Real estate agent Tracie DeMars pulled her car up to a small, one-level house set back from the street in the Fruit Valley neighborhood. When it was built in 1942, the two-bedroom, one-bath house with 828 square feet was an average-size new home.
“This is what many buyers want: a nuclear ranch with a little bit of yard,” said DeMars with Re/Max Equity Group. “If a house is decent and in good shape, it’s going to move fast.”
Lightning speed is more accurate.
Clark County’s real estate market for smaller homes is sizzling. Small pre-owned homes are receiving multiple offers and most often for more than the asking price. Those multiple offers are made within days of the house being listed, and sometimes within hours. This feeding frenzy happens not only in the gentrifying downtown neighborhoods, but also in some of Vancouver’s poorest neighborhoods: Fruit Valley, Rose Village and Harney.
There simply aren’t enough smaller, affordable homes on the market, DeMars said.
New homes are much larger than those built in decades past. In 2013, the average new home was 2,646 square feet. That’s more than 1,000 square feet larger than the average new home in 1973, according to the U.S. Census Bureau.
In the typical 1942 home, siblings shared a bedroom, the entire family shared a bathroom and the master bedroom closet was tiny. Americans had fewer possessions.
If You Go
• What: 3.5-hour free homebuyers class
• When: 5 to 8 p.m. Aug. 2 or Aug. 18
• Where: Marshall Community Center conference room, 1009 E. McLoughlin Blvd., Vancouver
• Register: 360-903-3504 or via email at email@example.com
• Learn more: www.traciedemars.com
The growing American home
The average new construction home has grown over the decades.
• 1950s: 983 square feet
• 1973: 1,660 square feet
• 2014: 2,600 square feet
Source: U.S. Census Bureau
June Clark County real estate market
• $293,500: Median residential sales price
• $328,900: Average residential sales price
Source: Mike Lamb, Windermere-Stellar Vancouver.
DeMars agrees that the trend to return to smaller homes has reached Clark County. She works with many first-time buyers and downsizing families with a budget of $200,000 to $225,000. That entry-level price point for existing homes won’t buy much, but the competition is fierce. Buyers inquiring about a just-listed home often are greeted with this news: “Sale pending.”
The little 1942 house on Unander Avenue in Fruit Valley was listed for $195,000. In two days, there were six offers. The winning offer of $210,000 was $15,000 more than the listing price. That’s $253 per square foot.
A few blocks away, DeMars pointed out a three-bedroom, one-bath 910-square-foot ranch that sold for $103,000 in 2010, at the depth of the recession, $160,000 a year ago and $195,000 this spring.
“The price increases this year are unsustainable,” DeMars said. “We’re quickly getting to the point where first-time buyers can’t afford a home.”
In October 2014, contractor Wood paid $150,000 for a one-bedroom home in the Shumway neighborhood. He renovated the 1920 home top to bottom, adding new roof, electrical, plumbing, cabinets, tile, heating and air conditioning. Three days after the restored 1,509-square-foot home was listed, it had three offers. It sold for $259,900.
Too few starter homes
Clark County’s inventory of starter homes isn’t enough for the demand, DeMars said. She said she believes a key reason for the lack of inventory of affordable homes is that developers in Clark County aren’t building modest three-bedroom, two-bath ranch houses priced for first-time buyers. (For more about small homes currently being built in Clark County, read a story in today’s Business section.)
Lacking new starter homes, buyers seeking smaller homes are competing for the same inventory of modest ranch homes and bungalows built decades earlier.
“We have a huge percentage of people starting out, and there’s nowhere for them to move,” DeMars said. “The buyers are still fighting for small homes built in the 1950s, ’60s and ’70s.”
Real estate agent Ryan LaPointe agreed: “There’s so little inventory. Typically anything in the $200,000 range gets bid up at least $10,000 if it’s a decent house.”
