PACIFIC COUNTY — In the economic wreckage left by the national housing implosion a decade ago, more than a thousand houses were available to buy in south Pacific County. This week there were 31.
When houses come on the market — particularly in desirable areas like Seaview and Surfside — multiple purchase offers are common, often for immediate cash.
This strong seller’s market — with the tightest supply in a generation or more — is reflected in quickly rising prices, a phenomenon that even extends into the traditional logging-based communities of north county.
“Prices are way up,” Pacific County Assessor Bruce Walker said last week. “One of the things that have jumped out is the sales and sales amounts in north county; south county has always been more up and down because of the number of second homes.”
South county homes sold in March went for a median of $286,450, or 14.26% more than in March 2020, according to the Northwest Multiple Listing Service. But prices were up even more in Raymond last month — 74% higher than a year earlier, bringing the median there to $243,400. South Bend prices were up 19% in March to a median of $174,100. (Median means half sold for more and half for less.)
Leading real estate agents personally gain from rising prices and high demand, but have qualms about some aspects of the current housing market.
“I personally have sold more [in dollar terms] in the last 3 1/2 months than I sold in the first 9 months of 2020,” Char Wolters, Realtor and managing broker at Lighthouse Realty’s Surfside office, said last week.
“Interestingly enough, total home sales are up over 20% year to date here in south Pacific County, while inventory is at an all-time low,” Seaview-based Realty ONE Group managing broker and Realtor Doug Knutzen said last week. “Things are selling fast and furious for asking or well over asking price. Realtors used to set a price using a Current Market Analysis and would feel pretty good about a potential sales price. Now we do the CMA, add 10-30%, and watch homes sell for 10-20% over that.”
From the buyers’ perspective
With most houses being snapped up fast, there currently are scant options available to long-term residents trying to buy a first home or size up for a growing family on working wages.
And as a practical matter, relatively few local residents remain active in the purchase market, according to real estate agents. With a median household income of $49,700 in 2020 — only about 63% of the state average — present Pacific County homeowners can theoretically afford to buy a house valued at about $254,000, according to the Washington Center for Real Estate Research at the University of Washington. First-time local buyers, with a median local household income of $34,790, find current prices insurmountable.
In Long Beach, Lighthouse realtor and broker Dan Whealdon said, “The affordability of local homes is very tight as we only have seven homes presently for sale under the $234,000 mark. To add to that stat, we only have 16 homes presently for sale in [south county] under $350,000.”
Sellers want a lot for the few places that remain available. The 31 houses on the south county market as of April 26 are priced at an average of more than $467,000 and a median of $400,000, according to NWMLS data. And at the current pace, it would only take about 47 days to sell all those houses.
As a practical matter, “Most of our buyers are not from Pacific County; a very small percentage of them are,” Wolters said. Would-be Pacific County residents are from “Seattle and surround area, Portland and surround areas like Clackamas county and Salem area, and Ridgefield and Battleground, because it’s not a bad drive.”
What all this means is that “We are off balance,” she said. “The effects of this fast-paced market are far reaching. My focus as a Listing Agent is to get the sellers top dollar but I realize this leaves many people who aren’t able to pay cash out in the cold. It is a moral dilemma for an empathetic person such as myself. Still, I, like many other agents am experiencing the best year of my career. It is fun, rewarding and it feels good to be successful, but I realize I am lucky to be in this position after covid has had horrific consequences on so many.”
Knutzen shares this sentiment about a housing market that is attracting an historic level of outside interest, but with a downside for local people who don’t yet own a home here.
“While this is good news for the sellers, buyers are in a completely different frame of mind. We are seeing what is called ‘Buyer Fatigue,’” he said. “Multiple offers, escalation clauses and sales prices over asking are making it very hard for most buyers to compete. Buyers and agents are getting frustrated after writing multiple offers on multiple homes, only to find that they are sold sometimes within hours. Homes are being sold sight unseen for cash. To be a buyer in today’s market means you need to have cash in hand, or a very strong finance package. Many successful buyers are willing to offer a price above what a home may appraise for.”
Wolters also is seeing multiple offers in many cases, particularly in communities like Seaview. Surfside has also been a hot market this year as buyers realize the homes are newer and neighborhoods in general are quieter, she said.
What lies ahead
Long-time residents — especially those in the real estate business — have witnessed multiple past up-and-down cycles for housing in Pacific County’s maritime resort communities. This brings some degree of caution about longer-term forecasts for the current market.
Local Realtors surveyed mention factors like low-interest mortgage rates, an increasing ability for knowledge workers to live wherever they like, and the desire to get away from covid exposure and social turmoil in nearby urban areas as continuing to drive up interest in coastal real estate.
According to data compiled by the county assessor, the number of arms-length residential property sales increased 20% in 2020 compared to 2019. However, the upward sales trend dates from even before the covid outbreak, with numbers climbing from 875 in 2016, to 947 in 2017 and 998 in 2018, before decreasing slightly to 937 in 2019 and more than rebounding to 1,125 last year.
“Totally a seller’s market with low inventory still and high prices,” Wolters said. “Pretty hard to see it ending this year but watching what happens in the Portland/Seattle market is a strong indicative of what happens here.”
Hot demand for coastal houses means it is increasingly hard to find anything to rent.
Some renters “are being asked to move with nowhere to go,” Knutzen observed. “Rents are being driven up beyond some folks’ ability to pay. The potential for selling your home or rental at a higher than expected price can be pretty tantalizing.”
“Yes,” Wolters said, “sellers absolutely deserve to get the most for their homes but the unintended consequences leave a void in our community. Rentals — if you can find them — are higher because landlords paid more to buy the home. Home prices are higher due in part to the cash flow coming from larger markets. Land prices are rising because there are so few homes but the cost of building materials have skyrocketed. When people can’t afford housing, it’s a desperate situation. Homes that used to be $125,000-$150,000 are now $200,000-$250,000.”
Wanted: Good appraisers
The local real estate market is also somewhat gummed up by a lack of qualified appraisers.
“The tried and true ones are so slammed they can’t meet the turn-around times,” Wolters said. Around 45 days is expected lenders in general, causing a huge backlog in paperwork for buyers. “Cash is king and the buyers and sellers know it. Appraisers aren’t the only ones struggling to meet the demand. Real estate agents, title companies, home inspectors, septic inspectors and lenders are all working at full capacity.”
Sellers’ preference for quick and easy cash sales leaves many buyers behind.
“I have no idea what the answer is or how long the current situation might last, but I do know that there are repercussions,” Wolters said. “I overheard someone say ‘At the beach, you either work two jobs or own two houses.’”