His latest report was on housing. It’s a definitive work in this marketplace. Enjoy.

Mid-Columbia Residential Market Highlights
by Dallas Fridley
Published Oct-25-2006

Residential housing market statistics for the Mid-Columbia are now reported by the Portland based Regional Multiple Listing Service (RMLS). The RMLS publication, Market Action, is an excellent source of residential market highlights for the Portland Metropolitan area, Lane, Douglas, Coos, and Curry counties, as well as the Mid-Columbia.

The Mid-Columbia report incorporates residential market statistics for both the Oregon and Washington sides of the region. RMLS statistics for the Mid-Columbia have been included in Market Action since January. Moving forward, market highlights in 2007 will include an outlook for over-the-year appreciation and changes in listings, sales volume and average market time.

An additional benefit of having a common source for residential market statistics is the ability to compare the price of housing in the Mid-Columbia to that of neighboring regions, like the Portland Metropolitan area.

Year-to-date residential market highlights reported for September indicate the average sales price in the Mid-Columbia was $246,900. The year-to-date median sales price was considerably lower than the average, coming in at $196,500. Thus far in 2006, the region closed 772 sales and compiled 1,402 listings. The average market time for the first nine months of the year was 80 days, while the active residential listings available at month’s end would last 6.4 months.

Comparing Portland and the Mid-Columbia

The Portland Metro area’s residential housing market is undoubtedly hotter than the Mid-Columbia’s. But given the stark differences in industry makeup, wages and other amenities, like access to higher education, it should be. In Portland, the year-to-date average sales price was $322,400 in September, nearly $76,000 higher than the Mid-Columbia’s average. Portland’s year-to-date median was $270,000 or about $74,000 above the Mid-Columbia’s. Average market time was much lower in Portland, at just 41 days, while its active inventory would last 4.5 months.

What about Hood River?

That is a very good question, and the answer is surprisingly easy to get at since RMLS breaks out statistics for 18 markets on the Washington side of the Columbia and 14 on the Oregon side.

Six of the market areas reporting for the Oregon side of the Mid-Columbia deal specifically with Hood River County, including Cascade Locks, Hood River City, Hood River-Westside, Hood River-Eastside, Odell, and Parkdale/Mt. Hood. Before we jump into the statistics, bear in mind that not all market areas share the same characteristics. Spend some time in Hood River and you’ll notice plenty of new townhouses, and minimal distances separating new homes on tiny lots. Take a drive out to the Westside and you’ll find bigger homes and larger lots. And one of the beauties of living in the upper valley is having an acre or more all to yourself.

Through September, Hood River-Eastside was winning the price war, with a median of $659,900. That’s a substantial sum of money but it is important to point out that there were just four closed sales underlying that number. Perhaps Hood River-Westside was a bargain, with a median of $428,500, and with 38 closed sales, it’s fair to say that there were enough data points to know what a home is likely to cost. Parkdale/Mt. Hood came in just above Hood River City, with a median of $310,000 (27 closed sales). Hood River City (112 closed sales) posted a median of $305,000, and Odell (15 closed sales) was much closer to the Mid-Columbia median at $263,000. Cascade Locks was the bargain value market in Hood River County with a median of $182,500 based on 15 closed sales.

What’s Going on in The Dalles?

The Dalles has been Google-d but the much anticipated run-up in housing prices will remain a mystery given the nine-months of data available. In truth, residential prices have risen considerably in

The Dalles, but instead of taking the ball in an up-field position, like Hood River, the real line of scrimmage was probably much closer to the 20-yard line. No matter how the year-to-date median is characterized, The Dalles remains a bargain, averaging $170,000 with 228 closed sales. Mosier is another market that is difficult to compare with other areas in Wasco County, and its median through September, at $302,300 (7 closed sales) was pricey. The year-to-date median prices in Dufur ($168,800), Tygh Valley ($110,000), and Wamic/Pine Hollow ($131,000) were a stark contrast to the Mid-Columbia’s median.

Home Prices on the Washington Side of the Mid-Columbia?

The pattern in Washington was in many respects a mirror image of what was reported for the Oregon side of the Mid-Columbia. On the west-end, year-to-date median prices in Stevenson ($322,500), Snowden ($384,500), White Salmon/Bingen ($252,800) and Trout Lake/Glenwood ($380,000) were well above the Mid-Columbia median. To the east, year-to-date median prices in Lyle ($220,000), Dallesport/Murdock ($177,600), and Goldendale ($107,000) appeared to be bargains.

