Brett Stomps | Windermere

How to Be Competitive in Affordable Housing

Affordable housing is the most sought after and under supplied type of inventory in the Columbia Gorge. This article isn't about the solution to creating affordable housing, but instead, how you can be competitive here in the Columbia Gorge.
Table of Contents
Table of Contents

A Conversation Worth Having

Affordable housing in the Columbia Gorge is a popular topic and one that generates a lot of heat. It’s a news headline we’re all aware of: Housing in the Columbia Gorge is not affordable. While it’s surely an easy target for any conversation starter, what can you do about it?

This article is dedicated to providing as much advice as I can generate on the topic. Some of it is harsh, but as I just said, this is a conversation about what you can do to be more competitive. And if you plan to live here in the Columbia Gorge, this is a conversation worth having.

What you do with this information is up to you.

A Real Estate Agent’s Perspective

As a full time real estate agent, I see first hand how difficult it is to find affordable housing in the Columbia Gorge. I get to see both sides of the fence, as if I were sitting right on top of it.

I take incoming calls from struggling buyers on an almost daily basis. Then, I guide them to get pre-approved with a lender and I help explain the current market condition. These conversations all eventually lead to one thing in common under the surface:

They don’t want it bad enough.

That’s right, I said it. Buyers complain about affordable housing in the Columbia Gorge, but they aren’t willing to look the facts and make the necessary sacrifices in their life to be competitive.

Sometimes those changes are financial (such downgrading their car), sometimes they’re the expectations of what their money can buy them. I’m forced to look at the facts everyday because that’s how I earn a living. I get paid by helping clients understand the path to home ownership.

But, the buyer has to make the changes to get there.

A buyer can pretend all day long that they are “not in a rush”, and that they’ll wait. But when I show them that the data does not support what they want, they give up or they take me as some pressuring salesperson and ignore me.

The truth is, housing is not getting any cheaper. Buying today gets you on the track to build equity now vs. waiting another 5 years and being 5 years behind.

So, why wouldn’t you be in a rush?

A home in W Timber Valley that sold in 2024 for 345K on 5ac backed to 950ac+ of WA State Land

The Misdirecting Story Buyers Were Told

To the buyer’s defense, most buyers (millennials) were fed a story from their parents along the lines of this:

Go to school, get a job, buy a car, find a rental, buy a house, have kids.

This does not work for most young buyers in the Columbia Gorge.

These days are long gone. If you want to be competitive in the affordable housing market in the Columbia Gorge, you need to:

Go to school longer, get two jobs, live with four roommates, and drive a beater. Then maybe you can buy a fixer and have kids with whatever finances you have left.

For most of you, it’s not your fault, but it is up to you to recognize what you face and adjust your trajectory. Home ownership is possible, and the only time you fail is when you give up.

What Buyers Don’t Want to Do

It’s in the above conversation that I find part two of the problem.

Most buyers are unwilling to make sacrifices.

They don’t realize the story they were told doesn’t work anymore. Look, I get it, everyone should be able to buy a home on a 40-hour work week, but this is where we are and that isn’t going to change. So, here are some suggestions to be competitive in the affordable housing sector in the Columbia Gorge.

Reduce Expenses

I asked my list of preferred mortgage lenders what kept buyers from pre-approving for a home loan, or what kept them from pre-approving for more. This is what they said:

Buyers have:

  • An expensive car payment
  • Expensive rent
  • Expensive hobbies
  • Travel too much
  • Eat out too much
  • High interest rates on consumer debt
  • Child care costs
  • Too many subscriptions
  • Student loans

Buyers need to reduce their expenses.

Now, I am not suggesting that you adopt your kids away or not enroll them onto the soccer team. There are just some lines I do not want to cross. But the point is, downgrade your car, downgrade your rental, and lighten your financial load. It’s us vs. the market, so don’t shoot us just because you don’t like where the market is headed.

