Nick Shivers - Is now the worst time to buy a home?

 High home prices, limited inventory, and elevated interest rates continue to make buying a house a challenge. Is there any relief in sight for prospective homeowners? Nick Shivers is a real estate expert and leader of the Nick Shivers Team. He joins the show to discuss today's housing market, where mortgage rates could be headed, and what buyers and sellers should expect next. 

Transcript

SPEAKER_01 0:12

Welcome back to Monday on the Radio Northwest Network, serving the Pacific Northwest states of Oregon, Washington, and Idaho with honestly provocative talk. It's a pleasure to get your calls. If you want to jump into the best conversation in talk journalism, it's right here every day at 866-HLARS. That's 866-439-5277. And as always, naysayers go to the head of the line. Well, short supply and increasing interest rates have put potential home buyers in a very bad place today. I thought we'd talk about that with Nick Shivers, one of the many great supporters of this program with his real estate business, the Nick Shivers team. Hey, Nick, welcome back.

SPEAKER_00 0:49

Always a pleasure to be here, Lars.

SPEAKER_01 0:52

I do follow your social media, and you made a comment uh you you posted a post that had to do with rising interest rates in the middle of short supply and at least in the Pacific Northwest, crazy prices for even a median-priced home. Would you mind sketching that out for my audience?

SPEAKER_00 1:08

Yeah, well, there's two, remember, real estate is a thousand different markets, and a lot of the national news is uh just like the national market. So the two areas that are getting beat up as far as values go are the south and the west coast. And it's for two different reasons. The south has a ton of supply, and but people still moving there, but just not to the extent. So they had tons of building, and so values are coming down even further than in the West Coast. The West Coast, on the other hand, there's the supply is limited just because it's a lot harder and a lot more expensive to build homes. But our domestic migration in Oregon, Washington, and California are negative right now. So that is why that we're only seeing anywhere from two and a half to about one and a half percent depreciation. Now, the caveat, Lars, is we don't usually see depreciation in the housing market, even in normal times. But when you factor in inflation, that that is about a five to six percent depreciation, what we're looking at this year.

SPEAKER_01 2:17

Well, tell me if I'm wrong. I mean, because ordinarily when I tell people if you buy a house over time, not necessarily in the short run, but over time, you can probably expect it'll rise in value two or three percent a year. And then when you factor in the tax savings of having a mortgage, it it usually ends up being a pretty solid return over 10, 20, 30 years, not necessarily in the next 18 months. Is is that two to three percent just not happening in the Northwest right now?

SPEAKER_00 2:42

No. No, no, we are not seeing that in the Northwest. And the fact we haven't seen it really since late 2022. Like in Multnomah County, we're down 9% from the peak. Washington County, we're down 7% from the peak. Clackmas County is only down about 3%. But yeah, we have not seen really any depreciation, and that's not factoring inflation since late 2022. So the bottom you'll see it in social media, people always say it's a crash. Well, the reality is what happened in 2020 with COVID and all that ridiculousness, it pushed appreciation into two years that should have taken about eight years to see depreciation. So, yes, we've seen depreciation since late 2022, but we're still up significantly from 2020.

SPEAKER_01 3:37

Okay, so fair enough. So people who who owned prior to 2020 or owned at that point are still doing okay in terms of the value of their house, but there's not any great incentive to jump in right now, knowing I'm gonna buy a $600,000 average house in Portland and it might lose 2% over the next year. Well, I can do the math on that. Who wants to drop 12, you know, drop a big mortgage payment in and at pen punitive rates and then lose $12,000 the first year you're in the house?

SPEAKER_00 4:06

Yeah, this is definitely, and I say it all the time, this is not a want-to market. This is a have-to market. And whether that is relocation or different changes in the family, um I do bet on, I mean, I did a talk a little bit about this. Japan is still betting on the American dream. They're buying up home builders like United States home builders left and right because they still believe in the demographics of going forward. And they they look at business a little bit different, not decades, it's more like uh generations. So they're still believing that American homeownership is not dead for sure.

SPEAKER_01 4:47

Okay, so so what would it take if you had a wish list, things that Oregon and Washington could do that are actually just get it back to normal, where you buy a house and you figure it'll go up 3% a year for the next 10 or 20 years?

SPEAKER_00 5:00

Well, the the like I've always said, build, baby, build. If if Lars, if we build more housing, okay, that doesn't mean, I mean, there's a there's the the and Trump said it. He said, I don't want the people that currently own houses to lose value, but we're gonna have to do something. And even if you get no like where we're at right now, anywhere from one to three percent depreciation for the next two to three years, you get wages continuing to go up at three and a half percent. And if we can get interest rates down to that five and a half to six percent, in three years, we're back to normal, a normal market, and then we could get into that one to three percent appreciation. And remember, for the longest time, owning a home, people weren't doing that because they wanted to get rich. That changed. But that being said, it was still a long-term good investment. I still believe it is a long-term good investment, but really that's what it's gonna take. It's gonna take a few more years of slight depreciation, more houses hitting the market, and interest rates to come down. If you get that, you don't need any crazy price crash.

SPEAKER_01 6:19

And by the way, I don't necessarily want people who have houses now, and I've got a dog in the f I have got a house now, but not planning to sell it anytime soon either. But I wish we could take the government to a large extent out of it. You know, you can't get them all the way out. But if right now in LA it's 30 percent of the cost of a house is government, I think in Portland and Seattle it's more like 20 percent. But if you think about the average prices at state 650 in Portland, 20 percent of that is $130,000 worth of government. If you can knock that down to $65,000 and actually make houses more affordable by taking a lot of the government ridiculous SDCs and all these other fees and penalties the government charges, while all the politicians are saying, we wish we could build more housing, great. Then drop the government's cut. You don't need $130,000 out of every single house, do you?

SPEAKER_00 7:12

That is the biggest part of the Road to Housing Act that will make a difference. And it's a lot of the West Coast. They always talk more affordable housing, but they don't ever cut any of the ridiculous red tape. If you do that, there is a big study by the biggest builders on the West Coast. And on average, Oregon, Washington, and California, a hundred and thirty-one thousand dollars before a shovel hits the ground. Lars, that you can't have affordable housing with that kind of red tape.

SPEAKER_01 7:47

No, and in fact, I understand you can't really change the cost of materials, although we could log more. You can't really change change the cost of labor, but you could certainly take the cost of government debt. That's Nick Shivers, one of the many great supporters of this program with his business called the Nick Shivers team. In a moment, I'm gonna tell you about the young lady who had a crash and wants twenty-eight million dollars from a Northwest city because of injuries because she hit a curb.