Looking into the Crystal Ball for 2012
Looking into 2012
As the New Year begins, I’ve already been in touch with many clients and friends wondering about what 2012 has in store for the real estate market. “Are prices going to continue to fall?” “Is this a good time to buy?” “If I sell my home this year, won’t I be taking a big loss?” “Is the market going to get flooded with an onslaught of bank-owned homes, driving prices down even further?” “Are we at the bottom of the market?” If I only had my crystal ball!
But here is what I do know…
Economy: Our present real estate market is tied tightly to the health of our employment figures. Our economy has been in a downturn, besieged with bad numbers for multiple years. However, over the past six months, we are seeing improvement in some of these figures, most importantly, unemployment has shrunk to 8.5% after being stuck at or above 9% for most of the past three years.
Inventory/Prices: Due to increased buyer activity, we have seen a dramatic shift in inventory for the Tri-County area of Portland. In November 2010 we had 9 months inventory. In November 2011 inventory fell to 5.3 months. Average sold price fell from $293,000 to $282,000 for that same period, a four percent correction. However, over the past three months prices have remained stable, averaging $281,000-$283,000. This is a possible sign that we have hit a threshold.
Selling: It is often difficult for home owners to think about selling in this current market. Prices have dropped 29 percent in the Tri-County area since the peak of July, 2007. For someone asking me if this is a good time to sell, my answer may be “No, you may want to wait.” However, for many, selling in this down market may make great sense if they are going to be buying a home on the other end. Remember, homes will rise and fall together, but more importantly, interest rates right now are at historic lows. No one knows how long they will be here, but by all accounts, if economic news continues to improve, interest rates are projected to rise.
Interest rates: Even two years ago, who would have ever thought we would see mortgage rates in the high 3’s to low 4’s. For those of us who do not see moving in the foreseeable future, refinancing may make tremendous sense, if you have not taken advantage of this opportunity already. Contrary to common belief, depending on the type of loan you have, you do not necessarily need equity in your home to refinance.
Buying: With historic low rates, first time buyers, second home buyers, and investors are entering the market, realizing this is an incredible opportunity. This is one reason why we have seen inventory levels decrease over the past year. It may still be considered a “buyer’s market,” but it is not uncommon for desirable homes, priced competitively, to be met with multiple offers.
When will we see the bottom of the market, and when will interest rates begin to rise???? Unfortunately, we will only know when we are looking at it in the rearview mirror.
Best Bang for your Buck!
I’m often asked by home owners and sellers “What can I do to make my home more appealing?” Depending on the home, the suggestions can be many! However, more times than not, painting is the most cost effective way to transform a room or freshen up the exterior of a home. Here in the northwest, the exterior of a home takes a beating from the elements. After a few years, even with the best of applications, paint can fade, chip, or begin to peel. Interior walls may have subtle wear marks and dings. If it’s been a while since the last paint job, the colors may be dated.
Quick tips if considering selling your home:
Neutral colors are usually best. Lighter colors help smaller rooms look larger and brighter. If you have questions about color, consult a professional home stager, or take some photos to your local paint store. Usually they are up to date on what colors are popular and would look good in certain rooms. Also, use colors that compliment furniture you will be using to stage the home. Look in home magazines to get color and decorating ideas!
If you don’t need to paint the whole interior of the home, painting bathrooms and kitchens is a way to make a home brighten up and appear clean.
If painting the whole exterior of the home is too big of an undertaking, putting a fresh coat of paint on the front door can do wonders. Sometimes a bright impact, or “punch,” color can provide for nice curb appeal.
If you are not a good painter, or not comfortable getting up and down a ladder, hire a professional. The only thing worse than old paint, is a poor paint job, with undercoat still showing through, or wall paint bleeding onto the ceiling or trim.
Finally, when possible, use low VOC (volatile organic compound) paint to keep harmful chemicals and additives to a minimum. Most paint companies now offer these and they do not cost much more.
I hope this has been helpful information. Now put on your old clothes, grab that roller, and have some fun!
Santa Claus and Paws!
On Saturday, December 3rd from 10 am-4:30pm, bring your family and four legged friends to our Windermere Moreland office for a holiday photo shoot with Santa Claus. Located at 1610 SE Bybee Blvd. Portland, 97202. Cost $10, with all proceeds going to the Windermere Foundation, benefitting local disadvantaged children and their families. Hope to see you there!
Investment Properties Heating Up
Today’s real estate market is bringing a new group of buyers to the table. Investors and home owners looking to supplement their income or find alternative sources of revenue are taking advantage of today’s market and snatching up income properties and vacation homes. With the correction of the market impacting neighborhoods throughout the Northwest, investors have recently stepped up in greater numbers and purchasing single family and multi-family homes that will be used for investment or vacation purposes.
The rental market has tightened recently with Portland’s vacancy rates being the lowest in the nation, averaging 3.4%. As a result, rental rates have shot up. Nationwide rental rates rose 1.77% in the month of March from the year prior. During the same period, Portland’s rents rose a shocking 9.92%.* With limited available housing, projections are for rents to continue to rise in 2012. While this isn’t necessarily good news for renters, this does provide opportunity for those looking for increased revenue sources.
If you or anyone you know would like more information about income properties or second homes, please feel welcome to contact me. It would be an honor to be of assistance.
*(OregonBusiness.com Aug. 2011)
When Buying, Plan and Budget for Doing your “Homework”
Everyone agrees that it is an excellent time to purchase real estate, if it makes sense for your unique financial situation. Taking into consideration prices and current interest rates, affordability for homes in the greater Portland area hasn’t been this attractive in many years.
In working with many first time buyers, I always want to remind them that there is more to purchasing a home than getting pre-approved, having money for a down payment, and finding the home of their dreams. It is also important for all home buyers to budget for doing their “homework” when they have identified and agreed on terms to purchase their future home.
Home inspections are a crucial part of the buying process. Usually, after mutual acceptance between buyer and seller, there is a period of ten days or so for the buyer to conduct all inspections they feel necessary to know everything they can about the workings of the home. Any issues that they want addressed after having the inspections need to be agreed to during this period.
Ten years ago, most home buyers would merely look at having a professional home inspection, which covers the overall condition of the home and its mechanics. Now, with more technology and information available, it is not uncommon for buyers to also include a sewer scope, radon test, soil test (if there is any evidence of past or current oil tank), and other inspections. I tell my clients to budget approximately $750-$1,000 for needed inspections and tests.
Although there is some risk in spending money on inspections and discovering the home may not be the home for you, it is money well spent to give you peace of mind on one of the most important financial decisions you will make.
