Prospective homebuyers in Clark County and across the nation are facing a similar issue when searching for a home: There are hardly any to choose from.
The county’s listing activity weakened significantly in November, with 494 new listings, down 22.3 percent from October, according to the most recent Regional Multiple Listing Service report. While the decrease can partly be attributed to seasonal slowdowns around the holidays, it also comes from a lack of supply, according to Windermere Northwest Living broker Mike Lamb.
“We’re talking about really record-low inventory,” he said. “There is not a lot of inventory in the lower price ranges that are the most affordable, where most of the transactions happen.”
Southwest Washington had 2.4 months of inventory in November, meaning it would take that long for all houses on the market to sell if no new homes were listed. Though this is an improvement from last winter when inventory was less than one month, Lamb doesn’t foresee levels returning to the four to six months typical of a balanced market.
“It is a ‘Why is the dog eating its tail?’ kind of problem,” he said. “You have no inventory, then somebody who wants to move can’t move because they don’t have anywhere to go, and so they can’t put their house on the market.”
It’s also difficult to improve inventory by building new housing, he added. Between complying with Washington’s building regulations and the long processes of getting permits and entitlements, it can take years to build subdivisions.
In Lamb’s experience, while the state’s regulations result in high-quality housing, this quality comes with a cost that deters new development.
“It is very hard and expensive to build anything in Washington,” he said. “For example, the insulation code. I’ve had various builders tell me that the last increase in the insulation code added tens of thousands of dollars to the cost of the house.”
As a result, some people aren’t buying homes because there aren’t enough homes to buy.
Even as inventory remains a problem, local buyers can take comfort in declining mortgage rates and sales prices. The median residential sale price fell 2.1 percent from October to $514,000, while interest rates for 30-year fixed mortgages are trending downward toward 6 percent, according to the government-sponsored home mortgage packager Freddie Mac.
Lamb thinks mortgage rates will continue coming down, making the market more favorable to buyers and putting less pressure on sellers. These lower rates, combined with falling prices, are making homes more affordable than they were a few months ago.
In the long term, however, Lamb doesn’t think housing will become significantly more affordable. “The froth that came with that crazy market is kind of blowing off,” he said. “Bottom line is, I really don’t see prices getting lower.”
A report released last week by real estate data curator ATTOM revealed that the slowing real estate market is affecting home flippers as well. Nationwide home-flipping rates dropped during the third quarter to 7.5 percent of all home sales, down from 8.2 percent in the second quarter, and investor profits on flips fell to a 13-year low.
Going forward, Lamb advises homebuyers to be patient as interest rates come down and the market stabilizes.
“If they’re patient, they’ll be able to find a house,” he said. “For all buyers, the days of going, ‘Oh, I’ve got 30 houses to choose from’ — well, no. But you might have two or three. That’s better than it was.”
