I'm currently consuming all things REI - books, blogs, podcasts, etc. in hopes of gaining the knowledge to make an exciting and financially independent future for myself and my wife.

Also, if we buy new homes for the expansion and then sell them to consumers will this disqualify us?  

But alive and well many places such as banks, credit unions, etc and it does not benefit the consumer overall. 

However, the challenge with short-term rental is all the HOA regulations prohibiting rentals fewer than 30 days.Heres my question: What is your opinion on the best route to go for house hacking in this market given the constraints?

If you end up going with a big bank that primarily tailors to conventional consumer loans... you'll get buried in bureaucracy and it will slow down your deal; but, to reiterate the key point - don't head into the relationship expecting the bank to act like something they're not. 

It was the wild west back then and I haven't seen consumer demand quite that crazy, but I have seen builders throwing houses everywhere they can like demand will never go down. 

True that there's fewer "deals" to be had these days, but if you're in the market for buy and hold, you can still find cash flowing properties that will help build your portfolio. 

Compared to our direct comps, we’re aggressively priced, now more and $1m lower than 147 Jaffrey which is smaller than ours with far fewer updates; we just don’t have the runway to hold firm at a higher number while waiting for a buyer to bite.

I think Wenatchee would be a tough market for me to start in right now given the recent home price trend in the past few years, fewer tenants/less of a rental market, and the initial cost of a home.

Yes some of it is their properties have gone up in price to equity, some of it is they have paid some things down, and some of it looks like retirement planning as older more experienced investors move towards retirement and seem to value cash flow over numbers of doors.We personally like moderate leverage, but we are starting to think in terms of slightly fewer doors that are paid off in 15 years vs having as many totally leveraged properties as possible.