It seems like some of the market sectors are once again not producing listings. I have several buyers that are seeking homes and there just isn't much to show in the sub median area. I have noticed some condos coming online as well as a fair bit of higher end properties. January and February are typically not big months for new listings, but it feels a bit tight even for the season. I have been estimating a modest growth year for 2019 but if inventory decides to get thin again we could see another perky uptick in values.
Some good news, the interest rates seem to have settled in a bit. Last year rates came out of the gate rising steady week after week, creeping up nearly a full point over the course of 2018. Now things seem to be a bit back and forth. The economy is still strong but not as robust as a couple years ago so a nicely healthy hum would be great for the next couple years. I'll keep you posted as inventory moves in to the early spring accumulation period.
Musings on the state of the market with tips, information and a little fun.
Showing posts with label tight. Show all posts
Showing posts with label tight. Show all posts
Friday, January 25, 2019
Friday, May 11, 2018
Buyer's need to be quick on the draw, and pull the trigger.
Well, a little 'old west' parlance in that headline, really drives home the situation that buyers find themselves in. This is particularly in this tight inventory condition our local market is facing. I feel like the pool of buyers is shrinking, mostly due to rising rates and recent rising prices that have 'priced out' many buyers.
Our inventory levels however have remained tight enough that even the shrinking pool of buyers is enough to tip the scales towards favoring the purchase side of the equation. This is particularly noticeable in the entry level price ranges under the median.
Buyer trying to get into a property listed at less than $325,000 in Clark County, WA are facing an uphill battle with so few listings to choose from. Some buyers are taking too much time deliberating on a potential house, that some other buyer writes an offer and gets accepted while they were chewing on a decision.
Here is the situation that buyers are facing. Prices are still rising. The rate of appreciation has slowed quite a bit. But they are still rising. We may end up with 2018 at 6% appreciation. If that hold a $300,000 house will rise in price roughly $1,500 per month! Meanwhile rates have been ticking up all year long averaging about an 1/8 point per month. That means the $300,000 buyer is losing $4,800 in purchasing power every month! So buyers are getting hit on both sides! Sitting on the fence is literally killing buyers, and many have hopped in and are keeping this tight inventory turning.
Some worry about a market correction. This is always a risk that any buyer takes when prices have been on a steady rise. Economic conditions in general are looking favorable. I haven't read too many analytical reports suggesting a serious bubble exists. Most of the professionals seem to feel like a modest slowdown is on tap over the next few years. I believe that is a healthy condition.
I wrote in my 2010 book, 'Don't Panic' that buyers often put to much emphasis on the "investment" value of the home they are going to live in. The reality is that when we buy a house to live in, we are buying the utility of the house as shelter. Improved real estate is not a good investment unless you maximize its income. So if a buyer wants to live in a property and is worried about its "investment" value, they ought to be renting out every inch of unused space in that house, yet so few do.
If a house suits a buyer's needs, has the proper function, utility, style, layout, condition, quality, neighborhood, etc. They should be less concerned about its pure investment value and more concerned about whether that house will serve them well for its intended use, shelter and a feeling of 'home'. Now that said, any buyer thinking about a short term proposition has to add a little emphasis on the potential for appreciation as selling the house can be difficult if the buyer has a tight equity position. In any case, unless one is buying the property specifically as an investment, a rental, flipper, etc. they should focus on the utility value of the home as that is what will serve them best in the long run.
One thing is certain, buyers need to pull the trigger, or the market may just leave them behind as permanent renters.
Our inventory levels however have remained tight enough that even the shrinking pool of buyers is enough to tip the scales towards favoring the purchase side of the equation. This is particularly noticeable in the entry level price ranges under the median.
Buyer trying to get into a property listed at less than $325,000 in Clark County, WA are facing an uphill battle with so few listings to choose from. Some buyers are taking too much time deliberating on a potential house, that some other buyer writes an offer and gets accepted while they were chewing on a decision.
Here is the situation that buyers are facing. Prices are still rising. The rate of appreciation has slowed quite a bit. But they are still rising. We may end up with 2018 at 6% appreciation. If that hold a $300,000 house will rise in price roughly $1,500 per month! Meanwhile rates have been ticking up all year long averaging about an 1/8 point per month. That means the $300,000 buyer is losing $4,800 in purchasing power every month! So buyers are getting hit on both sides! Sitting on the fence is literally killing buyers, and many have hopped in and are keeping this tight inventory turning.
