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Real Estate Investment Market Report for Washington, Oregon, and Idaho: May 2021

commercial construction loan

How do commercial construction loans work?

A construction loan is a type of short-term financing to fund a new construction project. If you’re planning to construct a multi-family home, apartment building, high-rise, commercial office building, or another type of large project, you will probably consider obtaining a commercial construction loan.

Commercial construction loans are different from other loans. Most loans are structured so the borrower receives the full amount they are requesting upfront. Then, once the loan is received, the borrower makes payments over a set period of time. However, with construction loans, the borrower does not receive the full amount upfront.

Understand the construction loan process

Market Activity

Seattle, WA
Market Overview

Seattle’s housing market has low inventory and high competition. From a supply and demand perspective, it’s one of the most imbalanced housing markets in the country. In April 2021, the month’s supply for condos and single-family homes was 0.96. According to the Northwest Multiple Listing Service (NWMLS), it will likely take four to six months for Puget Sound’s housing to shift to a more balanced market. The median price of a home in King County increased by 16 percent year-over-over. Snohomish County median prices increased 28 percent and Pierce County increased by 23 percent.

1,368
Homes Sold
$790,900
Avg. Home Price
$1,995
Median Rent
Vacancy Rates Graph
Source: U.S Census Bureau
3.8%
Rental Vacancy Rate
0.9%
Homeowner Vacancy Rate
5.5%
State Unemployment Rate
Metro Area Unemployment
Bellingham, WA
6.7%
Bremerton-Silverdale, WA
5.8%
Kennewick-Richland, WA
6.2%
Lewiston, ID-WA
4.0%
Longview, WA
7.0%
Mount Vernon-Anacortes, WA       
7.0%
Olympia-Tumwater, WA
5.9%
Portland-Hillsboro, OR-WA
6.3%
Seattle-Tacoma-Bellevue, WA
5.9%
Spokane-Spokane Valley, WA
6.5%
Walla Walla, WA
5.2%
Wenatchee, WA
5.9%
Yakima, WA
7.2%

Market Activity

Portland, OR
Market Overview

Many renters have left Portland’s urban neighborhoods for more space. Most of these metro suburban submarkets dropped at least 50 basis points to below 4.5 percent, allowing for positive rent growth. Vancouver, Washington was a popular destination among many renters, decreasing the vacancy rate to a low of 2.4 percent. As for downtown Portland, rent increased about 0.6 percent from the fourth quarter of 2020 to the first quarter of 2021 but remains down 5.8 percent compared to the first quarter of 2020. According to CoStar, this is the sharpest decline of any neighborhood in the area. Experts believe that rents will continue to rebound in the coming months.

1,290
Homes Sold
$530,000
Avg. Home Price
$1,695
Median Rent
Vacancy Rates Graph
Source: U.S Census Bureau
4.9%
Rental Vacancy Rate
0.2%
Homeowner Vacancy Rate
6.0%
State Unemployment Rate
Metro Area Unemployment
Albany, OR
6.8%
Bend-Redmond, OR
6.9%
Corvallis, OR
4.9%
Eugene, OR
6.8%
Grants Pass, OR
7.5%
Medford, OR
6.7%
Portland-Hillsboro, OR-WA             
6.3%
Salem, OR
6.1%

Market Activity

Boise, ID
Market Overview

Boise home prices hit new highs in April due to strong demand from homebuyers and low supply. The supply of homes for sale in Treasure Valley hit record lows. Simultaneously, demand increased as mortgage rates declined to all-time lows. In addition to the competitive market, Boise homebuilders have changed how newly constructed homes are sold. Until recently, homes were pre-sold three to six months before being completed. However, this wasn’t ideal for builders because costs aren’t cemented at this stage. Homebuilders are now waiting until construction is nearly complete before locking in home prices.

436
Homes Sold
$470,000
Avg. Home Price
$1,385
Median Rent
Vacancy Rates Graph
Source: U.S Census Bureau
4.2%
Rental Vacancy Rate
0.6%
Homeowner Vacancy Rate
3.1%
State Unemployment Rate
Metro Area Unemployment
Boise City, ID
3.8%
Coeur d'Alene, ID
5.0%
Idaho Falls, ID
3.3%
Lewiston, ID-WA                              
4.0%
Logan, UT-ID
2.1%
Pocatello, ID
3.8%
Twin Falls, ID
3.9%
Homes sold and average home price data is from Redfin.com. Median Rent data is from zumper.com.  Data shown in this email is an average over the last month unless otherwise marked.

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