was a more dramatic seasonal curve than the statistical average I compiled since 2001.  The 2011 curve is very typical when compared to most of the years since 2001. The 2013 curve is more like one I would expect to see in severe winter climates like the upper Midwest.

I think the best way to wrap your arms around this is to break the home buyers into two very broad classes. Those highly motivated to buy with external pressure and those buying because they can. So the first group is motivated by things such as a job transfer, loss of job, a new baby on the way, divorce, etc. This is external pressure and that makes someone willing to trudge through a foot of snow in the cold misery of January to look at houses or deal with the inconvenience of listing at a time they would rather stay indoors and visit with family.

The latter category is someone with a new job with higher income and maybe they think, "Hey, we can finally afford that dream house on five acres". Or perhaps they are empty-nesters looking to downsize. These buyers and sellers are much more likely to list or start the buying process when it is convenient. They are less likely to brave the wild elements of January looking at houses.

Anther reason there is a spike in sales in the summer is that families with school age children prefer to move over summer vacation when the kids are out school. This is especially true if the children will be changing schools after the move.

In a real estate market like this one; the biggest driver has been lack of inventory in that under median price range. When inventory increases that will relieve some of the pressure and could stabilize prices. If a seller has a home that is a little less than ideal; this is the time to list. This market is driven right now by move in ready, clean condition, updated properties. If a listing is a little outside those ideal parameters, the best way to sell it is in a market with less competition. As more listings come on the market toward May, the house can lose value and or position against superior properties that become available. March is a great way to tap into the "spring fever" of home buying a little ahead of the market. This is the time to get that slightly out of favor listing in front of buyers before a wave of potentially more desirable properties arrive on the scene.

If a seller has that perfect updated, move in ready median priced listing, then sometimes waiting till April can be a smart move so as to tap the increase in buyers actively looking that occurs in mid to late spring. Of course one way to get it both ways is to list in March at a slightly high price, gauge activity, get feedback and either sell at a high price or build a strategy based on the feedback and activity in March and April to position the listing ideally for May and June.

March Madness is amazing for college basketball and can be equally so for real estate.

Ho Ho Ho, Real Estate is in the Holiday Spirit

The real estate market is healthy right now. We are enjoying modest growth in pricing and strong sales volume. This is the kind of sustainable growth that is better than the rampaging growth of the 2004-2006 period.

The Regional Multiple Listing Service here in Clark County has posted sales summary data through first nine months of this year. 4728 real estate transactions have closed in those first nine months and that compares quite favorably with the 3805 through the first nine months of last year. This reflects a 24% increase in closed transactions. There is no shortage of buyers out there. The median price for 2012 was $194,500 and through the first nine months of 2013 the median is up 14% at $223,600.

Numbers tell many tales and a healthy pinch of the proverbial salt is in order with statistics. Has the actual value of any given home in Clark County appreciated by 14% this year? Not necessarily. Last year the market was still being driven by sustained growth with first time home buyers and the entry level market as well as a lot of REO (bank owned) and Short Sale transactions with typically lower closed prices. This year has seen a nice progression into the mid level price range as homeowners can finally sell that formerly upside down home. So as more transactions occur in the mid level, the median price rises. Even if the actual appreciation was very modest the median can rise much steeper if there is a market transition to more expensive homes.

All of that said, there has clearly been appreciation in the marketplace this year. Those three bedroom two bath 1200 square foot 1950s move in ready homes that were readily available for sale in the $130-140k range a couple of years ago are now easily $160-170k this year. But homes in the middle to higher price range have had much more modest appreciation.

I decided to dive in a little deeper. I took two county wide but very narrow market segments and will show actual growth in volume and appreciation between 2012 and through yesterday's closings this year. The first is a batch of typical entry level family homes and the second a typical first move up house. These are fairly small segments but this helps to keep them all truly comparable with as little variance as possible but still providing a large enough pool of data to be statistically sound. These all have very similar lots, in town and very similar sized homes, etc.


Last year there were 47 detached single family, three bedroom homes with 1200-1400 square feet of living space, sold in Clark County that were on a small to medium city lot and were not bank owned or short sale transactions. The median price was $163,900 and 98.19% of original list price with an average time on market of 27 days. So far this year the numbers for the exact same search yielded 83 sales with a median price of $185,000 and 97.55% of original list price with an average of 22 days on the market. Well that is 13% appreciation in that segment and a unit sales volume growth of 77%. What about the move up market?

