Clark County Housing

The OFM just released their April 1, 2016 population and housing stock estimate.  They do this once a year.  Given the apparent shortage of housing in Clark County, I was particularly interested in the ratios between the population and numbers of different types of houses in Vancouver and Clark County. As most people in the industry would have guessed, there are far fewer homes-per-person in Clark County and Vancouver than there have been in many years.  Once again, the builders did not build enough homes of any kind to keep up with the demand driven by population growth. Below is a summary of some of the information I pulled from the report: Clark County: Population Up 2.0% Population in 2016:   461,010 Increase of 9,190 people Housing Units Up 1.58% Housing Units in 2016: 177,495 Increase of 2,755 housing units   Clark County Housing Shortage Fewest housing units per person since at least 1990 Fewest single-family units per person since 2000

Home prices in Clark County are increasing rapidly.  In many ways this market feels like the 2005-2007 market.  Houses listed for sale are generating multiple offers within a few days.  They are generally selling for asking price or above.  People don't seem to care about over-paying, because they assume the house will be worth more in a few months. That said, there are significant differences between this market and the 2005-2007 Market.  in 2007, home prices were unaffordable relative to median incomes and interest rates.  There was also an oversupply of single family homes.  Now homes are relatively affordable, and there is a shortage of all types of housing. In 2007, the median income earner could only afford 77% of the average home. Now in 2016, the median income earner can afford 111% of the average home. Homes are much more affordable today. This is due to rising income and reduced interest rates.  See the chart below That is a major reason that home pri

Case Shiller is a few months behind.  So when they release their data, we never learn too much about pricing in our area.  However, it is interesting to compare prices in Portland MSA (includes Vancouver) with the rest of the nation. The above chart indicates that Portland price increases are out-pacing the rest of the Nation.  They were rising together until about the end of 2013.  Then Portland prices accelerated while National prices decelerated. Home prices in Portland have exceed 2007 peak levels.  Nationwide, home prices remain below the peak achieved in 2006. The next chart breaks the Portland market down to look at the low and high price tiers. Prices of lower prices homes in Portland are increasing much rapidly more than higher priced homes.  However, all are increasing rather rapidly.  And all price levels have exceed 2007 peak levels.

Washington State OFM will publish the April 1 population estimates on Thursday, June 30.  I project that they will report Clark County's population to be 461,800.  That would be an increase of 10,000 people.  The increase may turn out to be a bit greater.  To accommodate this increase we would need to build about 3900 housing units, including about 2700 single family homes.  Over the past couple of years we have built about 2000 units per year, including about 1500 single family homes.  During the year ending April 1, 2016 Real Estats, Inc. reported approximately 1400 new home sales.  The Census will probably report an increase of about 1600 or 1700 single family homes over that period of time. April 1, 2015 to April 1, 2016 Projected Population Increase 10,000 Single Family Homes Needed 2700 New Homes Sold 1400 New Homes Created (Estimate) 1600 Annual SF Housing Deficit (1100) It appears that ther

Even though home prices are appreciating rapidly in Clark County .  They cannot keep up with effects of low interest rates and rising income.  While affordability is trending down, home prices are still more affordable than average. It should be noted that this is based on the Washington State OFM Estimate for average income in 2015.  That number could be revised down, which would impact affordability.  However, it also assumes no increase in income levels from 2015 to 2016.  I believe this is conservative.  Affordability in 2016 may be even higher than shown here. But the year is young.  And if prices continue to increase, or interest rates increase, then affordability could drop rapidly.

Portland Metro (including Vancouver) leads the nation in price inflation over the past year.   The Case Shiller Repeat Sales Index shows that Portland house prices have appreciated 12.5% over the past year.  Only Seattle and Denver come close to this rate of price increase. Top Cities Annual Increase Portland 12.30% Seattle 10.80% Denver 10.00% San Francisco 8.50% Dallas 8.50% Tampa 7.60% US National 5.20% According to Case Shiller, houses in the Low Tier (<$270,000) appreciated at a rate of 15.5% for the year ending in March.  While the high tier (> $381,000) appreciated at a pedestrian rate of 10%. According to RMLS, the average home sale price in Clark County (this is an entirely different metric than used by Case Shiller) increased by 15% over the same per