Lower Expectations

Whether you are buying land or buying a home, if you are serious about finding affordable housing in the Columbia Gorge you need to lower your expectations. Drive further than you’re prefer, buy a smaller home than you’d prefer, buy something on less land.

This isn’t your forever home, and it sure beats putting your money into the pocket than that of someone else’s each month.

How to Be Competitive in Affordable Housing

Okay, so with my rant out of the way, if you are inspired to take action here’s what you need to do to be competitive in the Columbia Gorge affordable housing market.

Get Pre-Approved

If you don’t know where you stand, get pre-approved.

I am often so surprised at how many first time / low income buyers call me wanting to see property before they are pre-approved. I’m here to fulfil your heart’s wishes, not break it by showing you a home you later find out you can’t (or don’t want to) afford.

Your pre-approval lasts about 90 days, and while your credit will take a small ding, it will recover by the time you renew it. It is far more important to make your credit card payments on time.

Find and stick with a lender who can maximize your loan and offer creative financing solutions.

Having a pre-approval will make your offer stronger in the eyes of the seller.

Related: Going Local with Mortgage Lending
Related: Seller Financing in the Columbia Gorge
Related: The Basics of Seller Credits

Hire an Agent

As a buyer who wants to be competitive in the Columbia Gorge, hire a local buyer’s agent. A good local broker can help you see housing opportunities before they come on the market and can aid you in financial negotiations that you would have otherwise not known about, or attempted to try.

When interviewing buyer brokers:

  • Find someone who doesn’t mind a lower commission (based on a lower sale’s value).
  • Find an agent who is passionate about helping you.
  • Find an agent who has availability and works weekends.
  • Find an agent who can point out the locations of affordable homes.
  • Find an agent who has experience helping first time / low income buyers.
  • Find an agent who can help you navigate messy inspection negotiations.

Working with a skilled buyer’s agent will help you look better in the seller’s eyes and open up more opportunities for housing that you would have not otherwise seen.

Yup, that’s a furnace. But not just any furnace

Related: The Good & Bad of Buyer Agency Agreements
Related: Buyer Representation
Related: Steps to Buying a Home in the Columbia Gorge

Switch to Conventional Financing

Conventional loans are not as strict on the condition of the home as FHA loans. FHA loans are great if you haven’t saved up a 10 to 20% down payment, the problem is, most homes under 350K in the Columbia Gorge do not meet FHA requirements.

In the last 12 months, as of 4/4/24, there were 74 homes under 350K in the gorge that accepted FHA. 41 of them were in The Dalles, OR, and 24 were in Goldendale, WA. That leaves 9 FHA products available.

Save a bigger down payment and switch to a conventional loan to increase your opportunities.

In the last 12 months as of 4/4/24, there were 137 homes that were conventionally financeable under 350K in the gorge. 73 of them were in The Dalles, and 39 in Goldendale. That left 25 homes available, with all but 4 being on the Washington side (Klickitat & Skamania County).

4/4/23 to 4/4/24: Sold terms in the Columbia Gorge

Of all the residential sales under 350K in the Columbia Gorge in the last 12 months from 4/4/24, there were 192 homes that sold. 68 of those homes sold to cash buyers (35.4%). 61 of them sold using a conventional loan (31.7%), 33 sold using an FHA loan (17.1%), and 15 sold using VA (7.8%).

Focus on These Affordable Locations

Most buyers try to avoid The Dalles and Goldendale. It’s not like these are bad places to live, it’s that buyers are trying to avoid the big city life or they don’t want to live so far away from places like White Salmon, WA and Hood River, OR. This is understandable.

Except there are not enough products for everyone.

In the last 12 months as of 4/4/24, there were 50 homes available under 350K outside of Goldendale & The Dalles. Of that, 23 sold to cash buyers (46%). So, let’s face it, what can you do?

If you are looking for a home under 350K and you have a conventional loan, consider the following locations:

In the real estate industry, there’s a saying and it’s, “Drive until you can buy”. It’s harsh, I get it, but if you don’t want to be a renter for the rest of your life and you want to start saving money again, consider one of the locations above.