“Inventory still needs to grow significantly before we will see substantial relief in the upward trending prices,” said Mike Lamb, broker at Windermere-Stellar Vancouver.
Another factor affecting low housing inventory is that Portland’s high home prices are squeezing Oregon buyers into Clark County. DeMars says she has more Portland buyers than ever before. That’s making it even harder for Clark County buyers.
Sellers are winners
In this market, the sellers of starter homes are the winners. LaPointe also buys, renovates and sells older homes in Vancouver’s downtown neighborhoods. Recently when a two-bedroom, 823-square-foot house in the Lincoln neighborhood was listed, the house quickly had eight offers. LaPointe offered $30,000 more than the listing price, but the sellers didn’t accept his offer. Someone offered more.
LaPointe said a house smaller than 900 square feet in the Carter Park neighborhood had eight offers and sold for $297,000 — well in excess of listing price. Many were cash offers.
“Cash is winning right now,” LaPointe said.
Cash buyers include retirees who are returning to Clark County or young couples whose parents are buying a house for them. For first-time buyers who don’t have a pile of cash, it’s tough to compete.
Challenging for buyers
Recent empty-nesters Eliza and Harry Lane considered buying the 1940s house they’d rented for several years in the Lincoln neighborhood, but they realized they couldn’t afford to buy in that neighborhood.
Driven by price and aesthetics, the couple focused on homes built between 1940 and 1975. Their wish list included hardwood floors, an attached garage and a yard big enough to plant a garden.
They looked at about 20 houses priced less than $225,000. All needed work. At least one needed a new roof. Many required new flooring, decking or paint.
“Some of them were bank-owned and needed someone with much deeper pockets to buy them and fix them up,” Eliza Lane said. “We didn’t get to the point on any of those to find out what mechanical issues were wrong because we didn’t get beyond the cosmetics. We’re interested in looking after an old house, but we’re not interested in rebuilding it.”
They made offers on three houses. They changed their mind on one and withdrew from a second after the inspection revealed the need for expensive repairs. On another home the Lanes offered more than the asking price, but the house had 20 offers. It sold for 11 percent more than the asking price.
Tired of looking at homes that required extensive repairs, the Lanes increased their budget to $240,000. That made a difference. They walked into the 23rd home and found what they were looking for. Built in 1954, the one-level, 960-square-foot home in Vancouver Heights had good bones, including hardwood floors. It met other points on their wish list too, and it was in better shape than the less expensive homes they’d toured.
The seller accepted their offer, which was 1.5 percent more than the asking price. Now the Lanes are waiting for the appraisal. They should close before the end of August, more than a year after they started looking for a home.
“It’s been challenging,” Eliza Lane said.
She advises buyers looking in that starter home price range to “look into programs that can offer down payment assistance. Find a real estate agent who will be tenacious.”
Buying an older home often means buyers may have to compromise and give up items on their wish list, DeMars said. She stopped the car in front of a 700-square-foot, two-bedroom, one-bath ranch house on McLoughlin Boulevard built in 1942 for Kaiser Shipyard workers. The property lacks a garage or even a driveway. Whoever buys the house will have to park on the busy street. The listing price was $194,500.
But in the hot market, the house already has a sale pending.
DeMars said buyers “have to adjust what they want in a home. What’s more important? The room size or the location? Do you want one-and-a-half baths or a garage? We cannot change the market. A house is only worth what a buyer will pay for it.”
Sometimes, first-time buyers can’t afford a single-family home and have to settle for an attached, two-story townhouse. DeMars stopped the car again and pointed to a newer, three-bedroom, two-and-a-half bath townhouse near Burton Road. It had shared walls and a tiny yard.
Even the townhouse market is hot, DeMars said. Many buyers who can’t afford a single-family home are having to settle for a townhouse.
“It’s hard all the way around,” said DeMars.
For a first-time buyer who signs on the dotted line and agrees to pay $200,000 plus decades of interest, it could be home.