June 2023 Economic Report

Alliance Hosting Real Estate Forum Oct. 18

Housing drives the U.S. economy and is a major component in Lewis County fortunes.

The Economic Alliance of Lewis County recognizes the importance of the housing market, and in response is hosting a Real Estate Forum Wednesday, Oct. 18 at The Loft in Chehalis.

The latest figures from brokers at Northwest Multiple Listing Service for Lewis County from May reveal 121 new listings, 180 total active listings, 111 pending sales, and 96 closed sales with an average price of $418,000.

More important, the number of months a home is on the market for May is 1.88 months, compared to 1.60 in May of 2022. That signals an easing of housing inventory.

The Economic Alliance of Lewis County reached out to three key real estate market experts to gauge their thoughts on our housing market.

Greg Lund — Century 21 Real Estate in Chehalis

Lund firmly believes Lewis County government leaders could help the local real estate market. He said builders need relief from infrastructure requirements — extending utilities — which would increase the inventory of housing in the county.

“Historically (infrastructure costs) have been put on the backs of developers,” Lund said.

He said most of the developable land in Lewis County already with easy access to water, sewer and internet “are gone.”

Lund believes stronger public/private cooperation is needed, with the county, city and town governments helping to ease the high cost of putting in utility infrastructure and amenities such as gutters and sidewalks.

“My mantra is to get help with infrastructure opportunities,” he said. “We need some assistance from municipalities. … We don’t have enough housing and the cost of developing is high.”

Lund said with the rise in interest rates, housing affordability declines.

“Yes it’s more costly compared to a year ago with interest rates, but not dramatically higher than historical rates,” Lund said.

He said sales continue to be strong in Lewis County, but the lack of inventory continues to hold prices up.

For the housing rental market, Lund said COVID caused a jump in rental prices.

“There was a definite increase in rental rates, with $1,800 to $1,900 rents for fairly new apartments, which is not that different from a house payment, so there’s good reason to purchase and lock in your payment,” Lund said. “Once you own it, it doesn’t change. Rentals are at the whim of the market and landlords. And you don’t have to be married to a rate. You can refinance when rates go down.”

Lund talked about a condo development south of Chehalis. He said a developer built six condos in three buildings, each three bedrooms with two baths, and at 1,500 square feet. They went for $315,000 to $320,000.

“We had people coming down from Olympia and Yelm to buy and it sold out in about two months,” Lund said. “That shows there is that demand, but it took forever to get permitted. They had to appease the county and city gods, and that can be daunting.”

Angie Brown —Business Development atLewis County Title Company

“Some of the infrastructure that in the past has been sufficient is quickly being expanded and updated along with the ever growing development in the outlying areas in Lewis County, along with some of the larger land developers facilitating the water/sewer/roads to support their development and tying into the local facilities,” Brown said.

She believes there is a housing shortage impacting the county’s market, and county leadership could help ease the bottleneck.

“I believe we have a shortage, and from some of the boards/committees I sit on we have discovered some of the road blocks are developers/landowners not having clear guidelines of what the process is to move forward with their developments,” Brown said. “Different requirements within different municipalities are confusing. I think Lewis County could benefit from having a more streamlined process throughout. We also are growing rapidly and it takes time to develop housing options.”

Brown, similar to Lund, said a lack of housing inventory is a problem.

“We have a slowdown in the market, this is most likely due to lack of inventory,” she said. “Also interest rates rising plays a part. I think Lewis County needs more affordable housing options.”

Brown believes financially, owning is more advantageous than renting.

“I think owning over renting makes sense because you are building equity in your purchase,” Brown said. “You have something that is yours.”

She did state that for some, owning a house is not an open avenue.

“I think if we want to keep our youth in our area, rentals have to be an option; also for our elderly that need to rent over owning their home,” Brown said.

Jacek Gillispie —Senior Loan Consultant, Summit Funding

Gillispie is considered one of the top home loan consultants in Lewis County by area agents. He talks straight.

“We don’t have enough housing; we are low on inventory,” he said.

This causes prices to rise due to simple supply and demand market forces, and when combined with higher interest rates, it is chasing some potential home buyers away.

“And not just in Lewis County, but across the entire United States,” Gillispie said. “We definitely don’t have enough houses, and prices are still on the rise.”

He said the housing sales boom started in 2019, and that interest rates greased the market, with rates dropping below 3%.

“All of a sudden people were able to afford to move,” he said.

Gillispie said that was followed with a few years of strong sales, with a small slump last year for about six months before recovering.

He said 2023 “feels kind of like a normal year, after the 2020-2021 “ridiculous” years of sales.

“It feels like a down year (now), but that’s because we are coming off a hot market,” he said. “Three percent was never real. But it certainly juiced the market.”

Like Lund, Gillispie said state, county and city regulations are keeping developers at bay. Perhaps the most damaging is state Growth Management Act requirements that only allow low density zoning for landowners in rural areas such as Lewis County from breaking up their 10- and 20-acre parcels. He pointed specifically to Adna and areas outside of Chehalis.