How Much Income Does a New Homebuyer Need?

Living and working in the same community may not be an option for every new home buyer. In general terms, the threshold for a monthly mortgage assumes a payment of no more than 30 percent of your gross income. And under conventional mortgage terms, you can anticipate needing a down payment equal to 20 percent of the home’s sale price. Mortgage rates float up and down, and not everyone is going to choose a 30-year fixed rate, but for simplicity sake, a seven percent, 30-year loan is a reasonable place to start.

Graph 1 provides the outlook described above for several housing markets on the Oregon side of the Mid-Columbia. Graph 2 can be thought of as its companion, showing the difference between the median household income of each county in 2003 (the most recent figure available) with the income needed to purchase a median priced home under conventional terms.

Very few households in Hood River County would be able to afford a median valued Westside home given the gap between median household income and the 30 percent affordability standard. With an income gap of $52,695, a Hood River County household at the median level would spend 71 percent of its income on Westside mortgage payments. That outlook doesn’t take into account the down payment ($85,700), property taxes, insurance, up-keep and related costs of home ownership.

Compare that situation with The Dalles, where the gap between Wasco County’s median household income and a median priced home was just $2,087.

Looking at the Portland Metropolitan area once again, the spread between a high priced market, like Lake Oswego/West Linn and a lower priced market, like Columbia County, is certainly just as drastic. In the case of Lake Oswego/West Linn, the year-to-date median was $450,500, while in Columbia County it was $215,000.

The Washington side of the Mid-Columbia painted basically the same picture as the Oregon side. Graph 3 follows the same scenario described earlier, depicting the gap between median household incomes in Skamania and Klickitat counties and the income needed to afford a median priced home in select markets.

A Washington household at the median income level would be hard pressed to make a first-time home purchase in most of the Mid-Columbia markets shown in Graph 3. To enter the housing market in Stevenson with a household income equivalent to Skamania County’s $40,216 median, the affordability gap would be more than $28,000. Comparatively, the Dallesport/Murdock and Goldendale markets remain affordable.

What About Rental Housing?

According to the U.S. Census Bureau’s Housing Vacancy Survey, national homeownership in the second quarter of 2006 was 68.7 percent. For the first-time buyer age group of under 35-years-olds, the rate was 42.4 percent. In the western U.S., homeownership rates were slightly lower, at 64.7 percent.

The issue of housing affordability relates to more than median prices. Rental housing is a reality for nearly one-in-three western U.S. households. Looking at building permit numbers in 2005, single-family units represented 77 percent of Oregon’s permit total and 78 percent of Washington’s. While some of these single-family units end up as rental housing, their affordability is another question.

Structures with five or more units, typically apartment buildings, represented 18 percent of Oregon’s permits in 2005 and 17 percent of Washington’s.

Building permit activity in the Mid-Columbia region has been heavily weighted towards single-family units. Since 2000, just six percent of all building permits in Hood River, Wasco, Skamania and Klickitat counties were issued for multi-unit housing. And in recent years, townhouses have represented the lion’s share of the multi-unit permits.

Final Thoughts

The Mid-Columbia region is adding housing, the majority of which remains unaffordable to many first-time buyers. And the mix of new housing, which is comprised almost entirely of single-family units, fails to address the needs of one-in-three households.

Median home prices vary widely across the Mid-Columbia, with the least affordable markets concentrated on the west-end. The affordable markets for the vast majority of first-time buyers are located in the Mid-Columbia’s eastern-end.

The cost and availability of land for residential development is also an important consideration. Likewise, it is a difficult issue to address without a thorough understanding of land use planning goals and the adequacy of infrastructure to support new development.

Industry structure and growth can also help to define a community’s future housing needs. Earnings, as shown in Graph 5, are an important consideration in any affordable housing strategy. In that regard, wage growth in the Columbia Gorge region (Gilliam, Hood River, Sherman, Wasco, Wheeler, Skamania, and Klickitat counties) has been stagnant for more than a decade.

Courtesy of The Oregon Employment Department

This is a REALLY hot topic at the moment.

New construction requires a level of insurance that many developers have found prohibitive. Believe it or not, some developers have chosen to be vastly under insured in the case of a construction claim!

As Realtors, we are comming across this issue with some frequency. If nothing happens, well then, no one ever finds out. It’s when something major goes wrong that suddenly knowing the level of your contractors insurance is important.

Again, information and asking the right questions is absolutely KEY. It’s a simple question:

“Is your project insured, and may I see the documents?”

