As many of you have already heard on the news or read in the papers, the housing market appears to be on the mend. Contrary to what was expected, we have not experienced a tsunami of foreclosed homes (the so-called “shadow inventory”) roaring into the market and drowning out gains in new home sales. Markets such as Florida and Arizona appear to be on the rebound; according to the National Association of Realtors, Cape Coral had a 28 percent increase in median sales price over the last year, and Phoenix has had a 35 percent increase. The bad news is that Florida’s market started to soften two years before the Clark County market did, and it will likely take us another two years before we see a healthy housing market.
In talking with local builders in the Vancouver and Clark County markets, there are signs that the market is clearly improving. Strong markets such as Camas and Felida have seen increased demand, and markets which were deemed to be over supplied and saturated, like Ridgefield and Battle Ground, are seeing renewed building activity. Large national builders have purchased a significant inventory of finished lots for future development taking them off the market for local builders; DR Horton and Lennar own at least 235 lots between them in key Clark County subdivisions with good locations. This has created a tight supply of finished lots available for smaller builders, and we are starting to see competing bids on finished subdivisions and short plats.
So as we come to the end of 2012, I feel positive about the housing market for 2013. I do not believe it will come roaring back, but I do believe we will see strong recoveries in value for existing homes in the next few years, and a slow but steady recovery in the housing industry. According to New Home Trends, a provider of residential real estate information, the second quarter of this year saw 403 applications for new single family detached lots in the four-county area, up from a low of 10 in the second quarter of 2011 and a high of 2,100 in the second quarter of 2007.
Our challenges will be managing the impacts of a shortage of finished lots without a strong pipeline of new subdivision applications to meet demand. Though we may see increased costs due to material shortages, skilled labor shortages and finished lot shortages, the good news is that developers are once again contemplating the possibility of raw land purchases. A housing recovery will ultimately help spur a recovery in commercial and industrial real estate as well.
We are not out of the woods yet, but all signs including a four-year high in consumer confidence, are pointing in the right direction.
Real estate broker Sierk Braam specializes in distressed assets and investment sales at NAI Norris, Beggs & Simpson. Contact him at 360-852-9600 or sbraam@nai-nbs.com.
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