This time I ran sales of homes again, traditional sales, not short or REO. 2000-2500 square feet of living space, four bedrooms on a small to medium size city lot. 2012 had 71 sales with a median price of $232,000 and 95.79% of original list price and average time on market at 42 days. The numbers so far this year look like this; 170 sales at a median price of $251,125 and 97.01% of original list price with an average 39 days on market. This represents appreciation of 8% and a huge sales growth of 139%.

The overall synopsis follows the traditional model for market recovery. The bottom grows first and feeds growth to the middle of the market. With a 139% sales growth this year in the move up market, I foresee an opportunity for double digit appreciation in that segment for 2014. This of course depends on all the crazy variables in the real estate market and the economy at large. Marketing time continues to shrink and well priced homes get multiple above asking price offers. There is a segment of sellers that will "test the waters" with a high price and then end up reducing the price to sell. But 97% of original asking price is quite good.

Short sales in both of these segments were flat year over year. 23 sales in both 2012 and 2013 in the 3 bed segment. The 4 bed segment 31 in 2012 against 27 in 2013. I left out REO because the condition of the home varies so widely, banks often use auction methods and such, it is difficult to gauge those against traditional sales. If you look at the combined segments here, 2012 had a roughly 2:1 traditional vs short sale ratio and this year short sales remained flat while traditional sales skyrocketed so the ratio is now slightly more than 5:1. If this ratio carries through to the overall market it bodes well for our local market.

2014 is shaping up nicely for real estate. As the middle of the market begins to feel a surge so then the upper levels will enjoy favorable price movement as well.

The Sales Data Looks Healthy

I just spent the better part of this morning analyzing recent data from our local Multiple Listing Service and decided to run my 13 month analysis. One thing we often get in real estate is snippets of data year over year. This can be a good quick check to see which way the market has moved over a year, but lacks the insight provided by a monthly look at the trend over that whole period.

Many people like to see great leaps in price or sales but that can be unhealthy. Of course it is not as unhealthy as a depreciating market or precipitous drop in sales. But a rapid rise can lead to a premature peak and result in an uncomfortable drop in the market. Think about the four years of 2004 to 2007.

Data acquired from Regional Multiple Listing Service for Clark County, WA 
9-2012 through 9-2013 single family homes, excluding condos

Generally a modest and smooth appreciation in home values along with solid relatively flat seasonally adjusted sales is very healthy. Guess what? That is exactly what we have right now. The 50 year average appreciation for homes runs right around six and a half percent per year with a little more in up markets to offset the down markets. So an 8-10% annual appreciation over a decade is pretty healthy.

The median price for Clark County, WA is up from 197k in September 2012 to 237k as of September 2013. That represents a non-seasonally adjusted jump of around 20% but the curve will flatten again as we approach the winter. That sharp increase is a much driven by a movement from entry level buyers to mid level buyers as it is about actual appreciation. What I mean is that the inventory for the 125k-150k move in ready home dried up. Most of those entry level buyers are still making the same income they made a few years ago and they are priced out of the market. However those who sold their entry level homes a year ago made the move up in the last year driving the move up market. That moved the median price up disproportionately to actual appreciation.

I believe we will see a 30 month growth in median price starting from June of last year and ending on January 2015 at close to 30% which will average to around 10% annually. This is would be healthy. The current flat economy will keep things well regulated and without some improvement could lead to a fade in this valuation bump we had recently. The first spurt of growth is also often bigger as fence sitters jump into the market. If the market growth slows to a more modest 8-10% that is not a bad sign. On the contrary, it could lead to a steady long term rise in prices that is sustainable over a decade or more.

All that said, the real estate market is affected by many variables in the economy. Interest rates are a strong driver of real estate sales and they have been in the basement for several years. They could be on the rise as the federal government backs off their support of mortgage securities.  Even if rates continue their upward march toward normalcy, the market can still enjoy some growth. The fed will most likely continue their support of rate suppression until the economy is on solid footing. A growing and healthy economy will produce more qualified home buyers. We will lose some entry level buyers to higher rates but gain some in economic upward mobility as things shape up on the job front.

Inventory remains tight but there could be a pent up supply waiting to come on the market. Many people have been sitting on those homes they bought in the boom of '04-'08. They bought at or near the top of the market and have been unable to sell since the crash because they owe more than the market will pay. That is beginning to change as the prices move upward. Many of those people will soon be in a position to sell and many may exercise that option to take advantage of these still relatively low interest rates. Furthermore it has been reported that many banks are strategically holding on to REO inventory which adds to that potential inventory increase over the next few years. An increase in inventory will flatten out the sharp appreciation, but the availability of willing buyers should keep things modestly improving. Overall the real estate market is in position to enjoy a sustained gentle growth pattern that is healthy and beneficial to a recovering economy.

