Friday, March 15, 2019

Unincorporated Growth Driving Need for Annexation

The Urban Growth Boundary (UGB) for Vancouver is being built out out a rapid pace. This is creating an ever increasing urban population in unincorporated areas. The level of services and infrastructure provided at the county level is rarely as solid as that at a municipal level, yet Vancouver is nearly HALF unincorporated and will likely be more than half in the next decade if the city and county don't pull their heads out of the dark and stinky.

UGB Map from City of Vancouver Website
This is not intended as a insult to the Clark County government but rather more of an urban planning and development issue. Right now Vancouver is made up of land spread across more than a dozen zip codes with roughly 325,000 residents. Of those only 57% live in the incorporated city of Vancouver. It is safe to say that 90% of those living outside the city limits are living in a mostly urbanized area. Sure there are several thousand living in the "country" out in Proebstel and north of Barberton, but the overwhelming majority are in underdeveloped URBAN unincorporated areas that for the most part, are not well planned out communities. This is unacceptable behavior at the government level both City and County.

The city of Vancouver is already the de facto second largest city in the state. If the city would complete the Orchards annexation that was supposed be done over a decade ago the city would be the actual in-fact second largest in the state. Why does this matter? Simply put, large cities are noticed by companies looking to expand, move their HQ, build factories, and create JOBS, good jobs, not just service sector jobs. More than 50,000 Clark County residents commute into Oregon (mostly to Portland) to work each day. I would venture a bet that NONE of them are happy about the drive, nor paying Oregon's egregiously abusive state income tax. It is too easy to bring jobs here, yet our leaders seem to be a bit uninterested. To the great credit of the the city and the last three Mayors, the downtown and waterfront renewal has been outstanding and there are not enough kudos to go round for it.

Vancouver has an excellent port, wonderful rail connections, substantial amounts of available industrial land, better schools (than Portland), better quality of life, lower cost of living, frankly it's better in every measurable metric than Portland. Yet there go those 50,000 plus residents driving across that crappy old bridge into the clutches of the Rose City. I blame our county and city leaders. They are failing us on this botched annexation schedule and on jobs.

We need not wait for the new bridge, in fact if we took half of those commuters off the bridges we wouldn't need to replace it anyway, other than the fact that it is old. Oregon is making a move to "punish" Vancouver and Clark County commuters by trying to toll I-5 and I-205. Originally they wanted to toll the area south of Portland, but a new movement targeting Clark County has arisen with a notion to toll the North Portland and NE Portland areas instead.

Clark County and in particular Vancouver needs to focus on attracting medium to large employers from Portland and Washington County and beyond the region. I'm referring to companies with skilled labor and professional positions that pay well. I'm not talking about little 50-100 employee ops although those are fine, we can attract bigger 500-1000 employee operations, we have the space, and their employees will be MUCH happier on the north shore of the mighty Columbia. Portland is not exactly business friendly. Getting noticed is a big part of the equation, the Waterfront has attracted attention for the better and now we need to annex those areas already served by Vancouver's city utilities and move from mid-size to large city without a single new resident moving in. It's not about more growth, it's about capitalizing on the growth we have already had. Vancouver is already a large city, the people are already here, the city just hasn't recognized them yet. 

Friday, March 8, 2019

Inflated Local Rents, Drive the Purchase Market

As we move into the spring season our local market is primed to out perform the national market due largely to our puffed up rental market. a recent article in the Columbian newspaper showed that average Vancouver, WA 2 bedroom apartment rents were on par with Seattle and noticeably higher than neighboring Portland, OR. What is odd about this factoid, is that both Portland and Seattle have significantly higher median home prices than Vancouver.

Renting in Portland is far less expensive than buying, but in Vancouver it is actually cheaper to BUY than rent and that is rather anomalous for this region. This may be a fleeting moment however as a massive construction boom is underway with more than 7,000 new apartment units scheduled to come online over the next 12-18 months in Vancouver. Portland had a massive construction boom as well bringing some 20,000 units online recently or in the near future.

Over the last 5 years national trends among the millennials was to rent rather than buy and in fact that generation of Americans has had the lowest rate of home ownership in the post war era. That trend seems to be reversing and new reports show millennials are jumping in to the real estate market at rates not seen before.

I still believe 2019 will have modest growth rather than the robust seller's market conditions of 2016 through mid 2018. All things considered, millennials have market making potential just in their shear numbers. They represent 80 million Americans and are now reaching there prime earning years, the next several years should bring reasonable housing demand, but builders need to get ready to change their direction. The trend locally in new construction has been aimed at retiring baby boomers with one level homes. Other builders are still focused on large expensive homes as well and data suggests millennial buyers are not interested in 5 bedroom houses. This younger segment is having fewer children and is driving a bit of an urbanism movement.

Millennials are interested in modern design, energy efficiency and good use of space. The market is healthy and remains mostly neutral with a slight advantage to sellers in the 120% of median an lower market. Sellers of more expensive homes are at a slight disadvantage. 

Friday, March 1, 2019

Late Winter Slows Showings

We have had some late winter weather that still persists and the constant threat of snow seems to have kept many away from touring listed properties. All of my listings saw a substantial fall off over the last two weeks beginning with the the snowy weather in the middle of last month. We shall see if the snowy and chilly weather is the real cause or whether their is some other more diabolical market condition developing. My gut is that the sketchy weather was the real culprit.

Tomorrow and the next several days will be chilly by March standard to be sure, but the great yellow orb will be blazing bright across the late winter sky. I think that will bring the masses out to house hunt.

I read an interesting article in the Columbian today that cited rents in our area (Vancouver) are at or very near the same level as Seattle for a typical two bedroom apartment. We are well ahead of Portland which averages $1300 to our $1650. Ouch! I didn't see that coming, or did I? Portland has been on a red hot apartment building binge adding more than 13,000 units in recent months. Vancouver is also on a bit of a building binge, but units in Vancouver have not all come online yet.

For resale real estate, this bodes well as high rents tend to chase people towards ownership. Why rent if you can own for less? I think this could lead to a bit of a buyer's resurgence as spring awakens. That will keep our housing market humming along for the rest of the year. Inventory is still technically tight, but levels have been increasing slowly over the last 8-12 months and soon there will be a more 'normal' level of inventory with market absorption rates coming in at 4-6 months. Nice and healthy.

Let's see if this sunshine filled weekend proves me right, or if I have to start worrying about the spring.