Realtors working with Developers know about this issue, and should be able to gather the documents together in very short order. Often times you can speak with the Developer’s insurance agent and they can give you a quick overview of the coverage.

As a Buyer, you want to be comfortable that the Builder is insured under the correct type of insurance,(For example, as a General Contractor, with home construction as the basis of their insurance, and not a sub-contractor, building a property beyond their insurance scope) and in the correct amount. This can become an issue in the following ways:

1. Improper insurance can complicate your mortgage process
2. Improper insurance can complicate your ability to get homeowners insurance at a competetive rate

More often these days, Insurance is based per project, but that too can be fraught with complications. It is not out of the question to do background checks on the insurance company. In the event of a major claim, they could become a partner of yours….

In this day and age of large insurance claims……….Make sure you are covered!

It’s a simple question to ask any Realtor, and the answer is readily available.

Ready? Here goes:

“What’s the sales history on this house?”

Most Realtors already know the answer. In this market, with increasing regularity, we are seeing remodeled homes being bought, fixed up, and then resold.

This is a normal part of the market, but in recent years a part of this practice has come to be called the “Pump and Dump” after the old boiler room jargon referring to stocks.

If your prospective property is a “Pump and Dump” your Realtors reaction will inform you right away.

I suppose this rather perjorative phrase casts an overly wide net. I’ve seen many, many homes that have been turned into Gems! So it is with a measure of caution that we type this.

Make sure that when you offer on a newly renovated home, (Or a new home for that matter!) that you can review the Contractors License and Bond, and that you see evidence of both building permits and final inspections. In the unfortunate event of a claim, you’ll feel much more secure in your property knowing that you’ve already done the research.

In researching a title report for a client last month, I was shocked to learn that the property that we had just bargained for wasn’t buildable!

I read the deed, read it again, and finally made the call that I’m sure the Seller’s agent wasn’t happy to hear. His clients had thought they bought a buildable parcel, when in fact, they had not.

Just a few weeks ago, while doing some more title research, we discovered another adjustment to a deed that removed a couple of feet from our clients property, something that the current owner never even knew about!

These example illustrate our point. READ YOUR DEED AND TITLE DOCUMENTS. MAKE SURE YOUR REALTOR DOES TOO!

This includes, but isn’t limited to:

Any filed plats. Ask to see a copy of the plat, in the narrative there can often be restrictions to your ownership that you may not be aware of.

Review the local building codes and ask the City of County planner if there is anything extra that you should know about regarding your property, often times they’ll tell you important information! (Like stuff about White Salmon and Water meters, for example)

Ask to see exceptions that are listed on title! Often times there are exceptions to your title insurance report that don’t even relate to your property (especially in the case of subdivision) If you think an exception shouldn’t be on the title, ask your Realtor to inquire about removing that condition.

Make sure you are not the only eyes on the documents, Your Realtor should have the time and the attention to detail to inform you of potential. Often times, having an attorney on your team is also worth the investment!

Yikes. You knew, after the rain kept comming down, that it was going to be at least as bad as 96. The photos, however, were even a bit more sobering than we had all expected.

While shocking, the real issue other than the destruction is how the timing of this storm and the damage inflicted will impact Hood River. Right now, there is intense lobbying going on to determine which side of the mountain road will be repaired first. If Hood River is repaired first (most likely) expect a significant increase in winter traffic counts, and many new faces in town. These will most likely be people who have not discovered the excellent access Hood River has to the mountain, and Hood River’s value as a great staging point for a weekend at the mountain.

This will undoubtedly lead to more local interest in Hood River as a Winter destination………

HOWEVER……….If the repairs are delayed, and/or the other side of Highway 35 is repaired first, this could cut off the Hood River valley from one of its largest employers, and destroy and semblance of Winter commerce, from ski rentals all the way down to restaurant covers. Look out, that could mean a tough, long winter in this little town……

Stay tuned.

Fluidity is such a great thing! We’ve had some great new listings, some great clients come through, and over all, I think we’ve shaken off the doldrums of the late Summer.

Bill just listed a spectacular set of lots in Washington

Check These lots out!

Here’s a quick two photos of them………

Bill is also picking up a few of the Mosier Creek Townhomes project, an amazing property built in Mosier………

And he’s got another large commercial piece in The Dalles. Go Bill!

I’m picking up a couple of properties this week as well. A Lot, A Home and a very nice commercial site near the Hood River Hospital…….Looks like the end of the year will be pretty strong.