“So many places could make one- to two-acre lots, but can’t subdivide below five acres,” he said.

As far as renting vs. owning, Gillispie is firmly in the purchasing camp.

“If you are renting, you’re always paying someone else’s mortgage,” he said. “If you can afford to buy, you should buy. Houses will always appreciate over a long haul. Paying rent is like paying 100% of the interest of a loan.”

Washington State Statistics

Across Washington state, Northwest MLS brokers report improving inventory and year-to-date gains in sales and prices. Statewide inventory remains tight with only 1.44 months of supply.

Home buyers in Washington state found the largest selection of listings last month since December, with both pending sales and closed sales reaching their highest volume in months. Brokers at Northwest Multiple Listing Service (NWMLS) welcomed the uptick, but cautioned rising interest rates are crimping activity.

“Median prices have continued to decline year-over-year in the overall NWMLS service area,” said John Deely, executive vice president of operations at Coldwell Banker Bain. “Following a national trend, our market pricing peaked in April/May of 2022 with a steady decline through the end of the year. However, 2023 has seen slow and steady growth in median prices. … Buyers waiting for prices to come down will be disappointed based on current trends.”

For real estate agents, the beginning of summer usually brings an increase in active home buyers. But brokers and economists believe rising interest rates are deterring some buyers.

“Mortgage rates jumped this week, as a buoyant economy has prompted the market to price-in the likelihood of another Federal Reserve rate hike,” said Sam Khater, Freddie Mac’s chief economist. “Although there has been a steady flow of purchase demand around rates in the low to mid 6% range, that demand is likely to weaken as rates approach 7%.”

As rates approach the 7% benchmark, Nadia Evangelou, senior economist and director of real estate research for the National Association of Realtors, estimates 5.5 million households are priced out of the market compared to a year ago.

“Although there are fewer buyers, more than one-third of properties are sold above their list price due to limited inventory, especially of homes that first-time buyers can afford to buy,” Evangelou said.

U.S. Homes Valued at $45.3 Trillion

According to a report in the New York Times, in the United States, consumer spending makes up about 70% of the economy; changes in housing wealth can result in significant changes in economic growth. And Federal Reserve decisions affect the housing market through the cost of financing a home purchase.

Impact on Economic Growth

If house prices rise, then the effect on wealth is likely to cause an increase in consumer spending and a higher rate of economic growth.

In addition, residential real estate is the greatest source of wealth and savings for many Americans. Commercial real estate, which includes income producing properties such as apartment buildings, retail shopping centers, office buildings and manufacturing also creates jobs, according to a news release.

Housing loan rates remain between 6% and 7%. Rates reached 6.79% on June 1 — the highest they’ve been since November 2022 — before dipping down to 6.71% on June 8.

Mossyrock’s Payton Torrey Awarded Gary Stamper Memorial Scholarship

Alliance Open Returns to Riverside Friday, Sept. 15

The Economic Alliance of Lewis County created the Gary Stamper Memorial Scholarship after the passing of Commissioner Stamper in September of 2021 at the age of 67.

Stamper died after a five-week battle with COVID-19. He was vaccinated against the virus.

Gary was known for being a great leader, career educator, great mentor, soft-spoken, big-hearted, family man who had a passion for service. His death sent shockwaves through the community.

He was dedicated to his community and served as principal for White Pass Junior/High School, Lewis County Commissioner for District #3 as well as Fire Commissioner for District #3.

A renowned prep basketball coach, he was on the sidelines as the Mossyrock girls basketball team’s head coach during its successful run in the 2000s. The run, and Gary’s coaching career, culminated in a 2B state championship in 2007 when the Vikings defeated La Salle for the school’s first hoops title.

“A former principal, teacher and coach, Stamper touched many lives throughout Lewis County and beyond even before joining the Board of County Commissioners in 2015,” the county wrote in a news release following his passing.

He prided himself on “standing up for the little guy,” protecting the area’s timber interests and promoting economic growth while maintaining the area’s rural feel.

In his personal life, Gary enjoyed traveling with his partner Bobbi Barnes, and spending time with family, especially his grandchildren, whom he called his “top priority.”

A self-admitted softie when it came to animals, Gary also reveled in helping others. Whether it was delivering firewood to a struggling family, buying groceries for a perfect stranger or purchasing shoes for a student in need.

Gary, who grew up first in Riffe and then Mossyrock, graduated from Mossyrock High School before earning a bachelor’s degree in Political Science from Central Washington University and a master’s degree in School Administration from Heritage University.

Stamper was buried at the Klickitat Cemetery in Mossyrock.

The Gary Stamper Memorial Scholarship

This scholarship was made possible through generous contributions from family, friends, co-workers and local businesses.

The scholarship will be awarded in the amount of $1,500 by the selection committee composed of the Stamper family, the Economic Alliance of Lewis County executive director and the Lewis County manager, who have sole discretion on the recipient.

One recipient will be chosen each year that is graduating or has graduated from Mossyrock High School or White Pass High School.