Some worry about a market correction. This is always a risk that any buyer takes when prices have been on a steady rise. Economic conditions in general are looking favorable. I haven't read too many analytical reports suggesting a serious bubble exists. Most of the professionals seem to feel like a modest slowdown is on tap over the next few years. I believe that is a healthy condition.
I wrote in my 2010 book, 'Don't Panic' that buyers often put to much emphasis on the "investment" value of the home they are going to live in. The reality is that when we buy a house to live in, we are buying the utility of the house as shelter. Improved real estate is not a good investment unless you maximize its income. So if a buyer wants to live in a property and is worried about its "investment" value, they ought to be renting out every inch of unused space in that house, yet so few do.
If a house suits a buyer's needs, has the proper function, utility, style, layout, condition, quality, neighborhood, etc. They should be less concerned about its pure investment value and more concerned about whether that house will serve them well for its intended use, shelter and a feeling of 'home'. Now that said, any buyer thinking about a short term proposition has to add a little emphasis on the potential for appreciation as selling the house can be difficult if the buyer has a tight equity position. In any case, unless one is buying the property specifically as an investment, a rental, flipper, etc. they should focus on the utility value of the home as that is what will serve them best in the long run.
One thing is certain, buyers need to pull the trigger, or the market may just leave them behind as permanent renters.
Friday, July 29, 2016
Portland Transplants will continue to Drive Local Market
The City of Portland is more of less built out already. In fact a case can be made that Portland has been effectively built out for decades. When a City reaches build out and has no more room to expand, then real estate becomes tight. Portland is surrounded by other cities and protected space so as to have no more room to grow. There is no new land in Portland, only reclaimed land. This makes building in Portland more expensive and thus pushes prices on resale homes ever higher. It is a dilemma faced by many cities in America.
The rising housing prices in our next door neighbor has put pressure on the markets in surrounding areas such as Beaverton, Hillsboro, Gresham, and of course America's Vancouver. These surrounding areas have room to grow and room to build new homes and that keeps the relative price of housing a little lower compared to Portland.
For many years now, Vancouver Washington and Clark County at large has been a primary destination for Portland transplants. We are close to Portland, we have excellent schools, great highways, and a wide variety of housing types from urban high rise condos with stellar views, to Southern California style suburban neighborhoods with 4 beds in a culdesac.
Portlanders continue their exodus into the promised land of Clark County. These buyers flooding our market have pushed the entry level real estate to the brink. They have created a dynamic of puffed up low end houses but the middle market still enjoys some flex in pricing. $275,000 for a dated 1950s rambler but 25k more buys a brand new house the same size. It is an interesting scenario that there is little jump in price from a 1200 SF 3 bed 2 bath and a 5 bed 2.5 bath home in some neighborhoods.
There will always be those who want to live in the "city" regardless of housing costs. They who would live in a one room studio for $2000.00 a month before moving to the 'burbs'. Portland will always be that "city". No matter how big Vancouver USA gets, Portland is the core city for this region. So it (Portland) will continue to produce higher density housing on reclaimed land to keep the real estate market from stagnating and will continue to produce buyers for the adjacent cities like Vancouver, WA. that offer more traditional detached housing at prices that working class people can afford.
I suppose this synergenic relationship can benefit both cities. Portland continues its rise among major US cities as it become more urbanized and cosmopolitan, while Vancouver continues its mixed use approach with a rising downtown "city" core and a continuance of some of the urban sprawl.
Here in the 'Couv' we can enjoy the fact that as tight as inventory is it's not as bad as it is south of the river.
The rising housing prices in our next door neighbor has put pressure on the markets in surrounding areas such as Beaverton, Hillsboro, Gresham, and of course America's Vancouver. These surrounding areas have room to grow and room to build new homes and that keeps the relative price of housing a little lower compared to Portland.
For many years now, Vancouver Washington and Clark County at large has been a primary destination for Portland transplants. We are close to Portland, we have excellent schools, great highways, and a wide variety of housing types from urban high rise condos with stellar views, to Southern California style suburban neighborhoods with 4 beds in a culdesac.