The most affordable locations in the Columbia Gorge under 350K

The Upgrade

I mention it in my Affording a Home in the Columbia Gorge article, and I call it, “The Upgrade”. It’s where you buy a house in one of the locations above, live there for 5 or 10 years, make a few upgrades, and take your equity and upgrade to something closer to what you want.

I’ve worked with a few buyers now who are taking this route. They’re well on their way to finding a home closer to White Salmon, WA (where they want to be in the end).

A fixed up home in The Dalles, OR.

Be Proactive

If you are damned that you won’t live in The Dalles or Goldendale, you need to be proactive.

Remember, 35% of buyers under 350K are cash buyers.

Get Your Credit Up

While working on this article, I spoke with some of my preferred mortgage lenders. It’s estimated that if you kept your credit cards around 30% utilization for one year, you can increase your credit rating by almost 100 point in one year.

Having a better credit score will help you stretch your dollar at no cost to you.

Rent Out a Room

I’ll be the first to say it, I would hate renting out a room to my new house. However, if it came down to being able to reduce your monthly expenses, renting is the most popular way to hedge yourself financially here in the Colombia Gorge. $400 can go a long way. That’s $4,800 you don’t have to pay each year.

Ask Relatives for Assistance

If this is available to you, do it. Ask for a co-signer or for down-payment assistance from your relatives. Getting you into a home sooner only helps you build generational wealth for you and your own family.

The longer you own a home, the easier it gets.

Consider Seller Financing

Only 5% of sales in the last 12 months as of 4/4/24 sold using seller financing. Seller Financing in the Gorge is a creative way to get around higher interest rates, or low down-payments for a short period of time. Most seller financing only lasts for 5 years (roughly), at which point, you will need to pay the remainder of the debt usually by obtaining a traditional 30 year fixed loan.

Seller financing is a great way to get into otherwise non-conforming homes or plots of land where you can improve them into a conforming state to obtain a loan.

Buy Land & Place a Manufactured Home

This is one way to create your own affordable housing in the Columbia Gorge. I’ve seen buyers obtain a land loan for say, 80K in Lyle/Appleton @ 30% down, drill a well for 30K, put in a septic for 15K, then get a second mortgage for a manufactured home for around $150K. That’s a total of 275K for 5ac, a Mt. Hood view, and a new structure. That same structure today is probably worth 375K-400K.

Well-Flow-Testing
You can find views like this in High Prairie, WA for under 175K with a well on it.

Buy a Fixer and Rent it Out

If you are not willing to live in the most affordable locations in the Columbia Gorge, consider buying a fixer and renting it out instead. Sure, this takes more up front cash to do , but with enough cutting back on your expenses and saving up, you will get there in 2-3 years. A plan like this will increase your month-to-month income for the long term and increase your equity along the way.

And yes, buying a rental like everyone else out here creates more of a housing problem, I am not here to argue that, but there’s also no stopping the people who are already doing it. If the numbers work out, what’s wrong with increasing your income and equity so you can later move your equity to buy a home where you want?

This made the most sense in my situation, see: Investing in the Town of Klickitat, WA

From Investing in the Town of Klickitat, WA

In Closing

Write me all the hate mail you want, but as an everyday real estate broker, I live and breathe the experiences I write. I have witnessed buyers who have used these principals to obtain home ownership, and I have watched those who do not, remain as renters.

It’s you and I vs. the market place. I write the article so you and I can get ahead of this and so you can obtain your home ownership goals, if not now, in the future.

So, don’t shoot the messenger.

Disclaimer

The information provided on brettstomps.com is intended to be educational and accurate. However, information on brettstomps.com does not substitute as buyer and seller due diligence when transacting real estate. Buyers and sellers are advised to work directly with a licensed real estate professional, seek additional professional services when applicable, and to inquire at the state, county, and city offices for their due diligence.