I must have been the smartest man alive to start a business in real estate 8 years ago. (I say in jest.) My career started off with a bang. Back in 2004 and 2005 Portland home values rose just over 35 percent! Every home listed sold within a month. Buyer’s kept my phone ringing so much I wore one of those silly blue blinking ear devises as I darted through the office, restaurants, the gym, and even outside on my mountain bike or in route to kayak. How comical in hindsight. Where is that ear-piece now?
Well, at everyone’s surprise things changed quickly in 2006 as the media drew massive attention to the bursting of the housing bubble. This attention helped put a panic in the market as buyers drew weary and it seemed “everyone” wanted to put their house up For Sale with hopes of cashing out big returns. Below is my brief highlight of the changes experienced in the years after 2004-05 I’ll call the “7-year Itch”:
2006 – The media’s relentless attack on the housing market crash…a national phenomenon. Home buying slowed substantially as consumers drew weary of things to come. The inventory of homes For Sale grew substantially as home owners and property investors tried to cash out with inflated home prices. It was growing clear to everyone that home prices were too high. Portland’s housing bubble began to deflate... notably a year after other US cities.
2007 – A continued rise in the number of over-priced homes placed up for sale. Property investors disappeared and traditional home buyers drew increasingly wearing of pricing. I believe at this time there was still denial by home sellers and people working in the industry that this draw-down would continue.
2008 – The inventory of homes placed up for sale peaked at over 18,000 homes in the Portland Metro area. This was 3 times the inventory of homes For Sale back in 2004-05, and it seemed everything was overpriced. The few home buyers that remained wanted to see 40 – 60 homes before making a decision. I ditched the ear-piece! Home buying was down over 60%. A real fun time to be a real estate broker… I had doubts of being the smartest man alive.
2009 – Home buying bottomed out. Portland experienced a very cold and snowy winter that helped put the brakes on home buying. On the bright side, the volume of homes placed up For Sale declined. On the downside, this inventory was largely made up of distressed homes for sale at reduced prices (i.e. short-sales and foreclosures). Homes sold at BIG discounts from original inflated asking prices.
2010 – Portland’s housing market was bloated with inventory including distressed homes. Home sales were flat in all price ranges. Home values continued to decline.
2011 – Home values bottomed out in the winter of 2011-12. Home values were back to median prices in 2004 with all of the housing bubble gains disappeared - a loss of over 40% in home values. On the bright side - the inventory of homes For Sale declined rapidly including distressed properties. This tightening of supply combined with a rise in consumer confidence started a new trend for Portland’s housing market. Property investors returned to the market with cash purchases buying at bottomed out prices.
2012 – Consumer confidence and interest in home buying continued to rise. This was coupled with a rapid decline in inventory of homes For Sale. The media remained positive on the future of the housing market and buyers began to compete for homes in popular neighborhoods with multiple offers. Portland’s home prices rose 6.3% in median values, and 4.4% in average values. It became apparent to many economists the housing decline had bottomed out in 2010-11. The stock market boomed and personal wealth began to rise after a 7 year decline.
2013 – Forecast remains positive for the housing market in Portland and abroad. The number of homes For Sale will be at an all time low with a declining inventory of distressed properties that had plagued the market. Consumer confidence shows improvements with increased buying in most consumer goods and services. Economic indicators including Job reports continue to improve. Interest rates remain incredibly low. An increased interest in home ownership and tight inventory of homes for sale is projected to raise home values further in 2013.
What a cycle it’s been. A test of endurance and lessons learned for everyone. It really appears things are on the up-tick and to everyone’s amazement a marathon cycle that lead from excitement, to confusion, worry, denial, acceptance, and a cautious sigh of relief.
I appreciate the business you’ve brought me and relationships made running this marathon. Please stay in touch and keep me in mind when it comes time to move…again.
I also have a lender you can trust. His name is Steve Welch at Northwest Mortgage Group, Inc. His direct number is 503-805-6810. Interest rates remain unbelievably low around 4%!