Portlanders continue their exodus into the promised land of Clark County. These buyers flooding our market have pushed the entry level real estate to the brink. They have created a dynamic of puffed up low end houses but the middle market still enjoys some flex in pricing. $275,000 for a dated 1950s rambler but 25k more buys a brand new house the same size. It is an interesting scenario that there is little jump in price from a 1200 SF 3 bed 2 bath and a 5 bed 2.5 bath home in some neighborhoods.
There will always be those who want to live in the "city" regardless of housing costs. They who would live in a one room studio for $2000.00 a month before moving to the 'burbs'. Portland will always be that "city". No matter how big Vancouver USA gets, Portland is the core city for this region. So it (Portland) will continue to produce higher density housing on reclaimed land to keep the real estate market from stagnating and will continue to produce buyers for the adjacent cities like Vancouver, WA. that offer more traditional detached housing at prices that working class people can afford.I suppose this synergenic relationship can benefit both cities. Portland continues its rise among major US cities as it become more urbanized and cosmopolitan, while Vancouver continues its mixed use approach with a rising downtown "city" core and a continuance of some of the urban sprawl.
Here in the 'Couv' we can enjoy the fact that as tight as inventory is it's not as bad as it is south of the river.
Friday, October 2, 2015
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.
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.
Friday, April 24, 2015
Listed, Shown, Sold
That just about sums up the state of our market right now. Houses come on the MLS and agents are just waiting for them. Like sharks to the chum, they attack! Such is the state of housing in Clark County, Washington and in many other markets as well.
Many home owners seem to be guarded about selling right now. If the seller has equity and can sell, this could be the ideal time to list. There are not an overwhelming number of buyers but they do outnumber sellers significantly. This market locally is all about a lack of inventory not so much an abundance of buyers.
Sellers can capitalize on the lack of inventory and get a little more for their home. As more inventory hits the market prices will stabilize a little. There is always that sweet spot in market transitions. This is one of those sweet spots. Tight inventory makes it easy to sell but difficult to buy.
The real heat in the marketplace is generally in the bottom half of pricing. Those sellers looking to move up from the bottom half into the upper half can take advantage of that sweet spot I mentioned. Rapid price increases at the bottom and much more modest increases at the top make for a tidy advantage for a seller to sell now. Also, interest rates remain low and although I have been barking that they could go up significantly for several years, they will go up. When they do, all bets are off for many buyers and sellers.
For a seller that has been waiting to get out from under and upside-down house, now could be the time to grab one of the desperate and frustrated buyers to give them that little bit extra they need to clear the bank and move on to the next house.
It looks like this summer is going to be very interesting indeed.
Many home owners seem to be guarded about selling right now. If the seller has equity and can sell, this could be the ideal time to list. There are not an overwhelming number of buyers but they do outnumber sellers significantly. This market locally is all about a lack of inventory not so much an abundance of buyers.
Sellers can capitalize on the lack of inventory and get a little more for their home. As more inventory hits the market prices will stabilize a little. There is always that sweet spot in market transitions. This is one of those sweet spots. Tight inventory makes it easy to sell but difficult to buy.
The real heat in the marketplace is generally in the bottom half of pricing. Those sellers looking to move up from the bottom half into the upper half can take advantage of that sweet spot I mentioned. Rapid price increases at the bottom and much more modest increases at the top make for a tidy advantage for a seller to sell now. Also, interest rates remain low and although I have been barking that they could go up significantly for several years, they will go up. When they do, all bets are off for many buyers and sellers.
For a seller that has been waiting to get out from under and upside-down house, now could be the time to grab one of the desperate and frustrated buyers to give them that little bit extra they need to clear the bank and move on to the next house.
It looks like this summer is going to be very interesting indeed.
Friday, April 10, 2015
Market Trending Up on Values
The tight inventory I wrote about last week has translated into a perk for sellers as prices continue to feel upward pressure with more buyers than sellers. Lending is still tight so the buyers are not always the strongest and sellers should be advised to look deeper than price on each offer. As I have said time and again the best offer may not be the highest offer.
All of that said, here is the data for the first quarter of 2015. The Regional Multiple Listing Service says that Clark County Washington has 3.2 months of inventory. That is indeed tight. The median price was $255,000 over the first three months of the year. That is $10,000 higher than the same three months last year. Days on market are getting shorter and shorter as supply continues to shrink against a steady stream of ready buyers. As we move into May we might see a surge in inventory that will slow down the price frenzy.