Why Autumn is a good time to buy a house

Today I would like to offer up a good reason that frustrated buyers may find the proverbial light at the end of the tunnel as the fall season approaches.

During the summer months, most real estate markets enjoy a surge in sales activity. Many home buyers are families with children and the idea of moving in between school years is very attractive. It also does not hurt us locally that we have fabulous summer weather with which to enjoy touring homes. In any market the law of supply and demand is ever present. The summer months are yielding more buyers and thus the market experiences buyer pressure. If that sales pressure is not alleviated by increased supply (listings) then prices will nudge or even surge upward. We have seen this effect locally and around the nation this summer.

As our summer comes to a close many buyers have left the market. These buyers may only be out temporarily to get the family adjusted for the new school year or perhaps they feel that next year will be better for them to buy. Of course some of those buyers became purchasers. For the patient buyers this could be a small but significant bonanza. Those buyers that have left the market represent a relief of sales pressure. My experience has been that more buyers tend to leave the market in the fall than sellers. This creates an opportunity to buy that may not have been available in the height of the summer sales madness.

Current Listing in the Felida area of Vancouver $274,900 

Some of the run up in price is caused by multiple offers becoming an auction like frenzy driving up the price. Sometimes its less exciting than that, but houses seemed difficult to find this summer. The autumn tends to soften that just a touch and that could be the edge a buyer needs to get the house they want at a price they can live with.

Buyers should not be discouraged as the cooler days of fall settle in. Rates have settled down a bit and still remain very low by historical standards. The Fed is indicating they will be backing off the support of these low rates as the year closes. This could be the opportunity some buyers have been waiting for to own the home they have always wanted. The window could close in the next few months as interests rise and buyers become panic prone bidders. Call your favorite Realtor® today and happy hunting.

July's MLS sales figures for Clark County were stellar

The numbers are in for July from our local multiple listing service and they look great. Looking back first at last year, July 2012 was healthy but not stellar. Inventory was starting to tighten up and demand was strong enough in certain segments to generate multiple offers. 499 transactions were closed in July 2012 for Clark County against this year's total of 696. We are still well off the frenzied pace of 2005-2007 but clearly the best we've seen since "the crash".

Evaluating numbers is never as easy as just looking at the one or two "big" stats. Often people, including some Realtors®, look at median price or total unit sales as an indicator that all market segments are moving equally. Just because the median price is up 21% by no means suggests that any random house that was sold last year is now worth 21% more this year. The real estate market is very complex with neighborhood fluctuations, locations, home size, price range, and styles often performing independent of each other based on market demand or supply.

The chart below shows the "big" over all county stats for this local market and then breaks the numbers down a little further to show some broad segment trends. The big question for John and Sally homeowner is often geared towards, "can I sell MY house right now"? If John and Sally own a condo they may not be much better off this year than they were last year in market appreciation. The condo market is almost always late to recover.

Last year the sales figures were heaviest in the entry level market. Those $125-150k three bedroom ramblers were being snatched up and as such, supply tightened up and prices soared. This year that market segment was priced high enough that demand slowed down a little, but the middle market surged with larger four bedroom houses seeing significant increases in unit sales. Those bigger mid sized homes saw a massive 59% increase in sales but a more modest 13% increase in median price.

Last year I said that the bottom has to tighten up first before the middle can take off. Well, the bottom did tighten up and now the middle is taking off this year. That is driving the increase in median price. The smaller two bedroom houses have peaked with only a 1.3% increase in median price despite a large surge in unit sales of 46%. Even the bread and butter three bedroom market that was red hot last year, is showing preliminary indications that the buyers are nearing their limits. The 18% increase in median against a large surge of 29% in units sold is still quite robust, however. The sellers in the entry level often move up to that bigger house and as they sell their 2 and 3 bedroom homes they move into the middle market. The 59% increase in unit sales in that segment will likely produce more impressive median increases when we check the numbers in a few months.

Of course this discussion has to hinge on keeping other complex variables favorable, such as the general economy, jobs and the ever critical mortgage rates.

The big takeaway for homeowners is the fact that their home that may have been upside down or too tight to sell, could in fact be a seller today. Contact your favorite Realtor® for a Comparative Market Analysis on your home. Most offer this service for no charge, I certainly will.