Is there a crash coming?

by | Mar 30, 2016 | Real Estate | 0 comments

​Upcoming Free (& non-promotional) Home Buyer Classes:
Saturday April 2nd, from 9am-12pm (ish)
Marshall Community Center, conference room
1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)

Saturday, April 16th, from 12pm-3pm (ish)
Vancouver YMCA, conference room
11324 NE 51st Circle, Vancouver WA (corner of SR500 & Gher Road/112th Ave)

Monday night, April 18th , from 5pm-8pm (ish)
Marshall Community Center, conference room
1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)

Saturday April 30th, from 10am-1pm (ish)
Marshall Community Center, conference room
1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)

If these class dates and/or times don’t work for you, please let us know.  We understand that you have lives, and families, and work.  We will work something out that works better with your schedule.  Just let us know….
….we also have home seller classes available too…link on left on website

Remember…with reservation…we will throw in lunch, or dinner!  😀
Happy Spring!!

So, this week I received an email from a client asking about a ‘crash coming’?  I’ve also have a couple of other clients…both buying and selling… who are asking me the same?  I thought that it might be a good time to address this concern, so please…bear with me here.  This is a hard market right now…for everyone. For those of you friends with me on Facebook, you might have seen some of my recent comments.  There are a lot of offers on home, but only one wins…and nothing sucks more than having to call your client to say that theirs wasn’t the offer accepted.  Even when an agent is working for the seller, it is tough… how do you really know what offer is the best one? (Please see last weeks blog for more on that)  So, what is my opinion about a crash coming?

I have been a licensed real estate broker for just a bit over 11 years now…and I worked with a builder for 2+ years prior to that… so over 13 years in total in the real estate industry.   🙂  There are mixed feelings in the industry right now regarding a crash…  and here’s why.  In some aspects it is very similar to the boon of 2004-2006, but there are some differences as well.
The biggest similarity that people see are that homes are selling very quickly with multiple offers and for higher than listing price.  Honestly though that has been happening for 2 years now as the low interest rates, and the (then) lower home prices were bringing buyers back into the market as the economy recovered from the Great Recission.  The difference really is that this is very pronounced, and more extreme this year as home prices have surged in this past year.  There are a couple of reasons for that…

We do usually start seeing an increase in homes for sale in the spring months as people prepare to sell when the flowers are in bloom (and their curb appeal increases) and with the plan of purchasing their next home(s) between school years.   This will help ease our current super low home inventory, that is in part, driving up those home prices.  Did you know that per the Vancouver Housing Authority, the vacancy rate in Clark County is 1.87%?  That is crazy…and explains the increase in your rental rates….it also explains the surge of homebuyers that we are seeing right now in the real estate market.  If your rent is $1500, or more…that is a mortgage payment!  A lot of landlords will also be selling their rentals because the market is high.  Some homeowners who want to sell are also concerned with not being able to find a home to buy because the market is a ‘bit’ crazy right now, so they are holding off on listing their homes because of that.
Due to the lack of homes for sale, builders are ramping up their building to compensate…but…The cost of land is astronomically high, which is pushing the cost of building up, so while the builders are building a LOT Of homes, they aren’t in the most desirable price range of $250,000 and under.  The county is just now (in the past 6 months-year) opening up land for builders to purchase and build on, but again, at the cost of land, this isn’t going to help those in the first time home buying bracket too much.  What this does do though, is help those home owners who want to ‘move up’.  This means that they will sell their homes (in that first time home buying bracket) as they move up to that newer/more expensive/bigger/etc home. Not surprisingly, it is currently cheaper to buy an already existing home than it is to build one brand new.  The demand for homes is there, but it’s (only) my opinion that many builders are going to exploit that.  This also ties into the county and the last crash… when the market crashed a lot of builders (including the one I used to work for) had a whole bunch of land in their inventory to build on, and no one was buying.  When the market crashed a lot of builders ended up dumping that land and going into bankruptcy.  When this happened, the county put a moratorium on land and building.  This is why the small lots have been so plentiful lately…because that is all the county would allow for building.  The county should have started to release land for building, economically speaking, back in late 2014, or early 2015.   So, builders building will start helping the market to have more homes available for buyers…which will help that low inventory I just talked about.  I have been told as well by some of my bank friends that the banks will start unloading some of their ‘shadow inventory’ in the next year or so…and that will help with housing inventory as well.

