Potential homebuyers in Clark County face a difficult decision as the real estate market continues to normalize: Buy now or wait?
The median sale price for residential homes in Clark County continued falling last month, dropping from $514,000 in November to $479,900 in December, according to the most recent Regional Multiple Listing Service report. Interest rates for 30-year fixed mortgages also fell and are now just above 6 percent, according to the government-sponsored home mortgage packager Freddie Mac.
Given these relatively lower expenses, Living Room Realty broker Scott Cotrell thinks it makes sense to buy now.
“If they buy now, regardless of what they can afford, it’s always going to be better than renting because rent tends to always go up,” Cotrell said. “If you lock in a mortgage rate, it’s locked in for that life of the loan, and you know how much your expenses are going to be.”
Even as prices and interest rates fall, Cotrell doesn’t foresee housing affordability improving for potential homebuyers in the near future. Mortgage rates, though lower than their peak of 7.08 percent in November, are still high, limiting buying power.
Terry Wollam, managing broker at Wollam and Associates, agrees that now might be a good time to buy, as a lack of housing inventory will likely put upward pressure on prices going forward.
“Prices have probably hit their bottom, in my opinion,” Wollam said.
Southwest Washington’s inventory of houses for sale decreased 21 percent in December to 1.9 months, meaning it would take that much time for all houses on the market to sell if no new supply were added. This low inventory is partly due to seasonal market trends, as people might pull their homes off the market during the holidays. But this is still a notable decrease, according to Wollam.
“That’s huge. You don’t see that kind of drop in inventory that fast,” he said.
The drop isn’t a big surprise to Wollam; it follows a decrease in new listings in November. New listings in Clark County fell another 25.7 percent in December, to 367 compared with 494 in November.
Wollam doesn’t expect listing activity to improve much in the coming months.
“It’s a reflection of not as many people selling their homes because of the lower interest rate that they have on their homes,” he said. “That’s not a new thing; it’s definitely something that’s been taking place since June.”
Because new development is costly and can take years to complete, Wollam doesn’t anticipate an improvement in inventory levels until interest rates fall further, motivating more people to put their homes on the market.
Looking at the year ahead, Cotrell predicts interest rates could fall below 5 percent. If that happens, the market would “take off like crazy,” he said.
For this reason, he thinks buying now would be beneficial for those who want to avoid the stress of a hot market.
“The odds of a seller negotiating more now would be better than they would at that lower rate if they wait,” he said. “If rates drop more than 1 percent between now and, say, six months from now, that person can still refinance and get that rate.”
Wollam advises buyers to consider more creative financing options in lieu of the standard 30-year fixed mortgage.
“Finding a good Realtor or lender that can help you to understand what financing options are available, that weren’t available before, could really help with that barrier to entry in purchasing a home,” he said.