Lending is tight and that is making it tough on the first time home buyers facing higher prices and onery lenders. The robust activity in 2013 and 14 on the entry level homes has in fact provided a nudge up for the middle market sellers. Top of the line properties are seeing some much needed sales as well.
The fly in the ointment is this tight lending situation. Regulators had a field day after the crash in '09 and that is having a negative impact on the market as buyers find difficult guidelines and tougher mandates to get a loan processed and funded. Although many of the changes to the banking regulatory and lending practices have had positive results, in typical government fashion they have gone over board and may lead to worsening conditions.
Let's hope not. Buyers are well advised to act swiftly when the see a house they like and if it looks like a sharp price, it probably is. Don't try to haggle the seller down, he probably has three offers to look at. There are still some sellers that have overpriced listings and these sellers will find the market to be cruel. Buyers will bid up good values but they won't bit on that hydrogen filled, puffed up price that some sellers think they can float into the market.
Things are good out there folks, but things are tight also. You may want to get while the getting is good, as they say.
All of that said, here is the data for the first quarter of 2015. The Regional Multiple Listing Service says that Clark County Washington has 3.2 months of inventory. That is indeed tight. The median price was $255,000 over the first three months of the year. That is $10,000 higher than the same three months last year. Days on market are getting shorter and shorter as supply continues to shrink against a steady stream of ready buyers. As we move into May we might see a surge in inventory that will slow down the price frenzy.Lending is tight and that is making it tough on the first time home buyers facing higher prices and onery lenders. The robust activity in 2013 and 14 on the entry level homes has in fact provided a nudge up for the middle market sellers. Top of the line properties are seeing some much needed sales as well.
The fly in the ointment is this tight lending situation. Regulators had a field day after the crash in '09 and that is having a negative impact on the market as buyers find difficult guidelines and tougher mandates to get a loan processed and funded. Although many of the changes to the banking regulatory and lending practices have had positive results, in typical government fashion they have gone over board and may lead to worsening conditions.
Let's hope not. Buyers are well advised to act swiftly when the see a house they like and if it looks like a sharp price, it probably is. Don't try to haggle the seller down, he probably has three offers to look at. There are still some sellers that have overpriced listings and these sellers will find the market to be cruel. Buyers will bid up good values but they won't bit on that hydrogen filled, puffed up price that some sellers think they can float into the market.
Things are good out there folks, but things are tight also. You may want to get while the getting is good, as they say.
Friday, March 13, 2015
Buyers Need Their Loan in Place First!
I have a listing, a gorgeous 2200 square foot home in a neighborhood full of kids built in 2004. The price is right and it has been very busy with showings and offers. Funny thing is that three times this property has had offers that either failed to close or were withdrawn due to financing issues. Even though buyers are "pre-qualified" they should be "pre-approved" before making an offer. But even pre-approved can be tricky especially if the buyer is right up near their maximum borrowing limit. One of the three was due to the proceeds on a contingent sale falling short of the lenders required down. That was an unusual issue. The other two however were pre-approved borrowers that were likely riding right up against the max credit available trying to buy this home. As a listing agent I have the duty to get as much out of the buyer as possible and to help my seller pick the strongest offer. Even due diligence however can become moot when the buyer is pushing the limits of financing.
Pre-approvals differ from pre-qualification in that a pre-qual is based off verbal or online questionnaires about income and expenses with a soft credit pull. Approvals have the income documents in, full credit pull, and a computer underwriting approval in place. The pre-approval is conditioned upon the buyer maintaining their credit standing, down payment, and rates remaining favorable. If the borrower is trying to buy a house right up against the maximum amount approved, then it is real easy for that approval to go away if anything changes in the buyers financial situation of if rates have a negative fluctuation.
Back in 2012 when housing prices were at or near the bottom, I found that buyers were very cautious. It seemed like nearly every buyer was looking at houses well below the lender approval amount. As a result I had almost every single deal close once past the inspection period. These days it seems buyers are pushing things right to the ragged edge. That could be due to the sharp rise in prices. Let's face it, three years ago I could put a buyer into a nice clean livable house in a solid neighborhood for well under $200k. Frankly, $150,000 bought a great starter house. Those $150k homes are over $200k now, and that means buyers are pushing the financial envelope a little harder these days.