So, what about interest rates, and home prices?  It is an election year, and historically speaking, ‘they’ don’t like to ‘rock the boat’ too much during election years.  Historically speaking, election years stay pretty ‘status quo’.  What this means is that while we do expect ‘some’ fluctuation in interest rates it shouldn’t be too much.  Please remember though that I DO NOT have a crystal ball so this is all just speculation based on past experiences, market statistics, hearsay from others in the economic world, and a smattering of history.  I honestly don’t know what will happen….but like you, I am just along for the ride.  ‘We’ are expecting interest rates to increase though, and ‘think’ that we will start seeing some serious increases either after the election is over, or after the new president (whoever that is) comes into office.  Again though…interest rates should have started inching up when the market started looking healthier in 2014.  It’s all about balance, but of course they didn’t because they didn’t want to slow down the housing industry.  A LOT of people are employed by, and because of the housing industry.  While again, historically speaking, we don’t expect interest rates to do too much this year, “we” do expect to see significant jumps in the interest rates next year, and a lot of people are trying to buy now to tie into those really low interest rates.

Home prices are expected to steadily rise due to the high demand and low supply.  I am hoping it won’t jump in increases as much as it did last year though.  We saw the highest increase in home values during 2013-2014,  as the bottom of the market was really 2012, and this past year, 2015.

So, what is driving this?  Interest rates, expectation that they will rise next year (we are hearing that they expect to be about 5% by the end of next year), low inventory of homes for sale, land just now being opened for building, low vacancy rate for rentals (50% of clark county is actually rentals), folks who can sell waiting to see if the market will increase even more, and of course the fact that the Vancouver/Portland metro area is still one of the fastest growing areas in the country.  Ridgefield is, in fact, the fastest growing city in the state.
So what do I expect to happen?  I think interest rates are going to rise and I think that will slow down the housing market a bit as folks won’t be able to buy as much house.  Homeowners who have been thinking about selling will see that prices aren’t jumping as much so they will put their homes on the market..which will help inventory.  Banks will release shadow inventory more as they see the way the market is going as well.  Buyers however won’t be out in the droves they are now so that will stagnate the market a bit….balancing it out.  Prices might inch down some, but that is an unknown… it really depends on the buyers that are out there. As crazy as it seems, the housing market is really driven by you…buyers and sellers.
The housing market really goes with the level of confidence that people have in the economy and in the elected officials.  Right now people are getting in while the getting is still good because we have NO idea what will happen in the next 4 years…depending on who gets elected.

Is there a crash coming?  I don’t know…  there are similarities, but there are also a lot more differences than the last crash.  Do I think a ‘balancing’ is coming? Yes.  The market has to balance out to continue healthy growth because this past year has been ridiculous!  It’s also bringing out the worst types of realtors and lenders into the market again… 🙁

I know…no real answer here, and I’m not an economist, or an elected official… or a soothsayer.  My crystal ball shows me nothing but dust bunnies…that I really should be cleaning up before they band together and take over my house!  All I can report is what I know and what I’m being told by those who have a higher pay grade than myself.  🙂

One last thing you need to remember is that a real estate agent is not a sales person.  It is not our job to ‘sell’ you anything.  We are assistants,  advisers , guidance, and help.  You should not feel as if your agent is trying to sell you a home, or anything else, our job should be to help you in getting the home you want.  This being said remember that you do not get T-Bone steaks for the price of hamburger…Look ONLY at homes within your budget.  ALWAYS ask questions, and expect answers without a lot of lingo.  I was always told that if you can’t explain something in a way that the other person can understand clearly, it is because you don’t understand it yourself.  🙂

Information is power, and I hope that I am able to help you.  Good luck, and as always…May the odds be ever in your favor out there….  AND If you are looking for a real estate agent, I would love to be able to help you.  
 As always….this is just a quick overview…. please remember that your agent, and your lender work for YOU.  You drive the bus…we are merely GPS to help you get to your goals.  Like the classes, this weekly blog email is to help you with your home adventure.  The goal is to be informative and non-promotional.  🙂  We are, however, hoping you will call and want us to help with your adventure.

If you have any questions about this, or something you have heard…or if you would like me to help you with your home adventure, please call, email,  text, or facebook me anytime.  I am, as always, happy to help!

Thank you again for your business and your referrals!!  …and thank you for referring these classes to your friends, family, and co-workers.

.   ..disclaimer…if you have already purchased a home, or would no longer like to receive these emails, please let me know and I will be happy to remove you from any further mailings…

Upcoming Topics:  Septic vs Sewer
Last Week:  Multiple offers…how can you make YOUR offer stand out??

Have a great day, and I will talk to you soon,

Tracie DeMars / Realtor

ReMax Equity Group
License# 81289
Vancouver, WA

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