Home values make gains despite continued market uncertainty
In the halcyon days of the region's housing boom, well before the bust hit Southwest Washington's real estate market like an equity-erasing atom bomb, it seemed as if home prices had nowhere to go but up.
Ever since, homeowners across the board have seen a sickening drop in housing values, with median Clark County home prices pegged last month at $219,900 – up 7-23-2010 Edition
10 percent from May, but still well below the median value of $260,000 reported in December 2007, according to Regional Multiple Listing Service data.
And while at least two local residential real estate brokers believe home prices have hit bottom, worries about weak demand stemming from double-digit unemployment, excess inventory from a decade-long construction boom and the threat of a second wave of foreclosures continue to weigh heavily on the regional housing market.
"There's still a lot of uncertainty in the housing market right now," said Mike Lamb, an associate broker at Windermere Real Estate in Vancouver.
A tenuous housing recovery
Despite continuing weakness in the overall economy, as well as a glut from the recently-expired federal First Time Homebuyers Tax Credit program, the region's single-family home market has begun to show signs of a modest recovery.
Last month, 528 new home closures were reported in Clark County. While that figure was down .9 percent from May, closures rose 10 percent from June 2009 and 26.3 percent from June 2008, according to a real estate market report compiled by Lamb.
According to Lynn Krogseng, a broker at Keller Williams Realty in Vancouver, some of the increase in activity in the county's housing market has been driven by home sales in the $300,000 to $350,000 range – deals involving homebuyers taking advantage of depressed prices and historically-low interest rates to upgrade residences.
However, Krogseng estimated 72 percent of current pending sales made in the past few months in the greater Vancouver area involved homes valued under $250,000 – a possible signal that any increase in housing values would be modest for some time to come.
"Looking to the future to at least the end of the year, I see home prices rebounding, but not by much," Krogseng said.
Krogseng pointed to the region's high level of unemployment – 12.4 percent in Clark County in June, according to the Washington State Employment Security Dept. – as an ongoing "drag" on the housing market.
And while Lamb conceded that the weak employment picture in Clark County continued to weigh down the market, he preferred to focus on what he called the relatively-constant number of gainfully-employed potential homebuyers, both in Clark County and beyond.
"I've gotten calls from several Oregon businesspeople looking for homes in Clark County, saying, ‘We are out of here in the next six years,'" Lamb said.
Interest rates
There was one factor in home sales that Krogseng and Lamb unambiguously agreed on: rock-bottom mortgage interest rates have thus far failed to encourage a significant number of potential buyers to enter the housing market.
"It's sort of counterintuitive, but when rates are trending down, people are less likely to make a move," Lamb said.
Far from being an incentive to take advantage of a correction in regional home prices, some would-be homebuyers instead viewed historically-low interest rates as yet another sign of an economy still struggling to find its footing.
"Potential buyers see low interest rates as proof that the powers-that-be don't have confidence in the economy," Krogseng said.
According to Lamb, the region's single-family real estate market is unlikely to see a big impact until interest rates begin to climb once again – actions a recession-weary U.S. Federal Reserve is unlikely to take in the near future.
"Falling interest rates do not provide the impetus," he said. "People will be encouraged to act only when interest rates go up."
Gloom on the horizon?
Even as Clark County home prices begin to recover, a potential so-called "second wave" of foreclosures continues to hang over the region's real estate market. 7-23-2010 Edition
According to Krogseng, a combination of continuing high unemployment, looming adjustable rate mortgage resets and sluggish home value growth threaten to put even more pressure on struggling homeowners, many of whom are already on the verge of foreclosure.
"I don't think we're over the worst of it yet," she said.
In June, there were 384 foreclosures in Clark County, representing one in every 423 housing units, according to online distressed property search engine RealtyTrac.
Even with continuing signs of distress in the region's housing sector, Lamb reported seeing a recent "flurry of activity," leaving the 30-year Vancouver veteran broker hopeful that the regional real estate market would end the year with positive growth.
Krogseng also had a mostly optimistic outlook for the rest of 2010 – though she acknowledged that it would be tough going at least until the overall economy showed signs of definitive improvement.
"While I encourage people to buy now, the reality is that most people are either uncertain, or unemployed," she said.
