Drops in new real estate listings and inventory continued limiting the options of potential homebuyers in Clark County last month.
New listings fell to 813 in August, down 16.9 percent from July, according to the most recent Regional Multiple Listing Service report. This is the weakest listing activity in August since 2012, wrote Windermere Northwest Living broker Mike Lamb in his monthly Clark County Market Report.
Weak listing activity could contribute to an even less affordable housing market for potential homebuyers going forward.
“If we had more homes that were available, it would help on the affordability side,” said Terry Wollam, managing broker at Wollam and Associates. “With fewer listings, it continues to put pressure on prices to increase.”
In addition to weak listings, historically low inventory levels are keeping prices high. Inventory decreased from 1.9 months in July to 1.8 months in August. This means it would take 1.8 months for all homes on the market to sell if no new homes were added to the supply.
“A normalized or healthy market would be somewhere in the range of four to six months of inventory,” Wollam said. He added he is not surprised by August’s low inventory, given the current slowdown in construction and permits for building new homes.
Low inventory has put a strain on the local housing market. As Clark County’s population booms — growing nearly 20 percent since 2010, according to the U.S. Census Bureau — more people are looking for a place to call home in the county. High demand and low inventory means people are paying more for homes.
Wollam does not foresee the affordability of housing improving in the near future. “Washington state has the least amount of available homes per household in the U.S., and our inventory is a reflection of that,” he said.
Low inventory combined with weak listing activity also limits new sales, Lamb wrote in his report. New pending sales decreased 3.4 percent last month, from 702 in July to 678 in August.
On the bright side, sales — though lower than previous years — have been fairly consistent this summer. This is a sign the market is stabilizing, Lamb pointed out. Summer months typically see a dip in sales as people go on vacation.
“That would be good news, but the weak listing activity in August is cause for concern,” Lamb wrote. “For this market to improve we are going to need more good listings.”
Meanwhile, the pace of home price increases is moderating. The median sale price for a residential home in Clark County in August was $531,000, up just 0.3 percent from $529,400 in July.
Although Wollam does not think home prices will significantly increase going forward, he noted that homebuyers should still expect to pay more for housing due to high interest rates.
“We’ve had a substantial increase in the cost of housing,” Wollam said. “Not in what we typically think of, which is the price of a home that we pay for, but in that monthly payment and in the interest rate.”
Interest rates for 30-year fixed mortgages have risen past 6 percent, more than two times what they were a year ago. This is the first time mortgage rates have exceeded 6 percent since 2008, according to the government-sponsored home mortgage packager Freddie Mac.
For housing to be more affordable to potential homebuyers, Wollam recommends buyers use a 10-year adjustable-rate mortgage loan, referred to as a 10-year ARM, which provides a reduced interest rate. These loans have a fixed rate for the first 10 years before becoming variable for the rest of the loan’s term, adjusting based on current market rates.
Looking ahead, Wollam expects buyers to adapt to alternative financing options like ARMs as they seek housing that they can actually afford.
“It’s concerning, the greater percentage of people’s income that is being attributed toward housing today, especially in Southwest Washington, whether that be rent or a person’s payment on a house,” Wollam said. “And unfortunately, the statistics that we’re seeing do not project that that is going to get better in the near future.”
