Housing costs in Clark County remain high
Declines in new home listings and inventory further limited the options for potential homebuyers in Clark County last month.
New registrations fell to 813 in August, down 16.9 percent from July, according to the latest report from the Regional Multiple Listing Service. This is the weakest August listing activity since 2012, Windermere Northwest Living agent Mike Lamb wrote in his monthly Clark County Market Report.
Weak listing activity could contribute to an even less affordable housing market for prospective homebuyers in the future.
“Having more homes available would improve affordability,” said Terry Wollam, managing broker at Wollam and Associates. “With less supply, it continues to put pressure on prices to rise.”
In addition to weak prices, historically low inventories are keeping prices high. Inventory fell to 1.8 months in August from 1.9 months in July. That means it would take 1.8 months to sell all the homes on the market if no new homes were added to the supply.
“A normalized or healthy market would be somewhere in the four to six month range,” Wollam said. He added that he was not surprised by the low inventory levels in August given the current slowdown in construction activity and permits for new homes to be built.
Low inventories have weighed on the local housing market. As Clark County’s population booms — up nearly 20 percent since 2010, according to the US Census Bureau — more people in the county are looking for a place to call home. High demand and low inventories mean people are paying more for homes.
Wollam does not expect housing affordability to improve anytime soon. “Washington State has the fewest number of available homes per household in the United States, and our inventory reflects that,” he said.
Low inventories combined with weak listing activity are also limiting new sales, Lamb wrote in his report. New pending sales fell 3.4 percent last month, from 702 in July to 678 in August.
On the plus side, sales – although lower than previous years – have been fairly consistent this summer. This is a sign that the market is stabilizing, Lamb pointed out. Sales typically drop in the summer months as people go on vacation.
“That would be good news, but weak listing activity in August is a cause for concern,” Lamb wrote. “For this market to improve, we need more good listings.”
Meanwhile, the pace of house price increases is moderating. The median selling price for a Clark County home in August was $531,000, up just 0.3 percent from $529,400 in July.
Although Wollam doesn’t believe home prices will rise significantly in the future, he noted that homebuyers should still expect to pay more for home ownership due to high interest rates.
“We’ve had a significant increase in housing costs,” Wollam said. “Not in what we normally think about, which is the price we’re paying for a house, but in that monthly payment and the interest rate.”
Interest rates on 30-year fixed-rate mortgages have risen to over 6 percent, more than double what they were a year ago. This is the first time since 2008 that mortgage rates have surpassed 6 percent, according to government-backed home mortgage packager Freddie Mac.
To make housing more affordable for prospective homebuyers, Wollam recommends buyers use a 10-year, adjustable-rate mortgage loan, called a 10-year ARM, which offers a reduced interest rate. These loans have a fixed interest rate for the first 10 years before becoming variable and adjusted based on current market interest rates for the remainder of the loan term.
Looking ahead, Wollam expects buyers to tune into alternative financing options like ARMs when looking for housing they can actually afford.
“It’s worrying that today, particularly in southwest Washington, a larger percentage of people’s income is going towards housing, whether it’s rent or someone paying for a house,” Wollam said. “And unfortunately, the stats we’re seeing don’t predict that’s going to improve any time soon.”