Led Zeppelin – The Song Remains the Same
SEPTEMBER 2011 PORTLAND METRO REAL ESTATE UPDATE!
Ahhhhhhh……Or-RE-Gone! One day it’s summer and 90 degrees, the next day it’s Autumn in full force and you are digging out sweaters and boots??? The September real estate update reflects August statistics, which I have usually found to be a slower month. The activity slow-down is generally due to last minute summer hoorays and (for some) getting the kids ready for school once more. Of course, this year it was a smorgasbord of stock market volatility, due to European financial unrest and weather disruptions, which always affects our real estate market! Nonetheless, sales activity in the Portland Metro area showed improvements in closed and pending sales this August compared with August 2010! Closed sales grew 30.7% and pending sales were up 29.6% AND new listings dropped 24.8%. At this last month’s rate of sales, the 11,276 active residential listings would last about 6.2 months. I have to say that in that since January 2009 (with 19.2 months of inventory), we’ve “come a long way, baby”!!! And, this 6.2 months of inventory is lowest we’ve seen in that timeframe except for June of this year with a solid 6 months. So, overall you have to say things have gotten better!!
BUYERS: what does this mean for buyers? Well, actually … more of the same. The Fed has indicated they will keep interest rates low in hopes of stimulating the economy for awhile (but, remember, they can always change their mind). The inventory is being absorbed due to a combination of low, low pricing and low, low interest rates. It often gets very competitive these days on well-price properties. Click here for ideas on getting in the game. And, that’s a great combination!! If you are feeling stable (I know…what’s that???), I would consider making a plan and implementing. As always, you should buy smart and seek competent and trusted advice from your circle of mentors. Listen…then do your own research! Whether you rent or buy, you pay for the house you occupy so are you paying someone else’s mortgage? (See “INVESTORS” below).
SELLERS: what does this mean for sellers? Well, actually … more of the same. What to do if you are a seller in a challenged economy? If you are priced competitively, you will sell your home!! It may not happen overnight unless you’re priced aggressively!! The buyers that are out there are looking with specific requirements (a deal or a steal). There are less buyers due to more stringent home loan requirements and the buyers still hold the “upper hand”. Once buyers and sellers agree on a specified price, the biggest obstacle is the appraisal. Appraisers have a difficult job right now and despite the fact that the buyer must pay for said appraisal, the appraisers are working for the bank! There is an immense amount of pressure on them right now to identify “market value”. Low appraisals are a huge obstacle to completing sales right now! Word to the wise; don’t overprice and think finding a willing buyer is all you have to do!!
INVESTORS: what does this mean for investors? Well, actually … more of the same. Do we have a reoccurring theme here? If you’ve ever considered diversification or alternative investment strategies, now would be the time to implement. You can actually buy cash-flowing investment properties in this market. With the combination of a little cash-flow and the tenants paying the PITI (principal, interest, taxes insurance), you have accruable equity (with or without appreciation)! How does that work? You use your down-payment + other people’s money (a mortgage) to purchase a property. Your tenants pay that mortgage (which generally these days includes taxes and insurance), you realize whatever cash-flow (rents minus mortgage/taxes/insurance=cash flow minus maintenance). So, whether the real estate market appreciates or not, you accrue equity due to the tenants paying down the mortgage on a monthly basis. Is it a perfect system?…no, but building wealth is never a perfect system (otherwise, someone would just patent the idea and sell it). Can there be problems…you bet! I’ve recently completed a “short list of stuff I’ve learned managing my own rental properties”. If it were easy, everyone would be wealthy!!