Portland Real Estate - Good time to buy AND sell?

Real estate seems to be a hot topic these days. Everytime I turn on the TV I see CNN's ticker offering up some new tidbit. "New home starts down!" "Real estate inventory at an all-time high!" "Sub-prime lending crisis worsens!" I'm sure you've all seen many of the same news bites.

Guess what...we ARE in a changing market. That's not, necessarily, an entirely bad thing. The national real estate market burned white hot for the last couple of years, but anytime anything burns white hot, it necessarily burns itself out. As a real estate investor, when I see 25% appreciation (much higher in some areas) I'm thrilled and, more importantly, I'm motivated to buy. As a Realtor, though, 25%-plus appreciation makes me sit back and really think about the market; both for the present and for the future. What such high appreciation figures told me, personally, was that the market would slowly shift from a sellers' market to a buyers' market. I'm not some genius that picked up on a trend that everyone else missed. No, I'm just a realist. Any rational mind would see that homes cannot possibly continue to appreciate at 25%. Home prices cannot out-pace inflation and wage increases that drastically forever. Most importantly, if there's one hard and fast rule to economics, it is that everything is cyclical. Just like the stock market and the economy as a whole, the real estate market goes up and it comes back down. Guess what, though, it will also go back up. The cyclical nature of economics is at the very heart of all market theory.

Now understanding that we expect markets to rise and fall, why then, do we consider real estate to be such a safe investment? One simple reason is that, while the real estate market does go up and down, the down market is not a negative market. That's very important to understand. It is extremely rare for the real estate market to actually go truly down, as in backwards. Right now most people would consider this to be a down market in Portland. However, the MLS reports 8% appreciation for Portland Metro. It's higher in some areas and lower in others. That's way down from the 20% figure of a few years ago, but if that's a down market, I'll take it! While the stock market is extremely volatile, the real estate market is considered to be very stable...all things considered. There's a very real possibility that Portland's appreciation rate will drop, probably down to 5% or so, but that's not such a bad thing. For the past fifty-plus years the average home appreciation nationally was 5%. 50 years proves a pretty reliable trend. Portland is doing much, much better than most of the rest of the nation.

Even more importantly, though, is that appreciation is NOT the sole reason to buy real estate. There are many good reasons to buy, which I won't get into here. So back to the original question, is it a good time to buy OR is it a good time to sell? The answer to both is yes!

Clearly it is a buyers' market. We have a ton of inventory right now. Interest rates are near 6.25%, which is incredibly low. Properties are taking longer to sell, which gives the buyer more flexibility and, obviously, with so much inventory, there's less direct competition. Is it a good time to be a buyer? It's a great time!

How can it be both a good time to buy and a good time to sell? Simple. Well-priced homes will sell! With the current market conditions, especially due to the low interest rates, there are a ton of eager buyers. These buyers are smart, though. They've done their homework and won't be pushed around. They want a fair price. Fair is the key word. Buyers, for the most part, aren't looking to "steal" properties. They understand that a sale, in order to actually happen, must also be beneficial to the seller. We need two willing parties to get a real estate deal done. Buyers want a fair price. Sellers, if you price your home well, it will sell. It's really as simple as that.

Why is now a good time to sell? Not only is there a healthy supply of buyers, but interest rates are extremely low. Maybe this isn't the classic "cash out" market, but this is a great time to "re-allocate equity" or "trade-up". Again, with so many available properties (inventory), this is a perfect time to trade-up. If you have a growing family and need more space, what better time to buy a larger home than a time where prices are fair and interest rates are low? The opposite holds true, as well. If you're looking to down size, what an amazing opportunity you have. Sell your current home at a fair price and get a great deal on your new purchase.

Sellers must realize that if interest rates rise substantially, the "value" of their homes will decline. Not so much in actual dollars, but in available buyers. If interest rates rise to 8%, buyers will be able to afford "less house".

The most important thing for both buyers and sellers to understand is that this market is all about being fair. Buyers, take advantage of the incredibly low interest rates and the amount of choice you currently have. Realize, though, that so-called "low balling" will rarely win you the property you really want. Sellers, understand that if you price your home fairly, buyers will come.

We all need to take a step back, take a deep breath and look at the grand view. Real estate does not exist in a vacuum. Also, real estate should really be viewed over the long term. With the cyclical nature of economics we know that, over the long term, the market will rise again...not that it's bad now.

In any case, if you are thinking about buying or selling and are looking for an agent, I would love to apply for the job. There's nobody who cares more or will work harder.

As always, my Home Buying 101 workshop is going strong. If you or anyone you know would like to attend, just give me a call or email.