The facts about Oregon real estate values in January 2020
Folks, Ive been a real estate broker for 40 years. I also had a mortgage company for 22 years, and for the last 7 years have valued homes for banks, credit unions, loan servicers and Fannie Mae. I know more than most brokers about values, trends and the future of real estate in this state.
Here are some basics to start:
1. Supply and demand. Usually when there are more buyers than sellers, the value of anything goes up. Up to where though? Up forever?
2. In any area of the country, prices of anything from toothpicks to mansions will be determined by the yearly pay of Joe and Jane Worker. (To be politicly correct, any number of humans of any type or preference who either use just their own individual money or pool it to purchase. For ease, I will use Joe and Jane, no offense intended) Yes you have poor and rich but overall, its middle America wage earners that determine what values are around them. So, the answer to my question from number one above is---UP to Joe and Janes buying power, usually.
3. Things are not as 'usual', at least not the 'usual' of the last few decades. Oregon, has some unique factors driving controlling values. A few 'usual' factors are next:
a) OUTSIDE INFLUENCE . People are leaving other states due to weather and economy. Oregon had 40,000 arrivals in 2019 and I believe half were from California. (This adds to DEMAND)
b) Availability of houses for sale. We have been going through a time of extremely low numbers of homes for sale. (Hence--low SUPPLY)
c) Rent increases. Rents have raised so much that many peole fixed and kept their rental homes instead of selling (lowering SUPPLY)
OK that's low supply and high demand. So why are prices around northern Oregon at a neutral point?
1. Since the 2009 collapse, more and more people started to improve their homes for a long haul stay. The roofers, landscapers, fence builder, plumbers etc have NEVER been so busy. Owners couldn't afford to even replace their home if they sold it unless moving out f the area, so they just dug in to stay.
2. Societal changes. Offspring are now staying longer with their parents, keeping them out of the market. Older folks are not selling to downsize into a smaller home.
3. Doesn't make sense to rent to save money vs owning now because rent has skyrocketed! If your mortgage is 1500 and rent is 2000, why move? People who are going to retire cant find anything cheaper so they are doing things like renting rooms, spaces in yards for others to live in RVs, etc.
4. Banks are tearing up appraisals! Conditions are harder. Requirements are harder. Banks don't want a repeat of 2009 from overly inflated home values. Oregon values are AGAIN overly inflated.
Lets go back to out of staters driving controlling Oregons values. Lets say a person in San Francisco just sold their 1963 flat to 900 square footer for a cool million. They come here and see five 900 foot boxes in the north Portland area that have already been driven up again from 100,000 to 350,000 in the last few years. The buyers have lots of cash and don't worry if bank appraisals come in low. They offer 375,000 to get the home and BANG appraised values just went up. But, that's not happening in all areas---these buyers are usually double income millennials who fall in love with old gingerbreads, saltboxes with no off street parking, etc. They pay out the nose for those. Meanwhile, there are virtually no fixers to buy. Fliers, real estate brokers who buy on their own instead of helping people sell, and contractors beat the doors down on any house they see in these three counties, looking to steal a home, fix it and profit.
NEW HOUSING BEING BUILT. Thousands of units are being built and in plan to be built. The cities are expanded urban growth boundaries. Well this adds to SUPPLY and takes away some of the DEMAND pressure off existing homes or normal architecture.
This is a fraction of whats causing values to fluctuate but in general, Portland and surround areas have NEUTRAL areas with values holding still, DEFLATING areas, especially older very large expensive homes that ae no longer as favored s a new similarly priced home, and INFLATING areas of specialty interest as I spoke about above---the turn of the century homes, etc.
The future? Im not God and don't pretend to be but based on my experience we could see a semi reeat of 2008. Not to as great a dergree because most people now have to actually qualify for a loan instead of using a fake no income loan like we used to have. I would not hold off on buying now because of that. Oregon is planning for hundreds of thousands of people from other states.
An old broker in 1980 once said to me: "They keep makin babies but they don't keep makin land"
I see 3 to 5% a year increases until we again get to the newly in state Joe and Janes maximum ability again. This makes it very hard on locals, lower income, etc.
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