Seller's need to be diligent with the financing contingency and make sure the borrower is really approved and that they have a loan lock in place as soon as possible after the inspection period. Buyer's need to be sure to avoid adding any new debt during the entire home buying process. Buyer's also need to be vigilant in protecting their credit score as a drop in score may cause a "hit" to rate. If the buyer is up against the ceiling that slight 1/8th hit could crash their deal.
My experience has been that buyer's approved from large online national mortgage companies are far more likely to crash than those using a major or local bank, credit union, or local mortgage company. It seems like the online companies use best case scenario tactics to lure buyers to them. That best case scenario often does not materialize and the buyer is left with no loan after spending money on an inspection and maybe an appraisal as well.
Lenders are the most important piece to buying a house unless the buyer is using all cash. The best agents have one or more trusted lenders that they know will give their buyer solid approvals and offer the highest chance of a successful closing.
Buyers should to some extent shop offers between lenders but understanding that most loans are ultimately underwritten by the same small group of investor's standards. FHA and VA approvals should be very similar across all lenders. Fannie and Freddie loans will also be pretty close on approval amounts. The difference between lenders will usually fall into the fee category. This is where a buyer can shop the deal around. I have found that after the strict regulations imposed following the market crash that most local lenders fees run pretty darn close. Sometimes one bank may offer a program or an underwriting exception that might help a buyer get a house. Any claims of getting a significantly larger approval amount however are likely bogus.
This is a seller's market and buyers need to be ready to close. The loan and proper down payment need to be in place before buyers submit an offer. Buyers are risking the expense of inspections and possibly appraisal when making an offer so having the loan solidly approved just makes sense.
Pre-approvals differ from pre-qualification in that a pre-qual is based off verbal or online questionnaires about income and expenses with a soft credit pull. Approvals have the income documents in, full credit pull, and a computer underwriting approval in place. The pre-approval is conditioned upon the buyer maintaining their credit standing, down payment, and rates remaining favorable. If the borrower is trying to buy a house right up against the maximum amount approved, then it is real easy for that approval to go away if anything changes in the buyers financial situation of if rates have a negative fluctuation.
Back in 2012 when housing prices were at or near the bottom, I found that buyers were very cautious. It seemed like nearly every buyer was looking at houses well below the lender approval amount. As a result I had almost every single deal close once past the inspection period. These days it seems buyers are pushing things right to the ragged edge. That could be due to the sharp rise in prices. Let's face it, three years ago I could put a buyer into a nice clean livable house in a solid neighborhood for well under $200k. Frankly, $150,000 bought a great starter house. Those $150k homes are over $200k now, and that means buyers are pushing the financial envelope a little harder these days.
Seller's need to be diligent with the financing contingency and make sure the borrower is really approved and that they have a loan lock in place as soon as possible after the inspection period. Buyer's need to be sure to avoid adding any new debt during the entire home buying process. Buyer's also need to be vigilant in protecting their credit score as a drop in score may cause a "hit" to rate. If the buyer is up against the ceiling that slight 1/8th hit could crash their deal.
My experience has been that buyer's approved from large online national mortgage companies are far more likely to crash than those using a major or local bank, credit union, or local mortgage company. It seems like the online companies use best case scenario tactics to lure buyers to them. That best case scenario often does not materialize and the buyer is left with no loan after spending money on an inspection and maybe an appraisal as well.
Lenders are the most important piece to buying a house unless the buyer is using all cash. The best agents have one or more trusted lenders that they know will give their buyer solid approvals and offer the highest chance of a successful closing.
Buyers should to some extent shop offers between lenders but understanding that most loans are ultimately underwritten by the same small group of investor's standards. FHA and VA approvals should be very similar across all lenders. Fannie and Freddie loans will also be pretty close on approval amounts. The difference between lenders will usually fall into the fee category. This is where a buyer can shop the deal around. I have found that after the strict regulations imposed following the market crash that most local lenders fees run pretty darn close. Sometimes one bank may offer a program or an underwriting exception that might help a buyer get a house. Any claims of getting a significantly larger approval amount however are likely bogus.
This is a seller's market and buyers need to be ready to close. The loan and proper down payment need to be in place before buyers submit an offer. Buyers are risking the expense of inspections and possibly appraisal when making an offer so having the loan solidly approved just makes sense.
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